Writers Guild Suffers Big Loss as Court Dismisses Almost All Its Claims Against Agencies
The WGA was effectively ousted from its own lawsuit by the ruling, but says the ruling was nonetheless a victory.
More than three months after a Jan. 24 hearing, a Los Angeles federal judge on Monday dismissed virtually all of the Writers Guild of America’s claims against the three largest talent agencies, leaving the union with only a state antitrust claim and a related, essentially procedural claim.
The hardest hitting claims — for federal price fixing and racketeering — were dismissed with prejudice, meaning that the guild cannot refile them. Many of the dismissals were based on lack of standing, i.e., that the proper party for the claims are individual members, not the guild. But Judge Andre Birotte flatly disagreed with the WGA’s contention that packaging fees, an open and common agency practice that the WGA opposes, amount to bribes, kickbacks or racketeering activity.
“The WGA’s claims against the major talent agencies were gutted today by the federal court,” the three agencies said in a statement. “This is a resounding victory for CAA, UTA and WME. The judge ruled that the WGA has no standing to bring most of its claims and further has rejected the Guild’s contention that packaging fees are a form of a kickback. What has become crystal clear is that David Young, David Goodman and this WGA leadership have led thousands of writers over a cliff, wasted their member dues on failed lawsuits, and left them without agents to represent and advocate for them for more than a year.”
The statement continued: “While the agencies value the WGA’s role, the Guild’s current leadership has overstepped, recklessly damaging personal and professional relationships and forcing agents to defend their integrity and their livelihoods against the Guild’s false claims and inflammatory rhetoric. Meanwhile, the agencies’ claims against the WGA move full steam ahead.”
The battle, which shifted into high gear in April 2019 when the guild filed litigation and ordered writers to fire their agents en masse, has infuriated the agencies. “These guys have damaged the industry, our clients, our relationships with writers … for what?,” a senior industry source told The Hollywood Reporter. “A year later and finally a judge weighs in.”
In a statement Monday evening, the guild portrayed the result as a qualified win.
“We obviously would have preferred a complete victory,” said WGA West president David A. Goodman. “But the court’s decision assures that the Guild’s core claims, namely that packaging is a breach of fiduciary duty and that agencies have committed antitrust violations by fixing the price of those packages, will be explored through discovery, and ultimately in court. That’s what we wanted. There remain six powerful claims in our lawsuit that we will pursue, and discovery is underway. We are confident that the evidence uncovered in this process will support the claims detailed in our lawsuit.”
But with the case pared down, the scope of the guild’s discovery is likely to constrict as well, unless the WGA successfully amends those of its claims that were dismissed without prejudice. It’s hard to see how the guild could overcome standing problems via amendment though, leaving it little room to improve on the ruling.
And with all of the federal claims dismissed, the guild’s case may end up being bounced back to state court. Or perhaps not: The agencies’ own federal antitrust claims against the WGA survived an earlier motion to dismiss, leaving the WGA itself almost entirely playing defense.
The guild’s courtroom defeat comes on the heels of another battle lost just days ago, this one against employers: In a dispute over health coverage, the WGA rejected its own proposed negotiations over its expiring TV/theatrical basic agreement and told the head of the studio alliance, “You people are despicable.” That led the Alliance of Motion Picture and Television Producers to sideline the writers and instead commence negotiations Monday with SAG-AFTRA, whose contract doesn’t expire until June 30, well after the Friday (May 1) end date on the writers’ agreement.
The union’s claims (formally referred to as causes of action) and their disposition is as follows:
* COA 1 – Federal – Sherman Act – price fixing – brought by seven individuals and the WGA (for itself and its members). Dismissed with prejudice, as to the individuals and the guild, for lack of standing.
* COA 2 – Federal – Sherman Act – group boycott – brought by seven individuals and the WGA (for itself and its members). Dismissed, as to the individuals and the guild, for failure to allege facts that constitute a violation of law, but with leave to amend.
* COA 3 – State – Cartwright Act – price fixing – brought by seven individuals and the WGA (for itself and its members). Survives, because Cartwright Act standing is more lenient than under the federal Sherman Act (see COA 1).
* COA 4 – State – Cartwright Act – group boycott – brought by seven individuals and the WGA (for itself and its members). Dismissed, as to the individuals and the guild, for failure to allege facts that constitute a violation of law, but with leave to amend.
* COA 5 – State – common law – fiduciary duty – brought by seven (now six) individuals and the WGA (for its members). Dismissed, as to the guild, for lack of standing, but with leave to amend; difficult to see how amending could cure the standing issue. Survives as to the individuals’ COAs.
* COA 6 – State – Civil Code – constructive fraud – brought by seven (now six) individuals and the WGA (for its members). Dismissed, as to the guild, for lack of standing, but with leave to amend; difficult to see how amending could cure the standing issue. Dismissed, as to the individuals, for failure to allege facts that constitute a violation of law, but with leave to amend.
* COA 7 – State – Unfair Competition Law – unfair competition – brought by seven (now six) individuals and the WGA (for itself). Dismissed, as to the guild, for lack of standing, but with leave to amend; difficult to see how amending could cure the standing issue. Survives as to the individuals’ COAs.
* COAs 8 through 11 – Federal – racketeering – brought by seven (now six) individuals and the WGA (for itself and its members). Dismissed with prejudice, as to the individuals and the guild, for failure to allege facts that constitute a violation of law, because packaging fees are not bribes or kickbacks.
* COA 12 – declaratory relief – brought by seven individuals and the WGA (for itself and its members). Survives as to the COAs that survive.
* COA 13 – State – breach of contract – brought by Barbara Hall. Survives.
* COA 14 – State – promissory estoppel (related to breach of contract) – brought by Barbara Hall. Survives.
The guild has 14 days to attempt to resurrect some of its claims by amending its complaint. Meanwhile, several of the claims by individual writers survived the judge’s scrutiny. But that’s thin gruel for a lawsuit that the guild hoped would knock packaging fees into an ashcan.
Read the ruling.
April 27, 6:47 p.m. Updated with joint agency statement.
April 27, 9:26 p.m. Updated with WGA statement.
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Stay Tuned! I got a feeling we ain’t heard the last word on this! As for that Thin Gruel stuff I always found it to be ,,,well, Thin!
Arl
The Ol’ SAG Watchdog
*Headline photo was featured in Mr. Handel’s Hollywood Reporter article