In re High–Tech Emp. Antitrust Litig.

• Decision Date: 18 April 2012
• Docket Number: Master No. 11–CV–02509–LHK.
• Parties: In re HIGH–TECH EMPLOYEE ANTITRUST LITIGATION. This Document Relates to: All Actions.
• Court: U.S. District Court — Eastern District of California

856 F.Supp.2d 1103

2012-1 Trade Cases P 77,866

In re HIGH–TECH EMPLOYEE ANTITRUST LITIGATION.

This Document Relates to: All Actions.

Master No. 11–CV–02509–LHK.

United States District Court,

N.D. California,

San Jose Division.

April 18, 2012.

Anne Brackett Shaver, Brendan Patrick Glackin, Dean Michael Harvey, Eric B. Fastiff, Joseph Richard Saveri, Katherine M. Lehe, Lieff, Cabraser, Heimann & Bernstein LLP, Joshua P. Davis, University of San Francisco School of Law, San Francisco, CA, Eric L. Cramer, Sarah Rebecca Schalman–Bergen, Shanon Jude Carson, Berger & Montague, P.C., Philadelphia, PA, John D. Radice, Grant & Eisenhofer P.A., Linda Phyllis Nussbaum, Grant & Eisenhofer P.A., New York, NY, for Plaintiffs.

Craig Andrew Waldman, David Craig Kiernan, Robert Allan Mittelstaedt, Craig Ellsworth Stewart, Jones Day, Christina Joanne Brown, Flora F. Vigo, George Riley, Michael Frederick Tubach, O'Melveny & Myers, Donn P. Pickett, Frank Hinman, Zachary J. Alinder, Bingham McCutchen, LLP, Cody Shawn Harris, Daniel Edward Purcell, Eugene Morris Paige, John Watkins Keker, Paula Lenore Blizzard, Keker & Van Nest LLP, San Francisco, CA, Donald M. Falk, Edward D. Johnson, Lee H. Rubin, Mayer Brown LLP, Catherine Tara Zeng, Jones Day Palo Alto, CA, Robert T. Haslam, III, Emily Johnson Henn, Covington & Burling LLP, Redwood Shores, CA, Deborah A. Garza, Jonathan A. D. Herczeg, Covington and Burling LLP, Washington, DC, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' JOINT MOTION TO DISMISS; DENYING LUCASFILM LTD.'S MOTION TO DISMISS

LUCY H. KOH, District Judge.

Before the Court are Defendants' Joint Motion to Dismiss the Consolidated Amended Complaint (“Joint Mot.”), ECF No. 79, and Defendant Lucasfilm Ltd.'s Motion to Dismiss (“Lucasfilm Mot.”), ECF No. 83. The Court held a hearing on the motions on January 26, 2012. Having considered the parties' submissions, arguments, and the relevant law, the Court GRANTS IN PART and DENIES IN PART Defendants' joint motion to dismiss, and DENIES Lucasfilm's motion to dismiss.

I. BACKGROUND

This is a consolidated class action brought by employees alleging antitrust claims against their employers, all of whom are high-tech companies with a principal place of business in the San Francisco–Silicon Valley area of California. Plaintiffs challenge an alleged conspiracy among Defendants to fix and suppress employee compensation and to restrict employee mobility.

The Court recites the factual allegations as pled in the Consolidated Amended Complaint (“CAC”), ECF No. 65, and as indicated in judicially noticed documents. The Court then recounts the procedural background.

A. Factual Background

Unless otherwise noted, the following allegations are taken from the CAC and presumed to be true for purposes of ruling on Defendants' motions to dismiss. See Marder v. Lopez, 450 F.3d 445, 447 n. 1 (9th Cir.2006). The Court also takes judicial notice of documents from a related Department of Justice (“DOJ”) investigation and civil lawsuit that are referenced in the CAC or attached as exhibits to the Declaration of Christina J. Brown (“Brown Decl.”), ECF No. 79–1, and the Declaration of Dean M. Harvey (“Harvey Decl.”), ECF No. 93. A court “may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.” United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992). A court may also take judicial notice of the existence of matters of public record, such as a prior order or decision, but not the truth of the facts cited therein. See Lee v. City of L.A., 250 F.3d 668, 689–90 (9th Cir.2001). The Court may consider documents referenced in, but not attached to a complaint without converting a motion to dismiss into one seeking summary judgment. See Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir.2007).

1. The Parties

Defendants include the following high-tech companies with principal places of business located in the following cities in California: Adobe Systems Inc. (“Adobe”), San Jose; Apple Inc. (“Apple”), Cupertino; Google Inc. (“Google”), Mountain View; Intel Corp. (“Intel”), Santa Clara; Intuit Inc. (“Intuit”), Santa Clara; Lucasfilm Ltd. (“Lucasfilm”), San Francisco; and Pixar, Emeryville. CAC ¶¶ 16–20.

Plaintiffs Michael Devine, Mark Fichtner, Siddharth Hariharan, Brandon Marshall, and Daniel Stover (collectively “Named Plaintiffs”), all worked as software engineers for some of the Defendants. Id. ¶¶ 21–27. Mr. Devine worked for Adobe in the State of Washington from October 2006, through July 7, 2008. Id. ¶ 16. Mr. Fichtner worked for Intel in Arizona from May 2008 through May 2011. Id. ¶ 17. Mr. Hariharan worked for Lucasfilm in California from January 8, 2007, through August 15, 2008. Id. ¶ 18. Mr. Marshall worked for Adobe in California from July 2006 through December 2006. Id. ¶ 19. Finally, Mr. Stover worked for Intuit in California from July 2006 through December 2010. Id. ¶ 20.

