11:33am PT by Eriq Gardner
Viacom Sues Netflix for Employee Poaching
Viacom has filed a lawsuit alleging that Netflix induced one of its employees to break contract to join the streaming giant. The case, lodged in Los Angeles Superior Court last week, continues to explode the issue of the legality of fixed-term employment contracts.
Netflix is already being sued by 20th Century Fox Film Corporation — set to be acquired by Disney — over the poaching of two executives. In June, a California appeals court gave the green light for Netflix to assert counterclaims challenging Fox's alleged bullying of employees into "take-it-or-leave-it" deals. Netflix contends these types of fixed contracts restrain employee mobility and create unlawful barriers to entry in violation of California Business and Professions Code Section 16600. A trial in the case is scheduled for next summer.
Now comes a new lawsuit alleging tortious interference and unfair competition from Viacom, upset over the flight of TV production executive Momita Sengupta, who according to the complaint, had a contract offering exclusive services with a term that began in April 2017 and wasn't set to expire until April 2020.
"Netflix — in an effort to illegally augment its own workforce by 'cherry-picking' employees from other entertainment companies regardless of the nature of their ongoing contractual obligations to their current employer — became aware of Sengupta's employment and existence of her enforceable, ongoing Employment Agreement with Viacom in or around the summer of 2018," states the complaint.
Sengupta gave notice in late September, and Viacom says it then warned both Sengupta and Netflix of ongoing contractual obligations.
"Notwithstanding Viacom's express and unambiguous written communications to both Sengupta and Netflix, Netflix not only refused to rescind its offer of employment, but continued its ongoing activity to induce Sengupta to breach and interfere with her Employment Agreement with Viacom, including providing her with an attorney to respond directly to Viacom's letter, and thereafter proceeded to employ Sengupta," continues the suit. "Moreover, Netflix made clear its intent to continue a campaign of targeting and poaching other Viacom executives despite the existence of enforceable term employment agreements between Viacom and its executives by threatening Viacom that Netflix does 'not regard this dispute to be limited to Ms. Sengupta.'"
It's possible that Viacom's suit gets consolidated with Fox's, given that both tread on similar subject matter.
Viacom is being represented by Proskauer attorney Anthony Oncidi, who just so happens to be representing Creative Artists Agency in lawsuits and arbitration after several of its agents were poached by United Talent Agency. Viacom is demanding a permanent injunction and monetary damages.