Apple, A123 To Settle Lawsuit Over Poached Battery Engineers

itwbennett writes: Slashdot readers will remember that back in February, electric car battery maker A123 Systems sued Apple for allegedly "raiding" the Waltham, Massachusetts, company and hiring five employees, including two top-level engineers. The loss of these workers essentially forced A123 to shut down some of its main projects, the suit alleged. Now, according to court documents filed Monday, A123 and Apple "have reached an agreement, signed a term sheet, and are in the process of drafting a final settlement agreement."

Comments

Both ways?

[JBMcB]

Last year: Hey Apple, you can't collude with other companies to prevent poaching from each other!
This year: Hey Apple, you can't poach other company's employees!

Well which is it? Either you can hire other company's employees or you can't.

Re:Both ways?

[rahvin112]

Considering they are two completely different things you shouldn't be struggling with it.

The first, apple colluding with others, was a violation of the law. Market collusion between competitors is illegal, in this case in particular it cost hundereds of people thousands of dollars apiece.

The second, was a civil suit between companies likely for unfair competition. Apple's settlement of suit, rather than just going to court and winning indicates that Apple might have engaged in some improper behavior in acquiring those employees.

The only the first was illegal, the second very well could have opened Apple up to a civil lawsuit or they could have just settled to avoid the legal fees. Here's a tip for you, anyone can sue anyone (including themselves) for any reason. It's not till you get to court that you have to actually justify that suit and present evidence.

Re:Both ways?

[Anonymous Coward]

I feel like there is a grey line between paying engineers exorbitant salaries to shut down a competitor by attrition and offering to pay engineers a marginal increase within a standard deviation or two of the mean. I don't claim to know anything about the case specifics (IANAL, either), but I think that it could be argued that once you get passed a standard deviation or so, your actions become what amounts to anti-competitive tactics. Especially when your targets are effectively strategic assets to the company.

Re:Both ways?

[afidel]

Uh, how is this any different than when Apple ties up all the Gorilla glass capacity, or 1.8" hard drives (original ipod), or Samsung fab capacity for X months, or any other scarce resource that doesn't allow competitors to compete directly with them through contracts and offering a higher price? Oh, it involves non-executives earning a higher wage so therefore it's somehow bad. Pure BS.

Re:Both ways?

[RenderSeven]

Well, the suit claimed that Apple hired Mujeeb Ijaz (in charge of R&D), who in turn enticed his key scientists and engineers to follow him. A123 claims that:
- Ijaz has a non-compete clause in his contract,
- The other employees have a non-compete also
- Ijaz has a non-solicitation clause in his contract
- Apple knew about the clauses and enticed them to break them
- All the employees shared A123 proprietary knowledge and trade secrets with Apple
- Apple orchestrated all this to obtain trade secrets illicitly
- Ijaz attempted to solicit A123 partners on Apple's behalf

Yeah yeah, 'A123 claims' doesnt make it true. And, non-compete clauses may or may not be enforceable, though this type of situation may be one of the rare cases where it is. Still, if Ijaz had a contract to not solicit his former employees, thats enforceable, as is violating confidentiality, as is enticing people to break the law, as is conspiring to do so. I'd say it was far from a slam-dunk dismissal and there was enough risk that they settled. While A123 may have not had the resources to fight a protracted legal battle, their Chinese buyer apparently did.

So employees are property?

[trout007]

You don't own your employees and there is no such thing as poaching them. Offering a better deal is a perfectly legitimate business move.

Re:So employees are property?

[Harlequin80]

No but you can have agreements to not approach employees of another company to come work for you. This is different to "We will not employ your staff" which is what Apple got in trouble for previously.

You see "do not poach" clauses as a regular component of contracts where two companies are working very closely on a project together. The no-poach agreement usually runs for the duration of the project plus a period of time (usually 6 or 12 months)

Re:So employees are property?

[Harlequin80]

No sorry you misunderstand.

You want to come work for me you are absolutely more than welcome. In fact I would LOVE you to come work for me. I have no restrictions on hiring you at all. As long as you make the first move.

What I have is an agreement with your current employer that I wont walk up to you and say "So TomPaulco, what is it going to take for you to leave your current work and come over to me?"

As I said there is nothing stopping you coming and working for me, nothing stopping you from your rights to pursue happiness. The restriction is on my ability to tempt you to come work for me.

smart

[Anonymous Coward]

A123: We will sue you
Apple: What we are doing is legal bring it on
A123: In the lawsuit we will publicly release the projects they are working on

Profit

Re:Apple...

[PopeRatzo]

In the U.S.A. it is a lot cheaper to settle than go to court.

Not if you have an in-house legal department.

The settlement could well be because Apple fears what might come out in the discovery phase.

Re:Apple...

[slew]

If I had to speculate (and /. is the place to do so), I would guess that it was likely that at least one of the Engineers...

* Recruited another employee in violation of a no-solicitation agreement.
* Had a "choice-of-law" provision attached to their employment agreement (and were originally employed outside of California)
* Had some ownership stake in the A123 which had some restrictions which Apple volunteered to buy-out. (which would be stupid for apple to do, but you never know).

As I understand it, Apple was in process of petitioning for a change of venue (to California). Although California law is clear that no-compete employment agreements cannot be enforced, it less clear when no-competes agreements are entangled with ownership changes or in the case of no-solicitation so as to avoid any distraction to their new employees, they probably just decided to settle (for the right price)...

Re:It still amazes me that we treat labor as pawns

[Registered Coward v2]

It's obvious that the A123 employees left of their own accord. A123 doesn't hold any exclusive rights to those folks unless their under contract. If these folks were "at will" employees then by all means if a new deal comes along they should go. All of this begs the point that Apple shouldn't be paying a dime to A123 in this case. Employees are not slaves and it's time to get out of the mindset that they are pawns that can be traded or kept at the whim of some task master.

Exactly. It's called employment at will. Revenue down? Layoff staff? Can't pay your bills? Sorry, not my problem. Better job offer? Leave company. Can't complete important projects? Sorry, not my problem. Absent an enforceable non-compete it works both ways.