If this was true, Google Translate's "translate a website" feature would have been sued into nonexistence years ago. In fact, it probably would have never been created: its predecessors, like Babelfish, would have died first.

Translation is format-shifting. It is no more illegal for me to translate a movie from German to English than it is to convert it from a DOC to a PDF.

What would be illegal is if I paid for the movie, translated it, and then distributed it for free. The mere fact that it's a derivative work does not make it any more "mine" than the original, and thus it's just as much piracy as me distributing the original, untranslated version. Similarly, converting the movie from an iTunes MP4 to an MKV will not make it any more or less legal for me to redistribute it.

The legally dubious part is distributing just the translated script (i.e. subtitles), but not the movie itself. A reasonable fair use case could be made for this, though whether it would hold up in court likely depends on how much money each side spends on lawyers. Most likely, nobody will ever even bring such a thing to court, as there's no profit motive for doing so.