7 of the world’s most powerful tech companies have been accused of forming an antitrust conspiracy to suppress the compensation of their employees by entering into “no poach” agreements. Today, a San Jose judge will hear a motion to dismiss a class action civil lawsuit in which former employees seek damages from defendants Apple, Google, Adobe, Intel, Intuit, Pixar, and Lucasfilm.

The damning evidence against the defendants that I first uncovered last week, as well as the plaintiffs’ opposition to the defendants’ joint motion to dismiss the case indicate there is more than sufficient evidence for the case to proceed towards trial. If the defendants lose to or settle with the class that represents all full-time employees of these companies between 2006 and 2009, tens of thousands of Silicon Valley employees could be compensated.

Specifically, the senior executives of the defendants are accused of entering into a network of identical, interconnected illegal agreements not to recruit each other’s employees. Each agreement by itself may be a violation of antitrust laws including the Sherman Act, the Cartwright Act, and other California laws.

The plaintiffs also claim the agreements constitute an overarching antitrust conspiracy because each was made with knowledge of the other agreements, and relied on the other agreements to achieve a common goal of reducing compensation and mobility for highly sought-after skilled tech employees.

According to the plaintiffs’ statement (PDF), the chronology of some of the  agreements is as follows:

• January 2005 – Pixar senior executives (which include Steve Jobs) drafted written terms for a no-poach agreement and sent them to Lucasfilm
• May 2005 – Agreements began between senior executives at Apple and Adobe
• 2006 – Agreements began between Apple and Google shortly after Eric Schmidt joined Apple’s board of directors
• April 2007 – Agreements transpire between Apple and Pixar
• June and September 2007 – Google enters into agreements with Intuit and Intel that are identical to the agreements between Apple and Google, Apple and Adobe, and Apple and Pixar

Additionally, Steve Jobs personally contacted Palm’s CEO Edward T. Colligan to propose an unlawful agreement, writing “We must do whatever we can” to stop competitive recruiting efforts between the companies.” Colligan declined Jobs’ offer, writing “Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal.”

The plaintiffs request “The Court should deny the motion, lift the stay of discovery, and permit Plaintiffs ‘to secure the just, speedy, and inexpensive determination’ of this action.”

The defendants claim that the agreements were isolated and not interconnected. They claim the agreements were pro-competitive parts of legitimate collaborations between the companies, many of which had executives on each other’s boards or started as the same company as with Pixar and Lucasfilm.

The defendants also claim “The alleged bilateral arrangement provide no support for the overall conspiracy that plaintiffs have alleged in order to name the defendants in a class action”. They motion for continuation of the partial stay of discovery and for the case to be dismissed.

However, my research and sources indicate the defendants’ claims are false, the plaintiffs case is plausible, and so there are no grounds for dismissal. Furthermore, the only reason more evidence about the interconnection between the agreements isn’t available is because they were made so secretively.

The case should be allowed to proceed because the plaintiffs have produced “smoking guns” indicating a deep conspiracy. Specifically, “Do Not Cold Call” lists which defendants used to implement the agreements, and the written terms of Pixar’s agreement with Lucasfilm. These signal that today’s joint motion to dismiss the case should be denied because if discovery is permitted to continue, there’s a reasonable expectation that evidence of illegal activity will be revealed.

If the defendants’ motion to dismiss the case is denied, the case will move towards a trial by jury in June 2013. Rather than leave an assessment of damages to the judge and jury, the defendants may try to settle the case, similar to how they settled with the Department of Justice’s federal case in 2010. In the defendants lose or settle, full-time employees of the defendants could be compensated for the 10-15% of lost wages estimated by the plaintiffs’ law firm Lieff Cabraser.

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In his State of the Union address tonight, President Obama laid out a blueprint for economic recovery, with numerous references to the technology sector. “An economy built to last is one where we encourage the talent and ingenuity of every person in this country,” the President said, with Steve Jobs’ wife (and Instagram’s Mike Krieger) in audience, “That means women should earn equal pay for equal work. It means we should support everyone who’s willing to work; and every risk-taker and entrepreneur who aspires to become the next Steve Jobs.”

“An economy built to last is one where we encourage the talent and ingenuity of every person in this country.”—
Barack Obama (@BarackObama) January 25, 2012

I, like commenter Dan Bowen below, find it ironic that the President is apotheosizing Jobs, as the Apple CEO is known for outsourcing a large majority of hardware manufacturing to China. It seems like Obama likes the idea of Steve Jobs more than some of the things Steve Jobs actually did.

The President also mentioned the tech industry as a beacon of hope for our country’s blighted economy multiple times in the SOTU, and I have gathered the most relevant passages below.

“Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”

“Right now, companies get tax breaks for moving jobs and profits overseas. Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it.”

“No American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. “

“If you’re a high-tech manufacturer, we should double the tax deduction you get for making products here. Send me these tax reforms, and I’ll sign them right away.”

