Netflix has countersued 21st Century Fox in an executive poaching dispute, claiming the programming conglomerate’s contracts amount to “involuntary servitude.”
"This action concerns Fox's unlawful and anti-competitive business practices that impair the mobility of its employees and prevent industry competitors like Netflix from competing fairly for skilled employees," Netflix said in its filing in Los Angeles Superior Court, obtained by the Hollywood Reporter. "Through its widespread use of unlawful restrictive fixed-term employment agreements, Fox is facilitating and enforcing a system that restrains employee mobility, depresses compensation levels, and creates unlawful barriers to entry for Netflix and others competing in the film and television production business in violation of California Business and Professions Code Section 16600."
Netflix's countersuit hits back at Fox’s complaint last month that the SVOD service has engaged in a “brazen campaign to unlawfully target, recruit, and poach valuable Fox executives by illegally inducing them to break their employment contracts with Fox to work at Netflix.”
It’s a dispute with some implications for the pay-TV ecosystem, given that Netflix is now spending $6 billion a year to produce original content and is reshaping the traditional production business in the process.
Netflix said Fox bullies employees with “take-it-or-leave-it” deals.
"California prizes employee mobility and enshrines it in public policy, statute, and case law," Netflix’s countersuit added. "This broad principle of employee mobility is at the heart of our state's innovation and economic prosperity that is the envy of many around the world. Fox's fixed-term employment agreements are contrary to this in both spirit and application and are therefore void under California law."
Fox’s complaint came after Fox theatrical marketing executive Marcos Waltenberg bolted on his fixed-term contract and joined Netflix earlier this year. Also switching over was Tara Flynn, formerly VP of creative affairs for Fox 21 TV Studios.