LG Corp. and Samsung Electronics Co. were accused in a lawsuit of conspiring to suppress wages by agreeing not to recruit each other’s employees in Silicon Valley, where allegations of no-poaching pacts have plagued technology companies for years.
A former LG sales manager claims the South Korean electronics makers had a “long-standing agreement” not to “solicit or hire one another’s workers,” including top brass at both firms. The accord, dating back to at least 2005, has eliminated competition between companies whose similar work cultures resulted in frequent cross-hiring, according to Friday’s complaint in federal court in San Jose, California.
The lawsuit comes more than a year after Apple Inc., Google and other Silicon Valley technology companies reached a $415 million settlement over similar claims on behalf of 64,000 employees. Joe Saveri, who represented workers in the Apple-Google case, is the lead plaintiff’s attorney in the LG-Samsung case, which involves tens of thousands of U.S. workers, according to the complaint.
“The impact of this bilateral agreement is exacerbated because of the similarity between LG and Samsung’s businesses, and the scope of the business lines in which LG and Samsung compete in the United States,” according to the complaint by A. Frost, who seeks class-action status on behalf of other employees. “Absent the agreements, LG’s workers would be the most desirable targets of recruiting efforts by Samsung, and vice versa.”
LG spokesman John Taylor declined to comment on the complaint, as did a Samsung media representative in South Korea.
Saveri said he’s confident that a 2010 media report in India and a recruiter’s admission of the deal will be enough to win a court order to collect further evidence before a trial.
The plaintiff said he learned about the arrangement between LG and Samsung in October 2013 when a recruiter contacted him through LinkedIn to discuss a job opening at Samsung. After the initial exchange, Foster was informed that the recruiter had reached out in error, according to the complaint.
“I made a mistake! I’m not supposed to poach LG for Samsung!!! Sorry! The two companies have an agreement that they won’t steal each other’s employees,” Foster quoted the recruiter saying. Three years earlier, India’s Economic Times newspaper reported LG’s human resources chief in the country had confirmed the no-poaching deal.
The executive said LG and Samsung “have an ‘understanding’ not to hire from each other across levels,” the newspaper reported. “Hiring from each other will not take place without a gap of a year.”
The case is Frost v. LG Corp., 16-cv-05206, U.S. District Court, Northern District of California (San Jose).