Judge Inclined to Advance Antitrust Spat Between Talent Agencies, Writers Guild

LOS ANGELES (CN) – A federal judge indicated Friday he’s likely to advance an antitrust lawsuit by Hollywood talent agencies who claim the Writers Guild of America is stifling competition by organizing a boycott over talent packaging deals.

Hollywood talent agencies William Morris Endeavor, United Talent Agency and Creative Artists Agency say in their federal antitrust lawsuit that the guild unlawfully encouraged its members to fire agents who did not agree to new labor rules.

The guild sued the talent agencies in federal court in April, claiming that agencies unfairly deny writers maximum wages by packaging their work under TV or film proposal packages that often include directors, actors and other talent.

The agencies collect a fee for sending those packaging deals to studios.

The arrangement, which has been an industry standard for more than 40 years, is one that the guild is working to overturn through negotiations with the Association of Talent Agents.

Amid stalled negotiations, the guild asked members this year to fire agents who didn’t sign on to a “Code of Conduct” over packaging fees. Agencies have called the request an unlawful boycott.

At a hearing Friday on the guild’s motion to dismiss, Jeffrey Kessler, an attorney for William Morris Endeavor, told U.S District Judge Andre Birotte Jr. that the guild’s actions violated the Sherman Antitrust Act.

“The purpose was to coerce [talent agencies] to accept the code of conduct,” Kessler told Birotte, adding that the guild doesn’t qualify for labor exemptions in antitrust law.

Birotte told Kessler it’s common practice for unions to work on shifting power to benefit their members and asked why it would be unlawful in this matter.

“We say that this was done to restrain market competition by eliminating packaging deals and content affiliates,” said Kessler, who is with the firm Winston & Strawn. “There are less restrictive ways to address conflict of interest.”

At least 7,000 guild members have fired their agents over the new labor rules, Kessler said at the hearing, adding the actions negatively affect directors, actors and other talent who work with guild members.

Referencing a tentative ruling that was not made publicly available, Kessler said he agreed with Birotte that the case should proceed to the discovery phase. A trial is likely after that stage.

Spokespersons for the agencies did not respond to a request for comment.

Stacey Leyton, an attorney for the guild, told Birotte that the guild is simply seeking to eliminate labor contract provisions that have allowed agencies to operate where conflicts of interest are the standard.

Leyton added the guild’s request to members that they honor the boycott is protected by the First Amendment.

The guild’s rules on packaging fees are the same as those of sports unions who seek to protect players from deals that unfairly benefit teams and talent agencies, said Leyton, with the firm Altshuler Berzon.

Adam Levin of Mitchell Silberberg and Knupp, an attorney for United Talent Agency, told Birotte that the guild is unlawfully enforcing its code of conduct in producers’ labor agreements.

Leyton told Birotte that the code of conduct doesn’t cover showrunners in their capacities as producers and that the show runners can still be represented by unfranchised agents.

A spokesperson for the guild did not immediately respond to emails requesting comment on the tentative ruling.

Birotte took the matter under submission and said he would rule before the Christmas holiday.

This week, the Justice Department filed court papers in support of the agencies’ position and argued the matter should proceed to discovery to determine whether the guild’s activity qualifies for labor exemptions to antitrust laws.

Attorneys for the guild have said in court papers that the so-called boycott is standard union activity protected by statutory labor exemption, which allow workers to organize to improve their conditions.

Birotte denied the Justice Department’s request to participate in the case.

 

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