After something of a war of words, the Writers Guild of America (WGA) and Association of Motion Picture and Television Producers (AMPTP) have resumed negotiations for a new collective bargaining agreement. This agreement will cover writers for film, TV and digital productions.

Residuals for series and feature-length productions made for streaming services are expected to be among the most critical issues under negotiation. The Directors Guild was able to reach agreement with the studios including an increase of up to 50% on residuals for such shows. The DGA is traditionally the first of the above-the-line guilds to complete its three-year deal with the studios. Most of the time, the DGA terms serve as a benchmark in negotiations for the WGA and for SAG-AFTRA, the performers union, both of whose agreements also expire in the same year. COVID-19 has disrupted business as usual, however, and that precedent may not apply this year.

The parties will also be discussing another issue, unique to the pandemic. The WGA asked the AMPTP to agree to extend the period during which union members could earn the threshold amount to qualify for health coverage, since many were out of work. It appeared for a moment that this might derail negotiations entirely. When AMPTP President Carol Lombardini responded to the WGA’s request that she would need to take it back to the AMPTP member studios, chief WGA negotiator David Young fired back with an email saying, “You people are despicable.”

Fortunately for labor peace, both sides have expressed a willingness to address the extension as part of the overall contract negotiations. Lombardini has asked the WGA to tell her how many writers have actually been affected by shutdowns due to the pandemic. Many writers are working in remote writers rooms, while pilot development and screenwriting has always been solitary work well suited to sheltering in place.

The current expiration date of the WGA Agreement is June 30. An objective observer might say that this is not an opportune moment for either writers or studios to want a writers strike. Before the lockdown, there was widespread speculation that a strike was coming; less so now. I will not predict but I can hope.

The organizers of a Salt Lake City comic convention suffered another blow in their long-running trademark battle with the organizers of the San Diego Comic-Con.

The Salt Lake event styled itself as “Salt Lake Comic Con.” The owners of the registered trademark “San Diego Comic-Con” sued for infringement. Nearly six years of litigation culminated in a jury verdict in favor of the San Diego plaintiff.

The defendant appealed to the Ninth Circuit on the ground that “Comic Con” had always been used as an abbreviated term for comic conventions. It was therefore “generic ab initio” and never entitled to trademark protection.  The Circuit Court brushed this argument aside. It simply affirmed the trial court’s findings that there were insufficient facts to support an argument that the mark was generic. It also upheld an award of $3.7 million in attorney’s fees to San Diego Comic-Con’s attorneys, saying that the litigation conduct of the defendant’s attorneys met the standard of an “exceptional” case warranting such a remedy.

Although the coronavirus pandemic has brought production to a virtual standstill, writers, unlike directors and performers, are still able to work on development. While they shelter in place quietly plying their trade, their union has continued to make news.

Agency Litigation

The breaking story is a ruling in the California District Court case between the Writers Guild of America (WGA) and the major talent agencies William Morris Endeavor (WME), Creative Artists Agency (CAA) and United Talent Agency (UTA).

The bone of contention in this litigation  was the agencies’ practice of collecting packaging fees on television series. These are fees paid directly to the agencies by networks rather than by the agency’s clients. The union’s belief was that this created a conflict of interest.  The Guild was also alarmed that agencies were becoming producers and thus potentially hiring their own clients. The Guild directed its members to fire their agents unless they agreed to discontinue these practices, and the agencies sued, alleging an illegal group boycott.

The WGA asserted multiple counterclaims against the agencies, including federal and state price fixing, racketeering and breach of fiduciary duty. In a ruling on April 27, District Judge Andre Birotte, Jr. dismissed eight of the nine claims asserted by the WGA against the agencies.   What remains in the case from the writers’ side are state price fixing claims and the claims of individual writers for breach of fiduciary duty and unfair competition. The agencies’ claims are also still standing.

Packaging Dispute

Things haven’t been all bad for the WGA, however. The union has had surprising success in getting most of the important agencies other than WME, CAA, UTA and ICM Partners to agree to give up producing immediately and to give up packaging in 2021 if the big four have given it up by then. As a result, those agencies are back in business with their writer clients.

Collective Bargaining Agreement

The collective bargaining agreements of all three above the line guilds are up this year as well and once again the WGA is making headlines. The DGA, in typical fashion, had a orderly negotiation and closed a deal on April 2 that included an increase of nearly 50% in directors’ residuals for made-for-streaming programs.  SAG-AFTRA, the performers’ union, began its negotiations on April 27.

Things were not so simple with the WGA.

