CAA Files Antitrust Lawsuit Against WGA, Becoming Latest Agency To Sue

CAA has filed an antitrust lawsuit against the WGA, claiming that the guild has engaged in an “unlawful group boycott.” The suit, filed Monday in U.S. District Court in Los Angeles, is similar to lawsuits brought recently against the guild by WME and UTA.

“This lawsuit is necessary,” the 57-page suit states, “because the leadership of a labor union is attempting to restrain competition on a staggering scale using illegal means, including agreements with non-labor parties in service of a group boycott and overly restrictive restraints in commercial markets that the union has no authority to regulate, all of which is prohibited by law.”

The lawsuits stem from the 11-week standoff between the guild and Hollywood’s talent agencies — and the WGA’s demand that the agencies end packaging fees and sever their ties to corporately related production entities. The guild has ordered all of its members to fire their agents who refuse to sign a new Code of Conduct, and all the major agencies have refused to sign. At last count, more than 7,000 writers have fired their agents.

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“The WGA has organized a group boycott and unlawful restraint of trade targeting CAA and other talent agencies,” the CAA suit states (read it in full here). “The group boycott is, as the WGA’s leadership has freely acknowledged, a ‘power grab.’ In outline, the WGA’s illegal group boycott works as follows: The WGA instructed its members to refuse to deal with CAA and other talent agencies unless CAA and other talent agencies accept a ‘Code of Conduct’ requiring the agencies, among other things, to absolutely, categorically, and without exception cease and withdraw from (a) the decades-long practice of ‘packaging’ arrangements and (b) any affiliation with or investment in any entity that produces or distributes content. If the WGA’s members do not follow the WGA’s instructions to refuse to deal with agencies that reject the ‘Code of Conduct,’ the members face sanctions, up to and including expulsion from the union, effectively a death sentence for a writer’s (or writer-producer’s) career. As a result, most WGA members (even those opposed to the WGA’s actions) have fired their agents, including agents at CAA.”

According to the suit, “Federal antitrust law prohibits agreements that unreasonably restrict competition. In some circumstances, labor union activity has a limited exemption from the law of antitrust, because a limited exemption from antitrust law is necessary for the ordinary activity of labor unions, i.e., collective bargaining in a particular labor market. But this boycott is not ordinary labor union activity. The WGA’s group boycott exceeds—vastly—any exemption from the antitrust laws that the WGA may have for its ordinary activities as a labor union. Here, the WGA is trying to coerce anticompetitive agreements in order to severely restrict competition in markets far beyond anything the WGA might have a lawful labor union or collective-bargaining interest in restraining. Because the WGA’s group boycott oversteps the WGA’s legitimate and lawful union interests, and because the WGA is orchestrating and attempting to orchestrate the group boycott and unlawful product restrictions in concert with many non-labor actors, the WGA is in violation of the antitrust laws.”

The WGA, the suit claims, “has conspired with and induced non-labor groups— including producers, and non-licensed managers and attorneys—to join and/or aid and abet the group boycott. It has also tried to coerce the employers with whom the WGA has a collective bargaining agreement, including the major television production studios, to do the same. One purpose of the boycott is to restrain the agencies from engaging in the commercial activity commonly known as television packaging. A second purpose is to restrain the agencies from investing in or affiliating with content producers and distributors who seek to serve currently underserved market segments. In effect, the WGA is seeking to restrain competition in a significant portion of the entertainment industry, far beyond lawful union interests. The WGA’s unlawful group boycott ultimately will cause substantial harm not only to talent agents but also to actors, directors, production staff, below-the-line employees, and many other industry workers—as well as the vast majority of the union’s own writer membership—all of whom depend on the agencies’ procompetitive activities to ensure that television shows actually get made and that individual artists are equipped to maximize their value.”

“The WGA’s self-described ‘power grab’ seeks to end both agency packaging and agency-affiliated production—entirely and forever,” the suit states. “The WGA hopes to use its group boycott to prevent CAA and other agencies from receiving packaging fees, in any circumstances whatsoever, and from investing in affiliated content producers or distributors, in any circumstances whatsoever. That is stunning overreach. The WGA is attempting to limit competition in a broad swath of commercial markets, such as television packaging and content production, that the WGA has no authority to regulate. The WGA’s efforts to remake the entire entertainment industry extend far beyond any legitimate union or collective-bargaining interest it may hold.

“The WGA claims that its group boycott and efforts to restrain competition are justified by the possibility of a ‘conflict of interest’ created by packaging and affiliated production, but this purported justification cannot withstand scrutiny, because the WGA is enforcing its Code of Conduct through group boycott even in circumstances presenting no actual conflict of interest. In fact, for more than 42 years, until early April 2019, the WGA itself acknowledged and agreed that targeted restrictions and ordinary conflict-of-interest rules can protect any of the union’s conflict-of-interest concerns, without the far-sweeping and anti-competitive restraint of trade the WGA is attempting to enforce here.”

According to the suit, “The WGA has colluded and entered into illegal agreements with non-labor parties—including non-licensed managers and attorneys, “showrunners” acting in their capacity as producers of television programs, and studios and production companies—to enforce its group boycott.

“The WGA has illegally enlisted unlicensed attorneys and managers to assist them in facilitating the group boycott and restraint of trade. Under California’s Talent Agencies Act (and under similar laws in New York and other states), only licensed talent agents may procure artistic employment in the film and television industries for writers. It is flatly illegal for unlicensed artist managers or attorneys to procure a writer’s employment in film or television production. In blatant violation of that law, the WGA has urged unlicensed managers and attorneys to procure employment for WGA members who were clients of agencies, including CAA, that have rejected the WGA’s Code of Conduct.

“Shockingly, the WGA has even offered to indemnify managers and attorneys who violate the law by procuring employment for writers against later legal claims. The WGA’s attempt to coordinate its group boycott in combination with these non-labor groups—up to and including an offer to pay attorneys and managers for illegal conduct to facilitate the group boycott—is a clear and knowing violation of the antitrust laws.

The suit also says that the guild “has enlisted ‘showrunners,’ acting in their capacity as producers, not writers, to enforce the group boycott. Showrunners are executive producers, i.e., the effective “CEOs” of television series. Showrunners are responsible, among other things, for hiring staff writers, staffing other cast and crew, allocating a program’s budget, hiring actors (including negotiating contracts with actors), ensuring that the program meets that budget, and exercising near-absolute creative control over television programs. In these roles, a showrunner is quintessential ‘management.’ While most showrunners are also writers, showrunners predominantly perform functions that have long been recognized by the WGA to be ‘outside the scope’ of its collective-bargaining agreement with studios, and showrunners receive compensation (usually, the bulk of their compensation) for their non-writing work. In fact, showrunners often act not just as managers but as independent entrepreneurs, putting some of their own capital at risk in connection with the production of a television show and sharing in its profits. Because showrunners acting in their capacity as producers are managers and entrepreneurs, the WGA has no exemption under the antitrust laws for conspiring with non-labor-party showrunners in these circumstances. In addition, the WGA has no legitimate union interest in promoting the anti-competitive, nonwriting interests of showrunners in this manner.”