Twentieth Century Fox Film Corporation v. Netflix, Inc.

SC126423
September 16, 2016
State Court
California
Superior Court of the State of California

Twentieth Century Fox (“Plaintiff”) has lodged a complaint against Netflix, Inc. (“Defendant”) in California state court, alleging that Defendant fraudulently and maliciously interfered with the Fixed-Term Employment Agreements Plaintiff had with two of its executive employees: Marcos Waltenberg (formerly Vice President, Promotions) and Tara Flynn (formerly Vice President, Creative). Those agreements were to terminate in 2016 and 2017, respectively, with an additional two-year option period at their initial expiration. Waltenberg joined Defendant Netflix’s payroll, however, in January 2016 and Flynn joined before her option period expired in August 2016.

Netflix is accused of “soliciting, recruiting, encouraging, and inducing” Fox employees to terminate their employment with Fox early. For their part, Fox claims that Netflix’s actions have resulted in irreparable injury to Fox’s ability to contract for a stable workforce (especially with regard to corporate planning), and to its business reputation and goodwill. Twentieth Century Fox seeks compensatory and punitive damages, as well as a permanent injunction enjoining Netflix from interfering with any of its Fixed-Term contracts.
It is worth noting that the agreements at issue in this case are not non-competes.

California has taken the rare stance of voiding all non-compete agreements. California Business and Professions Code section 16600 provides that, “[e]xcept as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void.” This puts employers in the position of creating a workaround to employee retention and market advantage. In California, that is often accomplished through Fixed-Term Employment Agreements.

Check back for updates, and read the complaint here: https://www.scribd.com/document/324263613/Complaint-9-16

Fox 21, Inc., “Twentieth Century Fox Film Corporation”
Netflix, Inc.
Other state statute