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Did Netflix engage in unfair competition with Viacom?

Viacom has filed a lawsuit against Netflix alleging it breached an employment contract with a former employee. According to Deadline, the cable company claims that Netflix violated terms of a contract when they hired Momita Sengupta as VP for physical production for original series.

Viacom claims the executive had an exclusivity deal

Viacom claims Sengupta has signed a contract that bound her exclusively to the cable company until April 2020. The suit claims tortious interference and unfair competition by Netflix.

Netflix alleges the agreement is unenforceable

However, the streaming giant alleges that Sengupta’s employment agreement was illegal and therefore, unenforceable. Netflix states one of the reasons the agreement is unenforceable is because Sengupta was employed by Viacom for 16 years, and California caps employment agreements at seven years. The streaming company also alleges that the non-compete clause in her contract is unlawful.

The seven-year rule that Netflix referred to came from actress Olivia de Haviland successfully challenging contracts that bound actors and actresses to studios for years. The standard has been more broadly applied to other entertainment employees in recent years.

Netflix is also being sued by 20th Century Fox

Viacom counters that their contract with Sengupta was valid under California law and accuses Netflix of playing by their own rules. Netflix is also facing a lawsuit from the 20th Century Fox Film Corporation for allegedly poaching two of their executives.

California courts typically do not enforce non-compete agreements. Even if an employer is based in another state, California courts still usually refuse to enforce a non-compete clause in a California employee’s contract. If you are a company accused of poaching an employee from another California business, the law will likely be on your side. A business law attorney can represent your interests and protect your company from unjust accusations.

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