The People of the State of California-v-eBay, Inc, No. 5:2012cv05874 - Document 31 (N.D. Cal. 2013)
Court Description: ORDER granting 9 Motion to Dismiss signed by Judge Edward J. Davila on 9/27/2013. (ejdlc4S, COURT STAFF) (Filed on 9/27/2013)
Download PDF
<![CDATA[
The People of the State of California-v-eBay, Inc Doc. 31 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION United States District Court For the Northern District of California 10 11 12 THE PEOPLE OF THE STATE OF CALIFORNIA, Plaintiff, 13 14 15 v. EBAY, INC., 16 Defendant. 17 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 5:12-CV-05874-EJD ORDER GRANTING EBAY’S MOTION TO DISMISS CALIFORNIA’S COMPLAINT [Re: Docket No. 9] 18 19 Presently before the court in these related antitrust actions is Defendant eBay Inc.’s 20 (“eBay”) Motion to Dismiss Plaintiff the People of the State of California’s (“California”) 21 Complaint. No. 12-CV-05874 Dkt. No. 9. eBay has also moved to dismiss Plaintiff the United 22 States of America’s (“United States”) (collectively with California, “Plaintiffs”) Complaint in 23 related action No. 12-CV-05869. The court held a hearing on these matters on April 26, 2013. 24 Having reviewed the parties’ briefing and heard the parties’ arguments, and for the following 25 reasons, the court GRANTS eBay’s Motion as to California’s Complaint. 26 27 28 I. BACKGROUND The following background is taken from the court’s Order Denying eBay’s Motion to Dismiss in related case No. 12-CV-05869. 1 Case No.: 5:12-CV-05874-EJD ORDER GRANTING EBAY’S MOTION TO DISMISS CALIFORNIA’S COMPLAINT Dockets.Justia.com 1 a. Factual Background 2 This case concerns an alleged handshake agreement struck and occasionally refined by 3 eBay executives, including then-CEO Meg Whitman, and Scott Cook, the founder and Chairman of 4 the Executive Committee of Intuit, Inc. (“Intuit”), which restricted eBay and Intuit’s ability to 5 recruit or hire candidates from one another. The two complaints’ factual allegations largely mirror 6 each other. Accordingly, the following factual background is taken solely from the United States’ 7 Complaint and is assumed to be true for purposes of these Motions. See No. 12-CV-05869, Dkt. 8 No. 1. 9 In November 2005, eBay’s then-COO Maynard Webb wrote to Mr. Cook about a potential United States District Court For the Northern District of California 10 hire from Intuit who had contacted eBay regarding a job. Id. at ¶¶ 12, 15. Mr. Webb proposed a 11 going-forward policy under which eBay would not actively recruit from Intuit, would give Intuit 12 notice before making offers to senior-level Intuit employees who had initially contacted eBay, and 13 would inform Intuit after lower-level employees had accepted offers from eBay. Id. Mr. Cook 14 objected to the proposal to the extent it allowed any hiring of Intuit employees without prior notice 15 to Intuit, explaining that “we don’t recruit from board companies, period” and “[w]e’re passionate 16 on this.” Id. at ¶ 15. Mr. Cook committed that Intuit would refrain from making an offer to any 17 eBay employee without prior notice to eBay and stated that “[w]e would ask the same.” Id. 18 According to Plaintiffs, eBay and Intuit reached and implemented an initial no-solicitation 19 agreement by August 2006. Id. at ¶ 17. At that time, eBay was considering hiring an Intuit 20 employee to its Paypal subsidiary. When approached about this hire, Beth Axelrod, eBay’s Senior 21 Vice President for Human Resources at the time, stated that while she was “happy to have a word 22 with Meg [Whitman] about it,” she was “quite confident [Ms. Whitman] will say hands off because 23 Scott [Cook] insists on a no poach policy with Intuit.” Id. Ms. Axelrod went on to confirm with 24 Ms. Whitman that eBay in fact could not proceed with the hire without first notifying Mr. Cook. 25 Id. eBay discontinued recruitment of that candidate, apparently because “everyone agreed ‘that it’s 26 to[o] awkward to call Scott [Cook] when [they] don’t even know if the candidate has interest.” Id. 27 28 The parties continued to have discussions regarding recruiting and hiring in the ensuing months. In April 2007, Mr. Cook complained to Ms. Whitman that he was “quite unhappy” about 2 Case No.: 5:12-CV-05874-EJD ORDER GRANTING EBAY’S MOTION TO DISMISS CALIFORNIA’S COMPLAINT 1 an offer eBay planned to make to an Intuit employee who had approached eBay. Id. at ¶ 18. In 2 response, Ms. Axelrod instructed David Knight, eBay’s Vice President of Internal Communications 3 at the time, to hold off on making the offer. Mr. Knight complained that