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From Antitrust Law Daily, May 19, 2014

Pixar, Lucasfilm, and Intuit’s settlement of employee antitrust suit receives final approval; attorney fees granted

By Linda O’Brien, J.D., LL.M.

The federal district court in San Jose has given its final approval to the settlement of a class action suit brought against technology companies Pixar, Lucasfilm, and Intuit for their role in an alleged conspiracy to fix and suppress employee compensation (In re High-Tech Employee Antitrust Litigation, May 16, 2014, Koh, L.). The plaintiffs’ motion for attorney fees, reimbursement of expenses, and service awards was granted.

Software engineers and other technical workers who were former employees of several major technology companies filed a class action, alleging that Pixar, Lucasfilm, Intuit, and other companies engaged in a conspiracy to fix and suppress employee compensation and to restrict employee mobility through anti-solicitation agreements among the companies. The parties reached a settlement agreement that was preliminarily approved by the court on October 30, 2013.

Fairness factors. Applying Federal Rule of Civil Procedure 23(e), the court found that the settlement was fair, adequate, and reasonable to the class members. First, the settlement reflects the strength of the plaintiffs’ case and settling defendants’ position, and was reached after arm’s length negotiation by capable counsel. Second, the risks, expense, complexity, and likely duration of further litigation supported approval of the settlement. Third, the discovery process was thorough. Fourth, the settlement provided for substantial consideration—$20 million in total—to class members and the settling defendants agreed to cooperate in terms of authenticating documents and providing last known contact information for former employees for notice purposes. Fifth, the views of the plaintiffs’ counsel, who were experienced in litigating antitrust class actions, weighed in favor of settlement approval. Finally, the majority of class members have filed claim forms, while few class members have opted out of the settlements and five class members raised meritless objections to the settlement.

Notice to class members. The notice provided to class members constituted the best notice practicable under the circumstances, including individual notice to all class members who could be identified through reasonable efforts. The notice included a clear description of who is a class member, class member rights, and options under the settlement. In addition, the class administrator set up a telephone hotline and case-specific website where class members can access information.

Allocation plan. The plan of allocation was fair, adequate, and reasonable, and provided each claimant with a fractional share based on their total base salary during the time of the conspiracy, according to the court. The plan was an efficient way to allocate the settlement funds to the claimants based on the extent of their injuries.

Attorney fees. The court also determined that the plaintiffs’ requested award of attorney fees was appropriate. The amount sought—$5 million—reflected 25 percent of the common settlement fund and was reasonable in relation to the fund as a whole. The reasonableness of the award was based on (1) the result obtained for the class; (2) the risk incurred by class counsel was substantial in prosecuting a complex case; (3) the skills and experience of class counsel; (4) the burden on class counsel on litigating the case on a contingency basis; and (5) the modest size of the fee as compared to the market rate for fees in other class settlements. The request for reimbursement for litigation expenses was also reasonable in light of the scope of expert discovery and document-intensive nature of the litigation. Further, the service award payments to class representatives were fair and reasonable since the class representatives expended substantial time and effort in pursuing the litigation and did so to protect the interests of the class, the court noted.

Opt-out plaintiffs. Several class members exercised their opt-out rights regarding the settlement. Two former employees indicated that the proposed settlement was low in light of the collusion among the companies to suppress compensation.

The case is No. 5:11-cv-02509-LHK.

Attorneys: Catherine Tara Zeng (Jones Day) for Intuit Inc. Chinue Turner Richardson (Covington & Burling LLP) for Lucasfilm Ltd.

Companies: Pixar Animation Studios; Intuit Inc.; Lucasfilm Ltd.

MainStory: TopStory Antitrust CaliforniaNews

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