Sure, they have the launch of The Surgeon’s Cut tomorrow, but some weeks it kind of bites to be Netflix.
Already fighting an uphill appeal battle against Fox (AKA Disney ) for poaching two of their executives a few years aback, on December 4, the Reed Hastings and Ted Sarandos-led streamer were sued by Activision Blizzard for allegedly seducing away the latter’s CFO back in late 2018. Now, in a repeat of sorts of the skirmish with Fox, Netflix looks almost certain on Thursday to lose their legal dust-up with Viacom (now ViacomCBS) for snagging Momita Sengupta from the Shari Redstone controlled company two years ago.
“The Court finds that Viacom’s employment agreements do not contain unlawful non-compete covenants for the simple reason that Netflix has failed to support its argument with on-point statutory support,” declares a tentative ruling today from LA Superior Court Judge Jon R. Takasugi. “The cases relied on by Netflix concern at-will employment contracts,” the tentative continues.
“This is fatal to Netflix’s case because there is no dispute that Viacom employment contracts do not enforce the non-compete covenant beyond the contract period,” Judge Takasugi added in pretty stark terms.
Or, to make a long-ish tentative short: “Netflix’s motion for summary judgement is denied. Netflix’s motion for summary adjudication is denied. Viacom’s motion for summary adjunction is granted.”
If Netflix comes up a cropper, it’s almost certain they will appeal, like they did back in September after losing the long running Fox case in December 2019.
The then Viacom went after the steamer in October 2018 after they signed up Production Management EVP Sengupta to become Netflix’s VP of physical production for original series – a gig she still holds today.
“Netflix was aware that Sengupta was under a term Employment Agreement with Viacom,” the home of Comedy Central said in its October 5, 2018 filing in LASC. “Despite that fact, and flouting well-settled law that applies to all who do business in California, Netflix engaged in an illegal course of dealing designed to tortiously induce Sengupta to breach her Employment Agreement with Viacom so that she could commence employment with Netflix immediately,” it stated.
In December 2018, Netflix made their own filing in the case, essentially recycling their Fox arguments to paint Viacom as attempting to “stymie employee mobility.” As they did in the unsuccessful Fox matter, the freewheeling streamer pulled out claims that Sengupta’s deals with Viacom over 16 years violated the famed “seven-year rule.”
Not content to try to offer a new POV on California labor law, as they did in the Fox case, Netflix and their Orrick, Herrington & Sutcliffe lawyers also tossed in that says the non-compete clause in Sengupta’s contract was unlawful.
Judge Takasugi wasn’t having any of that today.
“If Netflix wishes to argue that non-compete covenants are illegal in fixed-term contracts where they restrain employees even after they have left the company due to termination or resignation (i.e., when they are no longer actually employed by the company), it must provide support for that contention,” he wrote in the tentative. “Netflix has failed to do so.”
Now, there is always a possibility that the LASC Judge will change his mind and issue a very different final order after the summary judgement hearing set for December 10 in DTLA. There’s always a chance someone with come up with a successful theory for cold fusion too, but that doesn’t seem to happening anytime soon either, if you know what I mean?
In the meantime, pathological science references aside, Netflix really do look to be getting legally chomped up this week for not keeping their hiring hands to themselves – and lawyers love to binge on that.