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What Is The Animation Wage-Fixing Lawsuit? An Explainer for the Community

2015’s biggest legal story for the animation community was undoubtedly the ongoing lawsuit known as In re: Animation Workers Antitrust Litigation. This is a class action involving the biggest feature animation studios, thousands of animation industry employees, a potentially large payout for the employees, and huge ramifications for the entire industry. The start of the new year seems like a good time to recap all the facts, the allegations, and where the case is today.

What is this all about and why should I care?

In September 2014, plaintiffs Robert Nitsch, a senior character effects artist at DreamWorks Animation until 2011; Georgia Cano, a digital and lighting artist at Rhythm & Hues until 2009; and David Wentworth, a production engineer and computer graphics supervisor at ImageMovers Digital, together filed a class-action lawsuit against several animation studios.

The plaintiffs claimed that the defendant studios conspired to restrict competition by exchanging sensitive compensation information, fixing compensation ranges of their employees, and most crucially, refraining from solicitation of each other’s employees, in violation of federal antitrust law and the California Business and Professions Code.

The plaintiffs claim that the defendants’ actions injured the plaintiffs and members of the class by “lowering their compensation and depriving them of free and fair competition in the market for their services.”

Further, the plaintiffs claim that the studios fraudulently concealed their conspiracy, preventing the plaintiffs from filing their complaint in a timely manner. Federal antitrust law prohibits such actions as restrictions on competition. Plaintiffs seek damages that could run into multi-millions, interest, attorney’s fees, and a permanent injunction.

Who are the defendants that are accused of wrongdoing?

The accused studios are:

  • Blue Sky Studios, Inc.
  • DreamWorks Animation SKG, Inc.
  • Lucasfilm Ltd., LLC
  • Pixar Animation Studios
  • Sony Pictures Animation, Inc.
  • Sony Pictures Imageworks, Inc.
  • The Walt Disney Company
  • Two Pic Mc LLC (formerly ImageMovers Digital LLC)

Which employees at those studios would be represented in the class action lawsuit?

Because this is a class action, the people who are suing the studios are doing so on behalf of other people who have similar claims. The suit seeks to potentially represent thousands of employees, specifically “all persons who worked at any time from 2004 to the present for Pixar, Lucasfilm, DreamWorks Animation, Walt Disney Animation Studios, Walt Disney Feature Animation, Blue Sky Studios, Digital Domain, ImageMovers Digital, Sony Pictures Animation or Sony Pictures Imageworks in the United States. Excluded from the Class are officers, directors, senior executives and personnel in the human resources and recruiting departments of the Defendants.”

When did artists realize they were being taken advantage of?

Beginning in 2009, the Antitrust Division of the U.S. Justice Department began investigating the hiring practices of several high-tech companies, including Google, Apple, Intuit, Intel, and Adobe Systems. The investigation ensnared Pixar and Lucasfilm as well, and lead to the discovery of written agreements among the defendants not to cold call each other’s employees and not to engage in bidding wars for employees. They also had agreed to notify each other whenever making an employeement offer to each others’ employees. Although the case ended up settling for hundreds of millions of dollars in April 2014, it was the discovery of emails revealed in that case that first convinced Nitsch, Cano, and Wentworth that there might be a case against the major animation studios as well as high-tech companies, and they filed suit in September 2014.

But do the artists have enough evidence to prove their case?

The case is being tried in U.S. District Court in the Northern District of California, San Jose Division, and the judge in the case, Judge Lucy Koh, has already ruled that the plaintiffs have enough evidence to defeat the studios’ attempt to dismiss the case and are moving toward a trial. Among the evidence the plaintiffs claim to be able to offer are numerous emails between the studios that reference the agreement not to compete for employees. This correspondence includes:

  • a September 29, 2004 email from Pixar vice president of human resources Lori McAdams that refers to a “gentleman’s agreement” among “ILM, Sony, Blue Sky, etc….not to directly solicit/poach from their employee pool;”
  • emails from early 2007 from McAdams to Sony Pictures Imageworks, Disney, ILM, DreamWorks, and Blue Sky, referring to daily discussions among themselves;
  • a February 14, 2007 email from Lori McAdams to human resources personnel at DreamWorks, Sony, Disney, and ILM seeking the “base salary range” for a studio position;
  • a 2007 email from DreamWorks’ head of compensation admitting to “shar[ing] general comp information (ranges, practices)” with other studios in order to “ask for that kind of information ourselves when we need it.”
  • a 2009 email from Industrial Light & Magic recruiter Lori Beck stating that ILM should not pursue a potential employee then employed at Sony ImageMovers because of their gentleman’s agreement.
  • deposition testimony from Sharon Coker, one-time Industrial Light & Magic, Disney, and ImageMovers human resources honcho, that the gentleman’s agreement among the studios was never written down.
  • an internal Lucasfilm document urging that questions about anti-solicitation agreements be made over the phone: “If you see an email forward…to one of our lawyers.”

