The fight between Hollywood’s writers and agents just keeps heating up. The Writers Guild of America announced Wednesday that it’s suing the industry’s four biggest talent agencies for “breach of fiduciary duty” and unfair competition tied to a widespread practice known as packaging, following months of failed negotiations, a Guild proposal to dramatically reshape the way agencies can do business, and, in recent days, the mass separation of thousands of writers and agents.
“Guild leaders have frequently noted that the agencies’ practice of charging packaging fees is not only bad for writers, it is unlawful,” said Anthony Segall, the Guild’s lawyer, at a press conference in Los Angeles. “We are here today to announce the filing of a lawsuit that will establish that packaging fees are indeed illegal under both California and federal law.”
The complaint against CAA, WME, ICM Partners, and UTA, which was filed earlier today in Los Angeles Superior Court, was made on behalf of the WGA as well as eight individual writers who have “been harmed by packaging,” Segall said. Among those plaintiffs is The Wire creator David Simon, one of the most vocal opponents of packaging in Hollywood.
The suit boils down to two claims. The first alleges that packaging fees — essentially, the money collected by agencies for bundling talent to bring a project together — violate state fiduciary laws. “Packaging fees sever the relationship between a writers compensation and what the agency receives in fees, and frequently pit the interests of the agency against those writer clients,” Segall said. The Guild’s second claim is that packaging fees violate California’s unfair competition law, which, according to Segall, prohibits “any representative of an employee from receiving ‘money or other things of value from the employee’s employer.’” Because agents are “employee representatives” under the law, he argued, packaging fees are illegal.
The Guild is seeking both an injunction to stop the Big Four agencies from engaging in future packaging deals, as well as “damages and the repayment of illegal profits on behalf of writers who have been harmed by these unlawful practices in the past.” According to the Guild, ICM, WME, UTA, and CAA receive more than 80 percent of packaging fees paid by studios.
Two of the plaintiffs, Cold Case creator Meredith Stiehm and Madam Secretary creator Barbara Hall, spoke at the press conference. According to Stiehm, Cold Case was packaged by her agency, CAA, without her consent. As the show went deeper into its run, Stiehm says the agency’s $75,000 episode fee affected the show’s budget, and that the agency’s share of profits were almost equal to her own. “When the show I created, worked on exclusively for seven years, went into profit, CAA ended up making 94 cents for every dollar that I earned,” Stiehm said. “This is indefensible.”
Following Stiehm’s remarks, Hall alleged that agents at two different companies, CAA and UTA, obfuscated packaging details from her. “The only thing that was explained was that I would not have to pay the usual 10 percent commission,” she said. “In neither case did my agency describe what I was giving up. Neither agency explained that they would get a large fee out of the budget of the series for the life of the series, which kept my fee — and those of other writers on the series — lower than they should have been.”
The lawsuit comes four days after a decades-old contract expired between the WGA and the Association of Talent Agents, which represents the Big Four and most other Hollywood agencies. WGA and ATA officials spent weeks negotiating over a new contract ahead of the April 13 deadline — with Guild members voting by more than 95 percent to implement a code of conduct that bans packaging fees and content production by agencies — but without a deal in place and agencies refusing to sign the code, the WGA instructed its members to fire their agents en masse. While Segall would not reveal exactly how many union members have separated from their agents, he did say it was a “vast majority” of the roughly 8,500 agent-represented Guild writers.
As the dispute between the WGA and the ATA is not a strike like the Guild showdown with the studios in 2007, Segall said it will not affect production. But when asked, “Why now?” by a member of the press in regards to the suit, fellow Guild attorney Casey Pitts said, “It’s become apparent that the abuses of packaging have become increasingly appalling over the recent few years, and that other efforts to address packaging have so far and not been successful.”
Update: Deadline reports that the ATA has responded to the WGA’s lawsuit with a statement from the association’s Executive Director, Karen Stuart. “This development is ironic given that the Guild itself has agreed to the legitimacy of packaging for more than 43 years,” said Stuart. “Even more ironic is the fact that the statute the WGA is suing under prevents abuses of power and authority by labor union leaders, even as the Guild has intimidated its own members and repeatedly misled them about their lack of good faith in the negotiating room.”
She called the lawsuit confirmation that the WGA has been set on a “predetermined path to chaos that never included any intention to negotiate,” adding that, “Knowing that it could take months or even years for this litigation to be resolved, WGA leaders are unnecessarily forcing their members and our industry into long-term uncertainty. While the legal process runs its course, we strongly believe that in the interim it remains in the best interests of writers to be represented by licensed talent agencies.”
Stuart then cited the Agency Standards for Client Representation, which is a set of operating rules assembled by the association as a counter to the Guild’s code of conduct. She said the ATA stands “ready and willing to represent writers with the added protections outlined” in the newly outlined Standards document.