SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
SANTA MONICA COURTHOUSE - DEPARTMENT R
TENTATIVE RULING
TWENTIETH CENTURY FOX FILM
CORPORATION, et al.
vs.

Case No.: SC126423
Hearing Date: June 5, 2019
Dept: R
Time: 8:30 AM

NETFLIX, INC., et al.
Plaintiffs Twentieth Century Fox Film Corporation and Fox 21, Inc.’s motion for summary
judgment on the complaint is denied. Plaintiffs’ motion for summary adjudication of the
inducing breach Waltenberg Agreement, inducing breach of Flynn Agreement, and unfair
competition in violation of Business & Professions Code §17200 causes of action is also
denied.
The court treats Plaintiffs’ motion for summary judgment/adjudication on Defendant
Netflix, Inc.’s cross-complaint as a motion for judgment on the pleadings, which is granted
with 20 days leave to amend.
The court treats Plaintiffs’ motion for summary adjudication of Defendant’s violation of
public policy and unconscionability affirmative defenses as a motion for judgment on the
pleadings, which is granted with 20 days leave to amend.
Plaintiffs Twentieth Century Fox Film Corporation (“TCFFC”) and Fox 21, Inc. (“Fox
21”) (collectively “Plaintiffs” or “Fox”) move for summary judgment against Defendant Netflix,
Inc. (“Defendant” or “Netflix”) on the complaint and cross-complaint. In the alternative,
Plaintiffs move for summary adjudication of the 1st (inducing breach of the Waltenberg
Agreement), 2nd (inducing breach of the Flynn Agreement), and 3rd (unfair competition in
violation of Business & Professions Code §17200) causes of action in their complaint, the 1st
(violation of Business & Professions Code §17200) and 2nd (declaratory relief) causes of action
in Netflix’s cross-complaint, and the 3rd (violation of public policy) and 24th (unconscionability)
affirmative defenses in Netflix’s operative answer.
A. Background
1. Complaint
On September 16, 2016, Plaintiffs filed a complaint against Netflix, alleging causes of
action for inducing breach of the Waltenberg Agreement, inducing breach of the Flynn
Agreement, and unfair competition in violation of Business & Professions Code §17200.
Page 1 of 20

 Plaintiffs alleged TCFFC entered into a Fixed-Term Employment Agreement with
Marcos Waltenberg (“Waltenberg”), effective as of December 9, 2014 (“Waltenberg
Agreement”), Waltenberg, as a material condition of his employment with TCFFC, agreed to
perform his duties as Vice President, Promotions, at least through December 31, 2016, Netflix
knew about the Waltenberg Agreement, including that Waltenberg agreed to work with TCFFC
for a specified term that had not yet expired, during its recruitment and solicitation of
Waltenberg, Netflix committed intentional acts designed to induce Waltenberg to breach the
Waltenberg Agreement by offering Waltenberg employment, recruiting and soliciting
Waltenberg, hiring Waltenberg, and indemnifying Waltenberg for claims arising from his breach
of the Waltenberg Agreement, Waltenberg materially breached the Waltenberg Agreement in
January 2016, as a result of Netflix’s tortious interference, by ending his employment with
TCFFC and failing to perform his duties through the agreed-upon term, and TCFFC suffered
damages as a result of Netflix’s conduct. (Complaint ¶¶8-10, 23-31.)
Plaintiff also alleged Fox 21 entered into a Fixed-Term Employment Agreement with
Tara Flynn, effective as of November 19, 2013 (“Flynn Agreement”), Flynn, as a material
condition of her employment with Fox 21, agreed to perform her duties as Executive Director,
Creative, and then Vice President, Creative, through an initial term ending November 19, 2015,
at Fox 21’s election, an additional two-year period ending November 18, 2017, and an additional
two-year period, pursuant to amendment, ending November 18, 2019, Netflix knew about the
Flynn Agreement, including that Flynn had agreed to work for Fox 21 for a specified term that
had not yet expired, during its recruitment and solicitation of Flynn, Netflix committed
intentional acts designed to induce Flynn to breach the Flynn Agreement by offering Flynn
employment, recruiting and soliciting Flynn, hiring Flynn, and indemnifying Flynn for claims
arising from breach of the Flynn Agreement, Flynn materially breached the Flynn Agreement in
August 2016, as a result of Netflix’s tortious interference, by ending her employment with Fox
21 and failing to perform her duties through the agreed-upon term, and Fox 21 suffered damages
as a result of Netflix’s conduct. (Complaint ¶¶12-22, 32-40.)
Plaintiffs alleged Netflix’s intentional interference with their Fixed-Term Employment
Agreements is an unlawful business act or practice under the Unfair Competition Law (“UCL”)
and Netflix has unlawfully competed with Plaintiffs by soliciting, recruiting, and inducing
Plaintiffs’ employees to breach their Fixed-Term Employment Agreements with Plaintiffs.
(Complaint ¶¶41-45.) Plaintiffs alleged Netflix is engaged in a brazen campaign to unlawfully
target, recruit, and poach valuable Fox executives by illegally inducing them to break their
employment contracts with Plaintiffs and to work at Netflix, an injunction is necessary to abate
Netflix’s continuing threat of unlawfully interfering with Plaintiffs’ Fixed-Term Employment
Agreements, and Plaintiffs are entitled to injunctive relief against Netflix restraining it from
further interfering with any of Plaintiffs’ Fixed-Term Employment Agreements. (Complaint ¶¶1,
45.) Plaintiffs prayed for a “permanent injunction enjoining Netflix, and its agents, servants,
employees, attorneys, successors and assigns, and all persons, firms and corporations acting in
concert with it, from interfering with any of Fox’s Fixed-Term Employment Agreements.”
(Complaint, Prayer 1.)

Page 2 of 20

 2. Cross-Complaint
On October 19, 2016, Netflix filed a cross-complaint against Plaintiffs, alleging causes of
action for violation of Business & Professions Code §17200 and declaratory relief. Netflix
alleged Plaintiffs’ use of Fixed-Term Employment Agreements unlawfully restrains Fox
employees from accepting employment elsewhere, including Netflix. (X-C ¶30.) Netflix alleged
Plaintiffs engage in the widespread use of unlawfully restrictive Fixed-Term Employment
Agreements and require otherwise typically at-will employees to enter into such agreements as a
condition of employment or promotion. (X-C ¶15.) Netflix alleged that, pursuant to the FixedTerm Employment Agreements, Plaintiffs require these employees to work exclusively for Fox
for a specified term of years, secure the exclusive and unilateral right to extend the length of
employment for an additional number of years, and include provisions that unlawfully purport to
allow Fox to seek injunctive or equitable relief to prevent a breach of the agreement. Netflix
alleged Plaintiffs, through these restrictive covenants, effectively seek to prevent their employees
from leaving to work for competitors before the end of the agreements’ term(s). (X-C ¶15.)
Netflix alleged the Waltenberg Agreement and Flynn Agreement illustrate Plaintiffs’ unlawful
behavior – both were subject to Fixed-Term Employment Agreements with additional option
years that Plaintiffs exercised unilaterally, neither was permitted to negotiate the terms of his or
her continued employment upon Plaintiffs’ exercise of its option, neither contract falls into the
narrow requirements of personal services agreements (such as those that are used for actors,
musicians, and celebrities tied to a particular creative project), and Plaintiffs refused to allow
termination of the contracts because Flynn and Waltenberg announced they intended to accept
jobs with Netflix. (X-C ¶20.) Netflix alleged Plaintiffs’ attempt to prevent Waltenberg, Flynn,
and any other employee who is subject to a Fixed-Term Employment Agreement with Fox, from
seeking or accepting employment from competitors, such as Netflix, is unlawful and constitutes
an unfair, unlawful, or fraudulent business practice under the UCL. (X-C ¶¶26-27, 31.)
Netflix seeks a judicial declaration “that Fox’s enforcement of fixed-term employment
agreements, arising from employment of Mr. Waltenberg and Ms. Flynn, and other Fox
employees that Netflix may seek to employ, be found unlawful under California law.” (X-C
¶37.) Netflix also seeks a judicial “determination of [its] rights to recruit, hire and/or retain Fox’s
current and former employees who are subject to fixed-term employment agreements.” (X-C
¶38.) Netflix prayed for the following: (1) an order enjoining Fox from continuing to use or
enforce Fixed-Term Employment Agreements or other restraints of trade against its employees in
California; (2) a declaration that Fixed-Term Employment Agreements with Fox employees are
unenforceable under Business & Professions Code §16600, and may not be used to prevent these
individuals from seeking employment with other companies, including Netflix; and (3) a
declaration that Fox is estopped from enforcing Fixed-Term Employment Agreements to prohibit
Fox’s employees from employment with other companies, including Netflix. (X-C, Prayer, pgs.
10-11.)
3. First Amended Answer
On July 26, 2018, Netflix filed a first amended answer to Plaintiffs’ complaint, asserting
several affirmative defenses, including affirmative defenses for violation of public policy and
unconscionability. Netflix alleged Plaintiffs’ claims are barred by the fact that they allege
Page 3 of 20