Much of this evidence seems to offer proof of an agreement among the studios to suppress competition for employees. The plaintiffs will also attempt to prove that the studios fraudulently concealed this illegal restraint on competition with statements made by recruiters and human resources personnel that the employee compensation packages they offered to potential employees were their “best offer,” or were “competitive” with other studios, without revealing that the studios had colluded to limit the competition among themselves. A 2007 email from Ed Catmull seeks to blame the construction of a daycare for the small salary bumps Pixar employees received in the wake of the 2006 box office smash Cars.

Could current Disney Animation Studios and Pixar president Ed Catmull, really be involved in all of this?

Ed Catmull.
Ed Catmull.

Not only involved, but it looks like Catmull was one of the scheme’s leaders. Remember, the conspiracy allegedly started when Lucasfilm first sold Pixar to Steve Jobs. The companies allegedly agreed not to pursue each other’s employees beginning then, and Catmull, a brilliant computer scientist who pioneered the development of computer animation, who was employed by Lucasfilm at the time, became president at Pixar. But even as the new animation studio grew from tiny start-up to became the dominant force in feature animation, Catmull apparently failed to allow his outsized success change his business practices. The plaintiffs have substantial evidence implicating Catmull:

  • a February 18, 2004 email from Pixar President Ed Catmull to Steve Jobs explaining that the anti-solicitation arrangement “worked quite well;”
  • a January 14, 2007 email from Catmull to then-Disney chairman Dick Cook, stating, “we have an agreement with Dreamworks [sic] not to actively pursue each other’s employees;”
  • a March 2007 email from Catmull to a contract recruiter at DreamWorks, in which Catmull wrote, “[W]e have had an agreement with Dreamworks not to actively pursue each others employees [sic];”
  • testimony from the earlier technology case in which Catmull admitted that Steve Jobs and DreamWorks head Jeffrey Katzenberg agreed not to “go after each other;”

Additional evidence suggests Catmull was practically obsessed with controlling costs:

  • in a June 2004 email from Lucasfilm then-president Jim Morris to Catmull, Morris wrote, “I know you are adamant about keeping a lid on rising labor costs;”
  • testimony from Catmull under oath admitted to his fear that “messing up the pay structure” would lead to “very high” compensation;
  • additionally, Catmull told Disney Chairman Dick Cook, after Disney purchased Pixar, that companies offering employees “a substantial salary increase” will “seriously mess up the pay structure.”

Catmull even took an active role in entangling his rival studios in the alleged conspiracy. In 2004, Catmull flew to Los Angeles to discuss with Sony executives an agreement “where neither of us let recruiters approach the other,” and in 2007 met with ImageMovers founder Steve Starkey to insist “how important it is that we not have a hiring war.”

What do the defendant studios have to say for themselves?

The studios have so far denied all of the charges, alleging that the plaintiffs have mischaracterized certain facts. They’ve also asserted various affirmative defenses, including the claim that the employees that might be included in the class action signed waivers concerning their employment that released their employer from liability for actions taken concerning their employment, and that the employees also agreed to arbitration in the case of a dispute relating to their employment. Time will tell how judge and jury look upon such defenses.

What is the current status of the case?

Currently, the parties to the case are in the middle of discovery, in which documents and other information which could bear on the outcome of the case is given to the other side. The court will have a class certification hearing in May 2016, in which the court is expected to approve or disapprove of the class on behalf of whom the plaintiffs filed suit.

Discovery is scheduled to continue until mid-October of 2016. Thereafter, experts retained by the two side will prepare their reports and rebut their opponents reports, and motions for summary judgment — in which the parties will argue that their side should win without a trial — not due until February 2017. If the case survives that, then a trial will follow thereafter, possibly in the late spring or summer of 2017.

This fight is not ending any time soon.

