9:43am PT by Jonathan Handel
UTA Files Antitrust Suit, Joining WME in Counterattack on Writers Guild
UTA on Thursday filed an antitrust lawsuit against the Writers Guild of America, accusing the union of violating federal law by exceeding the scope of its authority to regulate agents, just days after WME filed a similar lawsuit against the guild. The moves signal a dramatic escalation of the bitter struggle between the WGA and the industry’s major talent agencies over packaging fees and affiliate production.
Both lawsuits allege that the guild is engaging in an illegal group boycott of agencies that refuse to sign onto the union’s Code of Conduct, introduced in April, that bars both disputed practices. At issue in the litigation is the scope of a union’s right to act anticompetitively — for instance, to call for a boycott — under two specific labor antitrust exemptions, the “statutory exemption” that is written into the law and a judge-made “non-statutory exemption.”
"WGA placed the interests of a few well-heeled individuals above the interests of its membership," states UTA's complaint, which argues that most packaged writers benefit from not having to pay 10 percent commissions.
"More to the point, WGA not only acted contrary to the interests of writers, and other members of the Hollywood creative community, it also acted illegally," continues the complaint. "WGA has exceeded its lawful authority as a labor union by organizing an illegal group boycott against UTA and other talent agencies."
The statutory and non-statutory exemptions provide a safe harbor for union activity, but the agencies contend that the union has strayed onto the high seas and is now subject to potentially massive liability for its actions, including treble damages, as well as an injunction against the Code.
“WME and UTA are correct; there are serious antitrust violations taking place in Hollywood," the WGA responded in a statement to The Hollywood Reporter. "But they are all being committed by the [Association of Talent Agents] and the eight members of its 'bargaining' committee, and we will make their violations public in the next day or so.”
In addition, the union previously responded to WME’s Monday filing by pointing out that a 1975 antitrust lawsuit over packaging fees by a WME predecessor, the William Morris Agency, resulted in a preliminary ruling in the guild’s favor. “There is no merit to WME’s lawsuit, and the Guild will not be bullied into a bad deal,” said the WGA.
Given the typical timing of federal cases, it’s likely that the litigation may take 18 to 24 months to resolve, not including potential appeals. However, UTA (or WME) could move for a preliminary injunction and expedited discovery, making it possible that a court would rule a few months from now. A ruling in the agencies' favor would have a dramatic effect on the dispute by allowing writers to return to their agents while litigation proceeds, while a ruling in the guild's favor would prolong the stalemate until a final resolution.
It's likely that the WME and UTA cases will be heard by the same judge, and they may be consolidated as a single case. The same is true of any similar litigation that other agencies such as CAA or ICM may choose to file against the union.
The agencies have offered to share a portion of packaging fees with writers and to institute transparency and consent guardrails, but the guild has been steadfast in its intent to bar the practices and also to seize power from the agencies. Also in April, over 7,000 WGA members fired their agents under orders from the guild, and the WGA filed suit against WME, CAA, UTA and ICM in a parallel attempt to bar packaging fees. That suit is currently on hold though, pending procedural moves. Meanwhile, negotiations between the WGA and ATA have been fruitless.
UTA is represented by two prominent entertainment attorneys — Steven Marenberg at Irell & Manella and Adam Levin at Mitchell Silberberg. They present packaging and content-affiliation practices as long-standing ones that provide benefits "by expanding the output of television series, increasing competition with traditional production companies, creating new employment opportunities, and providing better terms to writers."
The complaint also states, "WGA’s notion that it has just recently discovered that these long-standing and properly disclosed practices are somehow actually illegal is utterly preposterous." The previous agreement between the guild and the ATA, in place for almost 43 years, expressly permitted packaging fees and did not bar affiliate production.
The heart of the lawsuit then attacks actions by WGA's leadership. UTA asserts that the union is threatening discipline against members who continue to be represented by agencies who won't agree to a code of conduct. The agency estimates that over 1,700 of its clients have terminated representation to date.
The lawsuit also includes discussion of other members of Hollywood's representation community, whom the agency says the guild has attempted to rope into joining its boycott.
States the complaint, "Upon information and belief, WGA has also adopted a policy of (i) paying the damages of any lawyers or talent managers who act pursuant to WGA’s purported delegation and are sued by talent agencies or clients for violating the California Talent Agency Act ('TAA'), and (ii) reimbursing unlicensed lawyers and managers who act pursuant to its delegation but are not paid by a writer (and who as unlicensed entities otherwise could not recover from that writer). Upon information and belief, these policies have caused, induced, and/or encouraged unlicensed lawyers and managers to combine with WGA’s unlawful group boycott and violate the TAA."
Eriq Gardner contributed to this report.
June 27, 11:15 a.m. Updated with WGA response.