First Fox’s Blue Sky Studios reached a multi-million dollar settlement and now tellingly Sony has come to an 8-figure deal to exit the on-going potential class action suit against itself, DreamWorks Animation, Pixar, LucasFilm, Disney and the now shuttered Imagemovers Digital over wage-fixing and anti-poaching allegations. The $13 million dollar Sony deal signals a major shift in the ‘toon studios’ legal strategy and could see the remaining defendants moving to make their own deals to wrap this thing up.
“Plaintiffs have reached a settlement with Defendants Sony Pictures Imageworks Inc. and Sony Pictures Animation Inc. and by early next week will file a motion for preliminary approval of this settlement,” declared a case management filing in federal court on April 29 by lawyers for plaintiffs Robert Nitsch Jr., David Wentworth and Georgia Cano (read it here).
While no details of the deal have been revealed publicly yet, I’ve learned that the settlement will see an approximately $13 million payout to the initial plaintiffs and other class members. Like the March 31 proposed Blue Sky settlement, the Sony units deal would not represent an admission of any liability or wrongdoing on the studio’s part in the class action.
Following Blue Sky’s lead, the Sony units settlement also indicate that the nearly 2-year old case may see the House of Mouse divisions and the now Comcast-purchased DWA primed to put their cards on the table too. Certainly for Jeffrey Katzenberg’s DWA, which Comcast bid $3.8 billion for late last week, a settlement would provide a regulatory advantageous clean slate moving into the closing stages of the sale.
Citing expediency, the plaintiffs’ attorneys want Judge Lucy Koh to schedule the preliminary approval hearing for the Sony settlement with the already set June 16 court appearance for the Blue Sky Studios deal. A hearing on class certification for the case is currently on the calendar for May 6.
Former DWA visual effects artist Nitsch first filed his case on September 8, 2014 with Wentworth and Cano putting their paperwork before the courts soon afterwards. “The Defendants themselves have explained the purpose of the conspiracy and in doing so, articulated the harm and injury caused by it to their workers. George Lucas explained under oath that the purpose of the non-solicitation agreement was to suppress wages and keep the visual effects industry out of “a normal industrial competitive situation,’” alleged Nitsch’s highly animated 27-page filing in the fall of 2014. “The agreement was explicitly intended to avoid ‘a bidding war with other companies because we don’t have the margins for that sort of thing.’”
With wide ranging implications for the animation industry and a pulling back of the veil of the way business is conducted, the matter has been pursued, tossed, revived and consistently opposed since Nitsch first took action in the fall of 2014.
The ‘toons studios involvement in this seemingly antitrust behavior came out of the corporate shadows in the now settled $415 million Department of Justice investigation into tech companies Apple, Google, Intel, Adobe and Intuit over their own agreement to not snag each others employees and to keep wages at a certain level.
Up until The Peanuts Movie maker Blue Sky broke ranks and settled earlier this year, the animation giants always held a united front that the case was meritless. Sony’s settlement now sees that front crumbling.
David Craig Kiernan, Robert Allan Mittelstaedt and Sarah Conway of the SF and LA offices of Jones Day represent Sony Pictures Animation and Sony Pictures Imageworks. Stephen Bomes, David Mark Goldstein, Lauren James Parker, Paul Francis Rugani and Shannon Christine Leong of the Washington DC, Seattle and San Fran offices of Orrick Herrington Sutcliffe LLP are also representing the Sony division in the matter.
Daniel A. Small of DC’s Cohen Milstein Sellers & Toll PLLC; Steve Berman of Seattle’s Hagens Berman Sobel Shapiro LLP; and Marc Seltzer of LA’s Susman Godfrey LLP are the main lawyers for Wentworth, Nitsch and Cano in the case.