Hollywood Studios Hit With Multi-Billion Dollar Class-Action Labor Suit

The Walt Disney Co., DreamWorks Animation, Digital Domain, Pixar, Lucasfilm and Sony Pictures are among the defendants in a new multi-billion dollar class-action suit contending that Hollywood studios and their vendors conspired to suppress tech workers’ wages through secret “non-poaching” agreements.  

The suit follows Breitbart News’ report of the stunning August 8 rejection by federal Judge Lucy Koh of a $399.5 million settlement as “inadequate” in a similar class-action suit, widely referred to as “High-Tech Employee Antitrust Litigation” involving 64,000 tech workers at Apple, Google, Adobe and Intel.        

The new class action lawsuit was filed by the Washington, D.C. law firm of Cohen, Milstein, Sellers & Toll in on behalf of Robert Nitsch versus DreamWorks Animation SKG Inc. in the U.S. Northern District of California (No. 5:14-cv-04062). Mr. Nitsch was a senior artist at DreamWorks Animation from 2007 to 2011. His suit claims, according to the Chicago Tribune: 

“The conspiracy deprived Plaintiff and other class members of millions of dollars which Defendants instead put to their bottom lines,” the lawsuit stated. “It did so at the same time that the films produced by these workers achieved world renown and generated billions of dollars in revenues in the United States and abroad.”

The “High-Tech Employee Antitrust Litigation” alleged that the defendant corporations entered into an “overarching conspiracy” through a series of six agreements not to solicit each other’s employees, in violation of the Sherman Antitrust Act and Clayton Antitrust Act, in order to suppress employees’ wages.  The corporations allegedly referred to the practice as a “no-poaching” agreement.  

In that case, the Court “admitted” into evidence the plaintiff’s expert testimony that the direct wage losses by workers as a result of the companies’ action was $3 billion before punitive damages that could triple the award.  

As reported by Breitbart News on August 11, the evidentiary ruling undoubtedly meant that the class-action was about to mushroom into a “broad conspiracy that could ensnare hundreds of large and small tech companies across America in a blatant fraud led by Apple to cheat tech workers out of many billions in wages.”    

Lucasfilm and Pixar were already targets of a Justice Department antitrust lawsuit in 2010, along with Apple, Google, Adobe Systems, Intel Corp. and Intuit, in which the government contended that their written “no solicitation” agreements prevented highly skilled employees from commanding higher wages and better job opportunities. The companies settled the litigation by agreeing to end the practices for a period of five years.

The suit alleges that when Disney bought Pixar in 2006, the non-solicitation agreements spread to Walt Disney Feature Animation, which Catmull headed, as well as to ImageMovers, the company founded by director Robert Zemeckis, according to a report by Variety.

A spokeswoman for DreamWorks Animation and spokesman for Sony had no immediate comment. A spokesman for the Walt Disney Co., which now owns Pixar, Lucasfilm and ILM, told The Recorder, “We believe this complaint is utterly without merit and intend to defend against it vigorously.”

The lawsuit lays out a straightforward conspiracy to establish non-solicitation agreements, “carried out by some of the most recognizable names in the American entertainment and technology industries,” including the late Apple founder Steve Jobs, Pixar President Ed Catmull; and filmmaker George Lucas.  It also contends that Jobs and DreamWorks Animation CEO Jeffrey Katzenberg “personally discussed and formed similar ‘no raid’ agreements between their companies.”  

The litigation alleges that senior human resources and talent recruiters met annually to discuss job titles to be included in an industry compensation survey. Through the meetings and other events, conspirators allegedly exchanged information that allowed them to “fix the salaries and wages of their workers within narrow ranges for the ensuing year.”

In 2006, the head of human resources at Pixar sent an email to the heads of H.R. at DreamWorks, Sony Pictures Imageworks, Lucasfilm/ILM, Disney Animation and others “to provide Pixar’s budget for salary increases in the following year, 2007, and to ask for other studios’ salary increase budgets in return,” according to Variety.

The lawsuit also quotes Lucas as saying that they “cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing.”

According to the suit, “All of the Defendants kept the agreements secret from their employees. Only their top executives and human resources and recruiting personnel involved in the conspiracy communicated about the agreements orally or in emails among themselves, and they almost always insisted that the agreements not be committed to writing.”

Last year, 147 workers in an “impacted class” of tech workers allegedly defrauded by the “no poaching conspiracy” at Lucas Films, Pixar, and Intuit settled for $136,054 each. But if the approximately 100,000 tech workers allegedly impacted by “no poaching” agreements settle on similar terms, California’s Hollywood Studios and tech giants will be sharing up to $13.64 billion in liability payouts.