Named Plaintiffs purport to represent the following nationwide class of similarly situated individuals:

All natural persons employed by Defendants in the United States on a salaried basis during the period from January 1, 2005 through January 1, 2010 (the “Class Period”). Excluded from the Class are: retail employees; corporate officers, members of the boards of directors, and senior executives of Defendants who entered into the illicit agreements alleged herein; and any and all judges and justices, and chambers' staff, assigned to hear or adjudicate any aspect of this litigation.

Id. ¶ 30.

2. DOJ Investigation

Many of the factual allegations in the CAC come directly from two civil complaints filed by the DOJ in the United States District Court for the District of Columbia (the “D.C. District Court”). See Joint Mot. 5–6. Plaintiffs reference these documents in the CAC, and both Defendants and Plaintiffs have attached documents from the DOJ lawsuit to their briefing. See Harvey Decl. Exs. A–B; Brown Decl. Exs. A–F.

From 2009 through 2010, the Antitrust Division of the DOJ conducted an investigation into Defendants' employment and recruitment practices. CAC ¶¶ 3, 111. After receiving documents produced by Defendants and interviewing witnesses, the DOJ concluded that Defendants reached “facially anticompetitive” agreements that “eliminated a significant form of competition ... to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities.” DOJ Complaint against Adobe, et al. (“DOJ Adobe Compl.”), Harvey Decl. Ex. A, at ¶¶ 2, 14; DOJ Complaint against Lucasfilm (“DOJ Lucasfilm Compl.”), Harvey Decl. Ex. D, at ¶¶ 2, 15, 22; CAC ¶ 112. The DOJ also determined that the agreements “were not ancillary to any legitimate collaboration,” “were much broader than reasonably necessary for the formation or implementation of any collaborative effort,” and “disrupted the normal price-setting mechanisms that apply in the labor setting.” DOJ Adobe Compl. ¶ 16; DOJ Lucasfilm Compl. ¶ 17; CAC ¶ 112. The DOJ concluded that Defendants entered into agreements that were naked restraints of trade that were per se unlawful under the antitrust laws. DOJ Adobe Compl. ¶ 35; DOJ Lucasfilm Compl. ¶ 3; CAC ¶ 112.

On September 24, 2010, the DOJ filed a complaint against Adobe, Apple, Google, Intel, Intuit, and Pixar regarding Defendants' agreements. DOJ Final J. against Adobe, et al. (“DOJ Adobe J.”), Brown Decl. Ex. A, at 2; CAC ¶ 114. On December 14, 2010, the DOJ filed another complaint against Lucasfilm and Pixar regarding Defendants' agreements. DOJ Final J. against Lucasfilm (“DOJ Lucasfilm J.”) Order at 1, United States v. Lucasfilm, Inc., No. 10–02220–RBW (D.D.C. June 3, 2011), 2011 WL 2636850 at *1;¹ CAC ¶ 114. In both cases, the DOJ filed stipulated proposed final judgments in which Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar agreed that the DOJ's complaints “state[ ] a claim upon which relief may be granted” under federal antitrust law. DOJ Proposed Final J. against Lucasfilm (“DOJ Proposed Lucasfilm J.”), Brown Decl. Ex. B, at 2; CAC ¶ 114.² Although Defendants did not admit any wrongdoing or violation of law, Defendants agreed to be “enjoined from attempting to enter into, maintaining or enforcing any agreement with any other person or in any way refrain from, requesting that any person in any way refrain from, or pressuring any person in any way to refrain from soliciting, cold calling, recruiting, or otherwise competing for employees of the other person.” DOJ Adobe J. at 5; DOJ Proposed Lucasfilm J. at 4; CAC ¶ 115. The D.C. District Court entered the stipulated proposed final judgments on March 17, 2011, and June 2, 2011, respectively. DOJ Adobe J. at 12, DOJ Lucasfilm J. at 1; CAC ¶ 115.³

3. Alleged Conspiracy⁴

Plaintiffs allege that Defendants engaged in a conspiracy to eliminate competition between them for skilled labor, with the intent and effect of suppressing the compensation and mobility of Defendants' employees. CAC ¶ 55.

According to Plaintiffs, the conspiracy consisted of an interconnected web of express bilateral agreements, each with the active involvement and participation of a company under the control of the late Steven P. Jobs (“Mr. Jobs”) and/or a company whose board shared at least one member of Apple's board of directors. Id. Defendants' senior executives actively participated in negotiating, executing, monitoring compliance with, and policing violations of the bilateral agreements. Id. ¶¶ 56, 65, 74, 79, 84, 85, 91, 98, 102, 104, 107. Defendants' senior executives also actively concealed each bilateral agreement, and Defendants' employees were not informed of, nor did they agree to, the terms of any of the agreements. Id. ¶¶ 64, 77, 82, 89, 100, 105.

From 2005 to 2007, each pair of Defendants in a bilateral agreement entered into nearly...