UPDATE, 6:55 pm: Netflix was stolen in court today for stealing one of Viacom executives in 2018, but not as much as expected.
Just like in his preface last week, although Judge Jon R. Takasugi dismissed the streamer’s argument that the Shari Redstone-ruled company had broken the famous seven-year rule with its ongoing contracts with then EPP production manager Momita Sengupta. However, contrary to his December 8 provisional order, the LA Supreme Court Justice did not grant Viacom an injunction to prohibit Netflix from poaching more employees in the future.
Netflix ignored the latter near miss but held the judge responsible in a statement made to . after Monday’s DTLA hearing.
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“Employee mobility and open, fair competition are at the heart of California’s innovation and economic prosperity,” said a spokesman for the streamer. “We strongly disagree with the judge’s decision, which we believe unfairly allows Viacom to use unfair and unlawful contractual terms to prevent its employees from accepting the job of their choice,” they added .
No official word on whether Netflix will appeal this decision as they committed their loss last year in Fox’s lawsuit over Queen’s Gambit’s apartment, where two of its executives were poached in 2016. Still, I would say if you were planning your next chess move, you can be pretty sure that an amazing bishop endgame will be heavily considered.
PREVIOUS DECEMBER 20: (Updated with Netflix Response) Sure, The Surgeon’s Cut will be out tomorrow, but in a few weeks it’s kind of a bite to be Netflix.
The streamer, led by Reed Hastings and Ted Sarandos, who had fought a tough appeal against Fox (aka Disney) for poaching two executives a few years ago, was sued by Activision Blizzard on December 4th for being its CFO in late 2018 Netflix is a re-run of the skirmish with Fox and seems almost certain to lose its legal turmoil two years ago with Viacom (now ViacomCBS) after it caught Momita Sengupta of the Shari Redstone-controlled company.
“The court finds that Viacom’s employment contracts contain no unlawful non-compete obligations for the simple reason that Netflix did not back up its arguments with occasional legal support,” said Jon R., Los Angeles Supreme Court Justice, on Tuesday a preliminary decision. Takasugi. “The cases cited by Netflix involve arbitrary employment contracts,” the verdict continues (read it here).
“This is fatal for Netflix because it is undisputed that Viacom employment contracts do not enforce the non-compete clause beyond the contract period,” added Takasugi rather sharply.
Or, to cut a long story short, “Netflix’s motion for a recapitulation is denied. Netflix’s motion for a summary decision is denied. Viacom’s request for a summary decision is granted. “
The streamer was also not silent about the reservation.
“We disagree with the judge’s preliminary ruling, which, if accepted, would confirm Viacom’s right to bind employees to contractual terms that are unfair and, in our opinion, illegal,” a Netflix spokesman said in a statement to . . “We will share the legal and factual basis of our position at the hearing on Thursday and continue to fight for the fundamental right of employees to leave their jobs to take on another.”
If Netflix launches a cropper, it’s almost certain that it will appeal, as it did in September after losing the long-running Fox case in December 2019.
The then Viacom followed Netflix in October 2018 after the streamer EVP Production Management hired Sengupta as VP Physical Production for the original series from Netflix – an appearance that it still holds today.
“Netflix was aware that Sengupta was under a fixed-term contract with Viacom,” said the home of Comedy Central in its report submitted to LASC on October 5, 2018. “Despite that fact and disregarding a well-established law that applies to anyone doing business in California, Netflix has been engaged in an illegal trade to illegally induce Sengupta to break her employment contract with Viacom in order to get her can immediately take up a job at Netflix, “it says.
In December 2018, Netflix filed its own filing on the case, essentially recycling its Fox arguments to label Viacom as an attempt to impede employee mobility. As in the unsuccessful Fox affair, the free-wheeling streamer alleged that Sengupta’s dealings with Viacom for over 16 years violated the famous “seven-year rule”.
Netflix and their attorneys at Orrick, Herrington & Sutcliffe were not satisfied with trying to offer a new POV on California labor law, as it did in the Fox case, and also accused the non-compete clause in Sengupta’s contract was illegal. Takasugi had none of it today.
If Netflix wants to argue that non-compete obligations are illegal in fixed-term contracts in which they withhold employees even after they have left the company due to a termination or resignation (i.e., when they are no longer actually employed by the company), it will must support this claim, ”he wrote tentatively. “Netflix didn’t do this.”
There is always a chance now that the judge will change his mind and make a different final order after the hearing set for Thursday. There is always a chance someone could come up with a successful cold fusion theory, but it doesn’t seem to be happening anytime soon.
Pathological scholarly evidence aside, it seems that Netflix is really being hit legally this week for failing to keep its hired hands to itself – and lawyers love to get involved.
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