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1 DANIEL M. PETROCELLI (S.B. #97802) dpetrocelli@oinm.com MOLLY M. LENS (S.B. #3867) mlens@omm.com J. HARDY EHLERS (S.B. #75) jehlers@omm.com O MELVENY & MYERS LLP 99 Avenue of the Stars Los Angeles, California Telephone: (310) Facsimile: (310) CONFORMEDCOPY Su ffiou^lof% pmla County of Los Angeles DEC Sherri R. Carter, Executive Officer/Clerk By Ruben Juarez, Deputy H Attorneys for Plaintiffs Twentieth Century Fox Film Corporation and Fox, Inc. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES, WEST DISTRICT TWENTIETH CENTURY FOX FILM CORPORATION, a Delaware Corporation, and FOX, INC., a Delaware Corporation, v. Plaintiff, NETFLIX, INC., a Delaware Corporation, And Related Cross-Claims. Defendant. Case No. SC 14 NOTICE OF TWENTIETH CENTURY FOX FILM CORPORATION AND FOX, INC. S MOTION AND SPECIAL MOTION TO STRIKE NETFLIX S CROSS-COMPLAINT PURSUANT TO THE CALIFORNIA ANTI-SLAPP STATUTE, CODE OF CIVIL PROCEDURE SECTION 4.16 [Declaration Of Molly M. Lens; [Proposed] Order filed concurrently herewith] Hearing Date: January, Time: 8:30 a.m. Dept: K Judge: Hon. Gerald Rosenberg Complaint filed: September 16, 16 Cross-Complaint filed: October, 16 RES ID: FOX S SPECIAL MOTION TO STRIKE PURSUANT TO C.C.P. 4.16

2 1 TO ALL PARTIES AND THEIR COUNSEL OF RECORD: 2 PLEASE TAKE NOTICE THAT on January,, at 8:30 a.m., or as soon thereafter 3 as the matter may be heard in Department K of the Los Angeles County Superior Court, Santa 4 Monica Courthouse, located at Main Street, Santa Monica, California 90401, plaintiffs 5 Twentieth Century Fox Film Corporation and Fox, Inc. will and hereby do move the Court for 6 an order (i) striking defendant Netflix's cross-complaint pursuant to the anti-slapp statute, 7 California Code of Civil Procedure Section 4.16, and (ii) awarding other and further relief 8 required by the anti-slapp statute, including attorney's fees and costs pursuant to California 9 Code of Civil Procedure Section 4.16( c ). 10 The Motion is based on this Notice of Motion; the supporting Memorandum of Points and 11 Authorities; all other pleadings and records in this proceeding; all other matters of which the 12 Court may take judicial notice; and any argument or evidence that may be presented to or 13 considered by the Court prior to its ruling Dated: December 7, 16 DANIEL M. PETROCELLI MOLLY M. LENS J. HARDY EHLERS O'MEL VENY & MYERS LLP By: atlielm. Petrocelli Attorneys for Plaintiffs Plaintiffs Twentieth Century Fox Film Corporation and Fox, Inc.

3 1 TABLE OF CONTENTS I. IL III. IV. v. VI. INTRODUCTION... BACKGROUND CALIFORNIA'S ANTI-SLAPP STATUTE PRONG ONE: THE CROSS-CLAIMS ARISE FROM PROTECTED ACTIVITY... 5 A. Netflix's Cross-Claims Are Based On Fox's Assertion Oflts Rights... 5 B. Fox's Assertion Oflts Rights Is Protected Activity PRONG TWO: NETFLIX CANNOT ESTABLISH A PROBABILITY OF PREVAILING ON ITS CROSS-CLAIMS... 8 A. B. c. The Labor Code Expressly Recognizes The Validity Of The Agreements That Netflix Seeks To Invalidate The Litigation Privilege Absolutely Bars Netflix's Cross-Complaint Netflix Does Not Have Standing D. Netflix's Declaratory Relief Claim Is Superfluous... CONCLUSION......

4 . 1 TABLE OF AUTHORITIES 2 Page(s) Cases Action Apartment Ass 'n, Inc. v. City of Santa Monica, 41 Cal. 4th 12 (07) Bardin v. Daimlerchrysler Corp., 136 Cal. App. 4th (06)....12, Barndt v. Cty. of Los Angeles, 1 Cal. App. 3d 397 (89) Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Vil!. Square Venture Partners, 52 Cal. App. 4th 867 (97) Blanchard v. DIRECTV, Inc., 1 Cal. App. 4th 903 (04) Blank v. Kirwan, 39 Cal. 3d 311 (85) Bower v. AT&T Mobility, LLC, 6 Cal. App. 4th 45 (11) Briggs v. Eden Council for Hope & Opportunity, Cal. 4th 1106 (99)... 6, 7 C.J.L. Constr., Inc. v. Universal Plumbing, Cal. App. 4th 376 (93)... Cal. Ass 'n of PSES v. Cal. Dep 't of Educ., 141 Cal. App. 4th 360 (06)... 12, Californians For Disability Rights v. Mervyn 's, LLC, 39 Cal. 4th 2 (06) Cel-Tech Commc 'ns, Inc. v. Los Angeles Cellular Tel. Co., Cal. 4th 163 (99)... 8, 9, 10 City of Colton v. Singletary, 6 Cal. App. 4th 751 (12)... 5 CRST Van Expedited, Inc. v. Werner Enter., Inc., 479 F.3d 1099 (9th Cir. 07) Daly v. Exxon Corp., 55 Cal. App. 4th 39 (97)... 11

