Apple shareholders are the latest to jump into the fray of a lawsuit against Apple over its anti-poaching agreements with a number of other tech companies. As we’ve previously reported, Apple, Google, Intel, Adobe, and a laundry list of other companies allegedly created illegal pacts to avoid hiring each others’ engineers, allowing each employer to keep its wages low without running the risk of a competitor snatching up its competition with a better deal.
Now, a little over a week after a class action settlement was rejected by the court for being too low, Apple shareholder R. Andre Klein has filed a derivitive complaint on behalf of all Apple shareholders (embedded below) accusing the company of “breach of fiduciary duty, gross mismanagement, waste of corporate assets, and breach of the duty of honest services.”
The shareholders’ case is based on the same evidence that has been presented during the class action suit brought by current and former employees of the companies involved in the agreements. You can read the entire filing below:
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Great, the shareholders will get a nickel a share compensation and some law firm will make 500 million dollars.
But most important, the companies paying out millions will be punished appropriately.
Sadly when you are dealing with mega companies like Apple, even 100,000,000 USD is pennies. Cook, Ive, and the rest will not have to pay that out of their own pockets… So what point is there? These type of people will do this time and time again, because they are not personally held accountable for the actions of the company.
I don’t see what the shareholders have to gain. Have they investigated to determine the company intent. My understanding of the case is Apple and the other companies weren’t conspiring to limit employee wages, though that was the effect, they simply wanted to hold on to good talent they helped developed.
Although I do not support what Apple and the other companies did, I see the class action as having a chilling effect on management. A good manager often times must take risks to keep his or her company moving forward. Some risks may result in the company losing money. Other times risks will make the company money. If the manager has to worry about being sued because he took a particular action that resulted in a loss he will be least likely to take such risks fearing he might be fired or the company sued.
Take the iWatch project for example. Apple has invested a lot of money into the project. Lets say the project is a flop. Does that mean the shareholders can file a class action because of the losses.
I hate referencing Steve Jobs but this case originated on his watch so I will. The shareholders should remember that Jobs, second time around, brought Apple back to profitability. I suspect if Jobs were still at Apple he would be disgusted with the shareholders action and might walk a second time.
This case is not the example of corporate ethical lapses that should be punished.
Someone gets it. Bravo.
Also another point that needs to be made; it was Steve Jobs himself who orchestrated it – from what has been leaked there were managers (Tim Cook included with that group) who were not happy with the situation but kept quiet because nothing good would have come of it due to Job’s ability to bull others. The question is, why did this idiot R. Andre Klein wait until now to say something? why didn’t he do something right back when it first came out? here is a better idea, if R. Andre Klein doesn’t like the management deal and how they’re trying to clean up the mess left by Steve then by all means he should sell his shares and buy shares in accompany with a management team he does like – no one is holding a gun to his head forcing him to own Apple shares.
All for the good of the company, the employees who were punished by lowering wages don’t deserve to get paid a wage appropriate to their skills!
An important point: There is no proof whatsoever that this informal agreement led to lower wages for any suspected parties affected. All the companies involved have great compensation packages and the people I know personally at Apple have always received very good bumps and bonuses.
Maybe next the justice department wants to look at non-compete employee contracts which are also standard in the tech world.
” A good manager often times must take risks to keep his or her company moving forward. Some risks may result in the company losing money. Other times risks will make the company money. If the manager has to worry about being sued because he took a particular action that resulted in a loss he will be least likely to take such risks fearing he might be fired or the company sued.”
Risk is part of the capitalist game. Want to unfairly keep your employees from finding better? Want to make sudo-monopolies by allowing companies to work together? I suggest you read up on 18th century business and how businessmen called robber barrons controlled your life, owned your home, forced you to buy company products to do your day to day jobs, paid you in company money and kicked your family out of the company house the moment you, the bread winner died.
Capitalism…it ain’t perfect but it ‘beats’ the other systems. In America, if you are willing to work, you can feed your family, put a roof over their heads, educate them, and care for the medical needs, at least in most instances. Robert, I’d be willing to bet you have a good life in this system you don’t care much for.
