Call it the new front line in the streaming battles: the poaching of executives.
21st Century Fox on Friday filed a lawsuit against Netflix, accusing the streaming video giant of illegally recruiting two of its executives who were under contract.
The suit, which was filed Friday in California Superior Court in Los Angeles, says Netflix 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.”
In a tight-knit industry where there is a of lot back-and-forth hiring, it’s unusual for a Hollywood studio to file a suit over executive poaching. The action underscores how Netflix’s rise as an entertainment juggernaut has created friction with major studios that find themselves competing for talent.
The lawsuit was sparked following the exits of two Fox executives: Marcos Waltenberg, who made the jump to Netflix earlier this year, previously worked as a marketing executive at Twentieth Century Fox Film; Tara Flynn, who made the move to Netflix just last week, had been the vice president of creative affairs at Fox 21 TV Studios.
Fox alleges that Netflix pursued and hired the executives even though it knew they each had employment contracts that were still in effect, according to the complaint.
"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.”
The Century City-based studio is seeking an injunction to prevent Netflix from interfering with its employment contracts, as well as compensatory and punitive damages.
In response, a Netflix spokesperson 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.”
Hollywood has long had a love-hate relationship with Netflix, known for such hits as “House of Cards” and “Orange Is the New Black.”
While its big wallet has given a boost to major television and movie studios when it comes to licensing content, tensions have flared as Netflix has become the go-to destination for millions of viewers who are attracted by its low cost, ease of use and commercial-free programming.
Netflix’s growing clout in the industry has made it an attractive destination for executives. Aside from Waltenberg and Flynn, an additional 19 Fox executives without contracts have also joined Netflix over the last two years, said a person familiar with the matter who was not authorized to comment.