 Netflix has induced breach of contracts that are void as against public policy and unconscionable
and, therefore, unenforceable. (FAA, pgs. 2, 6.)
B. Evidentiary Objections
Netflix’s evidentiary objections are sustained as to Nos. 1, 2, 3, 6, 7, 8, 15, 16, 19, 20, 29
(in part),1 and 30, and overruled as to Nos. 4, 5, 9, 10, 11, 12, 13, 14, 17, 18, 21, 22, 23, 24, 25,
26,2 27, and 28.
Fox’s evidentiary objections are sustained as to Nos. 1, 3-4, 6, 8, 10-13, 16, 23, 25, 2728, 30-31, 35-38, 43-45, 55, 59-61, 63-71, 73-82, 84, 85 (in part),3 87-90, 92-106, 109-110, 112,
114, 117, 121-126, 131, 133-134, 136, 138-141, 144-145, 151, and 153-156, 164-165, and
overruled as to Nos. 2, 5, 7, 9, 14-15, 17-22, 24, 26, 29, 32-34, 39-42, 46-54, 56-58, 62, 72, 83,
86, 91, 107-108, 111, 113, 115-116, 118-120, 127-130, 132, 135, 137, 142-143, 146-148, 150,
152, and 157-163. Fox’s objections Nos. 166-167 are not directed to evidence and are thus not
applicable. The Court will hear argument on No. 149.
C. CRC Violations
Fox did not include Netflix’s cross-claims for violation of Business and Professions Code
§17200 and declaratory relief in the separate statement in violation of CRC 3.1350(b) and (d).
Fox’s separate statement does not identify “material fact[s] claimed to be without
dispute” with respect to resulting damages in support of Issues 1 and 2. (See CRC
3.1350(d)(1)(B).) In the separate statement, Fox stated it did not receive the benefit of
Waltenberg’s services after January 22, 2016 through the end of the Term, December 31, 2016,
and it did not receive the benefit of Flynn’s services after September 2, 2016 through the end of
the Term, November 18, 2017. (Fox – SS Nos. 11 and 23.) However, these are not material facts
showing resulting damages. Fox’s separate statement also does not identify “material fact[s]
claimed to be without dispute” with respect to resulting economic harm in support of Issue 3.
Nevertheless, the court will proceed on the merits because Netflix did not challenge the
sufficiency of Fox’s separate statement, Fox cited to evidence of damages in the separate
statement, and Netflix addressed the issue of damages.
D. Undisputed Facts
Fox and Waltenberg executed a written contract for employment for a specified term,
dated December 9, 2014 (“Waltenberg Agreement”). (Netflix’s Response to Fox’s SS, pgs. 2-4,
No. 1.) At the time Waltenberg signed his employment contract with Fox in the spring of 2015,
No. 29 is only sustained as to the following language: “but he intimated how smart she was, how she was one of
the few people he trusted, how they had worked together for a very long time. It was incredibly apparent that she
was one of the most respected people in the office.”
1

2

Nos. 21-22 and 24-26 also do not comply with CRC 3.1354(b).

3

No. 85 is sustained only as to 441:15-442:2 of Waltenberg’s deposition testimony.

Page 4 of 20

 Waltenberg understood that he was agreeing to work for Fox for a specified term and Fox was
agreeing to employ him for a specified term. (Netflix’s Response to Fox’s SS, pgs. 76-79, Nos.
31-32.) The Waltenberg Agreement provides, in pertinent part, as follows:
The services to be furnished by you hereunder and the rights and privileges
granted to the Company by you are of a special, unique, unusual, extraordinary,
and intellectual character which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and a breach by you of any of the provisions contained herein will cause the
Company irreparable injury and damage. You expressly agree that the Company
shall be entitled to seek injunctive and other equitable relief to prevent a breach of
this Agreement by you. Resort to such equitable relief, however, shall not be
construed as a waiver of any proceeding or succeeding breach of the same or any
other term or provision. The various rights and remedies of the Company
hereunder shall be construed to be cumulative and no one of them shall be
exclusive of any other or of any right or remedy allowed by law.
(Netflix’s Response to Fox’s SS, pgs. 63-64, No. 29.) Fox, pursuant to Paragraph 1(a) of the
Waltenberg Agreement, agreed to employ Waltenberg for a period of two years, from January 1,
2015 to December 31, 2016 (“Term”). (Netflix’s Response to Fox’s SS, pgs. 4-5, No. 2.) On
November 6, 2015, Netflix sent a written offer of employment to Waltenberg (“Offer Letter”).
(Netflix’s Response to Fox’s SS, pg. 5, No. 3.) Waltenberg executed Netflix’s Offer Letter on
November 7, 2015. (Netflix’s Response to Fox’s SS, pg. 5, No. 4.) Prior to November 6, 2015,
Netflix was aware that Waltenberg had an employment agreement with Fox that contained a
specified term that had not expired. (Netflix’s Response to Fox’s SS, pgs. 5-6, No. 5.)4 On
December 16, 2015, Netflix agreed in writing to defend and indemnify Waltenberg from and
against any action by Fox taken in connection with his acceptance of Netflix’s offer of
employment (“Waltenberg Indemnification Agreement”). (Netflix’s Response to Fox’s SS, pgs.
6-9, No. 6.) Netflix paid for Pennington Lawson LLP to represent Waltenberg. (Netflix’s
Response to Fox’s SS, pg. 7, No. 7.) Netflix more than doubled Waltenberg’s salary. (Netflix’s
Response to Fox’s SS, pgs. 9-11, No. 8.) Waltenberg stopped working at Fox on January 22,
2016. (Netflix’s Response to Fox’s SS, pg. 11, No. 9.) Prior to January 22, 2016, Netflix was
aware the Waltenberg Agreement recited a term that ended on December 31, 2016. (Netflix’s
Response to Fox’s SS, pgs. 11-12, No. 10.) Waltenberg started working at Netflix on January
25, 2016. (Netflix’s Response to Fox’s SS, pg. 15, No. 12.)
Fox and Flynn executed a written contract for employment for a specified term, dated
November 19, 2015 (the “Flynn Agreement”).5 At the time Flynn signed her employment
Netflix responded to No. 5, as follows: “Undisputed that prior to November 6, 2015, Netflix was aware Mr.
Waltenberg had an employment agreement with Fox purporting to obligate him to a fixed-term ending at some point
in the future, but disputed as to whether the contract is valid and enforceable…” (Netflix’s Response to Fox’s SS,
pgs. 5-6, No. 5.) In this response, Netflix does not dispute it was aware of the Waltenberg Agreement prior to
November 6, 2015. Netflix only disputes the validity and enforceability of the agreement.
4

