Technology Giants Settle Hiring Suit | Hacker News Reader

Technology Giants Settle Hiring Suit

nytimes.com

77 pointsnicholas73130 comments

This is just absurd.

I honestly do not understand why the plaintiffs would settle this case. There are multiple emails that proposing the conspiracy, executing the conspiracy, expanding the conspiracy, and warnings to the ringleaders of the conspiracy (i.e. Jobs, Schmidt, Whittman, Lucas, etc.) being told explicitly what they were doing was illegal, and then actively taking actions to cover it up. (Specifically I refer to Eric Schmidt's email in which he said regarding the Apple-Google agreement, "I don't want to create a paper trail over which we can be sued later".)

The only way you can prevent this, and other kinds of organized and large scale fraud is through confiscation of revenue on a massive scale. To make the companies hurt and to directly effect the officers of the companies. Otherwise, these settlements are simply noise, and a chalked up as a cost of doing business.

Here's some numbers to keep in mind, when the settlement is announced. Google $16.86 BILLION in revenue Q4-2013 Apple $37.5 BILLION ($7B profit) Q4-2013 eBay $4.5 BILLION Q4-2013

Unless the settlement is in the tens-of-billions of dollars, it's nothing. (Bonus points, if they settle, "while admitting no guilt.")

OK, that's freaky. I read the HN comments first, then the original article. By the time I read the original article, it had been updated to quote the HN thread:

  On Hacker News, the grumbling about the settlement was 
  immediate. “I honestly do not understand why the 
  plaintiffs would settle this case,” one poster wrote. But 
  some saw another side: “What did the engineers risk with 
  this lawsuit? Nothing. What did the law firm risk? 
  Getting paid peanuts for hundreds of hours they spend on 
  the case if they lose.”

I did not know that the NY Times had started updating their articles with quotes from discussions about the same articles. Do they base which quotes they choose on your referrer? Will I see different quotes if I view this linked from Reddit?

I read the article first, and thought they were referring to another older HN thread on this topic. Thanks for pointing this out. It's a bit hard to believe (and insane) that they're updating their article real-time. And they've not even marked it as an edit.

Also note how cavalierly and routinely the Times (and most other "traditional" publishers) avoid actually linking to this thread, or basically anything other than internal links to other Times articles.

I honestly do not understand why the plaintiffs would settle this case.

Lawyers? Maybe they did the math and realized they could pocket $XXX million to $1 Billion if they settled.

On the other hand, engineers might get a $10 Adwords coupon or a free song on iTunes.

The attorneys are probably making a simple calculation:

a) Take a $1b settlement today, yielding $500m for attorneys.

b) Take a chance on a $5b judgement that is then challenged with years of appeals and possibly reduced arbitrarily by a defendant-friendly judge down the road.

The law firm probably is just happy to get the money.

Bingo, that was my reasoning too. Bird in hand and all. Probably that's enough money to make every lawyer in their firm a millionaire (not that it's divided evenly) so why take the chance?

That's the problem with commission-based sales (like a real estate agent or a headhunter). They say "My fee is a % of the sale, so I want the best price!", but really it's in their best interests to close as soon as possible.

So, the lawyers could get their fee RIGHT NOW, or wait years til they get paid and do lots of extra work. Clearly, the lawyers maximize their fee per hour worked by settling now, rather than having years of trials and appeals.

Except that appeals work is significantly cheaper than a large lawsuit at the district court, because it often focuses on legal error. They don't relitigate the case.

Also, attorneys don't take appeals work on contingency, so you don't often see as many appeals.

The only people what you are suggesting maximizes for is the plaintiffs.

You also act as if the lead plaintiffs in cases like you suggest are blameless. The attorneys are not the ones agreeing to settle, and they actually can't do things without the okay of their plaintiffs.

> The attorneys are not the ones agreeing to settle, and they actually can't do things without the okay of their plaintiffs.

What is the mechanism for making strategic decision for a class action suit? Do the plaintiffs hold a vote? Is the vote usually "we, the lawyers, have decided to settle for $x, either agree or sue on your own" or "should we settle for $x or keep pressing?"

Except that appeals work is significantly cheaper than a large lawsuit at the district court, because it often focuses on legal error. They don't relitigate the case.

You still ignored his main point, get the money now without delay and without the possibility of appeals court striking it down or lowering the amount won--if they win. Appeal after appeal can take a few years.

The attorneys are not the ones agreeing to settle, and they actually can't do things without the okay of their plaintiffs. Can they "strongly suggest" it to the plaintiffs?

"You still ignored his main point, get the money now without delay and without the possibility of appeals court striking it down or lowering the amount won--if they win. Appeal after appeal can take a few years."