5 1 2 TABLE OF AUTHORITIES (continued) Page(s) Daro v. Sup. Ct., 1 Cal. App. 4th 1079 (07) De Haviland v. Warner Bros. Pictures, 67 Cal. App. 2d 2 (44)... 3, 10 Digerati Holdings, LLC v. Young Money Entm 't, LLC, 4 Cal. App. 4th 873 (11 )... passim Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, 47 Cal. App. 4th 777 (96)... 5, 13 Equilon Enter. v. Consumer Cause, Inc., 29 Cal. 4th 53 (02)... 6, 13 Feldman v Park Lane Assoc., 160 Cal. App. 4th 1467 (08)... 7, 8, 12 Folgelstrom v. Lamps Plus, Inc., 5 Cal. App. 4th 986 (11) People ex rel. Gallegos v. Pac. Lumber Co., 8 Cal. App. 4th 950 (08) George v. Auto. Club of S. Cal. 1 Cal. App. 4th 1112 (11)... 9 Healy v. Tuscany Hills Landscape & Recreation Corp., 137 Cal. App. 4th 1 (06)... 7 Hood v. Sup. Ct., 33 Cal. App. 4th 3 (95)... Jarrow Formulas, Inc. v. LaMarche, 31 Cal. 4th 7 (03)... 7 Khajavi v. Feather River Anesthesia Med. Grp., 84 Cal. App. 4th 32 (00) Kwikset Corp. v. Sup. Ct., 51 Cal. 4th 310 (11) Lazar v. Hertz Corp., 69 Cal. App. 4th 1494 (99) ll -

6 2 TABLE OF AUTHORITIES (continued) Page(s) Leep v. Am. Ship Mgmt., LLC, 1 Cal. App. 4th 10 (05) Ludwig v. Sup. Ct., 37 Cal. App. 4th 8 (98)... 8 Malin v. Singer, 2 Cal. App. 4th 13 (13)... 4 Mattel, Inc. v. Luce, Forward, Hamilton & Scripps, 99 Cal. App. 4th (02)... 4 Millsap v. Nat 'l Funding Corp. of Cal., 57 Cal. App. 2d 772 (43) Navellier v. Sletten, 29 Cal. 4th 82 (02)... 5, 6, 7 Neville v. Chudacojf, 160 Cal. App. 4th (08)... 7 Osseus Tech. of Amer., Inc. v. DiscoveryOrtho Partners LLC, 1 Cal. App. 4th 357 (10)... People v. Persolve, LLC, 2 Cal. App. 4th (13) Rohde v. Wolf, 4 Cal. App. 4th (07) , 8, 13 Rubin v. Green, 4 Cal. 4th 17 (93)... 12, 13, 14 Scott v. Pac. Gas & Elec. Co., 11 Cal. 4th 454 (95) Simmons v. Allstate Ins. Co., 92 Cal. App. 4th 1068 (01 )... 4 Stonehouse Homes v. City of Sierra Madre, 167 Cal. App. 4th 531 (08)... Tollefson v. Roman Catholic Bishop, 2 Cal. App. 3d 843 (90) lll -

7 1 2 TABLE OF AUTHORITIES (continued) Page(s) Touchstone Television Prods. v. Sup. Ct., 8 Cal. App. 4th 676 (12) Traditional Cat Ass 'n, Inc. v. Gilbreath, 1 Cal. App. 4th 392 (04)... 5 Two Jinn, Inc. v. Gov 't Payment Serv., Inc., 3 Cal. App. 4th 13 () Statutes Cal. Bus. & Prof. Code Cal. Bus. & Prof. Code Cal. Bus. & Prof. Code Cal. Civ. Proc. Code , 6 Cal. Lab. Code , 10 Cal. Lab. Code Cal. Lab. Code Cal. Lab. Code , 9 Cal. Lab. Code , 9, 10 Cal. Lab. Code , 10 - iv -

8 1 2 I. 3 INTRODUCTION MEMORANDUM OF POINTS AND AUTHORITIES On September 16, 16, Fox commenced this lawsuit after Netflix tortiously induced two 4 Fox employees-marcos Waltenberg and Tara Flynn-to breach their written, fixed-term 5 employment contracts with Fox. Although Netflix also has recruited Fox employees who work 6 on an at-will basis, Fox filed this action only after Netflix knowingly solicited and hired two of 7 Fox's executives under fixed-term contracts, in defiance of Fox's explicit notice to cease and 8 desist. As set forth in its answer, Netflix takes the position that it cannot be held liable for 9 inducing W altenberg and Flynn to breach their contracts based on its unilateral determination that 10 their contracts are unenforceable. Although Netflix' s position is manifestly wrong, the issue has 11 been joined, discovery has commenced, and Fox's case will be adjudicated. 12 Having been put on notice that Fox fully intends to enforce its fixed-term employment 13 contracts, Netflix also has filed a cross-complaint. In this pleading, which this motion seeks to 14 strike, Netflix has brought unprecedented claims asking the Court to bar Fox from enforcing any and all of its fixed-term employment contracts with its current employees-literally hundreds of 16 such contracts-so that it may continue to induce their breach with impunity. Netflix's position not only seeks to inhibit-indeed, prevent-fox from exercising its Constitutionally-protected rights, it is also a direct attack on the California Labor Code (and its antecedent provisions), which for more than one century has explicitly recognized the validity of fixed-term employment contracts. Netflix makes no Constitutional or interpretative challenge to the Labor Code-rather, it audaciously asks the Court to disregard the law or create new limitations and conditions on the validity and enforceability of fixed-term contracts. The Court has no power to do what Netflix asks. Netflix's cross-complaint belongs in the Legislature, not the Courthouse. That is hardly the only fatal infirmity of the cross-complaint. Netflix is a competitor to Fox, is not a party to Fox's contracts with its employees, and has suffered no injury in fact, in law, or otherwise by reason of Fox's asserted right to enforce its contracts. Netflix has no standing whatsoever to bring the claims in the cross-complaint. Furthermore, Netflix's cross-complaint is nothing short of a request for a sweeping