5

In response to No. 13, Netflix does not dispute the existence of the Flynn Agreement. Netflix only disputes the
validity and enforceability of the Flynn Agreement. (See Netflix’s Response to Fox’s SS, pgs. 20-25, No. 13
(“Disputed as to whether Fox and Flynn executed a valid and enforceable contract for employment for a specified

Page 5 of 20

 contract with Fox in the fall of 2015, Flynn understood that she was agreeing to work for Fox for
a specified term. (Netflix’s Response to Fox’s SS, pgs. 81-85, No. 36.) In the fall of 2015, Fox
offered Flynn $180,000 per annum, Flynn asked for $250,000 per annum, and Fox and Flynn
executed the Flynn Agreement, which provided for a salary of $190,000 per annum. (Netflix’s
Response to Fox’s SS, pgs. 85-86, No. 37.) The Flynn Agreement provides, in pertinent part, as
follows:
The services to be furnished by you hereunder and the rights and privileges
granted to the Company by you are of a special, unique, unusual, extraordinary,
and intellectual character which gives them a peculiar value, the loss of which
cannot be reasonably or adequately compensated in damages in any action at law,
and a breach by you of any of the provisions contained herein will cause the
Company irreparable injury and damage. You expressly agree that the Company
shall be entitled to seek injunctive and other equitable relief to prevent a breach of
this Agreement by you. Resort to such equitable relief, however, shall not be
construed as a waiver of any proceeding or succeeding breach of the same or any
other term or provision. The various rights and remedies of the Company
hereunder shall be construed to be cumulative and no one of them shall be
exclusive of any other or of any right or remedy allowed by law.
(Netflix’s Response to Fox’s SS, pgs. 64-65, No. 30.) Fox, pursuant to Paragraph 1 of the Flynn
Agreement, agreed to employ Flynn for a period of two years from November 19, 2015 to
November 18, 2017 (the “Term”). (Netflix’s Response to Fox’s SS, pg. 25, No. 14.) On August
8, 2016, Netflix sent a written offer of employment to Flynn (“Offer Letter”). (Netflix’s
Response to Fox’s SS, pgs. 25-26, No. 15.) Flynn executed Netflix’s Offer Letter on August 9,
2016. (Netflix’s Response to Fox’s SS, pg. 26, No. 16.) Prior to August 8, 2016, Netflix was
aware that Flynn had an employment agreement with Fox that contained a specified term that
had not expired.6 On August 9, 2016, Netflix agreed in writing to defend and indemnify Flynn
from and against any action by Fox taken in connection with her acceptance of Netflix’s offer of
employment (“Flynn Indemnification Agreement”). (Netflix’s Response to Fox’s SS, pg. 28,
No. 18.) Netflix paid for Pennington Lawson LLP to represent Flynn. (Netflix’s Response to
Fox’s SS, pgs. 28-29, No. 19.) Netflix doubled Flynn’s salary. (Netflix’s Response to Fox’s SS,
pgs. 29-30, No. 20.) Flynn stopped working at Fox on September 2, 2016. (Netflix’s Response
to Fox’s SS, pg. 30, No. 21.) Prior to September 2, 2016, Netflix was aware the Flynn
Agreement recited a term that ended on November 18, 2017. (Netflix’s Response to Fox’s SS,
pgs. 30-31, DRSS No. 22.) On September 6, 2016, Flynn started working at Netflix. (Netflix’s
Response to Fox’s SS, pg. 34, No. 24.)

term, dated November 19, 2015, an essential element of Fox’s claim. [¶] Netflix contends the contract is
unenforceable…”).)
Netflix responded to No. 17, as follows: “Undisputed that prior to August 8, 2016, Netflix was aware Ms. Flynn
had an employment agreement with Fox purporting to obligate her to a fixed-term ending at some point in the
future, but disputed as to whether the contract is valid and enforceable…” (Netflix’s Response to Fox’s SS, pgs.
26-28, No. 17.) In this response, Netflix does not dispute it was aware of the Flynn Agreement prior to August 8,
2016. Netflix only disputes the validity and enforceability of the agreement.
6

Page 6 of 20

 E. Analysis
1. Complaint
a. Inducing Breach of the Waltenberg Agreement (1st COA) by TCFFC
“‘The elements which a plaintiff must plead to state the cause of action for intentional
interference with contractual relations are (1) a valid contract between plaintiff and a third party;
(2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a
breach or disruption of the contractual relationship; (4) actual breach or disruption of the
contractual relationship; and (5) resulting damage.’ [Citation]” (Quelimane Co. v. Stewart Title
Guaranty Co. (1998) 19 Cal.4th 26, 55.) “Because interference with an existing contract receives
greater solicitude than does interference with prospective economic advantage [Citation], it is not
necessary that the defendant’s conduct be wrongful apart from the interference with the contract
itself. [Citation]” (Id.)
TCFFC submitted evidence proving each element of the inducing breach of the
Waltenberg Agreement cause of action against Netflix. (See C.C.P. §437c(p)(1).) TCFFC
submitted evidence showing the existence of an agreement with Waltenberg. It is undisputed
that Fox and Waltenberg executed the Waltenberg Agreement and, pursuant to Paragraph 1(a) of
the agreement, TCFFC agreed to employ Waltenberg for a period of two years, from January 1,
2015 to December 31, 2016 (“Term”). TCFFC also submitted evidence suggesting Netflix was
aware of the Waltenberg Agreement, Netflix engaged in intentional acts designed to induce
breach or disruption of the Waltenberg Agreement, and there was an actual breach or disruption
of the Waltenberg Agreement. It is undisputed that Netflix was aware, prior to November 6,
2015, that Waltenberg had an employment agreement with Fox that contained a specified term
that had not expired, Netflix sent an Offer Letter to Waltenberg on November 6, 2015,
Waltenberg executed the Offer Letter on November 7, 2015, Netflix agreed in writing, on
December 16, 2015, to defend and indemnify Waltenberg from and against any action by Fox
taken in connection with his acceptance of Netflix’s offer of employment, Netflix paid for
Pennington Lawson LLP to represent Waltenberg, Netflix more than doubled Waltenberg’s
salary, Waltenberg stopped working at Fox on January 22, 2016, Netflix was aware, prior to
January 22, 2016, the Waltenberg Agreement recited a term that ended on December 31, 2016,
and Waltenberg started working at Netflix on January 25, 2016.
Additionally, TCFFC submitted evidence suggesting it suffered resulting damages.
Specifically, TCFFC submitted evidence suggesting it had to pay a consultant (Hugo Domenech)
to assume some of Waltenberg’s duties while it searched for a replacement and to otherwise
assist with the transition. 7 (Fox’s SS, pg. 11, No. 11.)8
7

Fox, in its Separate Statement, cited to evidence suggesting TCFFC had to hire a consultant, Hugo Domenech
(“Domenech”), “to finish the execution of the outstanding work that [Waltenberg] had left behind,” Domenech
stayed on as a consultant for three months, and Domenech was paid approximately 23,000 pounds (for
compensation and accommodations). (Declaration of Lens ¶74, Exhibit 73, Deposition of Roca 175:14-180:11.) In
Objection No. 24, Netflix objected to certain portions of Anna Roca’s (“Roca”) deposition testimony. However,
Netflix did not object to 175:14-180:11 of Roca’s deposition testimony. Moreover, the Court overruled Netflix’s
objections to the challenged portions of Roca’s deposition testimony.
Fox also claims to have suffered millions of dollars in losses due to decreased partner advertising support. (Fox’s
SS, pg. 10, No. 11 – Exhibit 73.) (Motion, pg. 13, fn. 3.) However, TCFFC did not submit admissible evidence
8

