The Writers Guild of America and several writers have filed a lawsuit against Hollywood’s biggest talent agencies over packaging fees.
“The Wire” creator David Simon, seven other writers, and the Writers Guild of America (WGA) have filed a lawsuit against the four major Hollywood talent agencies, trying to establish that talent agency “packaging fees,” in which an agent is paid directly by the writer’s employer instead of getting paid a ten percent commission fee from the writer, are illegal under both California and federal law. Packaging fees have been the standard form of compensation for the four largest talent agencies – William Morris Endeavor, Creative Artists Agency, United Talent Agency, and ICM Partners, the four of which receive over 80 percent of the packaging fees paid by Hollywood studios and networks.
“We are here today to announce the filing of a lawsuit to establish that packaging fees are illegal under the law of California,” WGA general counsel Tony Segall announced.
The lawsuit, filed in Los Angeles Superior Court, alleges that “because packaging fees are generally tied to a show’s revenue and profits, the agencies are incentivized to reduce the amount production companies pay writers and other talent on a show.” Thus, these fees violate California fiduciary law by pitting “the interests of the agency against those of its writer client.” The fees also violate the state’s Unfair Competition Law as an illegal “kickback” from production companies to agencies, according to the plaintiffs.
The Association of Talent Agencies (ATA), whose members include the four defendants, said the filing was a sign that the WGA “is on a predetermined path to chaos that never included any intention to negotiate.”
“Knowing that it could take months or even years for this litigation to be resolved, WGA leaders are unnecessarily forcing their members and our industry into long-term uncertainty,” ATA executive director Karen Stuart said.
The relationship between the WGA and ATA has been regulated by an agreement that is over forty years old. After negotiations over an updated arrangement didn’t pan out, the WGA asked agents to sign a new code of contact that would eliminate packaging fees. Most refused, so the WGA told its members to terminate relationships with agents that had not signed the new code.
“This development is ironic given that the Guild itself has agreed to the legitimacy of packaging for more than 43 years,” the ATA’s statement reads. “Even more ironic is the fact that the statute the WGA is suing under prevents abuses of power and authority by labor union leaders, even as the Guild has intimidated its own members and repeatedly misled them about their lack of good faith in the negotiating room.”
It continues, “While the legal process runs its course, we strongly believe that in the interim it remains in the best interests of writers to be represented by licensed talent agencies. We empathize with our writer clients and the untenable position they have been put in by WGA leadership. We stand ready and willing to represent writers with the added protections outlined in the Agency Standards for Client Representation that further ensures choice and greater transparency for writers.”