WGA Seeks Dismissal Of Talent Agencies’ Antitrust Lawsuit

David Robb

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The WGA East and West have filed a motion to dismiss a consolidated antitrust lawsuit brought by three of Hollywood’s biggest talent agencies – WME, CAA and UTA. That suit, which was filed in federal court in Los Angeles last month, alleges that “WGA leadership has engaged in an unprecedented abuse of union authority that has pushed their Guilds well beyond the protection of the labor exemptions. Their tactics are unlawful, and WGA’s outright bans on agency packaging and content affiliates do not serve any legitimate union interest.”

In their motion to dismiss the suit, the two branches of the writers guild said that “the three dominant Hollywood talent agencies” are engaged in an “attack” on their “federally approved role as the exclusive representative of writers in television and film, based on the Agencies’ disapproval of the unions’ good faith judgment about how to protect their members when delegating representational authority to individual talent agents.”

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The WGA and the Association of Talent Agencies – with which the guild is no longer willing to bargain – have been at an impasse for six months over a new franchising agreement. A Code of Conduct implemented by the WGA on April 13 bans packaging fees for one year and prohibits agency affiliations with corporately related production entities.

In its motion to dismiss, the WGA said that the three agencies “challenge, on federal antitrust and labor law grounds, the authority of the guilds to adopt a Code of Conduct setting forth certification (‘franchising’) standards that prohibit certain conflicts of interest by agents who represent Guild members in individual negotiations with production companies for compensation above the minimums required by the Guilds’ collective bargaining agreement.

“It is black letter labor law that the National Labor Relations Act gives the Guilds the exclusive right to represent their members in contract negotiations, and that if the Guilds choose to delegate any of that statutory authority, they may adopt standards (including conflict of interest prohibitions) that agents must meet. Such franchising standards are ubiquitous in the entertainment and sports industries, and the federal courts have concluded unanimously that because agents in such industries ‘perform a function—the representation of union members in the sale of their labor—that in most non-entertainment industries is performed exclusively by unions,” unions may lawfully adopt rules to ensure their members receive un-conflicted representation.

“The Agencies provide no reason to set aside canonical labor law here. They do not dispute that the Guilds may lawfully condition agents’ representation of Guild members on compliance with the Guilds’ standards; indeed, for decades, they accepted the Guilds’ authority to set such standards. Instead, the Agencies dispute the ‘necessity’ of the Code’s standards and improperly invite this Court to second-guess the Guilds’ decision to prohibit two practices—agents’ acceptance of ‘packaging fee’ payments from production companies that employ the agents’ writer-clients, and the Agencies’ acting as actual or prospective employers of their writer-clients by owning or affiliating with production companies—that give rise to inherent conflicts of interest that compromise the representation agents provide to Guild members.

“But the lawfulness of the Guilds’ actions does not turn on the Agencies’ views as to whether the Code is the best means of protecting Guild members against potential agency abuses. As the Supreme Court has admonished, courts must not use antitrust law to second-guess a union’s ‘judgment regarding the wisdom or unwisdom, the rightness or wrongness, the selfishness or unselfishness of the end of which the particular union activities are the means.’

“The Agencies’ federal antitrust claim fails because the Guilds’ conduct is fully protected by the antitrust labor exemption. Separately and independently, the Agencies fail to plead that the Guilds agreed to unreasonably restrain trade, that the Guilds possess a dominant market position, and that the Agencies have suffered an antitrust injury. UTA and CAA’s Labor Management Relations Act claim likewise fails, because the Guilds have not involved neutral ‘secondary’ parties in their dispute with the Agencies, and because the Guilds are acting within their statutory authority as exclusive representatives under the NLRA.”

“For the foregoing reasons,” the WGA said in its 26-page motion, “the First Consolidated Complaint should be dismissed in its entirety.”

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