Big 3 Talent Agencies, Saying There Is “Clear Possibility” Judge May Dismiss WGA’s Antitrust Suit, Seek Stay Of Document Discovery – Update

EXCLUSIVE, UPDATED with WGA statement: The Big Three talent agencies, locked in an antitrust lawsuit with the WGA, have asked a federal judge to temporarily stay discovery on certain documents sought by the guild, saying there is a “clear possibility” the guild’s counterclaims against them will be dismissed.

On January 6, U.S. District Court Judge Andre Birotte Jr. denied the WGA’s motion to dismiss the antitrust lawsuits filed against it by WME, CAA and UTA, but he has yet to rule on the agencies’ motion to dismiss the guild’s counterclaims against them. Oral arguments on that motion were held on January 24.

In a motion filed with the court Wednesday (read it here), the agencies said that even though they believe “that a stay might be justified for many more than the document requests put at issue by this motion, the stay that the agencies request is limited to just those 16 document requests included in their final attempt at compromise with Counterclaimants.” The two sides, they said, “have for weeks been engaged in extensive meet-and-confers concerning their respective documents requests.”

In a statement, the WGA said that it “disagrees that a stay is appropriate and we will file written opposition to the motion. The evidence that will be uncovered through discovery will prove the agencies’ conflicts of interest and breaches of fiduciary duty that we have detailed in our lawsuit.”

In their latest motion, the agencies said: “Because it would be extremely burdensome for the Agencies to search for, gather, review, and produce such documents, because disputes concerning these requests might require motion practice before the Magistrate, and because there is a ‘clear possibility’ that the counterclaims to which they purportedly relate will be dismissed, the agencies seek a limited and temporary stay of the 16 document requests at issue until the Court decides the Motion to Dismiss.” The WGA, they said, “will suffer no prejudice; the parties have plenty of other discovery to work on while waiting for the Court’s decision.”

The 16 documents at issue, the agencies said in their motion, concern the guild’s counterclaims “that might well be dismissed in the near future. For example, counterclaimants’ requests for every interagency communication dating back to 1999, and requests seeking virtually anything and everything relating to the Agencies’ dealings with the Association of Talent Agents relate exclusively to their price-fixing and group boycott counterclaims.”

Nearly one year ago, the WGA ordered all its members to fire their agents who refused to sign its agency code of conduct, which banned packaging fees. The WGA and the ATA last met June 6, with the guild claiming that the big agencies have refused to bargain for a new franchise agreement.

To bolster their belief that the court may dismiss all or part of the guild’s counterclaims, the agencies pointed to the judge’s own words at the last oral arguments in the case. “At the hearing on the agencies’ motion to dismiss,” they said, “the Court raised serious concerns about the viability of the WGA’s counterclaims. The Court’s very first question asked counsel to ‘assume, okay, that I – that somehow the guilds don’t have standing to bring this antitrust claim.’ This is no mere hypothetical because ‘a union, in its capacity as bargaining representative, will frequently not be part of the class the Sherman Act was designed to protect.’ And even as to the individual counterclaimants, in the Ninth Circuit, ‘generally, employees have been denied standing where their injuries were merely derivative of that of the employer.’

“The Court also asked counterclaimants’ counsel several focused questions about the ‘eerily similar’ Lenhoff case, where the Ninth Circuit rejected the same allegations of a ‘3-3-10’ price-fixing packaging fee conspiracy that Defendants have asserted here, and questioned Counterclaimants’ counsel at length about what ‘specific factual allegations show that these agencies actually conspired not to bargain with the Guild’ to support the plausibility of the group boycott Counterclaim.

“As the Court put it, the Counterclaim allegations seemed to simply suggest, ‘if anything, that people didn’t want to negotiate,’ rather than a conspiracy not to bargain. As for the RICO counterclaims, the Court indicated that it understood Section 302 of the Labor-Management Relations Act to have ‘been narrowly construed to apply to payments made by employers in collective bargaining,’ and questioned how defendants’ allegations ‘fit into … a RICO case’ given that the agencies are ‘not union representatives.’

“The Court also expressed its ‘concern that this is now viewed as criminal conduct, in essence, but it’s been going on for 40 years and no one said anything about it….It just strikes me as odd to say this is a kickback or a bribe that everybody knew about from 1990 something until the present day.’”

In conclusion, the agencies said that “The Court’s hearing on the agencies’ Motion to Dismiss the counterclaims demonstrated that there is, at the very least, a ‘clear possibility’ that the counterclaims will be dismissed. And, as set forth above, a limited stay of discovery pending the result of the agencies’ Motion to Dismiss would not affect the parties’ ability to move forward with discovery into the agencies’ claims that are definitively moving forward. On the other hand, requiring the agencies to address counterclaimants’ expansive and numerous discovery requests relating to counterclaims that may not survive the pleadings stage would be both prejudicial to the agencies and inefficient for the Court and the parties. For each of these reasons, the agencies respectfully request that the Court temporarily stay the agencies’ obligations relating to document request numbers 5, 10, 16, 17, 18, 36, 37, 38, 39, 40, 45, 46, 47, 48, 51 and 52 of counterclaimants’ First Set of Document Requests to WME, CAA and UTA pending the resolution of the agencies’ Motion to Dismiss.”

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