WME sues Writers Guild of America as agency dispute gets uglier

The dispute between Hollywood writers and their agents has gotten uglier with WME filing a lawsuit against the Writers Guild of America, alleging that the guild has committed antitrust violations and is abusing its power as a union.

William Morris Endeavor, widely regarded as the largest talent agency in Hollywood, said in its suit filed Monday in federal court that it was seeking a legal remedy for the ongoing dispute that ignited in April. The guild told its thousands of members to fire their agents after the two sides failed to reach a negotiated settlement on a range of agency practices, including packaging fees.

The lawsuit accuses the guild of organizing an illegal group boycott designed to prevent WME from representing the WGA’s members. The agency is also accusing the guild of violating the Sherman Antitrust Act by forcing a code of conduct on talent agencies that would limit their business practices.

“We took today’s step with careful consideration,” WME said in a statement on Monday.

“While we wish we were not in this position, we will not capitulate to a leadership group that limits the choices and opportunities available to our clients, and has made repeated attempts to undermine our business.”

WME noted in its complaint that the guild “had expressly permitted packaging for more than forty years.” It also accused the guild of being power-hungry and overly aggressive in the way it deals with agencies.

“That is not a legitimate union interest,” the agency argued in the complaint.

The WGA downplayed the suit in its own statement on Monday.

“There is no merit to WME’s lawsuit, and the guild will not be bullied into a bad deal,” the guild said.

The guild noted that it had objected to packaging fees in the past, pointing out that the William Morris Agency actually sued the guild in 1975 for antitrust violations in response to a WGA campaign to prohibit packaging fees.

The William Morris Agency merged with Endeavor Talent Agency in 2009 to form WME.

WME is the only plaintiff in the lawsuit, but writers are also waging war on other agencies, including such industry behemoths as CAA, UTA and ICM Partners.

The ongoing dispute involves a separate lawsuit filed by the guild against the top agencies over packaging fees — a lucrative and longstanding practice in which an agency receives fees over the course of a TV project for putting together talent.

WME’s lawsuit on Monday isn’t a response to the guild’s suit, which was filed in Los Angeles Superior Court.

Negotiations between the two sides broke down for a second time on Thursday when the WGA rejected the latest offer from the agencies to increase profit-sharing for junior TV writers. Talks first collapsed in April, leading guild members to fire their agents.

The two sides are also fighting over so-called affiliate production — a newer practice that has seen agencies becoming their own studios by entering the TV and movie production business.

The WGA is arguing that agencies face a conflict of interest if they both represent and employ a writer on a show or movie.

WME is seeking an injunction against the guild as well as unspecified damages. The agency’s lawsuit comes as its parent company, Endeavor, is preparing for an initial public offering.

Endeavor filed for its IPO in May and is expected to go public later this year.

The guild took aim at Endeavor’s planned IPO on Monday, claiming that the agency has misrepresented the number of clients it has in its filing with the Securities and Exchange Commission.

In a letter sent to the SEC, the guild said that WME’s claim of representing more than 6,000 clients doesn’t reflect the approximately 1,400 writers who have dropped their agents following the breakdown of negotiations.

“Endeavor has not adequately disclosed this significant reduction of its client base,” wrote Anthony Segall, an attorney representing the guild, in the letter.

He said that WME’s decision not to disclose client reduction in its filing constitutes “a serious misrepresentation.”

Endeavor disputed the guild’s assertion that it has misrepresented the size of its client base.

“Once again, in an attempt to disrupt our business, WGA leadership is misrepresenting the facts,” Endeavor said in a statement late Monday.

“Endeavor has clearly stated that it has ‘more than 6,000 clients’. This is not a static number given the fluidity of the client business, and is still accurate today even after the departure of our former writer clients.”

Hollywood agencies often represent writers in other professional areas, including directing and producing.

The guild has stated that more than 7,000 writers have sent termination notices to their agents across the industry since April.

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