Netflix Sued by Activision for Poaching CFO

Netflix Office Photo -Sunset Blvd. - Publicity 1-H 2020
Courtesy of Netflix

Netflix is facing another executive poaching lawsuit, this time from gaming giant Activision Blizzard over the departure of CFO Spencer Neumann.

Activision claims Netflix induced Neumann to breach his employment contract while the CFO was actively involved in negotiations with the streamer on the game company's behalf. This marks the third major entertainment company, following Fox and Viacom, to allege Netflix is illegally poaching employees.

Neumann had been with Activision Blizzard for just 18 months when, in late 2018, the gaming giant revealed via securities filing that it was putting the executive on leave with the intent to fire him. Netflix, which is known to be ruthless when it comes to saying goodbye to veteran executives, later revealed that it had hired Neumann to replace longtime CFO David Wells. Prior to joining Activision, Neumann held senior roles at Disney and Providence Equity Partners.

"Netflix’s unlawful behavior with regards to Neumann is no anomaly," writes attorney Daniel Petrocelli of O'Melveny & Myers in the complaint, which is posted below. "To the contrary, Netflix has a demonstrated pattern of caring only about attracting and employing whoever Netflix wants, regardless of whether it violates the law along the way."

Petrocelli — who represented Fox in its successful poaching suit against Netflix — argues that Neumann's employment agreement bound him to work for Activision until at least April 30, 2020, and Netflix was not only aware of the contract but also offered to pay the CFO's legal fees if he got sued over his exit.

Activision also alleges that Netflix CEO Reed Hastings was "personally involved" in Neumann's recruitment and hiring, which shows that "Netflix’s tortious and unethical conduct is intentional and a directive 'from the top.'"

Activision is suing for intentional interference with contract, unfair competition, and aiding and abetting breach of fiduciary duty. It's seeking compensatory and punitive damages and a permanent injunction barring Netflix from soliciting its employees who are under contract.

Meanwhile, there's a hearing on a motion for summary judgment in Netflix's dispute with Viacom next week and an appeal pending in its battle with Fox.

Netflix hasn't yet replied to a request for comment on the complaint, but its position in court has been that these kinds of executive contracts are unenforceable under California law.