  • matt

    So hypothetically speaking, if the artists suing those big studios win at the end, what would happen? Does the studio has to pay them money? Or has to pay all its employees? and if so, what kind of money would that be?

    • Brian Gabriel

      Depends on the ruling. If it settles or if the trial ends with a money judgment against the studios, all members of the class that have been identified would potentially be eligible for a share in the award.

      • Dr Duke

        If it goes like most class actions the lawyers will split up 75% of the money and all members of the class will get a coupon good for $2.00 off their next Pixar/Disney, Sony or Dreamworks DVD or Bluray.

    • Elephant in the room

      Matt – It’s hard to say what things will look like long term for those of us who worked at the studio’s in question. I’ve received two checks over the course of the on-going “settlement” in the past two years, both were very modest and did not equal a weeks pay.

      I think what’s more interesting is that there are thousands of artists who like me received the paper work in the mail. I didn’t seek out retribution, I simply filled out the paper work and sent it off.

      Isn’t it fitting though that there’s never any artists on cartoonbrew speaking out about the circumstances? I imagine it’s much like the VFX industry where people involved are scared to be blacklisted for their opinions or for standing against this illegal behavior.

      I know I am that’s why I’ve signed in as a guest.

  • Good luck with that.

    This fight is over before it ever started. The studios have *armies* of Lawyers, and can out-fund, and outlast and out bamboozle any sort of case put forth by a handful of former artists. Has this been going on? Yes. For years and years. Is it still going on now? Yes, of course it is. Will it always go on? Yes, any studio that looks you in the eye and says, “Trust us, we’re a family” is lying to you. Studio executives are in it for the money, bottom line. And that comes from standing on the backs of their artists.

    • Fried

      “Yes, any studio that looks you in the eye and says, “Trust us, we’re a family” is lying to you. ”
      Ironic that one of the comments to this article refers to the community as “animation brothers and sisters”, eh?

  • BurntToShreds

    What exactly happens if the plaintiffs win the case? What will these “huge ramifications for the entire industry” be?

    • Chicken McPhee

      Theoretically higher standard wage / better living conditions in the long-run.

      • Martian Monkey

        Hopefully down the line, too, like TV.

        Just finished working on a well known property and the wage per second was appalling. And it wasn’t even the animation studio’s fault as the money came from a major Hollywood studio.

        In my short 15 years in this business, I’ve seen quotas double to 60 seconds and the salary stay the same or drop. It’s not sustainable. Veterans must convince younger entrants to not put up with that kind of thing (and take their own advice). It’s the only way to change things.

        • Chicken McPhee

          Exactly. But all the newcomers just see the final product and are willing to sell their souls to bring Lassater coffee. Society has put these people on too much of a pedestal.

  • Jams

    I smell a new Netflix doc.

    • Strong Enough

      aaron sorkin movie

  • vincenzosz

    I have been following this case closely ever since Cartoon Brew first started posting about it, and as an animator its good to see you guys shining a light on a, frankly; despicable history of wage fixing among the entire feature animation industry. Animators and all the the thousands of artists that work on these films get little recognition as it is. Its pretty sad that almost 100 years after the Disney animator’s strike they are still not even treated properly within their own industry. Thanks Cartoon Brew for shedding light on this, and I hope this lawsuit creates a ripple of change for the better.

  • Chicken McPhee

    This is like the last act of the movie Casino. In fact, Martin Scorcese SHOULD make a film about this. The bubble had to burst eventually, especially when it was filling with noxious gas. And they’re not even ashamed of it because they genuinely don’t even understand how it impacts their underlings, or perhaps they don’t care. I have friends who trained as animators, but went to do more profitable things because being an animator at one of these places and feeding a family is not always viable. She makes about 40% more in salary in the Interaction Design field than animators of the above firms I talk to. That’s criminal, especially considering that the rake-in from their work is enormously larger than that of many of the tech firms that actually pay for the work.
    The most awful thing about all this is, that animators are essentially actors of these films.
    And they SHOULD RECEIVE ROYALTIES FOR THEIR ACTING. If that’s not an incentive, what is? Disney, for example, has a recorded history of inethical behavior. I realize it’s a large conglomerate, but the internal hyena philosophy is persistent through many of their branches.
    Disney once stood for imagination and sense of wonder. Making magic possible. And like with magic tricks, there’s a simple, horrible and dissapointing secret that the audience never wants to find out. This is it. Even George Lucas called them whiteslavers. And that’s what they are.

