Fox-Netflix Poaching Battle All but Certain to Avoid Trial

Fox drops two of its three claims against the streaming giant.
Illustration By Paul Hoppe

Disney's Fox unit has dropped two interference claims against Netflix. The move, made official in court papers filed Dec. 24, represents something other than a Christmas gift for the streamer whose recruitment of entertainment executives under contract set off a high-stakes legal battle. Instead, Fox's dropped claims all but guarantees there will be no trial in January. The two companies are likely to move to the appellate stage sooner rather than later.

Fox sued back in September 2016 upon the flight of production executive Tara Flynn and marketing executive Marcos Waltenberg. Netflix responded with a countersuit alleging that the executives' respective Fox employment contracts were unenforceable under California laws forbidding contracts that extended beyond seven years of personal service or restrained someone from engaging in a profession.

The victory in the case largely went to Fox after Los Angeles Superior Court Judge Marc Gross concluded the contracts weren't invalid. Although the judge ruled that Fox needed to prove damages in order to succeed on tortious interference claims, Fox won summary judgment on its unfair business practices claim and convinced the judge to issue an injunction that prevented Netflix from further recruiting its executives under contract.

Fox could have pursued victories on the interference claims at a trial (which, at the moment, is still scheduled for Jan. 27), but the message to Netflix from the earned injunction was more important than any monetary recovery. Plus, going to trial would likely mean airing some secrets about its business.

Instead, the two sides have come to a small agreement that will set the path going forward.

Fox drops the interference claims, according to a stipulation between the parties, and the decision to do so won't become grounds for Netflix to challenge the summary judgment on the unfair business practices claim. However, Netflix is still allowed to argue that the judge's prior finding of a triable issue of fact regarding damages bars summary judgment for Fox on the unfair business practices claim. 

What this really means is that there is no weighing of evidence remaining to decide. A trial won't be needed. Judge Gross can decide whether to reverse himself on the unfair business practices ruling as a matter of law, but more important, both sides are just about ready to take their arguments to California's Second Appellate District.