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Studios Hit With New Class-Action Suit Over Anti-Poaching Pacts

The Walt Disney Co., DreamWorks Animation and Sony Pictures Animation are among the defendants in a new class-action suit, contending that the studios and other visual effects and animation companies conspired to suppress wages via “non-poaching” agreements between the companies.

Also named in the lawsuit, filed on Monday in federal court in San Jose, are Pixar, Lucasfilm and its division Industrial Light and Magic, Digital Domain, and ImageMovers Digital. Also named was Sony Pictures Imageworks.

The lawsuit was filed on behalf of Robert Nitsch, who was a senior character effects artist at DreamWorks Animation from 2007 to 2011.

“The conspiracy deprived Plaintiff and other class members of millions of dollars which Defendants instead put to their bottom lines,” the lawsuit stated. “It did so at the same time that the films produced by these workers achieved world renown and generated billions of dollars in revenues in the United States and abroad.”

Lucasfilm and Pixar already were targets of a Justice Department antitrust lawsuit in 2010, along with Apple, Google, Adobe Systems, Intel Corp. and Intuit, in which the government contended that  their “no solicitation” agreements prevented highly skilled employees from commanding better wages and job opportunities. The companies settled the litigation by agreeing to end such practices for a period of five years.

But a class-action civil suit was filed in 2011, and during the litigation emails were disclosed which appeared to link other companies to the “no poaching” agreements, including Disney and DreamWorks Animation, who were not named defendants in either that lawsuit or the Justice Department action. In a settlement approved by U.S. District Judge Lucy Koh in May, Lucasfilm and Pixar agreed to pay $9 million, and Intuit agreed to pay $11 million. But Koh refused to approve a $325 million settlement with a class action group and other companies including Apple and Google.

The latest class action lawsuit was filed by Cohen, Milstein, Sellers & Toll in Washington.

A spokeswoman for DreamWorks Animation and spokesman for Sony had no immediate comment. A spokesman for the Walt Disney Disney Co., which now owns Pixar, Lucasfilm and ILM, said, “We believe this complaint is utterly without merit and intend to defend against it vigorously.”

The lawsuit lays out an elaborate conspiracy to establish non-solicitation agreements, “carried out by some of the most recognizable names in the American entertainment and technology industries,” including Steve Jobs, the late founder of Apple; Pixar President Ed Catmull; and filmmaker George Lucas. It also contends that Jobs and DreamWorks Animation CEO Jeffrey Katzenberg also “personally discussed and formed similar ‘no raid’ agreements between their companies.” The suit cites an email from Catmull in which he stated that they “have an agreement with DreamWorks not to actively pursue each others employees.” “Catmull acknowledged under oath that Jobs and Katzenberg discussed the subject and that the two companies weren’t ‘going after each other,'” the suit stated.

The suit contends that when Disney bought Pixar in 2006, the non-solicitation agreements spread to Walt Disney Feature Animation, which Catmull headed, as well as to ImageMovers, the company founded by director Robert Zemeckis.

“Catmull and other leaders of the conspiracy policed any violation of the conspiracy, even when it did not directly involve efforts to recruit their own employees,” the lawsuit claims. “Whenever a studio threatened to disturb the conspiracy’s goals of suppressing wages and salaries by recruiting employees and offering better compensation, the leaders of the conspiracy took steps to stop them for the anti-competitive benefit of all conspirators. For example, when ImageMovers began recruiting workers for its digital wing, ImageMovers Digital, in 2007, Catmull intervened to stop them from targeting other conspirators, even though he knew they would not target his company Pixar. His express purpose in doing so was to keep solicitation efforts from ‘mess[ing] up the pay structure. At Catmull’s request, a Disney senior executive advised ImageMovers to comply with the broad conspiracy.”

The litigation also alleges that senior human resources and recruiting personnel met annually to discuss job titles to be included in an industry compensation survey, and, in other meetings and events, exchanged information that allowed them to “fix the salaries and wages of their workers within narrow ranges for the ensuing year.”

The suit contends that in late 2006, the head of human resources at Pixar sent an email to the heads of H.R. at DreamWorks, Sony Pictures Imageworks, Lucasfilm/ILM, Disney Animation and others “to provide Pixar’s budget for salary increases in the following year, 2007, and to ask for other studios’ salary increase budgets in return.”

The lawsuit also quotes Lucas as saying that they “cannot get into a a bidding war with other companies because we don’t have the margins for that sort of thing.”

“All of the Defendants kept the agreements secret from their employees. Only their top executives and human resources and recruiting personnel involved in the conspiracy communicated about the agreements orally or in emails among themselves, and they almost always insisted that the agreements not be committed to writing,” the suit stated.





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