4:42pm PT by Jonathan Handel
Writers Guild Moves Agency Lawsuit to Federal Court, Adds Racketeering and Antitrust Claims
The Writers Guild of America on Monday dismissed its state court lawsuit against the Big Four talent agencies and refiled similar allegations and more in federal court against the top three firms, expanding an already bitter fight.
The new filings include antitrust claims and explosive allegations of racketeering against the agencies under a law known as RICO that is more commonly deployed against organized crime.
The target of the WGA filings is packaging fees, an agency practice in which talent firms are paid by studios and production companies rather than commissioning their clients. The filings also respond to and deny the antitrust claims brought against the guild by the three agencies. WME, CAA, UTA and ICM Partners were the defendants in state court, while the federal counter-defendants are the first three firms only.
“Over the years the major agencies have repeatedly broken federal antitrust law by conspiring to fix the price of packaging fees,” said WGA West president David A. Goodman. “Their current campaign to preserve the packaging fee model by strong-arming smaller agencies also violates the law. We are simply asking the court to stop these agencies from illegally enriching themselves at the expense of writers.”
The lawsuit charges that the packaging fee model violates the agencies’ fiduciary duty to their clients and constitutes a system of illegal kickbacks and price-fixing under federal law. The suit also alleges that the agencies’ “collusive agreement not to negotiate individually with the Guilds” and “collusive agreement to blacklist writers or other individuals or entities who object to packaging fees or agree to the Guild’s Code of Conduct” violate federal antitrust laws.
“The WGA’s dismissal of its own State court lawsuit today represents a complete retreat by Guild leadership, who were fully aware they faced certain defeat in the courts in a few weeks,” said UTA. “The lawsuit represented the WGA’s ill-considered and poorly executed campaign that continues to harm writers, who labor on unnecessarily without effective representation. The new claims are equally ill-considered, vitriolic and baseless. UTA is confident that they will ultimately be dismissed as well.”
The suit — which is technically a trio of counterclaims against the agencies by the guild and a total of eight individual plaintiffs — seeks a declaration that packaging fees are unlawful and an order that the agencies provide an accounting of all packaging fee deals involving guild members and disgorge all profits generated from packaging fees.
The expansion of the litigation and addition of claims under RICO, the Racketeer Influenced and Corrupt Organizations Act, represents a further hardening of the WGA’s position. The three agencies and the Association of Talent Agents had no comment, but the agencies had previously filed motions to dismiss the WGA from its own state court suit on grounds that it lacked standing and had consented to packaging for 43 years. They’re likely to reassert those positions in opposition to the WGA’s federal filing, as well as make additional arguments concerning the antitrust and RICO claims.
The state court motions to dismiss had been set for a Sept. 5 hearing, a date which the WGA had unsuccessfully sought to postpone until after the guild’s elections. By dismissing its own suit and refiling federally, the guild managed to delay what will be the first court test for its claims.
Aug. 19, 7:35 p.m. Updated with UTA statement.