After some back and forth, the employers’ bargaining unit, the AMPTP, announced that the parties had agreed to extend the current contract from May 1 to June 30. Negotiations for the new agreement would begin on May 11.

What complicated this arrangement was that the WGA lead negotiator, David Young, also proposed as a virus relief effort to extend eligibility for the WGA health plan through the end of the year for writers who would not otherwise qualify. Carol Lombardini, the AMPTP lead negotiator, responded that she would need to discuss that proposal with the studios she represents, not least because the WGA Health Fund is an independent entity jointly managed by labor and management. Young responded to Lombardini in a letter that said in part, “There will be an agreement  when both sides agree there’s one. You people are despicable.”

It is not certain as of today the effect that this will have on the timely commencement of negotiations between the WGA and the AMPTP.

The closure of Broadway theatres amidst the Corona pandemic came as a gut punch. It was swift, sharp and immediately changed the fate of the forty-one theatres that make New York City the center of the global theatrical market. It is a devastating and crippling event for our industry and the world at large, but there are ways in which we can mobilize to address its impact on the theatrical market – and the answer lies, at least in part, in the power of a ticketing pre-sale.

A very quick summary on theatrical ticketing: when patrons purchase tickets to a show, the monies are held in an escrow account until the performance has actually occurred. On a weekly basis (one week in arrears), ticketing agencies remit gross receipts to the theatres and producers, which amounts are thereafter used to cover weekly operating expenses and (hopefully), recoupment/payment of profits. This accounting structure enables theatres and ticketing agencies the ability to issue refunds directly to consumers, should a performance be cancelled.

While producers do not have access to gross receipts until after each performance, the escrow balance (i.e. prospective gross receipts) is a powerful metric when it comes to Broadway budgeting. For instance, if the escrow balance looks low for November, a strong pre-sale for the period commencing on or about Thanksgiving and leading into the holidays will likely protect a show from early closure. Simple (and like any business), the metrics allow producers to amortize the losses of low-grossing periods against higher grossing weeks.

So what does this mean for us now? It means we need to prepare the public to come back to Broadway – and if we start on April 13, 2020 (the currently scheduled re-commencement date), it will likely be too late for shows with less than Hamiltonian numbers. Importantly, refunds for show cancellation will always protect ticket-buyers if further shows are cancelled, so there is little downside to committing to show dates even in light of uncertain times.

Call your parents, circulate emails to your co-workers and make group bookings with your friends. You should be seeing West Side and Company and Jagged Little Pill and How I learned to Drive and of course, the Lehman Trilogy. Six and Doubtfire and Whose Afraid of Virginia Wolf. And Plaza Suite because Bradshaw is back on Broadway and Sing Street because we love an OG musical.

A gut punch hurts, but it’s not a knock out. I won’t give up on this season, and neither should you.

Minute Maid Park
Minute Maid Park” by clockwerks is licensed under CC BY-SA 2.0

After winning the 2017 World Series, its first in franchise history, the Houston Astros were the envy of the baseball world.  After serving as the league’s doormat with the worst record in baseball in 2011, 2012, and 2013, the Astros rose from the ashes, and in 2017 had perfected one of the most lethal offenses the sport had ever seen, mercilessly embarrassing opposing pitchers at an alarming rate.  One of those pitchers is Mike Bolsinger, a right-handed journeyman who pitched for the Toronto Blue Jays in a 16-7 shellacking against the Astros on their home field, Minute Maid Park, on August 4, 2017.  Bolsinger entered the fourth inning of that game in relief to record the final out of the frame.  He did, but not before he surrendered four runs off four hits and a home run.  At the time, it appeared Bolsinger simply lacked the talent to effectively face Major League hitters and he was demoted to the minor leagues never to play in the Majors again.  Of course, appearances can be deceiving.

Fast forward to January 13, 2020 when Major League Baseball released a ground-shaking report confirming the Astros engaged in an elaborate and longstanding sign-stealing scheme throughout the 2017 regular season, 2017 postseason, and a portion of the 2018 regular season.  The Astros were found to have used a camera positioned in center field to record the signs from an opposing catcher.  Team personnel would then watch the feed in a hallway between the clubhouse and dugout and would relay the signs to the Astros batters by banging a trash can.  This operation was deployed in the majority of Houston’s home games in 2017 with the most bangs heard during the game in which Bolsinger pitched, according to the complaint.