Lawyers don't get money unless clients want the money and are willing to settle. Period. The clients agree because they don't want this risk. They don't want to wait 7 years. It's easy to blame lawyers because they are essentially enablers, but ...

Behind every crappy settlement is a crappy plaintiff. There may be a shady lawyer somewhere, but laying the blame solely on the lawyer is silly.

For anyone who thinks the settlement is unfair, besides objecting, they can opt out. If he really thinks it is so cheap, easy, and low risk to win a lawsuit, he should do it.

"The attorneys are not the ones agreeing to settle, and they actually can't do things without the okay of their plaintiffs. Can they "strongly suggest" it to the plaintiffs? "

They can give their plaintiff candid advice, which is usually "This will take 3-7 years of your life, decide whether you'd rather spend that sitting in depositions or with a small amount of money"

The vast majority of good class action attorneys are fine with either. They can often win much larger amounts than the settlement amounts to. No court in the world would let them drop out of the lawsuit at this point (fun fact: You can't withdraw in most cases unless the judge lets you, and the judge is not going to let you just because you didn't settle)

I'm not going to claim there isn certainly a cottage industry of suing to settle in certain areas. Trotting out this lawsuit as an example of that (when for example, we still don't even know the settlement amount) seems silly.

Any engineers who are unhappy with the settlement can opt out and sue on their own.

With what? Google, Apple et al can spend $100 Million in a heartbeat, where's an engineer going to find $xx millions to spend so can possibly win $100K or so?

If you want to make the decisions you've got to also be the one supplying the cash.

In finance we call this the golden rule. He who has the gold makes the rules.

Yes indeed. I almost mentioned that in those exact words. :)

This really makes me lose a lot of respect for Mr. Jobs.

How hard would it have been to say "anything Google offers you, we'll double it, so don't fucking leave? We're busy changing the world here, and that would be a pointless setback."

It's not like Apple is exactly cash-strapped, and it's not like he didn't know the value of his teams ("means war" clearly speaks to that).

> This really makes me lose a lot of respect for Mr. Jobs.

I tried to work with Jobs in the late 70s and early 80s, and I couldn't stand him. After a brief spell I refused to work with Apple any more. Since then I've been waiting for the world to catch up with my already low opinion. :)

Apropos, everyone should read the Isaacson biography. Regardless of how you feel about the topic, it's a terrific book.

> Apropos, everyone should read the Isaacson biography. Regardless of how you feel about the topic, it's a terrific book.

Despite never having met or worked with the guy, I gotta side with Gruber's take on this one: Isaacson totally missed the boat. He was granted unprecedented (and now, unfortunately, impossible) access to a fiercely interesting person's life, and either his lack of contextual understanding or lack of domain knowledge led to a book that is, at best, underwhelming. His questions, his analysis, it all seemed so pedestrian and boring.

Maybe the lack of hard questions or deep insights is why Jobs chose him in particular to be granted such access, but I personally expected a whole fuck of a lot more from something that had so much promise to begin with. I feel like Mossberg or maybe even someone who doesn't write as their profession (Ive? Kottke? Kawasaki?) might have done a vastly better job.

Maybe I just wish I'd had a chance to know the guy, deeply flawed character and all, and no text will ultimately be sufficient - but Isaacson's effort left me with so many more basic questions than it even began to attempt to ask, much less answer.

And now, all that potential wisdom to be gleaned from this specific instance falls into the realm of the unlearnable. Perhaps that was the plan. Who are we to assume his legacy was any less meticulously crafted than anything else he unleashed upon the world?

> His questions, his analysis, it all seemed so pedestrian and boring.

I agree to some extent, but I also think this is a commonly heard complaint about books about an insider in a field or art, written by an outsider -- other insiders inevitably see the shortcomings of a generalist's way of describing a specialist.

I like the book precisely because it's the view of an outsider, who didn't necessarily understand all the minutiae of his subject or the field, but to some degree that circumstance can confer a kind of universality and accessibility to the end result.

There's also the handicap of writing a biography of a living person who has granted special access -- the writer must feel tremendous pressure to avoid saying anything that might end his access. That's always lurking between the lines when reading the biography of a person who was living when the book was written -- it can't compare to the more classic tell-all, "Mommy Dearest" kind of biographies of people no longer among the living. But the latter have their own problems.

In the final analysis, good writing is defined by what you leave out, not what you put in. I think Isaacson passes this test.

> This really makes me lose a lot of respect for Mr. Jobs.