It was an anti-poaching agreement, not an anti-hire agreement to my understanding. If an employee is unhappy where he is, he could easily have applied elsewhere. But other companies agreed not to “actively” seek people from other companies simply to steal their talent. If this is true, I cannot see how this is wrong. It still leaves the power in the employees hands and as long as Apple/Google etc treat their employees fairly they will keep said talent.
Using myself, an RN, as a comparison I have no problem with the hospital down the road not “actively” seeking my employment, but if I am unhappy or think I can do better I have the full right to look elsewhere. IF, this is in fact the case then I’m on Apple’s side with this 100%. That’s just my opinion of course. If my understanding is wrong then I will humbly accept that Apple is completely in the wrong.
What I am tired of seeing are Apple fanboys blanket supporting Apple, and others blatantly trying to make a buck. Because let’s face it, this complaint could have been made a long time ago. It sounds awfully suspicious that Mr. Klein waited until someone else won something so he wouldn’t get egg on his face had the other complainants lost their case.
Lastly, the idea that you will get paid less simply because you aren’t offered a job by other companies is a little arrogant to me. If the expectation is that someone else should do the leg work to give you a job, I can’t ultimately respect that even if you have great talent. It’s a nice pat on the back, but if you want it, go out and get it if you think you’re worth it. It was supposed to be a land of opportunity, not the land of give me and while sometimes it’s a fine line, it isn’t unfair. I realize the courts disagree with my philosophy here, but nevertheless it’s where I stand.
Ok, avoiding the right or wrong of this whole thing, this makes zero sense.
These companies made this pact which in turn led to them not paying their employees what they should have made. Therefore, these companies lowered their expenses which led to higher profits for the companies. That is basically what is at the heart of the complaint as I understand it.
So, how can this guy come in with the same evidence and say that this action hurt the shareholders? If they made higher profits by colluding then they in-fact helped the shareholders.
This seems like two completely contradictory accusations. By taking the same action these people are saying that Apple at the same time increased profits AND hurt shareholders.
Does this seem like a stupid contradiction to anyone else?
As an AAPL stock holder, I feel that if the stock price is materially affected by this action, we should really band together and file a class action suit against Bottini & Bottini and R.Andre Klein.
The suit’s only merit would be arguing that Apple failed to acquire talent because of this agreement, thus weakening its market position and effectiveness to do business.
I think this article in USA Today Explains what the true motive is: http://www.usatoday.com/story/tech/2013/02/07/greenlight-sues-apple-wants-more-cash/1898807/
Agreed. Moral considerations aside, this lawsuit makes no sense imo from a shareholder perspective.
1. Apple’s employee actions could be seen as keeping staff costs down, which helped profits and which contributed to increasing stock value.
2. Shareholders suing Apple helps to tarnish the reputation of the company which will push the stock down.
Any pay out from the lawsuit could be lost by decreasing stock value.
3. The USA article (mentioned in the thread) talked about general pressure for Apple to clean out its saved cash and hand it over to certain investors as increased dividends.
But it is uncertain if Apple would agree to that.
And in the meantime, pushing Apple’s stock lower with lawsuits creates an immediate loss for Apple investors.
Yes I am sure B-Schools out there are looking at Apple’s business models as gross mismanagement.
Despite the news about the Apple/Google anti-poaching agreement, Apple’s stock has actually gone up in value since this became a news item.
The shareholders who are suing Apple can’t claim any harm was done to their investments since they’ve made money, NOT lost money. There has been NO negative affect on the value of AAPL due to settlement of the Apple/Google anti-poaching agreement.
If those investors do go ahead with their law suit, they are going to look mighty foolish trying to claim that their investments have been negatively affected.
Employees need protection, employers need protection, shareholders do nothing but just want money. Yes they want their money to work but just leave it to the CEO and the team to run the company. You can withdraw yr investment if you don’t like how the company is running or you can replace the CEO if you can find one cheap and good one.
I don’t know the legalities of it, but it seems counter-intuitive that anyone would sue Apple for gross mismanagement. I mean… how much more successful could they be? And how much more could the stock climb? It’s not as iff Apple shareholders have suffered very much very often.
And if you’re a shareholder.. why would you introduce more negativity by suing the company? I mean… just sell your shares. That’s kind of how it works. Maybe i’m missing something because I haven’t read much of this saga, but it all just seems a little ridiculous.