Disney and DreamWorks Animation Want Appeals Court to Stop Fight With 10,000 Animation Workers

The studios make a big bid to pause a legal fight to get clarity on an issue that could impact the certifications of class actions.
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Jack Black seen promoting DreamWorks Animation's 'Kung Fu Panda' franchise.

If The Walt Disney Company and DreamWorks Animation get their way in a new move made on Thursday, workers who have been denied better job opportunities because of long-ago collusive behavior could find it more difficult to organize a class action antitrust lawsuit.

The companies as well as their subsidiaries are presently facing legal action over agreements made with each other not to poach workers in the animation industry. These pacts were six years ago the subject of a Justice Department investigation, a settlement with the government and many follow-up civil lawsuits. Late last month, U.S. District Judge Lucy H. Koh agreed to certify a class action (with some caveats) over antitrust claims between 2004 and 2010 with the potential for a trial where Disney and DreamWorks could face damages in the tens or even hundreds of millions of dollars. After all, Sony Pictures recently agreed to a proposed $13 million settlement while Fox's Blue Sky Studios agreed to a $5.9 million deal to resolve claims.

Now, the studios with skin left in the game have asked for permission for an interlocutory appeal, meaning one that would be heard before the 9th Circuit before the case ever gets to trial. And in a further sign of the high stakes, the appellate team is being led by Gibson Dunn heavyweight Ted Boutrous.

It's a bedrock principle that the statute of limitations on federal antitrust claims is four years, but plaintiffs who are stymied by fraudulent concealment may sue past this time upon discovery of the wrongs. The difficulty arises in figuring out on how to square this when plaintiffs are suing as a collective. As appellants' petition puts it, "This closely watched case raises an important question on a recurring issue impacting a wide range of class actions: Under what circumstances is class certification appropriate where, as here, all class members’ claims are time-barred unless they can establish tolling through fraudulent concealment?"

In putative class actions, when a judge is presented with claims of an individualized nature, it's often reason to deny class certification.

In this case brought on behalf of some 10,000 visual effects workers, Disney and DreamWorks say that "many class members here had actual knowledge of their claims years before this action was filed is no mere hypothetical, as the alleged conspiracy was openly discussed in an extraordinary record of meetings, blog posts, and emails."

They point to two of the named plaintiffs as exemplar of the supposed knowledge.

Robert Nitsch, a former visual effects worker who worked on Matrix Revolutions and Kung Fu Panda, received an email in 2008 entitled “collusion?” stating that “apparently, ilm [Industrial Light & Magic] and imd [ImageMovers Digital] have an agreement they will inform each other when they are interviewing each other’s employees. how illegal is this?"

And David Wentworth, who worked on Hellboy and Enchanted, read an old Facebook post during his deposition where another visual effects worker recounted an all-hands meeting at ImageMovers Digital where an all-hands meeting at the company was recounted with someone there acknowledging a no-poaching agreement. The poster wrote being "slightly shocked to hear this admitted to so publicly," and Wentworth commented, “I remember thinking the same thing.”

In certifying the class, Judge Koh waived off such evidence that plaintiffs knew of potential claims many years before they sued, writing in her opinion that  “the number of class members for whom Defendants identify such evidence is small" and that “the relatively small number of individual inquiries which might be required do not defeat predominance.”

Disney and DreamWorks may still use a statute of limitations defense, but the judge wouldn't let it stop class certification. Instead, the issue of whether antitrust claims are time-barred is set to be tested at trial in some fashion, perhaps a proceeding where plaintiffs must first show their claims are ripe by proving fraudulent concealment of the anti-poaching pacts on the part of the studios. But that's not good enough for the defendants who now aim to pause the litigation to get appellate review on whether certification is permissible here.

The appellate brief (read here) presents the issue as an important, unsettled issue of law.

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