Volume 34 Issue 2 Winter 2018 IN THIS ISSUE Letter From The Editor 3 The Music Publishers’ Legal “The Future is unwritten.”—Joe Strummer Battle With Spotify Takes A Decisive Turn by Robert C. Welsh Dear Forum Members, 8 Finding The Needle In The Welcome to Issue 34:2 of the Entertainment and Sports Lawyer! Haystack: Drafting Enforcable This is the first issue for 2018, and in case anyone has not noticed… Arbitration Clauses In Online it’s cold! Florida has snow! The East Coast has been buried in sub- Entertainment Contracts zero temperatures and feet of snow! Of course…here in Chicago, we by Jeremy M. Evans, LL.M merely call that “Thursday.” 20 The Best Offense is a Good Defense - A Primer on Asset Protection Planning for It is with a heavy heart that this column is written. The entertainment Professional Athletes industry recently lost a dear friend. Our long-time colleague and by K. Eli Akhavan, Esq. cherished member of the Forum’s Governing Committee, Richard Rappaport, passed away in Miami on December 16, 2017 after a brief 27 Lawyers, Agents, and the Blurred Lines Regulating Talent illness. Richard, one of the founders and driving forces behind our Representation annual Entertainment and Sports Law Symposium in Miami, was truly by Jeremy M. Evans, LL.M a distinguished gentleman and a credit to our profession. Not merely an outstanding attorney beloved by his clients, he was respected by 42 Litigation Update his colleagues. Richard’s kindness, grace, and warmth will be sorely by Michelle M. Wahl missed by all who had the pleasure of knowing him. We invite you to 60 A Young Lawyer’s Perspective join us and members of Richard’s family at the annual conference in by Amanda Alasauskas Miami where the initial Richard Warren Rappaport Memorial Lecture will be given by John Capouya, Associate Professor of Journalism at 64 A Young Lawyer’s Perspective The University of Tampa. by Amanda Alasauskas 69 A Law Student’s Perspective 2018 marks the 20th Anniversary of the Entertainment Law Initiative by Kate Drass and its national legal writing contest co-sponsored by the American Bar Association. The ELI invites law students to write a 3000 word 73 Ethics & The Addict by D’Bria Bradshaw essay about an issue the music industry currently faces. All essays must propose a solution. Winners of the competition have gone on to 78 ADR in Sports: It Fits like a successful careers in music, entertainment media, and beyond. Prizes [Baseball] Glove include tickets to the 60th Annual GRAMMY Awards Telecast and other by Amanda Alasauskas selected GRAMMY Week events, a ticket to the Annual MusiCares 86 Negotiating Contracts in the Person of the Year Tribute Gala, and more. For more information visit Entertainment & Sports www.entertainmentlawinitiative.com or email [email protected] . Industries Our next issue will feature the winning essay. by Brett Greenberg

In this issue, we feature Robert C. Walsh’s look at the music 88 A Law Student’s Perspective by D’Bria Bradshaw publisher’s legal battle with Spotify, Jeremy Evans guide to drafting enforceable arbitration clauses in online entertainment contracts, and 91 “Cold Callin” K. Eli Akhavan’s primer on asset protection for professional athletes. by Shelly Rosenfeld Jeremy Evans also takes another look at the blurred lines regulating 93 Letter from the Chair talent representation. Michelle Wahl and her team of Law Student by Len Glickman Authors and Young Lawyers provide us with yet another stellar Litigation Update which should be kept on every practitioner’s shelf.

We are proud to present poignant recaps of our Annual Meeting in our series: A Law Student’s Perspective. Newly admitted attorney, Amanda Alasauskas tackles both “How ‘Bigly’ is the Future of the Music Industry” and “Trademarks, Counterfeits, and Piracy! Oh My!” Kate Drass presents her take on the panel that addressed “Sports and Entertainment General Counsels” and “Hot Trademark and Advertising Issues in the Entertainment and Sports Industries.” D’Bria Bradshaw reports on “Ethics & The Addict: Legal Issues Related to the Attorney Practice of Law and to Representation of Celebrity Clients” and “ADR in Sports: It Fits Like A Glove.” First time law student authors Brett Greenberg and Andrew Winegar share their perspectives on “Negotiating Contracts in Entertainment and Sports” and Harry Reid’s Keynote Address, respectively.

And finally, we close with Shelly Rosenfeld’s parody of Tom Petty’s Free Fallin’—“Cold Callin”.

We are actively seeking articles from authors for the Journal. I encourage anyone interested to reach out to me and submit articles. We welcome submissions from any and all authors, and are always seeking amazing articles. The Author Guidelines can be found at: http://www.americanbar.org/content/dam/aba/ publications/entertainment_sports_lawyer/esl16authorguidelines.authcheckdam.pdf. The pending deadlines for article submissions are:

The pending deadlines for article submissions are: Spring 2018 (anticipated April Publishing) February 15, 2018 Summer 2018 (anticipated July Publishing) May 15, 2018 Fall 2017 (anticipated October Publishing) August 15, 2018 Winter 2018/2019 (anticipated January Publishing) November 15, 2018

Please, come speak with me at the Annual Meeting in Las Vegas, and share with me your ideas for the Journal. Best Wishes for a Happy, Health, and Successful New (ABA) Year! Brian A. Rosenblatt Bryce Downey & Lenkov LLC Editor-in-Chief, Entertainment and Sports Lawyer

Editorial Board Editor-in-Chief Litigation Update Editors Forum Manager Bernadette Steele Brian A. Rosenblatt Kenneth Freundlich Forum on the Entertainment and Bryce Downey & Lenkov, LLC Freundlich Law Sports Industries Chicago, IL Encino, CA American Bar Association

Michelle M. Wahl 321 N. Clark St. Swanson, Martin & Bell Robert G. Pimm Chicago, IL 60654 Chicago, IL Law Office of Robert G. Pimm Phone: 312-988-5658 Walnut Creek, CA Fax: 312-988-5677 Maidie E. Oliveau Law Student Assistant Editor Arent Fox LLP Kate Drass Los Angeles, CA IIT-Chicago Kent College of Law Richard J. Greenstone J.D. Candidate 2018 Richard J. Greenstone Attorneys Chicago, IL & Counselors at Law San Francisco, CA Young Lawyer Assistant Editor Stephen G. Weizenecker Amanda Alasauskas Barnes & Thornburg LLP Arnett Law Group, LLC Atlanta, GA Chicago, IL Vered Yakovee Miami Heat Miami, FL without even discussing it.” 536 F.3d. at 128 (emphasis in original). Finding The Whether the Second Circuit’s reading of MAI Systems is correct remains in doubt. Needle In The Recently, in Disney Enterprises, Inc. v. Haystack: Drafting VidAngel, Inc., 2017 WL 3623286 (9th Cir. August 24, 2017), the Ninth Circuit again Enforceable found infringing copying on the basis of its MAI Systems holding without any discussion Arbitration of the duration requirement, much less whether it was requiring that all infringing Clauses In Online copying involve the creation of “copies” that satisfy the duration requirement. Id. at *13 – Entertainment 14. Contracts 3 The quoted language is from the by Jeremy M. Evans, LL.M Magistrate Judge’s discovery report, whose recommendations were adopted in full by the I. INTRODUCTION1 district court. Id. at *1. One of the larger issues in contracts today is how they fit into an online world through accepting terms and conditions on websites. In this article, we will tackle the issue of drafting enforceable arbitration clauses in the terms and conditions of websites. Digging deeper, we will look at the entertainment industry and how entertainment- type businesses have utilized terms and conditions on their websites when streaming movies, television shows, and music. We will close by looking at the best practices of drafting online arbitration clauses in the terms and conditions as being recognizable by consumers, enforceable by law, and approved by courts of law.

II. WHAT IS AN ARBITRATION CLAUSE?

An arbitration clause prevents the publicity of disputes, decreases discovery, litigation costs, exposure to class actions, with the ability to obtain a business-friendly adjudicator. In a world of social media and video recording at nearly everyone’s fingertips, discretion is appreciation. In the entertainment industry, even more so today, arbitration clauses are utilized because the only thing gaining publicity and traction should be the marketing of the film, album, single, or television show, not personal and business disputes that become public. Increasingly with the ability to become instantly

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 8 infamous, arbitration clauses are very useful and or the breach thereof shall be settled by appreciated when dealing with legal disputes. arbitration administered by the American Arbitration Association under its applicable An arbitration provision is something you will Procedures for Large, Complex Commercial generally see as a clause inside a contract. Disputes, and judgment on the award Generally, it is placed towards the front of the rendered by the arbitrator(s) may be entered agreement to increase exposure of the clause. It in any court having jurisdiction thereof. The typically will include when arbitration is triggered arbitration shall take place before a panel (by some act or breach of the agreement), where of three arbitrators in ______, the matter will be heard, who will be the arbitrator ______.”4 or arbitration entity, and who will bear the costs of the arbitrator to start and at the end where a A sample Judicial Mediation and Arbitration decision is rendered. Services (“JAMS”)5 arbitration clause for a standard domestic contract would look like this: Practically, an arbitrator is a neutral party, sometimes a judge or someone with relative “Any dispute, claim or controversy arising out dispute-resolution experience that can render of or relating to this Agreement or the breach, a competent decision in a matter presented by termination, enforcement, interpretation or the disputing parties. Arbitration is private and validity thereof, including the determination of not public (unlike a court of law). Courts will he scope or applicability of this agreement to not overturn arbitration decisions unless due to arbitrate, shall be determined by arbitration fraud, corruption, or misconduct by the arbitrator in [insert the desired place of arbitration] unrelated to the facts and circumstances of the before [one/three] arbitrator(s). The arbitration underlying decision2 (Code Civ. Proc., § 1285 shall be administered by JAMS pursuant to its et seq.). Furthermore, the parties can sign a Comprehensive Arbitration Rules and non-disclosure and confidentiality agreement(s) Procedures [and in accordance with the to protect the filing, process, settlement, and/or Expedited Procedures in those Rules] [or award. pursuant to JAMS’ Streamlined Arbitration Rules and Procedures]. Judgment on the Per the Association of Corporate Counsel, a Award may be entered in any court having sample arbitration clause would look like this: jurisdiction. This clause shall not preclude parties from seeking provisional remedies in “Any controversy or claim arising out of or aid of arbitration from a court of appropriate the breach thereof, shall be settled by jurisdiction.”6 arbitration administered by the American Arbitration Association in accordance with A sample American Arbitration Association7 its Commercial Arbitration Rules [including the arbitration clause for a domestic contract would Optional Rules for Emergency Measures of look like this: Protection]. The arbitration hearing shall take place in ______, ______before “Any controversy or claim arising out of or a single arbitrator. Judgment on the award relating to this contract, or the breach thereof, rendered by the arbitrator may be entered in shall be settled by arbitration administered by any court having jurisdiction thereof.”3 the American Arbitration Association in accordance with its Commercial [or other] Per the Association of Corporate Counsel, a Arbitration Rules, and judgment on the award more complex arbitration provision would look rendered by the arbitrator(s) may be entered like this: in any court having jurisdiction thereof.”8

“Any controversy or claim arising from or relating to this contract or the breach,

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 9 Lastly, per California Lawyers for the Arts,9 a or found yourself subject to an arbitration clause sample clause calling for arbitration would look which you did not know that you agreed to in the like this: first place.13

“All disputes arising out of this agreement shall What’s more, since you did not review the terms be submitted to final and binding arbitration. and conditions, it is unlikely that you saw one The arbitrator shall be selected in accordance clause or provision in the terms and conditions of with the rules of Arts Arbitration and Mediation the online contract. The specific provision being Services, a program of California Lawyers a mandatory arbitration clause hauling you before for the Arts. If such services are not available, an arbitrator. This is important for consumers the dispute shall be submitted to arbitration because when agreeing to online contracts you in accordance with the laws of the State of are subjecting yourself to terms and conditions California. The arbitrator’s award shall be final, you might not be familiar. In this light, arbitration and judgment may be entered upon it by any clauses take away certain remedies available to court having jurisdiction thereof.”10 consumers, like injunctions or litigation before a civil court. Remedies that might be available to The Independent Film and Television Alliance consumers, but harmful to businesses. Where have similar sample arbitration provisions.11 Now remedies are taken away, the law and courts in that we have a flavor for what arbitration clauses California have attempted to protect consumers,14 look like, let us turn to how consumers generally but they have been restricted due to the view arbitration clauses to better understand how Federal Arbitration Act (“FAA”) and the United they might be drafted and interpreted by courts of States Supreme Court’s interpretation of FAA law. preemption.15/16

