Who knew that cartoons had such a dirty underbelly? There’s a vicious battle going on in the world of Hollywood computer animation and visual effects– a world so small that it’s apparently been pretty easy for a few companies to engage in illegal anti-poaching agreements, i.e., agreements not to hire employees from one another and/or compete over wages.
A new class action lawsuit about this practice has been filed against “DreamWorks, Disney's Pixar and Lucasfilm units, Sony Pictures and others” by an ex- visual effects worker at DreamWorks Animation named Robert Nitsch Jr. Mr. Nitsch says, “the studios and other visual effects and animation companies conspired to suppress wages via ‘non-poaching’ agreements between the companies.” This lawsuit comes on the heels of a 2010 DOJ case against “Pixar and Lucasfilm, as well as companies in the tech sector like Apple, Google, Adobe and Intuit, over anti-poaching agreements” and a 2011 class action. During that litigation, says Variety,
[E]mails 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.
THR writes that Judge Koh believed the $325 million settlement “wasn’t enough.” In addition, the judge “seemingly accepted that a conspiracy took place and cited ‘substantial and compelling’ evidence like an email from George Lucas, stating, ‘We cannot get into a bidding war with other companies because we don't have the margin for that sort of thing.’”
This article describes in a little more detail why “that sort of thing” got Mr. Lucas and others in such trouble. Specifically,
Pixar and Lucasfilm had a longstanding, secret agreement to control their computer specialists’ wages and mobility by not recruiting each other’s employees, and by agreeing not to “bid up” salary offers should an employee be considering both companies.
The agreement, originally forged between George Lucas, Pixar president Ed Catmull and Pixar CEO Steve Jobs in the mid-1980s, was illegal, a violation of the Sherman Antitrust Act. But to the executives and owners looking to maximize profits, the wage-fixing agreement worked, and so it would last for nearly a quarter of a century, spreading across Silicon Valley and across industries and oceans, until the Department of Justice’s antitrust division busted it open in 2010.
Sony’s entrance into the CGI film studio market in 2002 threatened to upset the wage-fixing cartel. As we reported, documents show that Pixar and Lucasfilm had become adept at roping other computer animation film studio outfits into the wage-theft agreement, including Dreamworks Animation. And yet Sony had always remained a standout.
In one email, a Pixar senior recruiter, Dawn Haagstad, writes to Pixar’s HR department an internal email subject headed “Studio Relationships” that describes Sony as:
“They’re ruthless! They’ve called employees directly about applying for positions even though they know we don’t engage in poaching.”
When think Pixar, I think Toy Story or Finding Nemo – usually not words like “ruthless.” So there you go. Dirty underbelly. Disenchanting, right?
Writes Variety, the lawsuit.
[L]ays 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.…
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.”
THR’s article lists some concerns about whether this particular class action will be able to go forward:
Pixar and Lucasfilm made their settlement last September with the intention of resolving their legal difficulties on this front. When Judge Koh signed off on the deal, class members were told they had to explicitly opt-out or be legally bound into releasing claims. Nitsch's lawsuit admits that his proposed class excludes the prior class and is rather vague on how the latest claims against Pixar and Lucasfilm represent something new. Nevertheless, the lawsuit asserts that the proposed class contains thousands of members.
Much of the latest lawsuit pertains to actions by executives at Pixar and Lucasfilm, but the complaint names Dreamworks, Sony, Disney, Digital Domain and ImageMovers as defendants too. Is the complaint pled with sufficient specific facts to support claims against these defendants?
And there may be a statute of limitations hurdle, as well.