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Writers Guild Withdraws State Suit Against Agencies, Refiles in Federal Court

The Writers Guild of America has withdrawn its state court suit against WME, CAA, UTA and ICM Partners alleging packaging fees are illegal and re-filed suit in federal court.

The WGA also responded to antitrust claims brought against the guild by the three agencies. Those agency suits alleged that the WGA abused its power in April by telling members to fire their agents if those agents had not signed the new Code of Conduct.

“Over the years the major agencies have repeatedly broken federal antitrust law by conspiring to fix the price of packaging fees,” said WGA West president David A. Goodman. “Their current campaign to preserve the packaging fee model by strong-arming smaller agencies also violates the law. We are simply asking the court to stop these agencies from illegally enriching themselves at the expense of writers.”

The federal counter-claim charges that the agencies’ packaging fee model violates their fiduciary duty to their clients and constitutes a system of illegal kickbacks and price-fixing under federal law. ICM is not included in the new suit.

The action also charges violations of federal antitrust laws via the agencies’ “collusive agreement not to negotiate individually with the Guilds” and “collusive agreement to blacklist writers or other individuals or entities who object to packaging fees or agree to the Guild’s Code of Conduct.”

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The guild is seeking a declaration that packaging fees are unlawful. It’s also asking the court to order agencies to provide an accounting of all packaging fee deals involving Guild members and disgorge all profits generated from “unlawful and unfair” packaging fees.

The WGA said that the state court claims will be consolidated and decided as part of the federal court action. UTA brushed off the filing of the new litigation in a statement Monday, asserting that the move was a “complete retreat” by the WGA.

“The WGA’s dismissal of its own state court lawsuit today represents a complete retreat by Guild leadership, who were fully aware they faced certain defeat in the courts in a few weeks,” UTA said.

“The lawsuit represented the WGA’s ill-considered and poorly executed campaign that continues to harm writers, who labor on unnecessarily without effective representation,” UTA added. “The new claims are equally ill-considered, vitriolic and baseless. UTA is confident that they will ultimately be dismissed as well.”

The state court motions by the agencies to dismiss the WGA suit had been set for a Sept. 5 hearing. The WGA had sought unsuccessfully to postpone the hearing until after the guild’s elections. The results of the WGA West election — which are widely considered to represent a referendum on Goodman’s hardline stance toward agencies — will be announced on Sept. 16.

The original WGA suit was filed on April 17, four days after the guild ordered its members to fire their agents if they had not agreed to the Code of Conduct. The action included eight WGA members as plaintiffs, who remain in the federal suit: Meredith Stiehm, Barbara Hall, Patti Carr, Ashley Gable, Deric Hughes, Chip Johannessen, Deirdre Mangan and David Simon.

The WGA case will be now handled by U.S. District Court Judges Andre Birotte and Alex MacKinnon, who were assigned the cases filed by CAA, WME and UTA.

Aaron Craig, a partner in the business litigation group at King & Spalding, told Variety, “I thought the WGA’s counsel made a strategic mistake when they initially filed their claims in state court, because Federal judges run a much tighter ship and tend to punish discovery misconduct far more seriously than their counterparts in state court.  Despite that initial misstep, the case is now in excellent hands. Judge Birotte and Judge MacKinnon are outstanding judges. If I was representing the WGA, I’d be very aggressive in going after documents and deposition testimony from each of the agencies, knowing that any gamesmanship will be severely punished.”

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