By David Ingram
WASHINGTON Nov 16 The U.S. Justice Department
and the state of California sued e-commerce company eBay Inc
on Friday over what they called an illegal agreement
with Intuit Inc not to recruit Intuit's employees.
The agreement eliminated competition for workers, depriving
them of access to better job opportunities, the Justice
Department and California Attorney General Kamala Harris said in
simultaneous news releases.
Meg Whitman, then eBay's CEO, and Scott Cook, Intuit's
founder, were closely involved in creating and enforcing the
agreement. Cook was serving on eBay's board at the same time he
was complaining about eBay's recruiting of Intuit employees,
federal officials said.
EBay said the government is wrong and that it will
vigorously defend itself.
"EBay's hiring practices conform to the standards that the
Department of Justice has approved in resolving cases against
other companies. The DOJ is taking an overly aggressive
interpretation in their enforcement of antitrust law in this
area," said eBay spokeswoman Lara Wyss.
Tax and financial software company Intuit, which faced
similar antitrust allegations in 2010 and settled, called the
new lawsuits a matter for eBay.
"We have already resolved any concerns that the DOJ had
about our recruiting practices and believe the matter for Intuit
is closed," said Intuit spokeswoman Diane Carlini.
A spokesman for Whitman, who left eBay in early 2008 and now
leads Hewlett-Packard Co, declined to comment.
The suit, and similar legal issues involving other
technology companies, highlight the intense competition for
talent in Silicon Valley. It also shows how the search for
talented employees can sometimes clash with relationships on the
boards of top technology companies.
The "handshake" agreement between eBay and Intuit was in
effect from 2006 until 2009 or later, federal officials said.
During that time, eBay's recruiting staff were instructed to
throw away resumes that came from Intuit employees, the
The policy was put in place to avoid an awkward situation in
which eBay might have recruited Intuit staff while Cook was on
the eBay board, according to a person familiar with eBay's
stance on the case.
In 2007, Apple Inc's Steve Jobs asked former Google
Inc Chief Executive Eric Schmidt to stop trying to
recruit an Apple engineer, a transgression that threatened one
junior Google employee's job, according to a court filing
earlier this year. At the time, Schmidt was an Apple board
EBay believes its policy was not illegal because it did not
have an effect on the market. The positions being sought,
including in marketing and engineering, were so broad that the
job seekers had lots of opportunity to find employment
elsewhere, the person familiar with the company's position said.
He spoke on condition of anonymity because they were not
authorized to speak publicly about the case.
Federal antitrust enforcers have "consistently taken the
position that these kinds of agreements are per se unlawful
under the antitrust laws," said Joseph Wayland, acting head of
the U.S. Justice Department's antitrust division.
EBay ended its recruiting policy after the DOJ changed its
legal position on such agreements, according to the person
familiar with the company's stance.
In the past, the DOJ focused on whether such agreements
actually impacted the market. But it changed that in 2009 to
assume that such policies automatically had an impact and were
therefore illegal, the person added.
The lawsuits target eBay only because Intuit was already a
defendant in a wide-ranging 2010 lawsuit that federal officials
brought against six technology companies. Intuit signed a
settlement agreement with the government that federal officials
call sufficient to prevent similar conduct in the future.
The eBay case grew out of the same wide-ranging
investigation, officials said.
A proposed class action pending in federal court in
California also addresses anti-poaching agreements among the six
technology companies: Adobe Systems Inc, Apple, Google,
Intel Corp, Intuit and Pixar.