III. HOW DO CONSUMERS VIEW IV. WHAT MAKES AN ONLINE ARBITRATION ARBITRATION CLAUSES? CLAUSE ENFORCEABLE BY LAW?

Prior to becoming a lawyer, and specifically a Formation is the all-important term in drafting practitioner who uses arbitration in their practice enforcement written and online contracts. for their clients or as a retired judge or lawyer, Formation of a contract in the online setting understanding let alone knowing what an requires the “reasonably conspicuous notice arbitration clause is a difficult proposition. This of the existence of the contract terms” by the would be akin to asking this author how to solve a business and the “unambiguous manifestation quantum physics problem or for a non-mechanic of assent to those terms” by the consumer.17 to tune a 1956 Bel Air Chevrolet correctly. With (Specht v. Netscape Communications Corp., specific reference to mandatory arbitration 306 F.3 17 (2d Cir. 2002).) In the context of clauses found in many online contracts, arbitration provisions in online contracts, a arbitration is just not common enough to come business would have to noticeably post the terms across in everyday life, to understand it or to and conditions that included an arbitration clause recognize it.12 on their website and the consumer would have to agree to those terms and conditions prior to the Furthermore, in taking a self-experiment, think online purchase/registration. about the last time you actually read the terms and conditions when you made a purchase or In the online context, posting of terms and signed up for a social media account. How about conditions is commonly seen in two formats, the last time you made a purchase via Amazon. “Clickwrap/Clickthrough”18 and “Browsewrap”19 com Prime®. Did you purchase a new iPhone 8 type agreements. From attorneys Alison Brehm or X recently, did you actually read the terms and and Cathy Lee with Kelley Drye & Warren LLP20, conditions for the contract? You did not, unless, describing the differences of each: of course, you were an attorney litigating a case

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 10 “Clickwrap and browsewrap agreements manifestation to assent” to the “reasonably differ in presentation and functionality. conspicuous notice” of terms. Clickwrap agreements require a user to affirmatively click a box on the website Therefore, in online contracting, when acknowledging agreement to the terms of considering a consumer (non-business to service,21 which are often available in a business relationship), an arbitration clause scrolling text box, before the user is allowed is enforceable where there has been a to proceed.22 Browsewrap agreements have “reasonably conspicuous notice of the existence hyperlinked terms of use that are typically of the contract terms” by the business and the found on a separate webpage, which the user “unambiguous manifestation of assent to those does not have to visit to continue using the terms” by the consumer.28 website or its services23... V. APPLICATION AND ENFORCEMENT: Generally, courts have declined to enforce SELECT ONLINE ENTERTAINMENT browsewrap agreements because the INDUSTRY ARBITRATION CLAUSES fundamental element of assent is lacking.24 As an initial matter, because no affirmative action When considering online entertainment contracts, is required by the user to agree to the terms we are specifically referring to the terms and other than use of the website, the validity of a conditions (and arbitration clauses) contained browsewrap turns on whether a user has on an entertainment-type company’s website. actual or constructive knowledge of a site’s For example, a music streaming company like terms.”25 Pandora or a television, film, and original content streaming service like Netflix. Pandora’s online Restatement § 69 of Contracts (Acceptance By arbitration provision provides as follows: Silence Or Exercise Of Dominion) also provides that: “[25. Governing Law and Disputes.] (d) Arbitration Agreement. Any claims by Pandora, (1) Where an offeree fails to reply to an offer, or claims by you that are not resolved by the his silence and inaction operate as an Informal Resolution procedure described in acceptance in the following cases only: section 25(c) above, arising out of, relating (a) Where an offeree takes the benefit of to, or connected with this Agreement must offered services with reasonable opportunity to be asserted individually in binding arbitration reject them and reason to know that they were administered by the American Arbitration offered with the expectation of compensation.26 Association in accordance with its Commercial Arbitration Rules and Supplementary The seminal case using Restatement § 69 of Procedures for Consumer-Related Disputes Contracts is Register.com, Inc. v. Verio, Inc., (including utilizing desk, phone, or video 356 F.3d 393 (2d Cir. 2004). The court held conference proceedings where appropriate that because the consumer took the benefit and permitted to mitigate costs of travel). This of the offer (even without an “unambiguous Agreement and each of its parts evidence a manifestation of assent” through a “browsewrap” transaction involving interstate commerce, type agreement), the consumer (a business) and the Federal Arbitration Act (9 U.S.C. § 1 accepted the terms and conditions of the offer et seq.) will apply in all cases and govern the (and the arbitration clause) where there were interpretation and enforcement of the arbitration multiple transactions between the parties.27 The rules and arbitration proceedings. Judgment court reasoned that the familiarity, occurrence, on the award rendered by the arbitrator may be and knowledge of the consumer (a business- entered in any court of competent jurisdiction. to-business online contract) played a role in the In addition to and notwithstanding the terms court’s decision distinguishing Verio from the stated above, the following will apply to your Specht decision requiring the “unambiguous disputes: (1) the arbitrator, and not any federal,

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 11 state, or local court or agency, will have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement including any claim that all or any part of this Agreement is void or voidable; (2) the arbitrator will not have the power to conduct any form of class or collective arbitration, nor join or consolidate claims by or for individuals; and (3) you hereby irrevocably waive any right you may have to a court trial (other than small claims court as provided above) or to serve as Would Pandora’s arbitration clause be a representative, as a private attorney general, enforceable under Specht where there is or in any other representative capacity, or to no unambiguous manifestation of assent or participate as a member of a class of claimants, conspicuous notice? Possibly, if the transaction in any lawsuit, arbitration, or other proceeding was a business-to-business relationship with against us or related third parties arising out of, multiple transactions (like Verio), but not where relating to, or connected with this Agreement. Pandora has failed to have a check box or pop- up specific to the terms and conditions to a The arbitration proceeding and the results non-business entity consumer trying to listen to thereof will be kept confidential by each party streamed music. and not used for any purpose other than a party exercising its rights and fulfilling its obligations Netflix’s arbitration clause in the “Terms of with respect to the other party; provided, Use” link and provides as follows: however hat either party may disclose the existence and results of the proceeding: (1) as “[15.] Arbitration Agreement required by law, rule, or regulation; (2) to its accountants, attorneys, and other fiduciaries; If you are a Netflix member in the United and (3) to an arbitrator or third party who has States (including its possessions and exercised its rights under this section 25 for use territories), you and Netflix agree that any as persuasive authority in other proceedings dispute, claim or controversy arising out of or brought pursuant to this section 25. relating in any way to the Netflix service, these Terms of Use and this Arbitration (e) Limitation of Actions. Regardless of any Agreement, shall be determined by binding statute or law to the contrary, any claim or arbitration or in small claims court. Arbitration cause of action you may have arising out of, is more informal than a lawsuit in court. relating to, or connected with your use of the Arbitration uses a neutral arbitrator instead of Services, must be filed within twelve (12) judge or jury, allows for more limited discovery months of the date the facts giving rise to the than in court, and is subject to very limited suit were known by you, or forever be review by courts. Arbitrators can award the barred.”29 the same damages and relief that a court can award. You agree that, by agreeing to these Pandora’s “Terms” are a “browsewrap” Terms of Use, the U.S. Federal Arbitration Act agreement located on their homepage, as seen governs the interpretation and enforcement of below:30 this provision, and that you and Netflix are each waiving the right to a trial by jury or to participate in a class action. This arbitration provision shall survive termination of this Agreement and the termination of your Netflix

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 12 membership. agree that you may choose whether the arbitration will be conducted solely on If you elect to seek arbitration or file a small the basis of documents submitted to the claim court action, you must first send to arbitrator, through a telephonic hearing, Netflix, by certified mail, a written Notice of or by an in-person hearing as established your claim (“Notice”). The Notice to Netflix by the AAA Rules. If your claim exceeds must be addressed to: General Counsel, US$10,000, the right to a hearing will be Netflix, Inc., 100 Winchester Circle, Los determined by the AAA Rules. Regardless Gatos, CA 95032-1815 (“Notice Address”). of the manner in which the arbitration is If Netflix initiates arbitration, it will send a conducted, the arbitrator shall issue a written Notice to the email address used reasoned written decision explaining the for your membership account. A Notice, essential findings and conclusions on which whether sent by you or by Netflix, must (a) the award is based. If the arbitrator issues describe the nature and basis of the claim or you an award that is greater than the value dispute; and (b) set forth the specific relief of Netflix’s last written settlement offer made sought (“Demand”). If Netflix and you do not before an arbitrator was selected (or if Netflix reach an agreement to resolve the claim did not make a settlement offer before an within 30 days after the Notice is received, arbitrator was selected), then Netflix will pay you or Netflix may commence an arbitration you the amount of the award or US$5,000, proceeding or file a claim in small claims whichever is greater. Except as expressly court. set forth herein, the payment of all filing, administration and arbitrator fees will be You may download or copy a form Notice governed by the AAA Rules. and a form to initiate arbitration at www. adr.org. If you are required to pay a filing YOU AND NETFLIX AGREE THAT fee, after Netflix receives notice at the EACH MAY BRING CLAIMS AGAINST Notice Address that you have commenced THE OTHER ONLY IN YOUR OR ITS arbitration, Netflix will reimburse you for your INDIVIDUAL CAPACITY, AND NOT AS payment of the filing fee, unless your claim is A PLAINTIFF OR CLASS MEMBER for greater than US$10,000, in which event IN ANY PURPORTED CLASS OR you will be responsible for filing fees. REPRESENTATIVE PROCEEDING. Further, unless both you and Netflix agree otherwise, The arbitration will be governed by the the arbitrator may not consolidate more than Commercial Arbitration Rules (the “AAA one person’s claims with your claims, and Rules”) of the American Arbitration may not otherwise preside over any form Association (“AAA”), as modified by this of a representative or class proceeding. Agreement, and will be administered by If this specific provision is found to be the AAA. The AAA Rules and Forms are unenforceable, then the entirety of this available online at www.adr.org, by calling arbitration provision shall be null and void. the AAA at 1-800-778-7879, or by writing to The arbitrator may award declaratory or the Notice Address. The arbitrator is bound injunctive relief only in favor of the individual by the terms of this Agreement. All issues are party seeking relief and only to the extent for the arbitrator to decide, including issues necessary to provide relief warranted by that relating to the scope and enforceability of this party’s individual claim.”31 arbitration agreement. Unless Netflix and you agree otherwise, any arbitration hearings will Netflix, like Pandora, also has its “Terms of take place in the county (or parish) of your Use” as a “browsewrap” agreement located on residence. their “Sign up/Register page as seen below:32

If your claim is for US$10,000 or less, we

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 13 arbitration in the terms and conditions). We can see these differences between the arbitration clauses in the sample ACC, JAMS, AAA provisions for business contracts and those with Pandora and Netflix.

Where an entertainment company might be more protective of their business model/license, how might an in-house or outside counsel attorney draft the best arbitration clause to make sure it is understandable, recognizable, and enforceable as a matter of law in the courts. That is what we will discuss last.