Jobs was a player. Look at how he played Wozniak, the mother of his daughter, & his daughter.

http://www.cnn.com/2013/08/15/tech/innovation/steve-jobs-mov...

At his return to Apple he made that speach to their employees about how hard they'll have to work to keep Apple alive, and that they shouldn't be there for the money.

He was right, all the more so in hindsight.

Because he was very good negotiating. Apple can do that on a case by case basis but announcing it like that will just increase their HR expenses A LOT.

Reuters is reporting the settlement to be about $324million. So an order of magnitude less than speculated here.

http://www.reuters.com/article/2014/04/24/us-apple-google-la...

And just in case anyone is wondering that works out to: $3375 per employee effected.

And more importantly it works to: $totally worth it for the companies involved.

324/4 = $81 million each (assuming they split it evenly, I have no idea how that division works).

While each employee represented in this suit got the shaft, the bigger problem (IMO) is that the punitive cost for the individual companies is small enough (relative to their sizes and how much they likely saved by engaging in this practice) that it alone is unlikely to change any future behavior.

So I ask this only half-jokingly - at this point, what self-respecting engineer would continue to work at Google, Apple, or these other firms? I mean, these guys conspired to illegally suppress your wages, but you're essentially a bunch of suckers who get paid off with a comfortable living, "interesting work," and a bonus check for a couple thousand dollars and you're happy. Meanwhile the people behind this are making literally billions of dollars of profit.

Salaried employment is made of suckers who can be compensated with less than they might be worth because the alternative is a world where they would have to fight for every scrip, scrap, and slice that they are owed.

I've been on both sides of that coin---I've worked for the startups and I've worked for "the industry." Am I being "taken advantage of?" Am I being paid less than I'm worth? Probably.

But I wouldn't trade the comfortable life of knowing my paycheck won't bounce for the hardscrabble life of the startup cowboy any day of the week.

I'm curious what your recommendation is. Is there a third option? Are you recommending people not work for the firms specifically involved in the settlement? I guess I could always look into IBM...

Most of the people who work at startups are salaried employees. So what's your point?

As for your third option, it's called self-employment. It demands that you fight for every scrip, scrap, and slice, but the reward is high: it's one of the best and only ways to get paid what you're truly worth.

It's not for me; I like externally-imposed structure and hate doing my own accounting specifically enough to track all the taxes self-employment demands I track. But it is a third option, and I tip my hat to those who find it fulfilling.

The alternative I am suggesting is to work for any of the million other companies out there, or work for yourself. Sure, IBM is an option, but there are plenty of others also.

It's not even about the amount of money lost/denied. It's about the principle of the thing - hence my comment about self-respect. Why would you work for one of the companies that engaged in this behavior when you have so many other options?

Can't retire on principles.

It's a trade-off.

Diogenes, Aristippus, and Dionysus

A philosopher named Aristippus, who had quite willingly sucked up to Dionysus and won himself a spot at his court, saw Diogenes cooking lentils for a meal. "If you would only learn to compliment Dionysus, you wouldn't have to live on lentils."

Diogenes replied, "But if you would only learn to live on lentils, you wouldn't have to flatter Dionysus."

The question is which you like less (or prefer more): lentils or having to flatter.

I think you answer your own question :) Comfortable living, interesting work, and big bonus checks (tens of thousands for many, hundreds of thousands for some) are indeed what attract a lot of employees. Larry, Sergey, and Eric are universally loved inside of Google, I don't think people mind that they are billionaires. It's not like they're taking $500MM a year in salary.

Nope, just a mere 83 thousand shares of stock per year. It's quite modest. http://finance.yahoo.com/q/it?s=GOOG+Insider+Transactions

Thank you for making my point for me. BTW the bonus checks I was referring to were the settlement payouts, not normal annual bonuses.

Well I still want to work at Google, but that's not for the money, it's for world domination.

This was a no-solicit agreement, not a no-hire. If you were working at Apple and wanted to work at Google, you could just apply and get hired.

And then you could get a counter-offer from your current employer. Nobody stopped this from happening, and a lot of engineers made a lot of money doing exactly this.

> And then you could get a counter-offer from your current employer. Nobody stopped this from happening, and a lot of engineers made a lot of money doing exactly this.

61. Third, each agreed that if either made an offer to such an employee of the other company, neither company would counteroffer above the initial offer. This third agreement was created with the intent and effect of eliminating "bidding wars," whereby an employee could use multiple rounds of bidding between Pixar and Lucasfilm to increase her total compensation.

I'm somewhere between the sentiments expressed here. I'm thankful there's a strong incentive for top-notch law firms to pursue cases like this. I doubt this would have happened otherwise. My concern is that a ~35% cut may motivate the firms to settle for much less than would be meaningful for the victims.

