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No cold call agreements and antitrust litigations

A couple of years back, I received a call from a company asking whether I would be interested in joining an upcoming hospital in the Middle East. It was a surprise call as I didn’t apply for any job or intend to take an employment. I understood that they ‘churn the data base and make cold calls.

Cold calling is defined as the solicitation of business from potential customers who have had no prior contact with the salesperson conducting the call.

Not just individuals, even companies make cold calls to prospective employees. Cold calling is one of the main methods used by companies in the high-technology sector to recruit employees with advanced and specialized skills, such as software and hardware engineers, programmers, and other technical professionals. Thus, cold calling involves communicating directly with another company’s employee who has not otherwise applied for a job opening.

No cold call agreements

In order to maintain a good working relationship among companies, between 2005 and 2009 , the companies in USA such as Apple, Google, Adobe, Pixer, Intel, Intuit, Lucasfilm entered into an agreement not to ‘cold call’ each other’s employees’.

This agreement has drawn the attention of Department of Justice (DOJ), Antitrust Division of US. The DOJ alleged in their complaint that the companies had 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. The same day it filed the suit, the DOJ and the defendants (i.e., the companies) proposed a settlement. The settlement agreement does not provide any compensation for company employees affected by the alleged agreements

Civil Class action

Apart from the above suit by DOJ, in 2011, a civil class action suit was filed by five plaintiffs on behalf of over 64,000 employees of Adobe, Apple Inc., Google, Intel, Intuit, Pixar and Lucasfilm against their employer alleging that their wages were repressed due to alleged agreements between their employers not to hire employees from their competitors.

(What is Class suit? In a class action lawsuit, one or more persons called “Named Plaintiffs” or “Class Representatives” sue on behalf of other people who have similar claims. The people with similar claims together are a “Class” and are called “Class Members).

Settlement

What happened to the suit? It ended up in settlement. A final approval hearing was held in July 2015 and on September 2, 2015, Judge Lucy H. Koh signed an order granting Motion for Final Approval of Class Action Settlement. As per the settlement, Defendants Adobe, Apple, Google, and Intel will pay $415,000,000 into a Settlement Fund.  After deducting attorneys’ fees, costs, applicable taxes, and other fees and expenses (see Question 16), the Settlement Fund will be distributed to Class Members. The Court-appointed settlement administrator distributed the settlement to class members the week of December 21st, 2015.

Does this mean that the employees of those companies got the benefit?

During last week, one of our friends, who worked in Intel (at USA) during 2005 received a cheque for USD $ 3000. He couldn’t believe it! He was one among 64000 employees who got the settlement money.

In general, technical, creative, research and development employees from 2005 to 2009, at any one of the above companies got the payment from the Settlement amount.

 

Thought for the day

Surprises are better than promises

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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm.For further information or query, please email it to team@simplifiedlaws.com