Today: Judge Lucy Koh shoots down a settlement proposed by Google, Apple, Adobe and Intel that would have ended a class-action suit claiming collusion against Silicon Valley tech workers.
The Lead: Settlement in no-poaching case called too small, rejected
A proposed settlement of a class-action suit claiming some of Silicon Valley's largest tech companies had conspired against their employees was rejected Friday for being too low.
U.S. District Court Judge Lucy Koh shot down the $324.5 million settlement that Apple, Google, Adobe and Intel agreed to with lawyers for more than 64,000 valley tech workers, who claimed the firms agreed to not poach employees from each others' work forces. The valley employees who sued over the "no poaching" agreements were expected to demand at least $3 billion from a jury if the legal fight had moved to trial, an amount that could have tripled under federal antitrust law.
In Friday's filing, Koh said that plaintiffs would receive less proportionally in this settlement than in a $20 million settlement with LucasFilm, Pixar and Intuit in the same case last year. Koh found the discount was especially egregious considering the plaintiffs' case had grown stronger since the earlier settlement, with Koh certifying it as a class action and withstanding an appeal of that decision.
"The court concludes that the remaining defendants should, at a minimum, pay their fair share as compared to the settled defendants, who resolved their case with plaintiffs at a stage of the litigation where defendants had much more leverage," Koh wrote.
Koh also rejected the notion that evidence was stronger against the companies that settled earlier than those still at play.
"This is particularly true for Google and Apple, the executives of which extensively discussed and enforced the anti-solicitation agreements," Koh wrote, specifically mentioning late Apple cofounder Steve Jobs, former Google CEO Eric Schmidt and Intuit chairman Bill Campbell.
"There is substantial and compelling evidence that Steve Jobs ... was a, if not the, central figure in the alleged conspiracy," Koh later wrote.
Emails presented as evidence in the case showed these powerful executives sharing damaging remarks about suppressing recruitment between 2005 and 2009. In one such 2005 email exchange, Jobs reportedly warned Google co-founder Sergey Brin about recruiting Apple workers: "If you hire a single one of these people, that means war."
The proposed settlement has been called unjust by one of the four named plaintiffs in the 2011 lawsuit, Michael Devine, a former Adobe engineer who wrote a letter to Koh last April bitterly attacking the deal. He likened the settlement to a shoplifter stealing a $400 iPad from an Apple store and being able to resolve the theft by paying $40, keeping the iPad and not having to admit wrongdoing.
"There's no justice for the class in that, nor is there any real deterrent to future wrongdoing," wrote Devine. "We want a chance at achieving real justice."
Devine's opinion was not universal among the named defendants, however: Mark Fichtner, a former Intel engineer who now lives in Arizona, submitted a declaration calling the deal "fair, adequate and reasonable."
The companies previously settled an identical antitrust case with the U.S. Justice Department, agreeing not to enter into such anti-competitive hiring arrangements. eBay settled a separate antitrust case with federal and state regulators.
Koh established a Sept. 10 hearing to continue the case.
SV150 market report: Earnings reports send stocks in opposite directions
Wall Street closed out the week with strong gains on Friday, with Silicon Valley technology stocks riding clocking gains amid big post-earnings swings.
Zynga, Nvidia and SolarCity were among Thursday's raft of Silicon Valley earnings reports, and the trading results Friday were strong but mixed. Four companies that announced earnings Friday were in the top five percentage gainers in the SV150: Nvidia gained 8.8 percent to $19 as analysts debated how the Santa Clara company will perform in the current quarter; ShoreTel jumped 10.7 percent to $6.65 and Medivation gained 7.5 percent to $80.93. San Jose networking company Ubiquiti was the final member of that group, adding 7 percent to close at $42.09, while fellow networking upstart Arista Networks -- which will be eligible for the 2015 SV150 after a big initial public offering earlier this year -- couldn't hold on to early gains and ended with a 0.2 percent decline to $72.03.
On the flip side, SolarCity had the worst day in the SV150, falling 7.3 percent to $70.13 after revealing widening losses despite signing up more customers for its solar-power deals. Goldman Sachs analyst Brian Lee wasn't scared away by the report, though, increasing his price target from $92 to $96 and writing, "We came away incrementally more bullish on growth and value potential as SolarCity achieved a number of record operational metrics in the quarter." Zynga fought back from its lowest prices in more than a year, but still dropped 1.4 percent to $2.88 after missing projections with its earnings report and reducing projections for full-year performance. At least eight analysts hacked their price targets for the San Francisco company's stock, Reuters reported, as any possible Zynga recovery story seemed to move farther out on the horizon -- "It's now a 2015 story," Jefferies analyst Brian Pitz said.
Apple gained 0.3 percent to $94.74 after China reportedly banned public funds from being used on the Cupertino company's products. Tesla's Wall Street momentum went in reverse, as the Palo Alto carmaker dropped 1.7 percent to $248.13 amid reports of drivetrain problems in the Model S. Facebook dropped 0.2 percent to $73.06 while reportedly looking into virtual-reality movies, and Pandora Media dropped 0.1 percent to $25.31 while picking up some new advertising revenue. Cisco added 0.7 percent to $25.03 amid rumors of more layoffs on the way, and Gilead gained 0.4 percent to $92.45 while reportedly planning to markedly drop the price of Sovaldi in India.
Up: Nvidia, Electronic Arts, NetApp, Salesforce, SunPower, Google, Juniper, Hewlett-Packard, eBay, Adobe
Down: SolarCity, GoPro, Splunk, Tesla, Zynga, Yelp, Netflix
The SV150 index of Silicon Valley's largest tech companies: Up 7.65, or 0.5 percent, to 1,534.84
The tech-heavy Nasdaq composite index: Up 35.93, or 0.83 percent, to 4,370.9
The blue chip Dow Jones industrial average: Up 185.66, or 1.13 percent, to 16,553.93
And the widely watched Standard & Poor's 500 index: Up 22.02, or 1.15 percent, to 1,931.59
Staff writer Howard Mintz contributed to this report. Sign up for the 60-Second Business Break newsletter at www.siliconvalley.com. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.