In Hollywood, a significant – but often blurry – line separates agents from managers. A recent lawsuit filed by Creative Artists Agency (“CAA”) against Range, a management company founded by former CAA partners, has thrust the thorny issue back into the spotlight. Under California’s Talent Agencies Act (“TAA”), only agents can “procure” work for clients. CAA alleges that Range is, in fact, a talent agency masquerading as a management firm – enabling it to procure work while avoiding the costly licensing and guild restrictions otherwise applicable to talent agencies. While still early, this case may provide some much-needed judicial guidance and help sharpen the agent-manager distinction.
Talent agencies are regulated by the State. Originally enacted to protect actors from unscrupulous (and double-dealing) agents, the TAA[1] is a licensing scheme that prohibits any unlicensed person from “procuring” work for an artist. Notably, the TAA and relevant case law interpret “procurement” broadly to include negotiating or discussing employment terms or “any active participation in a communication with a potential purchaser of the artist’s services aimed at obtaining employment for the artist, regardless of who initiated the communication or who finalized the deal.” Podwall v. Robinson, Case No. TAC-45605, Determination of Controversy, at p.10 (Labor Commissioner, June 22, 2018) (citing Hall v. X Mgmt., TAC 9-90)).
Agencies are also regulated by their collectively bargained agreements with a patchwork of talent guilds, including the Writers Guild of America (“WGA”) and Directors Guild of America (“DGA”). Under these agreements, agencies are limited in how they can be compensated; for example, talent agencies cannot possess an ownership stake in any production company engaging in production with their clients.
Managers, on the other hand, remain largely unregulated. While only agents can legally procure work, managers “coordinate everything else; they counsel and advise, take care of business arrangements, and chart the course of an artist’s career.” Blanks v. Seyfarth Shaw, 171 Cal.App.4th 336, 358 (2009).
But when does a manager’s day-to-day work for his clients become “procurement”? Case law is relatively limited but has established that certain work – such as explicitly negotiating the terms of a deal or soliciting employment – can only be performed by licensed agents. But with the precise contours of “procurement” still somewhat fuzzy, a manager often finds himself operating in a nebulous “gray area” that creates uncertainty (and risk) with potentially disastrous consequences. A manager who violates the TAA must disgorge all commissions stemming from illegally procured work.
In its lawsuit, CAA contends that certain CAA partners left to open a new management firm that intentionally operated in that “gray area” – allowing it to essentially provide agency services for its clients without being bound by either the TAA or relevant talent guild agreements. In addition to Range’s alleged theft of trade secrets and proprietary information, CAA contends that Range’s business model itself – to “falsely pos[e] as a management company” – provides it an “unfair advantage to others in the market” by allowing it to “offer high-profile clients the ability to avoid paying Range a commission by instead permitting Range to take a producer fee or credit on a client’s project” while “no law-abiding talent agency” can offer the same.
We’ll continue to monitor this case, keeping a close eye on developments that may alter this fundamental dynamic of the entertainment industry.
[1] Cal. Lab. Code § 1700.4, et seq.
For more information on entertainment law, please contact Benjamin Kussman, Esq. at [email protected].
