Relying on the California court’s 1985 Moyes decision permitting anti-raiding provisions, at least six of Silicon Valley’s largest companies agreed to not hire each other’s employees. This collaboration backfired, however, when the Networks and Technology Section of the Department of Justice’s Anti-Trust Division filed an anti-trust suit against the companies.
From 2005 to 2007, Adobe Systems, Inc. (Adobe), Apple Inc, (Apple), Google Inc, (Google), Intel Corporation (Intel), Intuit, Inc. (Intuit), and Pixar formed numerous bilateral pacts to not "cold call" each others' staff to meet their own needs. The six companies' claimed the agreements enabled them to enter into joint ventures without worrying that the other company would "poach" their engineers. Following the reasoning of the court's decision in Moyes, they insisted that their goal was to maintain a stable work force and sustain their businesses.
The DOJ Steps In
Not allowing the collaboration to solidify, the DOJ filed a complaint in 2010 against Adobe, Apple, Google, Intel, Intuit and Pixar alleging violations of the Sherman Antitrust Act (Sherman Act). Section 1 of the Sherman Act forbids every contract that restrains trade or commerce.
The DOJ complaint alleged that the No Cold Calling Agreements entered into by the companies was a substantial restraint on competition to the detriment of employees, who lost access to better job opportunities. The DOJ charged that such agreements are "per se unlawful" under section 1 of the Sherman Antitrust Act.
The six companies quickly agreed to dismantle their series of agreements without admitting any wrongdoing. In addition, the settlement prohibited the companies from signing any non-solicitation of employees agreements with any other companies.
The settlement and the DOJ’s application of the Sherman Act extend beyond California case law – that will be the focus of our next post on the DOJ Settlement.