The firm would gross a billion dollars on a $3B settlement, while the victims would get an average of $30K. And considering how expensive a trial is, I can see them settling for much less.

I don't know much about this field, but I wonder if it would make more sense for the court to take vote among the class members rather than letting the firm decide themselves. Or is it just up to the judge to decide if it's fair and in the best interests of the class?

Would it make more sense to have a government agency handle the litigation for class action lawsuits? I'm thinking of something like anti-trust lawsuits, which I believe can be initiated by both state attorneys and private law firms.

http://en.wikipedia.org/wiki/United_States_antitrust_law#Rem...

I'm not necessarily advocating for this, because I suspect there are a lot of implications I haven't thought through... however, I'm leaning toward it as an idea.

The big problem I see here is that the real victory for a law firm in a very compelling class action is mainly in gaining the right to represent the class.

At this point, the risks become asymmetrical, because the payout for the lawyers on a settlement is so high that it makes no sense to engage in even mildly risky behavior, even if the expected return is far higher with litigation. If you and 10 other lawyers are going to get to split 300 million, would you press for litigation that had an 80% chance of returning a billion, and a 20% chance of returning nothing?

That lottery would probably be the basis for extracting a good settlement, but it makes sense that lawyers would be extremely reluctant to take that risk, because the outcomes for them are tons of money for sure and probably tons of money but maybe no money. The order of magnitude gets lost in the gain, so only the risk remains as a consideration.

Would state prosecutors, who stand to build a career on this but will be paid "the same" regardless of the outcome, do a far worse job?

It's a form of the principle-agent problem:

http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem

Freakonomics identified a similar bias in real estate: realtors (earning a percentage of sales) work less hard for clients' home sales than they do their own, where the additional price received is worth more time.

The settlement was $324million for (64,000 class members and the attorney fees).

So the figure leaked. Wow, that ain't sh*t.

The fix is in. The class is represented by Lieff Cabraser Heimann & Bernstein, which has a long history of getting low settlements in big cases. They are a false-flag shill firm working for the benefit of themselves and the defendant companies.

Like scofflaws Archer Daniels Midland, they are long-time sponsors of NPR, so don't expect any hard-hitting reporting from the mainstream-left in the US.

Citation required.

It's simple math. Here's a case of theirs that was way under-settled:

http://en.wikipedia.org/wiki/California_Uninsured_Patient_Ho...

A whopping $3K-tops/year per class member: http://www.lieffcabraser.com/Case-Center/Comdata.shtml

That's 1) a single datapoint and 2) doesn't show how LCHB compares with other law firms in class-action cases.

I'm not doubting, or believing, your assertion. I'm requesting something more material than mere assertion.

I actually tend to share your skepticism of significant NPR sponsors -- too many companies in need of whitewashing / greenwashing seem to end up in that role, to the point it's tainted the brand. Now I think "Oh, I wonder what that company is trying to atone for" when I hear a credit (if I don't already know, e.g., Walmart, Microsoft, Monsanto, Comcast, etc.).

Frankly I couldn't care less about how other law firms do in class-actions. In this issue we have LCHB and the settlement as leaked/rumored totally stinks for the kind of activites, admitted intentions, we have here. So it doesn't matter how LCHB compares to others, what matters is that they aren't doing a good enough job here.

I mean, come on, isn't it suspicious how quickly all of this was worked out?

If you're going to argue a particular malfeasance or malpractice on LCHB's part, then a comparison with industry norms is appropriate.

I consider your assertions unproven.

I don't have to prove my opinion that the rumored settlement is too low because it's a value judgement. I can also say without burden of proof that non-prosecution of any criminal laws is less than ideal. I'm sure there's someone out there who would say the settlement is too high, that since the employees were free to start their own companies where they could make as much as they thought they were worth, so no harm.

In other words, I'm not arguing malpractice, nor incompetence in the courtroom sense, just that my interpretation of their history says that maybe they don't have the class's best interests at heart. Again, opinion.

If you have some sense that whatever they came up with was the best result possible, I'd really love to hear the rationale there, because I don't think one exists.

Could anyone explain how the terms of this are able to go undisclosed when this is a class action suit, and the plaintiffs are the public at large?

The plaintiffs are not the public at large. They are the class of people, 60,000 in number in this case, who were affected by these hiring practices. The terms of the settlement will be mailed to class members who are not directly involved in the suit, and they will be given the option to opt-out and preserve any individual claims they have against the parties.

Thanks, this is helpful. Does that mean the federal government is not a party to this suit?

