Fox Scores Big Win in Netflix Poaching Suit

A judge on Wednesday handed a major win to Fox in its long-running poaching suit against its rival Netflix.

Fox sued Netflix in 2016, after two employees left to join the streaming giant. Fox alleged that Netflix had interfered with its contracts with Tara Flynn and Marcos Waltenberg, both of whom left Fox before their contracts had expired. Netflix countered that Fox’s contracts are unlawful because they force employees to stay against their will. Netflix also charged that Fox was selectively enforcing its contracts, and that other employees were allowed to leave for other employers without consequence.

The case has been closely watched, as it could affect whether any employer can hold its employees to a fixed-term agreement. In a tentative ruling on Wednesday, Judge Marc Gross sided with Fox on the major question in the litigation, finding that Netflix’s arguments against Fox’s practices don’t stand up.

“The undisputed facts show Netflix intentionally interfered with Fox’s contracts with Waltenberg and Flynn,” Gross wrote. “In doing so, Netflix arguably sought to further its own economic interest at Fox’s expense and such conduct is not justified.”

Gross held, however, that Fox had failed to show that it was damaged by Netflix’s actions. That issue will left up for a jury to decide. The case is scheduled to go to trial in January.

Daniel Petrocelli, who represented Fox, argued that Netflix has been “audacious” in its disregard for Fox’s contracts, and said that since the case was filed, another 15 Fox employees have left for Netflix.

“Employees are being poached as we speak,” he said.

Karen Johnson-McKewan, arguing for Netflix, noted that Fox has engaged in substantial layoffs since the merger with Disney this spring.

“To suggest there’s some pillaging going on here is a bit overwrought,” she said. In light of the layoffs, “It feels like crocodile tears to be complaining about a handful of employees who have left to go to Netflix.”

Gross allowed Netflix to amend its cross-complaint to make additional arguments that Fox’s contracts ought to be invalidated.

Johnson-McKewan and Petrocelli declined to comment outside court.

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