Oral arguments were heard today in federal court on the Big 3 talent agencies’ motion to dismiss the WGA’s antitrust suit against them. If U.S. District Court Judge Andre Birotte Jr. denies the motion, the case would be headed for trial in March 2021 after a lengthy and costly discovery process, in which the sides would have to open their books to each other.
Last month, without ruling on the merits of the case, the judge issued a tentative ruling that denied the WGA’s motion to dismiss the lawsuits brought against the guild by WME, CAA and UTA. He made that tentative ruling before hearing oral arguments, and then made the ruling final on January 7. Today, however, he made no tentative ruling – either before or after the hearing.
Streaming Residuals Could Set The Stage For A WGA Strike In 2020, But Would Packaging Play A Role?
The guild argued today that packaging fees “are kickbacks and bribes” that the agencies have been extracting from the studios to package their shows, but the judge said, “I am concerned about this interpretation,” and asked how it could be that it’s only being challenged now if “everyone knew about it since 1990?”
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Birotte asked numerous other pointed questions to both side, though it should be noted that a judge’s questions are not always an indication of which way he or she is leaning. “Isn’t it foreseeable that packaging would reduce compensation for writers?” he asked the agencies’ attorneys, who argue that none of the individual plaintiffs have been harmed by packaging. The judge, however, noted that the extent to which writers are harmed could not possibly be known to them because the intricacies of the agencies’ packaging agreements “are not available to them.”
The agencies also argued that the guild doesn’t have standing to bring a complaint because, they claim, the guild’s pleadings in the case offer no proof that the guild itself was harmed by the agencies’ packaging practices. They also argued that the complaints brought by seven guild members who are individual plaintiffs should be remanded back to state court, where the case originated. The agencies also argued that there is no evidence that the individual plaintiffs were harmed by packaging.
With regard to the guild’s standing, and why he hadn’t made a preliminary ruling, the judge said: “I have some trouble getting my head around it.” At the end of the hearing, he said he would take the matter under submission, but didn’t indicate when he would make a ruling.
After the hearing, the guild said: “Once again, the court has given the issues of this case careful consideration. Our legal team delivered a forceful rebuttal to the agencies’ motion to dismiss our counterclaims. We look forward to seeing the court’s ruling.”
The agencies’ suits include claims that the WGA, in its nine-month campaign to end film and TV packaging fees, has restrained competition “on a staggering scale” through illegal means, including agreements with non-labor parties – such as non-writing showrunners, and lawyers and personal managers the guild deputized to perform agenting duties – in service of a group boycott and “overly restrictive restraints in commercial markets that the union has no authority to regulate.”
The guild’s counter-claims, meanwhile, allege that the three agencies’ packaging fee model violates federal antitrust laws and the Racketeer Influenced and Corrupt Organizations (RICO) Act. The WGA also claims that packaging fees violate the agencies’ fiduciary duty to their clients and constitutes “a system of illegal kickbacks and price-fixing under federal law.”
The dispute began in April when the guild ordered all of its members to fire their agents who refused to sign its Code of Conduct, which banned packaging fees and agency ties to corporately affiliated production entities.
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