Page 7 of 20

 Based on the foregoing, TCFFC met its burden on summary judgment/adjudication.
Therefore, the burden shifts to Netflix to create a triable issue of material fact. As discussed
below in detail, Netflix met its burden.
Netflix submitted evidence showing a triable issue of material fact exists as to resulting
damages. Netflix submitted evidence suggesting TCFFC saved time and money by promoting
Castillo to Waltenberg’s position because TCFFC did not have to train someone from the outside
and paid Castillo significantly less than Waltenberg. (Netflix’s Response Fox’s SS, pgs. 12-15,
11.) (Opposition, pg. 14, fn. 18.) Netflix also submitted evidence challenging TCFFC’s claim of
a loss/decrease in millions of dollars in promotional support. (Netflix’s Response to Fox’s SS,
pgs. 12-15, No. 11.) The Executive Summary Marketing Partnerships Promotions sheet (Exhibit
92) shows $7,525,819 in partner advertising support (“ATL Value”) secured for “Home,” $5
million of which was from a “Global” (not Latin America specific) McDonald’s deal, rather than
the $17 million Roca testified Waltenberg secured. (Fox’s SS No. 11.) (Netflix’s Response to
Fox’s SS, pgs. 12-15, No. 11.) (Caro Exhibit 92.) Breen testified that the amount of money that
brands spend on promotions does not impact how much money Fox spends on its own marketing
of its movies. (Netflix’s Response to Fox’s SS, pgs. 12-15, No. 11.) (Caro Exhibit 1.)
TCFFC’s request for $1 in damages does not save the motion for summary
judgment/adjudication because, as discussed above, there is a triable issue of material fact as to
whether Plaintiffs suffered any resulting damages, which cannot be determined via the instant
motion.
Netflix argues it was not a substantial factor in causing an alleged breach of the
Waltenberg Agreement. (Opposition, pg. 14.) Netflix cites to Yanez v. Plummer (2013) 221
Cal.App.4th 180, 187, for the proposition that “conduct is not a substantial factor in causing harm
if the same harm would have occurred without that conduct.” (Opposition, pg. 14.) Netflix
argues the evidence shows Waltenberg would have left TCFFC before his contract ended even
without a job offer from Netflix. (Opposition, pg. 14.) However, Netflix did not submit
admissible evidence showing the same harm would have occurred without that conduct – that
Waltenberg would have left TCFFC before the Term on his agreement expired and/or on the
same date he left TCFFC.
Netflix also argues its conduct was not designed to induce a breach of the Waltenberg
Agreement because Netflix expected Waltenberg to be let out of his contract. (Opposition, pgs.
13-14.) However, in light of the undisputed facts set forth above, the evidence cited by Netflix
does not create a triable issue of material fact as to interference or causation.
Netflix contends there are many factual disputes as to whether Fox’s contracts, including
the Waltenberg and Flynn Agreements, are valid and enforceable. (Opposition, pgs. 10-13.)
Netflix argues Fox’s Fixed-Term Employment Agreements violate Business & Professions Code
§16600 and “California’s ‘settled legislative policy in favor of open competition and employee
[mobility].’” (Opposition, pgs. 10-13, 17-20.) (See Business & Professions Code §16600
(“Except as provided in this chapter, every contract by which anyone is restrained from engaging
connecting the decreased advertising support (which was not to be paid to TCFFC) to any cognizable damage
suffered by Fox (i.e. loss of revenue, increase in expense, etc.).

Page 8 of 20

 in a lawful profession, trade, or business of any kind is to that extent void.”).) However, Netflix’s
reliance on Business & Professions Code §16600 is misplaced. The injunctive relief provisions
in the Fixed-Term Employment Agreements, which are set forth in the Court’s ruling on
Netflix’s motion for summary adjudication, are irrelevant to the injunctive relief Fox seeks in
this action. Fox represents it “does not seek, and has never sought, injunctive relief against
Flynn or Waltenberg” and “has never sought injunctive relief against any breaching employee.”
(Reply, pgs. 6-7.) Moreover, the injunctive relief provisions in the Fixed-Term Employment
Agreements do not violate the statute. Business & Professions Code §16600 does not “affect
limitations on an employee’s conduct or duties while employed.” (Angelica Textile Services, Inc.
v. Park (2013) 220 Cal.App.4th 495, 509.)9 The injunctive relief provisions are essentially
limitations on the employees’ conduct or duties while employed. The provisions refer to
injunctive relief to prevent a breach of the agreements, which suggest the provisions apply while
the employees are still employed (i.e. before any breach occurs). Moreover, as argued by Fox,
the injunctive relief provisions do not, in fact, restrain anyone. Fox, by way of the injunctive
relief provisions, merely reserved the right to seek injunctive relief. (Motion, pg. 21.)
Even assuming, arguendo, the injunctive relief provisions in the Fixed-Term Employment
Agreements violate Business & Professions Code §16600 and/or are void for any other reasons,
the Fixed-Term Employment Agreements are still valid as to the remaining lawful terms. The
injunctive relief provisions are collateral to the main purpose of the Fixed-Term Employment
Agreements, which is to employ the employees for specified terms and at set levels of
compensation. (See Civil Code §1599 (“Where a contract has several distinct objects, of which
one at least is lawful, and one at least is unlawful, in whole or in part, the contract is void as to
the latter and valid as to the rest.”).) (See also Winston Research Corp. v. 3 M (9th Cir. 1965) 350
F.2d 134, 140, fn. 4 (“The employment agreements contained a provision restricting the right of
the employee to work for a competitor of Mincom after termination of employment, contrary to
Cal.Bus. & Prof.Code § 16600. But as the district court held, under California law the void
provision was severable and the remainder of the contract fully enforceable. [Citation] As we
note later, we also agree with the district court that in the circumstances of this case use in
California of contracts containing this unenforceable provision did not require the court to deny
Mincom equitable relief for unclean hands.”).)
Netflix also appears to argue the Fixed-Term Agreements are tainted with illegality and,
therefore, cannot be enforced. (Opposition, pgs. 12-13.) (See Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 124 (“The basic principles of severability that
emerge from Civil Code section 1599 and the case law of illegal contracts appear fully
applicable to the doctrine of unconscionability. Courts are to look to the various purposes of the
contract. If the central purpose of the contract is tainted with illegality, then the contract as a
whole cannot be enforced. If the illegality is collateral to the main purpose of the contract, and
“Business and Professions Code section 16600 has consistently been interpreted as invalidating any employment
agreement that unreasonably interferes with an employee's ability to compete with an employer after his or her
employment ends. [Citation] However, the statute does not affect limitations on an employee's conduct or duties
while employed. ‘While California law does permit an employee to seek other employment and even to make some
‘preparations to compete’ before resigning [citation], California law does not authorize an employee to transfer his
loyalty to a competitor. During the term of employment, an employer is entitled to its employees' ‘undivided
loyalty.’ [Citation.]’” (Angelica Textile Services, Inc. at 509.)
9

