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Another class action filed against Pixar, others alleging Sherman Act violations

By Kyla Asbury | Sep 29, 2014

SAN JOSE, Calif. (Legal Newsline) - A California woman is suing Pixar after she claims it violated the Sherman Act by entering into anti-solicitation and compensation-suppressing agreements with other animation studios.

The genesis of the anti-solicitation and compensation-suppressing agreements at issue was a bilateral agreement originally entered into in the 1980s by George Lucas, the founder of Lucasfilm, Pixar President Ed Catmull and Pixar CEO Steve Jobs, but this bilateral anti-solicitation agreement metastasized over the years into an industry-wide wage-fixing cartel that included the Walt Disney Company, as well as others, according to a complaint filed Sept. 17 in the U.S. District Court for the Northern District of California.

DreamWorks Animation SKG Inc., Lucasfilm Ltd.; the Walt Disney Company; Digital Domain 3.0 Inc.; Imagemovers LLC; Imagemovers Digital; Sony Pictures Animation Inc.; Sony Pictures Imageworks Inc.; Blue Sky Studios, Inc; And Does 1 through 100 were also named as defendants in the suit

Georgia Cano claims this illegal conspiracy among the defendants to not actively recruit one another’s employees in order to thereby suppress their compensation was fraudulently concealed for years.

The "illegal conspiracy" was not known to the plaintiff and class members until, in late 2010, when the Department of Justice revealed as part of its then-pending investigation into similar illegal behavior by some of the largest technology companies in the world that Pixar had also engaged in per se violations of the Sherman Act by entering into anti-poaching and wage-fixing agreements with its competitors, the complaint says.

The anti-poaching and wage-fixing agreements were made for the express purpose of depressing and/or reducing market-based compensation for class members that are typically associated with the active recruitment of employees and workers in a competitive industry, according to the suit.

"While protecting and enhancing their massive profits, defendants through their anti-poaching agreements and wage-fixing agreements deprived class members of hundreds of millions of dollars worth of compensation for which plaintiff and the class now seek relief," the complaint states.

Following Disney’s acquisition of Pixar, the ongoing mutual anti-solicitation conspiracy expanded to include new animation companies that became partners of Disney’s, such as ImageMovers, according to the suit.

Cano claims beginning in 2007, Digital Domain’s Head of Human Resources, Lala Gavgavian, and other senior personnel at Digital Domain specifically instructed employees not to cold call or otherwise solicit other defendants’ employees.

The conspiracy among the defendants was not limited to the anti-solicitation agreements - it also included activities that were designed to establish and fix compensation for workers, according to the suit.

Cano claims 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," the complaint states.

The United States Department of Justice’s Antitrust Division investigated the anti-solicitation agreement between Pixar and Lucasfilm and found that their agreement was "facially anticompetitive" and constituted a per se violation of the Sherman Act, according to the suit.

"As the DOJ explained, the agreement 'eliminated significant forms of competition to attract digital animators and, overall, substantially diminished competition to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities,'" the complaint states.

Cano claims the DOJ concluded that the agreement "disrupted the normal price-setting mechanisms that apply in the labor setting."

Defendants Pixar and Lucasfilm signed settlements enjoining them from making such anti-solicitation agreements again.

"Defendants also sought to restrain competition by agreeing to notify each other when an employee or worker from one defendant applied for a position with another defendant, and to limit counteroffers in such situations," the complaint states. "Thus, when an employee at one defendant contacted a second defendant and the second defendant decided to make an offer, it would (a) notify the first defendant, and (b) decline to increase its offer if the current employer outbid it."

Cano is seeking class certification and compensatory damages. She is being represented by Steven G. Sklaver, Kalpana Srinivasan and Matthew R. Berry of Susman Godfrey LLP; Julian Ari Hammond of Hammond Law PC; and Craig Ackermann of Ackermann & Tilajef PC.

The case is assigned to District Judge Paul Singh Grewal.

Earlier this month, a similar lawsuit was filed in the U.S. District Court for the Northern District of California.

In it, a former DreamWorks employee claimed the defendants violated antitrust laws and caused hundreds of thousands of dollars of damages to the class members.

U.S. District Court for the Northern District of California case number: 5:14-cv-04203

From Legal Newsline: Kyla Asbury can be reached at

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