Disney, Pixar named in class action alleging antitrust law violations

By Kyla Asbury | Sep 15, 2014

SAN FRANCISCO (Legal Newsline) - A former senior character effects artist is suing DreamWorks Animation and other companies he claims "conspired to systematically suppress the wages and salaries of those who they claim to prize as their greatest assets."

Robert A. Nitsch Jr., who was employed by DreamWorks from 2007 until 2011 and was previously employed as a cloth/hair technical director for Sony Pictures Imageworks in 2004, named DreamWorks Animation SKG Inc.; Pixar; Lucasfilm Ltd LLC; the Walt Disney Company; Digital Domain 3.0 Inc.; ImageMovers; ImageMovers Digital; Sony Pictures Animation; and Sony Pictures Imageworks as defendants in the suit.

Nitsch claims the defendants violated antitrust laws and secretly agreed to work together to deprive thousands of their workers of better wages and opportunities to advance their careers at other companies, according to a complaint filed Sept. 8 in the U.S. District Court for the Northern District of California.

These workers include animators, digital artists, software engineers and other technical and artistic workers who are the creative genius and dedicated workhorses behind such films as Wall-E, the Shrek series, the Harry Potter adaptations and the Transformers series, among others, according to the suit.

"The conspiracy deprived plaintiff and other class members of millions of dollars, which defendants instead put to their bottom lines," the complaint states. "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."

Nitsch claims, with Steve Jobs as its CEO, Pixar agreed with Lucasfilm that they would not cold call each other’s employees; they would notify the other company when making an offer to an employee of the other company, if that employee applied for a job notwithstanding the agreement not to cold call; and the company making such an offer would not increase its offer if the company currently employing the employee made a counteroffer.

Such an agreement is referred to as a non-solicitation agreement, according to the suit.

"Jobs led Pixar as CEO until 2006, during which time he and [Ed] Catmull worked to spread the conspiracy and these types of anti-competitive agreements throughout the visual effects and animation industry," the complaint states.

By no later than 2004, Jobs and the CEO of DreamWorks Animation, Jeffrey Katzenberg, had personally discussed and formed similar "no raid" agreements between their companies, according to the suit.

"As Catmull explicitly acknowledged in an email: 'we have an agreement with DreamWorks not to actively pursue each others employees.' Catmull acknowledged under oath that Jobs and Katzenberg discussed the subject and that the two companies weren’t 'going after each other,'" the complaint states.

Nitsch claims when the Walt Disney Company purchased Pixar in 2006, the non-solicitation agreements spread to Disney’s other animation studios, including Walt Disney Feature Animation.

"Indeed, Disney quickly made Catmull — one of the architects and chief drivers of the scheme — the President of both Walt Disney Feature Animation and DisneyToons," the complaint states. "Together with Dick Cook, then the Chairman of Walt Disney Studios, Catmull soon formed a non-solicitation agreement with ImageMovers, a company founded by director Robert Zemeckis in 1997."

Catmull and other leaders of the conspiracy policed any violation of the conspiracy, even when it did not directly involve efforts to recruit their own employees, according to the suit.

Nitsch claims whenever a studio threatened to disturb the conspiracy’s goals of suppressing wages and salaries by recruiting employees and offering better compensation, the leaders of the conspiracy took steps to stop them for the anti-competitive benefit of all conspirators.

"The intent of the conspiracy was to suppress wages throughout the industry," the complaint states. "As Catmull later explained under oath, his concern about 'mess[ing] up the pay structure' was that it would make it 'very high.'"

The cooperation among the defendants was so systematic and deeply ingrained that in some instances, many conspirators were on the same e-mails concerning compensation for their workers, according to the suit.

"We believe there are important rights at stake in this case, and we will work hard to vindicate them," plaintiff's attorney Daniel Small said.

Nitsch is seeking class certification and compensatory damages with pre- and post-judgment interest. He is being represented by Small, Brent W. Johnson, Jeffrey B. Dubner, Matthew Ruan and George Farah of Cohen Milstein Sellers & Toll PLLC; and Bruce Spiva of the Spiva Law Firm PLLC; Richard L. Grossman of Pillsburg & Coleman LLP.

The case is assigned to District Judge Vince Chhabria.

Lucasfilm and Pixar were targets of a U.S. Department of Justice antitrust lawsuit in 2010, along with Apple, Google, Adobe Systems, Intel Corp. and Intuit, in which the government contended that their "no solicitation" agreements prevented highly skilled employees from commanding better wages and job opportunities.

The companies settled the litigation by agreeing to end such practices for a period of five years.

U.S. District Court for the Northern District of California case number: 3:14-cv-04062

From Legal Newsline: Kyla Asbury can be reached at classactions@legalnewsline.com.

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