Netflix Takes Near TKO In Exec Poaching Suit With Fox & Disney; Could Signal Beginning Of The End Of Legal War


(UPDATED WITH TENTATIVE RULING BEING MADE FINAL) Turns out that Netflix’s invoking Olivia de Havilland in its long legal tussle with Fox and now Disney over snagging executives a few years back and pushing back against employment contracts did the streamer about as much good as the two-time Oscar winner’s unsuccessful feud with FX over Feud.

“This court does not believe the overall legislative intent behind Labor Code §2855(a) would be served by the blanket ruling Netflix seeks, one that would prohibit all employees under contract in any business or context from engaging in continuous employment with the same employer for more than seven years,” a tentative decision from a Los Angeles Superior Court judge wrote Wednesday.

Coming just before a hearing in Santa Monica this morning, the left hook by Judge Marc Gross slams the always wide-swinging argument by the Reed Hastings-run company that the agreements now Netflix promotions and drama programming development bigwigs Marco Waltenberg and Tara Flynn had with their former employers at Fox were enforceable.

It’s not over yet, but, with some loose ends and potential appeal to be dealt with, what went down on Wednesday essentially sends Netflix to the mat on this one.

“Netflix is, in effect, asking this court to look solely to the length of each employee’s tenure with Fox as determinative,” the tentative adds. “However, Netflix, in making this argument, does not address the difference between the length of time someone has worked for a company and the term of any specific employment contract.”

Neither Netflix nor the now Disney-owned Fox studio responded to Deadline’s request for comment on today’s developments. As of now, a trial date for early next year stands and it seems the streamer is going for that despite Judge Gross adopting his tentative as a final ruling. As Fox took a bit of a miss on convincing the judge that they actually saw real damages from the two employees leaving for streaming pastures, Netflix also have been given the opportunity to re-plead in a new filing their counterclaims on the Fox fixed-term contracts and declaratory relief.

Distinct from a more recent and ongoing dispute of a similar nature with Viacom, this Netflix clash with the studio once owned by Rupert Murdoch kicked off back in September 2016. At that time, Fox went after the streamer alleging it had illegally snagged executives Waltenberg and Flynn and, in the process, encouraged the duo to shatter their employment contracts —  a POV that Gross agreed with today.

With near light-speed response, Netflix filed a counter-suit proclaiming Fox was actually engaged in unlawful and anti-competitive business practices itself. Pulling California law and policy into the spotlight plus the famed de Havilland seven-year precedent, Netflix argued that Fox tied its staff into restrictive fixed-term employment agreements that limit job mobility. They were agreements prospective employer Netflix considered invalid, which if true would force a major change in the way employee contracts in California are managed.

A near constant flow of filings and hearings, a failing Fox spurned on visit to the California Court of Appeal, a change of some ownership on the Fox side, dueling summery judgements back in February and a promise that the original plaintiff would only seek $1 in damages have held sway in the case up until today – where things could go in a very definitive direction.

The Fox/Disney assets are represented by Daniel Petrocelli, Molly Lens and David Marroso of O’Melveny & Myers LLP. Netflix’s outside counsel is a crew from Orrick Herrington & Sutcliffe LLP.

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