Page 9 of 20

 the illegal provision can be extirpated from the contract by means of severance or restriction,
then such severance and restriction are appropriate.”).) Netflix contends the Flynn and
Waltenberg Agreements “contain an explicit restraint: the injunctive relief provision that
purports to entitle Fox to enjoin Flynn and Waltenberg from working anywhere but Fox” and
argues “Fox can only support this restriction by falsely characterizing Flynn’s and Waltenberg’s
services are ‘of a special, unique, unusual, extraordinary, and intellectual character’ – a
representation with a specific and narrow meaning under California law that does not apply
here.” (Opposition, pg. 12.) (See Civil Code §3423(e) and C.C.P. §526(b)(5).)10
Netflix, relying on Latona v. Aetna United States Healthcare (C.D. Cal. 1999) 82
F.Supp.2d 1089, argues severance is unavailable because Fox “uses contracts to ‘control’ its
employees by preventing them from exploring other opportunities or testing their market value to
improve their negotiating position” and the “unlawful and misleading contract terms, including
the injunctive relief provision, further that overall purpose by creating an in terrorem effect on
Fox employees who, fearing litigation and ‘tend[ing] to assume that the contractual terms
proposed by their employer…are legal, if draconian,’ will not test the provision by attempting to
leave Fox.” (Opposition, pgs. 12-13.)
Latona involved a “Non-Compete and Confidentiality Agreement” (“Agreement”). (Id.
at 1090.) The Agreement contained a non-compete clause, anti-solicitation clause, and
confidentiality clause. (Id. at 1091.) Aetna asked its employees to sign the agreement, the
plaintiff refused, and Aetna terminated plaintiff’s employment. (Id. at 1090-1091.) The plaintiff
sued Aetna for violating Business & Professions Code §16600. The United States District Court
determined the exceptions to Business and Professions Code §16600 did not apply. (Id. at 10941096.) The court also noted:
…defendant's argument, that the Agreement cannot violate public policy because
even if unenforceable, it is simply a nullity, ignores the realities of the
marketplace. As between Aetna and an individual employee, the company is in an
infinitely better position to acquaint itself with the applicable laws, and to know
whether the non-compete clause violates section 16600. Employees, having no
reason to familiarize themselves with the specifics of California's employment
law, will tend to assume that the contractual terms proposed by their employer
(especially one of Aetna's magnitude) are legal, if draconian. Furthermore, even if
they strongly suspect that a non-compete clause is unenforceable, such employees
will be reluctant to challenge the legality of the contractual terms and risk the
deployment of Aetna's considerable legal resources against them. Thus, the in
terrorem effect of the Agreement will tend to secure employee compliance with
its illegal terms in the vast majority of cases. Prospective future employers, too,
may be reluctant to hire Aetna's workers; even if secure in the knowledge of the
unenforceability of Aetna's non-compete clause, these employers may well wish
to avoid the expense and energy of defending a lawsuit in which they are likely to
be joined. [Citations] In this way Aetna will be able to stifle marketplace
10

Case law suggests the special and unique language in Labor Cod §2855, Civil Code §3423, and C.C.P. §526
pertains to artists, musicians, or performers that have achieved distinction or star quality. (See Motown Record
Corp. v. Brockert (1984) 160 Cal.App.3d 123, 137-138, Paramount Pictures Corp. v. Holden (S.D. Cal. 1958) 166
F.Supp 684, 688, and Lemat Corp. v. Barry (1969) 275 Cal.App.2d 671, 678.)

Page 10 of 20

 competition for its human capital. This outcome is clearly in derogation of the
fundamental public policy interests that section 16600 was intended to advance.
(Id. at 1096-1097.) The court determined the severability clause did not save the Agreement.
The court noted “Aetna has emphasized throughout the litigation, the contract was never signed,
Ms. Latona enjoyed no benefit from it, and Aetna never sought to enforce it against her.” (Id. at
1097.) The court recognized the case presented “a wholly different issue: whether an employer
may fire an employee for refusing to sign an agreement containing provisions in direct violation
of public policy, then escape liability for wrongful termination on the grounds that the other
provisions of the agreement were inoffensive.” The court answered “no.” (Id.) The court stated
“Aetna never gave plaintiff the option of signing only a portion of the Agreement,” she “was
required to sign it in its entirety, complete with the illegal provisions,” Aetna could have revised
the Agreement but did not, Aetna presented the Agreement to the plaintiff as a “take it or leave
it” proposition,” and, when she declined, Aetna fired her. The court ruled Aetna could not be
relieved “of liability for a wrongful termination on the ground that if it had excised the offensive
portions of the Agreement, plaintiff would have had no grounds to object to signing it.” (Id.)
The court found “that the unenforceability of the Agreement [could not] be saved by the
severability clause.” (Id. 1097-1098.)
However, Netflix’s reliance on Latona is misplaced. The case is distinguishable and is
not binding on this court. As set forth above, the issue before the court in Latona was “whether
an employer may fire an employee for refusing to sign an agreement containing provisions in
direct violation of public policy, then escape liability for wrongful termination on the grounds
that other provisions of the agreement were inoffensive.” (Id. at 1097.) The instant action does
not involve the wrongful termination of an employee for refusing to sign an agreement
containing provisions that violate public policy. Rather, the instant action involves signed FixedTerm Employment Agreements. There is no dispute that Flynn and Waltenberg executed the
agreements with Fox. Moreover, the dispute in this action does not involve non-compete and/or
anti-solicitation clauses. The Fixed-Term Employment Agreements contain injunctive relief
provisions, which Netflix claims are invalid. Further, as discussed above, the injunctive relief
provisions in the Fixed-Term Employment Agreements, unlike the Agreement in Latona, apply
while the employees are still employed and do not, in fact, restrain anyone. Also, as discussed
above, the injunctive relief provisions in the Flynn and Waltenberg Agreements are collateral to
the main purpose of the Fixed-Term Employment Agreements, which is to employ the
employees for specified terms and at set levels of compensation.
Additionally, Netflix did not submit admissible evidence suggesting Fox included the
injunctive relief provisions in contracts for employees that were not providing services of a
special, unique, unusual, extraordinary, and intellectual character in order to mislead the
employees as to their legal rights and/or enjoin them from working anywhere other than Fox.
The fact that Fox included the injunctive relief provisions in their Fixed-Term Employment
Agreements is insufficient to render the entire agreements unenforceable, especially considering
Fox represents it “does not seek, and has never sought, injunctive relief against Flynn or
Waltenberg” and “Fox has never sought injunctive relief against any breaching employee.”
(Reply, pgs. 6-7.) (See Winston Research Corp. at 141.)

Page 11 of 20

 Netflix argues its conduct was justified. (Opposition, pgs. 19-20.) Netflix argues Fox
ignored its justification defense, which provides another basis to deny the motion for summary
judgment/adjudication. (Opposition, pg. 19.) According to Netflix, its “recruitment and hiring of
Flynn and Waltenberg – and its pursuit of qualified candidates for any given position –
vindicates California’s well-established public policy in favor of ‘open competition and
employee mobility’” and there are disputed issues of material fact as to “whether the nature of
Netflix’s conduct, weighted against Fox’s contracts and their effect on mobility and labor market
competition, justify any alleged interference with contract.” (Opposition, pg. 19.) However, Fox
was not required to address Netflix’s justification defense11 to meet its moving burden on
summary judgment/adjudication (on the complaint). (See C.C.P. §437c(p)(1) (“A plaintiff….has
met his or her burden of showing that there is no defense to a cause of action if that party has
proved each element of the cause of action entitling the party to judgment on the cause of
action.”).) Moreover, the undisputed facts show Netflix intentionally interfered with the
Waltenberg and Flynn Agreements and Netflix’s “stake in advancing [its] economic interest will
not justify the intentional inducement of a contract breach…” (See Environmental Planning &
Information Council v. Superior Court (1984) 36 Cal.3d 188, 193-194 (“The contours of
justification, or privilege, are not precisely defined. In relation to the tort of interference with
contract, we have said: ‘Whether an intentional interference by a third party is justifiable
depends upon a balancing of the importance, social and private, of the objective advanced by the
interference against the importance of the interest interfered with, considering all circumstances
including the nature of the actor's conduct and the relationship between the parties.’ [Citation]
When the defendant's action does not interfere with the performance of existing contracts, the
range of acceptable justification is broader; for example, a competitor's stake in advancing his
own economic interest will not justify the intentional inducement of a contract breach [Citation],
whereas such interests will suffice where contractual relations are merely contemplated or
potential. [Citation]”).) (See also Imperial Ice Co. v. Rossier (1941) 18 Cal.2d 33, 36 (“It is well
established…that a person is not justified in inducing a breach of contract simply because he is in
competition with one of the parties to the contract and seeks to further his own economic
advantage at the expense of the other. [Citation] Whatever interest society has in encouraging
free and open competition by means not in themselves unlawful, contractual stability is generally
accepted as of greater importance than competitive freedom.”).) There can be no dispute that
Netflix, by virtue of its “entry into original content production,” was in effect competing with
Fox. (Opposition, pg. 1.) (See also Netflix’s X-C ¶¶11-14.) The undisputed facts show Netflix
intentionally interfered with Fox’s contracts with Waltenberg and Flynn. In doing so, Netflix
arguably sought to further its own economic interest at Fox’s expense and such conduct is not
justified.
In light of the court’s ruling, Fox’s motion for summary judgment is denied. Based on
the foregoing, TCFFC’s motion for summary adjudication of the inducing breach of the
Waltenberg Agreement cause of action is denied.

