CAA, WME Head Back To Court In WGA Dispute

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In my last blog, I expressed cautious optimism that the WGA was making progress in settling its long-running dispute with CAA and WME, the two largest talent agencies and the last two holdouts in signing a franchise agreement that would permit them to represent writers. In April 2019, the WGA directed its members to fire their agents who did not agree to abandon package commissions ownership of production companies. Since then, the WGA agreed that agencies could own stakes of up to 20% in production entities.

CAA announced in early October that it accepted the WGA’s requirements in principle, though both sides acknowledged there was still much to work through. This certainly proved true. The parties have reverted to type and both CAA and WME have sued for preliminary injunctions in their federal lawsuit with the Guild.

CAA’s position is that it has acceded to the WGA’s demands. The packaging issue is largely settled. As for wiip, the producing entity of which it is part owner, CAA put its interest into a blind trust. The trustee’s instructions are to sell off CAA’s stake to no more than the WGA’s approved 20% threshold. According to CAA, by seeking to impose additional conditions on a settlement the WGA is “refusing to take ‘yes’ for an answer.” One reason it cites for the Guild’s intransigence is personal animus against CAA on the part of David Young, the executive director of the WGA.

CAA alleges that this is causing it irreparable harm, a necessary showing for a preliminary injunction. In support of this claim, CAA notes that UTA, one of its leading competitors, has already settled with the WGA. It alleges that UTA has been using CAA’s uncertain status to poach its writer clients aggressively, saying that the WGA will “never” agree to franchise CAA. As a result, 18 of CAA’s former writer clients have jumped ship to UTA and 16 have gone to other agencies.

WME’s motion followed a similar script. The agency said that it had agreed to reduce its ownership in Endeavor Content to 20% only to be faced with an unreasonable set of new demands. As a result of its continued inability to represent writers, it claimed to have lost its relationships with “thousands of writers and hundreds of showrunners who may never return.” The continued boycott stymies its ability to sign new literary clients. It is also losing agents, including former partners. To top it off, WME accused the WGA of playing a role in the postponement of its parent company Endeavor’s planned IPO by smearing it publicly as a “risky investment.”

WME also alleged that the bare knuckles tactics of David Young crossed the line into personal animosity. It submitted a declaration from Rick Rosen, a WME partner, stating that Young threatened repeatedly to “kill” Rosen during an August phone call. Rosen goes on to say that when he reported this call to WGA President David Goodman, he inferred from Goodman’s response that such behavior “is both expected and condoned.” Young and Goodman have denied these claims.

Both CAA and WME argue that the WGA’s tactics bring it outside the exemption from antitrust law that applies to collective actions of unions. Both agencies argue that the Guild is pursuing illegitimate goals of “conquest” that go beyond protecting its members from conflicts of interest. The union boycott is also illegal because it involves nonmembers such as talent managers and writers who are also producers.

The WGA has not yet filed a response to these motions. In its public statements, it accused the agencies of walking away from the negotiating table and heading back to court as a bullying tactic. Its legitimate goal is to get to the bottom of the tangled ownership structures of the two agencies to be clear that any deal it makes truly resolves their conflicts of interest.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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