New court filing shows stunning new evidence of wage-fixing by major Hollywood animation studios

By Mark Ames , written on December 2, 2014

From The News Desk

The Techtopus wage theft conspiracy has just gone Hollywood in a serious way.

Attorneys representing visual special effects workers suing the biggest names in computer animation have just filed an amended complaint to their wage-fixing lawsuit, originally filed in September and first reported here at PandoDaily.

The latest amended suit filed by attorneys from the law firm Cohen Milstein adds Blue Sky Animation—maker of the hit films Rio and the Ice Age—to a list of defendants which includes Dreamworks Animation, Disney, Image Works, Sony Animation and several other studios. Blue Sky, based in Greenwich, Connecticut, is a subsidiary of Murdoch’s 20th Century Fox.

I’m still poring through the amended complaint (embedded below), and some of the other court materials that backed it up. For now, all I can say for sure is that this bombshell new material seems to demonstrate that the collusion among VFX industry executives to fix and suppress their workers’ wages was at least as shocking and crude as anything arranged in the wage-fixing cartel led by Apple, Google, and the other Silicon Valley tech titans.

Among the claims in the amended complaint:

The wage-fixing conspiracy spread across the VFX industry earlier than previously reported.

Beginning in the mid-1990s, the heads of the top VFX human resources departments and their recruiters met yearly in secret to compare notes and discuss an industry compensation survey. According to the complaint, citing newly disclosed evidence, the studios being sued “understood that the [compensation] survey was used by each to ‘confirm or adjust our salary ranges.’” By 2007, the relationships between the competing animation studios’ HR heads were so tight that Pixar’s VP of Human Resources mass-emailed the other defendants to tell them “[c]hatting with all of you each day is really becoming a fun habit,” while her counterpart at Walt Disney Animation Studios wrote that she “hear[s] from you all on a daily basis.”

DreamWorks Animation’s role in the wage-fixing conspiracy was more far-reaching than first reported.

For example, in 2005, DreamWorks Animation asked Disney to provide “[a]ny salary information you have” on three positions. Disney reportedly responded the same day with pay ranges for the positions. In 2006, DreamWorks reportedly asked for Pixar’s “range of pay” for various employee positions, telling Pixar that DreamWorks “will be happy to share ours too.” DreamWorks contacted their HR counterpart at Disney that same year to collect detailed salary information from its competitors; “Disney responded by providing an exact salary range and offered to ‘get further into the details’ over the phone.” In a 2007 email, DreamWorks’ head of compensation wrote: “We do sometimes share general comp information (ranges, practices) in order to maintain the relationships with other studios and to be able to ask for that kind of information ourselves when we need it.”

The evidence of secret wage-fixing collusion between DreamWorks Animation and Pixar is particularly damning. The complaint cites an exchange taking place in March 2007: A new recruiter from DreamWorks made the mistake of contacting a Pixar employee. This prompted an email directly from Pixar’s Ed Catmull to the recruiter: “While we do not act to prevent people from moving between studios, we have had an agreement with Dreamworks not to actively pursue each others employees [sic]. I have certainly told our recruiters not to pursue any Dreamwork [sic] employees.” After which Pixar’s VP of Human Resources, Lori McAdams, wrote Catmull assuring her boss that she “know[s] [Dreamworks’] head of HR Kathy Mandato well, and she’s in agreement with our non-poaching practices, so there shouldn’t be any problem.” Then Pixar’s McAdams wrote to her Dreamworks counterpart, Mandato, to double-check that was “no problem with our past practices of not poaching from each other.”

Dreamworks’ HR chief responded:

“Absolutely! You are right . . . (my bad).”
When the situation was reversed and Dreamworks’ Mandato wrote to Pixar’s McAdams to make sure Pixar was also sticking to the wage-fixing agreement, McAdams responded:
“Argh, it shouldn’t have gone to anyone at our work or our competitors people [sic]. I’ll put a stop to it”
Indeed as late as January 2009, shortly before the Obama Administration’s DOJ began investigating the wage-fixing cartels in Silicon Valley and in Hollywood, DreamWorks’ head of Production Technology emailed the Human Resources chiefs at Pixar, LucasFilm (ILM), Sony Pictures Animation and Disney—to see if the other companies were “as generous” in their overtime pay as DreamWorks. In the email, the DreamWorks executive said he hoped that the subject was not “taboo.” A Sony executive “called him after emailing him the subject was not ‘taboo’ for her.”

Pixar kept a list of competitors with which it had secret non-solicitation agreements.

The “Competitors List” detailed “rules” naming the studios which Pixar was directed “not to ‘recruit directly’ or ‘solicit or poach employees’” from: Blue Sky, DreamWorks Animation, Image Movers Digital, Sony Pictures Imageworks and Walt Disney Animation Studios.

In another example of Pixar’s agreements, in 2005, Pixar’s VP of Human Resources, Lori McAdams, wrote:

“With regard to ILM, Sony, Blue Sky, etc., . . . we have a gentleman’s agreement not to directly solicit/poach from their employee pool.”
New evidence of Blue Sky Animation's participation in the collusion

In 2005, Blue Sky decided against recruiting a DreamWorks employee because Blue Sky “[didn’t] want to be starting anything with [DreamWorks Animation head Jeffrey Katzenberg] over one story guy.” Elsewhere, Blue Sky reportedly contacted Pixar to discuss “our sensitive issue of employee retention,” after which Pixar’s head of Human Resources contacted her counterpart at Blue Sky, Linda Zazza, “to assure her that we are not making calls to their people or trying to poach them in any way.”

* * * *

It’s remarkable that, five years after the DOJ began its investigation into wage fixing in the technology industry, we’re only now learning about how deep the cartel reached across the Hollywood animation studios. A telling paragraph in the new amended complaint lays out how the wage-fixing conspiracy’s reach into Hollywood was kept from the public until just this past summer:
Press reports in 2009 noted that the DOJ was investigating anti-solicitation agreements among high-tech companies. They did not indicate at that time that their investigation included Pixar, Lucasfilm, or any other visual effects or animation company. No visual effects or animation company was mentioned publicly as part of that investigation, nor were there any press reports about anticompetitive agreements in the visual effects and animation industry, until September 17, 2010, when a news story for the first time named Pixar as one of the companies under investigation. There was no public disclosure that Pixar had conspired with any other visual effects or animation companies, nor that any of the other Defendants in this case were suspected of any wrongdoing. The first public reports that Pixar had reached anti-solicitation agreements with any entity other than Apple were not published until December 2010, and then implicated only Lucasfilm. Until certain filings in the High-Tech docket were unsealed in 2013, there was no public information that any of the other Defendants here had engaged in similar conduct or that a conspiracy existed among the Defendants.
There's much, much more to sift through in the amended complaint, and associated documents. I'll publish updates to this story as I learn more.

Here's the full document:

Wage Theft Dreamworks Complaint Dec2-2014