William Morris Endeavor Entm't, LLC v. Writers Guild of Am.

• Citation: 478 F.Supp.3d 932
• Decision Date: 12 August 2020
• Docket Number: Case No. 2:19-cv-05465-AB-AFM
• Court: U.S. District Court — Central District of California
• Parties: WILLIAM MORRIS ENDEAVOR ENTERTAINMENT, LLC, et al., Plaintiffs and Counterclaim Defendants, v. WRITERS GUILD OF AMERICA, West, Inc., et al., Defendants and Counterclaimants.

478 F.Supp.3d 932

WILLIAM MORRIS ENDEAVOR ENTERTAINMENT, LLC, et al., Plaintiffs and Counterclaim Defendants,

v.WRITERS GUILD OF AMERICA, West, Inc., et al., Defendants and Counterclaimants.

Case No. 2:19-cv-05465-AB-AFM

United States District Court, C.D. California.

Signed August 12, 2020

Shawn R. Obi, Diana Hughes Leiden, Winston and Strawn LLP, Los Angeles, CA, David L. Greenspan, Pro Hac Vice, Isabelle Mercier-Dalphond, Jeffrey L. Kessler, Pro Hac Vice, Winston and Strawn LLP, New York, NY, for Plaintiff and Counterclaim Defendants William Morris Endeavor Entertainment, LLC.

Nicholas Frederic Daum, Patrick J. Somers, Richard B. Kendall, Kendall Brill and Kelly LLP, Los Angeles, CA, for Plaintiff and Counterclaim Defendant Creative Artists Agency LLC.

Anthony R. Segall, Juhyung Harold Lee, Rothner Segall and Greenstone, Pasadena, CA, Andrew Edward Kushner, P. Casey Pitts, Rebecca C. Lee, Stacey M. Leyton, Stephen P. Berzon, Altshuler Berzon LLP, San Francisco, CA, Ethan E. Litwin, Pro Hac Vice, Constantine Cannon LLP, New York, NY, W. Stephen Cannon, Pro Hac Vice, Constantine Cannon LLP, Washington, DC, for Defendant and Counterclaimant Writers Guild of America, West, Inc.

Anthony R. Segall, Juhyung Harold Lee, Rothner Segall and Greenstone, Pasadena, CA, Andrew Edward Kushner, P. Casey Pitts, Rebecca C. Lee, Stacey M. Leyton, Stephen P. Berzon, Altshuler Berzon LLP, San Francisco, CA, Ann M. Burdick, Pro Hac Vice, Writers Guild of America - East Inc., Ethan E. Litwin, Pro Hac Vice, Constantine Cannon LLP, New York, NY, W. Stephen Cannon, Pro Hac Vice, Constantine Cannon LLP, Washington, DC, for Defendant and Counterclaimant Writers Guild of America, East, Inc.

ORDER DENYING PLAINTIFFS AND COUNTERCLAIM DEFENDANTS' PARTIAL MOTION TO DISMISS FIRST AMENDED CONSOLIDATED COUNTERCLAIMS [Dkt. No. 117]

ANDRÉ BIROTTE JR., UNITED STATES DISTRICT COURT JUDGE

I. INTRODUCTION

Before the Court is Plaintiffs and Counterclaim Defendants William Morris Endeavor Entertainment, LLC's ("WME"), Creative Artists Agency, LLC's ("CAA"), and United Talent Agency, LLC's ("UTA") (collectively "the Agencies") partial motion to dismiss Counterclaimants Writers Guild of America, West, Inc.'s, Writers Guild of America, East, Inc.'s ("the Guilds"), Patricia Carr's, Ashley Gable's, Barbara Hall's, Deric A. Hughes's, Deirdre Mangan's, David Simon's, and Meredith Stiehm's (collectively "Counterclaimants") first amended consolidated counterclaims.¹ (Dkt. No. 117.) Counterclaimants oppose the Agencies' motion. (Dkt. No. 122). The Court heard oral argument regarding the Agencies' motion on July 10, 2020. For the reasons stated below, the Court DENIES the Agencies' partial motion to dismiss.

II. BACKGROUND

This case arises from a dispute between three of the largest talent agencies in Hollywood and two labor unions that represent writers in the entertainment industry. As the parties are familiar with the factual allegations at issue, the Court includes only a brief summary here. (See Dkt. No. 104 at 2–6) (setting out factual background in greater detail).