Bolsinger has now sued the Astros in Los Angeles Superior Court for unfair competition, negligence, and tortious interference with contractual and prospective economic relations.  Bolsinger claims his disastrous outing in Houston on August 4, 2017 doomed his baseball career and seeks consequential damages he alleges he incurred as a result of being bounced from the league.  Bolsinger also seeks disgorgement of the Astros’ $31 million in bonuses from the 2017 postseason and requests that these funds be paid to Los Angeles-based charities.  This week, Bolsinger added Astros’ owner, Jim Crane, to the suit as well as Derek Vigoa, the Astros’ current senior manager of team operations who reportedly developed the sign-stealing scheme when Vigoa was an intern with the team in 2016.

There are a few strikes against Bolsinger’s case.  As a procedural matter, Bolsinger chose to sue the Astros in Los Angeles, perhaps to obtain a more favorable jury, and claims venue is proper because member-investors of the team (a limited liability company) reside in Los Angeles.  However, the game in question occurred in Houston and both Bolsinger and the Astros’ organization reside in Texas.  Additionally, Bolsinger may be required to arbitrate his claims as a member of the Major League Baseball Players Association pursuant to the association’s collective bargaining agreement, though Bolsinger may argue his case involves intentional fraud and deceit that transcend an ordinary contractual dispute.  Plus, at least to date, Bolsinger is not suing MLB.

Turning to the substantive merit of Bolsinger’s claims, the fact that the Astros engaged in fraudulent behavior and unfair competition during the 2017 season, as well as in the game in which Bolsinger pitched, is well-documented and not reasonably subject to dispute.  However, whether the Astros caused Bolsinger’s demotion and inability to return to the Majors is up for debate.  Pitching for the Diamondbacks, Dodgers, and Blue Jays, Bolsinger had a career 4.92 ERA and an overall win-loss record of 8-19.  Only two of these games were against the Astros.  Additionally, Houston touched up Bolsinger on his home turf in Toronto earlier in the 2017 season for four runs off six hits and two home runs, so sign-stealing scandal or not, the Astros could argue they had Bolsinger’s number anyway.

How this case proceeds may determine whether other pitchers who suffered adverse career moves after struggling against the Astros in 2017 and 2018 will seek to settle their score in court.  The Astros’ are expected to file a response to Bolsinger’s complaint next month.

The full service agencies APA and Innovative Artists have signed the Writers Guild of America’s new agency franchise agreement. As a result, each will be free to resume representing writers but with some critical restrictions. (For background on the long-running battle between the WGA and the agencies, see our earlier posts here and here.) This may be the the WGA’s most significant victory to date in its fight to end the practice of agency package commissions. APA and Innovative are both prominent agencies, and APA’s CEO, Jim Gosnell, was president of the Association of Talent Agencies (ATA) until just before his agency agreed to sign.

The agreement, which is favored nations for all signatories,  requires agencies to refrain from producing projects or from collecting package commissions. The prohibition on packaging will be phased in and is not triggered completely until July 15, 2021. Until then, writers have a choice whether to be included in a package or to pay commission out of their fees. Moreover, this sunset period will be extended if at least two of the Big Four agencies (WME, CAA, UTA or ICM) have not stopped packaging by that date, either by signing a franchise agreement or as a result of legal action.

APA’s and Innovative’s concession came just days after Gersh, another full service agency and ATA member, agreed to sign the franchise agreement. Four other ATA members had previously signed the franchise agreement: Buchwald, a smaller full service agency, and three literary boutiques, Rothman Brecher Erlich Livingston, Kaplan Stahler and Pantheon. The Verve Agency, a non-ATA member, signed on in May of 2019, shortly after the WGA called on its members to fire their agents who refused to sign the new franchise agreement.

Although these developments represent significant progress from the WGA’s standpoint, there are currently no indications that the Big Four agencies will be signing a franchise agreement any time soon. WME, CAA and UTA are deep in litigation against the WGA in federal court in which each side has accused the other of numerous bad acts including antitrust violations. The court is currently considering the agencies’ motion to dismiss the union’s antitrust claims. These agencies have deep pockets and diverse revenue streams, but if more of the mid-sized agencies sign franchise agreements and the lawsuit heads for trial, the big agencies will face increased pressure to resolve their dispute or risk being shut out of the writer business.

Looking ahead, we can expect these developments to have an impact on the forthcoming negotiations of the new collective bargaining agreement between the WGA and the Association of Motion Picture and Television Producers (AMPTP). An early sign of this impact was manifested in the preliminary pattern of demands that the WGA sent to its members as a blueprint for those negotiations. One of the WGA’s demands is to require the studios to negotiate only with agencies that have franchise agreements with the WGA. The WGA had made a similar demand in March of last year, which the AMPTP rejected as tantamount to an illegal group boycott.