the decision to hold back 4 the offer put the applicant “in a bad position and [eBay] in a bad place with California law.” Id. A 5 week later Mr. Knight explained that eBay “desperately need[ed] this position filled” and asked 6 Ms. Axelrod and Ms. Whitman “to at least ‘negotiate’ any shift from a ‘no poaching’ agreement to 7 a ‘no hiring’ agreement” after this particular applicant was hired. Id. Plaintiffs allege that although this candidate was ultimately hired, eBay and Intuit’s 8 9 agreement thereafter “metastasized” into a no-hire policy. Id. at ¶¶ 18-19. “eBay recruiting United States District Court For the Northern District of California 10 personnel understood that ‘Meg [Whitman] and Scott Cook entered into the agreement (handshake 11 style, not written) that eBay would not hire from Intuit, period.’” Id. at ¶ 21. Similarly, “Mr. Cook 12 and Intuit…agreed that intuit would not recruit from eBay.” Id. The Complaints contain several examples of eBay’s understanding and implementation of 13 14 the agreement. For instance, when approached by two eBay employees about the policy, Ms. 15 Axelrod explained that “[eBay] ha[s] an explicit hands of[f] that we cannot violate with any Intuit 16 employee. There is no flexibility on this.” Id. at ¶ 20. eBay repeatedly declined to interview or 17 hire Intuit employees, even when it had positions open for “quite some time” or when the only 18 acceptable candidate was from Intuit. Id. at ¶ 23. 19 The Complaints also reflect Mr. Cook’s understanding of the agreement. When speaking 20 with a candidate who had decided to work for eBay but expressed interest in joining Intuit in the 21 future, Mr. Cook explained that “Intuit is precluded from recruiting [the candidate]” except under 22 limited circumstances. Id. at 21. Later, in August 2007, Ms. Whitman complained to Mr. Cook 23 that Intuit had been recruiting eBay employees in violation of the agreement. Mr. Cook responded 24 saying “#@!%$#^&!!! Meg my apologies. I’ll find out how this slip up occurred again….” Id. at ¶ 25 22. 26 In 2009, the Department of Justice’s (“DOJ”) investigation of no-solicitation/no-hire 27 agreements among technology companies became public. Id. at ¶ 25. According to Plaintiffs, 28 eBay and Intuit’s agreement remained in effect for at least some period of time after this 3 Case No.: 5:12-CV-05874-EJD ORDER GRANTING EBAY’S MOTION TO DISMISS CALIFORNIA’S COMPLAINT 1 announcement. Id. Since that time, a court in a separate action has ordered Intuit to refrain from 2 entering into or enforcing any agreement that improperly limits competition for employee services. 3 Id. at ¶ 9. 4 b. Procedural History 5 On November 16, 2012, Plaintiffs filed the instant actions against eBay, alleging that eBay 6 entered into a no-solicitation/no-hire agreement with Intuit in violation of Section 1 of the Sherman 7 Act, 15 U.S.C. § 1. No. 12-CV-05869, Dkt. No. 1; No. 12-CV-05874, Dkt. No. 1. California also 8 raises claims under the Cartwright Act, California Business and Professions Code § 16720, and the 9 California Unfair Competition Law (“UCL”), California Business and Professions Code § 17200 et United States District Court For the Northern District of California 10 seq. No. 12-CV-05874, Dkt. No. 1 ¶¶ 39-48. This court issued an order relating these two cases 11 on December 11, 2012. No. 12-CV-05869, Dkt. No. 11; No. 12-CV-05874, Dkt. No. 4. While 12 Plaintiffs point to Intuit as a co-conspirator, they have not named Intuit as a defendant in these 13 actions because it is already subject to a court order in United States v. Adobe Systems, No. 10- 14 01629 (D.D.C. Mar. 17, 2011), which prohibits it from entering into or enforcing any agreement 15 that improperly limits competition for employee services. No. 12-CV-05869, Dkt. No. 1 ¶ 9. 16 On January 22, 2013, eBay filed the instant Motions to Dismiss pursuant to Fed. R. Civ. P. 17 12(b)(6) for failure to state a claim on the grounds that both Complaints fail to allege an actionable 18 conspiracy and fail to allege harm to competition. eBay brings its Motion to Dismiss California’s 19 Complaint on the additional ground that California lacks standing to assert a claim for injunctive 20 relief under the Sherman Act and that it fails to state a claim under the Cartwright Act or the UCL. 21 No. 12-CV-05874 Dkt. No. 9. The court now turns to the substance of eBay’s motion as to 22 California’s Complaint. 