Sandberg Rejecting No-Hire Entreaty Seen Hampering Google

Statements by Facebook Inc. Chief Operating Officer Sheryl Sandberg over staff poaching in Silicon Valley could pose antitrust hurdles for her former employer, Google Inc.

Sandberg said in a court filing unsealed last week that while she was an executive at Google in 2006, she knew of an agreement to avoid recruiting some workers from software-company Intuit Inc. That didn’t stop her from refusing to limit hiring of Google employees after she joined Facebook in 2008, she said in the filing.

No-poaching agreements in Silicon Valley have thrust companies including Google, Apple Inc. and Intel Corp. into court. The companies are alleged to have violated antitrust laws by striking deals with one another to not recruit each other’s staff. Sandberg’s statement indicates there were executives in Silicon Valley who realized the practice was improper, which helps the plaintiffs in the lawsuit, said Joseph Alioto, an antitrust lawyer in San Francisco.

“The law is clear and it always has been,” Alioto said today in a phone interview. He said innovation at technology companies “was created out of these people being able to jump back and forth and get the best deal. The effort to try to eliminate competition for talent is and always has been illegal.”

Playing Fair

Silicon Valley technology companies are under pressure to play fair as firms grow more desperate for a limited supply of talented software and hardware engineers. The agreements not to hire each others’ workers have in the past entangled executives including Apple co-founder Steve Jobs and Google Chairman Eric Schmidt. In 2010, Apple, Google, Intel, Adobe, Intuit and Walt Disney Co.’s animation studio Pixar and visual-effects specialist Lucasfilm Ltd. settled with the U.S. Justice Department over similar claims.

Google, Apple, Intel and Adobe Systems Inc. are preparing for a May trial in federal court in San Jose, California, over employees’ claims they were harmed by the accords. Sandberg and Facebook aren’t defendants in the case.

Sandberg, 44, resisted an attempt by plaintiffs’ lawyers to question her during pretrial evidence gathering last year. She offered the filed statements instead, which she made on May 17, 2013, and that were filed March 21.

Sandberg worked at Mountain View, California-based Google from 2001 to 2008, where she became vice president of global online sales and operations. Before working on a partnership with Intuit in 2006, Google had agreed not to recruit the employees involved, she said in the filing. Fewer than 20 employees were on that list, Sandberg said in the filing.

Intuit Partnership

“Google agreed, at Intuit’s request, to not solicit the Intuit employees who would be involved in the discussions and/or the potential partnership,” she said in the filing.

In 2007, according to the lawsuit, Google put Intuit employees on a “do not cold call” list -- an agreement that Sandberg doesn’t remember being involved with and which wasn’t related to her prior work with Intuit, according to the filing.

After Sandberg left Google in 2008 to join Facebook, the two companies became embroiled in heated competition to hire each other’s workers. Sandberg said in the filing that she fielded separate calls from Google managers Jonathan Rosenberg, a former Google senior vice president, and Omid Kordestani, who were concerned about the rate at which Facebook was hiring Google employees.

“I declined at the time to limit Facebook’s recruitment or hiring of Google employees,” Sandberg said in the filing. “Nor have I made or authorized any such agreement between Facebook and Google since that time.”

Google’s View

Rosenberg backed up Sandberg’s statement in his own pretrial testimony, saying that Facebook refused to join any non-recruiting agreement amid growing tension between the companies as Facebook grew in size.

“I don’t feel that I had a satisfactory response from Sheryl [Sandberg] in achieving my objective,” which was “to reduce the overall number of employees that [Facebook] was hiring from Google,” Rosenberg said.

Genevieve Grdina, a spokeswoman for Menlo Park, California-based Facebook, and Matt Kallman, a spokesman for Google, declined to comment on the case.

Judge Koh

In October, U.S. District Judge Lucy Koh ruled that more than 64,000 technical employees can proceed as a group against Apple, Google, Intel and Adobe with claims that their incomes were held down by the companies’ agreements not to recruit one another’s workers.

A case management conference to prepare for the trial is set for March 27 in Koh’s courtroom.

Intuit, Pixar and Lucasfilm, which were originally defendants in the case, have tentatively settled the antitrust claims. While Koh must approve the settlements, Intuit has agreed to pay $11 million, and Pixar and Lucasfilm will together pay $9 million as part of the agreements, according to plaintiff lawyer Kelly Dermody. Employees from those three companies represent 8 percent of the class, Dermody said.

The case is In re High-Tech Employee Antitrust Litigation, 11-cv-02509, U.S. District Court, Northern District of California (San Jose).