CAA has become the latest top talent agency to file a federal lawsuit against the Writers Guild of America, accusing the union of “stunning overreach” in its quest to ban packaging fees and agency-affiliated production operations.
CAA’s suit comes a week after WME filed a similar complaint, followed on June 27 by UTA. The three cases are expected to be consolidated as they proceed in federal court in Los Angeles. The WGA did not immediately respond to a request for comment on CAA’s lawsuit.
The WGA filed suit in state court against WME, CAA, UTA and ICM Partners, accusing the agencies of violating their fiduciary duties to writer clients through packaging, which the guild asserts is a fundamental conflict of interest with agencies earning fees from production entities for helping to assemble TV series and independent films. CAA maintains that the WGA’s actions have been in violation of exemptions granted to unions for collective bargaining purposes under anti-trust laws.
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“In effect, the WGA is seeking to restrain competition in a significant portion of the entertainment industry, far beyond lawful union interests,” CAA’s complaint states. “The WGA’s unlawful group boycott ultimately will cause substantial harm not only to talent agents but also to actors, directors, production staff, below-the-line employees, and many other industry workers—as well as the vast majority of the union’s own writer membership — all of whom depend on the agencies’ pro-competitive activities to ensure that television shows actually get made and that individual artists are equipped to maximize their value.”
CAA’s complaint offers a more vigorous defense than the WME and UTA filings of TV series packaging having endured as a standard industry practice since the 1950s. CAA argues that packaging has been much more of a benefit than detriment to writers over the years because the standard 10% commission fee is waived for all clients of the agency who work on a show in which the agency is receiving a packaging fee. CAA asserts that packaging has become so commonplace that the volume of new TV series development would slow down if the practice were eliminated. Moreover, the end of packaging fee deals would mean that all writers would pay 10% of their income from writing to agents, hitting the pocketbooks of those writers that the WGA argues have been hurt by the lack of incentive at the major agencies to fight for salary increases for individual writers.
“Packaging is particularly important for artists (including writers) in the current media economy, because it helps agencies and their artists secure better deals in an environment in which studios seek relentlessly to reduce the costs of producing television programming, including the amounts paid to talent,” the complaint states. “Meanwhile, the overwhelming number of writers (who are employees, not producers, and who are not generally entitled to receive back-end compensation at all, even from profitable programs) almost always do better under a packaging deal than they would have under a commissioning system. That is because the back-end compensation paid to CAA in packaging deals comes at the expense of the studios, not writers or other talent.”
The WGA maintains that packaging fees are an inherent conflict of interest because the agencies receive backend points that make them a part owner of property. In that capacity, the agencies have every interest in keeping writer salaries low in order to maximize the agency’s share of potential profits down the road. CAA, like WME, asserts that the WGA’s theory is flawed because so few shows actually generate backend profits.
“The WGA’s positions ignore the overall economics of packaging fees,” CAA’s complaint states. “In the overwhelming majority of cases, scripted television programs do not generate back-end profits at all. In these cases, writers are clearly better off under a packaging fee model, in which the writers do not pay a 10% commission on their employment income, than they would be under a commission model, in which they pay 10% commission on all compensation earned.”
All told, CAA echoes the allegations made by WME and UTA that the guild has dramatically overstepped its bounds and is violating its anti-trust exemptions as a union by organization what the agencies call an illegal “group boycott.” After fitful negotiations with the Association of Talent Agents earlier this year, the WGA on April 13 implemented a new Agency Code of Conduct and instructed its 15,000 members (across the WGA West and WGA East) to fire agents who will not agree to abide by the terms of the new code.
“That is stunning overreach. The WGA is attempting to limit competition in a broad swath of commercial markets, such as television packaging and content production, that the WGA has no authority to regulate,” CAA’s complaint asserts. “The WGA’s efforts to remake the entire entertainment industry extend far beyond any legitimate union or collective-bargaining interest it may hold.”