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Judge tosses out fired executive's lawsuit against Netflix,

The Daily Journal

First Amendment Protects TV Streaming Company's Claims of
Trade Secret Theft Against Former Executive

A lawsuit claiming Netflix Inc. and Inc. blacklisted a former executive fizzled out Friday when a Los Angeles County judge tossed out the case.

Superior Court Judge Michael L. Stern ruled Netflix can't face litigation for communicating its belief that the executive, Jerry Kowal, had stolen trade secrets after quitting his job at Netflix and taking a new job at Amazon.

Kowal's lawsuit claimed the company made false statements, besmirching his good name, when it told his former Netflix colleagues and his new employer he'd stolen trade secrets.

As a result, Kowal said in his complaint, he lost his job at Amazon after less than two months and has been unable to find work since. But since the accusation of trade secrets theft came in the form of letter from counsel, Stern ruled it was privileged. The plaintiff might have won a reprieve if he could have proved Netflix made the statements maliciously, but Stern ruled Friday he had failed to do so. Kowal v. Netflix Inc., Inc. et al., BC541185 (Los Angeles County Super. Ct., filed April 1, 2014).

The ruling fell in line the reasoning Netflix articulated in its motion to strike the claims.

"The alleged statements, even if actually spoken, would be absolutely privileged," lawyers for Netflix wrote in the company's motion. "Kowal's complaint is therefore doomed from the outset."

The brief also called Kowal's lawsuit a "smear campaign" against Netflix that had publicly portrayed the company's culture as cutthroat and vindictive. Rachel E. Meny of Keker & Van Nest LLP and Michael J. Proctor of Caldwell Leslie & Proctor PC represented Netflix, while Douglas E. Dexter of Farella Braun & Martel LLP represented Amazon.

Caroline H. Mankey of Cypress LLP represented Kowal. Attorneys for all parties either could not be reached Monday or declined to comment.

Kowal argued that Netflix couldn't legitimately claim privilege over its actions because they were solely for the purpose of blacklisting him.

"Kowal's allegations, supported by the evidence, demonstrate that the Netflix Defendants' conduct was unrelated to any good faith investigation or judicial inquiry," his attorneys wrote in his brief arguing against the anti-SLAPP motion.

Stern did not agree, and further said whether Kowal's lawsuit was intended to chill Netflix's First Amendment-protected speech was "immaterial."

All that matters is that "the defendants' act underlying the plaintiffs' cause of action must have itself been an act in furtherance of the right of petition or free speech," Stern wrote.

The judge also dismissed Kowal's claims against Amazon, saying he hadn't properly pled a conspiracy to fire him.

David A. Lowe, a plaintiffs' attorney at Rudy, Exelrod, Zieff, & Lowe LLP in San Francisco, often represents executives in employment matters, and said lawsuits like Kowal's are rare.

"It's an issue that employees are frequently concerned about, and it may happen more often than we know, but it is very hard to find evidence of it," Lowe said. "We are rarely presented with a situation where it's clear that someone didn't get a job because of blacklisting."