UPDATED: The Department of Justice weighed in on the high-stakes legal battle between Hollywood agencies and the Writers Guild of America on Tuesday, arguing that the guild cannot claim blanket exemption from federal antitrust law.
The DOJ’s Antitrust Division said it is not taking sides on the merits of the seven-month battle between the guild and the major talent agencies. But the department did urge Judge Andre Birotte to reject the guild’s claim that its actions are exempt from scrutiny under antitrust law.
“The United States urges this Court to reject defendants’ argument that it can apply the labor exemptions from the antitrust laws in this case on the pleadings,” the DOJ stated.
David A. Goodman, the president of WGA West, responded that the DOJ’s support for the agencies was no surprise.
“It’s not surprising that Trump’s Justice Department has filed a brief designed to weaken a labor union’s effort to protect its members and eliminate conflicts of interest by talent agencies,” Goodman said. “The agencies’ antitrust claims are contrary to Supreme Court precedent, and we remain confident that the court will dismiss them.”
The division, led by Makan Delrahim, is involving itself in a Hollywood legal controversy for the second time in two weeks. Last week, Delrahim announced that he would seek to repeal the Paramount consent decrees, which have kept movie production divorced from exhibition for the last 70 years.
In wading into the fight between writers and their agents, the DOJ is taking on a much more pressing matter to the entertainment industry. Last April, the Writers Guild of America directed its members to fire their agents after the agencies refused to accept a ban on packaging fees. The guild argues that packaging fees — in which producers pay agencies to bundle talent on a project — represent a clear conflict of interest for the agencies, and have suppressed writers’ wages over the last 40 years.
Three agencies — WME, CAA and UTA — filed a federal antitrust suit against the guild in June, accusing it of engaging in an illegal “group boycott.” The guild filed a motion to dismiss the lawsuit in October, arguing that its actions are exempt from antitrust law because it is acting as a union.
In its statement, the DOJ argued that the labor exemption should be narrowly construed.
“The Writers Guild’s motion to dismiss is premised on the notion that as a legitimate union its judgment about what is best for its members cannot be ‘second-guess[ed]’ by this Court,” the DOJ argued. “Application of the labor exemptions here, however, is not so facile.”
The DOJ encouraged Birotte to do a factual analysis, rather than siding with the guild on the law alone, to ensure that antitrust law is not “discarded inappropriately.”
“Otherwise, the Court may disrupt the proper balance between federal labor law and federal antitrust law and undermine the fundamental protections for competition and consumers embodied in the federal antitrust laws,” the DOJ argued. “While any construction of the labor exemptions must allow unions to restrict competition in labor markets in pursuit of legitimate labor law goals, courts must also be careful to circumscribe the application of these exemptions lest unions be ‘giv[en] free rein to extend their substantial economic power into markets for goods and services other than labor.'”
A hearing on the case is set for Dec. 6.