WGA Sues Big Four Agencies Over Packaging Fees

 deadline.com  4/17/2019 5:13:28 PM 

The WGA said Wednesday that they have filed a civil lawsuit in Los Angeles Superior Court against the four major packaging agencies, accusing them of violating state and federal laws with respect to the fiduciary duties to their writer-clients.

Tony Segall, the general counsel for the Writers Guild of America, West, said during a press conference at WGAW headquarters in Los Angeles that the suit against CAA, WME, ICM Partners and UTA makes two claims: that packaging fees violate state fiduciary duty laws, and that those fees violate federal unfair competition laws.

Specifically, the suit cites the anti-kickback provisions of the Taft-Hartley Act. Under that law, representatives of an employee can’t receive money from an employer, Segall said.

“Packaging fees have caused tremendous financial harm to the guilds and their members including the individual plaintiffs,” read the 25-page suit.

The plaintiffs listed are the WGA West and WGA East, and WGA members Patricia Carr, Ashley Gable, Barbara Hall, Deric A. Hughes, George Johannessen, Deirdre Mangan, David Simon and Meredith Stiehm.

Simon is creator of HBO’s The Wire and The Deuce. Stiehm is creator of the CBS series Cold Case.

“When the show was sold, CAA negotiated a packaging fee for itself, without my knowledge,” Stein said in remarks at the press conference. “It wasn’t until six years and 134 episodes later that I learned about it. It turned out that on the show I created, I worked on exclusively for years, CAA ended up making 94 cents for every dollar I earned. That is indefensible. An agency should make 10% of what a client makes — not 20, not 50, not like in my case, 94%. 10% is enough.”

Packaging has been allowed under the WGA’s franchise agreement with the agencies since 1976. But Segall said Wednesday that “the guild has been uncomfortable with packaging forever.” He added that in the mid-1970s the guild filed lawsuits against then-William Morris Agency, in which a settlement was reached that allowed the guild to attempt to regulate packaging. That, however, was “completely unsuccessful,” he said, and in recent years the TV packaging agencies “have abandoned the 10% commission model” and now rely almost entirely on packaging fees.

“It’s now time to ban it altogether,” Segall said.

The guild and the talent agencies repped by the Association of Talent Agents have not set any dates to resume discussions in their impasse over a new franchise agreement. Formal negotiations broke off Friday, after which the guild ordered its members to fire their agents who refuse to sign its Code of Conduct.

Segall added that “to date, thousands of writers have signed letters” terminating their agents who refused to sign the code, which was approved by an overwhelming vote of the union’s members. It bans packaging fees and prohibits agencies from being affiliated to production entities through corporate parents.

Before talks broke off Friday, the WGA and the ATA each made minor concessions but remain far apart on those two key issues, leading to today’s lawsuit.

“The agencies’ packaging fees violate the fiduciary duty that agents owe to their writer clients and deprive them of the conflict-free representation to which they are entitled,” the suit reads. “For these reasons, and because the payments made from the production companies to agencies as part of any package, constitute unlawful kickbacks from an employer to a ‘representative of any of his employees’ … packaging is an unlawful or unfair business practice for the purposes of the California Unfair Competition Law.”

The suit says packaging fees should be “declared unlawful” and “unjoined” and the plaintiffs should be awarded disgorgement of unlawful profits, and individual plaintiffs should be awarded restitution and damages. “Plaintiffs bring this lawsuit to end the agencies’ harmful and unlawful practice of packaging fees,” it said.

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