Another blow was struck in the litigation between the Writers Guild of America (WGA) and the top three talent agencies.
In April, the agencies prevailed in their motion to dismiss eight of the nine claims asserted against them by the WGA in the pending US District Court case. They have now moved to dismiss the remaining claim.
The underlying issue in the case has been the WGA’s contention that the agencies’ practice of collecting packaging commissions is an illegal conflict of interest. Packages are commissions collected directly from networks or studios out of production budgets rather than directly from the clients of the agencies. In April, 2019, it directed its members to fire their agents unless they renounced the practice. This prompted WME, CAA and UTA, the three biggest agencies, to sue the WGA.
The WGA promptly counterclaimed, alleging violations of federal antitrust and racketeering law, of the California antitrust statute (Cartwright Act), fraud and breach of fiduciary duty. Individual writers also joined in each one of these claims. The April ruling by Judge Andre Birotte dismissed the federal price fixing and racketeering claims for lack of standing, because the alleged harm suffered by the union and its members does not fall under the statute. The court also held that the Guild lacked standing to assert fraud and fiduciary duty claims on behalf of its members.
The agencies have now moved to dismiss the WGA’s Cartwright Act claim. Judge Birotte had let this claim stand because that statute has more expansive standing requirements than the federal statutes. The agencies are asking the judge to reconsider that conclusion. They argue that if writers are given standing to sue, it would open a floodgate of potential plaintiffs resulting in duplicative recoveries and impossible problems of allocation and proof of damages. If the alleged harm of a package commission is that by being paid out of production budgets, the agents are pocketing money that would otherwise be going to writers, the same would apply to directors and performers, and not only them but also to cinematographers, make-up artists and everyone else involved in a production. “The risk of exponential and duplicative claims,” they say, “is precisely why the Cartwright Act does not permit standing in this case.”