Never one to shy away from poking the unions, especially when it comes to Hollywood, President Trump has ordered the DOJ (Department of Justice), specifically the Antitrust Division, into the ongoing legal conflict between the WGA – Writers Guild West and Writers Guild East – and mega agencies CAA, UTA, ICM and WME.
Currently, the two sides (of three letters) are at an impasse over demands by writers that agents no longer collect packaging fees or be co-owners of content through affiliates. It basically amounts to writers not wanting agencies taking kickbacks.
Back in April, most members of the guild fired their agents, members of the Association of Talent Agents, after not being able to reach an amicable accord over the fees.
The guild asked its members to not associate themselves with agents not agreeing to its conflict of interest prohibitions as “quintessential labor union activity that falls squarely within the statutory labor exemption.”
The action eventually led to a bitter election battle, mostly in the WGA West, between current WGA West president David A. Goodman and challenger Phyllis Nagy.
Now, the agents are suing the WGA, in federal court, for allegedly violating antitrust law.
In response, the Guild filed their own federal lawsuit against the agencies, arguing that packaging fees — payments from a studio to an agent in exchange for packaging talent on a project — are a conflict of interest that has held back writer pay for decades.
According to The Hollywood Reporter, TheWrap and other outlets, the U.S. government filed a statement of interest on Tuesday. The filing comes 10 days before Judge Andre Birotte is set to hear the WGA’s motion to dismiss the agent’s lawsuit
And they didn’t bring any sweet potato pie.
While cautioning that it is not taking a position on the merits of the case (uh huh) the Justice Department nevertheless wants the judge to be skeptical of the writers’ motion to dismiss.
The statement includes an admonishment from the Supreme Court: “Labor unions are lawful combinations that serve the collective interests of workers, but they also possess the power to control the character of competition in an industry.”
No, they’re not taking sides.
The brief adds, “While any construction of the labor exemptions must allow unions to restrict competition in labor markets in pursuit of legitimate labor law goals, courts must also be careful to circumscribe the application of these exemptions lest unions be ‘giv[en] free rein to extend their substantial economic power into markets for goods and services other than labor.’”
The Justice Department lawyers also take the position that labor exemptions to antitrust laws should be “narrowly construed.”
“The Writers Guild’s motion to dismiss is premised on the notion that as a legitimate union its judgment about what is best for its members cannot be ‘second-guess[ed]’ by this Court,” states the brief. “Application of the labor exemptions here, however, is not so facile. The pleadings in this case raise several factual disputes that this Court must resolve before holding either the statutory or nonstatutory labor exemption applicable here to ensure that federal antitrust law is not discarded inappropriately. Otherwise, the Court may disrupt the proper balance between federal labor law and federal antitrust law and undermine the fundamental protections for competition and consumers embodied in the federal antitrust laws.”
The WGA asserts that restraints on agents serve the objective of preventing financial conflicts while the agents take the view that the writers’ boycott oversteps such objective.
Again, the government appears to side with the agents.
The brief says, “While unions can restrict agent compensation when pursuing a legitimate union goal such as avoiding conflicts of interest, it is not a legitimate goal for a union to exert monopsony power over agents simply to extract additional rents.”
Ultimately, the brief promotes more fact-finding and wants that the court must examine whether the writers might have pursued less restrictive alternatives to a group boycott.
Goodman responded in a statement, “It’s not surprising that Trump’s Justice Department has filed a brief designed to weaken a labor union’s effort to protect its members and eliminate conflicts of interest by talent agencies. The agencies’ antitrust claims are contrary to Supreme Court precedent, and we remain confident that the court will dismiss them.”
Read the full DOJ statement here.