CAA Scoffs At WGA’s Latest Legal Move In Preview Of Its Defense of Guild Allegations Against Packaging Agencies

CAA today scoffed at the WGA’s request that the judge assigned to the guild’s lawsuit against the Big Four packaging agencies recuse himself. The WGA asked for the recusal because the judge’s wife once worked for the Endeavor talent agency and later worked at two TV production companies.

CAA’s letter to the judge also provides a preview to what could be their defense against the guild’s suit against CAA, WME, UTA and ICM Partners.

“The WGA’s theory could require the recusal of any judge who personally worked for or represented – or had a spouse, a family member, or a close friend who worked for or represented – any film or entertainment studio, talent agency, as well as arguably any entertainment law firm or talent management company,” CAA attorney Richard B. Kendall wrote in a letter to Los Angeles Superior Court Judge Marc Gross.

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“That would require the recusal of a significant portion of the bench in the Los Angeles Superior Court. Perhaps that is the WGA’s goal – to ensure that no judge on the bench may hear its case who has any prior familiarity with the issues the WGA’s case raises. But such a broad-sweeping, frivolous theory is not a reasonable basis for recusal under Code of Civil Procedure.”

The WGA, he told the judge, “cannot procure recusal by frivolously charging the entertainment industry as a whole with a ‘crime’ and seeking recusal of any judge with a connection to the entertainment industry. Plaintiffs assert that recusal is required because Your Honor’s wife has been employed by producing firms which ‘may have’ paid packaging fees to talent agencies, thereby supposedly committing a ‘crime’ pursuant to Section 302(a) of the Labor-Management Relations Act.”

The WGA made its case for recusal in a letter its attorney sent to the judge, saying that the guild wishes “to inform the Court of two facts that may be relevant in considering whether recusal is warranted here” – that his wife not only once worked for Endeavor before its merger with the William Morris agency in 2009, but subsequently worked at two production companies – Turner Network Television and GK-tv –that may have paid packaging fees to talent agencies.

The WGA said that “One of the three independent and alternative bases for the plaintiffs’ claim is that the payment of packaging fees violates the LMRDA,” which “makes it a crime for an employer to make payments to any representative of any of his employees, while Section 302(b) makes it a crime for any person to receive a payment prohibited by Section 302(a). “Although the plaintiffs’ theory in this case is that the defendant agencies received payments in violation of Section 302(b), a finding in plaintiffs’ favor on that issue would necessarily suggest that the production companies that paid those fees had violated Section302(a).”

Kendall, however, told the judge that “The WGA’s argument on this point is preposterous, for many reasons. “Section 302(a) is the LMRA’s ‘anti-bribery’ criminal provision, which makes it a crime for employers to bribe union officials and representatives. The WGA’s theory is apparently that any studio or entertainment company that has ever paid a packaging fee to a talent agency in connection with a WGA member’s employment (or, a fortiori, any manager or attorney representing that WGA-member in connection with his or her employment) has committed or aided and abetted this supposed ‘crime.’”

“There has never been a single case or prosecution anywhere in the country that supports this theory,” Kendall wrote. “The history and practice of the LMRA, and the Supreme Court’s interpretations of the statute make absolutely clear that this criminal provision was enacted to prevent employers from bribing union officials. There is no such allegation here.

“Indeed, WGA expressly authorized agencies to receive packaging fees for more than 42 years through the Artists’ Manager Basic Agreement of 1976. In other words, WGA (including members of its current leadership) affirmatively approved for decades the very conduct that WGA now calls ‘criminal.’ It is ludicrous to assert that the LMRA’s anti-bribery statute criminalizes packaging arrangements that have been expressly authorized for more than 42 years by the WGA itself, and which have been negotiated throughout those years by countless studios, producers, talent attorneys, talent agencies, and many other participants throughout the entertainment industry.”

The WGA, Kendall wrote, “apparently intends to use its frivolous theory to (a) charge the bulk of the entertainment industry with committing a ‘crime,’ and then (b) demand recusal of any judge with any relationship to the entertainment industry.”

Kendall also said that the claims of the eight named plaintiffs in the case — alleging breach of fiduciary duty — “Do not present the industry-wide issues on which the plaintiff’s recusal contention is premised, because the individual plaintiffs’ claims necessarily require individualized inquiry on a case-by-case basis.

“This point is easily illustrated with two examples: plaintiff David Simon’s claims are highly individualized. Mr. Simon has brought a breach of fiduciary duty claim and unfair competition law (UCL) claim against CAA based on the alleged use of a package fee related to the television series Homicide: Life on the Street. But Mr. Simon first complained about the package fee related to Homicide 19 years ago, in 2000. After deciding to stay with CAA as his agency, he waived and released all such claims in writing. CAA did not receive package fees on a David Simon project after that date. Mr. Simon’s claims are thus barred by the statute of limitations, as well as waiver, release, and estoppel, all of which are individualized issues.

“Plaintiff Barbara Hall’s claims against CAA are also highly individualized. CAA represented Barbara Hall in 2003, and secured for her a lucrative overall deal with a studio. Her signed agreement expressly acknowledged that the studio would be paying CAA a standard package fee, and as a result she paid no commissions to CAA on that show. She was not represented by CAA on the additional shows she references in her charging allegations. Again, Ms. Hall’s claims against CAA fail because of highly individualized issues, including the statute of limitations (which expired in 2007), waiver, and estoppel.

“Moreover, although the WGA unions have also purported to join the action, the WGA lacks standing to assert breach of fiduciary duty claims on behalf of their members. Nor does the WGA have any standing to assert claims on behalf of its members under the UCL.

“Among other reasons, a union can seek relief on behalf of its members only through a class action. Here, the WGA has expressly indicated on the Civil Case Cover Sheet that it is not bringing a class action against the defendants. We will address these and other issues in much more detail in responsive pleadings and motions at the appropriate time.”

Even if the judge does not recuse himself, the guild has one preemptory challenge and could be assigned a new judge.