$168M Deal in Animators’ Wage-Fixing Case Gets Tentative OK

SAN JOSE, Calif. (CN) – A federal judge granted preliminary approval late Thursday to a $168 million settlement between animation workers and the large movie studios that colluded to suppress their wages.

Before signing order granting approval on Thursday, U.S. District Judge Lucy Koh told lawyers attending the hearing that the settlement between lead plaintiff Robert Nitsch and major animation studios including Dreamworks, Blue Sky, Sony, Pixar, Disney and Lucasfilm was fair.

“I think this is a good recovery for the class,” Koh said from the bench.

About 10,000 animation workers, past and present will get some form of recovery, according to their attorney Jeff Friedman.

If the worker in question was working in the industry from the time the “no-poach” agreements were implemented by the studios to the time they were discovered and abolished – roughly 1986 until 2014 – he or she would stand to receive $12,636, Friedman told the court.

Bob Van Nest, an attorney for Disney, also attended the hearing and told Koh the defense offers its “support for a very substantial recovery for the class and it deserves preliminary approval.”

Before Koh finally signs off on the settlement, attorney fees must be hashed out. She expressed concerns over the class’ assertions they were entitled 25 percent, similar to what was doled out in the high-tech employee antitrust litigation involving nearly identical claims.

That case, also presided over by Koh, likewise explored a no-poach agreement between high-profile companies including Silicon Valley heavyweights such as Apple, Adobe, Google, Intel, Intuit, Lucasfilm and Ebay.

According to that lawsuit, those companies agreed to not cold-call each other’s employees thereby artificially suppressing wages for a large class of employees.

The high-tech settlement, which was finalized in July 2015, disbursed $435 million to a much larger class of employees.

At the beginning of the hearing, Koh took exception to the class’ argument that the present case was riskier, saying the plaintiffs in the original case “tilled the soil.”

However, Friedman countered by saying the animation workers in this case potentially faced greater difficulties in gaining employment in the industry as a result of being perceived as antagonistic toward the corporations in question.

Friedman further argued the animation industry is smaller than the industry encompassed by the high-tech litigation and as such, the plaintiffs who were out in front of the litigation faced a greater risk of being ostracized.

Koh appeared persuaded by Friedman’s gambit, calling it a “great argument.”

However, a motion for attorney’s fees has yet to be made, so much of the jockeying at the hearing was preliminary.

Robert Nitsch – a senior character effects artist for DreamWorks and a clothes and hair technical director at Sony Pictures Imageworks – brought the initial class action in 2014, claiming major animation studios colluded to fix wages and restrict career opportunities for artists.

Nitsch was joined by other plaintiffs who said the scheme was essentially industry-wide, with nearly all the major studios conspiring to stifle wages and opportunities for animators, digital artists, software engineers and other technical workers.

Nitsch said the scheme to fix wages was launched in 1986, when Apple founder Steve Jobs bought Lucasfilm’s computer graphics division from George Lucas and created Pixar.

Nitsch said Jobs, Lucas and Pixar president Ed Catmull agreed not to cold-call each other’s employees.

He claimed Pixar and Lucasfilm agreed to notify each other when making an offer to an employee, and agreed not to offer higher pay if the current employer made a counteroffer. And, he said Jobs and Catmull spread this kind of anticompetitive agreement throughout the animation industry.

“Whenever a studio threatened to disturb the conspiracy goals of suppressing wages and salaries by recruiting employees and offering better compensation, the leaders of the conspiracy took steps to stop them,” Nitsch said in the initial complaint.

The artists said the studios’ cooperation was so thorough they emailed each other salary and budget information.

Nitsch quoted Lucas as saying that “the rule we always had [was] we cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing.”

The other studios used similar practices and pay structures, according to Nitsch’s complaint.

After a Justice Department investigation, Pixar and Lucasfilm signed settlements prohibiting them from making such non-solicitation agreements. But Nitsch said the practice continued.

Dreamworks settled for $50 million, while Sony agreed to disburse about $13 million and Blue Sky agreed to pay about $6 million.

The “Disney defendants” which include Pixar and Lucasfilm – current subsidiaries of the Walt Disney Corporation but were separate entities at the inception of the wage-suppression scheme – agreed to pay $100 million.

Friedman works for Hagens Berman Sobol Shapiro in Berkeley, California. Van Nest works for Keker and Van Nest in San Francisco.

 

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