Los Angeles – The Writers Guild of America today filed a lawsuit in Los Angeles Superior Court seeking to establish that talent agency packaging fees are illegal under both California and federal law. Read the amended complaint.
The plaintiffs are Writers Guild of America West and East, along with writers and WGA members Patti Carr, Ashley Gable, Barbara Hall, Deric Hughes, Chip Johannessen, Deirdre Mangan, David Simon, and Meredith Stiehm. The defendants are William Morris Endeavor (WME), Creative Artists Agency (CAA), United Talent Agency (UTA), and ICM Partners (ICM)—the four major talent agencies that dominate the representation of writers in Hollywood. The four agencies receive over 80% of the packaging fees paid by Hollywood studios and networks.
“All of the writer plaintiffs have been hurt financially by packaging deals. They are creators and writers of television shows that have shaped a generation, yet their agents have profited at the expense of their own clients,” said Tony Segall, general counsel for the Writers Guild of America West.
“The plaintiffs will seek a judicial declaration that packaging fees are unlawful and an injunction prohibiting talent agencies from entering into future packaging deals. The suit will also seek damages and repayment of illegal profits on behalf of writers who have been harmed by these unlawful practices in the past.” Segall said.
The lawsuit comes as thousands of Hollywood writers, who are members of the WGA, are leaving talent agencies that refuse to sign on to the union’s Code of Conduct. The WGA announced April 12 that if talent agents want to represent WGA members they must agree to align their interests with writers’ financial interests by signing the Code of Conduct.
Plaintiff Meredith Stiehm, the creator of the hit television series Cold Case, which ran for seven seasons on CBS, only learned that the show that she created, wrote and executive produced was packaged by her agency, CAA, long after the agency made its packaging deal.
“When the show was sold, CAA negotiated a packaging fee for itself, without my knowledge. It wasn’t until six years and 134 episodes later, that I learned about it,” said Stiehm. “It turned out that on the show I created, and worked on exclusively for years, CAA ended up making 94 cents for every dollar that I earned. That is indefensible. An agency should make 10% of what their client makes—not 20, not 50, not like in my case, 94%. 10% is enough.”
The complaint is comprised of two claims:
- Packaging fees violate California fiduciary duty law. Under state law, talent agents are fiduciaries, who are required by law to represent writers with undivided loyalty and without conflicts of interest. Because packaging fees sever the relationship between a writer’s compensation and what the agency receives in fees, and frequently pit the interests of the agency against those of its writer client, packaging fees violate these fundamental fiduciary obligations.
- Packaging fees also violate California’s Unfair Competition Law. Packaging is an unfair practice because it violates a federal statute, section 302 of the federal Labor-Management Relations Act, the so-called “anti-kickback” provision of the Taft-Hartley Act. That statute prohibits “any representative” of an employee from receiving any “money or other things of value” from the employee’s employer. Because agents are employee representatives under the statute, their receipt of packaging fees—which are direct payments from employers—are prohibited under both state and federal law.
“Packaging fees are not a new practice in Hollywood, but they have always been controversial. It is time to put an end to the egregious conflict of interest that they pose,” Segall said.