Cartoon Studios Can’t Escape Animators’ Suit

     SAN JOSE, Calif. (CN) – DreamWorks, Disney, Sony and six other visual-effects studios for a second time cannot escape a class action accusing them of illegally conspiring to suppress wages.
     Former animators and other employees filed several lawsuits, which were consolidated into a class action, claiming that the studios stifled competition by agreeing not to cold call each others’ employees and by setting wage and salary ranges among themselves.
     U.S. District Judge Lucy Koh dismissed the lawsuit earlier this year after finding that the employees did not file the complaint within the four-year statute of limitations and failed to adequately plead a “fraudulent concealment” theory.
     However, the employees amended their complaint to sufficiently allege that the studios actively concealed their conspiracy, leading Koh to reject dismissal requests by
     DreamWorks Animation, Walt Disney Company, Lucasfilm, Pixar, ImageMovers, Two Pic, Sony Pictures Animation, Sony Pictures Imageworks, and Blue Sky Studios.
     Ashley Bede, an attorney for the employees, said her clients “appreciate Judge Koh’s lengthy and detailed analysis.”
     “The court’s opinion not only allows this case to proceed but also helps clarify statute of limitations issues that recur in antitrust litigation, which benefits all litigants,” Bede said. “We look forward to the opportunity to litigate this important case.”
     Koh found that the employees’ amended complaint sufficiently alleges that the studios made misleading, pretextual statements and took affirmative steps to keep the alleged conspiracy a secret.
     “Plaintiffs allege that defendants both made general statements regarding the reasons for certain salary raises and ranges that belied the true reason for compensation decisions, i.e., the alleged conspiracy, and that defendants made specific misleading statements to individual putative class members,” Koh wrote.
     For example, Pixar allegedly told its managers to instruct employees that salaries were set based on performance and proficiency, without any mention of a collusive salary range setting. Additionally, an email sent to Pixar employees suggested one of the reasons for the employees’ modest 3.5 percent raise in 2007 was to “fund additional benefit programs.”
     The employees say the statement was misleading because the actual reason the salary increases were modest was the illegal conspiracy.
     “Attributing the anti-competitive effects of a conspiracy to some cause other than the collusive conduct can be an affirmative act of fraudulent concealment,” Koh wrote.
     The employees also provide more detailed allegations in their amended complaint of the studios’ attempts to keep the conspiracy secret.
     For example, the employees allege that a Pixar executive and Lucasfilm executive chose in-person meetings instead of email communication so they could discuss merit-increase budgets for 2009.
     The employees also cite the deposition of a former human resources director for Walt Disney Company and ImageMovers that explained that the non-solicitation agreement between the studios was termed a “gentleman’s agreement” because it was not written down.
     In addition, Lucasfilm allegedly made efforts to eliminate the paper trail of its agreements with the other studios, and required that any discussions about the agreements be conducted over the phone.
     “These factual allegations raise the reasonable inference that defendants took affirmative steps to conceal the details of their conspiracy by intentionally choosing to meet in-person or over the telephone, rather than risk memorializing des about the alleged conspiracy,” Koh wrote.
     Therefore, the employees’ allegations of fraudulent concealment are sufficient to toll the statute of limitations, the judge said.
     The studios also unsuccessfully attempted to have the employees’ wage-fixing claim dismissed. Koh rejected their argument that the employees’ conspiracy claims should be analyzed as two separate conspiracies: a no-poaching conspiracy and a wage-suppression conspiracy.
     “Plaintiffs have alleged that defendants systematically shared information, agreed not to solicit each other’s employees, and that the purpose of the information sharing and no-poach scheme was to suppress wages,” Koh wrong, finding that these allegations constitute a single conspiracy.
     Attorneys for the defendants did not immediately respond to requests for comment.

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