How Sony stood up to Steve Jobs’ wage-fixing schemes at Pixar

Catmull_Jobs_Lasseter_Pixar

Ed Catmull, Steve Jobs and John Lasseter at Pixar

Steve Jobs may have been part of some of the biggest tech revolutions of the past forty years, but he was also part of an illegal attempt to suppress employee wages by way of a massive no-poaching agreement with other tech giants.

Another of the companies accused of similar actions by former employees was Pixar, the company Jobs purchased a majority interest in after being booted out of Apple in the mid-80s. In 2011, Pixar’s John Lasseter described Jobs as “forever…part of Pixar’s DNA.”

As it happens, that may not be entirely for the best.

Around the time that Jobs took over Pixar, the company forged an agreement with a number of other studios, agreeing not to steal their talent if they would do the same for Pixar.

Recently released emails from Pixar head Ed Catmull to Steve Jobs (and others) shows a February 2004 conversation in which Catmull contacted the Apple CEO to register his disgust that one company would try to stand up to them.

That company? Sony.

From: EC

Sent: Wednesday, February 18, 2004 1:19AM

To: Steve Jobs (sorry, you need Javascript to see this e-mail address)

Subject: Sony

Sony has approached all of our producers trying to hire them. They all just ignored Sony, although REDACTED forwarded on the email from the recruiter.

Today, REDACTED, one of our department managers told me that she was offered a position as producer for Sony’s first CG film and is likely to accept. If so, she would report to REDACTED.

The director of the movie is REDACTED [Jill Culton, ex-Lucasfilm and on Pixar-produced Monsters Inc—M.A.] who started off as head of story on Monsters but burnt out. She is good but fragile. The movie is about animals that turn the table on hunters. REDACTED

REDACTED will talk with her [the Pixar manager that Sony was poaching]. She isn’t so great that we have to keep her, and she isn’t so bad that she would hurt Sony.

We don’t have a no raid arrangement with Sony. We have set up one with ILM [Lucasfilm] and Dreamworks which has worked quite well. I probably should go down and meet with Sandy and Penney and Sony to reach some agreement. Our people are become [sic] really desirable and we need to nip this in the bud.

Unfortunately for Pixar, Sony refused to do this. Catmull evidently bore a grudge, because later on when Sony ran into problems with its CGI film division Catmull wrote another email expressing his eagerness to specifically pursue Sony employees for employment, given the company’s past refusal to tow the no-poaching line.

“Now that Sony has announced their intentions with regard to selling part of their special effects business, and given Sony’s extremely poor behavior in its recruiting practices, I would feel very good about aggressively going after Sony people,” he wrote.

While Pixar was one of several companies to settle in the ensuing class action antitrust case (paying $9 million in damages along with Lucasfilm), Apple kept fighting the case for longer, before settling for a combined $324.5 million (alongside Google, Adobe and Intel) in May this year. During the case it was argued that the wronged employees should be able to use evidence of Steve Jobs’ bullying in court.

Recently one of the plaintiffs has claimed that the settlement is unfair — given the original $3 billion in damages the plaintiffs were hoping for — and wrote to Judge Lucy Koh to ask her to rethink the decision.

  • http://www.youtube.com/matthewmspace matthewmspace

    In case anyone was curious, the movie that Steve said Sony was making was “Open Season.” Not rated well on IMDB either, 6.2/10 from over 50,000 people.

  • Tom Gibson

    And it wasn’t a “no-hire” agreement. It was a no-poaching agreement, which is entirely different.

    • LifeIdGood

      Correct, it was all about going after highly talented people from other companies as a way to steal their technology.

  • LifeIdGood

    This had nothing to do wages. These guys were very well paid. It had to do with the technology, and people taking that technology to other companies, as companies tried to poach them

    • Rich Archer

      What technology, exactly? If I’m a VFX artist with 10 years experience and want to take advantage of an opportunity at another studio, what technology could I possibly bring over to that new studio? I’d mostly be bringing my knowledge and experience and skills. Is that the technology you are referring to that people would be taking to other companies?

  • Kr00

    Another misleading article. It had nothing to do with fixing wages, it was totally about retaining the talent developed by the company. If companies didn’t do everything to retain their best staff, any other company can just cripple their opposition by hiring all their better workers. But don’t let the facts get in the way of click bait.

    • Luke Dormehl

      Have you been following this story at all? If you set up a mass no-poaching agreement you keep wages fixed at a lower level because employees don’t have the option of going elsewhere for more money. But don’t let the click bait accusations get in the way of the facts.

