Lawsuit says Disney, Sony, others conspired to suppress wages

  • Reuters
  • Updated: Sep 09, 2014 15:02 IST

A federal lawsuit filed on Monday accuses Walt Disney Co, Sony Pictures and other leaders in special effects and animation of conspiring to suppress wages in the industry through "no-raid" agreements.

The lawsuit filed in US District Court in San Jose, California, also names DreamWorks Animation SKG Inc, Digital Domain 3.0 and ImageMovers LLC as defendants.
The proposed class action alleges that the defendants agreed not to poach employees from one another, artificially depressing wages.

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.
In addition to the no-raid agreements, the lawsuit alleges that the companies' senior human resources and recruiting personnel met yearly to compare employee pay.

A Disney spokesman said the suit was without merit and the company would defend it vigorously. A DreamWorks spokeswoman declined to comment.

The new lawsuit comes about a month after US 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.

The case is Nitsch v. DreamWorks Animation SKG Inc et al, US District Court, Northern District of California, No. 5:14-cv-04062.

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