Idiotic AAPL shareholder lawsuit has only one possible winner — the lawyers

Late last week news broke that an Apple shareholder, R. Andre Klein, had filed suit against several senior officers of Apple. We've embedded the filing below so you can have a read through it should you wish. Because this is a fairly complex filing I've taken the time to read through it. What I'll offer you here is a simple explanation of the filing along with my opinion in the matter.

Most of the document is filled with a presentation of evidence that Apple's senior management, including the late Steve Jobs, along with directors of the company, had crafted illegal anti-poaching agreements between Apple and many other Silicon Valley companies. The evidence looks pretty compelling that these deals were in place. Did they know what they were doing was illegal? I don't know. Perhaps. Ed Colligan from Palm did appear to suggest (to Steve Jobs) that it might be illegal and wanted no part in it.

Anyway, the point is that Apple senior executives and directors (along with a huge list of other companies) probably had colluded to not actively recruit from each other's companies.

The shareholder suit, led by Klein and the law firm representing him, is out to directly sue these Apple executives and directors. The suit alleges that Apple's executives and directors lied in proxy filings because they did not disclose details about the DOJ investigation into these anti-poaching practices. It alleges that any reasonable shareholder, had they known about these material facts, would have considered voting differently in a shareholder vote (for example to elect certain directors or not).

But what about the money? The suit is vague here, but it suggests that Apple's executives and directors caused the company to lose millions of dollars because of lost innovation (because job hopping is good for innovation) and wasted time and money that the company had to invest in dealing with the DOJ investigation.

All of this, the plaintiff alleges, is the fault of Steve Jobs, Tim Cook, Bill Campbell, Mickey Drexler, Arthur Levinson, and a few others. Allegedly, they should he held accountable for the financial effect this had on shareholders.

My opinion? This whole thing is idiotic. It's beyond stupid. I'd like someone to sue this guy, and his law firm, for wasting the company's resources.

First of all, directors and senior officers are usually covered by D&O insurance provided by the corporation. So in suing these people, even if we shareholders were to win, we'd be paying out of our own pockets. The only possible winner here is the law firm.

Secondly, even if the executives and directors did pay a settlement it would be puny in comparison to the value of Apple shares. Let's say shareholders were to successfully sue for a monster settlement to a billion dollars, or 16 cents per share. If you happened to be wealthy enough to own one million dollars of Apple stock you'd get a life-changing sum of $1,700 as your portion of a billion dollar settlement.

And for all this, we shareholders need to now deal with the additional wasted efforts the executive team needs to invest in this extra lawsuit.

Here's what would be a lot more useful: Just demand that the corporation train its executive team and directors on how to develop law-abiding hiring practises. Have the company create appropriate new bylaws to deal with the problem.

And move on.

Let shareholders decide for themselves whether they want to stay invested in the company or not.

Here's the detailed filing:

Apple Shareholder Suit (opens in new tab)

Chris Umiastowski

Former sell side analyst, out-of-box thinker, consultant, entrepreneur. Interests: Wife & kids, tech, NLP, fitness, travel, investing, 4HWW.

  • Ignoring for the moment your assumptions about side A insurance and the corporations inability to apply exclusions, your solution is simply to "move on" and create new bylaws. How exactly does that provide any disincentive for future, similar behavior, or redress any grievances of the people injured by the original actions? (Hint: it does neither.) Simply "moving on" incentivizes executive boards to stay one step ahead of (by)laws, secure in the knowledge that, once they are caught, they can simply promise not to do it again, keep the gains of their improper actions, and move on to the next one. If you do not want your company's resources wasted, demand the executive board not engage in anti-competitive hiring practices, and demand further that they disclose relevant information to their shareholders as required. If it takes a lawsuit to teach them not to engage in such behavior, in the long run that is far from a waste for the company.
  • You're ignoring the fact there is already a lawsuit in place making those individuals wronged whole and the fact that the large driver for their actions had passed away years ago (Steve). Also the fact they have completely new HR VP in place that has had no dealings with Apple's said past hiring practices. 'Teaching them a lesson' doesn't really speak of anything but being vindictive really. So were in the revenge business now? Besides.. if they 'the shareholders' where that upset.. they could easily require and demand new board members and a change out of CEO.. w/o a lawsuit.. The only reason they went with a lawsuit was because the majority of the shareholders were content with the actions of the courts at this point; and the only way to force this individuals agenda was through a lawsuit.. Which tells me this isn't the 'shareholders' really.. it's sum few of them.. I would be interested in seeing how many, if any shareholders, really join this class action suit.
  • Nope, I'm not ignoring the suit; this is a separate legal action brought by a separate aggrieved party for a separate board action. They have rights to seek redress as well. As for "revenge business" - you watch too many movies, not to mention deliberately misstate what I said. I did not say "teach then a lesson" but "to teach them not to engage in such behavior" - it has nothing to do with vindictiveness, and everything to do with education. Sent from the iMore App
  • The named plaintiff in a class action suit usually get capture 20-25k.. Everyone else will get a $12 check.. All class action suits are geared towards the lawfirm and the named plaintiff. Unless it is a one on one civil suit only the lawyers win and society loses with increased pricing to make up the company loss... You want innovation? Easy.. Get rid of class action suits, or make the penalty too expensive if you lose. Sent from the iMore App
  • Regardless of your (clearly non-expert, untrained) opinion, using the term "idiotic" in the headline (or at all) is really unprofessional. But since the opinion offered within is as pretty idiotic as well, I guess they actually go together nicely.
  • It's definitely opinion as a non-expert in law but an expert in investing. It is idiotic, and I personally couldn't care less it comes across as unprofessioanl to anyone. That's how I feel. I am more than happy to acknowledge that your opinion is just as valid as mine.
  • So its only idiotic because it impacts money coming out of your pocket as a shareholder? Got it. Those "idiots" colluded and got busted. Now they have to deal with it. Life goes on.
  • Lol..Clearly you have mistaken this as a Westlaw forum. Imore is just a discussing and articles that are written and read by mostly non-lawyers. If you can not accept thoughts from people not in the legal profession, this may be the wrong forum for you if those are the only replies you are looking for.. Sent from the iMore App
  • "My opinion? This whole thing is idiotic. It's beyond stupid. I'd like someone to sue this guy, and his law firm, for wasting the company's resources." R. Andre Klein has put himself in a position as a shareholder now hasn't he? He has nothing and everything to lose. What is the point? But even with the point it mean nothing in the real picture here. Slice it dice anyway you like, it is like 2 steps forward with a foul, and play over no yards gained. I just would love to know the vendetta this guy has as a shareholder to even have thought about this, and his LAWYER, well he is a piece of SHIT anyways and probably thinks this is big league for him but, he will vanish in the mist.
  • Mr. Perfect... You should really watch your language. You're aot of line. Those remarks of your makes you look the same way you describe the lawyer...
    Don't take this conversation personal. Sent from the iMore App