5:13pm PT by Eriq Gardner
Judge Allows Writers Guild to Seek an Injunction Over Packaging Fees
The Writers Guild of America is on a roll in its war over the packaging fees that talent agencies collect for lining up most of the talent in a television series. Having recently scored agreements with UTA and ICM that include a stipulation to end packaging fee practices by 2022, the WGA convinced a California federal judge on Wednesday to allow it to proceed with legal claims against CAA and WME. What's more, the guild will be able to pursue injunctive relief.
Back in April, U.S. District Court Judge Andre Birotte ruled that the WGA didn't have standing to pursue antitrust and fiduciary duty claims. At the time, the judge concluded that the Guild and its writer-members don't buy packages of talent (like TV studios do) nor sell them in the market (as agents do), so they're not in position to directly claim competitive injury.
An amended complaint was filed, which then led to the agencies filing a new motion to dismiss — largely raising standing issues once again.
This time, the agencies can't dismiss.
Birotte concludes that the WGA does have standing.
"First, the Guilds have plausibly alleged an actual injury that is concrete and particularized by alleging that the Agencies continue to receive packaging fee payments under previously negotiated agreements, which directly reduces writer compensation and the Guilds’ dues revenue on an ongoing basis," states the order. "This alleged injury is fairly traceable to the Agencies’ challenged conduct, as it is the result of contracts allegedly negotiated by the Agencies on behalf of the Guilds’ writer-members."
The judge adds, "Finally, the Guilds’ injury is likely to be redressed by the injunctive relief sought, as the Guilds seek an injunction prohibiting the Agencies’ continued receipt of packaging fees. This injunctive relief would likely redress the Guilds’ injury by increasing the Guilds’ writer-members’ profit participation, which in turn would increase the Guilds’ dues revenue."
Birotte has rejected a motion to dismiss claims for breach of fiduciary duty, constructive fraud, violation of the Cartwright Act, and violation of California’s Unfair Competition Law.
The judge's conclusion that the WGA has stated a viable fraud claim rests in how Birotte sees enough in the “what,” “why,” “how," and "when" of what was disclosed to clients. Specifically, he points to allegations that agencies omitted telling clients about the material terms of packaging agreements and conflicts of interest in order to generate profits. He also points to how agencies allegedly had a uniform policy to do this over the past five years and told their clients they'd be benefitting without having to pay commissions.
CAA counsel Richard Kendall of Kendall Brill & Kelly comments, "This is simply the court saying the Guild has the right to try to prove their false allegations. We remain confident we will prevail at that time."
WGAW President David A. Goodman provides this statement: "We are pleased with today’s ruling of the court to deny WME and CAA's motion to dismiss our claims. Our goal since the beginning of this campaign has been to realign agencies' interests with those of their writer clients. As this case moves forward we are confident that the evidence uncovered through discovery will prove the agencies’ breach of fiduciary duty, constructive fraud, and violation of California's Unfair Competition Law that we’ve detailed in our lawsuit.”