Fox And Netflix’s Executive-Poaching Lawsuit Hits Court

20th Century Fox; Netflix

Oral arguments were heard today in a legal battle between media giants 20th Century Fox and Netflix over the right of contracted employees to seek better jobs elsewhere and Fox’s right to enforce fixed-term contracts it has with its employees that prevent them from going to work for competitors like Netflix.

Last September, Fox sued Netflix for “poaching” two of its executives — Marcos Waltenberg and Tara Flynn – who’d left to join Netflix while still under contract to Fox. Netflix counter-sued, claiming Fox’s fixed-term contracts violate state law.

In court Thursday, Fox attorney Daniel Petrocelli told Los Angeles Superior Court Judge Gerald Rosenberg that Netflix has “no conceivable standing to bring this complaint” because Fox has every legal right to enforce its contracts with its own employees.

Netflix attorney Karen Johnson-McKewan argued that Fox’s “ecosystem of fixed-term contracts” are “unlawfully restrictive” and if allowed to be enforced, would have “a chilling effect on employees’ mobility to prevent them from leaving.”

She noted that while fixed-term contracts have been ruled legal for “recording artists, athletes and movie stars,” they are not enforceable for “rank-and-file” workers, who typically are considered “at-will employees” – meaning that even though they sign employment contracts, are free to leave anytime they like.

The judge is expected to rule later today or tomorrow on Fox’s motion to toss out Netflix’s cross-complaint or send the case to trial. On Wednesday, he issued a tentative ruling that denied Fox’s motion to strike Netflix’s cross-complaint.

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