EXCLUSIVE: Things between Netflix and 20th Century Fox got very personal today over personnel at the heart of Fox’s claims that the streaming service “illegally” poached two of its executives. With allegations of immigration status threats, salary low-balling and Fox brass calling “Netflix is public enemy number one,” the home of House of Cards on Thursday filed paperwork in Los Angeles Superior Court opposing Fox’s efforts to blunt its cross-complaint in what looks to become a legal Battle of the Somme.
Back on September 19, 20th Century Fox and Fox 21 TV Studios, run by Bert Salke, went after Netflix in a lawsuit alleging intentional interference with contractual relations after the streaming service hired Marco Waltenberg and Tara Flynn, even though both execs were still under contract at Fox. Needless to say, Netflix didn’t take the shot across the employment-contract bow lightly and, several filings later, fired back today with even more brazen vigor.
“I gave notice of my intention to leave Fox 21 in a conversation with Mr. Salke on about August 17, 2016,” says Flynn of her intent to take up Netflix’s on its offer of employment as a Director in the Originals department in a declaration submitted Thursday, part of a slew of filings from Netflix lawyers. “Mr. Salke responded by telling me ‘they are not going to let you out of your contract,’ ” she added. “When I told Mr. Salke I was not asking for his permission, but was leaving, he asked where I was going. When I told him I had accepted a job with Netflix, he told me ‘Netflix is public enemy number one.’ ”
Waltenberg, now a Director of Partner Marketing for Latin America at Netflix, lays out a similar tale of a harsh environment at Twentieth Century Fox Film Corp in his declaration filed January 3 — in his case financially and geographically.
“In 2012, I asked my supervisor for a raise,” said Waltenberg, who spent almost a decade at Fox Film starting in Brazil and in Los Angeles since 2008. “At the time, I was in the U.S. under a visa, but was nearing the time when that visa could not be further renewed,” he notes. “I needed a green card to remain in the U.S. and continue working here. As I understood it, my employer needed to participate as a sponsor for the green card. In response, the head of Human Resources for the International division at the time, told me that not only would I not get a raise, ‘the company had no obligation to sponsor my green card, and that it was not company policy to sponsor all green cards,’ or words to that effect,” Waltenberg added. “II was shocked by the statement, and understood that she was threatening to have me deported from the U.S. I withdrew the request for a raise, and I received my green card in August of 2013.”
The notion of threat also arose for Waltenberg in November 2015, when he told his Fox bosses of his aim to exit for Netflix – where he says “my compensation …would be more than twice what I had to accept at TCFFC.”
“I asked to speak to the chain of command on that decision, and started by speaking with the President of International Marketing, who was my supervisor’s immediate superior,” says Waltenberg in his declaration. “He told me that ‘we are never going to let you out of your contract; Netflix is coming after everyone in this floor,’ ” the declaration states. “He also told me that he heard that Netflix is a tough place to work, and that I would be unhappy there.”
A suspended Waltenberg was escorted out the TCFFC building on January 15, 2016 and told to “think about” his situation and return to work the following week. He started working at Netflix on January 25, 2016.
Seeking a better deal at Fox 21 with legal help is what seemed to be the tipping point for Flynn back in 2012.
“When Mr. Salke learned that I had engaged counsel, and was proposing to negotiate different terms than were in the Fox 21 proposal, he called me into his office and screamed at me, and accused me of causing problems by hiring an attorney, and for attempting to negotiate the terms of the contract being proposed to me,” Flynn says of her first round of talks with Fox 21 after she was offered a deal that essentially “locked” her into an executive gig at the joint for three years with a salary of $75,000. “He instructed me to take what the company was offering,” Flynn adds, noting that two male employees who previously held her position were paid considerably more.
Eventually, after several high-wire contract talks and extension options over the next three years, Flynn ended up with a salary offer of $190,000 – far less than the $250,000 she thought she deserved and, though she accepted the deal in August 2015, it left her seeking to broaden her employment horizons outside of Fox.
Both Waltenberg and Flynn’s declarations outline a prolonged and unpleasant process of trying to extricate themselves from their respective Fox contracts with repeated assertions by bigwigs at the studio that they wouldn’t be let go as they desired.
“Netflix’s action is not based on Fox’s litigation activity,” said Netflix in its 18-page opposition Thursday to Fox’s December 7 demurrer and anti-SLAPP motion against the streaming service’s October 19 cross-complaint. “Instead,” the filing at Santa Monica courthouse today continues, “it centers on Fox’s widespread use of unlawful fixed-term employment agreements with business employees who do not provide services of a special, unique, unusual, extraordinary, or of intellectual character, as defined by California law.” In language familiar to those familiar with the paperwork back and forth so far in this matter, Netflix’s attorneys added, “Fox’s use of, and practices associated with, the fixed-term agreements violate Business and Professions Code § 16600, which codifies California’s strong public policy favoring employee mobility.”
“Fox’s widespread use of these unlawful contracts not only restrains employee mobility, it also depresses wages, chills competition, and unfairly harms competitors like Netflix, who do not engage in such unlawful conduct,” the streaming service notes.
“These contracts, which are based on a model developed for studio talent in the 1940s, and which Fox now has extended over time to unlawfully bind rank-and-file corporate employees, suppress employee mobility, to Netflix’s detriment,” the 17-page anti-SLAPP opposition filing also notes. “Fox’s misleading and unjustified characterization of the Cross-Complaint leaves all of this out, selecting instead a collection of stray phrases, stripped of their context in the pleading.”
With obvious wider employment law implications for California, a hearing on the motions is scheduled for January 19. However, I’m hearing that might now be delayed.
Orrick, Herrington & Sutcliffe LLP’s Lynne Hermle and Karen Johnson-McKewan are representing Netflix in the matter. Having just come off working for President-elect Donald Trump in his now-settled messy Trump University case, Daniel Petrocelli of O’Melveny & Myers LLP is representing the Fox parties, with O’Melveny & Myers’ Molly Lens and J. Hardy Ehlers also working on the case.