EBay Loses Bid to Dismiss U.S. Suit Over Intuit Hiring

EBay Inc. (EBAY), the world’s largest online marketplace, lost a bid to dismiss a lawsuit by the U.S. alleging that the company violated antitrust laws by agreeing not to hire people working for Intuit Inc. (INTU)

The government claims the “handshake agreement” was arrived at and refined by EBay executives including former Chief Executive Officer Meg Whitman and Intuit co-founder and former CEO Scott Cook from 2006 to 2009 to restrict recruiting and hiring each others’ workers, according to the complaint filed in federal court in San Jose, California.

EBay argued that the U.S. complaint and a similar case filed by California failed to allege a conspiracy on which such a suit could be brought, and that neither complaint alleged any competitive harm. U.S. District Judge Edward J. Davila today rejected EBay’s bid to throw out the U.S. case, and granted its request to toss California’s complaint.

“At this stage in the litigation, the court finds that the United States has plausibly alleged an actionable agreement between the two companies,” Davila wrote in an order, referring to the Justice Department’s case.

The judge ruled that while California didn’t demonstrate it has standing to bring the case, the state can refile its complaint.

Distorted Competition

The U.S. claimed the agreements distorted competition for specialized computer engineers and scientists and made it harder for workers to get better, higher-paying jobs. Intuit, which settled a Justice Department case over hiring practices in 2010, isn’t named as a defendant in either case.

A media representative of EBay and Nick Pacilio, a spokesman for California Attorney General Kamala Harris, didn’t immediately respond to e-mails seeking comment on the ruling.

Whitman retired from EBay in 2008 and joined Hewlett-Packard Co. (HPQ) in 2011.

The Justice Department case is U.S. v. EBay, 12-05869, U.S. District Court, Northern District of California (San Jose). The state case is California v. EBay, 12-05874, U.S. District Court, Northern District of California (San Jose).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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