CAA, WME and the WGA East and West have recently filed a flurry of motions in advance of next Friday’s hearing on the agencies’ request for a preliminary injunction that would end the guild’s boycott against them. In its latest filing, CAA says that the ongoing dispute is no longer about reaching a deal but has morphed into an “animus-driven revenge campaign” that seeks to put them out of business.
In a reply in support of the preliminary injunction, CAA told a federal judge today that it seeks the injunction because “in the last month, the Guilds’ unlawful boycott of CAA has transformed into an animus-driven revenge campaign that is devoid of any legitimate labor-relations purpose and threatens permanent and irreversible damage to CAA’s business. In November 2020, CAA agreed to the same ‘Franchise Agreement’ that the Guilds signed with other talent agencies. Yet the Guilds still boycott CAA, while franchising CAA’s direct competitors (UTA and ICM) on the same terms being denied to CAA. The Guilds encourage writers to sign up with conflicted, unlicensed managers, because, as the Guilds admit, they ‘need to use managers as leverage against CAA.’ The Guilds have decided, out of personal animus admitted by the Guilds’ chief negotiator, to boycott CAA, regardless of CAA’s agreement to the Guilds’ terms, in an effort to destroy CAA’s business.
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“Maintaining a group boycott in these circumstances is not a legitimate labor purpose,” CAA added. “The Guilds do not benefit from any ‘labor exemption’ to the antitrust laws. Nor may the Guilds take advantage of the anti-injunction provisions of the Norris LaGuardia Act (NLGA), particularly since they previously admitted that this is not a NLGA case. And even if the NLGA did apply, CAA easily qualifies for a NLGA injunction.
“CAA’s consent to the Franchise Agreement is the core issue before the Court. But the Guilds barely address it. Instead, the Guilds amalgamate CAA with WME (which has distinct issues). The Court should not be distracted. CAA seeks a narrow preliminary injunction, enjoining the Guilds from continuing the boycott given CAA’s agreement to the Guilds’ own terms. The Court should grant the injunction.”
The dispute arose in April, when the WGA ordered its members to fire their agents who refused to sign the guild’s Code of Conduct, which banned packaging fees and agency affiliations with related production companies. Since then, every major agency except CAA and WME have signed a modified code that phases out packaging fees and reduces ownership interests of production companies to just 20%.
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The WGA has argued in court filings that CAA and WME are more conflicted than the other agencies that have signed its franchise agreement because they have more entangled relationships with corporately affiliated production entities: CAA with wiip and WME with Endeavor Content.
CAA, however, told U.S. District Court Judge André Birotte Jr. today: “The core fact before the Court is this: CAA has agreed to terms that in all material respects conform to the Guilds’ Franchise Agreement. CAA has expressly agreed to sign an unmodified version of the Franchise Agreement. The only difference between CAA and other agencies the Guilds have franchised is that CAA has taken steps that are far more protective of conflict-of-interest concerns than other Guild-franchised agencies: in addition to irrevocably committing to selling its interest in its ‘affiliated’ production company (wiip) to the level required by the Guilds, CAA has also taken steps, until that sale is complete, to put its entire interest in wiip into a blind trust that CAA does not control.”
The WGA has argued that “the trust is not actually blind; there is no time limit on the trustee’s disposition of the trust asset; there is no limitation on who may purchase the asset; and the Guilds were not consulted on the trustee’s selection.”
The WGA also has issues with TPG VI, the giant equity firm that has a majority shareholder stake in CAA, saying that the agency’s “insistence that the 20% provision apply only to a single, specific TPG fund, especially because nothing would prevent TPG from merely transferring its ownership interest in wiip from the specified TPG fund to a different fund.
“These are the only reasons the Guilds offer as to why they have not accepted CAA’s agreement to their own terms,” CAA told the judge today. “But these are not legitimate objections. The whole point of the blind trust is that it gives CAA no control over, involvement with, or information concerning wiip until its interest is sold to meet the Guilds’ ownership-cap requirements.
“CAA has less involvement with an affiliated production company, during that sell-down period, than agencies like UTA which the Guilds have franchised. Agencies like UTA may, right now, continue to actively manage an up-to-20% interest in production companies, and the Guilds accept this. Until its sale is completed, CAA does not even have visibility into – much less control over – wiip’s operations. Thus, the trust is truly ‘blind,’ and the timing issue is a non-issue.
“Beyond that, the commitment to a sale is irrevocable and fully delegated to a trustee entirely outside of CAA’s control. The trustee is an unimpeachably respected attorney who primarily represents writers and in no sense represents or works for CAA. The Guilds do not suggest otherwise.”
“Nor does anything about TPG VI, CAA’s ultimate majority investor, change the picture,” CAA argued. “The Guilds’ stated concern about ‘transferring’ wiip’s ownership to another TPG fund is frivolous. CAA has specifically told the Guilds that CAA’s and any TPG-related entity’s holdings will not exceed 20% in the aggregate.
“The Guilds do not even address CAA’s evidence that (a) the only fund invested in CAA, TPG VI, has already agreed to cap its holding of any affiliate production company (when combined with CAA or any CAA affiliate) at 20%; and (b) that as a matter of law, fiduciary duties preclude TPG VI’s investment in CAA from being managed for the benefit of other TPG funds that might (hypothetically) invest in a film production company. The Guilds have no legitimate objection concerning TPG, and barely argue otherwise. Instead, the facts show that the Guilds’ real reasons for continuing the boycott are far from high-minded, namely a ‘power’ grab and the intense personal animus towards CAA executives that the Guild’s negotiator confessed to Ronald L. Olson.” Olson is CAA’s negotiator in the talks that have, to date, failed to produce an agreement on a deal that would allow CAA’s writer-clients to return to the agency.
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