(Law360) A putative class alleging LG and Samsung broke antitrust laws by agreeing not to poach one another’s employees asked a California federal judge on Tuesday to deny LG’s sanctions request, saying the case is based on factual evidence including a Samsung agent’s admission she was instructed not to recruit from LG.
The case, which is awaiting U.S. District Judge Beth Labson Freeman’s ruling on a motion to dismiss, was filed in September by a former LG sales manager, identified as A. Frost, who alleges he was contacted in 2013 by a Samsung recruiter, who later informed him, “I made a mistake! I’m not supposed to poach LG for Samsung!!! Sorry!” Another named plaintiff, former LG treasury manager Jose Ra, said he had a similar experience.
That central, fact-based allegation alone served as direct evidence of an agreement between the companies, said Tuesday’s opposition to LG’s motion for sanctions, which added that the complaint provided other direct and circumstantial evidence. The suit also included the admission of an agent for Samsung, who was told not to “cold call” LG employees for recruitment purposes, and cited a 2010 news article in which an LG executive confirmed the existence of an “understanding” between the companies.
Frost said the motion for sanctions didn’t address these facts and only said the companies don’t currently have anti-poaching policies, which the U.S. Department of Justice and Federal Trade Commission recently started criminally investigating.
“The U.S. LG defendants’ motion does not argue that the facts plaintiffs pled have been falsified. Instead, they largely ignore the facts plaintiffs plead,” the motion said. “They argue that plaintiffs and their counsel should be sanctioned because the U.S. LG defendants claim they ‘do not have a policy or prohibition against recruiting, cold-calling or hiring Samsung employees’ and therefore plaintiffs’ allegations are ‘false.’ The U.S. LG defendants do not claim they never had such an agreement with Samsung. They merely aver that there is at this time no such agreement.”
The class also said that questions of fact remained in the case, and LG had not proved the lawsuit was frivolous by providing LinkedIn data showing the existence of employees who have worked at both companies. Frost said only “a handful” of personnel had jumped from Samsung to LG since 2005 and that the paucity of hires supported, and didn’t disprove, its argument. It added that “an anticompetitive, illegal agreement need not be followed perfectly without exception to constitute an antitrust violation.”
The class also argued that LG’s denials and evidence of occasional cross-company hires were not enough to trigger sanctions for a bad faith filing or even dismissal, since they had a right to “test the evidence” and see if their claims survive summary judgment.
Class counsel Joseph R. Saveri reiterated in an email statement that the complaint contained a variety of evidence to back up its allegation that the companies mutually agreed not to cold-call one another’s employees, including the recruiter’s statement to Frost, which Saveri called “a direct quote.”
“We view this as an improper attempt to argue the merits,” he said. “We think these allegations are sufficient to withstand the motion. We look forward to taking discovery and preparing the case for trial.”
Attorneys and representatives for LG did not immediately respond to requests for comment.
The workers are represented by Joseph R. Saveri, Matthew S. Weiler, and Kyla J. Gibboney of Joseph Saveri Law Firm Inc.; Stuart G. Gross of Gross & Klein LLP; Steven N. Williams, Adam J. Zapala, and Elizabeth Tran of Cotchett Pitre & McCarthy LLP; Eric L. Cramer and Michael J. Kane of Berger & Montague PC; Vincent J. Esades of Henis Mills & Olson PLC; John Radice of Radice Law Firm PC; Jason S. Hartley, Jason M. Lindner, and Julie A. Kearns of Stueve Siegel Hanson LLP; Daniel E. Gustafson, Catherine K. Smith, and Brittany N. Resch of Gustafson Gluek PLLC; KennethWexler and Amy E. Keller of Wexler Wallace LLP; Simon B. Paris and Patrick Howard of Saltz Mongeluzzi Barrett & Bendesky PC; and Patrick W. Michenfelder of Throndset Michenfelder LLC.
LG is represented by Nathan P. Eimer, Daniel D. Birk, and James J. Kylstra of Eimer Stahl LLP, and John H. L’Estrange Jr., Joseph T. Ergastolo, and Andrew Edward Schouten of Wright L’Estrange & Ergastolo.
Samsung is represented by James L. Cooper, Kenneth L. Chernof, Anne P. Davis, Daniel B. Asimow, and Carolyn A. Pearce of Arnold & Porter Kaye Scholer LLP.
The consolidated case is Frost v. LG Corp. et al., case number 5:16-cv-05206, in the U.S. District Court for the Northern District of California.
(Reporting by Cara Bayles. Additional reporting by Dan Siegel and Y. Peter Kang. Editing by Orlando Lorenzo).