As you will recall from previous posts, a large high tech antitrust class action is being waged in California that has major implications for employer non-solicitation agreements.  Questions regarding agreements between employers that impact employee mobility are being addressed in this lawsuit against the backdrop of antitrust allegations.

High-Tech Employee Mobility Antitrust Class Action: Background Developments 

On October 24, 2013, U.S. District Court Judge Lucy H. Koh granted plaintiffs’ motion for certification in a class action alleging that Adobe, Apple, Google, Intel, and other large tech companies worked together from approximately 2005 to 2009 to negatively impact the pay of valuable employees by, among other things, agreeing not to actively recruit each other’s employees. The complaint seeks lost compensation and treble damages for the alleged antitrust violative employment practices of Adobe, Apple, Google, Intel Corporation, Intuit, Lucasfilm, and Pixar. The complaint states the tech companies formed agreements to (1) not recruit each other’s employees; (2) provide notification when making an offer to another’s employee (without the knowledge or consent of that employee); and (3) cap pay packages offered to prospective employees at the initial offer.  The allegations are an interesting twist on previous employee mobility cases.

On January 14, 2014, the U.S. Court of Appeals for the Ninth Circuit denied defendants’ petition to appeal the district court’s order granting class certification.  Now past the certification process, the individual plaintiffs that filed the antitrust lawsuit can now represent all class members in claims that Adobe, Apple, Google, Intel and other tech companies violated federal antitrust laws.

Trial of the class action is set to begin on May 27, 2014.

Latest Pre-Trial Developments: Documents Show Not Everyone Joined

As the parties prepare for trial next month, documents show that the companies that are accused of creating a system to prevent employee mobility were unable to pull another tech giant into the group.  Facebook declined the other companies’ friend request.  Facebook would not agree to not poach other’s employees, share salary information or agree to cap technical workers pay.

Today, these companies vigorously compete for talent.  However, pretrial documents seem to show that in the 2000s, executives of various tech companies frequently had conversations with one another before recruiting each others’ technical workers or making strategic moves in hiring and setting of salaries.

The failed effort to bring Facebook into the group was revealed in recently released pretrial documents, which include emails and depositions filed with the court.  In a March 28 ruling allowing the case to go to trial, U.S. District Judge Lucy Koh stated that an executive from one of the Defendant Companies “unsuccessfully sought to expand Google’s anti-solicitation agreements to Facebook.”

Waiting for Trial

If this matter proceeds to trial, it has the potential to captivate the world like no other trial since the Lindberg Baby Trial.  Tech’s glitterati will parade through the courtroom with court reporters and the press hanging on every word.  If the reports are correct, a potential mediated settlement may deny us the opportunity to see this spectacle.  More importantly for other companies, we will not get an answer to the vexing question of what mobility agreements can companies agree to between themselves when they potentially have an impact on employees.

We will continue to monitor this case here at the blog.  In the meantime, if you are currently considering employee mobility questions, please contact your Weintraub Tobin attorney to discuss.

Summary of Program

Join the attorneys from Weintraub Tobin’s Labor and Employment Group as they discuss important legal developments from 2013 and review the complexities of a number of new laws facing employers in 2014.

Program Highlights

  • New Federal and State Legislation and Regulatory Requirements
  • Updates in the World of Harassment, Discrimination and Retaliation Law
  • Privacy: Social Media and Beyond
  • Keeping up with the Complex Law Relating to Leaves of Absences and Reasonable Accommodations
  • Developments and Trends in Wage and Hour Litigation

Date:       April 30, 2014

Time:      9:00 a.m. – 12:00 p.m.

Location:   Irvine Company Office Properties, 610 Newport Center Drive, Newport Beach, CA 92660

For more information and to register for this seminar, please click here for a copy of the Flyer – Employment Law Update.

Employers may begin to see an increase in whistleblower litigation.

Effective January 1, 2014, the Legislature, through Senate Bill 496, amended Section 1102.5, California’s “whistleblower protection” statute.  We covered this in our “year in review” seminar, but given the scope of the changes in the law, we wanted to make sure to get the word out to those of you who may have missed it.

First, the revised statute now expands the statute’s protections to employees who report suspected violations of the law internally to “a person with authority over the employee” or to another employee with the authority to “investigate discover, or correct” the reported violation.  This means, to trigger whistleblower protection, the employee does not have to report the alleged violation to any entity, agency, or person outside the company.

Second, whistleblower protection now extends to external reports to any “public body conducting an investigation, hearing, or inquiry.”

Third, it is now unlawful for any employer to have any rule, regulation, or policy that prevents the disclosure of reasonably-believed violations of local (in addition to state and federal) laws, rules, or regulations.  Previously, the statute had been interpreted to exclude violations of local laws (see Edgerly v. City of Oakland (2012) 211 Cal.App.4th 1191).

Fourth, the revised statute also newly imposes liability where any person acting on the employer’s behalf (i.e., a manager) retaliates against an employee who either does engage in protected whistleblowing activity or who the employer believes has disclosed or may disclose the information externally or internally. This so-called “anticipatory retaliation” is particularly troubling, because the employee alleging retaliation may not have disclosed or even planned to disclose anything.