I'm pretty sure that other anti-trust cases are pursued by the federal government. If so, do you know whether it's still possible for the terms of settlement arising from such suits to be sealed?

> Does that mean the federal government is not a party to this suit?

Back in 2010 the U.S. Department of Justice entered into a settlement of the government's claims against Adobe, Apple, Google, Intel, Intuit, and Pixar. The proposed agreed final judgment, which I believe was approved by the court substantially as-is, is at http://www.scribd.com/doc/38096460/Settlement-in-tech-hiring.... The settlement imposed some restrictions on the companies' hiring practices, but those restrictions included significant carve-outs, some of which I discussed at http://www.oncontracts.com/dojs-employee-solicitation-consen....

The antitrust laws have criminal and civil components as well as governmental and private aspects. The government may prosecute violators of the antitrust laws and impose criminal or civil punishments. These are punitive. Private plaintiffs may then sue for monetary injuries they personally suffered. The fact that it takes the form of a class action just means a bunch of private claims are considered as a class. It does not change the fact that they are private claims.

This particular case was pursued by the government. The companies settled with the DOJ: http://www.justice.gov/atr/cases/f272300/272393.htm. See: http://www.mintz.com/newsletter/2011/Advisories/0858-0111-NA....

The DOJ has a policy against entering into confidential settlement agreements: http://www.law.cornell.edu/cfr/text/28/50.23. While it is in theory legal for them to do so, this regulation makes any such attempt potentially subject to litigation.

The DOJ document looks like they payed no fines, and essentially just promised not to do it again. Isn't this conceptually inconsistent with them paying out hundreds of millions of dollars to the class plaintiffs. Do they face any repercussions for the harm they did to developers outside the class due to lower market wages?

The federal government is not a party to this suit, at least not based on the complaint that I saw.

The results will be presented to the court on May 27th; I imagine they'll be kept quiet until then.

http://www.mercurynews.com/crime-courts/ci_25630192/apple-go...

No, it will be mailed to class members, and leak that way.

They can't keep quiet the terms of a proposed settlement from the 64k engineers they claim to represent :)

64k engineers ought to be enough for anyone (to reconstruct the initial settlement value).

I would think the judge need to approve the settlement before the claims are mailed.

Other way around. One of the options engineers receiving the mailing have is to go to the hearing and present their opinions on the settlement to the judge.

Most won't, but with 64k plaintiffs, most of them long-winded, it'll still need to be a patient judge.

What is currently private are the proposed terms of the settlement. Those get mailed to every member prior to any judge approving or denying them, because the class members can object independently of the lead plaintiffs

Regardless of what it'll say in print, 75% of any money will go to lawyers, and the rest will be doled out accordingly. Affected workers will have to get in line with appropriate documentation for their $75 pre-paid Visa card, to be mailed to them and delivered within 8-12 weeks.

Although it's nowhere close to 75%, probably more like 33%, I agree with the spirit of what you're saying.

Let's say the total settlement is for, say, $3 billion. The lawyers get $1 billion. That is a _lot_ of money for the work performed. More importantly it's money that the alleged victims are not getting.

You could argue that the victims wouldn't get anything except for the great public good performed by these valiant legal heroes.

A judge would never approve such a high contingency fee. Standard contingency fee is about 35%.

Yet the parent's point stands quite as firmly at 35% as it did at 75%. Intuitively it doesn't seem just for systemic friction to enrich undamaged parties so thoroughly.

How did you form the belief that the public at large are the plaintiff class? I believe it's comprised of people who actually worked for the named companies between specific dates.

Although I believe he meant "public" as in, people who were affected but not directly filing the lawsuits. So, as you say, people who worked for or were affiliated with the affected companies.

However, you can make the argument that this affected the entire North American tech labor market, in which case it truly would be the tech public at large.

Perhaps that's why they're so keen to settle.

The effects of a conspiracy to prevent poaching, effectively reducing the market for labor, will have knock-on effects. It affects wage levels at other firms, both within the technical community and in the affected regions at large. Given that the anti-poaching restrictions were international in scope (one instance involved former Apple employees being considered by Google, in France), this isn't a strictly Silicon Valley affair either.

So, yes, the affected markets were very large.

I am disappoint.

...AND signed with the lawyers to be represented.

the judge just have to agree that a significant number of people affect joined to allow a class action. even if in reality it leaves almost everyone out.

Suppose the settlement was $6B and 60k members are in the class. That's $100k per worker. However, the lawyers usually get 1/3, so $2B for the lawyers and $67k per worker.

That's the offensive part about class action lawsuits like this. The lawyers MAKE A FORTUNE. The class victims get a decent check, but nothing great, and probably less than they lost due to the crime.