9 1 advisory opinion and judicial imprimatur that it is free to disregard Fox's fixed-term contracts. 2 No such claim is ripe or otherwise justiciable and each must be dismissed on this basis alone. 1 3 Fortunately, California's anti-slapp statute provides an expedited procedure for 4 dismissing causes of action-like those in Netflix' s cross-complaint-that are based on the 5 exercise of protected activity. Because the assertion of Fox's right to enforce its employment 6 contracts is unquestionably protected activity, Fox easily satisfies the first prong of the anti- 7 SLAPP test. Thus, to avoid dismissal, Netflix must establish a probability of prevailing on its 8 claims. It has no probability of prevailing on the merits, because (1) that would require the Court 9 to invalidate, disregard, or alter the Labor Code; (2) Fox's enforcement of its contracts is 10 absolutely immunized by California's statutory litigation privilege; (3) Netflix lacks standing to 11 bring its claims; and ( 4) Netflix's claims are not ripe or otherwise justiciable. Netflix' s cross- 12 complaint must be stricken in its entirety. 13 II. BACKGROUND 14 Like countless employers across California and the country, Fox negotiates and enters into 16 written, fixed-term contracts with many of its employees. These contracts bind both Fox and its employees for specified durations and provide important, mutual benefits, such as exclusivity and stability to Fox, and job security and guaranteed compensation to employees for the fixed term. Waltenberg and Flynn were employed by Fox as executives under written fixed-term employment contracts. The Labor Code limits when either party may terminate such contracts without liability prior to the expiration of their specified terms. Pursuant to Section 29, Fox could do so only "in case of any willful breach of duty by the employee in the course of his employment, or in case of his habitual neglect of his duty or continued incapacity to perform it." Pursuant to Section 29, Waltenberg or Flynn could do so only "in case of any willful or permanent breach of the obligations of his employer to him as an employee." 2 1 Nor is the cross-complaint viable even if limited to the Waltenberg and Flynn contracts. It is both (1) moot in that those two contracts, unlike those with Fox's existing employees, have been terminated by the breaches that Netflix induced and (2) superfluous in that Netflix's same contentions regarding these two contracts are made in its answer. Ans. at 3: Section 55 provides that no employment contract can be enforced against the employee beyond seven years. It also specifies that contracts for services of a "special, unique, unusual, - 2 -

10 There is no dispute that Fox did not willfully or permanently breach its contracts with 2 Waltenberg or Flynn; therefore Section 29 is not at issue. Similarly, there is no dispute that 3 neither Waltenberg nor Flynn was employed for a term greater than seven years; therefore, the 4 Labor Code's temporal limitation is not at issue. 5 Late last year, Fox learned that Waltenberg intended to leave Fox for Netflix in violation 6 of his employment agreement with Fox. Declaration of Molly M. Lens ("Lens Deel.") Ex Fox notified Waltenberg, and then the litigation counsel he retained (or Netflix retained on his 8 behalf) that Fox intended to enforce its contractual rights. See id. Exs Waltenberg 9 nonetheless departed Fox for Netflix before the end of his term, and Fox filed suit against him for 10 breach of contract in February of this year. The case settled out of court in July In August of this year, Fox learned that Flynn intended to leave Fox for Netflix in 12 violation of her employment agreement and that, like Waltenberg, she had been solicited and 13 induced by Netflix to do so. Lens Deel. Exs Fox immediately advised Flynn, and 14 thereafter her litigation counsel (same as Waltenberg's), that Flynn's departure before the end of her term would be a breach of her employment contract. In addition, Fox retained litigation 16 counsel, who on September 1 notified Netflix in writing to refrain from employing Flynn in violation of her contract and that Fox intended to hold Netflix fully accountable for its actions. Cross-Compl., Ex. D at 1. Fox's litigation counsel also demanded that Netflix refrain from inducing further breaches of Fox's employment contracts: "Netflix's tortious actions are part of an unlawful campaign to target and poach valuable Fox employees and solicit them to break their contracts with Fox to join Netflix. We demand that Netflix immediately cease and desist from any such further conduct." Netflix attached this letter as an exhibit to the cross complaint. See id. extraordinary, or intellectual character" can be specifically enforced against the employee (i.e., through an injunction preventing that employee from working from another employer), again for a term not to exceed seven years. See De Haviland v. Warner Bros. Pictures, 67 Cal. App. 2d 2 (44) (provisions of contract that purported to bind actress to motion picture services contracts beyond seven calendar years unlawful under Section 55). Neither the Waltenberg nor Flynn contract exceeded seven years, nor is Fox seeking to enjoin Waltenberg or Flynn. 3 See Twentieth Century Fox Film Corp. v. Marcos Wattenberg, Los Angeles Superior Court Case No. SC137 (Complaint filed February 5, 16)

11 1 The next day, Netflix's General Counsel responded in writing, declining to rescind 2 Flynn's offer of employment. Furthermore, Netflix's letter was explicit that it would continue to 3 poach Fox employees under contract. See Lens Deel., Ex. 12 ("We do not regard this dispute to 4 be limited to the particular employees you have identified in your correspondence."). Fox then 5 commenced this action, seeking to hold Netflix liable in damages for its tortious interference with 6 the Wattenberg and Flynn contracts and prevent its continued interference going forward. 7 In response to Fox's assertion of its contractual rights, Netflix filed its cross-complaint 8 alleging two causes of action: the first contends that Fox's enforcement of its contracts constitutes 9 an unlawful business practice pursuant to California Business & Professions Code Section 0 10 ("UCL claim"), and seeks a declaration and an order that Fox is enjoined from enforcing its fixed- 11 term employment agreements, Cross-Compl. if 31, 10:-; and the second alleges that there is 12 an actual controversy between N etflix and Fox as to whether Fox's enforcement of its contracts is 13 lawful, and again seeks a declaration that "Fox is estopped from enforcing [its] fixed-term 14 employment agreements," id. 11 :2-3. Each of these duplicative claims arises directly from protected activities and fails as a matter of law. 16 III. CALIFORNIA'S ANTI-SLAPP STATUTE Section 4.16, known as California's anti-slapp statute, "provides an expedited procedure for dismissing lawsuits that are filed primarily to inhibit the valid exercise of the constitutionally protected rights of speech or petition." Malin v. Singer, 2 Cal. App. 4th 13, 1292 (13). To accomplish this goal, the statute instructs that it "shall be construed broadly." Cal. Civ. Proc. Code 4.16(a). In line with this same purpose, plaintiffs (here, the defendant and cross claimant) are not permitted to amend their pleading in response to an anti-slapp motion. See, e.g., Simmons v. Allstate Ins. Co., 92 Cal. App. 4th 1068, 1073 (01) ("Allowing a SLAPP plaintiff leave to amend the complaint... would completely undermine the statute by providing the pleader a ready escape from [the] quick dismissal remedy"). 4 Courts employ a two-pronged test to determine whether a cause of action should be 4 And no discovery may be taken on a challenged pleading. See Cal. Code Civ. Pro. 4.16(g); see also Mattel, Inc. v. Luce, Forward, Hamilton & Scripps, 99 Cal. App. 4th, 10 (02)

