In a settlement agreement with plaintiffs in an ongoing class-action lawsuit, DreamWorks Animation has reached a settlement that is believed to be as much as $50 million. The settlement was in regards to alleged wage theft and unfair competition.
Dreamworks Animation $50 Million Settlement
The following information is about the recent $50 million settlement that Dreamworks reached with plaintiffs.
Documents filed with the federal district court in San Jose reveal that the studio has agreed to pay $50 million to members of the class of animation and visual effects artists affected by the suit. Those artists include animation and visual effects employees who worked at DreamWorks between 2004 and 2010. If the court finds the agreement fair and accepts the settlement, a notice will be sent to those employees informing them what to do to ensure that they will receive their share of the settlement.
As part of the settlement agreement, the named plaintiffs—Robert A. Nitsch, Jr., Georgia Cano, and David Wentworth—will be awarded $10,000 in consideration of their efforts on behalf of the class. Additionally, the agreement allows for 30% of the settlement amount (or $15 million) to be paid to the plaintiffs’ attorneys. (When an attorney is hired by a plaintiff on a contingency basis—that is, without pay unless the plaintiff wins the case—that attorney will typically receive anywhere from 25-40% of the amount awarded to the plaintiff.)
Studios have been settling one by one, after the plaintiffs have repeatedly cleared hurdles in their path to trial — including beating a motion to dismiss and becoming a certified class.
According to the Monday filing, the $50 million is about 39.3 percent of the damages the plaintiffs’ expert attributed to DreamWorks. In arguing for the court’s approval, the studio points out that its percentage of damages is higher than that of Sony and Blue Sky who have already settled. In July, the court granted preliminary approval of a combined $19 million settlement offer from those studios.
As part of the deal, DreamWorks has agreed to help authenticate its own documents and answer reasonable questions, but will not voluntarily produce any employee to testify at trial.
Court documents filed by plaintiffs’ attorneys at Cohen Milstein Sellers & Toll; Hagens Berman Sobol Shapiro; and Susman Godfrey did not disclose how much they will seek in fees from the settlement. But in the pending Sony and Blue Sky deals—which total $13 million and $5.95 million, respectively—the firms sought 25 percent of the settlement funds.
The plaintiffs’ attorneys say the proposed $50 million deal with DreamWorks amounts to nearly 40 percent of the estimated damages inflicted on DreamWorks employees by the “no-poach” arrangement.
“The settlement here was reached after arm’s length negotiations, drawing on the expertise of informed, experienced counsel who have been deeply involved in this litigation since its inception, and it reflects the risks associated with both parties continuing to litigate this case,” the attorneys say in their motion for preliminary approval of the deal.
Disney Last ‘Toon Giant Standing As DreamWorks Animation Offers $50M Settlement In Anti-Poaching Suit
This all started when ex-DWA visual effects artist Nitsch first filed his case on September 8, 2014 with Wentworth and Cano putting their paperwork before the courts soon afterwards. “The Defendants themselves have explained the purpose of the conspiracy and in doing so, articulated the harm and injury caused by it to their workers. George Lucas explained under oath that the purpose of the non-solicitation agreement was to suppress wages and keep the visual effects industry out of “a normal industrial competitive situation,’” alleged Nitsch’s highly animated 27-page filing in the fall of 2014. “The agreement was explicitly intended to avoid ‘a bidding war with other companies because we don’t have the margins for that sort of thing.’”
With wide ranging implications for the animation industry and a pulling back of the veil of the way business is conducted, the matter has been pursued, tossed, revived and consistently opposed since Nitsch first took action in the fall of 2014.
Lucasfilm and Pixar were already targets of a Justice Department antitrust lawsuit in 2010, along with Apple, Google, Adobe Systems, Intel Corp. and Intuit, in which the government contended that their “no solicitation” agreements prevented highly skilled employees from commanding better wages and job opportunities. The companies settled the litigation by agreeing to end such practices for a period of five years.
In a settlement of a class action civil suit that Koh approved in May 2014, Lucasfilm and Pixar agreed to pay $9 million, and Intuit agreed to pay $11 million. But during the litigation, emails were disclosed that appeared to link other companies to the “no poaching” agreements. The animation workers filed their own class action lawsuit in December 2014.
20th Century Fox-owned Blue Sky Studios and Sony have both already made multi-million-dollar settlements in the case.
Arrangements to freeze wages and not poach employees were the subject of a separate investigation and lawsuit by the U.S. Justice Department in 2010. Several companies agreed to a prohibition against enforcing anti-poaching pacts for a period of five years, which ended the DOJ review, but in 2011, a class-action lawsuit was brought against Pixar, Lucasfilm, Apple, Google, Adobe and Intuit. The first two companies settled claims for $9 million while the other companies have gone to an appeals court after Koh rejected a $325 million settlement as insufficient.