The current WGA collective bargaining agreement expires on May 1, 2020. Rumors are flying that the negotiations will be contentious and Hollywood is bracing itself for a writers strike. Having learned the lesson in their struggle with the agencies that solidarity can achieve results, guild members may feel more emboldened to support a strike.

The nearly two-year legal saga between television host Tavis Smiley and PBS appears headed for its final chapter next month when the parties face off in trial.  Central to the dispute is the meaning and scope of the morals clause in Smiley’s contract with PBS.  PBS terminated its 14-year partnership with Smiley in 2017 for violating the clause after multiple allegations of sexual misconduct against Smiley surfaced.  Smiley filed suit in February of 2018 for breach of contract claiming that PBS’s invocation of the morals clause is simply a pretext for racial discrimination.  PBS countered alleging Smiley was the one who breached their agreement by violating the morals clause.

Although morals clauses are considered industry standard in Hollywood originating in the 1920s after silent-movie star Roscoe “Fatty” Arbuckle was famously accused of raping and killing an actress days after signing an unprecedented $3 million deal with Paramount Pictures, the precise meaning and scope of such clauses are notoriously ambiguous, making them often difficult to enforce.  In this instance, Smiley’s 2015 contract – the agreement at issue in this dispute – provides that he “shall not commit any act or do anything which might tend to bring [him] into public disrepute, contempt, scandal, or ridicule, or which might tend to reflect unfavorably on PBS…”.  This leads inevitably to questions of just what constitutes “public disrepute,” “contempt,” “scandal,” or “ridicule,” or counts as behavior that “might tend to reflect unfavorably on PBS.”

Washington D.C. Superior Court Judge Yvonne Williams provided some clarity in a ruling on January 2, 2020 that any alleged misconduct that predates Smiley’s contract with PBS (i.e., before 2015) does not come within the scope of the provision.  Since PBS claims its decision to terminate Smiley was based not only on misconduct that allegedly occurred before 2015 but also on misconduct that allegedly happened in 2015, 2016 and 2017, PBS’s counterclaim for breach of contract is still in play.  But Smiley may argue that since many of the earlier allegations were reported before the parties entered into the 2015 agreement, PBS had knowledge of these allegations yet still signed Smiley, thus waiving whatever moral objections PBS may have had to Smiley’s alleged behavior.

Also, given the ambiguity of the provision, Smiley may be able to challenge whether the allegations against him actually reflected unfavorably on PBS in light of other hosts and public figures that have appeared on PBS who were similarly accused of sexual misconduct including Charlie Rose, David Letterman, and Plácido Domingo.  The court may have hinted as to whether it would find such an argument persuasive when it denied Smiley’s motion to compel PBS to produce any records of other PBS personnel being accused of sexual misconduct as a “fishing expedition.”  But it is the jury that will decide the parties’ fate come February.

To follow up a story we two previous blogs (here and here), Redbox and Disney have settled their lawsuit over Redbox’s sale of download codes from Disney “combo packs.”

Combo packs were sets that Disney sold comprising a Blu-Ray and DVD of a movie plus a code that the purchaser could use to download a digital copy. Redbox bought combo packs at retail, broke them apart and sold the download codes separately from the physical discs.

Disney sought a preliminary injunction based on copyright infringement in February of 2018. Both parties’ arguments relied heavily on conflicting interpretations of the first sale doctrine, which states that once a person lawfully acquires a copy of a copyrighted work, she may then freely transfer it to others. There was no dispute that this doctrine permitted Redbox to sell or rent the Blu-Ray and DVD copies it acquired, but they differed on its applicability to the download codes. Redbox asserted that the paper slips containing the download codes were legally indistinguishable from the physical discs, while Disney’s position was that the codes were not themselves copies but only keys to permit consumers to create copies on their own computers.

The District Court agreed with Disney on the first sale issue, but interestingly, did not grant the preliminary injunction because it found that the terms of Disney’s license agreements for the download codes constituted misuse of copyright. The court found that under those agreements, the movies could only be downloaded by persons currently in possession of the discs with which they had been packaged. This meant that Disney was leveraging its copyrights to force consumers to sacrifice the free right to dispose of the physical discs that would otherwise be clearly permitted under the first sale doctrine.

After suffering such a narrow loss, it was a simple matter for Disney to revise the license terms for its download codes to say simply that the codes could not be sold separately. This was sufficient to overcome the copyright misuse argument, and Disney got its preliminary injunction in September 2018.

