Hollywood's Writers-Agents War Bleeds Into 'Walking Dead' Profits Dispute

AMC says CAA's lawyer is blocking an investigation into packaging fees and an "egregious conflict of interest between [Frank] Darabont and his agents." CAA and Darabont respond that this is a calculated "publicity sideshow."
AMC/Photofest
Frank Darabont

For nearly six years, Creative Artists Agency has been after hundreds of millions of dollars in allegedly missing profits from AMC's The Walking Dead, which, apologies to Game of Thrones, is still the biggest drama series ever to air on cable television. CAA enjoys profit participation along with series co-creator Frank Darabont for packaging the creative elements of the zombie series. As CAA's huge profits lawsuit is headed to trial next year, AMC is preparing to tell a jury a story of shady Hollywood agents in an effort to beat the claims and is now probing the genesis of CAA's involvement in The Walking Dead.

In a letter on Monday to a New York judge, AMC says its investigation is being obstructed by an attorney representing CAA.

But first, some background.

As it so happens, packaging fees — the type that got CAA a piece of The Walking Dead — have become a point of tremendous controversy at the moment as the Writers Guild of America takes on the big talent agencies in a separate suit that contends that these financial arrangements represent a breach of fiduciary duty and an illegal kickback under federal and state statutes. Writers don't like the idea that their agents are getting backend from studios. They are making a stand to ensure that their representatives are properly incentivized to do best by clients instead of maximizing their own compensation.

Agents and writers are now at war with each other over the issue of packaging fees, and AMC smells some advantage in the Walking Dead suit, a joint production between CAA and Darabont. 

In recent weeks, AMC's attorney Orin Snyder has been involved in deposing witnesses from the other side including Darabont and has raised the issue of packaging in the context of contract negotiations for the show, the parties' intentions when coming to certain agreements, and everyone's motivations.

Dale Kinsella, representing the plaintiffs, has allegedly gotten in the way.

"The reason for Kinsella’s obstruction is clear," writes Snyder. "Defendants have struck a raw nerve by exposing fundamental flaws in Plaintiffs’ case. Kinsella does not want Defendants to probe his clients’ contradictory positions on the MAGR [profits] definition. Even more, he does not want Defendants to expose the egregious conflict of interest between Darabont and his agents at CAA. The dirty secret in Hollywood is that talent agents often sell their clients down the river in exchange for bigger packaging fees for themselves. That is the subject of a pending lawsuit by the Writers Guild of America, of which Darabont is a member, against CAA and other talent agencies. That is what happened here, and Kinsella wants to shut down this inquiry."

The plaintiffs object to this characterization.

In their own letter to the judge, Darabont and CAA say the questions are supposed to be about profit participation audits and that the WGA dispute is "palpably irrelevant."

"Indeed, AMC's own garbled explanation of relevance in Darabont's deposition has now been replaced by a newly-minted argument: the WGA dispute shows CAA's 'motivation' behind Darabont's contract negotiations," states plaintiffs' letter. "But CAA's motivation in getting backend profit participation for Darabont, or a package fee on the TWD, has nothing to do with whether AMC cheated Darabont out of tens of millions of dollars in profits. AMC's constant groping to articulate relevance in an of itself demonstrates that this is little more than a publicity sideshow."

In depositions, attorneys often counsel clients not to answer objectionable questions. Sometimes, these objections go to the judge.

Here, AMC asserts that Kinsella's instruction to witnesses not to answer certain questions, his coaching and his interruptions amounts to misconduct. AMC wants the judge to intervene and bring these witnesses back for depositions so they may be asked questions without impediment.

Darabont's attorney sees Snyder as being the one who is harassing and behaving inappropriately.

At one point in the deposition, for example, Snyder is said to have ranted to Darabont that "when I cross-examine you [in front of a jury] on how... your lawyers messed up by filing case No. 2, it will explode in your face."

Overall, perhaps the integration of the packaging fee issue hints at a developing strategy from AMC, which, in reaction to the Walking Dead suit, once vowed to no longer do packaging arrangements with CAA.

After discussing Darabont's recent deposition, for instance, Snyder writes in his letter that AMC has "reason to believe that Plaintiffs' claims may be based on Darabont's misunderstanding of the rights his representatives secured for him — a misunderstanding created and/or advanced by CAA to hide their conflict of interest."

According to the plaintiffs, though, AMC's real purpose is to smear CAA, torpedo a trial date set for May 2020, and "create a rift between Darabont and CAA, while distracting attention from the fact that seven profit participants on The Walking Dead have now sued AMC for hundreds of millions in damages resulting from AMC's self dealing."

Updated May 21, 11: 25 AM upon the response filing from the plaintiffs.

Kinsella, in a statement after the filing, says, “As revealed in our letter to the court, AMC’s effort to disrupt and delay the existing trial date by creating sham discovery disputes is never ending. Understandably obsessed with focusing attention on anything but its own despicable behavior toward the profit participants, AMC has opportunistically attempted to link the WGA’s dispute with talent agencies as somehow relevant to AMC’s defense to Mr. Darabont’s claims regarding unpaid back end profits. We are optimistic the court will see through Mr. Snyder’s specious arguments and keep the parties on track for the scheduled trial.”