Lawsuit claims Steve Jobs, senior Apple directors hurt company with anti-poaching row

Posted:
in General Discussion edited August 2014
Piling onto Apple's anti-poaching courtroom saga, a new lawsuit seeks damages on behalf of shareholders for financial losses related to alleged misconduct by senior directors, including late cofounder Steve Jobs and current CEO Tim Cook.


Apple "Hands Off (Do Not Call List)" from 2009.


Filed with the U.S. District Court for the Northern District of California this week, the derivative shareholder complaint prepared by attorneys for plaintiff R. Andre Klein accuses Apple senior directors and officers of "breach of fiduciary duty, gross mismanagement, corporate waste, and breach of the duty of honest services."

Individual defendants, including Jobs and Cook, allegedly caused the company to violate antitrust laws, issue false and misleading financial proxy statements and stifle worker wages, according to the argument. As a result, Apple, which must be included alongside Klein and shareholders as a nominal defendant, was harmed by being forced into a time and asset consuming settlement with the U.S. Department of Justice in 2010, as well as an ongoing class action lawsuit leveled by a group of employees. Further, the company's reputation suffered, as did innovation.

In sum, defendants' actions allegedly forced Apple to spend a huge amount on expenditures related to "years of lost opportunities to hire more qualified employees that were employed at other companies; costs incurred from defending and paying a settlement in the class action for violation of antitrust laws; costs incurred from defending and settling allegations by the Department of Justice; and loss of reputation."

Klein's complaint builds on accusations from a class of former employees currently arguing that Apple endorsed anti-solicitation agreements designed to end worker poaching between top Silicon Valley firms Adobe, Google and Intel.

A large part of the filing points to discoveries made in the separate but related court case, including a recent decision by presiding Judge Lucy Koh to deny a proposed $324.5 million collective settlement offer. In the order handed down last week, Judge Koh identified Jobs as "a, if not the, central figure in the alleged conspiracy," based on witness depositions.

JobsSteve Jobs at the iPad 2's unveiling.


Also included as exhibits are a number of emails previously divulged as part of the High-Tech Employee Antitrust Litigation proceedings under Judge Koh. Highlighted among these is correspondence between Jobs and other tech moguls like Google's Sergey Brin and Eric Schmidt.

On the other end of the spectrum is an email from former Palm CEO Edward Colligan, one of the few voices of dissent who framed Jobs' tactics as "likely illegal." The Colligan affidavit, which suggests Jobs threatened to slap Palm with a patent suit if the company poached an Apple employee, came to light in 2013.

Additionally, press releases and media reports about Apple and its involvement in the anti-solicitation scandal are cited in Klein's complaint.

Defendants named include current CEO Tim Cook, former Chairman of Apple's board William Campbell, former CFO Fred Anderson and board members Mickey Drexler, Art Levinson, Bob Iger and Andrea Jung. In addition, 30 unknown "doe defendants" are cited, the identities of whom will be investigated if the suit moves to the discovery phase.

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Comments

  • Reply 1 of 76
    solipsismxsolipsismx Posts: 19,566member
    I can see how this anti-poaching law hurts employees and is unethical but I don't see how it hurts shareholders.
  • Reply 2 of 76
    So filling a suit against the company you are a shareholder of and its management will now benefit the shareholder?
  • Reply 3 of 76
    OK, so they filed a complaint. What do they actually want? Surely they have something in mind?
  • Reply 4 of 76
    OK, so they filed a complaint. What do they actually want? Surely they have something in mind?
    Money and lots of it.
  • Reply 5 of 76
    fred1fred1 Posts: 1,130member
    I think I'll organize a class action suit based in the extra amount I had to pay for my iPod Nano in 2007 because of the anti-poaching policy.

    Any takers?
  • Reply 6 of 76
    gtrgtr Posts: 3,231member
    fred1 wrote: »
    I think I'll organize a class action suit based in the extra amount I had to pay for my iPod Nano in 2007 because of the anti-poaching policy.

    Any takers?

    I'd take your offer...

    It's just that I made an agreement with somebody else not to.
  • Reply 7 of 76

    Wow. This country is heading into the crapper. 

  • Reply 8 of 76
    So, They're basically suing themselves to get more money. Hmm
    And they're about to get paid for the stock increase.
    Greedy bastards. LOL
  • Reply 9 of 76
    So they are suing Apple because Apples' conduct got them sued? And the fact that they were sued was a waste of time and money - so to rectify the situation they are going to sue Apple?
  • Reply 10 of 76
    Wow, talk about the sense of entitlement.
  • Reply 11 of 76
    Specious claims, as: "defendants' actions allegedly forced Apple to spend a huge amount on expenditures related to "years of lost opportunities to hire more qualified employees that were employed at other companies".
    This is nothing but a claim based on...nothing, saying IF Apple could have poached, they would have been more profitable? Is that a crystal ball prediction? One could easily argue the opposite considering Apple's financial growth over a longer period.
  • Reply 12 of 76

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  • Reply 13 of 76
    asdasdasdasd Posts: 5,686member
    Shareholder suits are ridiculous anyway, although this one is against Job's estate not the company.

    It's going to be hard to argue that Steve jobs destroyed shareholder value or that reducing employee wages also harms shareholders, their employers.
  • Reply 14 of 76

    A bunch of greedy lawyers trying to make money.  This case should be thrown out.

  • Reply 15 of 76
    slurpyslurpy Posts: 5,386member
    This Andre Klein sounds like a pathetic piece of shit, as is this lawsuit. The lawsuit is both utterly moronic, as well as non sensical and completely classless (ie. Suing the now dead Steve Jobs for "harming" the company). He's basically suing them for getting sued. Something straight from the onion.
  • Reply 16 of 76
    customtbcustomtb Posts: 346member
    richlo wrote: »
    So filling a suit against the company you are a shareholder of and its management will now benefit the shareholder?
    . No. It will benefit the person who filed suit and the layers.
  • Reply 17 of 76
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by CustomTB View Post





    . No. It will benefit the person who filed suit and the layers.

    How does it benefit the layers? What layers? 

  • Reply 18 of 76
    radarthekatradarthekat Posts: 3,898moderator
    Success breeds comtempt.
  • Reply 19 of 76
    crowleycrowley Posts: 10,453member
    Quote:

    Originally Posted by SolipsismX View Post



    I can see how this anti-poaching law hurts employees and is unethical but I don't see how it hurts shareholders.

    I guess the argument is that the executives acted inappropriately and illegally, which was not sanctioned by shareholders, and thereby brought legal action which resulted in punitive fines, which affect shareholder value.  If the punitive fines, and any associated loss of reputation, are greater than the advantage granted by the executive action then the shareholders have a net loss in value.

     

    I'm not sure exactly how it works, but I think that's pretty reasonable, and would appear to be an effort to shift the blame to where it should lie rather than just "on Apple, the company".  The outcome of the legal battle punished the company in the form of a fine, but that's not something that really affects the executives that were responsible.

  • Reply 20 of 76
    There is a potentially infinite recursion here. If they win, they'll have shown yet further damage to Apple, and can sue again, wash, rinse, repeat.
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