A. Factual background

The Guilds serve as the exclusive collective bargaining representative for their writer-members in negotiations with film and television producers. (Dkt. No. 112 "FACC" ¶ 46.) Historically, the Guilds delegated their authority to represent writers in negotiations through franchise agreements with talent agents. (Id. ¶ 16.) As a condition of being franchised, agents are subject to regulations promulgated by the Guilds. (Id. )

Prior to this dispute, from 1976 to April 2019, the Guilds were parties to the Artists' Manager Basic Agreement ("AMBA"). (Id. ¶¶ 160–61, 173.) The AMBA permitted talent agencies to package talent in exchange for packaging fees, albeit while reserving the Guilds' objections to agencies accepting packaging fees. (Id. ¶¶ 160–61, 166.) On April 6, 2018, the Guilds provided notice to the Association of Talent Agents ("ATA"), a trade association comprised of approximately 120 talent agencies, of the Guilds' intent to terminate the AMBA. (Id. ¶¶ 138, 166.) Between April 2018 and April 2019, the Guilds and the ATA unsuccessfully attempted to negotiate a new agreement to replace the AMBA. (Id. ¶¶ 166–70.)

On April 13, 2019, seven days after the AMBA expired, the Guilds formally implemented a new Code of Conduct. (Id. ¶¶ 173–74.) The Code of Conduct prohibits talent agencies from collecting packaging fees on any project on which their writer-client works. (Id. ¶ 171.) In implementing the Code of Conduct, the Guilds instructed their members to terminate any agent that had not agreed to its terms. (Id. ¶ 174.) Subsequently, the vast majority of the Guilds' members terminated their relationships with their agents. (Id. )

B. Procedural background

On June 24, 2019, WME filed a complaint against the Guilds alleging violation of Section 1 of the Sherman Act. (Dkt. No. 1.) On September 12, 2019, the Court ordered that three cases filed by WME, CAA, and UTA be consolidated for all purposes including trial. (Dkt. No. 40.) Pursuant to this Court's September 12, 2019 order, the Agencies filed their consolidated complaint on September 27, 2019.² (Dkt. No. 42.)

On October 18, 2019, Counterclaimants filed their answer to the Agencies consolidated complaint and their consolidated counterclaims. (Dkt. No. 44.) The Agencies moved to dismiss these consolidated counterclaims, and on April 27, 2020, the Court granted in part and denied in part the Agencies' motion to dismiss. (Dkt. Nos. 54, 104.) In particular, the Court (1) dismissed without leave to amend Counterclaimants' federal price-fixing claim for lack of antitrust standing, (2) dismissed without leave to amend Counterclaimants' claims under the Racketeer Influenced and Corrupt Organization Act ("RICO"), (3) concluded that Counterclaimants had demonstrated standing under California's Cartwright Act, and that they had stated price-fixing claim under the Cartwright Act, (4) dismissed Counterclaimants' federal and state group boycott claims, (5) dismissed the Guilds' representative claims for breach of fiduciary duty and constructive fraud for lack of associational standing, (6) concluded that Individual Counterclaimants³ had stated a claim for breach of fiduciary duty, (7) dismissed Individual Counterclaimants' constructive fraud claim, (8) dismissed the Guilds' UCL claim brought on their own behalf, (9) concluded that Individual Counterclaimants had stated a claim under California's Unfair Competition Law ("UCL"), (10) concluded that Counterclaimants had stated a claim for declaratory relief, and (11) concluded that Counterclaimant Barbara Hall had stated claims for breach of contract and promissory estoppel. (Dkt. No. 104.)

On May 11, 2020, Counterclaimants filed their First Amended Consolidated Counterclaims. (Dkt. No. 112 "FACC".) In their FACC, Counterclaimants realleged the following causes of action: (1) per-se price fixing in violation of the Cartwright Act, (2) breach of fiduciary duty (brought by Individual Counterclaimants on their own behalf), (3) constructive fraud (brought by Individual Counterclaimants on their own behalf), (4) violation of the UCL (brought by Individual Counterclaimants and the Guilds on their own behalf), (5) declaratory relief, (6) breach of contract (brought by Counterclaimant Barbara Hall on her own behalf), (7) promissory estoppel (brought by Counterclaimant Barbara Hall on her own behalf), (8) an equitable claim for breach of fiduciary duty (brought by the Guilds on behalf of their members), and (9) constructive fraud (brought by the Guilds on behalf of their members). (Id. ¶¶ 190–273.) Counterclaimants did not reallege their federal price-fixing claim, federal RICO claims, or federal and state group boycott claims. (Id. ) The Agencies now move to dismiss Counterclaimants' FACC in part.

III. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss a pleading for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6).

To defeat a Rule 12(b)(6) motion to dismiss, a pleading must provide enough factual detail to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The pleading must also be "plausible on its face," that is, it "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). A plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Labels, conclusions, and "a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955.

A pleading may be dismissed under Rule 12(b)(6) for the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988). When ruling on a Rule 12(b)(6) motion, "a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus , 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). But a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (2009) (internal quotation marks omitted).

A court generally may not consider materials other than facts alleged in the pleading and documents that are made a part of the pleading. Anderson v. Angelone , 86 F.3d 932, 934 (9th Cir. 1996). However, a court may consider materials if (1) the authenticity of the materials is not...