Disney Tells Its Lawyers to Take a Vacation

The Department of Justice has been running a lawsuit against some of Silicon Valley's most famous faces since 2009. The suit alleges that a number of high-powered firms agreed not to recruit technical talent from one another, which may reduce the turnover ratio of engineering departments but would also be a highly illegal activity. At the heart of the matter were Google (NASDAQ: GOOGL  ) and Apple (NASDAQ: AAPL  ) , each of which supposedly set up a network of do-not-call lists with other heavyweights (and one another).

The feds started settling the initial case nearly three years ago, but that wasn't the end of the story. With the DoJ's claims out of the way, a class-action lawsuit took shape. This one's not about anticompetitive strategy, but about unfairly limiting the earnings power of about 100,000 technical staffers. And that lawsuit is still rolling since judge Lucy Koh (yes, the honorable Lucy Koh of last summer's blockbuster, Apple's $1 billion victory over Samsung) denied a call for dismissal in April.

Well, Walt Disney (NYSE: DIS  ) has apparently had enough of this affair. In a weekend court filing, Judge Koh said Disney's Lucasfilm and Pixar units have settled their differences with unhappy employees. It's time for Disney's legal team to don their swimsuits and take a vacation, because for them, this long-running saga is finally over.

Lucy Koh, district judge in the Northern District of California. Image source: Northern District of California

Well, almost -- Koh expects a joint settlement status report by Friday, and she gives the lawyers another week after that to file five-page briefs on how this settlement might affect the remaining defendants. Until then (or perhaps not even then), we won't have any detail on what the settlements entailed. But attorney Joseph Saveri, who represented the disgruntled employees, seems to like the outcome, so it probably wasn't cheap for Disney.

The next hearing in the ongoing case is set for Aug. 8, giving the defendants and plaintiffs some time to work out a deal before the next court appearance.

It's hard to say whether or not the settlement affected Disney's share price. The stock dropped 1.5% on Monday, while the Dow Jones Industrial Average (DJINDICES: ^DJI  ) was rather flat, but Disney had other news competing for shareholders' attention that day. In particular, digital video site Hulu.com, of which the House of Mouse is a co-owner, was on the auction block last week. But Hulu's triumvirate of owners decided to keep the service in house and pump more capital into it instead.

"The future of Hulu is bright," said Disney CEO Bob Iger. "And if the future of Hulu is bright we should hold on to it."

It's an open question how much Disney investors agree with that statement. What we know for sure is that between the settlement and the 180-degree turn on Hulu, Disney shares have underperformed the Dow -- they're down another 1.3% today. The suit still hangs like a Sword of Damocles over the last five defendants, which include another Dow component. When all is said and done, depending on the cash sums involved, this legal action may end up shaving a few points off the Dow.

You can't really blame Disney for perhaps seeking an unfair advantage in the quest to rule your living room. The future of television begins now, with an all-out $2.2 trillion media war that pits cable companies against technology giants like Apple and Google. The Motley Fool's shocking video presentation reveals the secret Steve Jobs took to his grave and explains why the only real winners are these three lesser-known power players that film your favorite shows. Click here to watch today!


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