“I also hear from many business leaders who want to hire in the United States but can’t find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job. Think about that – openings at a time when millions of Americans are looking for work.”

“Join me in a national commitment to train two million Americans with skills that will lead directly to a job.”

“Let’s also remember that hundreds of thousands of talented, hardworking students in this country face another challenge: The fact that they aren’t yet American citizens. Many were brought here as small children, are American through and through, yet they live every day with the threat of deportation. Others came more recently, to study business and science and engineering, but as soon as they get their degree, we send them home to invent new products and create new jobs somewhere else. let’s at least agree to stop expelling responsible young people who want to staff our labs, start new businesses, and defend this country. Send me a law that gives them the chance to earn their citizenship. I will sign it right away.”

“You see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country. That means women should earn equal pay for equal work. It means we should support everyone who’s willing to work; and every risk-taker and entrepreneur who aspires to become the next Steve Jobs.”

“After all, innovation is what America has always been about. Most new jobs are created in start-ups and small businesses. So let’s pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow. Expand tax relief to small businesses that are raising wages and creating good jobs. Both parties agree on these ideas. So put them in a bill, and get it on my desk this year.”

“Don’t let other countries win the race for the future. Support the same kind of research and innovation that led to the computer chip and the Internet; to new American jobs and new American industries.”

“The new rules we passed restore what should be any financial system’s core purpose: Getting funding to entrepreneurs with the best ideas, and getting loans to responsible families who want to buy a home, start a business, or send a kid to college.

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Last week a friend of mine asked me at brunch, innocently enough, “What’s Instagram, and why do you use it?”

I meekly offered the answer, “It’s a way to share photos via the iPhone,” and then, feeling like I hadn’t done it enough justice, went on the defensive and was like, “Oh but it’s really simple and that’s what makes it emotional. Like in one click, I can view all these interwoven stories.” It turns out he used Instagram himself, and just wanted to hear someone describe its appeal.

The appeal of Instagram is, for lack of a better word, simple; the world is moving too damn fast and we don’t want the cognitive load of figuring out what we’re looking at — we just want to see simple pretty things. This simplicity is what makes services like Instagram, Twitter and Pinterest a joy versus other entertainment offerings.

The truth is that on any given day, I’d rather check in on Instagram then watch a movie. Today — from afar — I watched my friends visit Germany, take in the 49r’s vs. Giants game, traverse the Sundance festival and eat at a restaurant on my block. I probably opened the app between 10-15 times. And I watched absolutely no TV today.

When Paul Graham implored startups to “kill Hollywood” last Friday, his point resonated with the tech echo-chamber because in a sense we’re already there — more people visit Zynga games monthly then both the viewership records for television and the Hollywood box office. Giftcards for Facebook Credits populate the aisles of my supermarket checkout — in the same “impulse buy” section as celebrity gossip rags.

Humans have loved stories since the dawn of communication, we’re addicted to entertainment. And we are at a crux in that addiction.

What “kill time” startups like Facebook, Youtube, Twitter, Zynga and most recently Instagram have in common with the movie and television industry is that they all enable people to entertain themselves, or essentially kill time. What they don’t have in common is that the former are all free, play into our zeitgeist need for simplicity and don’t cost millions of dollars to produce. This is a pain point that Hollywood is currently suffering through.

The most watched television episode in history, the season finale of MASH, drew over 105 million views.  Facebook has eight times that many people visit it monthly. The truth is, as much as people passionately cry out against Hollywood’s focus on metrics, anyone who’s sifted through TechCrunch article after TechCrunch article realizes that the Valley is equally as metrics obsessed.

The war for attention leaves Hollywood at a disadvantage. Box office returns are the lowest they have been in 16 years. Why pay $10 to commit to watching something in a theatre when you can watch it at home for much less with the added bonus of being able to check your email? And, why even bother spending two hours of your time sitting and absorbing a complex narrative that isn’t connected to you, when you can pop open your iPhone and get a quick hit of rarefied entertainment from people you actually know — who you can actually relate to as opposed to just project on.

Once in grade school my class held a sleepover so we could watch the entirety of Gone With The Wind and we all stayed awake, rapt by the drama between Scarlett and Rhett. Nowadays I’ve seen people pull out their phones and check Twitter (or worse, fall asleep) half way through something as overly stimulant as Inception. I pull out my phone to run through Instagram every time I’m stuck in a checkout line or any other place I need to kill time — like it’s some sort of entertainment inhaler.

Hollywood just can’t compete with that.

• INSTAGRAM

Instagram is a free photo sharing application that allows users to take photos, apply a filter, and share it on the service or a variety of other social networking services, including Facebook, Twitter, Foursquare, Tumblr, Flickr , Foursquare and Posterous.[2] The application is compatible with any iPhone, iPad or iPod Touch running iOS 3.1.2 or above.

Instagram, in an homage to both the Kodak Instamatic and Polaroid cameras, confines photos into a square shape. This is in contrast to the…

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