Lit Agency Amends Poaching Antitrust Lawsuit Against UTA & ICM Partners, Focuses On Packaging & Lack Of Diversity

Boutique literary agency Lenhoff & Lenhoff has amended its February antitrust lawsuit against UTA and ICM Partners stemming from the defection of two of its top producer clients to the two major agencies, allegedly as a result of “poaching.” Seeking a variety of financial damages, the original jury-demanding filing sought a permanent injunction prohibiting UTA and ICM from “the predatory practice of client poaching from any and all talent agencies that represent television clients.” Filed today in California District Court, the amended complaint (read it here) goes further: In addition to poaching, it asks for “a preliminary and permanent injunction to enjoin Defendants from packaging, producing, financing and distributing of scripted series and all other content programming while maintaining a Talent Agency License.” (It is unclear whether UTA and ICM Partners were served with the original lawsuit.)

Packaging — a hefty fee an agency receives from studios and networks for putting together the key auspices on a project — has emerged as the single most important television revenue stream for the top agencies, bringing in what the complaint alleges is “billions of dollars.”

Lenhoff “alleges that packaging fees are, in fact, a division of fees and sharing of profits between a Studio employer and an Agency,” which the company argues violates State Labor Code Section 1700.4.

While only UTA and ICM Partners are named as defendants, the suit points finger at all major talent agencies over the practice of packaging. Lenhoff accuses what it calls “the 4 Uber Agencies” (UTA, ICM, CAA and WME) of forming a “cartel” that “essentially own stock in each other’s packaging assets,” dominating the scripted market by “controlling 96% of the scripted packaging, 79% of scripted series staffing, and 91% of the scripted series term deals.” The boutique agency also accuses the agencies of “predatory practices,” “horizontal price-fixing, horizontal market division, and a concerted refusal to deal, making it impossible for competition” and squeezing out boutiques companies like Lenhoff & Lenhoff.

As part of the packaging model, a writer-producer does not have to pay commission to their agency when employed on a show the agency packaged. Plaintiff calls that “packaging inducement,” as the big agencies sometimes could help even lower-level producing talent staff on an agency-packaged show without having to pay commission, putting smaller agencies that don’t have the caliber of talent to command a package at a disadvantage.

Because this is an antitrust lawsuit, Lenhoff & Lenhoff has to prove consumer harm. To do so, the agency “alleges that the consumer suffers, because of the lack of diversity and creativity caused by the monopoly.” As part of that, the new filing includes packaging and staffing data, analyzed by Dr. Darnell Hunt, Director of the Ralph J. Bunche Center for African American Studies at UCLA.

In his declaration, included as an exhibit in the complaint, Hunt argues that the public has been denied access to diverse storytelling reflecting the realities in America as a result from the big agency’s failure to promote diversity in their packaging.

UTA had no comment beyond its original statement when the suit was filed in February: “This complaint is utterly without merit.” ICM Partners also had no comment.

Lenhoff is being represented by attorney Philip Kaplan.

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