Writers Guild Accuses Agencies of Collusion in Cease-and-Desist Letter
Art and Experience: The Writers Guild of America has hit back at Hollywood agents with accusations of collusion following a pair of lawsuits alleging that the guild is abusing its collective bargaining authority.
With the bitter standoff in its third month, the WGA brushed off recent suits by UTA and WME, calling them “meritless.” The guild sent a cease-and-desist letter Friday from outside attorneys W. Stephen Cannon and Ethan Litwin to the Association of Talent Agents and the top eight agencies accusing them of having engaged in “collusive actions that constitute unlawful restraints of trade” under the Sherman Act including collusion and price-fixing. It asked for a response by July 15.
“The Guild therefore demands that you cease and desist from this anticompetitive behavior,” the WGA’s attorneys said in the letter.
The guild disclosed the missive in a letter from its negotiating committee to its 15,000 members. The WGA directed its members in April to fire their agents following the major agencies’ refusal to sign onto a new Code of Conduct, which bars the agencies from collecting packaging fees and from owning interests in production companies. The union argues that the fees create an unlawful conflict of interest and it’s persuaded about 70 smaller agencies to sign the code.
Negotiations with the Association of Talent Agents have been futile, collapsing twice — first on April 12 and again on June 7. WGA West president David Goodman announced on June 20 that the guild would only negotiate with WME, CAA, UTA, ICM Partners, Paradigm, Gersh, APA, Rothman Brecher and Kaplan Stahler. None of the agencies have done so, insisting that they will only bargain through the ATA.
“Under labor and antitrust law the ATA’s right to negotiate with the Guild existed only because the Guild consented and, in doing so, extended legal protection to the ATA,” the letter to members said. “But that accommodation is not the norm. Trade associations such as the ATA don’t typically have the right to bargain for their members as a group; such bargaining is usually an illegal restraint of trade. Because it’s now clear that the ATA is, in fact, the source of restraint of trade within the agency community, we will no longer facilitate that obstacle to a fair agreement.”
The letter from Cannon and Litwin said the ATA has furthered its members’ conspiracy to restrain competition among themselves by directing its members not to agree to the Code of Conduct, to forgo price competition and instead to follow the compensation structure advocated by the ATA.
“The ATA members’ collective refusal to deal with the WGA violates the antitrust laws,” the letter said. “Moreover, the ATA’s offer to share 0.8%, and then 2%, of back-end packaging fees is nothing more than a naked agreement among competitors to fix prices, absent any derivative labor exemption.”
In packaging deals for television, writers forego having to pay agents a 10% commission. The WGA also sued CAA, WME, UTA and ICM Partners in April in California state court for alleged conflict of interest in collecting packaging fees, five days after telling its members to fire their agents if the agents had not signed the Code of Conduct.
The move by the WGA could open the door for another lawsuit. The WGA did not disclose in the cease-and-desist letter or in the message to members whether it will file another lawsuit should the agencies not comply.