Netflix’s first amended answer contains a justification affirmative defense (AD No. 23). Fox did not move for
summary adjudication of the justification affirmative defense.
11

Page 12 of 20

 b. Inducing Breach of the Flynn Agreement (2nd COA) by Fox 21
Fox 21 did not submit evidence proving each element of the inducing breach of the Flynn
Agreement cause of action against Netflix. (See C.C.P. §437c(p)(1).) Fox 21 submitted evidence
showing the existence of an agreement with Flynn. It is undisputed that Fox 21 and Flynn
executed the Flynn Agreement and, pursuant to Paragraph 1 of the Flynn Agreement, Fox 21
agreed to employ Flynn for a period of two years from November 19, 2015 to November 18,
2017. Fox 21 also submitted evidence suggesting Netflix was aware of the Flynn Agreement,
engaged in intentional acts designed to induce breach or disruption of the Flynn Agreement, and
there was an actual breach or disruption of the Flynn Agreement. It is undisputed that Netflix
sent a written offer of employment to Flynn on August 8, 2016, Netflix was aware, prior to
August 8, 2016, Flynn had an employment agreement with Fox that contained a specified term
that had not expired, Netflix agreed in writing, on August 9, 2016, to defend and indemnify
Flynn from and against any action by Fox taken in connection with her acceptance of Netflix’s
offer of employment, Netflix paid for Pennington Lawson LLP to represent Flynn, Netflix
doubled Flynn’s salary, Flynn stopped working at Fox on September 2, 2016, Netflix was
aware, prior to September 2, 2016, the Flynn Agreement recited a term that ended on November
18, 2017, and Flynn started working at Netflix on September 6, 2016.
However, Fox 21 did not submit admissible evidence showing resulting damages. Fox 21
appears to assume actual damages are presumed merely by Flynn’s failure to complete her
contract terms. However, Fox 21 did no cite to on-point case law or authority to support such a
presumption. As to specific damages, Fox’s separate statement lists an item of damage under
No. 23, suggesting Fox 21 hired Andrew Richley (“Richley”), intending to replace an executive
level opening created by Flynn’s departure, and paid Richley a higher salary than Flynn.
However, this is too tenuous to support summary adjudication because the evidence also shows
Richley did not replace Flynn directly in that it was a different position and Flynn’s department
was terminated. (Fox’s Separate Statement, pg. 21, No. 23 – Declaration of Lens ¶¶53 and 75;
Exhibits 52 and 74.)
Based on the foregoing, the court finds Fox 21 did not meet its burden on summary
judgment/adjudication to show damages on the second cause of action
In any event, Netflix submitted evidence showing a triable issue of material fact exists as
to resulting damages. Netflix submitted evidence suggesting Fox 21 never actually replaced
Flynn and there is no evidence of monetary harm. (Netflix’s Response to Fox’s SS, pgs. 31-32,
No. 23.) (Opposition, pg. 14, fn. 18.) Barron testified she has not performed an analysis to
determine whether there has been a decline in revenues attributed to Fox 21 since the fall of 2016
and such an analysis would not be useful because Flynn “had nothing to do with revenues. She
had more to do with the cost side of it.” (Netflix’s Response to Fox’s SS, pgs. 31-32, No. 23.)
Barron also testified she does not believe Fox 21 has replaced Flynn, she is not aware of any
disruption to Fox 21’s financial planning, long-range plans, as a result of Flynn’s departure, and
she is not generally aware of any effect on Fox 21 as a result of Flynn’s departure (unless
someone wanted to bring it up to her). (Netflix’s Response to Fox’s SS, pgs. 31-32, No. 23.)
(Deposition of Barron 202:25-203:25.) Fan testified Flynn was never replaced, no one ever
confirmed for Fan the person to whom she would be reporting, and “[they] just made sure the job
was done and persevered.” (Netflix’s Response to Fox’s SS, pgs. 31-32, No. 23.) (Deposition of
Fan 106:16-108:5.)
Page 13 of 20

 Fox 21’s request for $1 in damages does not save the motion for summary
judgment/adjudication because there is a triable issue of material fact as to whether Fox 21
suffered any damage, which cannot be determined via the instant motion.
Netflix argues it was not a substantial factor in causing an alleged breach of the Flynn
Agreement. (Opposition, pg. 14.) Netflix argues the evidence shows Flynn would have left Fox
21 before her contract ended even without a job offer from Netflix. (Opposition, pg. 14.)
However, Netflix did not submit admissible evidence to show the same harm would have
occurred without that conduct – that Flynn would have left Fox 21 before the Term on her
agreement expired and/or on the same date she left Fox 21.
Netflix also argues its conduct was not designed to induce a breach of the Flynn
Agreement because Netflix “was content to speak with her about a future hire and deferred to her
as to how she wanted to proceed.” (Opposition, pgs. 13-14.) However, in light of the undisputed
facts set forth above, the evidence cited by Netflix does not create a triable issue of material fact
as to interference or causation.
The court notes Netflix appears to argue the Fixed-Term Employment Agreements,
including the Flynn Agreement, violate the 7-year rule under Labor Code §2855. (Opposition,
pgs. 5, 8.) The evidence before the Court shows Flynn signed the first agreement on October 25,
2012. (“September 2012 Agreement”). The September 2012 Agreement identifies the term of
employment as two years – from September 10, 2012 to September 9, 2014, with one option for
an additional year – from September 10, 2014 to September 9, 2015. The September 2012
Agreement identifies Flynn’s position as Director, Creative, and sets forth the following
compensation schedule: (1) 80,000 per annum for the first twelve months; (2) $85,000 per
annum for the second twelve months; and (3) $92,500 per annum for the one-year option period.
(Fox’s SS – No. 13.) (Netflix’s Response to Fox’s SS, pgs. 20-25, No. 13, citing Exs. 59 - 62.)
Flynn signed the second agreement on November 20, 2013 (“November 2013 Agreement”). The
November 2013 Agreement states it supersedes any and all prior agreements and identifies the
term of two years – from November 19, 2013 to November 18, 2015, with one option for an
additional two years – from November 19, 2015 to November 18, 2017. The November 2013
Agreement identifies Flynn’s position as Executive Director, Creative, and sets forth the
following compensation schedule: (1) $95,000 per annum for the first twelve months; (2)
$127,500 per annum for the second twelve months; and (3) $135,000 per annum for the first
twelve months of the option period and $145,000 per annum for the second twelve months of the
option period; and (4) a car allowance in the amount of $7,200. Id. Fox 21 exercised its option in
the November 2013 Agreement. Id. As of November 19, 2015, Flynn and Fox 21 amended the
November 2013 Agreement, as follows: (1) $190,000 per annum for the first twelve months of
the option period and $200,000 per annum for the second twelve months of the option period and
(2) one additional two-year option. Id.
However, the Labor Code contemplates that an employee and employer can, under
certain circumstances, enter into an employment contract for a “specified term.” Also, Netflix
did not establish that all of Fox 21’s agreements with Flynn are void. Netflix did not identify or
analyze Fox 21’s contracts and amendment with Flynn and/or the terms of the contracts and
amendment. Netflix merely argued, in a footnote, that “Flynn’s contract is also invalid because
it extends beyond the seven-year limit for personal services contracts.” (Opposition, pg. 13, fn.
Page 14 of 20

