Follows failure to agree on new contract

The Writers Guild of America has filed suit in a Los Angeles Superior Court against talent agency packaging fees, saying they are illegal. That is when a studio, rather than a client, pays an agent a fee for bringing it a "package" of talent" under their representation.

The writers want the court to declare the fees unlawful and enjoin the agencies from future deals. They also want damages and disgorgement of "illegal profits."

Filing suit were the Writers Guild of America East and West and various individual writers. The defendants are the Big Four talent agencies William Morris Endeavor (WME), Creative Artists Agency (CAA), United Talent Agency (UTA), and ICM Partners (ICM).

Related: WGA Tells Members to Can Their Agents, For Now

WGA describes TV packaging fees as "when an agency demands to be paid directly by the studio rather than commissioning talent at 10%." In that case, it says, "the agency has no financial incentive to get TV writers more money."

The Association of Talent Agents (ATA) counters "Packaging, by definition, keeps more money in writers’ pockets. Clients come to agencies to get their projects made and to keep them on the air. A failed show makes no money for the agency –it’s a loss. Agencies’ interests are aligned with their clients when they package, just like they are aligned when they commission clients."

Writers said the fees violate the law in two ways. First, they claim that agents, as fiduciaries under state law, are required to provide their individual clients with undivided loyalty, while the fees are a conflict of interest that pits the financial interest of the agency against their own client. Second, the fees violate California's Unfair Competition Law because they violate the "anti-kickback" provisions in federal law that prevents "'any representative' of an employee from receiving any 'money or other things of value' from the employee’s employer."

The suit comes after the guild failed to strike a new Artists’ Manager Basic Agreement (AMBA) with the ATA, in part because the guilds are not happy that their agents also get to be their programming producers, saying that is a conflict of interest given that makes them both the writers employers and employees.

It also comes after the guild told its members to essentially fire their agents unless and until they agreed not to have an ownership interest in the production and distribution of content.