Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Sony Pictures to pay $13M to settle non-poaching suit against animation studios, (May 5, 2016)

By Linda O’Brien, J.D., LL.M.

In a consolidated class action brought by three former employees against visual effects and animation studios for agreeing on wage and salary ranges and entering into non-solicitation agreements, defendant Sony Pictures has agreed to pay $13 million to settle the litigation, according to a motion for preliminary approval of the settlement filed in the federal district court of San Jose, California (In re Animation Workers Antitrust Litigation, May 3, 2016).

DreamWorks Animation, The Walt Disney Company, Lucasfilm, Pixar, ImageMovers, Sony Pictures, and Blue Sky Studios are in the business of creating visual effects and animation for motion pictures. Robert A. Nitsch, Georgia Cano, and David Wentworth were artists and engineers previously employed by one or more of the animation studios. In 2014, Nitsch, Cano, and Wentworth filed a series of class action complaints, asserting violations of Section 1 of the Sherman Act, the California Cartwright Act, and the California Unfair Competition Law (UCL). Specifically, the employees alleged that the defendants conspired to suppress employee compensation by entering into non-solicitation agreements and agreeing on salary ranges.

The plaintiffs are seeking preliminary approval of a proposed settlement under which defendants Sony Pictures has agreed to provide a lump sum payment of $13 million to the settlement fund, as well as to authenticate documents produced during discovery.

According to the plaintiffs’ motion, the proposed settlement was reached after arm’s-length negotiations conducted by informed, experienced counsel who had been involved in the litigation since its inception and reflects the risks associated with continuing the case. In particular, the plaintiffs were familiar with the strengths of the case and challenges of proceeding to trial and were guided by rulings and settlement valuations deemed fair and reasonable.

The proposed settlement satisfies the requirements under Federal Rule of Civil Procedure 23 for preliminary approval. The settlement was reached after informed, arm’s-length negotiations and extensive discovery were conducted; there were no obvious deficiencies; and the settlement did not grant preferential treatment to class representatives or segments of the class. The settlement also fell within the range of possible approval, since the amount represents 16.7 percent of the damages that the plaintiffs’ expert estimated Sony Pictures caused its employees.

The proposed class was sufficiently numerous, as there were several thousand animation and visual effects employees who worked for the defendants and there were questions of law or fact common to the class. The claims of the class representatives are typical of the claims of the class and the class representatives will fairly and adequately represent the interests of the class.

Additionally, there were questions of law or fact common to class members that predominated over any questions affecting only individual class members and a class action was superior to other available methods for the adjudication of the case.

The plaintiffs propose to preliminarily certify the class for settlement purposes defined as all animation and visual effects employees employed by the defendants in the United States who held jobs in the following time periods: Pixar (2001-2010), Lucasfilm (2001-2010), Dreamworks (2003-2010), Walt Disney Company (2004-2010), Sony (2004-2010), Blue Sky Studios (2005-2010), and ImageMovers (2007-2010).

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

Attorneys: Daniel A. Small (Cohen Milstein Sellers & Toll PLLC), Steve W. Berman (Hagens Berman Sobol Shapiro LLP), and Marc M. Seltzer (Susman Godrey LLP) for Robert A. Nitsch, Jr.

Companies: DreamWorks Animation SKG, Inc.; Pixar; Lucasfilm Ltd., LLC; The Walt Disney Company; Digital Domain 3.0, Inc.; ImageMovers; ImageMovers Digital; Sony Pictures Animation; Sony Pictures Imagesworks

News: Antitrust CaliforniaNews