      • dreamdjinn

        Actually, it doesn’t keep wages fixed. The employees always had the option to go find work else where and see of they could get better work. Poaching at the company level was discouraged. And to be honest I don’t see an issue with it.

      • Rich Archer

        Well, no — if someone is denied an opportunity to advance and grow at another studio because of these agreements, it really does affect wages. It’s sort of why the practice is illegal.

        Employees always have the option to go find work elsewhere? So hypothetically, if I’m at Dreamworks and want to move on to Pixar, but I can’t because they need me at Dreamworks and Pixar recruiters are honouring the no-poaching agreement, what option do I have if I”m unhappy at Dreamworks? Do I find work at another studio where the salary and conditions wouldn’t be as high or desirable? Do I find work in another industry? I’m curious to know what options you believe employees affected by these agreements would have.

      • dreamdjinn

        The purpose of the policy was to retain intellectual and human capital. Could a byproduct have been wage suppression? Possibly, but I don’t think anyone will ever really know.
        Each and every person who wasn’t happy could walk into the the office of another company and get a job (as long as they respected any applicable NDA’s).
        Poaching is when a COMPANY reaches out to the employees of another company to try to lure them away.
        When an individual employee wants to find a new job/position such as in your example, they were always able to do that without being blocked by either company (except for NDA if applicable). Sorry.. Repost)

      • Rich Archer

        Thanks for clarifying. It’d be interesting to know if that was truly the practice with these policies, that these policies did not restrict people’s mobility and career opportunities, that recruiters and employees alike understood that.

        However, cold-calling employees isn’t an illegal act. If I hire a recruiter, I would want them to recruit the best.

      • Kr00

        Luke, settle down. You know quite well what the anti poaching agreements were all about. Even Sony has admitted it had agreements with other film houses but not Pixar. So please don’t let these facts get in the way of your distorted story. If this practice of poaching was left unchecked, there would be no innovation, no progression and no company loyalty. Is that what we want? And by the way, most of these people earn way over the average wage, so pulling out the wages freeze argument is redundant.

      • Luke Dormehl

        Because people qualified to do certain jobs don’t deserve any opportunity for improvement? I really don’t see what you’re saying here.

      • Rich Archer

        You do not innovate as a company, progress as a company, or establish loyalty from your employees with anti-poaching agreements, or by engaging in any other illegal activities.

        If you want to retain an employee, make the working conditions so good that they won’t want to leave or offer a contract. Good companies do not retain their employees by denying them future opportunities for advancement and growth.

      • dreamdjinn

        The purpose of the policy was to retain intellectual and human capital. Could a byproduct have been wage suppression? Possibly, but I don’t think anyone will ever really know.
        Each and every person who wasn’t happy could walk into the the office of

  • jch

    If these workers aren’t under a personal services contract then there is no reason they shouldn’t be available to be contacted by competitive companies. No poaching means that companies are trying to stifle wages by not using salary as a means to protect their investment in the talent.
    Animators are free agents, collusion by the studios to protect themselves by limiting competition for their talent and expertise is completely illegal.

    • dreamdjinn

      It could be said that bidding wars for employees would artificially inflate wages. The employees were at no time prevented from finding work elsewhere. If they truly cared about their wages/progressions, the employees should have been aggressively working the job market.

      • jch

        How does that work when the other companies in the industry have secretly agreed not to hire each others employees? It’s not like leading edge computer animation artists can just walk into another job anywhere – there are only a half dozen firms that do this work at feature film quality levels.

      • dreamdjinn

        Poaching, as I mention before, is specifically, a COMPANY not actively seeking to steal away another company’s employee.
        If an EMPLOYEE seeks out employment at another firm, the company can hire them.
        The companies soanfthey wouldn’t actively seek out employees from each other companies BUT if an employee from one of those other companies walked through their door they coul hire them.
        I don’t know how much clearer I can be…

        They didn’t have a secret agreement not to HIRE. They had a secret agreement not to POACH. There is a difference.

    • Rich Archer

      Well said, jch.

  • mattack1

    “past refusal to tow the no-poaching line.”

    Toe, not tow.

About the author

Luke DormehlLuke Dormehl is a UK-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Formula: How Algorithms Solve All Our Problems, And Create More and The Apple Revolution, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme, and other publications. He'd like you a lot if you followed him on Twitter.

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