Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Document production ordered in non-poaching suit against animation studios, (Mar 28, 2016)

By Michael Menzhuber, J.D., LL.M.

In a consolidated class action, alleging a conspiracy to restrain competition for labor and reduce compensation among animation and visual effects companies, the federal district court in San Jose, California partially granted the plaintiffs’ motion to compel production of documents by Pixar, Lucasfilm, Dream Works, Walt Disney, Sony Pictures Animation, Sony Pictures Imageworks, Blue Sky Studios and ImageMovers Digital (In Re Animation Workers Antitrust Litigation, March 23, 2016, Grewal, P.).

The first category of documents requested concerned those that were sent to or received by Palmer Advantage (PA), a third-party consultant to LucasFilm. The record suggested that PA: (1) was retained by Lucasfilm to help its legal department on how best to comply with various wage and hour laws and (2) worked at the direction of in-house counsel and retained counsel in preparing the disputed documents. However, the court determined that the plaintiffs had a right to insist that these suggestions were backed up by firm evidence. Consequently, it required that Lucasfilm either serve a sworn declaration from both counsel confirming its representations or produce the 38 documents which Lucasfilm claimed were privileged.

The second category concerned documents involving Lois Scali, Pixar’s executive vice president and general counsel. The court determined that Pixar met its burden of clearing showing that she was either obtaining or providing legal advice and that her “dual status” did not deprive the disputed documents of their privileged status.

The court further determined that that documents fell within the “crime-fraud” exception to the privilege because the plaintiffs were seeking in camera review of the documents by the court, rather than production of the documents. The threshold for conducting in camera review requires only a factual showing sufficient to support a reasonable, good faith belief that review of the documents may reveal evidence to establish the claim that the crime fraud exception applied. The court found that this threshold was met because the evidence showing Scali’s involvement in Pixar’s alleged conspiracy suggested a reasonable and good faith belief that Pixar was engaged in or planning a criminal or fraudulent scheme when it sought her advice to further that scheme.

The court disregarded Pixar’s assertion that the plaintiffs were seeking “a premature merits determination” because “piercing the privilege,” let alone merely conducting an in camera review, did not reflect a merits decision.

The case is No: 5:14-cv-04062-LHK.

Attorneys: Daniel A. Small (Cohen Milstein Sellers & Toll PLLC) for Robert A. Nitsch, Jr. Daniel Glen Swanson (Gibson, Dunn & Crutcher LLP) for Dreamworks Animation SKG Inc. Emily Johnson Henn (Covington & Burling LLP) and John Watkins Keker (Keker & Van Nest LLP) for Pixar and Lucasfilm Ltd. LLC.

Companies: Dreamworks Animation SKG Inc.; Pixar; Lucasfilm Ltd. LLC

Cases: Antitrust CaliforniaNews