Not all of us handle this well, and I don't know about everyone else, but I have at least one job in my past that I left with some burned bridges. The idea of interviewing for a job and having my potential new employer calling the Bill Lumbergh-equivalent whom I eventually lost my shit about and publicly chewed out for being a moron, for an opinion about me, literally puts me in a cold sweat.
So this article would worry me, but I've seen it in practice a few times, since the Los Angeles tech scene is small enough that a lot of people have at least one stint at a small set of companies (e.g. Yahoo, MySpace, PriceGrabber, Citygrid, etc). Usually it's not quite so deliberate as the article paints of stalking mutual connections on LinkedIn. The typical scenario is someone on another engineering team asking, "hey I'm interviewing X, did you work with him when you were at Y company?" and I'll say, "yeah, he was really badass" or some equivalent. Even if I don't have a great opinion of him, it's usually something like, "Well I think he got let go when they did layoffs in 2009, but his manager was a dick so who knows."
Software engineering one of the few meritocracies left. If your quality of your work is good and you're respected by your peers, then Bill Lumbergh's opinion of you probably doesn't matter. And if it does, it's probably not a place you want to work at anyway.