Are you just unhappy that someone is profiting off this, or that the plaintiffs aren't making enough money?

If the former, then you probably need to re-think what would happen if the system was set up a different way (i.e. something other than a order-unity fraction of the total amount). The defendants in a case like this are always going to willing to pay a significant fraction (e.g. 20%) of the potential settlement in lawyer fees in order to fight the suit. If the plaintiffs can't spend a similar amount, they will be at a serious disadvantage in court. These fees are merely a symptom of the (alleged) problem that court outcomes depend so much on lawyer fees. If you want to fix the problem, you need to change the court process; attempts to limit class-action fees will just aid the large corporations.

If the latter, then you just want the court to pay out more money to the plaintiffs. But remember: having the plaintiff lawyer fees directly proportional to the settlement is an excellent motivation for the lawyers to win the biggest settlement they can for their class-action clients.

This case will probably be fine. However, there are tons of cases where the lawyers get 100% of the cash settlement.

The lawyers have to show a benefit for the class, and it can be as small as getting the company to promise to stop doing whatever was a problem and hiring one outside firm to verify compliance. Then then lawyers can get a settlement of $500/hour for all the time they spent on the case with an inflated number of hours.

I have seen cases where the lawyers on both sides are basically conspiring against the class, and the judge is okay with it because he wants to get back to the golf course. The plaintiff's laywers basically say, "hey you agree to the smallest thing the judge will accept as a benefit to the class, and you don't bitch about paying us $500/hr. Deal?"

Were these cases in state or federal court?

Basically, it can be summarized as:

Problem: The legal system is expensive and inefficient. If a lot of people are wronged by the same defendant, it is impractical for them to pursue their claim.

Solution: Let's have class action lawsuits where the lawyers make a fortune!

In this example, the defendants get a decent bonus check. I'm really offended by "class action" lawsuits where the lawyers make millions and the victims get a coupon for $10 off their next purchase.

Also, in this case, THE LAWYERS WERE TAKING NO RISK. There already was a ton of evidence from the justice department case. What actually happens is several groups of lawyers rush to file, each with a different lead plaintiff, and then the judge picks which group of lawyers get the big cash windfall.

"In this example, the defendants get a decent bonus check. I'm really offended by "class action" lawsuits where the lawyers make millions and the victims get a coupon for $10 off their next purchase."

Me too. But the only good solution to this is no class action lawsuits (which i'm actually fine with, but let's be real that anything else won't work in all cases).

"Also, in this case, THE LAWYERS WERE TAKING NO RISK. There already was a ton of evidence from the justice department case. What actually happens is several groups of lawyers rush to file, each with a different lead plaintiff, and then the judge picks which group of lawyers get the big cash windfall. "

This is so wrong i don't even know where to start.

So if i wanted to, say, create a new version of facebook, you'd say i wasn't taking any risk because i can already see what facebook did?

What does making a Facebook clone have to do with pursuing a civil lawsuit WHEN GOVERNMENT LAWYERS ALREADY PRODUCED A TON OF EVIDENCE SHOWING GUILT.

Making a Facebook clone is risky, you could spend the money and get no users.

Suing these defendants is almost risk-free, there already was a ton of evidence due to the Justice department investigation.

So "having some evidence that never resulted in a conviction" = risk-free?

This is identical to the facebook case in terms of risk.

The lawyers outlay a lot of money (many millions) up front. Clients pay basically nothing. The lawyer could lose all of it due to things outside of their control. Actually winning, even with a good start, requires a large amount of time, energy, and expense.

The idea they can't lose because the justice department got some evidence is completely irrelevant to anything. It saves a small amount in discovery costs. That's it. It doesn't even save the plaintiffs money, it saves the defendants money because the discovery they produce is near identical

The plaintiffs still need to go through all the discovery. They still have to take depositions, go through all the documents, etc.

You seem to have literally no idea what is involved in a lawsuit. I would be more than happy to walk you through what actually happens.

The response to your point is usually that no one plaintiff would have the resources to pursue their claims on their own. The expected value of bringing this kind of claim against a defendant, much less these defendants, is probably not that positive if you were to go about it on your own. At least this way you get $67k.

What is a better alternative? (Other than preventing stuff like this in the first place.)

Crowdsourcing? What do you estimate as total legal expenditures if a top-notch legal firm were hired just for their hourly rates? Divide that by 60k.

How many of those 60k do you think would have been willing to put up thousands (or tens of thousands) of dollars in advance with no guarantee that they would win? I'm one of those people and I certainly wouldn't have.

