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Fox scores a win over Netflix in dispute over executive poaching

Fox scores a win over Netflix in dispute over executive poaching
A Los Angeles judge decided that Netflix improperly sought to induce Fox employees to break their contracts. But the case isn't over yet and could still go to trial. (Associated Press)

Fox has notched a legal victory over Netflix after a Los Angeles judge sided with the now Disney-owned studio in an executive poaching dispute that has wide-ranging implications throughout Hollywood.

But the case isn’t over yet as the two sides continue to hash out key points of contention in court.

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L.A. County Superior Court Judge Marc D. Gross sided with Fox in a preliminary decision that was made final late Wednesday, ruling Netflix improperly sought to induce Fox employees to break the contracts they had signed.

“Netflix arguably sought to further its own economic interest at Fox’s expense and such conduct is not justified,” he wrote in his decision.

However, Gross didn't grant Fox a final judgment on those claims because there's a dispute over how much damage the studio sustained. Even though Fox was seeking only a symbolic $1 in damages, the court is expected to continue hearing the matter.

Gross also hasn’t ruled on Fox’s request for an injunction against Netflix that would prevent the streaming giant from ransacking the studio’s executive talent. A July hearing has been set to further adjudicate the matter.

Netflix, which declined to comment, appears to be keeping its options open. The Los Gatos, Calif.-based company still intends to plead its case in front of a jury, according to an individual with knowledge of the suit. A trial date has been set for January.

The case has been widely watched in Hollywood as Netflix and other major streaming companies continue to lure executive talent away from the traditional studios.

Netflix has been particularly aggressive in its search for talent, scooping up executives and showrunners as it seeks to maintain its dominance in the escalating streaming wars.

Fox sued Netflix nearly three years ago, claiming that the company’s poaching of two executives — Marco Waltenberg and Tara Flynn — was illegal under California law.

Waltenberg was a vice president at 20th Century Fox Film, while Flynn was a vice president of creative affairs at Fox 21.

Fox argued that Netflix improperly induced Waltenberg and Flynn to break the fixed-term employment contracts they had signed with Fox. But Netflix countered that such contracts aren’t enforceable because they are anticompetitive and limit employees’ freedom.

Since then, Fox has identified up to 20 employees that it believes have been poached by Netflix.

In its original filing, Fox argued that Netflix was encouraging employees to disregard the contracts they had signed with the studio and jump ship.

The majority of 21st Century Fox was recently acquired by the Walt Disney Co. in a monumental $71.3-billion deal. Since then, the combined company has seen layoffs among its L.A. staff.

12:48 p.m.: This article was updated with additional details about Netflix.

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