The WGA and the Big 3 talent agencies are at loggerheads over whether the guilds’ in-house counsel should be allowed access to certain confidential financial and business records that the agencies have agreed to turn over during the discovery phase of their ongoing legal battle over packaging fees.
The agencies – WME, CAA and UTA – argue in their latest court filings for a protective order that some of the sensitive documents they might produce could be used against them at a later date if they ever enter into negotiations with the guild for a new franchise agreement, and that these documents could be shared with their competitors. They’re also concerned that the guild’s in-house lawyers – WGA West general counsel Anthony Segall and WGA East general counsel Ann Burdick – could use the agencies’ client lists to uncover and discipline writers who have returned to their agencies in defiance of the guild’s April 2019 order to fire their agents who have refused to sign the WGA’s code of conduct.
See their protective order arguments here.
The agencies, in their proposed protective order, would bar the guild’s in-house attorneys from seeing such information, but would allow those documents to be seen by the guild’s two outside law firms involved in the case. The WGA, however, says that this would create “a truly unprecedented restriction on the guilds’ ability to litigate this case.”
“The business information that the Agencies now seek to protect would almost certainly be used – consciously or unconsciously – by the Guilds’ staff in any future negotiations, substantially prejudicing the agencies’ bargaining positions and power,” the agencies said of possible future franchise talks with the WGA. “Furthermore, as part of the Guilds’ ‘divide and conquer’ strategy, the Guilds have negotiated individual franchise agreements with the Agencies’ direct competitors, apparently engaging in information sharing (in the form of a ‘Most Favored Nations’ Clause) about the Agencies. The risk of the Guilds’ staff sharing sensitive Agency information with their competitors – intentionally or inadvertently – is palpable and the consequences irreparable.”
The agencies, in seeking “Outside Counsel’s Eyes-Only” protections, also told U.S. Magistrate Alexander MacKinnon, who’s overseeing the discovery portion of the case, that the WGA’s in-house counsel could “misuse” the information they’ll produce “to punish guild members.”
“Information concerning Guild members who have not terminated their agency relationship implicates important privacy concerns that the Agencies seek to address through the protective order,” they said. “These concerns are real: Documents recently produced by the Guilds evidence that WGA members terminated their agents out of fear of retribution by the Guilds, including expulsion, fines and loss of insurance.”
The agencies also told the judge that the guilds can challenge in court their designation of any document as “Outside Counsel’s Eyes Only,” which they say will ensure “that the designation is not abused. The Guilds, however, refuse to consider any solution that results in anything less than full and immediate visibility by their in-house counsel to the Agencies’ confidential business information.”
The WGA East and West argue, however, that they “will be seriously prejudiced if the Agencies’ proposal to prohibit the Guilds’ two General Counsels from reviewing this and other information is accepted. These two attorneys have been substantively involved in every decision in this case: they have participated in dozens of strategy conferences and reviewed, edited, and approved all court filings, all discovery issued, all discovery responses, and all meet-and-confer communications with the Agencies of any substance – including emails. They play this central role in the defense and prosecution of this case because, in contrast to the Guilds’ outside counsel – who do not regularly represent the Guilds outside of the subject of this litigation – they are intimately familiar with factual information about the entertainment industry relating to the core issues in this case – e.g., how writer contracts are negotiated and enforced, the nature of writers’ jobs and how they are structured, how writers work with agents, and how agents work with studios.
“Restricting these two attorneys’ access to the many categories of documents that the Agencies deem sensitive – including the identities of entertainment industry participants directly relevant to the Guilds’ potential liability – would severely handicap outside counsel’s ability to understand the facts relevant to this dispute, evaluate the Agencies’ purported damages and settlement proposals, and otherwise litigate this matter.”
As for the agencies’ claims that the guilds’ general counsels could “misuse” the information provided by the agencies in discovery, the WGA said that its proposed protective order “already precludes such disclosures. There is no basis for the Agencies’ unsupported speculation that experienced officers of the court who understand and acknowledge their ethical and legal duties will violate their obligation to protect sensitive information as required by those designations. This Court should reject the Agencies’ unprecedented attempt to tie their opponents’ hands, and should instead enter the Guilds’ proposed protective order.”
As for the agencies’ assertion that the guilds’ in-house counsel could use the agencies’ client lists to ferret out writers who have returned as clients to the Big 3 agencies, the WGA said: “There is no basis for the Agencies’ assertion that Guild members are threatened by the very organization constituted to advance their interests, or must be protected by entities whose conduct Guild members, through an overwhelming show of support, have decided are harmful to Guild members’ interests. The Agencies do not establish that this information implicates any privacy interests at all. The Agencies cite no case law supporting that point, and it is black letter law that labor unions may ‘enforce a properly adopted rule which reflects a legitimate union interest, impairs no policy Congress has imbedded in the labor laws, and is reasonably enforced against union members who are free to leave the union and escape the rule.’
“Labor organizations have always had working rules that their members are obliged to follow, and the Supreme Court has specifically held that entertainment unions may prohibit their members, ‘on pain of union discipline, from using an agent who has not, through the mechanism of obtaining … a ‘franchise,’ agreed to comply with the union’s regulations.’ Although the Agencies dispute the legality of the Guilds’ working rule, the Agencies fail to establish any privacy right in information regarding possible violations of union working rules – whether lawful or not.”
The WGA also said that the agencies misrepresented possible penalties the guild could levy on members who violate its Working Rule 23, which prohibits members from being represented by non-franchised agencies. “The Agencies cite ‘loss of insurance’ as a possible repercussion,” the guild said, “but no such penalty exists for violations of Rule 23.”
The two sides did agree, however, that following their meet-and-confer efforts, which have been ongoing since January 31, “the Parties to this action were able to agree on the majority, but not all, of a Stipulated Protective Order.”
On April 27, U.S. District Court Judge Andre Birotte Jr., the trial judge in the case, threw out major portions of the WGA’s lawsuit, ruling that the guild lacks antitrust standing to pursue its federal price-fixing claim; lacks organizational standing to bring claims for breach of fiduciary duty and constructive fraud on behalf of its members; lacks standing to bring an Unfair Competition Law cause of action on its own behalf; failed to plead racketeering activity by the agencies, and failed to state claims upon which relief can be granted with respect to its group boycott claims.
The judge, however, allowed the guild to proceed with its state price-fixing claim and will allow several individual plaintiffs to pursue their claims for breach of fiduciary duty, unfair competition and breach of contract.
The cutoff date for the completion of discovery is October 21, with the trail set for March 23.
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