I'd guesstimate in the low to mid 8 digits. Apple apparently paid its lawyers more than $60M to beat Samsung. Ubuntu managed to raise $13M from 28 thousand people.

The other argument in favor of class action contingency structure is the alignment of interest between plaintiffs and attorneys. Although as already pointed out in other parts of this thread, perhaps the incentives begin to mis-align when settlements reach a certain size?

The lawyers also do all the work and take on all the risk.

> The lawyers also do all the work and take on all the risk.

Except for being the ones who were actually harmed in the matter.

Edit: Despite my snarky reply, I'm with toomuchtodo - I upvoted your post even if I felt annoyed by it at first, because you make a very good and valid point and it gave me food for thought.

Why was I annoyed by your post, then? Probably my Borland check.

It must have been about 20 years ago, but there was some class action suit on Borland stock. I was in the class and from the numbers they sent out, it looked like I might actually get some real money out of it, at least a thousand bucks or so.

Then my check came. $17.

I pored through the documents to see what had gone wrong, and I found it: there was a limited settlement fund, I think around $12 million, only a tiny fraction of the hundreds of millions that the original class action notification had talked about.

Out of the $12 million settlement fund, the lawyers got $7.5 million.

I'm going to quit software development and get into that business.

Do it. Honestly. I would love to see one complainer here take on the task of dealing with a large class action lawsuit, and see what it's really like.

People think startup life of "80 hour weeks" is bad. Try a large lawsuit sometime ;)

Not that i think they aren't overpaid, or sometimes reach settlements that don't benefit anyone but lawyers, but that's a different problem, and in fact, why a lot of countries really don't do class action lawsuits like the US.

The problem is people want the result they want, without having to do any of the work. If you want that result, you should be the lead plaintiff. Or opt out and sue yourself.

It sounds like you didn't make much money because your side (mostly) lost the lawsuit. If the lawyers had taken nothing from the pot you would have made $45 instead which also wouldn't have been very exciting.

Honestly I bet the lawyers weren't happy with the result either and their part of the settlement mostly just covered their costs.

Class members can opt out to preserve their own right to pursue independent action. Most won't, because as small as class action end payouts to class members may be, they don't carry the risk or time cost of pursuing your own direct action case.

> Except for being the ones who were actually harmed in the matter.

What did the engineers risk with this lawsuit? Nothing. What did the law firm risk? Getting paid peanuts for hundreds of hours they spend on the case if they lose.

The engineers lose the capacity to get compensation for what was done to them. If they lose the lawsuit by bad lawyers, they wont get a penny.

The fact that there is risk upfront doesnt make any payoff reasonable. Otherwise, you wouldnt find layers keeping 99% abusive.

The biggest question for me is, with so much money ats take, why dont several lawfirms compete to each other for a lower cut? at 2 billion profits potential profit, why dont they offer a lower comission to get the client?

Because the client is generally more concerned with getting a favorable outcome in the lawsuit than on the fee and a lawyer willing to charge a smaller fee is a signal that they will be less likely to achieve a favorable outcome.

It's the same reason that you don't see a lot of price competition for real estate brokers (though this is changing some).

I'm not saying this is a great reason, but I do thin it is the reason.

hundreds is certainly an underestimate. Lawsuits like this have massive amounts of discovery to go through.

It's ok for VC to risk their capital on startups, why is it not ok for lawyers to risk their time and capital on class action lawsuits?

Upvoted, because as much as I hate your answer, you're right.

I like to imagine the cognitive dissonance this is causing in Google employees ("Google is good" / "Those emails are damning evidence of a conspiracy to break the law") leading to explosive outbursts and aggressive responses on eng-misc.

eng-misc is the area for the most cynical of employees. you really don't know anything if you expect them to be experiencing cognitive dissonance as you stated.

And $6 billion split between all the companies involved is a rounding error.

Make the fine $6 trillion and now you're talking something that will likely deter this behavior.

$100K per worker is irrelevant compared to the amount of money the companies gained by holding down salaries even 5% after compounding.

It's not like everybody's salary jumps up the lost amount after this.

By putting the companies out of business, and all their employees out of work?

So, illegal behavior is fine as long as it provides jobs? You might want to think about your statement a little harder.

Yes, the penalty should be high enough that the company goes bankrupt if they lose 2 or 3 of these kinds of cases.

From the ashes of immoral companies, better ones will prosper.

I disagree, 6B is a large number. Settlements of that size are probably pretty rare. I think the tech companies caved quickly because of the round after round of bad press they were getting(which was doing a number to their "we care about our employees" propaganda). Should be interesting to see how it's distributed.

