Facts

Executives from eBay Inc. entered into an informal agreement with Scott Cook, founder and Chairman of the Executive Committee of Intuit Inc. In November 2005, an eBay executive wrote to Cook about a potential hire from Intuit. The potential hire had contacted eBay concerning a job. The executive and Cook then agreed to an informal policy where eBay would not actively recruit from Intuit without first informing Intuit, and Intuit would do the same thing in return.

The policy was implemented by August 2006, when eBay considered hiring an Intuit employee, but decided against it due to the agreement. Both eBay and Intuit communicated regularly regarding employment offers made to each other's employees, and had the general effect of a "no hiring" policy.

The Dept. of Justice investigated the companies policies, and in 2009, the investigation into the hiring agreements became public. The People of the State of California then filed suit against eBay.

PLAINTIFF'S CONTENTIONS:
The plaintiffs argued that eBay and Intuit's hiring agreement violated the Sherman Act, the Cartwright Act, California Business and Professions Code, and the California Unfair Competition Law. Among other things, the plaintiffs claimed that eBay continued to follow its informal agreement with Intuit, even after learning that it was being investigated by the Dept. of Justice.

DEFENDANT'S CONTENTIONS:
eBay moved to dismiss, arguing that the plaintiffs had failed to state a claim, because they had not established a conspiracy or any harm to competition. eBay argued that even when the Dept. of Justice began its investigation that it did not necessarily mean that its actions were illegal.

Result

The court granted a dismissal with leave to amend.