UPDATED with latest: WME followed CAA’s lead Wednesday, asking a federal judge to issue a preliminary injunction that would force the Writers Guild to drop its group boycott against the agency. The move comes the day after CAA filed a similar request in their long-running legal battle with the guild over packaging fees and production affiliates.
WGA West president David A. Goodman called WME’s latest court filing “meritless.”
The dispute arose in April 2019 when the WGA ordered its members to fire their agents who refused to sign the guild’s Code of Conduct, which banned packaging fees and agency affiliations with related production companies. Since then, every major agency except CAA and WME have signed a modified code that phases out packaging fees and reduces ownership interests of production companies to just 20%.
In a declaration accompanying today’s filing, WME president Ari Greenburg railed against the WGA for holding talent agents to a different standard than talent managers, who are not licensed by the state or regulated by the guild. “The Guilds claim their boycott against WME is intended to address conflicts of interests relating to packaging fees and content affiliates. Since the boycott started, hundreds of former WME writer-clients have signed with talent managers instead of signing with a franchised talent agency (or waiting for WME to regain its franchise).”
The WGA East and West, he said, “do not regulate talent managers and do not prohibit their members from using talent managers to procure employment (in fact, the Guilds publicly agreed to indemnify managers who procure employment for Guild members). Many talent managers take producing fees, many talent managers act as packaging agents, and many talent managers charge higher commissions than WME agents. Yet the Guilds do not stop their members from working with managers (quite the opposite).”
“For the past few months,” Goodman said in a statement, “the Guild has been engaged in an ongoing and sometimes productive negotiation with WME in order to resolve their various conflicts and to provide them a path forward to signing the UTA/ICM Franchise Agreement. Four weeks ago, WME asked for contract language from us and, in return, the Guild repeated its prior request for additional information on their corporate structure in order to provide them with such language. They have been silent since.
“Today, WME joined CAA in seeking to end the agency campaign, not by picking up negotiations where they left off a month ago – not by looking to resolve their own conflicted practices – but, instead, by once again asking the courts to deny the Guild’s basic right to represent its members in collective action.
“That is not a way forward. As we said to CAA yesterday, the Guild and its members will not be bullied into giving up our right to fair and non-conflicted representation. If WME honestly believes that the way to win writers’ hearts is to threaten us with undermining the Guild itself, they do not know writers – twenty months in and they still do not know writers.
“Like every other agency before them, WME (and CAA) will have the opportunity to get writers back when they return to the table – when they stop attacking us and take seriously the work of reforming their own deep-seated conflicts. Meritless court actions will not save them from that.”
“We’re the bully?” a WME spokesperson scoffed. “We aren’t the ones who used intimidation tactics to coerce writers into firing their agents, and continually threaten members who speak out in opposition to them. We aren’t the ones who sued first. We aren’t the ones who won’t say yes to reasonable and realistic terms and want to continue to fight. No, that’s the WGA.”
WME said that its motion, filed today in U.S. District Court in Los Angeles, “seeks to halt the Guilds’ illegal and illegitimate effort to exit WME from the business of representing writers by ordering Guild members to fire their WME representation under the threat of union discipline. The preliminary injunction, if granted, would preserve the relative positions of both WME and the Guilds until a trial on merits can be held regarding whether the Guilds overstepped any labor exemption protection pursuant to the Sherman Antitrust Act.”
“The Guilds’ recent conduct erases any plausible deniability that what motivates their group boycott is an illegitimate and illegal effort to put WME out of the business of representing writers no matter what WME agrees to do to address the Guilds’ pretextual concerns about conflicts of interest,” said Winston & Strawn partner Jeffrey Kessler, who serves as lead outside counsel to WME. “The truth of the matter is that WME has made all substantial concessions requested of it, with minor transitional exceptions that are logically consistent with exceptions made to other agencies. These latest actions underscore the unfortunate reality that the Guilds have no intention to franchise WME, constantly shifting the goal posts as a delay tactic.”
“A union campaign to eradicate harmful conflicts of interest is one thing; a campaign to eradicate an agency’s writer representation business is quite another,” Kessler said. “WME’s ultimate goal, from the beginning, has always been to act in good faith to reach an agreement with the Guilds that is in the best interests of writers and the entertainment community as a whole.”
WME cited several actions undertaken by WGA against WME, including:
• On April 13, 2019, as part of what the Guilds’ leadership boasted to be a “power grab” to “conquer” the biggest talent agencies, the Guilds implemented a new Code of Conduct—banning, rather than regulating, all agency packaging and content affiliation—and instructed their members that Working Rule 23 prohibits them from being represented by unfranchised talent agencies. Approximately 7,000 WGA members joined the Guilds’ boycott and fired their talent agencies under threat of WGA discipline.
• On September 1, 2020, the Guilds publicly stated that WME would be free to sign a franchise agreement on the same terms as ICM. Privately, however, this has not been the case for WME.
• In the wake of the ICM and UTA franchise agreements, WME reached out to the Guilds’ leadership, and expressed a willingness to agree to the same substantive terms on packaging and content affiliates as ICM and UTA. The only exception was that, as to WME’s parent company’s (Endeavor) content affiliate (Endeavor Content), two transitional accommodations were necessary: First, WME’s parent company needed a reasonable time to come into compliance with the 20% ownership cap on content affiliates, which cannot happen overnight – and the company would be willing to sign binding terms to a specific timeframe for such a transaction. Second, WME asked that Endeavor Content be permitted to grandfather-in existing projects (including with Guild members) that otherwise would be imperiled by a sale to new owners. The Guilds refused WME’s agreement to their own demands.
