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Fox-Netflix Poaching Suit Show Must Go On, Appeals Court Rules

By William Vogeler, Esq. on March 07, 2017 | Last updated on March 21, 2019

A California appeals court turned down a request to intervene in a lawsuit between 20th Century Fox and Netflix.

The Second District Court of Appeals said Fox, which wanted to stay the lawsuit and challenge a trial court's rulings, may appeal if it loses in the trial court.

Fox had sued Netflix in September 2016, alleging the company had poached Fox executives Tara Flynn and Marco Waltenberg. Netflix counter-sued, claiming Fox's employment agreements violate state law.

Fixed-Term Agreements

After the trial court judge ruled against Fox on two motions, attorney Daniel Petrocelli petitioned the the appeals court to stop the case from proceeding to judgment.

"Unless reviewed now, the order will unleash months and possibly years of litigation and uncertainty over the enforceability of agreements affecting Fox's executive workforce, and disrupting Fox's business operations at the highest level -- which of course is an essential purpose of Netflix's cross-complaint," Petrocelli argued in the petition. "And not just Fox's operations -- the order also casts a shadow over all the California employers and employees who depend on fixed-term agreements for the mutual stability they provide."

First the appeals court declined to stay the matter, and then sent the parties back to the trial judge for further proceedings. "Petitioner has an adequate remedy at law by way of appeal," the court said.

Court Watchers on Netflix

Attorney Ken Sulzer at Constangy Brooks said the case may have wide-reaching impact beyond Hollywood, where fixed term employment agreements are common.

"This could absolutely be impactful across industries, even outside TV and film production," he said. "There are lots of executives with fixed terms, and headhunters call them up every day."

If Netflix prevails, court watchers said, employers will have fewer ways to keep executives and other workers from going to work for competitors.

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