Enlarge / The exterior of DreamWorks Animation in Glendale, California.ROBYN BECK/AFP/Getty Images
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Comcast-owned DreamWorks Animation will pay out $50 million to settle allegations that its leaders illegally conspired to suppress workers’ wages.
The movie studio’s animation division is at the heart of a class-action lawsuit first filed in 2014 by Robert Nitsch, who worked as a character effects artist at DreamWorks from 2007 to 2011. Nitsch and his lawyers claimed that the conspiracy included some of the biggest names in the entertainment and technology worlds, including Apple founder Steve Jobs, Pixar President Ed Catmull, and George Lucas, founder of Lucasfilm.
The complaint (PDF) quoted Lucas as saying “we cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing.” In addition to suing DreamWorks, the class-action complaint named Pixar, Lucasfilm, Walt Disney Animation, Sony Pictures Animation, Blue Sky Studios, Digital Domain, and ImageMovers Digital as defendants.
Blue Sky and Sony reached an earlier settlement agreement with the plaintiffs, with Blue Sky agreeing to pay $5.95 million and Sony agreeing to pay $13 million.
The allegations describe a system similar to the “no cold call” agreement that got several tech companies into hot water with the Department of Justice back in 2010. Again in this case, part of the blame was pinned on former Apple CEO Steve Jobs. The complaint stated:
With Jobs as its CEO Pixar agreed with Lucasfilm that (a) they would not cold call each other’s employees; (b) they would notify the other company when making an offer to an employee of the other company, if that employee applied for a job notwithstanding the agreement not to cold call; and (c) the company making such an offer would not increase its offer if the company currently employing the employee made a counteroffer.
The revelations about Silicon Valley’s “no cold call” deal led to a government investigation in 2010 and a class-action lawsuit in 2011 that ultimately led to a $415 million settlement last year.
The Nitsch plaintiffs had already passed their most important test when the judge allowed them to form a class in May. The class includes animation and visual effects employees who worked at Pixar, Lucasfilm, Dreamworks, Walt Disney, or Sony from 2004-2010 and at Blue Sky Studios from 2005-2010. The plaintiffs reported that they were able to serve direct notice via mail or e-mail to 10,828 class members, which they believe represents about 98 percent of the total class.
The DreamWorks settlement (PDF) argues that $50 million is a better deal for the class, since it represents about 39.3 percent of the damages that the plaintiffs’ expert believes DreamWorks caused its employees. That’s more than the 25 percent recoup they got from Blue Sky, more than the 16.7 percent they recovered from Sony, and more than the 14.26 percent of damages that plaintiffs got in the earlier case against Apple, Google, and other tech giants.
Legal fees for the DreamWorks settlement will come out of the $50 million, and the motion doesn’t specify what portion the plaintiffs will ask for. In the Sony and Blue Sky settlement, lawyers are asking for $4,737,500, which is 25 percent of the $18.95 million total.
The next step is a hearing in January in which US District Judge Lucy Koh will weigh in on the proposed settlement and listen to objectors. The settlement won’t become binding unless she approves it.
The deal was first reported last night by Hollywood news sites The Wrap and Deadline.com.