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Apr.

24, 2019 LOS ANGELES DAILY JOURNAL


BY RICK SIEGEL

What’s in the dispute between


writers and agents?
Perhaps the question of resolution depends on how long and hard the
ATA is willing to fight for the status quo.
After a year of warnings, the Association of Talent Agents is no longer on double secret
probation. With its recently filed breach of fiduciary duty and unfair business practices lawsuit,
the Writers Guild of America has dropped the big one.
This declaration of war created a shockwave in the entertainment community, despite the
WGA's repeated warnings that with the expiration of their ATA contract in April 2019, the Guild
would no longer allow talent agencies to receive packaging fees or own production companies.
It was hard to discern whether the ATA saw the Guild's proclamations as a real threat or just a
negotiating tool. Their public stance was intractable: in a world with more and more vertical
integration, an agency owning sports leagues or becoming film financing and production
entities was inevitable and needed. Moreover, as the Guild had acquiesced to packaging for 50-
plus years, any effort to end these things would be a non-starter.
Even as the dispute became very real, when 95.3 percent of union writers voted to give the
organization authority to require its members to leave any agency that refused to sign a code of
conduct memorandum in which they would accept the WGA's prohibitions, the agents' only
concession was to offer showrunners a nominal split of their packaging fees. An offer that was,
not surprisingly, rejected.
It is easy to predict where most labor disputes will end. Take the halfway point between the
demands and the offers of the two parties, then move the needle towards whoever you think
has the most leverage.
This impasse, however, is different. The WGA lawsuit alleges: (1) that as packaging amounts to
unfair competition, the agencies' packaging activities violate Cal. Bus. & Prof. Code Section
17200 et seq; and (2) the agencies practice of packaging is a breach of the fiduciary duty agents
owe their writer clients. In other words, the Guild is claiming the ATA it is acting unlawfully.
The production element takes finding an acceptable meeting of the minds to an even higher
degree of difficulty. The Guild's complaint filed on April 17 in state court makes no mention of
their unhappiness over the agencies' ownership in production/employer entities. The Guild's
next step may well be to petition a federal court for a ruling on similar antitrust claims the U.S.
Justice Department used in 1962 when MCA was both an agency and studio.
Especially if the golden age of the packaging cash-cow is over, the major agencies may see
greater economic benefit in the revenue streams of partnerships and equity positions in their
production entities than in getting writers and actors employment. Bottom line, if they see
those efforts as better for their bottom line than just getting 10 percent of client revenues, they
may see no other choice.
In the short term, despite the protestations being offered by the ATA, studios and networks will
still be greenlighting productions and WGA writers will still be getting work.
Personal managers will, and this should be as shocking as Captain Renault learning there was
gambling in Rick's Café, continue to help their clients find work. The basic idea of the personal
manager is to maximize the quantity and quality of their clients' job opportunities; it is
impossible to think a personal manager can remove themselves from the procurement process.
Picture a corporate chart: the artist is both the chairman of the board and the product, sort of
like being both Steve Jobs and the iPhone.
The talent agents -- and one client can have different agents for writing, directing and acting
both for television and film, personal appearances and endorsements -- are the vice presidents
of sales. The attorney is the vice president of business affairs, the publicist the vice president of
public relations. The personal manager is the chief executive officer. The other representatives
all report to the manager. How, under those circumstances, can the personal manager be
banned from getting involved in the creation of revenues?
Most attorneys will not step up and look for work -- procure -- for their clients. Save some
music attorneys, it is not what attorneys do. However, transactional lawyers will continue to
negotiate deals that reach their desk, it defies logic to think they would tell a valued client to
find someone else to pay for such work.
Should a member of the bar without a talent agency license be wary of the labor commissioner,
who notably in Blancarte v. Solis, TAC-27089, found a lawyer re-negotiating a sports reporter's
KNBC contract violated the TAA? Maybe not.
There is a very good chance the labor commissioner did not get this right and as noted by
several commentators, no court has ever opined on this issue. Unlike the State Contractor's Act
-- the licensing scheme the Talent Agencies Act is most often compared to -- the TAA does not
specify what activities require licensure. Just the opposite, in Marathon v. Blasi, 42 Cal. 4th 974,
986 (2008), the California Supreme Court noted how "[t]he Act contains no definition, and the
Labor Commissioner has struggled over time to better delineate which actions involve mere
general assistance to an artist's career and which stray across the line to illicit procurement."
Instead, a more elemental authority shows Blancarte did not need a talent agency license, as
negotiating for his client should not have been considered procurement: a dictionary.
Since the term "procuring" is not defined in the TAA, courts and the labor commissioner must
construe it "according to its ordinary, contemporary, common meaning." Human Life of Wash.
Inc. v. Brumsickle, 624 F.3d 990, 1021 (9th Cir. 2010) (citations omitted).
Likewise, as the TAA does not define the term "negotiate," the term should be construed
according to its common meaning: to "(1) try to reach an agreement or compromise by
discussion with others "his government's willingness to negotiate" synonyms: discuss terms,
talk, consult, parley, confer, debate. (2) Find a way over or through (an obstacle or difficult
path). "there was a puddle to be negotiated" synonyms: get around, get past, get over, clear,
cross." Oxford Dictionary of Current English (2009). "Procure" means "to get possession of,
obtain, acquire, to cause to happen.
These two terms are clearly different: "Procure" is related to getting, bringing about, creating
an opportunity; "negotiation" has to do with refining and finding agreement to the specific
terms of a solicited opportunity. As borne out by a simple check of a thesaurus, the terms
"procure" and "negotiate" are not synonymous. To go further: Both terms have multiple
synonyms and none of the synonyms are synonymous to each other.
Had this argument been forwarded in Solis, the labor commissioner may well have found a
talent agency license was not needed to negotiate a deal for an artist that the representative
did not procure.
The labor commissioner could come into play in two other ways. The agents may petition to
stay the lawsuit, claiming that as an agent/artist issue it must first be adjudicated at the
administrative agency. The commissioner has historically opined that packaging has nothing to
do with procurement, and thus their getting fees directly from the employer is a not a violation
of Cal. Lab. Code Section 1700.39.
Conversely, as packaging is, in short, a reward for bringing key employees to work on a project,
WGA members could individually petition the commissioner for relief against either packaging
or agencies' conflicts of interest of owning production entities. Especially under this level of
scrutiny, and with subsequent determinations holding that making a deal that requires future
employment is within the jurisdiction of the TAA, the next ruling may favor the artists over the
agents.
It all points to a long, protracted fight, potentially resulting in a huge disruption to how show
business is transacted. The writers appear to be on solid legal ground. Moreover, it will be
awkward for the Guild to first sue the agents for acting unlawfully, then subsequently decide to
allow the illegality to continue if the writers get to share enough of the ill-gotten booty.
Perhaps the question of resolution depends on how long and how hard the ATA is willing to
fight for the status quo. They have the fiscal ability to defend a legal fight, but without quick
resolution, will the agents' ex-clients feel a need to come back? Will the agencies with strong
revenue streams in production and partnerships simply tether their literary and acting
departments, as MCA did six decades ago? Will a court or the labor commissioner say that
personal managers can procure without worry of future consequences, either based on the
WGA's decision or because of a current court challenge to the TAA's constitutionality.
As the agents have the most to lose, they also have the most to save. It will be interesting to
see if the ATA can transition from bravado and threats to making a proposal acceptable to the
Guild without compromising their large agencies' long-term business objectives.