California court hands managers split decision

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In a closely watched case, a unanimous California State Supreme Court ruled Monday that the state's Talent Agencies Act applies to personal managers as well as agents.

But perhaps more significantly, the ruling no longer forces the state's Labor Commissioner to void a manager-talent contract in its entirety when a minor violation occurs. With that leeway, personal managers consider the court decision a victory.

Until now, as long as the talent could find a case of unlawful procurement — even for the slightest thing like sending off a head shot to a casting agent — the artist could withhold all commissions.

"It means a very large percentage of managers will no longer face labor commission hearings," said attorney Donald Smiley, who represented management company Marathon Entertainment in the case. "The vast majority of them, if you look at the (labor commission complaint) list, were all cases where the major contract — the source of most of the money — was not being questioned. It was an attempt to avoid paying the commission because of small items that would have not been that incidental to the parties."

The decision involves a long-running dispute between actress Rosa Blasi (the Lifetime series "Strong Medicine") and her former manager, Rick Siegel, and his Marathon Entertainment.

Marathon sued Blasi over unpaid commissions. The actress responded by claiming that Marathon had acted as an unlicensed talent agent by illegally procuring employment for her. Under the TAA, only licensed agents can gain employment for clients.

The court of appeal in June 2006 ruled the TAA applied to managers, but in its decision brought up the issue as to whether the state's doctrine of severability could apply.

On appeal to the Supreme Court, the seven justices were charged with deciding what the legal consequences were to a manager who steps over the line and procures employment for a client. The court was asked to determine whether managers were exempt from regulation under the TAA; whether the Labor Commissioner can sever the alleged acts of illegal procurement from the rest of the manager's contract; and whether there was a genuine dispute between Marathon and Blasi for the commissioner and court to decide whether severability would apply.

In turning to the first question of a manager's exemption from the TAA, the court focused on the act's language and concluded that managers "remain exempt from regulation insofar as they do those things that personal managers do, but they are regulated under the act to the extent they stray into doing the things that make one a talent agency under the act."

The justices also looked at the language of the act to determine the question of severability and whether the TAA allows partial recovery of fees owed for legally provided services.

The act "is silent — completely silent — on the subject of the proper remedy for illegal procurement," Justice Kathryn Werdegar wrote for the panel. But state contract law allows contracts to be void in whole or in part and that in this case, the Labor Commission could in fact separate the alleged illegal acts with the rest of the contract on a case-by-case basis.

"Instead of looking for a bright line, they have to look at the entire relationship and come to a fair and equitable result," said attorney Gerald Margolis, who with Ben Shatz filed a "friend of the court" brief on Marathon's side on behalf of the National Association of Artists' Managers. "Now, Marathon and Blasi are going back to Superior Court so it can decide whether or not severability should be applied to that instance. Maybe Marathon will win, or Blasi, but essentially the ruling will be rooted in the right thing to do rather than the easy bright line solution."

Said AFTRA general counsel Thomas Carpenter, who filed a "friend of the court" brief on Blasi's behalf: "While AFTRA is disappointed that the California Supreme Court did not strongly affirm the contractual rights of performers and other talent and their relationships with talent agents, we are encouraged that the ruling found that personal managers are regulated by the California Talent Agencies Act.

"In fact, the court strengthened the argument that anyone — personal managers or others — who procures work is covered by the act. In addition, AFTRA is pleased that the Supreme Court ruling does not preclude enforcement of the Talent Agencies Act by the state Labor Commissioner, which will continue to give performers and other talent a valuable forum for resolution of disputes."

Blasi's attorney Michael Plonsker called the decision mixed.

"The court has appropriately found that the TAA is still alive and well and if anybody is not licensed and procures, they've violated that act," Plonsker said. "That question is what happens now that they've decided the doctrine of severability applies. That's the thing that remains unclear.

"It's going to be up to the actors and managers to take the appropriate positions they believe, and it's up to the court to decide whether it applies."

For former talent manager Maria Piedad Bonilla, it's a step in the right direction. Nearly five years ago, Bonilla left the business after some of her clients used the TAA to avoid paying her commissions for work she said she had done for them.

"I lost faith in the system," Bonilla said. "I was afraid to send a picture or talk to a casting agent about my client. Where do you draw the line?

"I can't spend numerous hours holding their hand, making sure they get excellent demo reels and not get paid for it."

In the court's conclusion, the seven justices suggested that perhaps it is time for the legislature to take another look at the law and fix some of its ambiguity.

"We, of course, have no authority to rewrite the regulatory scheme," the court stated. "In the end, whether the present state of affairs is satisfactory is for the legislature to decide, and we leave that question to the legislature's considered judgment."
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