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Studios Seek to Erase Lawsuit

Walt Disney Co. and DreamWorks Animation SKG Inc. will head to federal court later this month to seek dismissal of a lawsuit alleging that they and seven other companies conspired to keep down the salaries of animation artists who created some of Hollywood’s best-selling films and TV shows. Court documents allege the movie studios and visual effects houses worked together to suppress the pay for animators, digital artists and software engineers. While no exact dollar figure is requested in the suit, at stake are millions of dollars that the workers feel is due them. Attorneys are seeking to have the suit designated as a class action. Already, a related class action lawsuit involving Pixar and Lucasfilm Ltd. was settled in 2013 at a federal court in San Jose. Daniel Lay, a former visual effects artist with DreamWorks who is not part of the suit, said the allegations against U.S. companies could just be the start since the animation and special effects industry is global, with major companies in Canada, United Kingdom and New Zealand. “My suspicion is as this goes forward, it will show more players on an international level,” said Lay, who writes about the industry on his blog, VFX Soldier. The litigation alleges the collusion goes back to 1986, but also that it continued into the late 2000s. It allegedly started when Lucasfilm in San Francisco sold its computer graphics division to Apple Inc. co-founder Steve Jobs. He established the division as a separate animation studio named Pixar with himself as chief executive until Pixar was sold to Disney in 2006. Prior to the acquisition, Lucasfilm and Pixar had entered into agreements to eliminate competition between them for skilled workers, the lawsuit alleges. In 2012, Disney also acquired Lucasfilm. The lawsuit contends that under the scheme, studios would notify each other when an employee applied for an open position at their company and would limit counter-offers in such situations. Additionally, permission was needed from one company before another company in the conspiracy could hire one of their employees. Executives from the companies, including those in human resources, met to discuss hiring practices, the lawsuit said. Steve Hulett is the long-time business representative of the Animation Guild Local No. 839 in Burbank. Prior to that, he worked as a writer at Disney Animation and saw firsthand the changes in the entertainment industry that brought about “sky high” salaries for animators in the late 1980s through the 1990s. With the success of Disney’s “Lion King” in 1994, bidding wars broke out as other studios moved into feature animation, a domain that had long belonged to Disney. DreamWorks Animation was founded in 1994, and Warner Bros. Entertainment and Turner Broadcasting ramped up their animation divisions. “There were four animation studios where there had been just one a few years earlier,” Hulett said. Salaries in the $3,000 to $4,000 a week range for one- or two-year contracts were not unheard of during this period. If studios and effects houses were colluding, Hulett said, it was likely in response to these expenses that drove up the cost of animated films. In the lawsuit, the local defendants are Disney, DreamWorks, ImageMovers LLC in Los Angeles and ImageMovers Digital, in Burbank, a joint venture of ImageMovers and Disney now known as Two Pic MC. The others are Sony Pictures Animation Inc. and Sony Pictures Imageworks Inc. in Culver City, Blue Sky Studios Inc., of Greenwich, Conn.; and Disney subsidiaries Lucasfilm Ltd. in San Francisco, and Pixar. Three former workers filed lawsuits separately late last year and they were consolidated into a single case in December charging the companies with anti-trust law violations. The workers are Rob Nitsch, a former DreamWorks Animation character effects artist, who now operates a photo studio on Cape Cod; Georgia Cano, who used to work for Rhythm & Hues, Walt Disney Feature Animation, and ImageMovers Digital; and David Wentworth, who also worked at ImageMovers Digital. “The conspiracy deprived plaintiffs and other class members of millions of dollars in compensation while the films they produced generated billions of dollars in revenues for defendants,” the suit states. Nitsch said via email that he could not discuss the lawsuit. Cano and Wentworth both live in California but were not able to be reached for comment. Attempts to reach attorneys for the plaintiffs were not successful. ‘Improbable theory’ DreamWorks Animation and Disney would not comment on the pending legislation, but attorneys for the studios and the other defendants laid out their arguments to dismiss the lawsuit in a 36-page motion filed in January. On March 26 they are scheduled to argue in San Jose federal court before U.S. District Court Judge Lucy H. Koh to have the suit dismissed. The studios claim the lawsuit has come too late for the statute of limitations and no facts back up the “improbable theory” of a labor conspiracy. “The few allegations plaintiffs have cobbled together to show that they did are wholly inadequate to state a claim against these defendants,” the motion said. The road to the litigation started in 2009 with a Department of Justice investigation of agreements between Silicon Valley tech companies not to cold call each other’s employees or make counter-offers when a position was being filled. Apple, Google Inc., Intel Corp. and Intuit Inc. were among the companies under the spotlight, as were Pixar and Lucasfilm. The investigation concluded that the companies had violated anti-trust laws but the department took no action against them. But a civil class action lawsuit – High-Tech Employee Antitrust Litigation – arose in 2011 from that investigation that resulted in Pixar and Lucasfilm agreeing two years later to a $9 million settlement and Intuit to an $11 million settlement. A preliminary agreement announced March 3 would have tech industry defendants Apple, Google, Intel, and Adobe Systems Inc. paying out $415 million Lay said that he has heard from visual effects professionals through his blog receiving payments from the Pixar and Lucasfilm settlement but that the amount was not a lot. “This may be a slap on the wrist but it is important to know the truth about what is happening,” Lay said. Lawyers for the three plaintiffs suing the studios have filed a 48-page response in anticipation of the March 26 hearing in which they maintain their case was filed on time because it was not until after court documents from the High-Tech Employee lawsuit were unsealed in 2013 and 2014 that they were aware of the full extent of the conspiracy. Also, the filing alleges there was no evidence in the motion to show the conspiracy stopped when the Justice Department investigation started. “Defendants do not point to a single document demonstrating that any defendant abandoned the conspiracy upon the start of the DOJ investigation,” the response said. As a former DreamWorks employee, Lay is not yet part of the class in the active lawsuit but would join if asked. He has spoken with the Justice Department about its investigation and claimed he has witnessed himself how the collusion worked. After leaving DreamWorks in 2010, Lay went to Digital Domain in Los Angeles, where he was producing hair and clothing effects for the film “Jack the Giant Slayer.” When he suggested to his superiors that perhaps former colleagues at DreamWorks would be interested in moving over to Digital Domain, it was “casually” explained to him that it couldn’t be done, Lay said. When DreamWorks was named in the active lawsuit, he understood the reluctance to hire the company’s employees. “When that came out I was not surprised the agreement was there,” Lay said.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.
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