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Fox Sues Netflix Over Poached Executives: Does It Have a Case?

By Casey C. Sullivan, Esq. on September 21, 2016 | Last updated on March 21, 2019

Fox wants to keep its executives from streaming over to Netflix, and it's calling on its lawyers to help it out. 21st Century Fox sued Netflix in Los Angeles Superior Court last Friday, accusing the online video streaming company of engaging in a "brazen campaign to unlawfully target, recruit, and poach valuable Fox executives."

Such a lawsuit is unusual in the entertainment industry, the Los Angeles Times notes, where back-and-forth hiring of executive talent is common. But Fox thinks the lawsuit is worth it, saying that Netflix "is defiantly flouting the law by soliciting and inducing employees to break their contracts."

Netflix's (Allegedly) Illegal Poaching

The lawsuit comes after two Fox executives fled the studio for Netflix. Marcos Waltenberg, formerly a market exec at Fox, moved to Netflix early this year; he was followed by Tara Flynn, Fox's former VP of creative affairs, who left for Netflix just last week.

"We filed this lawsuit because we believe Netflix is defiantly flouting the law by soliciting and inducing employees to break their contracts," Fox said in a statement. "We intend to seek all available remedies to enforce our rights and hold Netflix accountable for its wrongful behavior."

Does Fox Have a Case?

Poaching away employees generally isn't illegal. Companies that want to prevent employees from jumping ship generally depend on contract provisions like non-competes. But in California, where both Fox and Netflix are based, non-compete clauses are largely forbidden.

That leaves Fox to claim that Netflix has engaged in unfair competition and tortuous interference with contractual relations, accusing Netflix of illegally inducing its execs to break their contracts. Their complaint states that Waltenberg's two year contract was to run through 2016, with Fox having a right to extend, while Flynn's was to work at Fox until 2019, according to the Hollywood Reporter.

Netflix, however, doesn't believe those agreements are enforceable. In a statement, the company said: "We intend to defend this lawsuit vigorously. We do not believe Fox's use of fixed term employment contracts in this manner are enforceable. We believe in employee mobility and will fight for the right to hire great colleagues no matter where they work."

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