Activision Terminating Neumann
Activision-Blizzard terminated the contract in January 2019 of Spencer Neumann, its Chief Financial Officer. However, the reason for his dismissal was not cleared by Activision but only talk being that it was unrelated to the Company’s financial reporting or disclosure controls and procedures. There was news by the Reuters that he was jumping ship to Netflix.
Activision Sues Netflix
But now the company is thinking of the scenario in another way as Activision is now suing Netflix for poaching its former executive, nearly after two years of the incident. The lawsuit filed by Activision contains accusations of Netflix knowingly convinced Neumann to breach his employment contract with Activision and adding to this it is also mentioned that Netflix engaged in tortious conduct when Activision was negotiating with Netflix over a commercial partnership to distribute its linear media content with help of Neumann’s assistance.
The suit explains that with an optional one-year extension, Activision hired Neumann in May 2017 as CFO for a total term of three years. Neumann in exchange for “substantial compensation” agreed to various contractual obligations that committed him which meant that he will try his best for the growth of Activision and will not work for his benefits by misusing his position.
Netflix being Bully
The complaint is a pretty dramatic one as it said the commitment was pretty short-lived as Netflix “deliberately and maliciously” worked to pry Neumann away from Activision which was an effort by the co-CEO Reed Hastings of Netflix who was “personally involved” with Neumann. He was also offered for paying all his legal representation or cover any penalties arising from the breach of contract, so he bypassed his actual contract and jumped ship. Neumann resigned from Activision on December 31, 2018, though his contract was until April 30, 2020, and soon after a couple of days, Netflix announced Neumann is appointed as their new CFO.
This sudden resignation and his departure to Netflix forced Activision to pay millions of dollars more to his replacement than Neumann himself would have earned as explained in the lawsuit. To keep them from bolting, they had to pony up millions more to other executives than they were due to earn. Activision has demanded Netflix to cover up all those costs and subsidiary costs which were the cause of also after punitive damages and an injunction against what it says is “a pattern and practice of unlawfully inducing employees of other competitors to breach their fixed-term contracts.”
Activision will still be raided for its workforce unless Netflix is restrained by appropriate injunctive relief by targeting its executives who have voluntarily entered into enforceable and ongoing fixed-term employment agreements. This will cause great irreparable harm to Activision by losing the value of its valid fixed-term employment agreements causing damage to its business reputation, workforce, and business opportunities. While on the other hand Defendants will follow to continue unjust and tortious conduct.