 17.) While Fox 21 concedes the agreements and amendment entered into with Flynn (set forth
above) “could have led” to a more than seven-year term in violation of Labor Code §2855, Fox
21 represents it “never executed the Flynn Option.” (Reply, pg. 6, fn. 5.) The question before the
court is whether the unexercised options in the Amendment to the November 2013 Agreement
render the November 2013 Agreement void or merely render the Amendment or options (to the
extent they result in a term exceeding seven years) void. Netflix did not adequately address this
issue. Netflix, relying on Kirkland v. Golden Boy Promotions, Inc. 2013 WL 12132028, argues
the fact that “Flynn had not reached seven years when she left does not matter” because, where,
“as here, the central purpose of a contract extension is to bind the employee beyond the
maximum period under law, the contract is void.” (Opposition, pg. 13, fn. 17.) As discussed
below, Kirkland does not support Netflix’s argument. Instead, Kirkland suggests the option may
be void, not the November 2013 Agreement.
In Kirkland, the United States District Court concluded the Promoter Agreement itself
was not unenforceable under 4 C.C.R. §222 (with the exception of the extension provisions,
which are severable) even though the Contract Extension, “which was meant to extend the term
of the original Promoter Agreement,” was illegal under §222 because the “sole and central
purpose of the Contract Extension was to form a contract for a period exceeding five years.” (Id.
at 4-6.) (Emphasis Added.)
An argument can be made that the November 2013 Agreement is not void. If the central
purpose of the November 2013 Agreement was to employ Flynn for a term of two years, with
one option for an additional two-year term, at set compensation, the purpose would be lawful.
That purpose would not be dependent on extension of the Flynn-Fox 21 relationship beyond the
seven-year period permitted by Labor Code §2855. Assuming, for purposes of the instant
motion only, that the Amendment is a contract extension that was meant to extend the term of the
November 2013 Agreement and the sole and central purpose of the Amendment was illegal
under Labor Code §2855, under the reasoning in Kirkland, the Amendment would be void, not
the November 2013 Agreement. The undisputed facts show Flynn stopped working at Fox 21 on
September 2, 2016, which was during the option term set forth in the November 2013 Agreement
and before the (unexercised) option term in the amendment to the November 2013 Agreement.
Additionally, the statute itself suggests the November 2013 Agreement would not be
void. Labor Code §2855(a), by its plain terms, states a contract to render personal service “may
not be enforced against the employee beyond seven years from the commencement of service
under it.”
Netflix did not explain how the Flynn Agreement is void and/or cite to on-point case law
or authority to support a finding that the November 2013 Agreement is void because an
Amendment to the agreement contains unexercised options that would arguably extend the total
term beyond seven years. Netflix also did not establish Fox’s other Fixed-Term Employment
Agreements violate the seven-year rule. Even assuming, arguendo, some of Fox’s Limited-Term
Employment Agreements violate the seven-year rule, it would not preclude Fox from seeking an
injunction with respect to the Limited-Term Employment Agreements that do not violate the
seven-year rule.
Based on the foregoing, Fox 21’s motion for summary adjudication of the inducing
breach of the Flynn Agreement cause of action is denied.
Page 15 of 20

 c. Unfair Competition in Violation of Business & Professions Code §17200 (3rd COA)
by Plaintiffs
Business & Professions Code §17204 provides, as follows: “Actions for relief pursuant
to this chapter shall be prosecuted exclusively in a court of competent jurisdiction by the
Attorney General or a district attorney or by a county counsel authorized by agreement with the
district attorney in actions involving violation of a county ordinance, or by a city attorney of a
city having a population in excess of 750,000, or by a city attorney in a city and county or, with
the consent of the district attorney, by a city prosecutor in a city having a full-time city
prosecutor in the name of the people of the State of California upon their own complaint or upon
the complaint of a board, officer, person, corporation, or association, or by a person who has
suffered injury in fact and has lost money or property as a result of the unfair competition.”
(Emphasis Added.)
To satisfy the standing requirements under the UCL, a party must “(1) establish a loss or
deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and
(2) show that that economic injury was the result of, i.e., caused by, the unfair business practice
or false advertising that is the gravamen of the claim.” (Kwikset Corp. v. Superior Court (2011)
51 Cal.4th 310, 322.) (See also Law Offices of Mathew Higbee v. Expungement Assistance
Services (2013) 214 Cal.App.4th 544, 555-556 (“Proposition 64 amended section 17204 to
provide that no private party has standing to prosecute a UCL action unless he or she ‘has
suffered injury in fact and has lost money or property as a result of the unfair competition.’
[Citations] ‘To satisfy the narrower standing requirements imposed by Proposition 64, a party
must now … establish a loss or deprivation of money or property sufficient to qualify as an
injury in fact, i.e., economic injury…’ [Citation]”).)
Business & Professions Code §17203 provides, as follows: “Any person who engages,
has engaged, or proposes to engage in unfair competition may be enjoined in any court of
competent jurisdiction. The court may make such orders or judgments, including the
appointment of a receiver, as may be necessary to prevent the use or employment by any person
of any practice which constitutes unfair competition, as defined in this chapter, or as may be
necessary to restore to any person in interest any money or property, real or personal, which may
have been acquired by means of such unfair competition. Any person may pursue representative
claims or relief on behalf of others only if the claimant meets the standing requirements of
Section 17204 and complies with Section 382 of the Code of Civil Procedure, but these
limitations do not apply to claims brought under this chapter by the Attorney General, or any
district attorney, county counsel, city attorney, or city prosecutor in this state.”
Injunctive relief under the UCL “requires a threat that the misconduct to be enjoined is
likely to be repeated in the future.” (Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440,
465.)
Fox argues “Netflix tortiously interfered with Fox’s specified term employment contracts
with Waltenberg and Flynn,” the “first two causes of action establish that Netflix has engaged in
an unlawful business practice under Section 17200,” and “Fox is entitled to an injunction for
‘threatened future harm or [a] continuing violation.’” (Motion, pgs. 17-19.)
Page 16 of 20

 However, there is a triable issue of material fact as to whether Fox suffered resulting
economic injury and thus has standing to seek injunctive relief. As discussed above in detail,
there is a triable issue of material fact as to resulting damages with respect to the inducing breach
of Waltenberg Agreement. Also, as discussed above, Fox 21 did not submit admissible evidence
showing it sustained resulting damages, and, in the alternative, there is a triable issue of material
fact as to resulting damages with respect to the inducing breach of Flynn Agreement cause of
action.
Based on the foregoing, Fox’s motion for summary adjudication of the unfair competition
in violation of Business & Professions Code §17200 cause of action is denied.
2. Cross-Complaint
a. Violation of Business & Professions Code §17200 (1st COA)
As discussed above and in the court’s ruling on Netflix’s motion for summary
adjudication, the injunctive relief provisions in the Fixed-Term Employment Agreements do not
violate Business & Professions Code §16600 because the provisions appear to apply while the
employees are still employed and do not, in fact restrain anyone, and, even assuming, arguendo,
the injunctive relief provisions in the Fixed-Term Employment Agreements violate Business &
Professions Code §16600 and/or are void for any other reasons, the Fixed-Term Employment
Agreements are still valid as to the remaining lawful terms
It is not clear from the allegations in the cross-complaint or Netflix’s opposition (see pg.
20) that Netflix’s cause of action for violation of Business & Professions Code §17200 is based
on Fox’s alleged violations of Labor Code §2855. Netflix alleges Fox’s Fixed-Term
Employment Agreements are “unlawfully restrictive” because they require the employees to
work exclusively for Fox for a specified term of years, they secure the exclusive and unilateral
right to extend the length of employment for an additional number of years, and they include
provisions that unlawfully purport to allow Fox to seek injunctive relief or equitable relief to
prevent a breach of the agreements. (X-C ¶15.) Netflix alleged “Fox effectively seeks to prevent
its employees from leaving Fox to work for competitors before the end of the agreement’s term.”
(X-C ¶15.) Netflix alleged the “unreasonable terms and conditions of Fox’s fixed-term
employment contracts, coupled with Fox’s selective and abusive enforcement tactics, create a
deterrent effect that restrains employee mobility, artificially suppresses compensation, and stifles
competition in violation of California law.” (X-C ¶19.) Netflix alleged the Waltenberg
Agreement and the Flynn Agreement are examples of “Fox’s unlawful behavior.” (X-C ¶20.)
Netflix also alleged the Fixed-Term Employment Agreements violate Business & Professions
Code §16600, are anti-competitive, and create a form of involuntary servitude. (X-C ¶¶24-25,
28-32.) Netflix’s mere reference to Labor Code §2855 in the cross-complaint is insufficient to
allege one or more contracts violate the seven year rule. (X-C ¶26.) Moreover, it is unclear
whether Netflix’s violation of Business & Professions Code §17200 cause of action can properly
be based on alleged violations of Labor Code §2855.
Based on the foregoing, the court treats Fox’s motion for summary adjudication of the
violation of Business & Professions Code §17200 cause of action as a motion for judgment on
Page 17 of 20

