A federal judge on Tuesday allowed the three major agencies to pursue a lawsuit against the Writers Guild of America, finding that the guild’s agency boycott is not immune from antitrust scrutiny.
U.S. District Judge Andre Birotte denied the guild’s motion to dismiss the suit, brought by WME, CAA and UTA, holding that the agencies have made a plausible claim that the boycott was a “predatory device” intended to harm the agencies.
The ruling marks a significant win for the agencies, which have accused the WGA of an unlawful “power grab” in its war on packaging fees. In his ruling, Birotte showed little sympathy for the WGA’s claim that it is merely seeking to promote its members’ best interests by stamping out a pernicious conflict of interest.
Birotte said that the WGA had “not provided a plausible argument that prohibiting packaging enhances overall efficiency and makes markets more competitive.”
Instead, Birotte held that the agencies made a credible case that the boycott violates antitrust law by stifling competition in the market for writer representation. Birotte also found that the WGA had “expressly permitted” packaging fees for the last 40 years — a point the guild disputes.
Birotte also credited the agencies’ argument that the WGA had combined with “non-labor” parties — including showrunners, attorneys and managers — in effectuating the boycott. The WGA has argued that showrunners — who are members of the guild — are not bound by the guild’s new anti-packaging rules if they are not performing work as writers. But Birotte found that the agencies’ suit had adequately alleged that showrunners have been coerced into firing their agents even when they act solely as producers.
The ruling is a severe blow to the WGA, which had claimed that its actions are entirely protected by the labor exemptions to federal antitrust law. The agencies’ lawyers have argued that the guild has gone well beyond that protection with its boycott, threatening to harm directors, actors and ultimately consumers.
A trial has been tentatively set for March 2021, and both sides are expected to conduct costly discovery between now and then. The guild has filed its own countersuit, accusing the agencies of violating antitrust laws by negotiating only through their trade organization, the Association of Talent Agents. A hearing on the agencies’ motion to dismiss that claim is set for Jan. 17.
In a statement, the WGA said it would press ahead with the case.
“A dismissal would have been welcomed, but we appreciate the court’s desire to have a more complete factual record,” the guild said. “We continue to move forward with our case and are confident that the evidence uncovered through discovery will prove the agencies’ conflicts of interest and breach of fiduciary duty that we have detailed in our complaint.”
The agencies issued a statement Tuesday morning applauding the ruling, saying they had prevailed despite the WGA leadership’s efforts “to avoid judicial scrutiny of their illegal actions.”
“The actions of this Guild’s leadership have exposed its members to significant legal and financial exposure,” the agencies said. “We will continue to take all steps necessary to defend our respective businesses and will aggressively move forward to address the issues in this litigation. While the legal process runs its course, we strongly believe it is in the best interests of writers to be represented by their agents.”
The Department of Justice Antitrust Division has sided with the agencies, and urged Birotte to deny the guild’s motion to dismiss.
The Writers Guild wants to bar agents from collecting fees from producers for packaging writers on projects, arguing it is a conflict of interest that suppresses writers’ wages. The guild is also opposed to agencies owning production companies, called affiliated production. In April, the guild directed its members to fire their agents after the agencies refused to sign the guild’s new code of conduct. The agencies filed suit, alleging that the guild was engaged in an illegal group boycott.