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Silicon Valley's next battle: 'Star wars?'

A group of employees at some iconic Silicon Valley companies may be on the verge of settling a years-long case brought on their behalf claiming that that their employers conspired to limit the employees' ability to get better jobs and earn more money. At the heart of the lawsuit is a claim that shifting pairs of companies agreed not to solicit each other's employees affirmatively. That, in turn, allegedly had the purpose and effect of limiting employee mobility and suppressing employee compensation. The justly revered Steven Jobs was at the center of this alleged web of agreements.

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No one is claiming any firm agreed with any other firm not to hire each other's employees or to set any employee's or group of employees' pay. Instead, the claim is that the alleged agreements not to reach out to certain currently-employed prospects with information about opportunities at another employer had an anti-competitive effect in the market for the services of the high-tech employees who comprise the class.

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The case is scheduled to go to trial at the end of May. If the case does go to trial, the losing side presumably will appeal and any such appeal may result in precedent clarifying the murky law of anti-solicitation agreements as it applies to all industries, at least those doing business in the jurisdictions within the Ninth Circuit. But what if the case ends up not being tried and results in no precedent to guide future cases asserting similar claims? Would that mean that all of the activity in this case will have been all sound and fury signifying nothing? Maybe not. Here's why.

First, there is at least the prospect that the prosecution of the case will spur an increase in the already intense war for star talent in Silicon Valley. The degree to which this will happen is unknowable and may even be insubstantial. The defendants in this case employ only about 2% of technical employees in this country, according to papers filed in this case by the defendants last Friday, April 18. But even if the impact improbably is limited to the defendant companies alone, Google and Apple among them, there may be increasing mobility between and among companies routinely rated among the most desirable employers for this kind of talent. And what if the attention this case has generated means its impact is felt beyond these defendants and beyond this industry?

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Second, a settlement that precludes these anti-poaching arrangements for a time may give employees at all levels greater leverage in negotiating higher pay. More leverage is meaningless without a receptive party on the other side. Nothing will bar these companies — or any other employer, for that matter — from rejecting a request for more money. But the prosecution and settlement of this case may embolden those on both sides of the recruiting and retention process, even if the outcome of any given negotiation is uncertain.

Third, the increased flow of information may result in being placed where they are best suited rather than staying as a matter of inertia where they first land. The same flow of information could also lead people to go places for the wrong reason where they are ill-suited. The availability of information has sometimes miraculous, sometimes diabolical consequences. Rapid developments in the age of the Internet, thanks largely to the great minds at work in Silicon Valley, certainly teach that.

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Whether this case goes to trial or not, what happens in this Silicon Valley case probably won't stay there. HBO just ordered a second season of its new series "Silicon Valley," a show devoted entirely to the mores of the place. Silicon Valley officially has our attention.

Commentary by Dan Eaton, a partner with the San Diego law firm of Seltzer Caplan McMahon Vitek where his practice focuses on defending and advising employers. He also is a professor at the San Diego State University College of Business Administration where he teaches classes in business ethics and employment law. Follow him on Twitter @DanEatonlaw.

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