Netflix Hit With Another Lawsuit For Poaching
Video game giant Activision Blizzard filed an explosive lawsuit against Netflix on Friday, alleging the streaming company illegally poached its former CFO Spencer Neumann. Activision is suing Netflix for intentional interference with a contract, unfair competition and aiding and abetting breach of fiduciary duty.
The suit alleges Neumann was negotiating a deal with Netflix to distribute Activision's linear media content when Netflix induced him to breach his employment contract with Activision. Despite signing a three year fixed-term employment agreement on May 30, 2017, Neumann was terminated by Activision for cause for violating his legal obligations just 18 months later.
"Netflix unapologetically recruits talent without regard to its ethical and legal obligations," the filing reads. "To shape its workforce to its desires, Netflix not only ruthlessly fires its own employees that it deems "adequate," but is engaged in a years-long campaign of unlawfully poaching executives from Netflix's competitors regardless of their contractual obligations."
The suit alleges Netflix's push to hire Neumann came from the highest levels of management, including Netflix co-founder, chairman and co-CEO Reed Hastings.
"Indeed, Hastings, Netflix's co-CEO, was personally involved in Neumann's recruitment and hiring, evidencing that Netflix's tortious and unethical conduct is intentional and a directive "from the top,"" the filing reads.
Activision is seeking a permanent injunction prohibiting Netflix from soliciting its employees who are subject to fixed-term employment agreements as well as compensatory and punitive damages.
Activision's lawsuit marks the third such lawsuit against Netflix alleging illegal poaching of employees that are under fixed-term employment agreements.
A judge ruled last December that Netflix induced two Fox employees to violate their fixed-term employment agreements and issued an injunction prohibiting them from poaching Fox employees. Netflix filed an appeal in September, saying "the Court's injunction violates the century-old rule that a court cannot force a person to perform a personal-services contract absent certain rare circumstances."
Viacom followed Fox and filed a similar lawsuit in 2018 that is still ongoing, alleging Netflix poached a TV production executive despite being under a fixed-term employment agreement.
"We think Netflix should be required to play by the same rules as every other company doing business in California, and we are taking the steps necessary to ensure they do," Viacom said in a statement regarding the lawsuit.
Netflix's stance has been that the contracts aren't enforceable under California law and that they impede employees' ability to advance their careers. Netflix also argues the contracts prevent companies from fairly competing for skilled employees.
Activision has retained Daniel Petrocelli and Molly Lens of O'Melveny & Myers, which is the same legal team that represented Fox in their case against Netflix.
While Netflix has disrupted the way people view content, it's next endeavor may be trying to disrupt California labor laws as it now finds itself fighting three lawsuits in the state.
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