At first glance, we can see that Netflix’s VI. CLOSING: BEST PRACTICES IN arbitration clause is more detailed than DRAFTING ENFORCEABLE ONLINE Pandora’s, and it also exempts class action ARBITRATION CLAUSES lawsuits (sixth paragraph of section 15)33 if a consumer wanted to bring such a claim with Enforceable contracts, whether written or similarly situated consumers. Would Netflix’s online, turns on the formation. Formation of arbitration clause be enforceable under Specht? a contract in the online setting requires the Like Pandora, possibly, if it was a business-to- “reasonably conspicuous notice of the existence business relationship with multiple transactions of the contract terms” by the business and the like in Verio. However, with a consumer just “unambiguous manifestation of assent to those wanting to stream their favorite television terms” by the consumer.34 (Specht v. Netscape show or movie, the arbitration clause is likely Communications Corp., 306 F.3 17 (2d Cir. to be unenforceable where there is a lack of 2002).) In the context of arbitration provisions notice and assent to the terms and conditions in online contracts, a business would have to absent a check box or pop up requiring the act noticeably post the terms and conditions that of assenting before proceeding to signing-up/ included an arbitration clause on their website registering for the service. and the consumer would have to agree to those terms and conditions prior to the online purchase/ Are arbitration clauses for entertainment registration for the consumer to be subject to the companies and their online contracts different terms and conditions. from other businesses? The obvious answer might be “yes” where each business’s arbitration According to Specht, the arbitration clause would clause is likely, and hopefully, drafted differently need to be a part of a “clickwrap/clickthrough” and specific to the business’s needs. In the agreement to be enforceable. The user/ entertainment industry, we might see more consumer would be forced to physically do protection against the consumer’s use of the something to assent to the terms. Think of the business’s license of other’s intellectual property “check-box” before purchasing something or in music, television, and film because content and some service online as a digital signature to an other’s rights are at the heart of the industry. This agreement right before payment/registration is makes sense because the intellectual property is made. It is currently the best-known way to make the underlying value of the service being provided terms and conditions, and specifically arbitration (e.g., streaming of music/television/film content). clauses, enforceable. It also puts the consumer An entertainment company would, therefore, on notice by having the consumer forced to click want to protect itself and content owners (via a something before a purchase/use. license) from harm by reducing the available consumer remedies (e.g., requiring mandatory Per attorneys Brehm and Lee, mentioned earlier

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 14 in this article in “Click Here to Accept the Terms Both website owners and users stand to of Service,”35 they provide the following practical benefit from such clear presentation of the advice in drafting: terms. The owners have more certainty in knowing that the agreements will be upheld, “Best Practices for Ensuring Enforceability” and the users have a greater understanding of the terms dictating their use of the website A review of the decisions addressing or any commercial transaction. Ultimately, the online agreements—whether clickwraps, more that an agreement looks like a clickwrap browsewraps, or a combination of both— (i.e., requiring users to check the box next reveals that there are a variety of ways to to the statement, “I have read and agree to increase the likelihood that the agreements will the Terms of Use”), the more willing courts be enforced, and these can be easily followed will be to find the notice necessary to give by website owners: rise to constructive assent and enforce the agreement.37” • There is a check-box that users must click adjacent to an affirmation similar to, “By Brehm and Lee’s advice has a consistent clicking on the box, you are indicating that you theme: be clear, be up front, and be consistent. have read and agree to the Terms of Use”; With online agreements, the tendency may • The webpage is designed so that if the user be to hide the terms and conditions, but the does not check the box manifesting assent opposite is true. Drafters should be making it to the terms, the user cannot proceed in the easier for consumers to consume not only the transaction; product being sold, but also to consume the • In addition to a check-box that users must entire benefit and consequences of their assent click, the terms of use are available either in a to the agreement. nearby scrolling text box or a nearby hyperlink; • Any hyperlink of the terms is obvious, e.g., In this light, some companies with quirky “Terms of Use” is underlined and has decent personalities have turned their terms and size lettering and visible coloring (not small conditions into funny and entertaining scenarios lettering and not obfuscatory coloring); where you could imagine the wording being • Any hyperlink of the terms has a central or something like “Our Lawyers Made Us Do This” obvious location on the webpage, e.g., the or “READ THIS BECAUSE WE MIGHT OWN hyperlink is directly below the “I Agree” button YOU AFTERWARDS.”38/39/40 It is not advisable, (not relegated to the bottom of the webpage, but it is an interesting note because it shows which would require the user to scroll down to some companies understand what consumers a submerged portion of the webpage); are actually agreeing to, so companies should • Any hyperlink of the terms immediately make it clear for them to understand and assent displays the terms (instead of requiring the so they can get on to enjoying the very product user to click on a series of hyperlinks to view they are trying to purchase/enjoy. the terms); • The terms of use are evident in every Professor Eric Goldman of Santa Clara webpage on the website (rather than visible University School of Law has some similar, on only one webpage), in addition to requiring but more specific advice when drafting users to attest that they have read the terms of online agreements (and making sure use; online arbitration clauses are enforceable). • The terms are in readable font (at least 12 Goldman suggests that when advising tech, point); and entertainment, or business clients, or any • The agreement contains all requisite business doing business online that the attorney elements of an enforceable contract (e.g., draft a “mandatory non-leaky clickthrough consideration, sufficiently definite material agreement.”41 This means that the process for terms, etc.).36 assent to the agreement is a single process

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 15 and is mandatory before the consumer can stick. Meaning, do not leave open to change move forward/enjoy the thing that they are the contract or its terms unless it is purposeful purchasing. Non-leaky means that a person and needed. Once you make the terms cannot bypass the “accept” button of the changeable, unilaterally, it takes away from the terms and conditions. Clickthrough means the bargain agreed to between the parties, thus, consumer has to scroll through the agreement’s making it illusory, misleading, and deceptive, terms and conditions before clicking the accept even if your intention was the opposite. button. 42 In some sense, Goldman’s three- point way is to ensure everyone is on the If a client wants to change the agreement, send same page when conducting business online. a notice. We are all used to seeing these. In the Pandora and Netflix examples, their Sometimes we receive letters in the mail, browsewrap agreements lacked the both the emails, or pop-ups while browsing that notify check box/pop up and the clickthrough, thus the user that the terms and conditions for the likely making them unenforceable with a non- company and those who use its services have business consumer. changed. We often do not read them, but then again, we hardly read contracts as consumers It is also essential that an attorney does not unless something goes wrong. The point here just copy and paste what other companies is (1) as a business, to send a notice when the have done with their online agreements. In this terms change and (2) as a consumer, to pay way, Zachary Briers of Pepperdine University attention when it happens. School of Law proposes three rules when drafting online agreements. First, ensure that As an example, Pandora has a notice of change your contract is not illusory. If the contract to the agreement in their terms of service, but reserves to one party the unilateral right to they also provided wording that if a change revise the agreement, provide that any future were to occur, the user would be notified and revisions are prospective only, provide notice have a thirty-day opportunity to opt-out. We can and opportunity to opt-out, or provide a new see the Pandora.com example below45: contract. Second, maintain evidentiary support, meaning proof showing what the website looked like at all stages with screen-shots or a history, when changes were made and why, and evidence of individual assent and to what terms. For example, a consumer who agreed to the terms and conditions thirty times in a month period showing continuous access and assent to the terms. Third, avoid the “every-one is doing it meme.” Meaning, just because a large company is doing it does not make it the best way of doing things.43 Pandora has drafted well because the term is not illusory by offering notice and opt-out Let us break down Briers’s advice a bit further. opportunities, but also by giving itself some First, for illusoriness, one seminal case is leeway as laws and its business model change. Harris v. Blockbuster, Inc., 622 F.Supp.2d 396 As an aside, another way to enhance Pandora’s (N.D. Tex. Apr. 15, 2009). In Harris, the court “change in terms” provision would be to make established precedent that when a contract clear that any revisions to the arbitration has a clause that authorizes one party to make provision would only apply to disputes that arise changes to the “contract” without notification the prospectively, after the implementation of the term is illusory and hence the entire “contract” revision, and not to previously accrued disputes. is void.44 The practical advice here is to draft agreements with clauses and provisions that As far as evidentiary support, this makes

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 16 sense and is likeable to our elementary property matters. Evans is an award-winning mathematics teacher telling us to show our attorney and community leader based in Los work. Businesses need to keep evidence Angeles. He may be reached at Jeremy@ handy showing what they did and did not CSLlegal.com, 213.545.1332, www.CSLlegal. do. Furthermore, businesses, with all of the com, or @JeremyMEvansESQ. technology and search programs, need to ______reasonably keep track of who is visiting their 1 1 A great deal of gratitude goes to Pepperdine site and why. This is good for advertising and University School of Law Professors Zach consumer use, behavior, and sale projections, Briers and William Nix for their insight into the but is also important for litigation and proving subject matter that something did or did not happen. 2 Code Civ. Proc., § 1285 et seq.) 3 Association of Corporate Counsel, “Sample Lastly, as our mother’s would tell us growing Arbitration Clauses with Comments” (http:// up, be the leader, do not follow Johnny www.acc.com/_cs_upload/vl/membersonly/ jumping off the cliff. In business, the same SampleFormPolicy/409703_1.pdf) (Last principle applies. The worse thing a new or accessed on 9/21/2017)choice and access to existing business can do is copy something more customized, often commercial-free, digital from another business. Without a mandatory services. non-leaky clickthrough agreement, the Netflix 4 Id. and Pandora examples provided above are 5 Judicial Arbitration and Mediation Services completely unenforceable in most states (“JAMS”) (https://www.jamsadr.com/): “JAMS is because they lack conspicuous notice to the largest private alternative dispute resolution the terms. The difference here between provider in the world. With its prestigious panel browsewrap and a clickthrough agreement of neutrals, JAMS specializes in mediating being an unenforceable contract and the and arbitrating complex, multi-party, business/ attorney drafter possibly losing his job or worse. commercial cases – those in which the choice of neutral is crucial.” (Last accessed on In closing, the pop-up or check box and 9/21/2017) mandatory clickthrough requiring the 6 “JAMS Clause Workbook: A Guide to Drafting consumer’s signature and review places the Dispute Resolution Clauses for Commercial terms and conditions before the consumers Contracts” (https://www.jamsadr.com/clauses/) eyes so that they have the option to review (Last accessed on 9/21/2017) the agreement and its terms and conditions/ 7 American Arbitration Association (“AAA”) terms/terms of use. With the above, you can website (https://www.adr.org/Arbitration): “AAA have the consumer “unambiguous[ly express panels comprise distinguished judges as well as their] manifestation of assent to those terms” leaders in the legal and business communities (including an arbitration clause) by having the with industry-specific knowledge and expertise. business place its terms (including an arbitration Arbitrators are required to adhere to Codes clause) on its website prior to purchase/use of Ethics developed by the AAA and the with a notice providing “check-box“ accept American Bar Association (ABA). Select button that is a “reasonably conspicuous notice Expert Panels include Aerospace, Aviation, and of the existence of the contract terms.” In this National Security; Construction, Cybersecurity, manner, the consumer can find the needle in Employment, Energy, Healthcare, Intellectual the haystack and the business will have drafted Property, Judicial, Labor, and Large and an enforceable online arbitration clause. Complex Cases.”) (Last accessed on 9/21/2017) Jeremy M. Evans is the Managing Attorney at 8 “AAA Clause Drafting” (https://www.adr.org/ California Sports Lawyer®, representing sports, Clauses) (Last accessed on 9/21/2017) entertainment, and business professionals 9 California Lawyers for the Arts (http://www. in their contract, negotiation, and intellectual

