Lawsuit Alleges Disney’s Board of Directors Knew About Artist Wage-Fixing Conspiracy

Towers’ suit alleges that the Disney board of directors knew of the conspiracy alleged in the related lawsuit, and “actively concealed and ensured the secrecy of the conspiracy.” Because the board members filed financial statements and certifications, and “signed each of the Company’s annual reports filed with the U.S. Securities and Exchange Commission,” they are alleged to be guilty of signing “and/or certif[ying] false and misleading statements.”

Because of their positions and influence, directors have duties of loyalty and candor, and must “exercise good faith to ensure the Company” operates honestly and complies with all federal and state laws and regulations. The suit points out that Disney’s Standards of Business Conduct specifically called out antitrust laws the related lawsuit alleges were violated, stating, “Antitrust laws…prohibit agreements that unreasonably restrict competition. Don’t enter into any agreement or understanding, whether formal or informal, with a competitor to set prices.”

Given that talented and successful animation and visual effects artists generally require years of specialized training and effort — and because the community of such artists is comparatively small, and localized in California within a handful of major employers — they are particularly susceptible to such collusion among those employers, making such a conspiracy troubling.

Towers does not seek personal damages, but instead mainly seeks restitution to Disney for damages caused by the defendants’ breaches of fiduciary duty and unjust enrichment, and that the defendants surrender any “profits, benefits, and other compensation” they received as a result of their actions. Towers also seeks measures to provide greater oversight of Disney’s disclosure procedures and hiring practices, as well as greater stockholder input on the policies and guidelines of the studio’s board of directors.

As Cartoon Brew reported in August, the federal judge overseeing the earlier lawsuit, Judge Lucy Koh, denied the studios’ motion to dismiss that case, allowing the case to move forward. Judge Koh has scheduled a case management conference for December 9th.

This week, Disney announced an annual dividend payout to stockholders that is 19 percent higher than what the company paid out last year.