UPDATED with quotes from attorneys, WGA reaction and more detail: A federal judge on Friday indicated he’ll refuse to throw out the federal antitrust lawsuits filed by Hollywood heavyweight agencies CAA, WME and UTA against the Writers Guild of America.
In a crucial hearing for the high-profile guild-vs.-agencies battle in Los Angeles today, U.S. District Court Judge Andre Birotte Jr. issued a tentative ruling against the guild’s motion to dismiss the suits.
Coming just days after blocking an attempt by the Justice Department to participate in the case, Birotte put the tentative out before the nearly two-hour hearing began. The judge then heard arguments from attorneys for both sides. At the conclusion of the hearing, Birotte told the assembled attorneys and agencies reps that he would put a final ruling in the docket in a week or two.
If the tentative stands, it will be a big win for CAA, WME and UTA against the WGA in the long public and court battle over then past several months
CAA’s attorney, Richard Kendall of Kendall Brill & Kelly, said Friday of the tentative ruling, “I thought it was extremely well-reasoned and persuasive.” Tony Segall of L.A.’s Rothner, Segall & Greenstone, who is representing the WGA, didn’t speak during the 90-minute hearing and had no comment on the judge’s decision but said afterward, “I think we made our case brilliantly.” Stacey Leyton argued for the guild in court this morning.
Later, the guild put out a statement. “We appreciated the thoughtfulness and time the court gave to this issue. Our lawyers clearly articulated why the agencies’ complaint should be dismissed. We look forward to seeing the court’s ruling.”
Up next, Judge Birotte will hear the agencies’ motion to dismiss the WGA’s counter-claims on January 17.
Denial of the WGA’s motion to dismiss is not appealable, so now the case could proceed to trial after the discovery process, which is what the agencies want if the Judge holds to his tentative. Had Birotte granted the motion to dismiss, the agencies could have taken their case to the Ninth Circuit Court of Appeals, which is what the guild wanted.
It’s also possible in a final ruling that the judge will find that some portions of the agencies’ consolidated complaint will be dismissed and other portions will be allowed to stand. In that case, whatever portions of the complaint survive the motion to dismiss will then proceed, eventually, to trial.
WMA attorney Jeff Kessler of Winston & Strawn did most of the talking on behalf of the agencies, arguing that case law establishes that the guild’s campaign violates antitrust laws. Specifically, he said showrunners act “much more like management” and, as such, are “non-labor parties” who were coerced by the guild to fire their agents.
To support his argument, he pointed to Law & Order creator Dick Wolf. “He doesn’t perform writing services, but he is part of this boycott.”
That may have not been the best example, however, because Wolf is credited as a writer on all of his shows. WGA attorney Leyton told the judge that the WGA’s Code of Conduct only applies to writers and writer-producer hyphenates, and that showrunners are free to keep their agents on shows for which they do not perform any WGA-covered writing services. Leyton also said that she does not necessarily agree that Wolf is not a writer on his shows.
The judge asked each side numerous questions about the allegations in the agencies’ complaint, including the charge that the guild’s agency campaign is a “power grab” – a quote cited in their complaints that they lifted from a speech by WGA West president David A. Goodman. “Isn’t every labor dispute about a shift of power?” Birotte asked.
Kessler argued that the guild’s “power grab” was in service of an “illegitimate purpose,” but Leyton countered that the agencies had taken Goodman’s quote out of context. “We are making a power grab,” Goodman said back in February, but he called it “a necessary, proper and fair power grab. As the agencies have taken our collective power and used it to maximize their power and income, we have to take our power back and make sure it is used to maximize our incomes.”
Many of the judge’s other questions similarly targeted other aspects of the agencies’ claims, including the allegation that it was unlawful for the guild to pressure attorneys and managers to perform the work of writers’ fired agents.
“Don’t you have to allege that a lawyer or manager took them up?” Birotte asked. To which Kessler said: “We have done that. They’re using their lawyers and managers.”
The judge allowed the attorneys for both sides — Adam Levin of Mitchell Silberberg repped UTA in court today — to see his tentative ruling but told them at the end of the hearing to return their copies to the court, thus making it unavailable to reporters.
The agencies’ suits include claims that the WGA, in its nearly eight-month campaign to end film and TV packaging, has restrained competition “on a staggering scale” through 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.”
The guild alleges 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.”
In their motion to dismiss the suit, the WGA East and West said “the three dominant Hollywood talent agencies” are engaged in an “attack” on the WGA’s “federally approved role as the exclusive representative of writers in television and film, based on the agencies’ disapproval of the unions’ good faith judgment about how to protect their members when delegating representational authority to individual talent agents.”
According to the WGA countersuit: “The agencies’ federal antitrust claim fails, because the guilds’ conduct is fully protected by the antitrust labor exemption. Separately and independently, the agencies fail to plead that the guilds agreed to unreasonably restrain trade, that the guilds possess a dominant market position, and that the agencies have suffered an antitrust injury.”
The WGA also claims that it has not involved neutral “secondary” parties in its dispute with the agencies, and that the agencies’ claims fail because the WGA is “acting within their statutory authority as exclusive representatives under the National Labor Relations Act.”
Two key legal issues were at the heart of today’s hearing: whether the agencies’ complaint adequately addressed their allegations that the guild’s actions are outside traditional union activities; and whether the WGA joined with non-labor groups in a campaign to ban the longstanding commercial practice of packaging.
In evaluating the WGA’s motion to dismiss, Birotte had to assume that the facts as alleged in the agencies’ consolidated complaint are true. Based on that, he decided that their complaint stated a legally sufficient cause of action and therefore denied the WGA’s motion to dismiss.
The legal battle stems from the WGA’s April 13 ordering of its members to fire their agents en masse who refused to sign its Code of Conduct, which originally banned packaging fees and agency affiliations with related production entities. Since then, the guild has modified its code to allow signatory agencies to continue packaging until Jan. 22, 2021 – and even longer if it doesn’t get two of the Big Four agencies to sign up. The latest version of the guild’s deal also allows agencies to own up to 5% of an affiliated production entity.
All three agencies have made similar claims against the WGA, which are what they were asking the court to dismiss today. In its lawsuit, CAA alleges that the WGA “has organized a group boycott and unlawful restraint of trade targeting CAA and other talent agencies. The group boycott is, as the WGA’s leadership has freely acknowledged, a ‘power grab.’”
The WGA filed its original lawsuit against the agencies in state court on April 17, and the CAA, WME and UTA countered with their antitrust lawsuits in June. Then on August 19, the guild withdrew its state case and filed counter-claims in the agencies’ federal antitrust case.
Deadline’s Dominic Patten and Erik Pedersen contributed to this report.