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 17 calawyersforthearts.org/clas-mission--vision. 18 Technopedia.com, “Clickwrap Agreement” html): “California Lawyers for the Arts empowers (https://www.techopedia.com/definition/4243/ the creative community by providing education, clickwrap-agreement): “A clickwrap agreement representation and dispute resolution.” (Last is a type of contract that is widely used with accessed on 9/21/2017) software licenses and online transactions 10 California Lawyers for the Arts, “Sample in which a user must agree to terms and Mediation - Arbitration Contract Clauses” (http:// conditions prior to using the product or www.calawyersforthearts.org/sample-clauses. service.The format and content of clickwrap html) (Last accessed on 9/21/2017) agreements vary by vendor. However, most 11 Independent Film & Television Alliance, of clickwrap agreements require the consent “Sample Arbitration Clauses” (http://www. of end users by clicking an “OK,” “I Accept” ifta-online.org/sites/default/files/Arbitration_ or “I Agree” button on a pop-up window or a Sample%20Clauses_Sep2013.pdf) (Last dialog box. The user may reject the agreement accessed on 10/10/2017) by clicking the Cancel button or closing the 12 Peter Holland, “Study Shows that Consumers window. Once rejected, the user us unable are Unaware of and Do Not Understand Forced to use the service or product. A clickwrap Arbitration Clauses,” TheHollandLawFirm.com agreement is also known as a clickwrap license Blog via National Association of Consumer or clickthrough agreement.” (Last accessed on Advocates, January 22, 2015 (http://www. 9/21/2017) consumeradvocates.org/blog/2015/study- 19 DashFarrow.com LLP, “Website Agreements: shows-consumers-are-unaware-and-do-not- Browse-wrap vs. Clickwrap Agreements,” understand-forced-arbitration-clauses) (Last July 19, 2012 (http://www.dashfarrow.com/ accessed on 10/10/2017) website-agreements-browse-wrap-vs-clickwrap- 13 Id. agreements/): “A Browse-wrap agreement 14 Katharine O. Beattie, Donald C. Davis, “State is one where the terms of an agreement are Supreme Courts Continue to Try to Chip Away located on a website, but are often connected to at FAA Preemption; The United States Supreme the main web page of the product by a hyperlink Court Is Not Amused,” Lexology.com, May to another web page that contains the contracts 23, 2017 (https://www.lexology.com/library/ terms and conditions. Normally there is no detail.aspx?g=cd2187d8-2c6f-46dd-977a- affirmative manifestation of assent necessary 06797e11cbd9) (Last accessed on 10/10/2017) to agree with the terms located on the linked 15 Andrew J. Pincus, Archis A. Parasharami, web page. The customer must also affirmatively “Supreme Court Holds that Federal Arbitration click the hyperlink to even access and become Act Preempts California Court’s Interpretation aware of the terms of the agreement.” (Last of Arbitration Clause,” ClassDefenseBlog. accessed on 9/21/2017) com, December 15, 2015 (https://www. 20 Alison S. Brehm, Cathy D. Lee, “Click Here to classdefenseblog.com/2015/12/supreme-court- Accept the Terms of Service,” Communications holds-that-federal-arbitration-act-preempts- Lawyer, Vol. 31, No. 1, American Bar california-courts-interpretation-of-arbitration- Association, January 2015 clause/) (Last accessed on 10/10/2017) 21 The phrases “terms of use” and “terms of 16 Julie Werner, Ed Zimmerman, “US Supreme service” are often used interchangeably. See Court to Determine Whether Workers Be In, Inc. v. Google Inc., No. 12-CV-03373- Waive Class Action,” Forbes.com, October LHK, 2013 WL 5568706, at *6 (N.D. Cal. Oct. 9, 1, 2017 (https://www.forbes.com/sites/ 2013) edwardzimmerman/2017/10/01/us-supreme- 22 Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, court-to-determine-whether-workers-waive- 837 (S.D.N.Y. 2012) class-action/#6611ff982267) (Last accessed on 23 Be In, 2013 WL 5568706, at *6 10/10/2017) 24 Tompkins v. 23andMe, Inc., No. 5:13-CV- 17 Specht v. Netscape Communications Corp., 05682-LHK, 2014 WL 2903752, at *7 (N.D. Cal. 306 F.3 17 (2d Cir. 2002) June 25, 2014)

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 18 25 Sw. Airlines Co. v. BoardFirst, L.L.C., No. makeuseof.com/tag/10-ridiculous-eula-clauses- 3:06-CV-0891-B, 2007 WL 4823761, at *2 (N.D. agreed/) (Last accessed on 10/10/2017) Tex. Sept. 12, 2007) 40 Erik Germ, “6 Terrifying User Agreements 26 Restatement § 69 of Contracts (Acceptance You’ve Probably Accepted,” Cracked.com, By Silence Or Exercise Of Dominion) February 15, 2012 (http://www.cracked.com/ 27 Register.com, Inc. v. Verio, Inc., 356 F.3d 393 article_19683_6-terrifying-user-agreements- (2d Cir. 2004) youve-probably-accepted.html) (Last accessed 28 Specht v. Netscape Communications Corp., on 10/10/2017) 306 F.3 17 (2d Cir. 2002) 41 Professor Eric Goldman, “Internet Law: Cases 29 Pandora.com, “Pandora Services Terms of & Materials (2017),” pg. 354, Santa Clara Use,” Sec. 25 (https://www.pandora.com/legal) University School of Law (Last accessed on 9/21/2017) 42 Id. 30 Pandora.com, “Register/Sign-Up” (https:// 43 Professor Zachary Briers, “Internet Law www.pandora.com/account/register) (Last Course,” Pepperdine University School of Law, accessed on 10/10/2017) Malibu, CA (9/11/2017 and 9/18/2017) 31 Neftlix.com, “Netflix Terms of Use,” Sec. 15 44 Harris v. Blockbuster, Inc., 622 F.Supp.2d 396 (https://help.netflix.com/legal/termsofuse) (Last (N.D. Tex. Apr. 15, 2009) accessed on 9/21/2017) 45 Pandora.com, “Pandora Services Terms of 32 Netflix.com (https://www.netflix.com/) (Last Use,” Sec. 5 (https://www.pandora.com/legal) accessed on 10/10/2017) (Last accessed on 9/21/2017) 33 Id. at Sec. 15, 6th paragraph 34 Specht v. Netscape Communications Corp., 306 F.3 17 (2d Cir. 2002) 35 Alison S. Brehm, Cathy D. Lee, “Click Here to Accept the Terms of Service,” Communications Lawyer, Vol. 31, No. 1, American Bar Association, January 2015 36 See Davis v. HSBC Bank Nev., N.A., 691 F.3d 1152, 1158 (9th Cir. 2012); In re Zappos.com, Inc. Customer Data Sec. Breach Litig., 893 F. Supp. 2d 1058, 1064 (D. Nev. 2012); E.K.D. ex rel. Dawes v. Facebook, Inc., 885 F. Supp. 2d 894, 901 (S.D. Ill. 2012); Van Tassell v. United Mktg. Grp., LLC, 795 F. Supp. 2d 770, 791–92 (N.D. Ill. 2011); RealPage, Inc. v. EPS, Inc., 560 F. Supp. 2d 539, 546 (E.D. Tex. 2007); Feldman v. Google, Inc., 513 F. Supp. 2d 229, 236–38 (E.D. Pa. 2007) 37 See Be In, Inc. v. Google Inc., No. 12-CV- 03373-LHK, 2013 WL 5568706, at *7 (N.D. Cal. Oct. 9, 2013) 38 RJ, “Who said Terms of Service Agreements can’t be funny?” DailyConversations.com, January 23, 2012 (http://www.dailyconversions. com/internet-marketing/who-said-terms-of- service-agreements-cant-be-funny/) (Last accessed on 10/10/2017) 39 Chris Hoffman, “10 Ridiculous EULA Clauses The Best Offense That You May Have Already Agreed To,” Makeuseof.com, April 23, 2012 (http://www. is a Good Defense

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 19 example, agents may negotiate contracts and Lawyers, procure employment for their clients, while lawyers procure employment for their clients Agents, and the by negotiating contracts. This article aims to Blurred Lines provide a clearer picture of the regulatory scheme and limits on what agents and lawyers can and Regulating Talent cannot do, and why, for their clients. Finding reasoning in all of this will help all better serve Representation clients and the artistic and athletic communities. by Jeremy M. Evans, LL M The California Labor Commissioner licenses and I. THE HOLLYWOOD DILEMMA regulates talent agents and those who procure employment for talent in California through the Professionals who serve as talent agents, TAA.3 The California Secretary of State licenses sports agents, and/or lawyers all must meet and regulates sports agents through its powers specific regulatory and licensing requirements. and the Miller-Ayala Act.4 The State Bar of Regulations are specific by state, and California California along with the California Supreme is no different. This article focuses on regulations Court licenses and regulates lawyers.5 The governing agents and lawyers who represent question of whether lawyers can be excluded talent in the sports and entertainment industries from or regulated under the TAA and other in California. Part I of this article introduces the California agent requirements from representing issues of navigating the talent representation or working with talent or sports clients when industry, which includes agents, lawyers, lawyers are duly licensed by the State Bar of managers, and clientele and presents the California and the California Supreme Court to do “Hollywood Dilemma” where lawyers cannot so has been hotly debated.6/7/8 represent talent without a secondary license and/or registration. Part II describes the major The history of the TAA begins with Hollywood registration requirements for talent agents, and the talent agent community that lobbied the sports agents, and lawyers, with a discussion California State Legislature to pass legislation on the somewhat ironic similarities between excluding lawyers and everyone one except agents and lawyers. Part III discusses the licensed talent agents from working with ethical and practical dilemmas in representing Hollywood’s best. 9 Nonetheless, how and why a talent. Part IV sets forth the debate regarding licensed attorney cannot represent talent without the constitutionality of limits placed on lawyers the fear of being left holding the proverbial 1/2 through the Talent Agencies Act (“TAA”), bag (with no money in it), but a licensed talent state registration requirements, and judicial agent can practice law without a license is an decisions involving challenges to the TAA. Part important question because it raises the issue of V discusses who is best trained to service sports fairness.10/11 and entertainment clients. Part VI concludes this article by wrapping up and providing solutions to This article explores the foregoing questions, the matter of lawyers representing talent. with the following parameters. First, lawyers face a variety of interesting ethical dilemmas The registration requirements for talent agents, when representing talent. Second, this article sports agents, and lawyers are clearly delineated will apply to both sports agents representing on the respective forms, in the application athletes and talent agents in the entertainment processes, and in checking off the requirements industry representing actors. Third, although the to become licensed for each. The problem is registration requirements are different in terms of that the work involved in servicing clients in each representing entertainment talent versus sports licensed area often overlaps and encompasses clients, the barriers to entry are similar. The quasi, if not, legal practice crossovers. For focus in this article will be on the two camps

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 27 that must be licensed to work in one form or Lastly, for an agent to represent a professional another, lawyers and agents, since managers do athlete in an American professional sports not require any formal registration requirements league (such as for the National Football when not procuring employment for clients.12 League20 draft or in free agency, or a Major League Baseball21 player’s (athlete’s) II. AGENT AND LAWYER LICENSE AND arbitration, free-agency contract, or related REGISTRATION REQUIREMENTS matter), the agent must register with the Player’s Association of the respective league Below are the various registration requirements where the athlete plays or will play. As an when a person wants to represent talent.13 example, the National Football League (NFL) and Major League Baseball (MLB) both require A. Sports Agents a fairly large application fee, annual fees, passing a knowledge-based test, a background Sports agents in California are licensed and check, have a player on a professional team’s regulated by the California Secretary of State roster, and in some leagues must have a four- through the power of the office and the Miller- year degree and a graduate-level degree. Ayala Act.14 The statutory scheme is as follows: MLB does not require a formal education, but if one has a formal education, he or she have [I]n California, a player agent must register with the opportunity to be designated as an “Expert the California Secretary of State as an agent, Agent” 22 by applying and going through the while making mandatory declarations and approval process. Professional league agents disclosures, paying a small fee, and obtaining are generally referred to as “Certified Agents” a bond.15 If the agent wants to advise and work or simply “Certified.” Certified Agents are with student-athletes, he or she must register generally not lawyers and may not practice law at the school that the student is attending.16 unless they are licensed to do so.23 Failure to comply may result in the agent/ advisor being fined, suspended, or being Sports agents are often represented by lawyers disabled from representing athletes in one form and agents. Agents typically handle the or another.17 Further, certain acts by agents (or negotiations with the professional sports league others) could affect the eligibility of the student- and the lawyer handles the contract review athlete—and could therefore result in liability and the personal and business matters off the on the part of the agent. There is no formal field. Sometimes the lawyer will wear two hats, education requirement to become an agent in acting as an agent and a lawyer where properly California.18 However, one must demonstrate licensed/registered to do handle both. relevant experience.19 B. Talent Agents Athlete advisors are like agents in that they are generally the same person with a different In California, the TAA is the regulatory scheme registration requirement completed. Athlete governing talent agents. The TAA provides, in advisors work with high school and college general, that one must apply for a license, pay a athletes who are entering the draft or thinking fee, go through a background check, and obtain about entering the draft for a team or entering a bond.25 No formal education is required, as an individual in a professional sports league. but applicants must provide and demonstrate Registration generally requires payment of a experience in the industry. The TAA24 was fee and paperwork. Advisors are generally created out of protection for the talent industry non-lawyers and may not practice law unless in Hollywood to protect itself from unscrupulous they are licensed to do so. individuals who might not have the client’s best interest in mind.26 The California Labor Commissioner has jurisdiction under the authority of the TAA over talent agents and those who

