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A California federal judge has handed DreamWorks Animation, The Walt Disney Company, Sony Pictures and Blue Sky Studios a big setback in an antitrust lawsuit that examines the way that studios allegedly colluded to deny workers in the visual effects community better work opportunities and better compensation.
On Thursday, U.S. District Judge Lucy Koh denied defendants’ motion to dismiss an amended complaint just four months after she ruled that claims were barred by the statute of limitations. This time, she determines that the plaintiffs have sufficiently added details to their complaint to have adequately pled that the conspiracy was fraudulently concealed.
The lawsuits from Robert Nitsch Jr. and others followed an investigation by the U.S. Justice Department in 2010 and subsequent litigation against Pixar, Lucasfilm, Apple, Google, Adobe and Intuit. Pixar and Lucasfilm previously settled for $9 million (and are now facing new claims here), while the tech companies have been seeking approval on a settlement worth about $415 million.
The plaintiffs say that the roots of the concerted action to suppress wages and work opportunities dates back to the 1980s, when George Lucas sold his computer division to Steve Jobs, and the two plus Pixar president Ed Catmull “subsequently reached an agreement to restrain their competition for the skilled labor that worked for the two companies.”
By the middle part of last decade, other studios were allegedly brought into the fold. In 2005, a human resources manager at Pixar wrote, “With regard to [Industrial Light and Magic], Sony, Blue Sky, etc., we have no contractual obligations, but we have a gentleman’s agreement not to directly solicit/poach from their employee pool.”
Sony and Disney were said to be listed with directions not to “recruit directly” or “solicit or poach employees,” DreamWorks CEO Jeffrey Katzenberg allegedly personally discussed joining the conspiracy with Jobs, and Catmull began meeting with Sony executives to ask them to quit cold-calling employees. When a Sony recruiter contacted a Pixar employee in October 2006, Pixar’s HR manager is described as contacting her counterpart at Sony to “tell them to knock it off.”
A big part of the latest lawsuit also has to do with wages. The suing workers say that the studios met once a year at the California offices of Croner Company to “set the parameters of a compensation survey” that “provides wage and salary ranges for the studios’ technical or artistic positions, broken down by position and experience level.” The studios shared information related to budgets and discussed how overtime was handled.
The studios allegedly carried out a conspiracy “in a manner specifically designed to avoid detection,” for example avoiding detailing the agreements in written documents, making misleading statements on recruiting websites and brochures and taking actions in the prior litigation — including lying under oath and shielding documents under attorney-client privilege.
Judge Koh says it’s enough.
“Here, the Court finds that Plaintiffs’ allegations of pretextual statements regarding compensation, in combination with Plaintiffs’ allegations that Defendants actively concealed and ensured the secrecy of the conspiracy, are sufficient to allege ‘affirmative acts,'” she writes.
She adds that whether plaintiffs had “constructive knowledge” of the claims years before filing a lawsuit is an issue for trial.
Of all the companies, Sony has been the most adamant that it has done nothing wrong, that it never entered into the “gentleman’s agreement” with Pixar or the other studios.
“However, as Plaintiffs note, that Sony may have violated the alleged agreement does not disprove Sony’s involvement in the conspiracy as a matter of law,” responds the judge, noting that an absence of documents showing Sony’s involvement doesn’t let it off the hook at least at the early stage. “Indeed, if Sony were not part of the conspiracy to begin with, there would be no need for Pixar to tell Sony to “knock it off (again!).”
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