ICM Partners, United Talent Agency Hit With Antitrust Lawsuit for Poaching Clients

A boutique firm proposes that the "Big 4" have monopolized the television market and become predatory.
Armando Arorizo/Bloomberg via Getty Images

Attempting against odds to make a federal case over client poaching, boutique talent agency Lenhoff & Lenhoff is now suing United Talent Agency and International Creative Management Partners for allegedly violating antitrust law.  In a lawsuit filed in California federal court on Feb. 13, Lenhoff & Lenhoff rejects the notion there's nothing to be done over a practice that's both common and long-standing in Hollywood.

The filing comes after Lenhoff & Lenhoff lost two of its prized clients. The complaint doesn't identify the names of these clients. One is said to be a "director, producer, and DGA unit production manager," whose income tripled in the four years she was being represented by Lenhoff & Lenhoff, before being lured to UTA. The other is said to be a "director, producer, and production manager," who after leaving for ICM, entered into a multi-year-contract on a television series. The defections of these clients have allegedly caused Lenhoff & Lenhoff great harm.

According to the lawsuit, Charles Lenhoff's agency has attempted to have representatives at the Association of Talent Agents intervene when clients have been contacted. The plaintiff accuses UTA of a "robo-dialing" program and says its efforts to avoid having clients poached included giving its competitor a list of exclusively represented clients every month.

But the big talent agencies have grown powerful, and the plaintiff is particularly upset over the way that some of its competitors have been inducing clients to leave by offering them "package deals."

In Hollywood parlance, package deals are ones where agencies line the key talent for a project before bringing it to a studio. Directors, writers and producers who are part of a package don't always pay a 10 percent commission. According to the latest lawsuit, "Client #2" was lured to ICM this way. Instead of accepting a standard commission, says the lawsuit, "UTA would be looking to earning a 'packaging fee,'" full of back-end profit participation, which the lawsuit presents as both an unfair competition as well as a way that the bigger agencies have taken control over the talent.

"Because these 'Uber Agencies' stockpile talent, as well as exercise control over the development, production, financing, distribution, advertising, and even the technology for delivery to the consumer, they have morphed into... producers and de-facto employers," states the lawsuit.

Since this is a federal antitrust lawsuit (with more standard tortious interference claims included as well), Lenhoff & Lenhoff must show consumer harm.

"Ultimately, Plaintiff further alleges, the consumer suffers, because of the lack of diversity and creativity caused by the monopoly described," says the lawsuit.

The plaintiff goes through some of the regulation regarding talent agencies and how the California Labor Commissioner has exempted package agreements from its jurisdiction. In 1998, it's said that the Labor Commission blessed packaging arrangements for being in the "artists benefit," but Lenhoff & Lenhoff claims that in 2015, that analysis is "no longer correct, fair, or sustainable." The plaintiff also makes bones about supposedly conspiratorial dealings with the Screen Actors Guild, getting the guild to back off a rule that forbade agencies from possessing financial interest in productions.

In a lawsuit that's often rambling — digital studio expansion, fund raising for agency acquisitions, William Morris Endeavor possibly going public, the blurring of lines between an agent and a manager, etc. — it's alleged that the Big 4 Agencies (including Creative Artists Agency) have monopolized the television market by controlling 92 percent of talent deals and have become "predatory" through their poaching and pricing practices.

Seeking monetary damages, Lenhoff & Lenhoff also proposes a permanent injunction to prohibit UTA and ICM from poaching clients from other agencies that represent television clients. The agency is being represented by attorney Philip Kaplan.

"These allegations have no merit whatsoever, and beyond that we have no comment," says UTA spokesman Chris Day.

ICM had no comment.

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner

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