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 28 procure employment for talent.27 covered in representing talent as talent can recover from lawyers. Of course, in California, C. Lawyers pursuant to Rule of Professional Conduct 3-410-Disclosure of Professional Liability Lawyers have the highest bar to reach their Insurance, malpractice insurance is not required profession and have the highest ethical standards for lawyers, but lawyers must disclose the imposed compared to talent agents and sports absence of malpractice insurance in writing to the agents.28 In California, to graduate from an client at the time of retention.32 If lawyers were American Bar Association accredited law school, allowed to represent talent without registering prospective lawyers must enter law school with as a talent or sports agent, there is room for 15 years of school (a bachelor’s degree), take cooperation to make it so that lawyers must carry the Law School Admission Test (LSAT), have a malpractice insurance when working with talent to good grade point average, take and pass three cover the TAA’s bond requirement. years of law school, pass the Moral Character (background check), take and pass the Multistate Interestingly, personal experience has shown Professional Responsibility Exam (MPRE), that malpractice insurance rates for sports and take and pass the California Bar Examination, entertainment lawyers are higher than other maintain continuing legal education requirements, practice areas. Moreover, only certain insurance and obtain legal malpractice insurance or companies will insure lawyers working in the disclose to clients otherwise that the lawyer sports and entertainment industries.33 The higher does not carry malpractice insurance.29 Once the rates also show that the insurance industry is above requirements are fulfilled and adhered to behind the ball on servicing lawyers as clients with the highest ethical standards, a lawyer may because talent clients are not more likely to file then practice law. suit against their lawyers because they work in the sports and entertainment industry. There D. Similarities Between Agents and Lawyers is actually an argument that it is less likely for a lawyer to be sued by a client or vice-versa The work that lawyers and agents engage in because celebrities and athletes get enough representing talent are eerily close, and one attention and suing someone is not the type of could make the argument that the agent industry attention talent would want. It also shows that was based on the qualifications of becoming there is a general misunderstanding and distrust a lawyer. For example, one of the interesting where the rules and regulations are murky and questions that have crossed the minds of many hard to comply. lawyers is whether malpractice insurance can serve as the bond required by the TAA30 and Another similarity can be found in the state sport agent regulations in California. A requirements to become a licensed talent agent, bond serves as guard against some error by the sports agent, and lawyer. In California, as in agent that the talent can recover to compensate most states, a law student graduate who wants talent financially for the loss. Similarly, to practice law must take and pass both the malpractice insurance serves as a guard against bar exam and the moral character evaluation, some error by the lawyer that the client can pay the necessary fees, and keep up with their recover to compensate financially for the loss. continuing legal education requirements, while Arguably, these forms of insurance coverage purchasing malpractice insurance or disclosing to mirror each other and are interchangeable minus the client [or prospective client] that he does not the higher threshold31 to prove malpractice has carry malpractice insurance in writing.34 A lawyer occurred versus recovering on a bond. in California may also become specialized in a field by taking and passing a test after a certain In the instance where bonds and malpractice number of years in practice.35 insurance are interchangeable makes for an argument that lawyers could just as easily be In California under the TAA,36 a prospective

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 29 talent agent must pay a fee, post a bond, changes, the question of why the barriers of entry pass a background check, and demonstrate have been lowered to work closely with the most their experience.37 Likewise, a sports agent high profile talent groups is left unanswered. in California must pay a fee, post a bond, pass a background check, and demonstrate III. ETHICAL DILEMMAS AND PRACTICAL their experience. Furthermore, a sports agent REALITIES IN REPRESENTING TALENT must also register with the respective players association where the agent will/is representing Practically speaking, the two most common talent by paying a fee and/or passing a collective responses to the dilemma that lawyers have to bargaining agreement exam, among other register as talent agents by agents or otherwise requirements like having an undergraduate and a are (1) quit complaining, just register and pay post graduate degree demonstrating knowledge the fee, or (2) get a law passed to exclude/ and experience (ex: National Football League include lawyers from the TAA. Both responses Players Association). 38 The players’ association are related because the consequence for each registration requirement currently only applies to is the same. For one, if a lawyer registers as the five major unionized team sports in the United a talent agent under the TAA, the lawyer is still States: the National Basketball Association, subject to the ethical rules as a lawyer unlike Major League Baseball, Major League Soccer, that of the agent competition/counterpart. the National Hockey League, and the National Second, this creates an unfair advantage for Football League. agents over lawyers. Third, it also ignores the fact that lawyers, who have the most stringent In looking at the qualifications and requirements educational and testing requirements (especially for each, there are four common denominators: in California), would be best served to service (1) paying a fee, (2) being ethically and morally high profile clientele.39 Fourth, assuming the responsible/passing a background check, (3) lawyer lobby were to convince the California taking a test and/or showing background and State Legislature to pass a bill to exclude or experience/continuing education, and (4) include lawyers in the TAA or the Miller-Ayala posting a bond/having malpractice insurance. Act, lawyers would be still be subject to the The only differences here are that it is ironically high ethical standards set by the State Bar cheaper in yearly fees to become/stay a of California and the Professional Rules of licensed lawyer compared to both sports and Conduct.40 Lastly, a lawyer obtaining an agent talent agents, but it is harder to become and license ignores that lawyers are actually licensed stay a lawyer by way of the legal education, to practice law, which is the thing agents are bar exam, moral character test, background practicing unlicensed when negotiating contracts check, continuing legal education, paying for and the like. costly malpractice insurance, and abiding by the ethical and client confidentiality obligations and Ethically speaking, there are four leading ethical requirements. dilemmas faced by lawyers when representing talent. The first ethical dilemma has to do with The comparisons between the agent and legal recruiting clients/talent, the second with practicing industries reiterate the point that where lawyers law in multiple states, while the third and fourth historically existed before agents, the agent surround issues of conflicts of interest and model was based upon the lawyer model, both attorney communication with a represented party. in fact and in practice. However, agents can do As partially quoted from “Ethical and Practical lawyerly activities without being licensed lawyers, Implications and differences between Sports like negotiate contracts and represent talent Agents and Attorneys:”41 clients, but lawyers cannot do the same activities without being subject to discipline, disbarment, IN-PERSON CONTACT WITH PROSPECTIVE fines/fees/litigation, and/or loss of earned legal CLIENTS fees by way of the TAA. Until the current system

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 30 American Bar Association (ABA) Model Rule of entity in the unauthorized practice of law. Professional Conduct 7.3(a)(2), Direct Contact (B) A member shall not practice law in a with Prospective Clients, Solicitation of Clients: jurisdiction where to do so would be in violation of regulations of the profession in A lawyer shall not by in person, live that jurisdiction.45 telephone or real-time electronic contact solicit professional employment when a [CONFLICTS OF INTEREST EXPLAINED significant motive for the lawyer’s doing so BELOW] is the lawyer’s pecuniary gain, unless the person contacted: … (2) has a family, close LAWYER COMMUNICATION WITH A personal, or prior professional relationship REPRESENTATED PARTY with the lawyer.”42 California Rule of Professional Conduct 2-100, California Rule of Professional Conduct 1-400, Communication With a Represented Party46 Advertising and Solicitation, provides: , and ABA Model Rule 4.2, Communication with Person Represented by Counsel,47 (A) For purposes of this rule, “communication” prevent Lawyers from communicating with means any message or offer made by or on represented parties without the represented behalf of a member concerning the availability party’s Lawyer approval and/or a court order for professional employment of a member or . . . The Talent Agenc[ies] Act48], the Miller- a law firm directed to any former, present, or Ayala Act49 and MLB/NFL Player Association prospective client, including but not limited rules50 regulate agent changes/designations, to the following: … (4) Any unsolicited but are mostly quiet when it comes to correspondence from a member or law firm solicitation and communication as long as the directed to any person or entity. agent(s) are registered [or licensed] properly.51 (B) Any unsolicited correspondence from a member or law firm directed to any person or First, recruiting is essential in both the sports and entity. entertainment industries. There is a dilemma (C) A solicitation shall not be made by or on of how lawyers can comply with being talent or behalf of a member or law firm to a prospective sports agents in any form where the underlying client with whom the member or law firm has no job and roles of an agent place the lawyer in a family or prior professional relationship . . .43 compromising position(s) by (1) having to recruit clientele without prior relationships and (2) to THE MULTIJURISDICTIONAL PRACTICE OF work out of state (i.e., outside the jurisdiction LAW where the lawyer is licensed to practice law). Therefore, the lawyer would be violating the ABA Model Rule of Professional Conduct first two rules of conduct mentioned above if 5.5(a), Unauthorized Practice of Law— the lawyer recruited a talent athlete or actor in Multijurisdictional Practice of Law, provides: another state.

A lawyer shall not practice law in a jurisdiction Moreover, California Rule of Professional in violation of the regulation of the legal Conduct 3-310-Avoiding the Representation of profession in that jurisdiction, or assist another Adverse Interests52 presents another principal in doing so.44 issue with lawyers representing talent as the current system is devised. Imagine a lawyer that California Rule of Professional Conduct represents Los Angeles Dodgers starting second 1-300(a)(b), Unauthorized Practice of Law, baseman as well as the top rookie in baseball provides: who is in the Dodgers farm system, who also happens to play second base. The Dodgers (A) A member shall not aid any person or organization wants to trade or not renew the

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 31 veteran client’s contract at the end of season, with the second basemen and the same result while simultaneously calling up the young follows. prospect client. Even with written disclosures by each party notifying of the actual (not perceived And therein lies the Hollywood Dilemma. conflict of interest), the lawyer would be conflicted Lawyer ethics require one permissible act, out of the representation. while the practicalities of the entertainment and sports industries provide for another. It is not a In providing an entertainment-based industry judgment on one or the other, it is a reality that example, paraphrasing a story the book “Power lawyers and agents face on a day-to-day basis. House: CAA The Untold Story of Hollywood’s It is also why Hollywood and the sports industries Creative Artists Agency” by James Andrew Miller rely heavily on talent agents to navigate difficult will be illustrative.53 Actor Nicole Kidman wants waters and why lawyers have been excluded, a top part in the next hot summer movie. Actor by rule or self-preservation, maybe both, from Julia Roberts, her peer and also a highly talented representing talent. actor, wants the part too. A lawyer represents both. As an agent, the common phraseology IV. CONSTITUTIONALITY AND DISRUPTION would be that the director or the producer makes OF THE TALENT AGENCIES ACT the final decision and therefore if there is a conflict of interest it is out of the agents hands. The foregoing parts of this article discussed how Similarly, the general manager of the baseball state legislation, specifically the TAA and the team or the front office and ownership makes Miller-Ayala Act, imposes barriers on lawyers team decisions when signing their next second representing talent in the entertainment and baseman, not the agent, therefore a conflict of sports industries. This section examines the interest does not exist with the agent. constitutionality and fairness of all the rules and regulations on lawyers in representing talent However, the issue in conflicts of interest is not through case law. in who makes the decision, i.e., the judge or jury, general manager, director or producer, it is how In applying the TAA to an actual case, the Solis v. well the lawyer zealously advocates for the client Blancarte, TAC-27089 (2013)60 matter that was within the bounds of the law. 54 A lawyer could heard before the California Labor Commissioner not conceivably represent both interests of the (who has jurisdiction over the TAA matters).61 The clients equally where the two are fighting for the case is instructional because it highlights that same role or field position. Someone will have a lawyer, although duly licensed to practice law to compromise and the lawyer will have been in California, cannot represent talent (including compromised by being the position to represent reviewing contracts) without being a licensed conflicting parties in the same transaction.55 talent agent. A lawyer cannot review or negotiate a contract for talent because that act is seen as Lastly, with regard to attorney communication “procuring” employment, which is in violation with a represented party,56 using the Kidman and of the TAA. As a result of the case, lawyer Dodgers examples above. Again paraphrasing Blancarte lost his negotiated percentage fee from the Power House book by Miller,57 imagine from the agreed upon retainer agreement. The Lawyer “A” represents actor Kidman, but not case demonstrates a few lessons that will be actor Roberts who is represented by Lawyer “B.” discussed later in this article, but for now know Lawyer A wants to represent Roberts to add to that not being licensed/registered as a talent his book of clientele. However, by approaching agent in California has serious consequences actor Roberts without Lawyer B’s written consent and implications.62 Lawyer A would violate both the in-person contact rules58 and the attorney-client communication rule59 because Roberts is already represented by Lawyer B. On the sports side, replace the actors

