There is a good chance the nearly three-year-old legal war between Fox and Netflix over executive poaching by the streaming service will still go to trial in May. However, if new motions see the case tossed beforehand and there is no trial, the studio still owned by Rupert Murdoch says it will seeking damages of “only $1 for this cause of action with this motion.”
The “motion” is a somewhat redacted summary judgment filing that 20th Century Fox Film Corporation and Fox 21 dropped in the court docket late Friday to hit back at the similar motion Netflix fired off earlier that day.
“‘Disrupting’ Fox’s contracts by inducing their breach is unlawful in this state, as Netflix well knows,” the often colorfully worded 27-page motion from Fox outside lawyers Daniel Petrocelli, Molly Lens and David Marroso of O’Melveny & Myers LLP says near the top (read it here).
“Having no real defense, Netflix seeks to avoid liability by boldly asserting that Fox’s employment contracts -all of them- are unconscionable and against public policy, thereby permitting Netflix to freely disrupt them – all of them,” the Los Angeles Superior Court filing adds, claiming with much highlighting of the obvious that “Netflix maintained an actual poaching blueprint—an Excel spreadsheet updated over time that identifies key executives at other companies and the durations of their unexpired contracts.”
“If Netflix wants to achieve a wholesale change in California law, it must lobby the
Legislature in Sacramento rather than resort to self-help and violate the law,” the motion proclaims with some realpolitik in what has become a serious philosophical discussion in many ways. “In the meantime, this Court in Santa Monica should grant summary judgment in favor of Fox.”
Separate from the analogous and more recent dispute with Viacom, the case started back in September 2016, when Fox went after Netflix claiming it had illegally snagged executives Marcos Waltenberg and Tara Flynn and encouraged them to break their employment contracts.
Very quickly, the Reed Hastings-run streamer filed a counter-suit that declared Fox was actually engaged in unlawful and anti-competitive business practices. Pulling California law and policy into the spotlight, Netflix threw down that Fox bound its employees into restrictive fixed-term employment agreements that limit job mobility. They were agreements prospective employer Netflix considered invalid, which is a major change in the way employee contracts in California are managed.
With paperwork back and forth since the initial complaint, an unsuccessful trip to the California Court of Appeal for the now soon-to-be-Disney-owned Fox, Netflix in their own summary judgment motion of February 1 ripped Fox’s claims of unfair competition as “fundamentally flawed, exposing the unfair, abusive, and anticompetitive conduct Fox uses to hold its employees hostage.”
Not so much, said Fox in its de facto response that same day.
“Indeed, that is the very relief Netflix seeks in its cross-complaint — both a judicial declaration that the fixed-term agreements between Fox and its employees are unenforceable and an injunction preventing their further use,” Fox argues, as it seeks an April 18 hearing in front of Judge Lawrence Cho on its motion.
“In other words, Netflix, a rival competitor, wants the Court to exercise its equitable powers to invalidate hundreds of contracts to which Netflix is not a party and where the contracting parties themselves- Fox and its employees- have no interest in seeing their contracts declared invalid. This proposition is all the more perverse when considering Netflix seeks to break contracts of employees who are not before the Court and have no opportunity to be heard.”
How that hearing goes we’ll know on April 16 and April 18 if Netflix and Fox get their way on the schedule.
Netflix is represented by a team from Orrick Herrington & Sutcliffe LLP.
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