eBay must face Justice Department suit over recruiting -ruling

Reuters

By Dan Levine

SAN FRANCISCO, Sept 27 (Reuters) - A U.S. judge on Fridayrefused eBay's attempt to dismiss a U.S. Department ofJustice civil lawsuit over its alleged agreement with Intuit torefrain from recruiting each other's employees.

In a tandem order, U.S. District Judge Edward Davila in SanJose, California, granted eBay's motion to dismiss a parallellawsuit brought by the state of California.

Representatives for eBay and the California attorneygeneral's office could not immediately be reached for comment.

The suit, and similar legal issues involving othertechnology companies, highlight the intense competition fortalent in Silicon Valley.

A "handshake" agreement between eBay and Intuit came intoplace in 2006 and involved executives including then-eBay chiefexecutive Meg Whitman and Intuit founder Scott Cook, accordingto court documents. At the time, Cook was serving on eBay'sboard and complained about eBay poaching Intuit employees.

Federal and state antitrust regulators sued eBay last year.Intuit was not named as a defendant because it was already partof a wide-ranging 2010 lawsuit that federal officials broughtagainst six technology companies, including Apple andGoogle. The companies agreed to a settlement agreementwith the government that federal officials call sufficient toprevent similar conduct in the future.

In its motion to dismiss, eBay argued that the government'slawsuit must fail because it solely reflects conversationsbetween eBay and Cook. Since Cook was an overlapping director ofboth companies, eBay argued that the government could not allegea conspiracy between two separate entities.

However, Davila ruled that the government has "plausibly"alleged an actionable agreement between both companies. In aseparate order, Davila ruled the state of California did nothave legal standing to pursue claims against eBay.

The cases in U.S. District Court, Northern District ofCalifornia are United States of America vs. eBay, 12-5869, andthe People of the State of California vs. eBay, 12-5874.

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