Although a preliminary injunction frequently brings an end to copyright litigation, Redbox fought on for another year. It continued to press its first sale arguments and attempted to bolster its allegations of copyright misuse by claiming that Disney was engaging in anticompetitive behavior to protect the launch of the Disney+ streaming service. Finally, however, in mid-November of this year the parties called it a day. Redbox agreed to a permanent injunction against selling download codes and gave the District Court continued jurisdiction to enforce its terms.

 

In a move that could upend the US theatrical exhibition landscape, the Antitrust Division of the Department of Justice has announced that it will seek court approval to terminate the Paramount Consent Decrees.

The Paramount Consent Decrees went into effect in 1948 following the decision of the Supreme Court in United States v. Paramount Pictures that the major studios were violating antitrust law. At that time, the studios had total control over all aspects of the industry. They had talent under long-term contracts, full control over production and ownership of the theaters in which their movies were shown. When it came to licensing pictures to theaters that they didn’t own, they indulged in practices such as block booking—forcing theaters to book less attractive features in order to get the more desirable ones—and circuit dealing—offering to deal exclusively with favored theater chains in order to extract more favorable terms. The DOJ’s move would permit the studios to get back into theater ownership immediately and, after a two-year adjustment period, would lift the ban on block booking and circuit dealing.

In a speech before the ABA, Assistant Attorney General Makan Delrahim explained that the DOJ’s position is that the Consent Decree has served its purpose. Given the passage of time and the effect of the decree itself, he said, there is no way that the studios could reinstate the horizontal cartel of the late 1940s. Vertical integration, moreover, is no longer subject to blanket prohibition under current antitrust law. As a further factor in the DOJ’s decision, Delrahim pointed to the changes in the theatrical exhibition business that have been wrought by streaming services.

The National Association of Theater Owners came out in opposition to the proposal last year when the DOJ first announced that it was evaluating the Consent Decree. Following the Department’s recent official announcement, the Directors Guild of America has likewise announced its opposition, calling it a “step in the wrong direction.”

Netflix’s original series “When They See Us” was released in May of this year and portrayed the prosecution of five teenagers of color who were wrongfully convicted of raping a white woman in Manhattan’s Central Park in 1989.  The series depicts the detectives and police abusing the teens, isolating them from their parents, and subjecting them to continuous hours of questioning without food or bathroom breaks to elicit false confessions.  In Part 4 of the series, after the actual culprit came forward, the Manhattan assistant district attorney confronts the lead detective on the case and says in reference to the detective’s interrogation of the teens, “You squeezed statements out of them after 42 hours of questioning and coercing, without food, bathroom breaks, withholding parental supervision… The Reid Technique has been universally rejected.  That’s truth to you.”

John E. Reid & Associates, which developed and trademarked The Reid Technique as a means of effectively interviewing, questioning, and interrogating suspects, begs to differ and filed suit against Netflix on Monday for defamation and false light because of these statements.  Reid claims its technique does not involve, and rather prohibits, striking or assaulting a suspect, making any promises of leniency, denying a suspect any rights, conducting excessively long interrogations, or denying a suspect any physical needs.  Reid adds that its technique urges extreme caution when interviewing juveniles and that the techniques used to interview the teens in “When They See Us” do not represent the Reid method.   Reid further takes issue with the allegation that the technique is “universally rejected,” though this statement could be viewed by the court as a matter of opinion and therefore beyond the scope of defamation.

Another open question is whether these statements are comments of and concerning John E. Reid & Associates or its founder, John Reid, as opposed to the product Reid created.  If the comments are seen as attacking a product, Reid’s claims may be better suited for a trade libel cause of action, which would require proof of actual damages as opposed to just general harm, and/or a dilution of its trademark by tarnishment under the Lanham Act.

Also of note is that the detective in the episode responds to the statement saying he did not know what technique he used in interrogating the teens, which suggests that the overall context in which the allegedly defamatory statements were made conveys a degree of doubt as to whether the interrogation involved The Reid Technique.  Under this view, it would appear that the series took a neutral stance on the technique and crafted the dialogue to allow the viewers to conclude whether the technique was used and/or was responsible for the way the teens were mistreated.  Anticipating this argument, Reid argues that the character playing the assistant district attorney and who accuses the detective of employing The Reid Technique is portrayed as intelligent and credible, while the detective is depicted as a bad actor.

Netflix has not publicly commented on the suit but is expected to file an answer sometime next month.