12 1 stricken under the anti-slapp statute. Under the first prong, Fox must show that the cause of 2 action arises from protected activity. "The anti-slapp statute's definitional focus is not the form 3 of the plaintiffs cause of action but, rather, the defendant's activity that gives rise to his or her 4 asserted liability-and whether that activity constitutes protected speech or petitioning." 5 Navellier v. Sletten, 29 Cal. 4th 82, 92 (02). Here, because Section 4.16 protects both legal 6 proceedings themselves as well as communications in anticipation of bringing suit, and Netflix's 7 cross-complaint is based on such proceedings and communications and seeks to enjoin them in 8 the future, there can be no reasonable dispute that Netflix's claims arise from protected activity. 9 See, e.g., Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, 47 Cal. App. 4th 777, (96). 10 Under the second prong, the burden shifts to Netflix "to establish a 'probability' of prevailing on 11 the claim by making a prima facie showing of facts that would, if proved, support a judgment in 12 [Netflix]'s favor." Traditional Cat Ass 'n, Inc. v. Gilbreath, 1 Cal. App. 4th 392, 398 (04). 13 To meet its burden, Netflix must also defeat Fox's defenses, including the litigation privilege. 14 See Digerati Holdings, LLC v. Young Money Entm 't, LLC, 4 Cal. App. 4th 873, 888 (11). As discussed below, Netflix's claims each fail for a number of independent reasons. 16 IV. PRONG ONE: THE CROSS-CLAIMS ARISE FROM PROTECTED ACTIVITY For the purposes of section 4. l 6(b ), a cause of action "aris[ es] from" conduct that it is "based on." Navellier, 29 Cal. 4th at 89. Courts thus look to the activities that form the basis for the challenged causes of action, and then ask whether those activities are protected. See, e.g., id. at 89-93; Digerati, 4 Cal. App. 4th at "Whether the 'arising from' requirement is satisfied depends on the 'gravamen or principal thrust' of the claim." Digerati, 4 Cal. App. 4th at 884. "Stated differently, the question is whether the protected activity is merely an incidental part of the cause of action." City of Colton v. Singletary, 6 Cal. App. 4th 751, (12). A. Netflix's Cross-Claims Are Based On Fox's Assertion Oflts Rights. The conduct that forms the basis ofnetflix's cross-complaint is Fox's assertion of its rights to enforce its fixed-term employment contracts. See, e.g., Cross-Compl. ir 4 ("Fox enforces its fixed-term employment agreements selectively, and mainly when its employees seek to work for a Fox competitor."), if 16 ("Fox determines whether to enforce its fixed-term employment - 5 -

13 1 agreements based in part on whether the employee is seeking employment with a competitor."), 2 if (complaining of Fox's use of fixed-term employment agreements "coupled with the threat of 3 litigation" and "discouraging competing employers from recruiting or hiring its employees"), if 4 ("Fox's selective and abusive enforcement tactics[] create a deterrent effect"), if (saying that 5 Fox's actions with respect to Waltenberg and Flynn "illustrate Fox's unlawful behavior"), if 6 (citing and attaching Fox's demand letter to Netflix), if ("Fox seeks to prevent its employees 7 from leaving the company through the use of legal threats and injunctions."). 8 Netflix's UCL claim predicates its standing allegation on Fox's enforcement of its fixed- 9 term contracts. Id. if 32 ("Netflix has suffered an injury in fact and has lost money and property 10 as a result of Fox's attempts to enforce unlawful fixed-term employment agreements against Mr. 11 Waltenberg, Ms. Flynn, and other California employees."). And it seeks relief barring Fox's 12 enforcement efforts in the future. Id. at 10:- (seeking declaration "that Fox's use of, and 13 attempts to enforce fixed-term employment agreements constitutes unfair competition"), 10:- 14 (seeking "order enjoining Fox from continuing to use or enforce fixed-term employment agreements or other restraints of trade against its employees in California"). Netflix's claim for 16 declaratory relief likewise seeks a declaration that "Fox's enforcement of fixed-term employment agreements, arising from employment of Mr. Waltenberg and Ms. Flynn, and other Fox employees that Netflix may seek to employ, be found unlawful under California law." Id. if 37. These enforcement efforts are not "merely incidental" to the cross-complaint: rather, both causes of action are directly "based on" Fox's enforcement efforts. See, e.g., Digerati, 4 Cal. App. 4th at ; Equilon Enter. v. Consumer Cause, Inc., 29 Cal. 4th 53, (02). B. Fox's Assertion Oflts Rights Is Protected Activity. The anti-slapp statute protects any written or oral statements made before a judicial body or in connection with an issue under consideration by a judicial body. See Cal. Civ. Proc. Code 4.16(e)(l) & (2). 5 Fox's initiation of litigation against Netflix (as well as its earlier litigation against Waltenberg) unquestionably is protected activity. See, e.g., Navellier, 29 Cal. 5 When proceeding under these two subsections, there is no separate "public issue" requirement. Briggs v. Eden Council for Hope & Opportunity, Cal. 4th 1106, 1113 ( 99)

