A California federal court recently dismissed the majority of the counterclaims asserted by the Writers Guild of America (the Guild) against William Morris Endeavor Entertainment, Creative Artists Agency, and United Talent Agency (the Agencies) in a highly publicized suit over the Agencies’ right to receive “packaging” fees.
The case arose from the Guild’s decision last year to prohibit talent agents from earning packaging fees on film and television projects. For decades, it was common practice for studios to pay talent agents “packaging” fees for acquiring and pooling talent (e.g., assembling writers, actors, and directors, as talent agencies have a substantial roster of such talent) for a given project. These fees frequently consist of a combination of license fees paid by studios for a project and a percentage of the project’s gross receipts. The Guild banned this practice last year, claiming that packaging fees create conflicts of interest between talent agents and the writers they represent. In the Guild’s view, enabling talent agents to participate in the profits of a film or television project through packaging (1) lowers production budgets (thereby reducing writer compensation) and (2) lowers the agents’ incentive to increase their writer-clients’ compensation. The Guild favors a commission-based system, where a talent agent takes a percentage of their clients’ earnings, which it believes better incentivizes talent agents to maximize their writer-clients’ compensation. Following the Guild’s ban, the Agencies filed suit, alleging the packaging prohibition amounts to an illegal group boycott in violation of the Sherman Act.
Continue Reading Counterclaims on the Cutting-Room Floor: How a Central District Court Cut Down the Writers Guild’s Countersuit Against Hollywood’s Talent Agencies