Big 3 Talent Agencies Ask Judge To Dismiss Remainder Of WGA’s Packaging Lawsuit

The Big 3 talent agencies, having already won a partial victory in their yearlong legal battle with the WGA over packaging fees, now are asking a federal judge to dismiss all of the guild’s remaining claims.

In a 25-page motion filed Wednesday, WME, CAA and UTA asked U.S. District Court Judge Andre Birotte Jr. to toss out the WGA’s remaining claims of price-fixing, unfair competition and breach of fiduciary duty.

Read the agencies’ latest motion here.

On April 27, the agencies declared that they’d won a “resounding victory” after Birotte dismissed major portions of the WGA’s case when he ruled that the WGA lacks antitrust standing to pursue its federal price-fixing claim; lacks organizational standing to bring claims for breach of fiduciary duty and constructive fraud on behalf of its members; lacks standing to bring an Unfair Competition Law (UCL) cause of action on its own behalf; failed to plead racketeering activity by the agencies, and failed to state claims upon which relief can be granted with respect to its group boycott claims.

The WGA filed an amended complaint on May 11 that sought to reinstate many of the claims the judge had dismissed, asking the court to “declare that packaging fees constitute a breach of the agencies’ fiduciary duties to their writer-clients,” and to find that “the agencies’ packaging fee practices constitute constructive fraud.”

The agencies, however, are now asking the judge to throw the WGA’s case out entirely, arguing that the counterclaimants – the WGA East and West and seven of their members – “fail to correct any of their prior pleading defects and assert a revised collection of counterclaims based upon substantively unchanged factual allegations.”

The judge allowed the guilds to proceed with their price-fixing claims under California’s Cartwright Act, but the agencies now argue that that claim “fails for a lack of antitrust standing,” and that “the guilds cannot bring claims for breach of fiduciary duty, constructive fraud, or a Cartwright Act claim on behalf of their members.”

The agencies also argue that the Cartwright Act claims should be dismissed in their entirety “because neither the guilds nor any of their members have standing under California law.”

The agencies also told the judge that he should not reinstate the constructive fraud claims – which he already dismissed – that have been re-submitted by the seven individual writers in the case, because they have made “no new factual arguments” in their amended complaint – “just more rhetoric about how packaging constitutes fraud all of the time.”

Arguing against the WGA’s request for a court-ordered injunction that would bar packaging fees outright, the agencies also took issue with the WGA’s claim that it’s been harmed because it had to install a staffing submission system to help find jobs for its agentless members who in April 2019 were ordered by the WGA to fire their agents who refused to sign the WGA’s code of conduct, which banned packaging fees and agency affiliations with related production entities. Those mid-tier agencies that have signed the guild’s revised code can now continue packaging until the end of next year, unless any two of their competitors at the Big 3 and ICM Partners agree to sign the code before then.

“The Guilds allege that they have spent money to create a self-designed staffing system to replace services formerly performed by talent agents, including those at the Agencies here,” the Big 3 said in their latest motion. “Running an independent staffing service is of course a decision made by the Guilds, not a choice forced upon them by any conduct of the Agencies. This fact alone dooms any claim of Article III standing” under the Unfair Competition Law.

“Further, it is pure speculation that the Guilds’ ostensible need to provide this staffing service would be cured by an injunction to end packaging or to require the Agencies to make more specific packaging disclosures. Indeed, many talent agencies have already succumbed to the Code of Conduct, have resumed representing writers, and agreed to eventually cease providing packaging services to their writer-clients. Yet, the Guilds nonetheless allegedly continue to provide their staffing services. Further still, there is no way to know whether one or more of the Agencies here would ever agree to the Code of Conduct, which bans not only agency packaging but also content affiliates. Thus, it is not at all clear how an Unfair Competition Law injunction against Agency packaging would redress the Guilds’ purported need to provide staffing services.”

The agencies, noting that the issue of the WGA’s negotiations with these other talent agencies who have signed its code is not before the Court, said that the WGA East and West “also contend that they are suffering ongoing harm because ‘the Guilds have been required to accept Code revisions that phase out the ability of Guild-franchised talent agents to accept packaging fees on future projects instead of immediately barring such fees, and that are contingent in part upon at least one of the Agencies agreeing to the revised Code.’

“More specifically, the Guilds allege that because of their decision to permit other talent agencies — i.e., not the Agencies here– to temporarily continue packaging, the Guilds have been required, at least temporarily, to continue to ‘monitor’ packaging by other agencies and ‘educate’ their members about packaging.

“Putting aside the extraordinary nature of the Guilds’ acknowledgment that they are franchising agencies who continue to package – a practice that the Guilds purport to believe always amounts to a tort – it hardly supplies Article III standing. For one thing, it is hard to imagine a more obviously self-inflicted harm. For another, these allegations center around franchise agreements that the Guilds negotiated and executed with third parties who are not before the Court, and the conduct of third parties is insufficient to confer Article III standing as a matter of law.”

The agencies also told the judge that the packaging they still do involving actors and directors is not even involved in this matter, and will continue no matter the final disposition of this case. “Finally, the Guilds allege that packaging fees paid in deals involving other parties, e.g., an actor or a director, reduce Guild dues revenue. But the injunction the Guilds seek – against the Agencies packaging writers – does not even purport to stop the Agencies from continuing to package actors and directors and thus would not redress the purported – and implausible – harm of which the Guilds complain. Nor would the Guilds conceivably have standing to seek any injunction to stop the Agencies from providing packaging services that their non-writer clients continue to desire. This is yet another implausible over-reach to try to manufacture non-existent Article III standing under the UCL.”

A hearing of both sides’ motions has been set for July 10.