The WGA and writers Patricia Carr and Chip Johannessen sued the agency in April for breach of fiduciary duty and constructive fraud. ICM’s demurrer, filed today in Los Angeles Superior Court, is similar to the answer filed by CAA early this month. WME and UTA, who also were sued by the guild, are expected to file their motions for dismissal early next week.
“In a remarkable and naked attempt at a power grab, plaintiffs – a top-heavy writers’ union and some of the most influential and wealthiest writers and TV producers in Hollywood – seek to eliminate the industry-wide practice of packaging,” ICM said (read its demurrer here). “Yet, this very same union, and these same writer-producers, expressly consented to and benefitted from packaging for nearly five decades.”
The WGA has been locked in a bitter dispute with Hollywood’s talent agencies for more than three months over packaging fees, which the guild says amount to “illegal kickbacks” to the agencies from the studios. ICM said in its demurrer that the WGA’s claim that packaging fees violate a federal criminal law that prohibits bribing union officials “is absurd on its face. Section 302 of the Labor Management Relations Act has never been applied outside the union context in its 72-year history and has no application here.”
On April 13, the guild ordered its members to fire all their agencies who refuse to sign its new Code of Conduct banning packaging fees, which had been allowed under the now-expired Artists’ Managers Basic Agreement for 43 years. At last count, more than 7,000 writers have fired their agents.
The WGA “first attempted their power grab through an unlawful group boycott and mandated mass firing of the agents who represented their writers for decades,” ICM said in its filing. “Now, plaintiffs seek to eliminate packaging by abusing the court system, brazenly asking this court to declare packaging illegal. But they have no legal basis to do so. Their claims are barred by their own express consent to packaging. Even absent that consent, the claims are not legally cognizable. The WGA’s fiduciary duty and constructive fraud claims fail because the WGA – a union of more than 14,000 individuals (only a fraction of whom have ever participated in packaging) – has no standing to bring such individualized claims. This is not a class action, and the individual WGA members’ common law claims may not be aggregated and transformed into an industry-wide action.”
ICM attorney Marvin Putnam told Deadline that the claims made by Carr and Johannessen “are laughable because the shows that she claims we impermissibly packaged all occurred well before her relationship with ICM, and the show that Johannessen says was packaged, was not.” Carr is a member of the WGA West’s board of directors, and Johannessen is a member of the guild’s agency negotiating committee.
Putnam claims that the guild filed its lawsuit “for strategic reasons, not legal reasons. One of the clearest indications of that is that they claim that ICM breached its fiduciary duty to the WGA. But that it legally impossible because ICM has no fiduciary duty to the WGA. That is a factually and legally absurd position, and the law says that it definitively not true. Their lawyers know that, and could have only brought this suit for the strategic reason that the WGA has told its members, which is to increase costs to the agencies and therefore force them to sign the Code.”
Last month, the guild declared an impasse in its talks with the Association of Talent Agents, and offered a new deal to individual agencies that would allow them to continue packaging and taking packaging fees on films and TV shows for one more year before switching over to a 10% commission model – a business model that hasn’t existed in decades.
In its demurrer, ICM cited this offer as proof that packaging is not illegal. “After filing this lawsuit, in June 2019, the WGA publicly offered to extend packaging for one calendar year to any agency willing to sign onto its other terms and conditions. The WGA’s offer is squarely at odds with its stated litigation position that participation in packaging is illegal … something it would hardly do if it actually believed packaging violated federal law or harmed writers.”
ICM also said that the WGA’s “theories that packaging constitutes unfair competition because it universally breaches fiduciary duties and amounts to constructive fraud fail for at least two reasons. First, the fiduciary duty and constructive fraud claims fail because the WGA and the individual plaintiffs consented to the concept, structure, and economics of packaging, as exhibited by the AMBA. Second, and critically, breach of fiduciary duty and constructive fraud are, are necessarily individualized claims. If individuals give informed consent, an action by an agent is not a fiduciary breach or constructive fraud even if it would otherwise constitute a conflict of interest.”
ICM further asserts that the WGA lacks standing to even bring a claim for breach of fiduciary duty. “The WGA does not – and cannot – allege that ICM breached fiduciary duties owed to the WGA; the agencies are indisputably not fiduciaries of the WGA. Rather, the WGA purports to assert claims on behalf of some undisclosed number of its approximately 14,000 members (only a fraction of whom were ever represented by ICM). In essence, the WGA asks this court to issue an advisory opinion declaring that ‘packaging fees,’ as a general proposition – and in every single instance – ‘constitute a breach of the Agencies’ fiduciary duty to their writer clients.’”
“This is impossible,” ICM said in its demurrer, “as it would require the court to assume facts as to each specific writer who is not a party to the litigation, and otherwise base its opinion upon a hypothetical set of facts that may or may not apply to each individual agency-writer relationship. Not only is this a clear misuse of the declaratory relief statute, but such a claim fails for lack of standing.”
As for plaintiff Carr, ICM said that while she “vaguely asserts that she was harmed ‘by the payment of packaging fees to agencies,’ she pleads no facts sufficient to establish that ICM breached any fiduciaries owed to her. For example, Carr asserts that she worked on packaged shows 90210, Mixology, Private Practice, and Reba, yet she fails to allege that any of those shows were packaged by ICM. To the contrary, Carr specifically alleges that CAA, not ICM, packaged 90210, Private Practice, and Reba. And she alleges that ICM only represented her from January 2018 to April 2019, years after Mixology ended its run in 2014. Carr admits that ICM began representing her after all four shows ended. Carr’s claims thus contain no well-pleaded facts against ICM and must be dismissed.”
CAA, WME and UTA have all filed separate antitrust lawsuit against the WGA, claiming that the guild has engaged in an “unlawful group boycott.” The guild has said those suits have “no merit.”
As for plaintiff Johannessen, ICM said that he “does at least allege ICM packaged his show Saints and Strangers. That allegation, however, is wholly false; ICM did not package Saints and Strangers.”
The WGA and the ATA, meanwhile, haven’t met in more than a month, and no new talks are scheduled.