In a further ratcheting up of hostilities, the WGA on Friday sent the Association of Talent Agents a cease and desist letter, demanding that it stop its “anticompetitive behavior” and “comply with the document preservation demands outlined herein,” referring to a list of documents the guild wants preserved that it says will prove collusive behavior.
This latest action comes after WME and UTA separately sued the guild for engaging in an “illegal group boycott.”
“The agencies’ collusive agreements have caused tremendous financial harm to the guild’s members by artificially depressing the compensation paid to writers,” the guild’s attorneys, W. Stephen Cannon and Ethan E. Litwin, said in the nine-page letter (read it in full here) sent today to ATA executive director Karen Stuart. “Monies that would otherwise be paid to the writers are instead paid to the agencies as a packaging fee or otherwise left on the table. As a consequence, the agencies have wrongfully earned hundreds of millions of dollars by virtue of their illegal scheme. This financial cost to the guild’s members is not offset by the agencies’ practice of waiving its commission on packaged deals.”
WGA Offers Talent Agencies One-Year Respite From Proposed Ban On Packaging Fees
The guild implemented its own Agency Code of Conduct on April 12, and ordered its members to fire any agents who refuse to sign it. At last count, more than 7,000 writers had done so.
“After WGA members terminated further representation by the agencies, the ATA and its members have continued to collusively impose packaging fees on programs written by WGA-represented writers,” the cease and desist letter states. “These packaging fees have been to the benefit of the agents and to the detriment of the agents’ WGA- member clients. The ATA and its member agencies enjoy no antitrust exemption for this conduct, which is a per se violation of the antitrust laws.
“Indeed, the ATA and its members have pursued fixed-price talent packages for decades, attested to by their repeated admissions concerning ‘standard 3-3-10’ packaging fees. It is a basic tenet of antitrust law that, where no exemption applies, otherwise competing entities may not directly or indirectly (e.g., through a trade association like the ATA) agree among themselves on the price or any price-related terms for which they will sell their services.”
More recently, the letter says, “The ATA has sent letters to its members, held briefing sessions, and otherwise advocated against members signing the Code of Conduct. The ATA and its member agencies have further reinforced their collusive agreements through exclusionary practices, seeking to unfairly and illegally exclude lawyers and managers from having any role in facilitating employment opportunities for WGA members.”
To date, Verve is the only major agency to sign the guild’s code, though it is not an ATA member. The guild’s cease and desist letter states that the other agencies “have collusively agreed not to sign the guild’s Code of Conduct. Following news that Verve had negotiated a Code of Conduct and Franchise Agreement with the WGA, the ATA and its leading members closed ranks and threatened to retaliate against Verve and, implicitly, against any agency that subsequently reached an agreement with the guild.”
The letter goes on to say that “While the ATA and its member agencies further presume that they are entitled to set the agenda for negotiations with the guild: they are not. 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. 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.”
As proof of this “collusive” behavior, the cease and desist letter cites the responses from the reps of seven agencies to WGA West executive director David Young’s offer to negotiate with them separately from the ATA. According to the letter:
•Stephen Kravit of The Gersh Agency responded first: “Under no circumstances will The Gersh Agency meet with you separate from the ATA.”
• In response to this email, ATA Executive Director Karen Stuart asked: “Can I share with group”? The following responses make clear that she did so.
• Richard B. Levy of ICM Partners then responded: “we will not [negotiate] individually.” Instead, he insisted that any proposal from Guild must be to “the entire ATA negotiating committee.”
• Jay Sures of UTA stated: “Since you have an official WGA proposal, I think it is best for you to send it to your counterpart at the ATA.”
• Rick Rosen of WME added: “WME believes the path to resolution is through the ATA. . . . We again invite you to send your proposals to the ATA for consideration by our entire negotiating committee.”
• Julia Johnson of APA noted: “While we are always open to, and have repeatedly requested, frank discussions in an effort to reach a new commercial understanding that serves both the agencies and your members, we will not do so individually.”
• Craig Wagner of Paradigm opined that “as an ATA member we feel it would be inappropriate and counterproductive to have unilateral discussions or negotiations directly with the WGA without the involvement of the ATA.”
• Elliot Stahler of Kaplan Stahler summed up the position of the agencies: “Consistent with the responses of our fellow ATA negotiating committee member agencies, Kaplan Stahler Agency has no interest in individually negotiating with the WGA.”
“Notably,” the guild said, “not a single member of the ATA’s negotiating committee has said otherwise. The ATA and its members are thus engaged in an illegal concerted refusal to deal with the guild—unless or until the union accedes to this trade association’s demand on packaging rights. The guild has in no way consented to this collusive behavior and the ATA and its members’ insistence on collective negotiation is per se illegal.”
In message to their members, the guild’s negotiating committee explained why it was taking this step.
“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. 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.”
Despite all that, the guild said that “We continue to stand ready to negotiate with any agency.”
Subscribe to Deadline Breaking News Alerts and keep your inbox happy.