Judge Allows CAA to Pursue Punitive Damages Against UTA Defectors

The judge also sees CAA’s complaint over a “midnight raid” being more than an “inflammatory" slander campaign.
Illustration by: Taylor Callery

One of the biggest Hollywood talent agency shake-ups in years has seen its first big ruling. Los Angeles Superior Court judge Lisa Hart Cole has moved ahead with a tentative issued this morning and it's bad news for United Talent Agency.

In April 2015, Creative Artists Agency sued over the defection of 12 agents to UTA including Gregory Cavic and Gregory McKnight, who brought with them top clients including Will Ferrell, Chris Pratt and Ed Helms. The complaint against UTA, Cavic and McKnight alleged a "lawless midnight raid" happened when the agents, still under payroll, "worked clandestinely with each other" to defect.

In reaction, UTA called the lawsuit a "flailing and desperate attempt to save face" and brought a motion to delete large portions of the complaint it saw as being a "slander campaign" to publicly embarrass UTA. For example, the defendant didn't like the allegation that its push to poach agents amounted to an "illegal and unethical conspiracy."

In Cole's adopted tentative opinion, however, she shrugs off the objection that the allegations are "inflammatory" and conclusory without sufficient factual support. "All of them are relevant to Plaintiff’s tort claims for intentional interference and breach of fiduciary duty," states the tentative.

While UTA's attorney Bryan Freedman told Cole he's pleased with her ruling, he did take the opportunity to tell the court again the "midnight raid" language is irrelevant and he alluded to proving that in a forthcoming motion for summary judgment.

Additionally, Cole has decided to let CAA pursue punitive damages against Cavic and McKnight.

Under California law, punitive damages are available for "oppression, fraud, or malice." The defendants argued there was not specific facts pled that rose to this standard.

But the judge disagrees.

"Among the wrongful acts committed by Defendants, they allegedly signed potential CAA clients with Defendant United Talent Agency during the 2015 Sundance Film Festival, even though they were at the festival on behalf of CAA," she writes. "These factual allegations are sufficient to support any conclusory allegations of malice."

On the other hand, the tentative does give UTA some relief at least for the time being.

UTA argues that there are no allegations that it ratified the wrongful acts of those defecting agents. Cole sees the point. 

"A corporation is not deemed to ratify misconduct, and thus become liable for punitive damages, unless its officer, director, or managing agent actually knew about the misconduct and its malicious character," states the tentative. "There are no allegations that officers, directors or managing agents of Defendant United ratified or authorized Defendants Cavic’s and McKnight’s actions."

CAA's attempt to win punitive damages from UTA will be stricken, though she's granting the agency an opportunity to amend the complaint with more specific facts. CAA won't, though, be allowed to seek attorney's fees. The judge ruled those as not recoverable.

That won't be a problem, according to CAA's attorney Anthony Oncidi. He says he has information that specifically ties high-ranking UTA officials to the ratifying conduct, which he'll add to the amended complaint.

After adopting the tentative, Cole asked the parties for an update on a portion of the dispute that is playing out in arbitration.

Oncidi said, following an arbitrator's tentative ruling on May 1, “the most astounding series of shenanigans has been unleashed by the other side.”

Shortly thereafter Cole sent the attorneys back to their seats to hear other cases on her calendar, and later met with the parties in her chambers.

Cole then set a trial to begin December 12. It's expected to last 7-10 days.

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