14 1 4th at 90 ("The constitutional right of petition encompasses the basic act of filing litigation."). 2 The anti-slapp statute equally protects Fox's pre-litigation efforts. As the Supreme 3 Court has observed, the anti-slapp statute, like the California litigation privilege embodied in 4 Civil Code Section 47(b), protects "communications preparatory to or in anticipation of the 5 bringing of an action or other official proceeding." Briggs, Cal. 4th at 11. "Both section and Civil Code section 47 are construed broadly, to protect the right of litigants to the 7 utmost freedom of access to the courts without the fear of being harassed subsequently by 8 derivative tort actions." Healy v. Tuscany Hills Landscape & Recreation Corp., 137 Cal. App. 9 4th 1, 5 (06). Because "the California Supreme Court has repeatedly recognized the 10 relationship between the two [inquiries,] [b]oth the Supreme Court and the Court of Appeal have 11 looked to the litigation privilege as an aid in construing the scope of section 4.16, subdivision 12 (e)(l) and (2)." Feldman v Park Lane Assoc., 160 Cal. App. 4th 1467, 1479 (08). For 13 this reason, the California Courts of Appeal routinely invoke the litigation privilege test to 14 determine whether a communication regarding prospective litigation falls under Section 4.16(b)-that is, whether the communication "relates to litigation that is contemplated in good 16 faith and under serious consideration." Compare Action Apartment Ass 'n, Inc. v. City of Santa Monica, 41 Cal. 4th 12, (07) with Digerati, 4 Cal. App. 4th at 887; Neville v. Chudacof, 160 Cal. App. 4th at (08); Rohde v. Wolf, 4 Cal. App. 4th, at (07). 6 Fox's efforts to enforce its contracts easily meet this two-part test. First, Fox's assertion of its contractual rights to Netflix and its intent to enforce its employment agreements undeniably "relate to" anticipated litigation because they "concerned the subject of the dispute." See Digerati, 4 Cal. App. 4th at (statements asserting contractual right of final approval of documentary related to lawsuit against producers and potential distributors of documentary seeking to enjoin its distribution); Rohde, 4 Cal. App. 4th at (voic messages 6 The narrow circumstances in which Sections 47 and 4.16 of the Civil Code are not coextensive are not present here. See, e.g., Jarrow Formulas, Inc. v. LaMarche, 31 Cal. 4th 7, 737 (03) (while a claim for malicious prosecution is subject to section 4.16, the litigation privilege does not apply because it would nullify the tort of malicious prosecution)

15 1 concerning asset that was subject of dispute in which parties threatened litigation were "relate[ d] 2 to litigation"). Second, the anticipated litigation was both "contemplated in good faith and under 3 serious consideration." "'Good faith' in this context refers to a good faith intention to file a 4 lawsuit rather than a good faith belief in the truth of the communication." Digerati, 4 Cal. 5 App. 4th at 887. Because Fox "commenced [the Waltenberg and Netflix] litigation[s] soon after 6 the alleged statements were made... the evidence compels the conclusion that, at the time [it] 7 made the statements, [Fox] seriously and in good faith contemplated commencing litigation against [Waltenberg and Netflix]... to enforce [its] rights under the agreement[s]." Id. at v PRONG TWO: NETFLIX CANNOT ESTABLISH A PROBABILITY OF PREVAILING ON ITS CROSS-CLAIMS With Prong 1 satisfied, the burden shifts to Netflix to establish a probability of prevailing by making a prima facie showing of facts that would, if proved, support a judgment in its favor, including defeating Fox's defenses. See, e.g., Ludwig v. Sup. Ct., 37 Cal. App. 4th 8, 14, 16 (98). Netflix cannot rely on allegations in its pleading to make this showing; it must produce admissible evidence supporting its claims. See id. at 16 (Legislature intended that plaintiff be required to "marshal the facts sufficient to show the viability of the action before filing a SLAPP suit") (emphasis in original). Netflix cannot bear its burden with respect to either cause of action. A. The Labor Code Expressly Recognizes The Validity Of The Agreements That Netflix Seeks To Invalidate. A claim for an unlawful or unfair business practice under Business and Professions Code Section 0 requires the existence of an "unlawful, unfair or fraudulent business act or practice." Here, Netflix does not attempt to argue that Fox's contracts qualify as "unfair," which "means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the 7 The result would be the same even if the Action Apartment litigation privilege test were not overtly invoked. See, e.g., Feldman, 160 Cal. App. 4th at 1481 (easily concluding that allegations that tenants had violated their lease and accompanying threats to sue were "clearly... communications in connection with an ongoing dispute and in anticipation of litigation). And it makes no difference that Netflix claims Fox's enforcement efforts are "selective and abusive," Cross-Comp!. a if, because "it is now well established that the litigation privilege applies without regard to 'motives, morals, ethics or intent... [It] is simply a test of connectedness or logical relationship to litigation." Id. at 1490 (internal citation omitted)

