Apple Inc. (NASDAQ:AAPL), Adobe, Intel, and Google Inc. (NASDAQ:GOOG) have agreed to pay a $324.5 million settlement to around 60,000 workers whom the large tech firms defrauded via a conspiracy to fix wages. According to a report by Apple Insider, approximately $80 million, or 25% of the haul, will go to the lawyers involved in the case and cover various court fees. The balance will be distributed to the workers on a pro rata basis, depending on their salary at the time the wage fixing and non-poaching agreements were in effect.
Thus far, Judge Lucy Koh, who has handled a number of other prominent cases involving the Cupertino tech giant and its rivals, has not approved the settlement, perhaps mulling whether it is sufficient to cover the problems caused by the anti-competitive plot. The settlement also entails workers waiving all other claims against the companies for wage policies or agreements up to the date when it was offered, which was yesterday, May 22, 2014.
As revealed by another California antitrust settlement posted on Scribd, a 25% share of the award being paid to the class counsel is considered to be fair in a successful class action suit. In fact, this one-quarter share is described as the “benchmark” for California class action procedures, and is based on several factors. One is the high quality result obtained for the plaintiffs. Another is the skill of the lawyers, to which is added the risk they took on handling a case of such complexity.
The burden of undertaking the litigation on a contingency basis, meaning the lawyers are only paid if the case is won, also adds legitimacy to the 25% cut, according to the court documents. Furthermore, this amount is held to be low and extremely reasonable. In light of class action cases where the majority of the award is pocketed by the lawyers, this last argument is probably quite true.
Apple and its fellow defendants will end up paying each worker between $2,000 and $8,000, depending on salary at the time the conspirators cheated them. The first $1 million will be distributed within 10 days of Judge Koh’s initial decision, and once she has fully approved the settlement, the remaining balance will be released within 7 days.
The settlement puts to rest a legal struggle which has been festering since 2011 and which had its origins in the years before that. Steve Jobs’ decision to undertake an illegal scheme almost certain to be discovered and end up costing Apple more than a few pay raises remains somewhat baffling, since it ultimately did his firm no good. However, it is also possible that retaining key personnel at critical junctures in development was deemed more valuable than the money likely to be lost when the antitrust actions eventually came to light.