23 II. LEGAL STANDARD 24 Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim in the 25 complaint with sufficient specificity to “give the defendant fair notice of what the ... claim is and 26 the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) 27 (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be 28 dismissed if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). 4 Case No.: 5:12-CV-05874-EJD ORDER GRANTING EBAY’S MOTION TO DISMISS CALIFORNIA’S COMPLAINT 1 Dismissal under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim is “proper only 2 where there is no cognizable legal theory or an absence of sufficient facts alleged to support a 3 cognizable legal theory.” Shroyer v. New Cingular Wireless Servs., Inc., 606 F.3d 658, 664 (9th 4 Cir. 2010) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). In considering whether 5 the complaint is sufficient to state a claim, the court must accept as true all of the factual 6 allegations contained in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While a 7 complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, 8 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly, 550 9 U.S. at 570). III. United States District Court For the Northern District of California 10 DISCUSSION California seeks only injunctive relief for its Sherman Act and Cartwright Act claims. See 11 12 No. 12-CV-0587, Dkt. No. 1 at ¶¶ 38, 45. Section Sixteen of the Clayton Act sets forth the 13 standing requirements for antitrust injunctive relief actions, requiring that any person 1 wishing to 14 pursue a claim “against threatened loss or damage by a violation of the antitrust laws” may do so 15 “when and under the same conditions and principles as injunctive relief against threatened conduct 16 that will cause loss or damage is granted by courts of equity.” 15 U.S.C. § 26. Thus, to have 17 standing in this action, California must allege “(1) a threatened loss or injury cognizable in equity 18 (2) proximately resulting from the alleged antitrust violation.” Rohnert Park v. Harris, 601 F.2d 19 1040, 1044 (9th Cir. 1979). California contends that its allegations that eBay continued to enforce its agreement with 20 21 Intuit even after learning of the DOJ’s investigation into similar agreements among other 22 technology companies and the lingering effects that occurred therefrom are sufficient to state a 23 threatened injury for purposes of injunctive standing. See No. 12-CV-05874, Dkt. No. 1 ¶¶ 18, 29. 24 The court disagrees. At best, the public announcements of the DOJ’s investigations put eBay on 25 notice that its agreement was potentially illegal. However, the announcements did not concern 26 eBay itself or the particulars of its agreement with Intuit. Moreover, they did not and could not 27 1 28 In bringing a claim under Section Sixteen, California is treated as a private person. See Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 261 (1972). 5 Case No.: 5:12-CV-05874-EJD ORDER GRANTING EBAY’S MOTION TO DISMISS CALIFORNIA’S COMPLAINT 1 constitute a legal determination that the behavior at issue indeed amounts to an antitrust violation. 2 eBay’s adherence to its agreement in the face of generalized legal ambiguity simply does not, 3 without more, suffice to state a threatened, forward-looking, antitrust injury. Accordingly, the 4 court finds that California has failed to demonstrate standing for injunctive relief. 5 6 IV. CONCLUSION The court DISMISSES WITH LEAVE TO AMEND California’s Sherman Act claim for lack of standing. As California’s remaining claims under the Cartwright Act and the UCL rise and 8 fall with its Sherman Act claim, those also are DISMISSED WITH LEAVE TO AMEND. See 9 Cnty. of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1160 (9th Cir. 2001); see also Nova 10 United States District Court For the Northern District of California 7 Designs, Inc. v. Scuba Retailers Ass'n, 202 F.3d 1088, 1091 (9th Cir. 2000); Cal. Bus. & Prof. 11 Code §§ 16750(a)-(b). 12 Any amended complaint must be filed within fourteen days of the date of this Order. 13 California is advised that it may not add new claims or parties without first obtaining eBay’s 14 consent or leave of court pursuant to Federal Rule of Civil Procedure 15. 15 Additionally, the court hereby sets a Case Management Conference for November 15, 2013 16 at 10:00 a.m. The parties shall submit their Joint Case Management Conference Statement by no 17 later than November 8, 2013. 18 19 IT IS SO ORDERED. 20 Dated: September 27, 2013 21 22 _________________________________ EDWARD J. DAVILA United States District Judge 23 24 25 26 27 28 6 Case No.: 5:12-CV-05874-EJD ORDER GRANTING EBAY’S MOTION TO DISMISS CALIFORNIA’S COMPLAINT
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