16 1 law, or otherwise significantly threatens or harms competition." See Cel-Tech Commc 'ns, Inc. v. 2 Los Angeles Cellular Tel. Co., Cal. 4th 163, 7 (99). 8 Nor does Netflix invoke the 3 "fraudulent" aspect of the statute-and it cannot, given the agreements' clear and express 4 language. See George v. Auto. Club of S. Cal., 1 Cal. App. 4th 1112, (11). 5 Rather, Netflix argues only that the enforcement of Fox's contracts are "unlawful." See, 6 e.g., Cross-Compl., iii! 4,, 30, 31, 32. Unlawful acts are those forbidden by law. See Cel-Tech, 7 Cal. 4th at 0. But it is axiomatic that an act cannot be unlawful when it is expressly 8 permitted by law. See id. at 4 ("[C]ourts may not use the unfair competition law to condemn 9 actions the Legislature permits."); Lazar v. Hertz Corp., 69 Cal. App. 4th 1494, (99) 10 ("The UCL does not apply if the Legislature has expressly declared the challenged business 11 practice to be lawful in other statutes."). That is precisely the case here. 12 The California Labor Code expressly recognizes the enforceability of fixed-term 13 contracts. The Labor Code first defines "[e]mployment for a specified term" as "an employment 14 for a period greater than one month," contrasting this with "employment, having no specified term, [which] may be terminated at the will of either party on notice to the other." Cal. Lab. Code 16 29; see also id. at 29 (listing "[ e ]xpiration of its appointed term" as one of four events causing termination of employment). The Labor Code then delineates the circumstances under which an employee may prematurely terminate such an agreement without breaching it. Id. 29 ("An employment for a specified term may be terminated by the employee at any time in case of any wilful or permanent breach of the obligations of his employer to him as an employee."). Likewise, Section 29 sets forth the circumstances under which an employer may prematurely terminate a fixed-term contract without breaching it. Id. 29, compare with id. 29 ("[E]mployee who is not employed for a specified term and who is dismissed by his 8 The California Supreme Court has also been clear that the "unfair" aspect of the statute cannot be used to '"plead around' an 'absolute bar to relief simply 'by recasting the cause of action as one for unfair competition."' See Cel-Tech, Cal. 4th at 2. For this reason, no claim for "unfair" conduct can lie when, as here, see Section V.A infra, conduct is permitted by statute. Id. at 2 ("[T]he unfair competition law's scope...is not unlimited....lfthe Legislature has permitted certain conduct or considered a situation and concluded no action should lie, courts may not override that determination. When specific legislation provides a 'safe harbor, 'plaintiffs may not use the general unfair competition law to assault that harbor.") (emphasis added)

17 employer is entitled to compensation for services rendered up to the time of such dismissal"). Finally, Section 55 specifies that, while fully enforceable for a term of less than seven years, fixed-term contracts "may not be enforced against the employee beyond seven years from the commencement of service under it." Id. 55. Netflix does not allege that Fox has sought to enforce its contracts "beyond seven years," id., or "in case[s] of [Fox's] willful or permanent breach," id. at 29, the only statutorily imposed limitations on the enforceability of such agreements. Quite the contrary, Netflix goes outside the Labor Code and rests its entire argument on Business & Professions Code Section 16600, arguing that Fox's contracts violate it as "an expression of California public policy" by seeking to restrain an individual from engaging in a lawful profession, trade or business. See, e.g., Cross-Compl. if. Netflix, however, cannot so easily sidestep the Supreme Court's proclamation that "courts may not use the unfair competition law to condemn actions the Legislature permits." Cel-Tech, Cal. 4th at 4. Further still, Netflix's argument assiduously ignores that these Labor Code sections are (of course) the Legislature's expression of the "public policy" when it comes to fixed-term contracts. As explained in the seminal De Haviland opinion, issued shortly after Section 16600's enactment: The fact that a law may be enacted in order to confer benefits upon an employee group, far from shutting out the public interest, may be strong evidence of it. It is safe to say that the great majority of men and women who work are engaged in rendering personal services under employment contracts. Without their labors the activities of the entire country would stagnate. Their welfare is the direct concern of every community. Seven years of time is fixed as the maximum time for which they may contract for their services without the right to change employers or occupations. Thereafter they may make a change if they deem it necessary or advisable. There are innumerable reasons why a change of employment may be to their advantage... Legislation which is enacted with the object of promoting the welfare of large classes of workers whose personal services constitute their means of livelihood and which is calculated to confer direct or indirect benefits upon the people as a whole must be presumed to have been enacted for a public reason and as an expression of public policy in the field to which the legislation relates. De Haviland, 67 Cal. App. 2d at 5 (discussing Labor Code 55) (emphasis added). Thus, for the last 50-plus years courts have-without hesitation-repeatedly interpreted, enforced, and recognized the validity of these unremarkable contracts, frequently at the insistence and for the benefit of the employee. See e.g., CRST Van Expedited, Inc. v. Werner Enter., Inc.,

18 F.3d 1099, (9th Cir. 07) (recognizing cause of action against competitor for interference with employees' fixed-term contracts, arising from competitor's hiring of fixed-term employees with knowledge of their agreements); Touchstone Television Prods. v. Sup. Ct., 8 Cal. App. 4th 676, (12) (rejecting argument that employer's "decision not to renew her contract before the current term expired is analogous to an employer's decision to terminate an atwill employee in violation of public policy"); Leep v. Am. Ship Mgmt., LLC, 1 Cal. App. 4th 10, (05) (noting that "the absence of a fixed period of employment would rule out any duty to pay unearned wages"); Khajavi v. Feather River Anesthesia Med. Grp., 84 Cal. App. 4th 32, (00) ("Termination of employment for a specified term, before the end of the term, based solely on the mistaken belief of a breach, cannot be reconciled with either [Labor Code 29's] text or settled principles of contract law" and would "would treat a contract with a specified term no better than an implied contract that has no term"). 9 At a more fundamental level, Netflix's UCL claim boils down to the preposterous position that Fox owes Netflix-its competitor-a duty to release its employees from their fixed-term employment contracts or otherwise make them available for Netflix to hire, so that Netflix may "pursu[e] additional Fox current and former employees for potential employment opportunities." Cross-Compl. iii!,. Fox, of course, owes Netflix no such duty, and Section does not remotely suggests otherwise. Far from it: "California law has long recognized a 'competition privilege' which protects one from liability for inducing a third person not to enter into a prospective contractual relation with a business competitor." Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Vil!. Square Venture Partners, 52 Cal. App. 4th 867, 881 (97). Netflix's second cause of action for declaratory relief necessarily fails for the same 9 See also Daly v. Exxon Corp., 55 Cal. App. 4th 39, 45 (97) (employee whose fixed-term agreement, renewable at option of employer, had expired could not sue for wrongful termination); Tollefson v. Roman Catholic Bishop, 2 Cal. App. 3d 843, 854 (90) (one-year employment agreement, renewable at the option of employer, did not give rise to implied contract for an indefinite term, terminable only for cause), disapp. on other grounds by Scott v. Pac. Gas & Elec. Co., 11 Cal. 4th 454 (95); Barndt v. Cty. of Los Angeles, 1 Cal. App. 3d 397, 404 (89) (recognizing cause of action against employer for damages arising from premature termination of fixed-term contract); Millsap v. Nat '! Funding Corp. of Cal., 57 Cal. App. 2d 772, 777 (43) (employer liable to employee for two years' salary for breach of fixed-term contract)

