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WGA Drops Lawsuit Filed In State Court Against Big 4 Agencies, Consolidates Claims In Federal Court – Update

David Robb

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UPDATED with UTA response:The WGA East and WGA West have dropped their lawsuit against the Big 4 talent agencies, and have answered and filed counter-claims in the federal antitrust case that CAA, WME and UTA brought against the guild. Click the link below to read the counterclaims.

The guild filed its original suit on April 17 in Los Angeles Superior Court, claiming that packaging fees violate California’s fiduciary duty and unfair competition laws. The Big 4 agencies — UTA, CAA, WME and ICM Partners —  filed their antitrust lawsuits against the WGA in June, claiming the guild is engaging in an “unlawful group boycott.” Those suits were filed in U.S. District Court in Los Angeles.

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“Over the years the major agencies have repeatedly broken federal antitrust law by conspiring to fix the price of packaging fees,” WGA West president David A. Goodman said Monday. “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.”

UTA was the first to come out with a statement: “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. 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.”

ICM Partners said Monday that it too had been dropped from the state suit, but the agency was not mentioned by the guild in a note to members.

“There is a new development in our campaign to end conflicted agency practices,” guild leaders told their members today. “In June, WME, CAA and UTA filed frivolous antitrust lawsuits against the WGAW and WGAE in federal court. Today, the Guilds responded to those actions by filing our own antitrust and racketeering claims in federal district court against WME, CAA and UTA. Our filings include the response required to the antitrust charges against us, while also seizing the opportunity to address their violations of antitrust law. We have consolidated in the federal action our California state law claims and accordingly have withdrawn the separate state court action. While the Guild’s actions today are limited to the three agencies that filed the antitrust lawsuits against us, additional suits are under contemplation against agencies that also received our cease-and-desist letters.”

Here is a summary of the claims contained in the federal filings against the agencies:

• Packaging fees violate the fiduciary duty that agents owe to their writer clients under California law and deprive them of the conflict-free representation to which they are entitled.

• The agencies’ breach of fiduciary duty also constitutes constructive fraud under California Civil Code.

• Packaging fees are unlawful kickbacks from an employer to a representative of its employees in violation of Section 302 of the federal Labor-Management Relations Act. The agencies’ repeated violations of Section 302 constitute both an unfair business practice under California law and a “pattern of racketeering activity” under the federal Racketeer Influenced and Corrupt Organizations Act (“civil RICO”).

• The agencies have committed violations of state and federal antitrust laws by (1) conspiring to fix the price of packaging fees under the 3-3-10 formula; and (2) engaging in an unlawful group boycott by refusing to negotiate with the Guild on an individual agency basis and by coercing other agencies to join that group boycott.

According to the guild, “The suits ask the court for an order prohibiting agencies from receiving packaging fees; requiring the agencies to provide an accounting of all packaging deals involving Guild members; and disgorging profits generated from unlawful and unfair packaging fees. The suit also seeks treble damages and other relief for the agencies’ antitrust violations.

“The WGA will continue to use all appropriate methods, including litigation, to align agency interests with the interests of writers. We remain committed to moving the negotiation process forward with the remaining unsigned agencies.”

Read the WGA’s counterclaim filings by clicking the links below:

WME

CAA

UTA

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