“Poacher” Netflix Prevails in Appeals Court: Counter-suit Against Fox to Go Ahead in Trial Court

by: The Knowledge Group

July 10, 2018


We reported in April on Twentieth Century Fox’s ongoing legal actions against Netflix for poaching employees on fixed-term contracts. By then Netflix had countersued, blasting Fox’s contracts as tantamount to involuntary servitude.

Fox then moved to end Netflix’s countersuit under California’s anti-SLAPP statute, which bars frivolous litigation over protected activity — Fox’s right to hold employees to their contracts. In California’s Second District appellate court, Fox argued it had no recourse outside the courts to enforce these employment contracts.

As the appellate panel deliberated on whether to allow Netflix’s countersuit to continue, Netflix paid $300 million to lure top producer Ryan Murphy away from Fox.

New Win for Netflix

The court, a three-judge panel of California’s Second District Court of Appeals, has now green-lighted Netflix’s effort to have Fox’s fixed-term employment contracts invalidated. The panel agreed with the lower court in finding that Netflix’s countersuit is not barred by anti-SLAPP provisions. For the panel, Justice Lamar W. Baker wrote that “Netflix’s claims do not arise from protected activity.”

Now, Fox’s original lawsuit and Netflix’s countersuit will both go ahead at the trial court.

Fox on the Defensive

While Netflix reprehends Fox for selectively enforcing the fixed-term contracts, allowing some employees to get out of them but standing in the way when some want to work for a competitor, Fox states that the new appellate opinion “has no bearing on the merits of Fox’s claim” that Netflix has illegally poached its personnel. Fox describes its practice of extending fixed-term employment contracts as “enshrined in the California Labor Code” and has resolved to vindicate this position at the trial court level.

Netflix, for its part, is “pleased to see” that the recent decision from the Court of Appeals supports Netflix, and has reiterated its position that Fox’s contracts are illegal.

Are they? As the case moves forward, many corporations that rely on fixed-term contracts await the next episode in this long legal drama.

You can stay updated with the latest in Anti-Poaching agreements with our upcoming webcast on July 24.  This webcast is eligible for Continuing Legal Education (CLE) credit, full information can be found by clicking here.