Fifth, the protection of whistleblowers applies even if disclosing illegal activity is part of the employee’s job duties. For example, a publicly traded company’s compliance officer is now protected for disclosing alleged illegal activity even though her job requires her to report such activity, externally or internally.  This change was in reaction to previous California court decisions, which had previously interpreted this section not to provide protection to an employee whose duties include disclosure of legal compliance information.

Although the change in law creates new sources of liability for California employers – with penalties of up to $10,000 per violation – the law at least clarifies a prior split of authority. California and federal law are now harmonized regarding whether an employee must first report an alleged violation of securities laws to the SEC to receive protection against retaliation under the Dodd-Frank Act. A California employee is protected under state and federal law, regardless of whether he or she first reports violations of securities laws to a government or law enforcement agency, to a specified public body, or via an employer’s internal reporting procedure.

In light of the expanded protection for whistleblowers who report unlawful conduct to or about their employers, employers should update their anti-retaliation policies to reflect these new provisions and request that employees acknowledge receipt of this update.  Employers should train managers and supervisors regarding their compliance obligations and anti-retaliation laws. Employers must be even more diligent in investigating employee reports promptly, impartially (i.e., a supervisor who is accused should not be the one to investigate), and take appropriate corrective action.  Employers should always carefully document the legitimate business reasons for adverse employment decisions such as discipline and terminations, but the expansion of whistleblower protections to difficult-to-disprove “internal complaints” and perceived planned complaints makes this even more important.  And, if at all possible,  persons accused of alleged violations should not be permitted to make unilateral decisions adverse to the complaining employee.

Summary of Program

Join the attorneys from Weintraub Tobin’s Labor and Employment Group as they discuss important legal developments from 2013 and review the complexities of a number of new laws facing employers in 2014.

Program Highlights

  • New Federal and State Legislation and Regulatory Requirements
  • Updates in the World of Harassment, Discrimination and Retaliation Law
  • Privacy: Social Media and Beyond
  • Keeping up with the Complex Law Relating to Leaves of Absences and Reasonable Accommodations
  • Developments and Trends in Wage and Hour Litigation

Date:       April 30, 2014

Time:      9:00 a.m. – 12:00 p.m.

Location:   Irvine Company Office Properties, 610 Newport Center Drive, Newport Beach, CA 92660

For more information and to register for this seminar, please click here for a copy of the Flyer – Employment Law Update.

It is a truism that preliminary injunctions are “rare” and “exceptional” remedies.  But rarity is context specific.  As a percentage of cars made, Cobra GTs are rare.  If you are standing in the plant where they are made, however, they are anything but rare.  So, while it may well be true that preliminary injunctions, as a percentage of all cases filed are “rarely granted,” that does not mean that most preliminary injunctions are denied.   Although I have no numbers, my experience is that most preliminary injunctions that are brought before a court are likely granted.  That is because attorneys who prepare such applications go through a fairly rigorous self-selection.

Attorneys do not like to lose and they rarely try to bring a preliminary injunction if they don’t think they can satisfy a court that the facts necessitate its issuance.  The same is true of temporary restraining orders which, after all, are only a short term preliminary injunction which can be acquired on shortened (and sometimes no) notice.  When an attorney runs into court with a stack of papers screaming that his client’s hair is on fire and that the defendant is lighting the matches, most judges will, just out of caution and prudence, be inclined to order the defendant to stop playing with matches.  This is especially so in trade secret misappropriation and unfair competition cases.  A plaintiff company runs into court essentially asserting that it will be destroyed or irreparably injured unless the court issues an injunction.  It claims that its customer lists or information associated with customer lists known by former employees is being used to destroy or injure it.  On those facts, many judges will issue a preliminary injunction.  The truth in trade secret and business unfair competition cases is that preliminary injunctions are common.

It may also be less of a big deal than everybody thinks.  Such orders will typically say something like: “don’t use your former employer’s trade secrets.”  Orders in excess of that injunction, or that prohibit contact with particular customers, may be subject to a writ of supersedeas or expedited appellate court review.  While some trade secret and unfair competition cases settle after the preliminary injunction issues, increasingly we see cases where the preliminary injunction is put into place will proceed to trial or disposition by later motion.  On motions for preliminary injunction or application for TRO, the defendant has all the disadvantages.  Plaintiff has had substantial time (or at least more time than defendant) to develop evidence, prepare declarations, obtain computer forensics and the like in advance of filing the motion.  Defendant is on, well, the defense and must hurriedly prepare declarations, computer forensics.  This rush often puts defendants at an extreme disadvantage.

Cautionary note:  Many defendants will rush to prepare declarations which commits them to statements that they may later regret.  Very few individuals remember with any accuracy the content of email communications, or what stored documents or computer forensics will actually show when they are examined.  It is all too common an experience that a party will assert that they have never had any contact with X, Y or Z only to find several emails contradicting that assertion in later discovery.  Counsel must take great care not to let defendants overcommit factually in declarations filed in response to a preliminary injunction in advance of electronic communications and documents being collected and reviewed.