Mark Ames reports on the latest revelations in a major anti-trust case against Silicon Valley giants including Disney, Sony, Dreamworks, Lucasfilm, and Pixar. For tech titans, enough is apparently never enough.
The earlier chapters of this sorry saga exposed a long-standing scheme by which major tech companies including Apple, Google, Adobe, Intuit, Intel, Lucasfilm and Pixar colluded to suppress wages of an alleged one million workers. The collusion was agreed at the CEO level of all the participants and memorialized through written agreements.
A related private suit was filed last September by animator against nine movie industry heavyweights including Walt Disney Animation, Dreamworks Animation, Sony Pictures, LucasFilm and Pixar. It alleged similar conduct to the bigger Silicon Valley wage suppression suit. Among other things, the companies not just compared pay levels but agreed to fix them, and also signed agreements not to recruit from each other.
An amended complaint in the animator suit added two studios to the complaint and far more important, exposed that the wage-fixing scheme was far longer standing that previously thought. Key items from Ames’ story:
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.” …
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”
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.
There are two striking features to this case. The first is as with the Silicon Valley wage suppression agreements, these deals were remarkably brazen: conducted at the very top of these firms, so no attempt to shield the CEOs, well understood by all the HR departments involved, no effort taken to hide what was happening (as in regular use of e-mails). This is the conduct of an industry that thinks it is above the law.
The second is that the early inception and extent of this conduct puts paid to the prescription regularly served up to American workers, that they need to get more skills so they can compete in the global marketplace. Animators have highly developed technical skills. If they weren’t particularly valuable and in relatively short supply, they wouldn’t have been targeted so early by employers. And they hold a special place not just domestically but internationally. The only other country with a large pool of animators is Japan, and language and cultural issues limit fungibility both ways.
So professional who fit squarely in the supposed employment sweet spot, STEM, have their opportunities limited, both in terms of pay and career advancement. And one of the most serious ways is the least obvious. Forbidding poaching on the other major employers of animation talent means that any startup or small player would be raided at disproportionate rates. The wage fixing pact thus had a side effect of entrenching the already-dominant position of the industry leaders. Venture capitalists recognized how they’d been victimized by the Silicon Valley wage collusion/non-recruiting agreements. They understood after the fact why so many of their startups had been plagued, and sometimes wrecked by regular raiding by the industry giants. The big firms made sure they had nowhere else to go.
Mind you, these practices also constitute a form of wage theft. It’s not as easy to calculate the losses as when a Walmart pressures employees to work off the clock, but there is no question wage levels in these jobs would have been higher over time had these wide-ranging practices not been implemented.
The message is clear: acquiring skills is not all that it is cracked up to be when companies seek to organize themselves so as to treat workers as disposable, and when they can’t do that, to contain their bargaining power. The advantaged positions are ones where you’ve attached yourself to capital, either directly, by controlling resources, or being a key advisor to a person or organization in that position. Any other place is precarious.