Sony Agrees to Cooperate in Anti-Poaching Suit Against Disney

Sony Pictures Entertainment Studios - H 2014
AP Images

Sony Pictures Entertainment Studios - H 2014

To settle claims that it struck a secret deal with other studios to suppress wages and work opportunities in the animation industry, Sony Pictures has agreed to pay out $13 million. Perhaps more intriguingly, Sony is promising to help out plaintiffs who continue to pursue Disney in an ongoing putative class action.

The lawsuit emanates from a pact that George Lucas reached with Steve Jobs in the 1980s. At the time, the two agreed to restrain competition for skilled labor at both Pixar and Lucasfilm. Over time, more companies are said to have jointed into a "gentleman's agreement" not to cold call each other's employees, provide notifications when providing job offers and make no counteroffers. In 2010, after an antitrust investigation, the Justice Department reached a settlement with Apple, Google, Intel, Adobe and Pixar that forbade the anti-poaching pacts. Then, civil lawsuits began. The tech companies made a $415 million settlement with former employees, while Pixar and Lucasfilm arrived at a $9 million deal.

In September 2014, more lawsuits came against Disney's Pixar and Lucasfilm units, Sony Pictures, Blue Sky Studios and others. The actions were eventually consolidated, and U.S. District Court Judge Lucy Koh ruled against a motion to dismiss.

At the time, Sony was adamant that it had done nothing wrong. According to its court papers, "To the contrary, the picture that emerges from the CAC, and the record it relies upon, is not that Sony Pictures entered into nonsolicitation agreements, but that Sony Pictures consistently engaged in aggressive recruiting practices."

But on Tuesday, the plaintiffs told the judge that Sony had agreed to a $13 million lump-sum payment to the settlement fund. According to a motion in support, the money represents approximately 16.7 percent of the $78 million in damages calculated by its expert. That's a low percentage, but the plaintiffs point to the unpredictability of juries, a potential appeal and the hotly contested issue of whether the statute of limitations precludes claims over nearly decade-old activity. Further, the plaintiffs say that "some evidence shows there were concerns among other co-conspirators that Sony Pictures was 'cheating' and at times not fully abiding by the terms of the no-poach agreement," which could have aided the studio's defense of the collusion charges.

The plaintiffs led by attorneys at Cohen Milstein and Hagens Bergman also are trumpeting another aspect of the proposed settlement — Sony's forthcoming help in getting the legal action certified as a class action and aid at trial.

"The Settlement provides the additional consideration that Sony Pictures will cooperate with plaintiffs to prepare a declaration for all documents produced by Sony Pictures in this case that appear on plaintiffs’ trial exhibit list and provide no voluntary cooperation to the other defendants," states the plaintiffs' motion in support of a settlement that will require the judge's approval.

Class certification is the next big fight in this dispute. At a hearing set for Friday, Judge Koh has directed the plaintiffs to address questions including the following:

— The entire class has to overcome the statute of limitations using fraudulent concealment. Does this distinction alter the balance in favor of the individual questions?

— How to deal with putative class members who released claims as part of the earlier $9 million settlement or who are beholden to arbitration agreements?

— What to do if the judge finds that activity prior to 2004 may not be included in the claims?

Besides Disney, DreamWorks Animation also is a defendant in this lawsuit.