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 32 A. Case law: Constitutional Challenges with talent or otherwise be subject to fines, loss of license, and possibly reputation. However, In 2008, the National Conference of Personal lawyers have been assisting the entertainment Managers brought a lawsuit against the Governor and sports industries for years and their efforts of California (National Conference of Personal should applauded and rewarded, not discarded Managers v. Edmund G. Brown, 9th Cir. No. and dismissed through the TAA and similar laws 15-56388, April 25, 2017) claiming that the and regulations. The TAA has also become a TAA was unconstitutional for vagueness, a tool for talent to use when not wanting to pay violation of the commerce clause, a violation of attorney’s fees,67 and bad behavior should not be the first amendment, and void as involuntary encouraged. servitude.63 The case was dismissed, but the matter arose out of a 9th Circuit Court of Appeal B. Case Law: Disruption in the Talent case, Marathon Entertainment, Inc. v. Blasi, 9th Agencies Act Power of Arbitrating Claims Cir. No. B179819, June 23, 2006, where the manager for the talent sought to recover unpaid There has been some crack in the armor fees, but the court found for the talent because of the TAA though and the California Labor the manager procured employed while not being Commissioner who hears matters under the licensed under the TAA.64 The Brown court held in TAA’s jurisdiction. Again, in 2008, the United dismissing the case that: States Supreme Court in Preston v. Ferrer, 552 U.S. 346 (2008)68 held that an arbitration clause “[C]ourts have already have sufficiently in a lawyers contract with talent, even though the established what “procuring” means, noting that lawyer was unlicensed as a talent agent under it is contained in ‘numerous California statutes’ the TAA, the talent would still be forced to submit that have not been challenged [and that to mandatory arbitration as opposed to a hearing personal managers were subject to the Talent before the California Labor Commissioner.69 Agencies Act according to the Blasi case] . . . The court reasoned that “when parties agree [The court] said ‘Not being compensated for to arbitrate all questions arising under a work performed does not inevitably make that contract, state laws [the TAA] lodging primary work involuntary servitude. Plaintiff’s members jurisdiction in another forum [the California Labor [managers] have choices’ . . . [The Court] also Commissioner], whether judicial or administrative, rejected claims that the Talent Agencies Act are superseded by the FAA [Federal Arbitration violated the Commerce Clause . . . and the First Act].” 70 An overhauling of the TAA is not a Amendment. Of the latter, [the court] wrote that complete win for Lawyers because an arbitrator the state statute ‘protects conduct, not speech. would still have to apply the TAA and the law to a It does not limit the speech of a personal dispute, but it is a break in a series of victories for manager; it limits the personal manager’s ability the TAA’s authority. to enforce contractual obligations when that person engages in the conduct of procuring C. Potential First Amendment Challenges to employment.’65 the Talent Agencies Act

The problem with the above decision is that is The above decision highlights the remaining does not attack the Hollywood Dilemma head on constitutional question. In this light, the 14th with regard to what the rule of law is “supposed Amendment to the United States Constitution to do” and how it applies to lawyers, who are provides that: licensed to practice law. The American rule of law is based in fairness and the treatment of All persons born or naturalized in the United people equally.66 In that sense, the law should States and subject to the jurisdiction thereof, bring people and their activities to the light, not are citizens of the United States and of the into the dark. What the current system does is State wherein they reside. No State shall to force lawyers into small exceptions to work make or enforce any law which shall abridge

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 33 the privileges or immunities of citizens of the malpractice claims, and possibly loss of license United States; nor shall any State deprive any to practice law. Therefore, the focus is really on person of life, liberty, or property, without due intrastate commerce. process of law; nor deny to any person within its jurisdiction the equal protection of the laws.71 Intrastate commerce is regulated by the states. Even for a lawyer who has licenses in The law should be fair to all and apply equally two or more states, the representation would according to the 14th Amendment. Certain be limited to one state and in one court at classes of people, especially lawyers who are a time. Lastly, there is no preemption yet duly licensed, should not be excluded from by federal law, but the National Collegiate representing talent-based clients. Furthermore, Athletic Association’s proposed Uniform Athlete all prospective clients, including talent, should Agents Act74 and the existing Uniform Bar have access to legal services as they wish. Examination75 could be precursors of what is to come to help regulate the crossover between According to another legal theory, an argument the entertainment, legal, and sports industries could be made that restricting lawyers to not to allow lawyers to work with talent in a more representing talent without a talent license seamless, efficient, and ethical manner. is a restraint on trade and intra/interstate Currently, however, despite the unfairness and commerce. There are three sources of law for lack of clarity, lawyers will have to continue commerce. The Commerce Clause describes to avoid representing talent or find a narrow an enumerated power listed in the United exception to do so without being subject to States Constitution (Article I, Section 8, Clause discipline and/or losing earned legal fees. 3).72 It is one of Congresses’ most recognized powers as a listed duty in the Constitution to V. WHO IS BEST TRAINED TO SERVICE regulate commerce. TALENT?

The “Dormant Commerce Clause ultimately This article has discussed the needs of talent means that because Congress has been representation and the roles, often overlapping, given power over interstate commerce, of agents and lawyers in that process. This states cannot discriminate against interstate article also discussed that lawyers must be commerce nor can they unduly burden registered as agents under the TAA, even interstate commerce, even in the absence of though lawyers are licensed by the State Bar federal legislation regulating the activity.”73 The of California to practice law. This article then Dormant Commerce Clause is not a specifically turned to the ethical and practical dilemmas enumerated power listed in the Constitution, but in representing talent. Now this article closes has been developed through case law. Lastly, with a discussion on perhaps the most there is intrastate commerce that is generally important aspect of all in representing clientele regulated by the states unless preempted by (which may include talent), i.e., relationships, federal law. Intrastate commerce is business while providing some solutions to Hollywood that occurs within one states border only. dilemma.

The major prevention from applying any form The lawyer-client relationship is one of the most of the commerce clause to the lawyer-agent closely held and respected according to the dilemma, specifically the TAA and the Miller- letter-of-the-law and practice. It is equal to the Ayala Act, is that lawyers are limited to practice doctor-patient and clergy–penitent privileges. law in the states where they are licensed. However, the TAA and the various sport Specifically, when a lawyer practices outside agent registrations restrict talent and sports the licensed jurisdiction (i.e., California), the clients from utilizing their counsel of choice lawyer, minus specific exceptions, would without some registration, exception, or third be subject to discipline, fines, civil litigation, party relationship, which as discussed above

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 34 presents its own lawyer-client privilege and Controversies Surrounding Lawyers, Managers, fiduciary duty challenges. and Agents Participating in California’s Entertainment Industry.”76 Some courts and For contexts sake, it takes a lawyer nineteen administrative bodies have jumped into the years of schooling after taking a bar discussion since that time, including the Solis, examination and passing the moral character Blasi, Ferrer, and the National Conference of test before being able to practice law. A lawyer Personal Managers cases in 2006, 2008, 2013, also has further continuing legal education and 2017. and ethical duty requirements while practicing law. In addition, without disregarding the many The Ferrer case is good law and a U.S. talented talent and sports agents in America Supreme Court case, but that dealt with and around the world, the question becomes arbitrations in private contracts with talent why lawyers are limited from being able to where the lawyer is not licensed as a work with talent directly without an additional talent agent (thus highlighting the power license. The situation should really be turned of severability in contracts). It did push on its head. It is agents who should be seeking back against the TAA and California Labor to become lawyers to represent clients to avoid Commissioner’s jurisdiction, which cannot be the unauthorized practice of law, not lawyers understated considering the case history, but losing earned fees and relationships because according to Blasi and National Conference of of a specialized license requirement. Personal Managers, it is the act of procuring employment that places individuals under Talent and sports clientele should be free the auspice of the TAA, not the job title of the to seek legal counsel from those who have individual (lawyer or otherwise). The Solis obtained the highest ethical and education case is dispositive as to lawyers, but it is standards. The rhetorical question is why not authoritative law as a California Labor the entertainment and sports industries have Commissioner decision. allowed lower standards where agency work is not subject to conflicts of interest and The difficulty of navigating the lawyer vs. agent other important and necessary rules and arena in representing and working with talent requirements as lawyers. Turning the dilemma as dealmakers is a Hollywood Dilemma. The on its head, the question becomes should the topic is interesting from a policy perspective California State Legislature make it harder because it seems backwards that the most for agents to represent talent by raising the educated and sometimes the most experienced requirements (i.e., to become licensed lawyers people in the room (lawyers) cannot “procure” before representing talent in the sports and work for talent without a talent agent or sports entertainment industries). Currently, the TAA agent license where “procure” could mean and case law that has created the Hollywood something as customary for a lawyer as Dilemma has dealt with the matter unfortunately reviewing a contract. Conversely, a talent by asking who is better situated with the current agent who is unlicensed as a lawyer can act rules to represent talent, not by asking who is as a lawyer when reviewing and negotiating better qualified/trained to represent talent. contracts. Therefore, any solution should require (1) exclusion from getting licensed VI. CONCLUSION: SOLUTIONS TO THE as an agent if one is a licensed lawyer, or (2) HOLLYWOOD DILEMMA inclusion in the TAA or new law as an agent if one is a licensed lawyer, and (3) coming to Over the years, many authors before have terms/a compromise on how to deal with the written on the Hollywood Dilemma. In 2001, ethical dilemmas when practicing law as a Gary Devlin at Pepperdine University School talent agent or as an exception because one is of Law wrote on many of the same topics in acting as an agent.77 “The Talent Agencies Act: Reconciling the

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 35 One solution revolves around not being The above solution works by having the lawyer licensed as a lawyer at all. This may seem work with a licensed talent agent. Working like an attractive solution at first, but not when with talent directly or with a talent agent is law school is arguably the legal education one possible because 1700.4(a) and 1700.44(d) of needs to be a successful agent, specifically the TAA provides for exceptions to those who in contract drafting and negotiations, and yet are working (1) on music contracts79 or (2) at costs significant time, preparation, six figures, the written request of and with a registered and three-years to obtain. It is therefore not a talent agent.80 However, the issue with the practical one or financially sound one to ignore music contract exception is that this is a small the law license all together. exception in comparison to the larger body of work being done in film, television, and sports On the other hand, Ari Emanuel with WME (there is currently no exception for lawyers to | IMG,78 one of the top talent agents and work with sports agents in Miller-Ayala Act or executives in Hollywood, along with many other registration requirements). It is, in other others, have never attended law school, words, a start, but not the finish. For one, proving that law school is not a guaranteed too many clients are left without service by path to success in the talent representation lawyers in the music exception model where business. However, ignoring the issue by the industry has also been seriously disrupted forgoing law school or forgoing a license to with the advent of over-top-media and direct practice law does not seem to be the best path to consumer distribution.81 On the second forward since there are very talented lawyers in exception, this is a start because, as will be the talent representation business. Back to the discussed later, additional issues arise when a dilemma at hand, how do lawyers to work with lawyer acts in concert with an agent. talent without being subject to the TAA? For one, California Rule of Professional One observable, but problematic solution Conduct 1-320-Financial Arrangements With may be to ignore legal ethics and the TAA all Non-Lawyers,82 requires that the lawyer’s together. There is some evidence that this role in the matter be limited to (1) reviewing occurs on the recruiting side in general and contracts and advising generally on business where lawyers are wearing two hats, one as a matters, and (2) to be paid by the company lawyer and one as agent. The dilemma here as general or outside counsel or directly by is navigating the waters between those two the client. The lawyer would not be able to hats. Moreover, the result of being caught is exchange legal fees with a non-lawyer (the that lawyers are subject to discipline and a loss agent), thus somewhat preventing percentage of license by the State Bar of California and/ fees, or on working with the client to procure or losing an earned fee via the California Labor employment (e.g., for sports agents read Commissioner when acting as a talent agent. “recruit” or “negotiate a deal”) with a studio or professional sports team. Essentially, the A third and possibly more practical and ethical lawyer would be acting as a lawyer not a talent solution is to utilize the TAA and the various agent, however, the issue here is to determine sport agent registration requirements to the whether lawyers can work with talent without lawyer’s advantage by working within the being licensed as a talent or sports agent not Rules of Professional Conduct. First, this is whether regulations can box lawyers in to one practical because maybe as a lawyer one may specific activity. It seems, at least according not want to do as much handholding as an to Rule 1-320 and the TAA that lawyers would agent. Maybe a lawyer wants to focus on the be limited to working with talent in conjunction broader concepts and ten-thousand foot view with a licensed talent agent in a non-music in representing the client as there something deal where the other parameters apply. Seems very powerful, rewarding, and nostalgic in the onerous and it is. lawyer-client relationship.