    • Ghoest

      Disney animators (tag employees in general) do receive royalties. It’s all put into the union pension plan so it’s not as obvious to them

      • Chicken McPhee

        First I hear of that. I’m guessing the same is not true for Pixar though.

        • Ghoest

          Yeah Pixar is not a union shop

          • Chicken McPhee

            Is Pixar strongly against unions? Don’t they have a clause that allows them to fire anyone who would enter a union?

          • Ghoest

            I’ve never work at Pixar so I’m not sure. To me it seems more like the social mentality of the Silicon Valley/ Bay Area. We all love to think of Pixar as the amazing animation studio that it is but we forget it’s part of Silicon Valley and not Hollywood. I also suspect it’s illegal to fire someone for interest in unionizing or collective bargaining.

            But as far as being non Union, I think any business has natural strong interests in not being unionized as it allows them to be more flexible as a business without additional outside overhead. However for workers this is a pretty raw deal. I will say tho that to their credit (and Dreamworks PDI’s when it was up there and not Union) they did manage to keep people around and generally not be entirely shitty. But they do/did get paid less per employee (I suspect tho the salary grade is steeper as you move up in the ranks as opposed to a union studio where salary is more diffuse).

          • Chicken McPhee

            Now, why does a company whose products have a VERY long shelf life and very greasy take-in not take care of their employees half as well as others?
            It may be illegal to fire someone for interest in unionizing, but it’s also illegal to keep the artists’ wages down like this. But you know, salary of one of those fatcat would-be pseudo-creative executives could support a staff of 25.
            Pixar builds its fortune and glory on people it turns around and collectively screws. If that’s not disillusionment, I don’t know what is.

          • Ghoest

            I would submit that you are making a statement more on the current state of capitalism. No matter where you work in this industry you’re getting the screw let’s not pretend you aren’t. These movies make millions on top of millions of dollars and a small sliver is doled out to production. A lawsuit won’t fix this and it’s a bit naive to think it will. The problem is a broader issue than a little ol’ animation industry. If you want to make money you need to be in buisness for yourself, not for the established studios.

  • Elsi Pote

    Justice will be served for all of our animation brothers and sisters.

    Keep the faith and don’t give up.

    The day of the reckoning is on its way.

  • Taco

    There are also a few interesting “depositions” & “Freudian Slips” in this old Spline Doctors Interview with Dr Ed Catmull from back in 2007. If you listen carefully about him cancelling the Employee contracts at Disney when the Pixar Boys moved in there.

    • RCooke

      No contracts, except for all the top artistic talent. No union, except for writers and actors. Has Disney fired any of these management people yet? Wasn’t that hr woman at Pixar Lori MacAdams the head of hr at Lucasfilm? I guess there was no “poaching” there. I wouldn’t be surprised if Disney was to consider replacing the entire management at pixar to make all this go away. How many of the people at each of these places don’t have any direct input into the actual making and promotion of the films? Has the wage fixing affected those people?

  • TeaPee

    I work for one of those studios now so my wage is lower because of the wage fixing. I could join the class action… but i imagine I’d be let go pretty quick if I did that. I wonder how many people joining the class action are current employees of those studios. Potentially the contract i signed could stop me joining the class action also.

  • alt animation podcast

    im curious as to how much effect something like this has on the wages of the many smaller studios in this business.

  • Is hard to believe that the same people that created the industry, the same people that struggled to get money, that fought vs corporate to create animation as an art form, shorts, movies…..that worked day and night without give up, that know how hard the artists work to create animation…………are the same people that are doing this to US……. thanks Ed Catmull and Steve Jobs and the other crooks……….at the end of the movie we realized who are the bad guys of this movie….. greedy pigs………….

  • Leslie

    I did some Animation deals at one of these studios. When we needed Animators and some were expressing interest in joining us from a competing studio, I was told they were untouchable until their current movie ended. The Animators also had to make it clear they were reaching out to us and not us reaching out to them. I always thought that was pretty shady.

  • EvilDrPorkchop

    “They’ve also asserted various affirmative defenses, including the claim that the employees that might be included in the class action signed waivers concerning their employment that released their employer from liability for actions taken concerning their employment, and that the employees also agreed to arbitration in the case of a dispute relating to their employment.”

    How is this sort of waiver legal?