Writers Guild Sends Antitrust Cease-and-Desist Demand to Talent Agent Association

The battle now shifts to federal court, as each side accuses the other of violating complex competition statutes.
Getty/WGA/ATA

Just days after two talent agencies sued the Writers Guild of America for alleged antitrust violations, the guild fired back Friday with a lengthy lawyer letter demanding that the agencies and their trade association cease their own alleged antitrust violations, which the guild says include collusion, price fixing and refusals to deal.

The move portends likely countersuits from the WGA and continues the extraordinary escalation of the dispute between the union and major talent firms over the legality of packaging fees and affiliate production, which already encompasses the federal antitrust suits by WME and UTA, an earlier state court suit by the WGA against those agencies and CAA and ICM and a WGA action against most agencies that has seen over 7,000 writers fire their agents (which the WME and UTA suits assert is an illegal group boycott) — all punctuated by fruitless negotiating sessions between the parties.

In a particularly far-reaching claim, the WGA letter — which was announced in an email to members and which demands compliance by July 15 — also asserts that the Association of Talent Agents doesn’t even have the right to negotiate with the guild at all without the union’s permission.

“The Guild, as the exclusive representative for its members, is exclusively empowered to determine whether to delegate authority to represent its members and, if it does decide to so delegate, the scope of that authority,” says the letter. “Thus, the Guild may unilaterally determine the scope of negotiations with the agencies, as well as unilaterally determine if it will permit the agencies to negotiate collectively through the ATA.”

Coupled with that assertion is a claim that when ATA members meet in order to decide what to propose to the guild in negotiations, they are engaged in collusion and price fixing. Taken together, the contentions amount to an attack on the existence of the ATA itself.

More generally, when agencies adhere to relatively standard formulas for packaging fees, and communicate with each other when they split packaging fees amongst themselves, they are engaged in price fixing and collusion, according to the guild. And the agencies’ refusal to sign onto the guild’s Code of Conduct prohibiting packaging fees and affiliate production is an unlawful “refusal to deal,” in the guild’s view.

The letter dismissed the WME and UTA suits, saying that the guild’s conduct was protected by exemptions in the antitrust law. Somewhat surprisingly, the missive comes a day after the guild made a new proposal to the agencies in which the union offered to allow the talent firms to continue packaging for a year, so long as they agree to then end the practice.

In an email to members, the WGA referred to the proposed provision as a “sunset clause,” but it comes after previously implacable opposition to the practice — and is seemingly contradicted by Friday’s cease and desist letter. The email also said that the guild would be sending out a member survey Friday on the agency campaign.

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Here is the Friday email to members:

June 28, 2019

Dear Members,

  • For 15 months, the WGA consistently told the ATA and major agencies what writers must have: proper fiduciary representation. We remain ready to negotiate from this fundamental principle,and yesterday made another proposal. For 15 months the response, always through the ATA, was that the agencies will continue packaging fees and production arms, and will hide how much they make by these practices. They claim we don’t know what is good for us as writers, and that they know better than Guild leaders and 95.3% of members what kind of representation we deserve.
  • The Negotiating Committee and elected leadership finally had enough and informed each unfranchised agency we would no longer attempt to bargain a new agency agreement with the ATA since the process has proven unfruitful. Instead, we told them we would now bargain with each individual agency. In response, the agencies, clearly collaborating through the ATA, refused the offer and stated they would only negotiate through the ATA. The other response was to file two meritless antitrust lawsuits earlier this week.
  • Under labor and antitrust law the ATA’s right to negotiate with the Guild existed only because the Guild consented and, in doing so, extended legal protection to the ATA. But that accommodation is not the norm. Trade associations such as the ATA don’t typically have the right to bargain for their members as a group; such bargaining is usually an illegal restraint of trade. Because it’s now clear that the ATA is, in fact, the source of restraint of trade within the agency community, we will no longer facilitate that obstacle to a fair agreement.
  • For this reason, the ATA and the eight agencies that comprise its negotiating committee (CAA, UTA, WME, ICM, APA, Gersh, Paradigm, Kaplan Stahler), received a cease and desist letter today (linked here). It demonstrates from an antitrust perspective, the agencies and ATA are engaged in:
    • Price fixing "standard" 3-3-10 packaging fees
    • Collusively deciding how to split packaging fees
    • Unlawfully refusing to deal with the WGA except through the ATA
  • We remain available to bargain reasonable, fair terms. But we’re not going to sit back and allow agencies to accuse us in a court of law of the very things they are doing. Packaging fees are illegal, and in practice also an illegal form of price fixing. Any competent observer can corroborate these facts.

We continue to stand ready to negotiate with any agency.

In Solidarity,

WGA-Agency Agreement Negotiating Committee

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Here is the previous day’s email to members:

June 27, 2019

Dear Members,

We want to update you on a few recent developments:

  • The Guild remains determined to move the negotiation process forward. Therefore, today we sent a new proposal to each formerly-franchised agency and reiterated our offer to meet to discuss any concerns they might have. The new proposal has significant changes from the last formal proposal they received, including:
    • To address agency concerns, we are offering a contract instead of a Code of Conduct, giving either party the right to re-open the agreement with at least 90 days’ notice prior to its termination date, as is traditional.
    • We clarified the agency can represent producers (including PODS) that do not employ writers, a change resulting from conversations during negotiations with Verve.
    • We simplified the agency requirement of notice to the WGA of writer commencement by allowing them to copy the WGA on invoices.
    • Most importantly: In order to transition to a 10% commission model, our new sunset clause allows the agency to continue to make packaging agreements for one year.
  • We are making this offer despite the fact that every one of the eight member agencies of the ATA “bargaining” committee has rejected the offer we made last week to meet individually and discuss this new proposal.
  • UTA has joined WME and filed its own lawsuit accusing the Writers Guild of engaging in, of all things, an antitrust violation. But make no mistake – writers are in no fashion intimidated by these actions; tomorrow we will inform you of the Guild’s response to the agencies’ lawsuits and collusive behavior.
  • The member survey regarding the agency campaign will be sent to you tomorrow.

In Solidarity,

WGA-Agency Agreement Negotiating Committee

Chris Keyser, Co-Chair
David Shore, Co-Chair
Meredith Stiehm, Co-Chair
Lucy Alibar
John August
Angelina Burnett
Zoanne Clack
Kate Erickson
Jonathan Fernandez
Travon Free
Ashley Gable
Deric A. Hughes
Chip Johannessen
Michele Mulroney
Michael Schur
Tracey Scott Wilson
Betsy Thomas
Patric M. Verrone
Nicole Yorkin
David A. Goodman, President WGAW, ex-officio
Marjorie David, Vice President WGAW, ex-officio
Aaron Mendelsohn, Secretary-Treasurer WGAW, ex-officio
Beau Willimon, President WGAE, ex-officio
Jeremy Pikser, Vice President WGAE, ex-officio
Bob Schneider, Secretary-Treasurer WGAE, ex-officio

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