DreamWorks Animation, Disney and Sony Ask for Dismissal of Class Action Wage-Fixing Suit

Disney Dreamworks animation Wage fixing Scandal

DreamWorks Animation, the Walt Disney Co., Sony Pictures Animation and Blue Sky Studios contend that an antitrust wage-fixing lawsuit filed by digital animation workers “comes far too late” and that their claims lack evidence.

The workers, in class action complaints filed last year, claimed that studios conspired via non-poaching agreements and cite evidence uncovered in previous litigation against Lucasfilm and Pixar.

The studios, in a filing in federal court in San Jose, Calif., said that the new lawsuit “is futile as a matter of law and comes far too late. The statutes of limitations for their claims expired long ago.”

In their motion for dismissal, the studios say that the plaintiffs “allege no facts to support their improbable theory that the challenged conduct continued beyond” a Department of Justice investigation of Pixar and Lucasfilm, which led to a settlement.

In their filing, the studios contend that the employees “do not allege a single term of this alleged agreement to fix compensation levels or point to a single communication evidencing any such agreement. Rather, plaintiffs allege that defendants participated in a third-party industry salary survey, attended meetings in connection with that survey and other industry conferences, and occasionally communicated about compensation issues. But it is well-settled that such allegations, sowing a mere ‘opportunity’ to conspire, are insufficient to plead a price-fixing agreement.”

The plaintiffs in the antitrust case are former DreamWorks senior character effects artist Robert Nitsch; former ImageMovers Digital production engineer David Wentworth; and digital artist Georgia Cano, who held jobs at Rhythm & Hues, Walt Disney Feature Animation and ImageMovers Digital. They are seeking class action status. A hearing is scheduled on March 26 before U.S. District Judge Lucy Koh.

The studios also are seeking to compel Nitsch into arbitration, citing his employment agreement.

The workers contend that the roots of the anti-poaching agreements go back to the mid-1980s, when George Lucas and Ed Catmull, the president of Steve Jobs’ newly formed company Pixar, agreed to not raid each other’s employees.

Other companies then joined the conspiracy, their suit contends, with agreements on such things as cold calling and notifying each other when making an offer to an employee of another company. The lawsuit cites emails between Catmull and human resources personnel, and it also claims that Jobs and Jeffrey Katzenberg, the CEO of DreamWorks Animation, “personally discussed DreamWorks joining the conspiracy.”

Also named as defendants in the suit are ImageMovers, Lucasfilm and Pixar. Those companies also are seeking dismissal.

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 that appear to link other companies to the “no poaching” agreements, including Disney and DreamWorks Animation, which were not named as defendants in either that lawsuit or the Justice Department action. In a settlement approved by 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 suit suit contends that at animation studios, “Senior human resources personnel met annually after the survey for an ‘opportunity for an intimate group of us to get together,’ which they termed ‘Directors meeting.’ At least at one studio, the meetings were called the annual ‘salary council.'”

The suit claims that in late 2006, the head of human resources at Pixar sent an email to the heads of HR at DreamWorks, Sony Pictures Imageworks, Lucasfilm/ILM, Walt Disney Animation Studios, Blue Sky Studios and others to provide Pixar’s budget for future salary increases in 2007, and to ask for the other studios’ salary increase budgets in return.

But in their motion to dismiss, the studios contend that the three plaintiffs “allege no facts suggesting that defendants’ actual wages (or any other element of compensation) reflect any wage-fixing agreement.” They say that the plaintiffs have only offered factual allegations that are “limited to allegations about sporadic exchanges of information.”

“None of the three named plaintiffs alleges anything about his or her compensation,” the studios said in their motion. “In short, there is no allegation about any aspect of compensation, beyond the purely conclusory allegation that compensation was suppressed.”

The studios also said that “wage surveys” are a “commonplace mechanism to increase transparency about the market and enable employers to compete in labor markets.”