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THE LATEST: Hollywood Writers Guild and Talent Agencies Entangled in Labor/Antitrust Lawsuits and Countersuits

A Hollywood union’s recent amendments to its union rules has sparked federal antitrust lawsuits by talent agencies. The Writers Guild of America (WGA), a labor union and the exclusive collective bargaining representative for writers in the entertainment industry, recently instituted new rules that prohibit its members from dealing with talent agencies that do not adopt the WGA’s new “Code of Conduct.” The WGA’s new Code prohibits its members from dealing with talent agencies that employ “packaging” arrangements, whereby agents forego individual commissions from their clients in lieu of “packaging fees” from production companies for providing pools of talent (writers, actors, directors, etc.). The Code also prohibits WGA’s members from affiliating with “any entity that produces or distributes content.” If WGA members continue to deal with talent agencies that have not adopted the Code, the members face sanctions, up to and including expulsion from the union.

WHAT HAPPENED:

  • Three of the “Big Four” talent agencies—Creative Artists Agency, LLC, United Talent Agency, LLC, and William Morris Endeavor Entertainment, LLC—individually brought suit alleging that WGA’s new rules effectuate an illegal group boycott in violation of Section 1 of the Sherman Act.

  • The talent agencies allege that WGA has orchestrated a group boycott by requiring its members to refuse to deal with any agency that employs “packaging fees” and has furthered this conspiracy by coercing certain “showrunners” (e., independent contractors, producers of television content and other employers in the television industry) to refuse to deal with plaintiff-agencies. Allegedly, more than 7,000 writers in television and film have fired their agents pursuant to the Code.

  • The Guild brought federal antitrust counterclaims against the agencies alleging that the “packaging fee” model was instituted by the talent agencies themselves and constitutes a price-fixing conspiracy aimed at reducing competition in the talent agency market and violates California’s Unfair Competition Law. The Guild also counterclaimed that the packaging fees constitute unlawful “kickbacks” in violation of the federal Labor-Management Relations Act, and using the proceeds from those fees to fund the agencies’ enterprises and in-house production companies constitutes a “racketeering enterprise” in violation of Racketeer Influenced and Corrupt Organizations Act (RICO).

  • On September 27, 2019, the plaintiffs filed a consolidated complaint in the US District Court for the Central District of California. William Morris Endeavor Entm’t, LLC, et al., v. Writers Guild of America, West, Inc., et al., No. 19-cv-05465 (C.D. Cal. Sept. 27, 2019).

WHAT THIS MEANS:

  • Although federal antitrust laws provide an exemption for labor union activity, the federal labor exemption does not immunize otherwise anticompetitive conduct that is not part of bona fide labor negotiations.

  • Antitrust scrutiny in the labor market has been increasing ever since the Department of Justice announced its efforts to prosecute “no poach” agreements criminally, see herehere and here. Most recently, the DOJ held a public workshop regarding antitrust issues in labor markets.

Parties engaging in labor negotiations should be on high alert for any practices that might raise antitrust scrutiny, particularly those that are outside the parameters of traditional labor negotiations, like negotiations of wages and benefits packages.

© 2019 McDermott Will & Emery

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About this Author

Michelle Lowery Antitrust Litigation Attorney McDermott Will & Emery
Partner

Michelle Lowery focuses her practice on complex antitrust litigation, transactional, and counseling matters and is a member of the firm’s antitrust and competition practice, which is designated “Global Elite” as one of the top 25 competition practices in the world by Global Competition Review. Michelle has been recognized by the Legal 500 USSuper Lawyers, and Benchmark Litigation as excelling in antitrust work.

Michelle has a decade of experience in achieving exceptional results for her clients in class action conspiracy, monopolization and...

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Steven Vaughn Antitrust litigation lawyer McDermott
Associate

Steven Vaughn focuses his practice on antitrust litigation and class action defense. Steven has a strong background in economics and both civil and criminal government investigations.

During law school, Steven served as a law clerk for the US Senate Permanent Subcommittee on Investigations, and as an intern for Hon. Barbara A. McAuliffe in the United States District Court for the Eastern District of California. Steven was Senior Articles Editor for the Georgetown Journal of Law & Public Policy, and an executive board member of the Georgetown Chapter of The Federalist Society. His student note: Facilitating Entry, was selected for publication.

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