Disney and Dreamworks offer an unconventional argument to invalidate a wage-theft lawsuit

Disney, Pixar, Lucasfilm, and Dreamworks Animation are employing a unique legal strategy to counter a wage theft lawsuit brought against them by approximately 10,000 animation industry employees. The studios argue that certain animation artists, who are part of the lawsuit, were already aware of an alleged conspiracy against them. In essence, they contend that these artists should not be entitled to damages, fundamentally challenging the validity of the lawsuit.

The legal battle took an interesting turn when, on May 25, the federal district court overseeing the class-action antitrust case certified the class definition of the artists covered by any potential ruling. The class includes all animation and visual effects employees employed by the defendants in the United States who held specific jobs during certain time periods for Pixar, Lucasfilm, DreamWorks Animation, The Walt Disney Company, Sony Pictures Animation, Blue Sky Studios, and Two Pic MC LLC. However, the court decided not to expand the class at that time, leaving the door open for potential future expansions.

Shortly after the court’s decision, Disney and Dreamworks appealed the class certification to the Ninth Circuit Court of Appeals. In their appeal, the studios emphasized that the case had been dismissed the previous year by Judge Lucy Koh on statute of limitations grounds. The lawsuit was only allowed to proceed when the plaintiffs demonstrated that the studios might have fraudulently concealed their activities.

Now, Disney and Dreamworks argue that even if there was concealment, many artists within the certified class were aware of the alleged conspiracy among the studios. The studios point to various pieces of evidence, including emails between Pixar employees discussing a “gentleman’s agreement” between Pixar and another studio, a 2006 meeting where Disney’s president allegedly admitted to a non-poaching agreement, and blog posts indicating knowledge of the conspiracy.

The studios contend that if the artists had knowledge of the alleged conspiracy, it nullifies any concealment defense regarding the statute of limitations. In simpler terms, they argue that artists who were aware of being mistreated by the studios should not be eligible to participate in the lawsuit seeking damages.

Judge Koh, in her certification ruling, acknowledged some of the studios’ concerns but found much of the evidence of prior knowledge too general. She noted that while information might have been available generally, specific instances of knowledge were insufficient to warrant a limited class certification. Additionally, she highlighted that the studios could later raise individualized statute of limitations defenses against specific class members.

Despite the court’s ruling, Disney and Dreamworks remain unconvinced, prompting the appeal to the Ninth Circuit. The outcome of this legal maneuvering will likely shape the trajectory of the wage theft lawsuit, with a ruling from the Ninth Circuit expected in several weeks. Until then, the class of artists covered by the lawsuit remains in a state of uncertainty.

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