 the pleadings, which is granted with leave to amend. (See Prue v. Brady Co./San Diego, Inc.
(2015) 242 Cal.App.4th 1367, 1375-1376, and American Airlines, Inc. v. County of San Mateo
(1996) 12 Cal.4th 1110, 1117-1118.)
b. Declaratory Relief (2nd COA)
A cause of action for declaratory relief requires the following elements: (1) person
interested under a written instrument or a contract; or (2) a declaration of his or her rights or
duties (a) with respect to another or (b) in respect to, in, over or upon property; and (3) an actual
controversy. (C.C.P. §1060.)12
“For declaratory relief, the party must show it either has suffered or is about to suffer an
injury of ‘sufficient magnitude reasonably to assure that all of the relevant facts and issues will
be adequately presented.’ [Citation]” (Stonehouse Homes LLC v. City of Sierra Madre (2008)
167 Cal.App.4th 531, 542.)
“[D]eclaratory relief operates prospectively only, rather than to redress past wrongs…”
(Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1404.)
Netflix alleged there is an actual controversy between the parties “concerning their
respective rights and duties with respect to Fox’s fixed-term employment agreements and efforts
to unlawfully restrict or prevent Netflix from recruiting, hiring, and/or employing Fox’s current
and former California employees.” (X-C ¶34.) Netflix alleged “Fox’s fixed-term employment
agreements with Waltenberg and Flynn, and upon information and belief, with other Fox
employees, unlawfully restrain them from their right to pursue lawful employment with Netflix,”
in direct violation of Business & Professions Code §16600. (X-C ¶35.) Netflix alleged a judicial
declaration is necessary at this time as it has established employment relationships with former
employees of Fox (Waltenberg and Flynn) and wishes to continue those relationships and it
“wishes to compete fairly to employ other Fox employees and is denied the opportunity due to
Fox’s continued use of the unlawful fixed-term employment agreement.” (X-C ¶36.) Netflix
requests a “judicial declaration that Fox’s enforcement of fixed-term employment agreements,
arising from employment of Mr. Waltenberg and Ms. Flynn, and other Fox employees that
Netflix may seek to employ, be found unlawful under California law.” (X-C ¶37.) Netflix also
requests a “judicial determination of Netflix’s rights to recruit, hire and/or retain Fox’s current
and former employees who are subject to fixed-term employment agreements.” (X-C ¶38.) As
discussed above and in the court’s ruling on Netflix’s motion for summary adjudication, the
injunctive relief provisions in the Fixed-Term Employment Agreements do not violate Business
& Professions Code §16600 because the provisions appear to apply while the employees are still
employed and do not, in fact restrain anyone, and, even assuming, arguendo, the injunctive relief
provisions in the Fixed-Term Employment Agreements violate Business & Professions Code

(See Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 549-550 (“It is the general rule that in an action for
declaratory relief the complaint is sufficient if it sets forth facts showing the existence of an actual controversy
relating to the legal rights and duties of the respective parties under a contract and requests that the rights and duties
be adjudged. [Citation] If these requirements are met, the court must declare the rights of the parties whether or not
the facts alleged establish that the plaintiff is entitled to a favorable declaration. [Citations]”).)
12

Page 18 of 20

 §16600 and/or are void for any other reasons, the Fixed-Term Employment Agreements are still
valid as to the remaining lawful terms.
It is unclear both from the cross-complaint and Netflix’s opposition (see pg. 20) whether
this cause of action is based in any way on an alleged violation of the seven year rule. Netflix’s
mere reference to Labor Code §2855 in the cross-complaint is insufficient to allege one or more
contracts violate the seven year rule.
Based on the foregoing, the court treats Fox’s motion for summary adjudication of the
declaratory relief cause of action as a motion for judgment on the pleadings, which is granted
with leave to amend.
3. First Amended Answer
a. Violation of Public Policy (3rd AD)
Netflix asserts violation of public policy as the third affirmative defense in its first
amended answer. Netflix alleged “Plaintiffs’ claims are barred by the fact that they allege
Netflix has induced breach of contracts that are void as against public policy.” (FAA, pg. 2.)
However, it is unclear from the first amended answer and Netflix’s opposition (see pgs. 16-17,
§D.1) whether this defense is based on anything other than Business & Professions Code
§16600. In the first amended answer, Netflix did not identify the “public policy” at issue and/or
allege facts to show the Fixed-Term Employment Agreements violate public policy. Answers
must plead a factual basis for defenses, just as complaints must for causes of action. (See C.C.P.
§431.30(b) (“The answer to a complaint shall contain…(2) A statement of any new matter
constituting a defense.”).) (See also FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d
367, 384 (“That brings us to the allegations of new matter. Numerous defenses were purportedly
raised by defendants' allegations of affirmative defense. Most of these allegations fail to state a
defense even when liberally construed in defendants' favor. [Citation] Some are simply
immaterial. For example, defendants allege as a conclusion that plaintiff's claim is barred by
laches, an equitable defense that has no application to the plaintiff's legal claim. [Citation] All of
the allegations are proffered in the form of terse legal conclusions, rather than as facts ‘averred
as carefully and with as much detail as the facts which constitute the cause of action and are
alleged in the complaint.’ [Citation] The only affirmative defenses that are mentioned in the
summary judgment proceedings, fraud in the inducement and failure of consideration, are not
well pled, consisting of legal conclusions, and would not have survived a demurrer.
[Citations]”).)
Consequently, the court treats Fox’s motion for summary adjudication of the violation of
public policy affirmative defense as a motion for judgment on the pleadings, which is granted
with leave to amend.

b. Unconscionability (24th AD)
Page 19 of 20

 Netflix asserts unconscionability as the twenty-fourth affirmative defense in its first
amended answer. Netflix alleged “that each of the contracts for which Plaintiffs allege Netflix
has induced a breach or may induce a breach in the future are unconscionable and therefore
unenforceable.” (FAA, pg. 6.) However, Netflix did not allege “ultimate facts demonstrating”
the Fixed-Term Employment Agreements are unconscionable. (IMO Development Corp. v. Dow
Corning Corp. (1982) 135 Cal.App.3d 451, 460.)
Based on the foregoing, the court treats Fox’s motion for summary adjudication of
Netflix’s unconscionability affirmative defense as a motion for judgment on the pleadings, which
is granted with leave to amend.
F. Conclusion
Fox’s motion for summary judgment on the complaint is denied. Fox’s motion for
summary adjudication of the inducing breach of the Waltenberg Agreement, inducing breach of
the Flynn Agreement, and unfair competition in violation of Business & Professions Code
§17200 causes of action is denied.
The court treats Fox’s motion for summary judgment/adjudication on Netflix’s crosscomplaint as a motion for judgment on the pleadings, which is granted with leave to amend.
The court treats Fox’s motion for summary adjudication of Netflix’s violation of public
policy and unconscionability affirmative defenses as a motion for judgment on the pleadings,
which is granted with leave to amend.

Dated: June 5, 2019
Hon. Judge Marc D. Gross
Judge of the Superior Court

Page 20 of 20