No clear victory for either side

Neither managers nor talent landed a total win, but managers came out ahead Monday as the California Supreme Court delivered its much-anticipated decision on the Talent Agencies Act.

While the court unanimously held that the act does preclude managers from procuring employment for clients, it ruled that an “isolated instance of procurement does not automatically” bar a manager from collecting commissions.

The labor commissioner has the discretion to review the manager-client relationship on a case-by-case basis and apply principles of fairness to allow managers to be paid despite isolated acts of procurement, according to the decision. For the past four decades, the labor commissioner virtually automatically voided a contract if a manager ever procured employment for the client. The result was that the client stopped paying commissions, and the manager was required to disgorge a portion of payments already made.

In legal terms, the court applied the doctrine of severability of contract, holding that the valid part of the talent-management relationship could be severed from the illegal procurement portion.

The court also urged the legislature to rewrite the Talent Agencies Act, which is universally loathed by talent managers.

The case stems from the 1978 act, which deregulated managers but prevented them from procuring work for their clients. Only talent agents, which are regulated by state statute, can procure employment.

Managers have long contended that early in an actor’s career, the line between managing and procuring is vague and that once an actor becomes successful, he can use an isolated instance of procurement to get out of paying commissions. The law, which was intended to shield talent from unscrupulous operators, had become a sword against managers, they claimed.

Plaintiff Rick Siegel, the president of Marathon Entertainment, said he was “very happy” with the result and believes it represents a “sea change” in how the Labor Commission will resolve his long-running case against actress Rosa Blasi, as well as how such cases will be handled in the future. Siegel also expressed disappointment that the court rejected his contention that the Talent Agencies Act is not applicable to managers.

Gerry Margolis of Manatt Phelps & Phillips, who filed an amicus brief on behalf of the National Assn. of Artists’ Managers, hailed the decision as good for managers, as well as for the business at large.

“The labor commissioner and the courts will have to do more work now,” Margolis said. They will have to look at the overall relationship between a manager and a client and apply principles of fairness.” Margolis said the commissioner’s previous position that any act of procurement voids an otherwise productive relationship was just unfair.

Blasi’s attorney, Michael Plonsker, said: “Although we are pleased that the court has confirmed the applicability of the Talent Agencies Act to personal managers and all others who would procure employment without a license, we are disheartened that the court has seen fit to strip the act of the deterrent mechanism — namely, automatic voiding of the illegal talent agency contract in its entirety — that has stood for 40 years. Now it is for the Legislature to determine — as suggested by the Supreme Court — whether it will amend the Talent Agencies Act to make explicit that the remedy announced by the court is contrary to the bright line and harsh deterrent intended by the Legislature.”

The American Federation of Television and Radio Artists’ statement sounded a similar note:

“While AFTRA is disappointed that the California Supreme Court did not strongly affirm the contractual rights of performers and other talent and their relationships with talent agents, we are encouraged that ruling found that personal managers are regulated by the California Talent Agencies Act.”

In the Blasi case, the court found that Marathon did not procure Blasi’s lead role on the television series “Strong Medicine,” and directed the lower court to determine whether severing the contract to allow payment to Marathon was appropriate under those circumstances.

Blasi’s is one in a long line of cases, including those involving Arsenio Hall and Thomas Haden Church, in which the labor commissioner barred payment to the manager.

As outlined at great length by the court, Blasi hired Marathon in 1998 to serve as her personal manager in exchange for a 15% fee. During the ensuing three years, Blasi’s professional appearances included a lead role as Dr. Luisa Delgado on the television series “Strong Medicine.” In 2001, Blasi terminated her Marathon contract.

Marathon sued Blasi, seeking to recover unpaid “Strong Medicine” commissions. Blasi filed a petition with the labor commissioner alleging Marathon had violated the act by soliciting and procuring employment for Blasi without a talent agency license. The labor commissioner agreed, finding that Marathon had violated the act by providing talent agency services without a license, and barred Marathon from recovery.

Marathon appealed the labor commissioner’s ruling to the Superior Court, claiming that the Talent Agencies Act as applied to managers violated the state and federal constitutions. Marathon again lost in the trial court. The Court of Appeal reversed the decision in part; it agreed with the trial court that the act applied to personal managers.

However, it concluded that under the law of severability of contracts, the possibility existed that Blasi’s obligation to pay Marathon a commission on that contract could be severed from any unlawful parts of the parties’ management agreement.

Monday’s opinion affirms the Court of Appeal’s decision.

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