Judge rejects $324.5M wage

Shara Tibken/CNET

A US district court judge has rejected a settlement reached in a wage-fixing lawsuit involving Silicon Valley powerhouses such as Apple and Google, saying the $324.5 million deal is unreasonably low.

Judge Lucy Koh, of the Northern District of California in San Jose, on Friday said the settlement amount should have been higher, particularly given the strong case the plaintiffs had against the companies.

'The court finds the total settlement amount falls below the range of reasonableness,' Koh said in her ruling. She set a case-management conference for Sept. 10.

Silicon Valley powerhouses including Apple, Google, Intel, and Adobe revealed in April they had reached a deal with about employees who accused them of using noncompetitive hiring practices to keep wages low. The following month, the companies revealed the settlement totaled $324.5 million, avoiding a potentially costly and drawn-out trial that was scheduled to start at the end of May. If the plaintiffs had won in court, they could have received damages of more than $9 billion.

Under the settlement's terms, employees in the case would receive an average of about $3,750, Koh said in her ruling Friday. She noted that she's 'concerned that class members recover less on a proportional basis' from the settlement with the four remaining defendants than from the settlement with the other three initial defendants -- Lucasfilm, Pixar, and Intuit -- reached a year ago. The lower level for the deal comes even as the plaintiffs' case has gotten stronger, she said.

If the remaining defendants -- Apple, Google, Intel, and Adobe -- reached a settlement at the same or higher rate as the settled defendants, the amount should total at least $380 million, she said.

Intel in a statement said it's 'disappointed that the Court has rejected preliminary approval of an agreement that was negotiated at arm's length over many months.'

'We appreciate that the court has provided the parties with additional information on the court's view of the case,' the company said. 'We have made no decisions concerning future steps at this stage.'

Google declined to comment. We've contacted Apple and Adobe, and will update the report when we have more information.

The class-action lawsuit covered nearly 65,000 employees and was set to go to trial at the end of this month. The plaintiffs originally planned to seek $3 billion. One plaintiff spoke out against the $324.5 million amount settlement after it was announced, saying it was not nearly enough.

The case started in 2001 when a former Lucasfilm software engineer filed a lawsuit alleging that the seven companies were conspiring to keep wages low by refraining from poaching one another's employees. Several similar complaints followed and they were all consolidated into a class-action lawsuit that covered employees who worked for the companies between 2005 and 2010.

Lucasfilm, Pixar, and Intuit settled last year for a combined $20 million, covering 8 percent of the employees named in the suit.