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President Donald Trump’s Justice Department is making a mark on Hollywood. Specifically, the Antitrust Division, which unsuccessfully attempted to block the merger between AT&T and Time Warner, took the side of Netflix over eligibility for the Academy Awards and just last week moved to terminate the decades-old Paramount Consent Decrees.
This administration isn’t done. On Tuesday, the U.S. government filed a statement of interest in the ongoing legal war between agents and writers.
Currently, the two sides are at a standstill over demands by writers that agents no longer collect packaging fees nor be co-owners of content through affiliates. The inability of the Writers Guild of America and the Association of Talent Agents to come to agreement at the deal table has led to dueling claims in federal court. It’s also led to most Hollywood writers disassociating themselves from their former agents at WME, CAA, UTA, and ICM.
In reaction to a “group boycott,” the agents are suing the WGA for allegedly violating antitrust law.
In response, the WGA is asserting statutory and non-statutory labor exemptions, which provide a safe harbor under certain circumstances when workers organize themselves to improve their working conditions. The WGA takes the mantle as the exclusive bargaining unit for its members and basically tells a California federal court not to second-guess its judgment. The guild characterizes its alleged directive that members not associate themselves with agents not agreeing to its conflict of interest prohibitions as “quintessential labor union activity that falls squarely within the statutory labor exemption.”
Now, the Trump administration steps forward.
While cautioning that it is not taking a position on the merits of the case, the Justice Department nevertheless wants the judge to be skeptical of the writers’ motion to dismiss.
A new brief to the court (read in full here) includes an admonishment from the Supreme Court: “Labor unions are lawful combinations that serve the collective interests of workers, but they also possess the power to control the character of competition in an industry.”
The Justice Department lawyers take the position that labor exemptions to antitrust laws should be “narrowly construed.”
“The Writers Guild’s motion to dismiss is premised on the notion that as a legitimate union its judgment about what is best for its members cannot be ‘second-guess[ed]’ by this Court,” states the brief. “Application of the labor exemptions here, however, is not so facile. The pleadings in this case raise several factual disputes that this Court must resolve before holding either the statutory or nonstatutory labor exemption applicable here to ensure that federal antitrust law is not discarded inappropriately. Otherwise, the Court may disrupt the proper balance between federal labor law and federal antitrust law and undermine the fundamental protections for competition and consumers embodied in the federal antitrust laws.”
The U.S. government soon gets more specific about why the judge should greenlight a fact-finding mission.
For instance, the brief notes that agencies are taking the position that the labor exemption is inapplicable because the group boycott included showrunners in their capacities as producers. (Showrunners are typically both writers and producers.) Additionally, the agencies take issue with the involvement of lawyers and managers in helping writers line up work.
“It is an issue of fact whether these entities are part of the group boycott and, if so, in what capacity,” writes the Justice Department, agreeing with the agents. “Only after resolving these factual issues can this Court address the legal question of whether the alleged boycott falls outside the statutory labor exemption because it includes a non-labor group. For instance, the role of a showrunner can vary significantly between different shows…”
The government then goes through the next part of the analysis on whether statutory labor exemptions apply. The safe harbor only kicks in if the union’s activity is guided by “legitimate self-interest” and the union doesn’t combine with non-union groups. The brief argues that courts have traditionally guarded against any pretextual invocation of the exemption by “evaluating the connection between the means chosen and the end invoked.”
The WGA asserts that restraints on agents serve the objective of preventing financial conflicts while the agents take the view that the writers’ boycott oversteps such objective.
Again, the government appears to side with the agents.
States the brief: “While unions can restrict agent compensation when pursuing a legitimate union goal such as avoiding conflicts of interest, it is not a legitimate goal for a union to exert monopsony power over agents simply to extract additional rents.”
Ultimately, the conclusion comes that fact-finding must continue and that the court must examine whether the writers might have pursued less restrictive alternatives to a group boycott.
“It’s not surprising that Trump’s Justice Department has filed a brief designed to weaken a labor union’s effort to protect its members and eliminate conflicts of interest by talent agencies,” said WGAW President David A. Goodman in response to the DOJ brief. “The agencies’ antitrust claims are contrary to Supreme Court precedent, and we remain confident that the court will dismiss them.”
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