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Judge Doubts WGA Claim That Packaging Fees Are Kickbacks

A federal judge seemed skeptical on Friday of the Writers Guild of America’s claim that packaging fees amount to a criminal kickback to agents.

Judge Andre Birotte heard more than two hours of arguments from attorneys for the guild and three agencies: WME, UTA and CAA. He said he would issue a ruling at a later date on the agencies’ motion to dismiss the guild’s countersuit.

Birotte seemed inclined to dismiss part of the complaint, though not all of it. Birotte was especially dubious of the WGA’s argument that the agencies have engaged in a 40-year racketeering conspiracy by accepting fees from studios for packaging talent — which the guild claims amount to bribes or kickbacks under federal anti-corruption laws.

“It was going on for 40 years and no one said anything?” Birotte asked.

The WGA has also accused the agencies of engaging in a price-fixing conspiracy by suppressing writers’ wages, and of an illegal group boycott, by agreeing to deal with the guild only through its trade association. The suit also alleged a breach of fiduciary duty, fraud and unfair competition.

Birotte seemed dubious that the agencies had committed an antitrust violation by relying on the Association of Talent Agents to deal with the union.

“If anything, it seems like people just didn’t want to negotiate,” he said.

The agencies asked the judge to dismiss all the claims, arguing among other things that the WGA does not have standing to allege a price-fixing conspiracy.

Birotte seemed inclined not to dismiss the claims under state law, suggesting it would be more efficient to handle the entire case at once rather than send those claims back to state court. He also pressed the agencies’ lawyers on whether the writers had a right to know the terms of the guild’s packaging deals with studios, and asked if WGA had a point that packaging fees could suppress wages.

“Isn’t it foreseeable that these packages would reduce the producers’ overall profit, and that would reduce compensation to writers?” Birotte asked.

Earlier this month, Birotte denied the WGA’s motion to dismiss the agencies’ antitrust suit against the guild, finding the agencies had made a plausible case that the guild had abused its power in the packaging fight.

In April 2019, the WGA directed its members to fire their agents, after the agencies refused to accept a new code of conduct that prohibits packaging fees. Since then, many smaller agencies have signed onto the code — but the major talent agencies have held out.

The agencies and the WGA anticipate a trial in March 2021.

The WGA issued a statement after the hearing: “Once again, the court has given the issues of this case careful consideration. Our legal team delivered a forceful rebuttal to the agencies’ motion to dismiss our counterclaims. We look forward to seeing the court’s ruling.”

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