19 1 reasons. It, too, is based on the exact same Section argument and seeks to "estop[]" Fox's 2 enforcement of its contracts. Cross-Compl. iii! 33-38, 10:-11 :4. In fact, Netflix' s declaratory 3 relief cause of action does not assert a single fact not asserted in support of Netflix's UCL claim. 4 Id. Because "[a] request for declaratory relief will not create a cause of action that otherwise does 5 not exist," Cal. Ass 'n of PSES v. Cal. Dep 't of Educ., 141 Cal. App. 4th 360, 377 (06), Netflix 6 cannot even state this claim, let alone establish a probability of prevailing on it, see Bardin v. 7 Daimlerchrysler Corp., 136 Cal. App. 4th, (06) ("[P]laintiffs failed to state 8 claims for unfair competition and violation of the CLRA. There are no other facts that reveal an 9 actual controversy exists between the parties. Therefore, the second amended complaint did not 10 state a claim for declaratory relief."). 11 B. The Litigation Privilege Absolutely Bars Netflix's Cross-Complaint. 12 Netflix also cannot establish a probability of prevailing because the litigation privilege 13 bars its claims. Digerati, 4 Cal. App. 4th at 888 ("A plaintiff cannot establish a probability of 14 prevailing if the litigation privilege precludes liability."). "For well over a century, communications with 'some relation' to judicial proceedings have been absolutely immune from 16 tort liability by the privilege codified as section 47 (b)." Rubin v. Green, 4 Cal. 4th 17, 13 (93). This absolute immunity applies equally to UCL claims when such claims are directed at pre-litigation and litigation communications, as "the unfair competition statute does not override the litigation privilege." Id. at 14; see also Feldman, 160 Cal. App. 4th at 1486 (applying privilege to prelitigation communications, noting "[t]he privilege has been held to apply to suits to enjoin tortious conduct... including claims of unfair competition statute"); People v. Persolve, LLC, 2 Cal. App. 4th, 16-77, (13) (litigation privilege applies to UCL claim unless "borrowed" statute is "irreconcilable" with privilege, so as to "render the prohibitions underlying the unfair competition claims meaningless," such as with fair debt collection acts); People ex rel. Gallegos v. Pac. Lumber Co., 8 Cal. App. 4th 950, (08) (applying privilege to UCL claim); Blanchard v. DIRECTV, Inc., 1 Cal. App. 4th 903, 9 (04) (same). Here, as discussed in Section IV, supra, the cross-complaint is based on Fox's privileged pre-litigation and litigation activities and seeks to prevent such activities in the future. Because

20 1 the "privilege provides a substantive defense to (Netflix's UCL] action...(netflix] cannot meet its 2 burden under the second step in applying the anti-slapp statute of demonstrating a probability 3 of prevailing." Rohde, 4 Cal. App. 4th at 38; see also Digerati, 4 Cal. App. 4th at ; 4 Dove Audio, 47 Cal. App. 4th at The litigation privilege bars Netflix's claim for declaratory judgment for the very same 6 reasons that it bars Netflix's UCL claim. Like the UCL claim, Netflix's declaratory relief claim 7 targets Fox's protected, privileged communications by seeking "a judicial determination that 8 Fox's enforcement of fixed-term employment agreements... be found unlawful," and that Fox be 9 "estopped from enforcing fixed-term employment agreements to prohibit Fox's employees from 10 employment with other companies." Cross-Compl. if 37,11 :2-4 (emphasis added). The Supreme 11 Court has held that litigants cannot escape the absolute immunity afforded by the litigation 12 privilege by "discover[ing] a conveniently different label for pleading what is in substance an 13 identical grievance arising.from identical conduct as that protected by section 47(b)." Rubin, 4 14 Cal. 4th at 13 (emphasis added). Because Netflix's second claim incorporates the allegations of its first claim, pleads "an identical grievance arising from identical conduct" (i.e., Fox's 16 enforcement of its contracts), and seeks to "estop" Fox's privileged enforcement efforts, it, too, is barred by the privilege. See Equilon, 29 Cal. 4th at (affirming grant of anti-slapp motion to "action for declaratory and injunctive relief [that] expressly was based on [] activity in furtherance of [] petition rights"). c. Netflix Does Not Have Standing. Netflix does not have standing to bring its UCL claim. Prior to 04, "any person acting for the interests of itself, its members or the general public" could bring a Section 0 claim. See Californians For Disability Rights v. Mervyn 's, LLC, 39 Cal. 4th 2, 2 (06). In 04, however, frustrated with the abuse enabled by this broad grant of standing, voters enacted Proposition 64. This significantly curtailed standing under the UCL, with "only the California Attorney General and local public officials [being] authorized to file and prosecute actions on behalf of the general public." See id; see also Cal. Bus. & Prof. Code 535. As the California Supreme Court has explained, private parties "must now (1) establish a

