Early Arguments in Writers Guild Case Against Agencies Leave Judge "Torn"

An in-the-weeds hearing leaves matters unresolved as the judge takes the agencies' motion to dismiss under advisement.
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A federal judge in downtown Los Angeles heard contentious arguments Friday morning as WME, CAA and UTA sought dismissal of the Writers Guild of America’s packaging fee case against the three largest agencies but the judge deferred decision on the agencies’ motion, taking the matter under advisement after whipsaw arguments from nine assembled lawyers had played out in front of a full courtroom.

After an unusually lengthy two-hour session focusing on arcana of antitrust law, a labor anti-kickback statute, racketeering prohibitions and the even more technical doctrine of standing, a visibly frustrated Judge Andre Birotte tried to bring matters to a close.

“You’ve got three minutes,” he told one lawyer who had already spoken earlier in the hearing. A moment later, Birotte added, “Two minutes 58 seconds.” His eyebrows shot up when another attorney remarked in passing that he would seek the judge’s indulgence so that a colleague might also add rebuttal. The colleague scored a final, two-minute slot.

“There’s much more that I’ve got to look into,” Birotte said as he concluded the session in the middle of what would otherwise have already been the lunch hour, consumed instead by such matters as whether the guild’s state law claims should be stripped from the federal case and sent back to the California court they came from. The litigation began last year with the WGA’s state filing on April 17 and subsequently moved to federal court.

“Once again, the court has given the issues of this case careful consideration,” the WGA said in a statement. “Our legal team delivered a forceful rebuttal to the agencies’ motion to dismiss our counterclaims. We look forward to seeing the court’s ruling.” Agency reps had no comment.

A March 2021 trial date is set for proceedings that would encompass the agencies’ antitrust claims against the guild, which Birotte ruled Jan. 7 would proceed, as well as for whatever claims by the guild and individual writers survive after Friday’s hearing. The results of the hearing and briefing might not be known for a while: That Jan. 7 ruling came a month after a hearing on the matter, even though the judge had already largely made up his mind and produced a tentative opinion, which he had not done for Friday’s hearing.

Outside the legal arena, over 7,000 writers have fired their agents, and the guild has been increasingly successful in cleaving mid-sized agencies from their mega-brethren, with APA and Gersh signing deals with the union in the past several days, joining Verve, Kaplan Stahler, Culture Creative Entertainment, Buchwald, Abrams, Rothman Brecher and other shops. Attention may now shift to ICM and Paradigm, which have not signed, but which are not in litigation with the union, either (ICM previously was).

Meanwhile, the 14 claims brought by the WGA and seven individual writers — which mostly center on the assertion that packaging fees violate antitrust, labor, racketeering, unfair competition and fiduciary duty doctrines — run to almost 100 pages, and with the agencies mounting both substantive and procedural challenges, it was all but inevitable that the Friday hearing would get lost in the weeds. In most respects, the proceedings were a rehash of the briefs, with little new ground broken.

“I’m torn on this issue,” the judge said early on, referring to the question of whether the guild had associational standing — the right to bring claims on behalf of its membership in a schema somewhat akin to a class action. But on another issue — whether packaging fees violated a labor statute  — Birotte seemed inclined to favor the talent firms.

“It strikes me as odd to say this is a kickback or a bribe that everyone knew about,” he said, focusing on the fact that packaging fees have been a widely known and longstanding practice. But the judge walked that back somewhat a bit later, noting that openness alone can’t insulate conduct if a prohibition applies.

With those matters left unresolved, the argument moved on to a discussion of the relevant market for antitrust analysis. Do agencies sell packages to studios, or do they sell representation services to writers, who in turn sell their writing services to studios?

The choice of formulation could dictate how a precedent involving tuna boats and Star-Kist applies. “[The agencies] don’t see the writers as their clients,” argued an attorney for the WGA, “they see the studios as their clients.”

And, she added, “They see the writers as fish that they sell.”