The U.S. Department of Justice has filed an antitrust lawsuit against eBay, Inc. in the United States District Court for the Northern District of California.  The suit, filed on November 16, 2012, claims that eBay violated antitrust laws by entering into an agreement not to hire or recruit the employees of a competitor, Intuit, Inc. The DOJ asserts that the agreement eliminated competition in the marketplace, stifling access to better job opportunities and salaries of affected employees.

The DOJ alleges that the agreement applied to employees at the highest levels at each company, covering specialized computer engineers and scientists, and barred the companies from soliciting each other’s employees. In addition, at least as to eBay, the agreement barred the company from hiring any employees at all. The DOJ alleges this arrangement started no later than 2006 and lasted at least until 2009. The complaint alleges that eBay’s recruiters were told not to pursue applications that came from Intuit employees and even to throw out resumes received from them. The suit alleges that Meg Whitman, eBay’s CEO, and Scott Clark, founder of Intuit and chair of its executive committee, were closely involved in crafting and enforcing the agreement. In an odd twist, Cook was also on the eBay board when he was complaining about eBay’s recruitment of Intuit personnel.

The relief sought by the DOJ includes preventing eBay from enforcing the Inuit agreement as well as prohibiting eBay from entering into any similar agreement with any other companies. Further, the DOJ’s Antitrust Division partnered with the California Office of the Attorney General, which conducted its own investigation and filed a similar lawsuit on the same day. Intuit is already subject to a settlement with the DOJ in another case prohibiting it from entering into “no hire” agreements, which might explain why Intuit was not named in this complaint.

Employers invest heavily in time and money to recruit, train and develop talent. They have legitimate interests in protecting their confidential information and avoiding unlawful interference with their personnel relationships. In rare circumstances, however, peace agreements with competitors to not poach each other’s talent can trigger scrutiny under antitrust laws. Jackson Lewis attorneys are available to assist employers as they navigate this minefield.