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After a lengthy lull in the legal battle between Hollywood’s writers and its talent agencies, a case in California federal court suddenly got hot again on Tuesday with a motion from CAA seeking a preliminary injunction.
Earlier this year, the Writers Guild of America made progress in convincing many talent agencies to give up packaging fees while capping affiliate production (meaning instances where a parent or sister company produces film and TV content). The parties have been at a standstill since the early months of 2019. To become franchised again and represent top writers, Verve in May 2019, Paradigm in March, UTA in July and ICM in August agreed to respective deals with the WGA. The last big holdouts were CAA and WME, and the former seemed ready to throw in the towel too. But CAA demanded “a commercially practical time to come into compliance with the 20% ownership limitation” to divest its stake in an affiliate production company (wiip), and the WGA refused the request. As CAA now puts it, “the Guilds refuse to take ‘yes’ for an answer.”
As such, CAA wants an immediate end to what it sees as the writers’ illegal boycott of talent agencies who refuse to sign a “Code of Conduct.” CAA demands that U.S. District Court Judge Andre Birotte, Jr. grant a preliminary injunction by determining that it is likely to prevail on antitrust claims. In the case, CAA asserts that the boycott isn’t protected by any labor-related exemption to the antitrust laws because it’s not based on legitimately preventing conflicts of interest but is instead a “power grab,” and because the WGA is conspiring with non-members, specifically showrunners and managers, to enforce the boycott.
CAA, represented by Richard Kendall, alleges that it has been trying to mediate a resolution for months to no avail. Some new details emerge from today’s court filings including the WGA’s apparent insistence of appointing a “third party monitor” to control any “restructuring” performed by CAA to come into compliance with writers’ demands.
According to a declaration by CAA managing partner Bryan Lourd, the agency delivered a copy of the franchise agreement last week as well as a copy of an irrevocable blind trust.
“CAA placed its entire interest in wiip into the Blind Trust, and the Trustee of the Blind Trust was given clear direction to sell-down CAA’s present interest in wiip such that the combined holdings of CAA will not exceed the 20% ceiling established by the WGA’s operative franchise agreement for all talent agencies,” states Lourd. “By executing the Blind Trust, CAA was-and is-in full compliance with the WGA’s requirements to be a franchised talent agency, because CAA has reduced its interest in wiip below the 20% threshold. In that November 11, 2020 letter, CAA requested that the WGA respond by close of business on November 16, 2020. The WGA has not responded.”
Lourd adds something else in an effort to show the judge irreparable harm, one of the prongs for an injunction. It pertains to Damon Lindelof, one of Hollywood’s biggest writers (Lost, Watchmen, Leftovers).
Says Lourd, “Earlier today, Peter Micelli of Range Media, a management company, admitted to CAA that Damon Lindelof, a well-known showrunner who was forced to terminate CAA as a result of the WGA boycott, has signed with Range Media instead of waiting any longer to rejoin CAA.”
It’s apparently open season on CAA clients.
“CAA agents report (based on conversations with UTA agents) that UTA is now aggressively pitching former CAA writer-clients with the argument that the Guilds will ‘never’ franchise CAA, and that therefore clients must come to UTA in order to have an agent,” states the preliminary injunction motion.
CAA reports having at least 18 clients who, after firing CAA, signed up for representation from UTA. And 16 other former clients are reported to have joined other agencies.
“The Guilds’ group boycott has put agent employment at CAA at risk,” continues the motion, addressing Range, a management company involving some former CAA agents. “Further departures of CAA agents to such ventures are likely if the Court does not act.”
Why won’t WGA just take a deal?
CAA attributes the settlement failure to “personal animus” on the part of David Young, executive director of the WGA. According to a declaration from Munger Tolles partner Ronald Olson (another lawyer representing CAA), back in September during negotiations, Young “expressed strong negative feelings about CAA. Mr. Young added that, in his opinion, writers would be fine without CAA as an option.”
The WGA hasn’t immediately responded to a request to comment about today’s motion, but the Guild did send a letter to its members this afternoon.
Signed by the WGA’s negotiating committee, the letter speaks about last week’s delivery of the franchise agreement and blind trust for wiip. The letter then mentions CAA’s legal threat if it didn’t accede.
“For the second time in the past few months, CAA has chosen to negotiate this deal from both sides of the table, as if it were possible to reach a settlement with the WGA without ever consulting us on the terms,” states the latter. “That is not how negotiations work. Nor will the Guild be held to arbitrary deadlines. Nor is it helpful to take additional legal action—such as the request for an injunction CAA filed this afternoon—in the middle of a complex conversation about untangling CAA’s conflicted corporate structure.”
The WGA does acknowledge that CAA’s latest proposal is a “step forward,” but the Guild quickly adds that writers’ interests aren’t yet fully protected. Among other things, WGA continues to express concern about TPG, the private equity firm that has a majority ownership stake in CAA. (Among the court papers filed today by CAA was a declaration from a private equity expert attempting to explain why TPG’s involvement raises no real conflict issues.)
In reply to the WGA negotiating committee’s statement, CAA said on Tuesday: “Rather than respond to the negotiating committee’s unsworn public statement today, we choose to stand on the sworn testimony we submitted to the court this afternoon. We remain ready to meet the Guild at the negotiating table to finalize a deal. If they remain unwilling, we will see them in court.”
As for CAA’s efforts to wind down the stake in wiip, “CAA has signed itself to an irrevocable trust without any input from the Guild,” continues the letter, which signals that CAA is still non grata as an agency for writers. “That is an act of substantial hubris.”
Nov. 17, 7:17 pm PST Updated to include CAA’s reply to the WGA negotiating committee’s statement.
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