21 1 loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic 2 injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair 3 business practice or false advertising that is the gravamen of the claim." Kwikset Corp. v. Sup. 4 Ct., 51 Cal. 4th 310, 3 (11). Netflix's cross-complaint, however, does nothing more than 5 recite the requisite legal standard. See Cross-Compl. 32 ("Netflix has suffered an injury in fact 6 and has lost money or property as a result of Fox's attempts to enforce unlawful fixed-term 7 employment agreements against Mr. Waltenberg, Ms. Flynn, and other California employees.") Such a threadbare conclusory assertion would not survive a demurrer, much less satisfy Netflix's 9 burden to demonstrate with admissible evidence that it has a probability of prevailing on this 10 claim. See Folgelstrom v. Lamps Plus, Inc., 5 Cal. App. 4th 986, (11) (affirming 11 dismissal of UCL claim based on lack of standing); Bower v. AT&T Mobility, LLC, 6 Cal. App. 12 4th 45, (11) (same); see also Blank v. Kirwan, 39 Cal. 3d 311, 3 (85). 13 Even leaving Netflix's deficient pleading aside, Netflix cannot establish that it has lost 14 money or property or suffered an injury in fact as a "result of' Fox's allegedly unlawful conduct. To provide standing, "there must be a causal connection between the harm suffered and the 16 [allegedly] unlawful business activity." See Daro v. Sup. Ct., 1 Cal. App. 4th 1079, 1099 (07); see also Two Jinn, Inc. v. Gov 't Payment Serv., Inc., 3 Cal. App. 4th 13, (). Netflix cannot establish such a connection. As to the Flynn and Waltenberg agreements, the only conceivable "lost money or property" Netflix could allege are its costs in defending this lawsuit. Leaving aside that such costs are the direct result of Netflix's tortious interference, because Fox's enforcement efforts are absolutely privileged (and lawful), they cannot form part of any "connection" with "unlawful business activity" as a matter of law. See Rubin, 4 Cal. 4th at 10. As to Fox's contracts with its current employees, Netflix could describe only "at the most a conjectural or hypothetical injury, not an injury in fact." Bower, 6 Cal. App. 4th at 55. N etflix' s claim for declaratory relief fails for the same reason because it is based entirely on the allegations of its UCL claim. Again, Netflix cannot restate, as a claim for declaratory 10 Paragraph 32 contains a second sentence alleging Netflix is "unlawfully denied the ability to fairly compete for Fox employees." This says nothing more than that it has brought a UCL claim

22 1 relief, "a cause of action that otherwise does not exist." Cal. Ass 'n of PSES, 141 Cal. App. 4th at Where, as here, a plaintiff cannot state a UCL claim and no other facts that reveal an actual 3 controversy exist between the parties, the plaintiff cannot state a claim for declaratory relief. See 4 Bardin, 136 Cal. App. 4th at ("[P]laintiffs failed to state claims for unfair 5 competition... There are no other facts that reveal an actual controversy exists between the parties. 6 Therefore, the second amended complaint did not state a claim for declaratory relief."). 7 Netflix lacks standing to assert its claim for declaratory relief for two additional reasons. 8 First, as to the Flynn and Waltenberg Agreements, Netflix has no standing because "there is no 9 basis for declaratory relief where only past [alleged] wrongs are involved." Osseus Tech. of 10 Amer., Inc. v. DiscoveryOrtho Partners LLC, 1 Cal. App. 4th 357, 366 (10). Second, in 11 seeking declarations regarding Fox's enforcement of its contracts generally, see Cross-Compl. at 12 10:-11 :4, Netflix asks the Court to "render [an] advisory opinion[] on disputes which the 13 parties anticipate might arise but which do not presently exist." Stonehouse Homes v. City of 14 Sierra Madre, 167 Cal. App. 4th 531, 542 (08). After all, even Netflix agrees that some fixedterm contracts are enforceable. Cross-Compl. at 6 n.1. Yet it asks the Court to declare Fox's use 16 of all of such contracts unlawful. Id. at 10:-11 :4. The Court should not entertain this request, which is unripe, hypothetical, and not justiciable. Stonehouse, 167 Cal. App. 4th at 540, 542. D. Netflix's Declaratory Relief Claim Is Superfluous. Netflix's claim for declaratory relief should be dismissed for yet another independent reason-it is "unnecessary and superfluous." See Hood v. Sup. Ct., 33 Cal. App. 4th 3, 3 (95). Here, Netflix has alleged the unenforceability of Fox's contracts as an affirmative defense. See Ans. at 3:3-5. Thus, by its own admission, the enforceability of the Wattenberg and Flynn agreements will be litigated in the context of Fox's complaint. Courts routinely reject similar attempts by parties to convert a defense into a claim for declaratory relief. See C.J.L. Constr., Inc. v. Universal Plumbing, Cal. App. 4th 376, 391 (93) (compiling cases). The Court should do so without hesitation here. VI. CONCLUSION For the foregoing reasons, Fox's anti-slapp motion should be granted. - -

23 Dated: December 7, 16 DANIEL M. PETROCELLI O'MEL VENY & MYERS LLP By: Daniel M. Petrocelli Attorneys for Plaintiffs Plaintiffs Twentieth Century Fox Film Corporation and Fox, Inc

24 Reservation Printout-SC Page 1 of1 THIS IS YOUR CRS RECEIPT INSTRUCTIONS Please print this receipt and attach it to the corresponding motion/document as the last page. Indicate the Reservation ID on the motion/document face page (see example). The document will not be accepted without this receipt page and the Reservation ID. RESERVATION INFORMATION Reservation ID: Transaction Date: Case Number: Case Title: Party: Courthouse: Department: Reservation Type: Date: Time: November, 16 FEE INFORMATION (Fees are non-refundable) First Paper Fee: Description SC1 4 TWENTIETH CENTURY FOX FILM CORP., ET Al. VS. NETFLIX, INC. TWENTIETH CENTURY FOX FILM CORPORATION (Plaintiff) Santa Monica Courthouse K Special Motion to Strike under CCP Section 4.16 (Anti-SLAPP motion) 1// 08:30 am Party asserts first paper was previously paid. Special Motion to Strike under CCP Section 4.16 (Anti SLAPP motion) Total Fees: Fee $60.00 Receipt Number: 11611K9902 $60.00 PAYMENT INFORMATION Name on Credit Card: Credit Card Number: Shara XXXX-XXXX-XXXX-5979 A COPY OF THIS RECEIPT MUST BE ATTACHED TO THE CORRESPONDING MOTION/DOCUMENT AS THE LAST PAGE AND THE RESERVATION id INDICATED ON THE MOTION/DOCUMENT FACE PAGE /16