4:58pm PT by Ashley Cullins
Is CAA's Secret Arbitration Success Driving UTA's Legal Strategy?
The CAA-UTA battle behind closed doors in arbitration could lead to an all-out war in open court.
Earlier this month, the court denied a bid to file certain briefs under seal in the agent-poaching fight between CAA and UTA — and they show that CAA nearly beat one of UTA's key claims when the arbitrator issued a tentative ruling in CAA's favor.
The arbitration deals with the exit of three CAA agents who were bound by employment contracts when they quit to work for UTA: Jason Heyman, Martin Lesak and Nick Nuciforo. The lawsuit deals with two who were not under contract themselves, Gregory Cavic and Gregory McKnight, but are being accused of helping the other three breach their contracts.
CAA attorney Anthony Oncidi argues that UTA's legal strategy is motivated by a “thinly disguised attempt to dispense with [JAMS Arbitrator Richard Chernick] who has offended them by issuing an adverse tentative ruling,” according to court documents.
Oncidi claims Chernick was ready to toss UTA's defenses related to the seven-year-rule, which limits an employer's ability to keep an employee under contract for more than seven consecutive years without an opportunity to consider competitive employment offers. The rule has been at the crux of UTA's defense regarding Heyman, Lesak and Nuciforo, who each began working for CAA in 2005.
A footnote in CAA's motion to stay the lawsuit pending the outcome of arbitration indicates the agency's argument against the seven-year rule centered on the notion that "[t]here is nothing in Section 2855 that renders the last contract in a series of contracts unenforceable just because there were prior term contracts.” (That argument failed when ICM tried to use it in a 2007 arbitration with longtime agent Ed Limato. However, since arbitration doesn't create case law, that decision won't have any direct bearing on this one.)
“CAA readily concedes that the Proposed Ruling is not binding on this Court (or even on Arbitrator Chernick at this point),” writes Oncidi in a brief. He argues it was sufficient, however, to spook UTA into throwing up roadblocks in an effort to have the court rule on the issue and preempt Chernick’s final ruling.
Given the highly confidential nature of the arbitration, further details of the proceedings are unclear, but the documents indicate discovery is in progress and there are currently no arbitration hearings scheduled.
UTA’s perspective starkly differs. Attorney Bryan Freedman argues an LLC agreement the employees signed when TPG bought its majority stake in CAA is the governing document and CAA is refusing to honor its requirement that arbitration be handled by a retired judge.
“CAA refused and still refuses to arbitrate the issues under these agreements,” states a motion to compel arbitration for Cavic and McKnight and consolidate it with that of the other three agents. Because Chernick is not a retired judge, consolidation could essentially reset arbitration to square one before another arbitrator.
A June 2015 email from Oncidi to Freedman that is attached as an exhibit to court documents shows Oncidi offered to arbitrate the dispute with a retired judge per the LLC agreement, even though CAA believes the employment agreements are the governing documents. Oncidi claims UTA's counsel never responded to that stipulation, which was proposed along with nine others, and didn't object to JAMS' selection of Chernick as the arbitrator.
Adding fuel to the fire, there's also a heated dispute between the parties regarding whether Chernick ordered them to keep certain arbitration details out of the public court case to preserve confidentiality.
Freedman argues the tentative ruling CAA is touting is irrelevant and Oncidi is breaking confidentiality by referencing it.
"Nowhere do the agreements provide CAA with any authority to reveal the content of ongoing arbitration proceedings to the trial court or to any other entity or individual," he writes in a reply brief. “[The tentative ruling] was never adopted by the Arbitrator, and in fact, on July 11, 2016 ... the Arbitrator granted Respondent’s request to withdraw their motion for summary disposition related to the tentative ruling.” So the motion that prompted the tentative ruling no longer exists.
The transcript of a July hearing, which largely happened behind closed doors in Judge Nancy Newman's chambers because of The Hollywood Reporter's presence in the courtroom, hints that UTA's next move in the legal fight could very well be a breach of confidentiality lawsuit against CAA.
"We have no problem with the procedural statements that were made, but we are not in any way acquiescent to that opposition being filed in the present form that it's in because we feel that it violates the confidentiality obligations that CAA themselves drafted," said Freedman. "And we will file a lawsuit as a result of it if that's filed in open court."