Major Studios Fight|Class Certification

SAN JOSE (CN) — Dreamworks, Pixar and Disney told a federal judge Friday that employees and former employees have no basis for a class action antitrust suit accusing major animation studios of conspiring to fix wages.

"Their fraudulent concealment claims fall short of what they promised. They haven't done their homework and it's not certifiable," Dreamworks Animation attorney Robert Van Nest told U.S. District Court Judge Lucy Koh. "This case should not go forward as a class action."

Lucasfilm, Sony Pictures and three other studios also are defendants.

Van Nest offered two principal reasons against class certification.

First, he said, the plaintiffs did a poor analysis of which employees were harmed by the alleged conspiracy to suppress wages.

The putative class includes independent actors who make millions of dollars, which demonstrates that the plaintiffs' analysis was faulty, as was their estimate that the class contains about 10,000 people, Van Nest said.

"You have actors making millions of dollars that just get thrown in the class," Van Nest said. "You have market executives, assistants, heads of creative all of these people, clearly at a management level."

Plaintiffs' attorney Jeff Friedman said the analysis was based on Social Security numbers, and in some cases employees had been promoted, changed jobs or had their job titles changed, which should not disqualify them from the class.

Friedman added that arguing about how large or small the class should be differs from whether there should be a class at all.

"Their only challenge is the composition of the class," Friedman said of the studios. "There is nothing there."

Van Nest's second argument was that the plaintiffs failed to demonstrate concealment: that blog posts, emails and other documents show that many of the putative class members were aware of the studios' attempt to suppress wages.

"There was a town hall meeting at Disney in 2006, where they directly disclosed the company had a no-poaching agreement," Van Nest told Judge Koh. He said that two of the three class representatives were aware of the scheme, which should disqualify them from the lawsuit.

Mark Selzer, another attorney for lead plaintiff Robert A. Nitsch Jr., et al., said the defense arguments properly belong to a trial, not a class certification hearing.

"They cherry-picked some third party statements about whether maybe some employees got noticed," Selzer said. "But these [communications] affect a tiny part of the class members, and it is no reason to deny the vast majority of class members their day in court."

Nitsch's September 2014 lawsuit claims major animation studios colluded to fix wages and restrict career opportunities for their artists.

Nitsch, who was a senior character effects artist for DreamWorks and a clothes and hair technical director at Sony Pictures Imageworks, says animation and special effects studios - including Walt Disney and its subsidiaries Pixar and Lucasfilm, Sony Pictures, Digital Domain 3.0 and ImageMovers - conspired to stifle wages and restrict career opportunities for animators, digital artists, software engineers and other technical workers.

The lawsuit mirrors a class action filed against tech giants, Apple, Google and others in 2010, which claimed their CEOs made "gentleman's agreements" to eliminate competition and companion wage-setting mechanisms, by not poaching each other's employees.

Pixar and Lucasfilm settled that case for $9 million collectively last year, but Judge Koh has rejected a $325 million agreement proposed by Apple, Google, Intel and Adobe in that case.

Nitsch claims the animation studios acted in much the same way as the tech companies, conspiring to deprive artists of "millions of dollars which defendants instead put to their bottom lines."

The lawsuit continues: "It did so at the same time the films produced by these workers achieved world renown and generated billions in the United States and abroad."

Nitsch says the scheme dates back to when Apple founder Steve Jobs bought Lucasfilm's computer graphics division from George Lucas in 1986 and created Pixar. Nitsch says jobs, Lucas and Pixar president Ed Catmull agreed not to cold-call each other's employees.

Neither Lucas, Catmull nor Apple are defendants in Nitsch's complaint.

He claims Pixar and Lucasfilm agreed to notify each other when making an offer to an employee, and agreed not to offer higher pay if the employee's current employer made a counteroffer. And, he says, Jobs and Catmull spread this kind of anti-competitive agreement throughout the animation industry.

"Whenever a studio threatened to disturb the conspiracy's goals of suppressing wages and salaries by recruiting employees and offering better compensation, the leaders of the conspiracy took steps to stop them," the complaint states.

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

Nitsch quotes 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, Nitsch's complaint states.

After a Justice Department investigation, Nitsch says, Pixar and Lucasfilm signed settlements prohibiting them from making such nonsolicitation agreements. But Nitsch says the practice continues.

Van Nest is with Keker and Van Nest in San Francisco; Friedman with Hagens Berman Sobol Shaprio in Berkeley; and Selzer with Susman Godfrey in Los Angeles.

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