WGA sues four main talent agencies over packaging fee dispute

The battleground between Hollywood’s writers and the agents who represent them shifted to the courtroom as the Writers Guild of America sued the four main Hollywood talent agencies over a long-standing practice the union says is harming its members.

At a news conference Wednesday, the union said it has filed suit in Los Angeles County Superior Court against the agencies — CAA, WME, ICM Partners and UTA — alleging that the widespread use of packaging fees violates state and federal laws.

These fees are the money that agencies extract from TV shows and movies for pulling together talent — writers, directors, actors and others — for projects. Writers believe agencies have prioritized these packaging fees over their traditional duties of representing clients. Agents have countered that writers benefit from packaging, in part because they don’t have to pay the traditional 10% commission.

The lawsuit claims the agencies’ use of such fees violates the state’s fiduciary duty law by pitting the interests of agencies against those of their clients. It also alleges the fees violate anti-kickback provisions of the federal Taft-Hartley Act.

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The WGA is seeking an injunction from the court to prevent agencies from collecting such fees, as well as damages and repayments from fees that it contends were illegally obtained.

The agencies did not immediately respond to the lawsuit.

The legal action comes four days after the WGA made good on its threat to have members fire their agents en masse if they could not reach an agreement on a new code of conduct for agents to replace a 43-year-old pact. The union has urged members to seek out attorneys and managers to represent them.

The standoff has rattled Hollywood over the last two months because of the central role agents play in the production of film and TV projects.

Lawyers for the guild said they are confident in the suit, despite going up against four formidable agencies with vast legal resources.

“We will see the litigation through to the end,� said Anthony Segall, an attorney at Rothner, Segall & Greenstone, who is representing the union.

Although packaging has existed for decades, writers believe that agents frequently go too far in their pursuit of the fees.

“The abuses of packaging have become increasingly appalling,� said P. Casey Pitts, an attorney at Altshuler Berzon, who is also representing the guild.

Barbara Hall, who has worked on the series “Judging Amy� and “Madam Secretary,� said at the news conference that she has tried to seek accounting transparency on the shows from her agents at CAA and UTA, respectively.

“They wouldn’t help,� said Hall, one of eight writers who are co-plaintiffs with the guild.

Meredith Stiehm, another plaintiff, said that CAA was making more per episode on the show “Cold Case� than she was for at least the first two years of the series. CAA collected $75,000 per episode, she said.

Stiehm alleged that when she suggested CAA take a cut in packaging fees, Warner Bros., the show’s distributor, said the fee was fixed and couldn’t be changed. Stiehm called the agency’s actions “indefensible.�

Agency representatives did not respond to requests for comment.

Before Wednesday’s lawsuit, there were hints that the fight would eventually end up in court.

On Friday, lawyers for the Assn. of Talent Agents threatened to sue the WGA over a plan that talent managers and attorneys assume some of the responsibilities of agents. The association said that such a proposal would violate both California and New York law, and would constitute unfair competition to its member agencies.

“ATA will take appropriate action as needed, against any person engaged in unfair competition, to protect the lawful interests of its members,� said Marvin S. Putnam of Latham & Watkins, the firm representing the agencies.

The union is enforcing a new code that bars long-standing practices that have been the source of major friction with writers. The guild’s members voted overwhelmingly last month in favor of the code of conduct.

Agencies, however, have balked at the new document.

“The WGA’s code of conduct is a threat to agency business operations,� Karen Stuart, executive director of the ATA, said in a statement last week.

Numerous writers already have indicated they will fire their agents in accordance with the guild’s position. The WGA estimates that about 8,500 of its 13,000 members have agents and are thus affected by the dispute, and that thousands have already sent out termination notices.

Guild members have been largely unified behind the union’s actions.

“Lost� writer Damon Lindelof used his Instagram account over the weekend to say he had sent his agents at CAA the guild’s termination letter. “My agents have become my friends,� he wrote. “As brutal as it is to send this letter, I unequivocally stand with my sisters and brothers and my union.�

Aside from packaging fees, the fight also involves a more recent phenomenon — the aggressive move by agencies into TV and movie production, an area once the exclusive domain of the Hollywood studios but which has seen an invasion by tech giants Netflix, Apple and Amazon.

WME, CAA and UTA have all embarked on some form of production. The three firms have brought in private equity investors, which have transformed the agency industry in the last decade by putting pressure on them to boost profits and find new sources of income.