A judge today shut down Netflix’s appeal in a long-running legal battle centered on the streamer poaching executives from Twentieth Century Fox Film Corporation. Netflix had claimed, in part, that Fox’s contracts were void because they violate California’s famed seven-year rule and severely restrict employee mobility. It had also claimed that Fox must show resulting harm.
But today, a three justice panel led by Judge Dorothy Kim rejected the Netflix appeal, writing in part:
Netflix’s assertions about the legal validity of the injunction are belied by the terms of that decree. The injunction does not restrain Fox employees from leaving Fox at any time, even during the fixed term of their agreement, subject only to a potential claim for breach of contract. By its express terms, the injunction restrains only Netflix; it proscribes only solicitation or inducement during the fixed term of an employee’s agreement. Netflix thus remains free to solicit lawfully Fox’s at-will employees and to hire Fox fixed-term employees at the end of their contract term. Netflix can also hire Fox employees during the fixed term, if the employee initiates the contact with the company without inducement or other act of interference by Netflix. Thus, contrary to Netflix’s characterization, the injunction does not directly or indirectly decree specific performance of any fixed-term personal services agreement with Fox.
Read today’s full filing here.
The five-year battle between Netflix and the now Disney-owned Twentieth Century Fox centers on two executives hired from the latter by the former: marketing exec Marcos Waltenberg and production exec Tara Flynn.
Fox filed the original suit in 2016. It alleged that Netflix interfered in the contract between Fox and its employees. Netflix countersued, claiming that Fox’s contracts should be ripped up because of the aforementioned seven-year rule.
Two years ago, Santa Monica Judge Marc Gross said he would “take under submission” his dense 50-page tentative ruling of earlier that embraced Fox’s motion for an injunction over the employment contracts dust-up. On the flipside, the Los Angeles Superior Court judge’s draft inclination handed no damages to Fox and no inducement to breach on the part of Netflix.
It was noted in those proceedings that Netflix had lured more than a dozen Fox employees into its ranks. “Fox has not been harmed, Fox is OK,” Netflix’s outside attorney said, arguing Fox must demonstrate harm had been caused.
“The very purpose of injunctive relief,” according to today’s opinion, “to prevent future bad acts, would be defeated if, as Netflix contends, the proponent of such relief were required to demonstrate that it had not enjoyed savings as a result of defendant’s conduct.”