Disney, Sony and Dreamworks sued in class action for conspiring to supress wages

Posted on: September 18th, 2014 by Steve Larson
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Walt-Disney-LogoA lawsuit filed in U.S. District Court in San Jose, California, names a number of employers of technical and creative employees as defendants.  The putative class action alleges that the defendants agreed not to poach employees from one another, in order to keep wages down. 

Disney had already reached a $9 million settlement with salaried employees in July 2013 as part of a broader class action lawsuit over no-raid agreements in the California technology industry.

The proposed class in the new lawsuit consists of “technical, artistic, creative and/or research and development” employees and is not restricted to salaried employees.  The lawsuit alleges that the conspiracy in the animation industry dates back to 1986, when Lucasfilm Ltd and Pixar, now both part of Disney, agreed not to cold call each other’s employees and not to outbid each other’s pay offers, according to the complaint.  Other defendants entered into similar agreements with one another by the mid-2000s or even earlier, according to the complaint.

The lawsuit points to numerous emails from company executives referring to no-raid agreements. In one 2007 email, Pixar president Ed Catmull is quoted as saying that poaching each others’ employees with higher pay offers “seriously messes up the pay structure.”  In another email, Catmull is quoted as saying that the animation companies had “avoided wars” because they had “conscientiously avoided raiding each other.”  Catmull acted as an enforcer, according to the complaint, urging other companies to stick to the no-raid rule even when they weren’t directly threatening Pixar.

The new lawsuit comes about a month after U.S. District Judge Lucy Koh in San Jose refused to approve a proposed $324.5 million settlement in the broader tech industry suit, partly because she found recovery for the class members would be too low compared with the Disney settlement approved earlier. Defendants in that case, including Google Inc. and Apple Inc. are appealing her ruling.