For people saying the settlement isn't enough. That's probably true, but it's not a bad settlement as class actions go. Class action litigation has a number of problems, partly because plaintiffs' attorneys working pure contingency have little incentive to see claims all the way through, and partly because judges and juries are skeptical of claims against large, respected companies.
In this case, there were a number of challenges. The first of which was that the DOJ settled with a slap on the wrist.[1] That's a very strong signal to both the court and jurors that the claims aren't a slam-dunk. Second, remember that in a civil case you don't just have to prove that the defendant did something wrong. You have to prove every element of the often multi-facted claim. Finally, there's a lot of back-and-forth with experts. Defendants can afford to hire the world's leading economists to say that the damages were less than claimed. Plaintiffs will have experts, but they're unlikely to be able to front the money for them to do as thorough a job.
$412 million would be over 10% the plaintiffs' experts estimated damages of $3 billion. That's not an atypical recovery in a class action settlement.
[1] Contrast this to the LCD price fixing cases, where the DOJ's levying $500+ million in fines resulted in big civil settlements.
They suppressed the entire market. They should pay tens of billions to the workers in the affected market. The individuals responsible should at the very least be fired!
But it was a windfall to every company not in the no-poach cartel, and made more talent available to startups and small companies.
And then, the economic benefits of talent-outside-the-giants flowed (via early-employee equity) to many of the same people who "lost out" on big-company salary-bidding wars.
The effects of such collusion on "the entire market" are thus pretty murky. If you've worked with any ex-Apple, ex-Google, etc people – you may already have been a net-beneficiary!
It may have been a windfall to other companies outside the conspiracy but it was not a windfall for the employees of those companies. Collusion meant the big companies didn't mean to pay as much as they otherwise would have. This means smaller companies can also pay less for the same talent. I worked at one of those smaller companies in the Bay Area. I have every reason to believe that if market rates were higher I would have received more pay. I do not consider myself a beneficiary of this scheme.
But if the employees were truly worth more – they produced more in value – then as long as new companies were free to start (some indeed started by those same ex-cartel employees themselves), then someone would pay that full value.
And if, with hundreds or thousands of potential employers, almost all outside the cartel, the salaries were still what they were... then what's the proof employees were worth more, anyway?
If there's some purchasable commodity that can generate $X in value, then a competitive market will tend to offer up to ($X - epsilon) for that commodity. Even if a cartel of a few of the biggest purchasers A, B, and C coordinate such that they'll only pay (0.90 * $X), the existence of dozens or hundreds or even thousands of other self-motivated bidders mean the commodity is still going to go for ($X - epsilon).
The same goes for skilled labor. The A, B, and C cartel may be driving down their short-term compensation costs a little, but by incrementally letting talent that's more productive go elsewhere, that talent and the economy is still doing just fine.
You're assuming the early employee equity made up for what they lost in salary. Or that it even became worth something afterwards. Or that equity even makes up for the base salary cut you receive when working for a startup, ignoring this collusion.
Also, if their base salary were higher elsewhere they could likely demanded even more equity. So even if you're assuming the equity isn't worthless, they potentially could have gotten more if salaries were higher.
That's exactly my point: both ex-cartel employees and everyone else who wound up working together outside the cartel may have gained from the cartel's stinginess.
It's only the people who stayed put, at one of the cartel companies through the whole era, who have a strong case for estimatable monetary damages.
Here's a fine that might catch their attention: All companies involved should receive no new H1Bs for a duration equal to the time they had this illegal arrangement.
Why are you vilifying H1B in this? H1B holders would have been affected just as badly by this as anyone else.
In fact, probably more so. It's difficult to move job as an H1B holder due to the legal requirement to have the same job role. The only places fulfilling this would very likely be between these companies, which would have been suppressed.
The $100 checks are kind of insulting IMO. I'd rather see criminal sanctions or at least fines against the individuals responsible. Any fines would make more sense as going into a training program to expand the labor pool.
I agree. Fines are B.S. We need scalps. Sending boldface names to jail will certainly cause future potential bad actors to think twice before transgressing.
Seriously surprising to hear that money-conscious lawyers might agree to such a piddly amount ($415M) from 4 companies whose collective market cap is over 1 trillion dollars. This is palatable only if it comes with significant sanctions and admission of wrongdoing, which of course, is highly doubtful.
You have to look at it from the lawyers perspective. 30% or whatever their cut is of $415 Million is a huge pay day for them. Why go through the time and hassle of seeing the case through when you can have a huge payday now with no more work.
Since I'm not an insider, I won't argue the merits and difficulties of extracting a settlement in a situation such as this. But if I were a shareholder looking at this not-very-surprising and easy-to-stomach number, I would simply see this as having been an acceptable cost of doing business.
In this case, there were a number of challenges. The first of which was that the DOJ settled with a slap on the wrist.[1] That's a very strong signal to both the court and jurors that the claims aren't a slam-dunk. Second, remember that in a civil case you don't just have to prove that the defendant did something wrong. You have to prove every element of the often multi-facted claim. Finally, there's a lot of back-and-forth with experts. Defendants can afford to hire the world's leading economists to say that the damages were less than claimed. Plaintiffs will have experts, but they're unlikely to be able to front the money for them to do as thorough a job.
$412 million would be over 10% the plaintiffs' experts estimated damages of $3 billion. That's not an atypical recovery in a class action settlement.
[1] Contrast this to the LCD price fixing cases, where the DOJ's levying $500+ million in fines resulted in big civil settlements.