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 36 Second, keeping in mind the above example. requirements, California Rule of Professional Conduct 1-310-Forming a Partnership With The second solution is really two parts because a Non-Lawyer83 also forbids lawyers from (1) it covers “agency” work that is legal in entering into a partnership with non-lawyers nature, and (2) covers legal work in a state (e.g., agents) where the underlying work is where a lawyer is unlicensed. In some sense, legally related (e.g., where legal advice is being the second solution is a “National Agency and provided). Therefore, a lawyer could work with Licensure Act” for lawyers. The business-side a licensed talent agent as outside or general of this is that it is more inclusive in including counsel in a non-music deal where the lawyer lawyers, while still permitting current agents to is paid by the company or talent directly and keep current and future clients. does not share the legal fee, but the lawyer could not be a partner in the company or take Professor Devlin agrees that a single legislative any profit sharing. bill would be the best step forward, not one specific to managers, agents, or lawyers.85 The above is both impractical and unrealistic. Since he wrote on the subject in 2001, the issue This is similar to putting limits on making a of lawyers being exempt from the TAA has not living for lawyers like the National Football occurred. The current legislation is the same, League does with its rookie player contracts.84 the TAA abides. Other than Solis, lawyers have One can see with the convoluted application of not attempted to directly challenge the TAA such rules, lawyers forgo becoming licensed through litigation. Unfortunately, where the lawyers and having to take the feared California California Labor Commission has jurisdiction Bar Exam to become licensed talent or sports over the TAA, Courts have not ruled on the agents. It also begs the question of whether matter as to lawyers, and thus the process is the TAA has lowered the barriers of entry in cyclical. However, the court in Ferrer showed a working with the most high profile and wealthy willingness to treat the lawyer-client relationship populations in the world, entertainment, with deference by respecting a contractual and sports clientele. Lastly, in working in matter in a retainer agreement, or maybe it was conjunction with a licensed talent agent in a just specific to a federal question by way of the non-music deal where the pay structure and Federal Arbitration Act preemption. relationship is legal and ethical, a lawyer could advise one client, but not necessarily, the other The question of whether talent is better served in the same transaction because there would by restricting lawyers from working with talent be a conflict of interest and disclosures could where lawyers are the best trained to service not cure that conflict. talent is an important one. The dilemma is similar the sports agency industry where the However, there are two solutions to solve National Collegiate Athletic Association limits the Hollywood Dilemma as mentioned at the when and where agents can work with athletes. beginning of this section. First, the California Arguably, the law should be allowing open Legislature needs to exclude lawyers from communication, not restricting it. It seems both the TAA because lawyers are licensed, carry constitutional and simple business savvy to malpractice insurance, and are trained in art allow communication versus restricting it. With that talent need the most (contracts, intellectual a “National Agency and Licensure Act,” the property, dispute resolution, and negotiations) sports and entertainment industries can have when protecting clientele’s business and a much clearer system that is understandable careers. Second, the United States Congress and fair to both lawyers and clientele. needs to pass legislation that covers both entertainment and sports agents so that a Jeremy M. Evans is the Managing Attorney at lawyer working in California may represent California Sports Lawyer®, representing sports, an athlete or actor working in Georgia, for entertainment, and business professionals

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 37 in their contract, negotiation, and intellectual 8 Eriq Gardner, “Challenge to California’s Talent property matters. Evans is an award-winning Agent Licensing Law Revived by Appeals attorney and community leader based in Los Court,” The Hollywood Reporter, March 19, Angeles. He may be reached at Jeremy@ 2015 (http://www.hollywoodreporter.com/ CSLlegal.com, 213.545.1332, www.CSLlegal. thr-esq/challenge-californias-talent-agent- com, or @JeremyMEvansESQ. licensing-783130) (Last accessed on 10/17/17) ______9 Gary Devlin, “The Talent Agencies Act: 1 Laws Relating to Talent Agencies, the “Talent Reconciling the Controversies Surrounding Agencies Act” or “TAA,” Cal. Labor Code 1700- Lawyers, Managers, and Agents Participating 1700.46 (https://www.dir.ca.gov/dlse/talent/ in California’s Entertainment Industry,” talent_laws_relating_to_talent_agencies.pdf) Pepperdine Law Review, Vol. 28. Issue 2, Art. 4 (Last accessed on 10/14/2017) pg. 406 (http://digitalcommons.pepperdine.edu/ 2 The Artist Management Law (1937) and Artist cgi/viewcontent.cgi?article=1343&context=plr) Management Act (1943) were precursors to the (Last accessed on 10/14/2017) 1978 Talent Agencies Act in California 10 Kirk T. Schroder, Esq., “Lawyer Doing 3 Talent Agencies Act, 1700-1700.46 Business with Clients and Taking on Other 4 The Miller-Ayala Act (Cal. Bus. & Prof. Code, Roles: Manager, Agent or Partner: Ethical div. 8, ch. 2.5, § 18895 et seq.); (A copy of the Considerations and Pitfalls: Ethical Dilemmas required Athlete Agent Disclosure Statement In Providing Non-Legal Services,” American can be found here: http://bpd.cdn.sos.ca.gov/ Bar Association (https://www.americanbar. sf/forms/sf-aa1.pdf) (Last accessed on org/content/dam/aba/administrative/ 10/14/2017) entertainment_sports/materials/ethical- 5 Admission Requirements, State Bar dilemmas.authcheckdam.pdf) (Last accessed of California (http://www.calbar.ca.gov/ on 10/17/17) Admissions/Requirements) (Last accessed on 11 Susan Barbieri Montgomery, Steven J. 10/14/2017) McDonald, William Hochberg, James F. 6 Kirk T. Schroder, Esq., “Lawyer Doing Grace, Megan E. Low, Mark A. Fischer, Lucy Business with Clients and Taking on Other D. Lovrien, “Representing Clients in the Roles: Manager, Agent or Partner: Ethical Arts: Five Things Lawyers Should Know,” Considerations and Pitfalls: Ethical Dilemmas LANDSLIDE: Publication of the ABA Section In Providing Non-Legal Services,” American of Intellectual Property, Vol. 5 No. 3. American Bar Association (https://www.americanbar. Bar Association, January/February 2013 org/content/dam/aba/administrative/ (https://www.americanbar.org/content/dam/aba/ entertainment_sports/materials/ethical- publications/landslide/january_february_2013/ dilemmas.authcheckdam.pdf) (Last accessed ABA_LAND_v005n03__representing_clients_ on 10/17/17) in_the_arts_five_things_lawyers_should_ 7 Susan Barbieri Montgomery, Steven J. know.authcheckdam.pdf) (Last accessed on McDonald, William Hochberg, James F. 10/17/17) Grace, Megan E. Low, Mark A. Fischer, Lucy 12 Christiane Cargill Kinney, LeClair Ryan, D. Lovrien, “Representing Clients in the “Managers, Agents & Attorneys,” Lexis Practice Arts: Five Things Lawyers Should Know,” Advisor Journal, 11/25/2015 (https://www. LANDSLIDE: Publication of the ABA Section lexisnexis.com/lexis-practice-advisor/the- of Intellectual Property, Vol. 5 No. 3. American journal/b/lpa/archive/2015/11/25/managers- Bar Association, January/February 2013 agents-amp-attorneys.aspx); Richard Busch, (https://www.americanbar.org/content/dam/aba/ “Walking on the California Talent Agency Act’s publications/landslide/january_february_2013/ Thin Ice: Personal Managers Beware!” Forbes. ABA_LAND_v005n03__representing_clients_ com, March 25, 2013 (https://www.forbes.com/ in_the_arts_five_things_lawyers_should_ sites/richardbusch/2013/03/25/walking-on-the- know.authcheckdam.pdf) (Last accessed on california-talent-agency-acts-thin-ice-personal- 10/17/17) managers-beware/#787e2d65609f) (Last

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 38 accessed on 10/17/2017) the State Bar of California, Summer 2016, 13 Jeremy M. Evans, “Ethical and Practical Volume 22, Issue 3 Implications and differences between Sports 24 Talent Agencies Act, 1700-1700.46 Agents and Attorneys,” Big News for Solo & 25 Talent Agency License and Fee-Related Small Firms, Solo and Small Firm Section of Talent Services, Dept. of Industrial Relations, the State Bar of California, Summer 2016, State of California (https://www.dir.ca.gov/ Volume 22, Issue 3 dlse/Talent%20Agency_License_and_Fee- 14 The Miller-Ayala Act (Cal. Bus. & Prof. Code, Related_Talent_Services.htm) (Last accessed div. 8, ch. 2.5, § 18895 et seq.) on 10/14/2017) 15 The Miller-Ayala Act, supra, (art 1.5, § 18896- 26 Gary Devlin, “The Talent Agencies Act: 18896.8) (A copy of the required Athlete Agent Reconciling the Controversies Surrounding Disclosure Statement can be found here: http:// Lawyers, Managers, and Agents Participating bpd.cdn.sos.ca.gov/sf/forms/sf-aa1.pdf) (Last in California’s Entertainment Industry,” accessed on 10/14/2017) Pepperdine Law Review, Vol. 28. Issue 2, Art. 4 16 University of Southern California Athlete and pg. 406 (http://digitalcommons.pepperdine.edu/ Agent Disclosure Form (https://policy.usc.edu/ cgi/viewcontent.cgi?article=1343&context=plr) files/2011/02/athletes_agents_disclosure_form. (Last accessed on 10/14/2017) pdf) (Last accessed on 10/14/2017) 27 Talent Agencies Act, 1700-1700.46 17 Agents and Amateurism: Agent Information, 28 Admission Requirements, State Bar NCAA (http://www.ncaa.org/enforcement/ of California (http://www.calbar.ca.gov/ agents-and-amateurism) (Last accessed on Admissions/Requirements) (Last accessed on 10/14/2017) 10/14/2017) 18See the Athlete Agent Disclosure Statement, 29 Id. supra. 30 Talent Agencies Act, 1700.4 19See section 17 of the Athlete Agent Disclosure 31 “What is Legal Malpractice,” Sacramento Statement, supra. County Public Law Library (http://www.saclaw. 20 Information for Agents, National Football org/wp-content/uploads/legal-malpractice.pdf) League Players Association (https://www.nflpa. (Last accessed on 10/17/2017) com/agents) (Last accessed on 10/14/2017) 32 California Rules of Professional Conduct, rule 21 MLBPA Agent Information and 3-410 Regulations, Major League Baseball 33 Kirk T. Schroder, “Entertainment Law: Players Association (http://www.mlbplayers. Some Practice Considerations for Beginners,” com/ViewArticle.dbml?DB_OEM_ par. 15, Entertainment & Sports Industries, ID=34000&ATCLID=211073022) (Last AmericanBar.org, (“This article is an accessed on 10/14/2017) abridged and edited version of one that 22 MLBPA Regulations Governing Player originally appeared in The Entertainment Agents, § 4(A)(5) (as amended effective & Sports Lawyer, Winter 1996 (13:4”) February 15, 2016) (https://www.americanbar.org/newsletter/ (http://reg.mlbpaagent.org/Documents/ publications/gp_solo_magazine_home/ AgentForms/Agent%20Regulations.pdf). (A gp_solo_magazine_index/schroder.html); Liz copy of the MLBPA’s Designation of Expert Mullen, “Mandatory malpractice insurance Agent Advisor form can be found here: http:// may thin NFL agent ranks,” Sports Business reg.mlbpaagent.org/Documents/AgentForms/ Daily, August 29 - September 4, 2005 (http:// Exhibit%20A%20-%20Designation%20 www.sportsbusinessdaily.com/Journal/ of%20Expert%20Agent%20Advisor.pdf) (Last Issues/2005/08/20050829/Labor-Agents/ accessed on 10/14/2017) Mandatory-Malpractice-Insurance-May-Thin- 23 Jeremy M. Evans, “Ethical and Practical NFL-Agent-Ranks.aspx) (Last accessed on Implications and differences between Sports 10/20/2017) Agents and Attorneys,” Big News for Solo & 34 Admission Requirements, State Bar Small Firms, Solo and Small Firm Section of of California (http://www.calbar.ca.gov/