• WME outlined and guaranteed an extremely reasonable and swift timeframe within which it would be compliant with the 20% ownership cap. An overly broad request for documentation was made and a follow-up phone conversation took place on October 2, 2020 between the Guilds’ and WME’s counsel, mutually narrowing the request. WME provided to the Guilds – and the Guilds have received – all of the documents that were requested during this conversation. The Guilds’ mislead their membership into believing such documentation was not provided.
• Most recently, on November 17, 2020, the Guilds told their members that they sent WME a proposal on October 16, 2020. However, this was not a proposal to reach an agreement; this was a letter to request additional restrictive requirements to be drafted in a “side letter”. The proposed side letter imposed stricter requirements, including sanctions and monitoring, of WME. Upon receiving this letter on October 16, 2020, WME requested contractual language from the Guilds but never received it. While the literal word “proposal” was used to label the Guilds’ October 16, 2020 letter, it was merely a proposal with a list of additional, onerous and unreasonable demands that went far beyond what was asked of any other agency.
“To date, WME has lost more than one thousand clients who have been coerced into terminating WME at the instruction of the Guilds,” Kessler said, “and once severed, these client relationships may never return. Many of these former clients are today signing with new talent agents or managers, and WME is subjected to parting ways with agents who do not believe the Guilds intend to arrive at any agreement with WME.”
Excerpts from client terminations that WME says “illustrate the illegality of the Guilds’ boycott actions” include:
• “I am writing to inform you, as my captors have demanded, that you are fired. I have no choice but to comply, about this my captors have been very clear, in the hundreds of vaguely threatening emails they have sent me. . . . [T]his PR stunt of forced mass firings is merely that, a stunt, and one that hurts writers.”
• “I will now be forced into compliance with Writers’ Guild Working Rule 23. That is why I am sending this note at 11:59; I want to savor every second of our strong bond and partnership as long as I possibly can before the WGA will consider repercussions. What are the repercussions [of non-compliance]? I don’t know. Nobody has said. Conjecture says everything from ‘fines’ to ‘expulsion from the Guild.’”
• “I held out long as I could, brother, but the Guild is hounding me (and threatening a ‘trial’ whatever the hell that means).”
• “In a few days, you’ll receive ‘official’ notice via WGA form letter e-signed by me indicating my intention to sever our writer/agent relationship with regard to work under guild jurisdiction. I want you all to know this is NOT my choice and if I can find a way to prevent it, I will. I’m being coerced into this step through fear of disciplinary action. I don’t have the resources to defy the guild. I can’t afford the fines, I can’t afford to lose my insurance and I can’t afford to be forced into FICOR while the situation works itself out.”
WME maintains that “This stark evidence confirms that the Guilds’ objective is to harm WME—not merely to help its writer members. In fact, the Guilds have admitted that the intent of their campaign is to ‘conquer’ or ‘grab power’ from major talent agencies, and the Guilds’ recent refusal to franchise WME on the same terms as it franchised over a hundred other agencies confirms the Guilds’ objective as an unmitigated ‘power grab’ to prevent WME from ever representing writers. This is neither a traditional nor lawful union objective.”
Like CAA, WME has been in talks with the guild recently for a deal that would allow their clients to come back to the agencies. On Tuesday, the guild told its members that it “sent a proposal to WME on October 16th, but we have not as yet received a counter from them. To reiterate, until further notice, Working Rule 23 remains in effect with regard to both CAA and WME.”
Working Rule 23 prohibits members from being represented by non-franchised agents.
In his declaration, Greenburg said that “Several members of WGA’s own leadership and negotiating committee are represented by managers who produce and/or participate in packaging fees. For example, Michael Schur – who serves on WGAW’s Agency Franchise Negotiating Committee – is managed by David Miner of 3 Arts Entertainment, which produces work for Mr. Schur.
“WGA leader Shawn Ryan uses management/production company The Shuman Company, which has participated in packaging fees for years and is still collecting packaging fees from series, such as S.W.A.T.
“Chris Keyser—WGAW’s Negotiating Committee Co-Chair—frequently works with manager/producer Erwin Stoff of 3 Arts Entertainment, who is producing Mr. Keyser’s latest project Summer.
“And Damon Lindelof, a longtime CAA showrunner client and vocal supporter of the WGA’s boycott, just signed with Range Media Partners—an unregulated management company, started by former WME and CAA agents, that has publicly stated its desire to produce and invest in client companies.”
Pointing to a declaration filed today by Richard Rosen, the head of WME’s television department, Greenburg pointed out that Rosen “describes the nature of the harm that has been inflicted on WME by the Guilds’ boycott, including the loss of clients. As I mentioned above, hundreds of these former clients have left WME for managers. This includes Julie Plec, a WME client for over 20 years, who fired WME and is now solely represented by management/production company Management 360.
“WME client Martin Gero and Josh and Jonas Pate elected to be solely represented by The Framework Collective. Longtime WME client Leila Gerstein elected to be solely represented by Kaplan/Perrone. And longtime client Matt Miller elected to be solely represented by Anonymous Content.
“Management companies are exploiting this environment in which the Guilds have sidelined WME and Creative Artists Agency, LLC while permitting management companies to freely engage in production and packaging and to charge high commissions. New management companies are on the rise, e.g., Framework Collective, Range Media Partners and Blue Marble, and existing management companies are expanding, e.g., 3 Arts/Lionsgate, Anonymous, and Grandview/Amazon.
“If and when WME’s former writer-clients hire an agency, they will be paying more than they did before terminating WME because managers typically take a 10% commission on top of agent and lawyer fees. The WGA action has harmed writers by forcing them to pay more for the same representation they had before.”