According to the NYTimes link, the actual plaintiffs in this lawsuit claimed that employees had lost out on ~3B in wages due to the fixing. Why do you think they're wrong in this claim?

Because there are two pieces to a penalty:

1) Restitution to the parties. $6 billion is probably in the right ballpark

2) Deterrent to prevent the behavior. $6 billion isn't relevant.

And, to be fair, $6 billion is the direct damage to people directly employed at these companies. Consider the fact that all salaries in the Bay Area were depressed by this action. That's a LOT more than $6 billion.

Honest question: Who gets the settlement ? Anyone who worked for defendants between certain years ? How do they determine 60K employees ? What if someone has left the industry altogether or in an unfortunate case, is no more ? Can someone shed light on this area ?

Pity. I'd have liked to see the disclosures forced by going to trial, as well as a far more substantial penalty. Is there any indication if earlier DoJ action prevents a future investigation and penalty for this?

I worked for one of these firms during the time period mentioned (as I suspect many other readers here did). Does that automatically make me one of the class members? How do I find out more?

https://www.hightechemployeelawsuit.com/

Though I think the deadline has passed... you had to register to be part of it.

Update: oh, I take that back, you have until 4/26/2014 it says.

If you are one of the class members you should have received mail. They might not have the right address. You could try contacting the law firm.

New report with the $amount ($324M): https://news.ycombinator.com/item?id=7645182

The moral of the story...

If you have a business, it is almost always to your advantage to break the law in pursuit of profit. Even lawsuits, rare as they are, are cheaper than following the law.

What about the cost of losing the trust and energy of the same people that helped build the business?

True, this will only change when Mr CEO or HR person gets jail time.

Since the companies are considered people, they should also get jail time. That should motivate shareholders to insist on scrupulous behavior.

Corporate jail time (i.e. barring a company from operating in the marketplace) is equivalent to a death sentence for most companies. Nevertheless, I'd love to hear some ideas about what else "jail time" for a corporation might mean.

The core of the Citizens United decision was that becoming a member of a group (ie: Corporation) did not abrogate individual rights. The implication is that groups of people have the exact same rights as individuals.

I think there needs to be a corollary in terms of responsibility.

Of course, the entire raison d'etre of modern corporations is to indemnify the members against responsibility for the actions of the group.

>Corporate jail time (i.e. barring a company from operating in the marketplace) is equivalent to a death sentence for most companies.

It's an economic death sentence for most individuals, too.

I will suggest that "we don't have enough people in prison" is not actually on America's list of problems right now.

Free some, jail some others...Degrees of guilt, impact of their crime and all.

Nope. As long as it's wildly profitable, it shall be done.

Can anyone answer this question - for what appears to be a rockstar case, is there any reason why someone would opt for a class action suit and not sue on their own?

How come no one goes to prison? (Genuine question: does US monopoly law not allow that outcome?)

A lawsuit case like this is a civil matter - judgements / settlements are made based on some violation of a legal agreement between two parties. Violation of that legal agreement may or may not be a criminal issue.

For someone to go to prison, a criminal case would be needed, requiring criminal acts - not just violations of a legal agreement - and government prosecutor willing to bring charges against the parties allegedly responsible.

It seems there were (probably) criminal acts here, but as of yet we've not seen a prosecutor go after the case. These kind of things can be further complicated in the US because of the different standards of proof required for each case type. In a criminal case, the state must be able to prove "beyond any doubt" that the defendant is indeed guilty. Civil cases have a much less ironclad standard for guilt/responsibility, and can often be easier to "win" as a result.

Its certainly possible that government prosecutors are aware of the issue, and aware of the civil settlement, but don't believe they could prepare a compelling enough case based on the evidence available to win a criminal trial against undoubtedly well-legally-represented executives.

The emails seem like fairly good evidence for criminal misconduct, but I am not a court nor a lawyer.

Errr, what criminal law do you believe it violates?

Any one of the numerous federal antitrust laws that prohibit collusive behavior, such as the Sherman Act.

http://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_Li...

Section 2 describes it as a felony.

Obstruction of justice? The emails explicitly state that the planning should be taken offline, presumably to thwart any future investigation.

Obstruction of justice (which is not actually a single thing, really) generally deals with doing this when there is an investigation in progress.

See http://www.fas.org/sgp/crs/misc/RL34303.pdf for more details of the federal statutes.

Anticipatory obstruction is kind of a possible thing under SOX, but otherwise, no.

So every divorce case where one party tries to conceal something should end in a prison term?

No one in the US goes to prison except low level drug offenders.

Everyone else is too big to jail.

Reply on news.ycombinator.com