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 39 Admissions/Requirements) (Last accessed on with_prospective_clients.html; http://www. 10/14/2017) calbar.ca.gov/Attorneys/Conduct-Discipline/ 35 Legal Specialization, State Bar of California Rules/Rules-of-Professional-Conduct/ (http://www.calbar.ca.gov/Attorneys/Legal- Current-Rules/Rule-1-100) (Last accessed on Specialization) (Last accessed on 10/14/2017) 10/14/2017) 36 Talent Agencies Act, 1700.4 43 California Rules of Professional Conduct, rule 37 Athlete Agent Disclosure Statement, 1-400 Secretary of State, State of California (http:// 44 ABA Model Rules of Professional Conduct, bpd.cdn.sos.ca.gov/sf/forms/sf-aa1.pdf) (Last rule 5.5 accessed on 10/14/2017) 45 California Rules of Professional Conduct, rule 38 How to Become an Agent, NFLPA.com 1-300 (https://www.nflpa.com/agents/how-to-become- 46 California Rules of Professional Conduct, rule an-agent) (Last accessed on 10/14/2017) 2-100 39 David L. Faigman, “The California bar exam 47 ABA Model Rules of Professional Conduct, flunks too many law school graduates,” Los rule 4.2 Angeles Times, March 21, 2017 (http://www. 48 Talent Agencies Act, 1700 latimes.com/opinion/op-ed/la-oe-faigman- 49 The Miller-Ayala Act, supra california-bar-exam-cut-score-20170321-story. 50 MLBPA Regulations Governing Player html) (Last accessed on 10/14/2017) Agents, supra; NFL Players Association 40 Rules of Professional Conduct, State Bar of Regulations Governing Contract Advisors California (“The California Rules of Professional (as amended through August 2016) Conduct are intended to regulate professional (https://nflpaweb.blob.core.windows. conduct of attorneys licensed by the State Bar net/media/Default/PDFs/Agents/ through discipline. They have been adopted RegulationsAmendedAugust2016.pdf ) (Last by the Board of Trustees and approved by the accessed on 10/14/17) California Supreme Court pursuant to statute 51 Jeremy M. Evans, “Ethical and Practical to protect the public and to promote respect Implications and differences between Sports and confidence in the legal profession. The Agents and Attorneys,” Big News for Solo & rules and any related standards adopted Small Firms, Solo and Small Firm Section of by the Board are binding on all members of the State Bar of California, Summer 2016, the State Bar”) (http://www.calbar.ca.gov/ Volume 22, Issue 3 Attorneys/Conduct-Discipline/Rules/Rules- 52 California Rules of Professional Conduct, rule of-Professional-Conduct) (Last accessed on 3-310 10/14/2017) 53 James Andrew Miller, “Power House: CAA 41 Jeremy M. Evans, “Ethical and Practical The Untold Story of Hollywood’s Creative Implications and differences between Sports Artists Agency,” HarperCollins, First Edition, Agents and Attorneys,” Big News for Solo & 2016 Small Firms, Solo and Small Firm Section of 54 People v. McKenzie (1983) 34 Cal.3d 616, the State Bar of California, Summer 2016, 631 Volume 22, Issue 3 55 DLSE - Talent Agency Cases, Dept. of Labor 42 Rule 7.3: Direct Contact with Prospective Standards and Enforcement, Dept. of Industrial Clients, ABA Model Rules of Professional Relations, State of California (http://www.dir. Conduct (Note that California has not adopted ca.gov/dlse/dlse-tacs.htm) (Last accessed on the ABA Model Rules. California’s licensed 10/14/2017) attorneys are subject to the California Rules of 56 California Rules of Professional Conduct, Professional Conduct. See California Rules rule 2-100; ABA Model Rules of Professional of Professional Conduct, rule 1-100) (https:// Conduct, rule 4.2 www.americanbar.org/groups/professional_ 57 James Andrew Miller, “Power House: CAA responsibility/publications/model_rules_of_ The Untold Story of Hollywood’s Creative professional_conduct/rule_7_3_direct_contact_ Artists Agency,” HarperCollins, First Edition,

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 40 2016 69 Id. (“As this Court recognized in Southland 58 ABA Model Rules of Professional Conduct, Corp. v. Keating, 465 U. S. 1 (1984), the Federal rule 7.3; California Rules of Professional Arbitration Act (FAA or Act), 9 U. S. C. §1 et seq. Conduct, rule 1-400 (2000 ed. and Supp. V), establishes a national 59 California Rules of Professional Conduct, rule policy favoring arbitration when the parties 2-100 contract for that mode of dispute resolution”) 60 Solis v. Blancarte, TAC-27089 (2013) 70 Id. at 2 61 Unless there is an arbitration clause in the 71 U.S. Constitution. Amend. XIV, Sec. 1 contract, see Preston v. Ferrer, 552 U.S. 72 U.S. Constitution. Art. I, Sec. 8, Clause 3 346 (2008) (https://www.supremecourt.gov/ 73 The Dormant Commerce Clause, LAW opinions/07pdf/06-1463.pdf) (Last accessed on Shelf: Educational Media (https://lawshelf.com/ 10/12/2017) courseware/entry/the-dormant-commerce-clause) 62 DLSE - Talent Agency Cases, Dept. of Labor (Last Accessed on 10/14/2017) Standards and Enforcement, Dept. of Industrial 74 “Need For and Benefits of the Uniform Athlete Relations, State of California (http://www.dir. Agents Act (UAAA),” NCAA.org (http://www.ncaa. ca.gov/dlse/dlse-tacs.htm) (Last accessed on org/enforcement/agents-and-amateurism/need- 10/14/2017) and-benefits-uniform-athlete-agents-act-uaaa) 63 National Conference of Personal Managers 75 Jurisdictions That Have Adopted the UBE, v. Edmund G. Brown, 9th Cir. No. 15-56388, National Conference of Bar Examiners (http:// April 25, 2017, (http://caselaw.findlaw.com/us- www.ncbex.org/exams/ube/) (Last accessed on 9th-circuit/1857795.html) (Last accessed on 10/14/2017) 10/12/2017) 76 Gary Devlin, “The Talent Agencies Act: 64 Marathon Entertainment, Inc. v. Blasi, 9th Cir. Reconciling the Controversies Surrounding No. B179819, June 23, 2006 (http://caselaw. Lawyers, Managers, and Agents Participating in findlaw.com/ca-court-of-appeal/1355194.html) California’s Entertainment Industry,” Pepperdine (Last accessed on 10/12/2017) Law Review, Vol. 28. Issue 2, Art. 4 (http:// 65 Ted Johnson, “Talent Managers Lose Legal digitalcommons.pepperdine.edu/cgi/viewcontent. Effort to Toss California Law: Statute Prohibits cgi?article=1343&context=plr) (Last accessed on Reps From Procuring Employment,” Variety. 10/14/2017) com, March 16, 2013 http://variety.com/2013/ 77 Gary Devlin, “The Talent Agencies Act: biz/news/talent-managers-lose-legal-effort- Reconciling the Controversies Surrounding to-toss-california-law-1200004111/) (Last Lawyers, Managers, and Agents Participating in accessed on 10/14/2017) California’s Entertainment Industry,” Pepperdine 66 See generally, “Part 1: What is the Rule of Law Review, Vol. 28. Issue 2, Art. 4 (http:// Law,” American Bar Association Division of digitalcommons.pepperdine.edu/cgi/viewcontent. Public Education (https://www.americanbar.org/ cgi?article=1343&context=plr) (Last accessed on content/dam/aba/migrated/publiced/features/ 10/14/2017) Part1DialogueROL.authcheckdam.pdf) (Last 78 “Variety 500, Ari Emanuel, WME | IMG,” Variety. accessed on 10/14/2017) com (http://variety.com/exec/ari-emanuel/) (Last 67 DLSE - Talent Agency Cases, Dept. of Labor accessed on 10/17/2017) Standards and Enforcement, Dept. of Industrial 79 Talent Agencies Act, 1700.4(a) Relations, State of California (http://www.dir. 80 Talent Agencies Act, 1700.44(d ca.gov/dlse/dlse-tacs.htm) (Last accessed on 81 Erin Jacobson, “Ways The Music Industry 10/14/2017) Can Change For The Better,” Forbes.com, 68 Preston v. Ferrer, 552 U.S. 346 2/1/2017 (https://www.forbes.com/sites/ (2008) (https://www.supremecourt.gov/ legalentertainment/2017/02/01/improvements- opinions/07pdf/06-1463.pdf) (Last accessed on the-music-industry-needs-to-see-in- 10/12/2017) 2017/#24c759ae229c) (Last accessed on 10/14/2017) 69 82 California Rules of Professional Conduct, rule

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 41 1-320 83 California Rules of Professional Conduct, rule Litigation Update 1-310 by Michelle M. Wahl; Patrick Ouellette; Kathryn S. Yoches; 84 Andrew Brandt, “The Fine Print of Rookie Katie R. Day; Kyle E. Simmons; Bernetta Hardy Contracts in the NFL,” SportsIllustrated.com, May 16, 2017 (https://www.si.com/mmqb/2017/05/16/ A Landmark Win for YouTube Users nfl-rookie-contracts-fine-print) (Last accessed on 10/14/2017) The U.S. Copyright Act affords a “fair use” 85 Id. at 406 defense for alleged infringement in some instances. However, successfully arguing such a defense is not always a simple task. Without any bright-line rule or definitive standard, courts find themselves rendering decisions on a case- by-case basis. Granted, courts are required to consider a number of non-exhaustive factors, including (1) the purpose and character of the work, (2) the nature of the copyrighted work, (3) the quality, amount and substantiality of the portion of the copyrighted work used in relation to the copyrighted work as a whole, and (4) the effect of the use upon the potential market for or value of the copyrighted work.

This defense became crucial in 2016 when Matt Hosseinzadeh (“Hosseinzadeh”) a YouTuber, sued the creators of YouTube channel H3H3, Ethan and Hila Klein, alleging they had misused fair use and were infringing Hosseinzadeh’s copyright when H3H3 posted a video featuring clips of Hosseinzadeh’s video and then criticizing the same. Besides copyright infringement claims (and a defamation claim), Hosseinzadeh alleged that the Kleins had violated the Digital Millennium Copyright Act by asserting misrepresentations in a counter-takedown notice.

In its fair use examination, the Court held that criticism and comment, such as that exhibited by the Klein’s video at issue, were classic fair use examples and were one of the key factors favoring the Kleins. However, because the Hosseinzadeh video was considered a creative work protected by copyright law, factor (2) favored Hosseinzadeh. Factor (3) was a flush given that the use of Hosseinzadeh’s video in Klein’s video was a necessary element for its critique and criticism. Finally, in light of the differing nature of the two videos, the Court held that the Klein’s video was not a substitute for the Hosseinzadeh video. Considering

Entertainment & Sports Law Winter 2018 (Volume 34 / Issue 2 | 42