Offer California Can't Refuse: How an Efficient and Adaptable Framework Can Improve Remedies Under the Talent Agency Act
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UCLA UCLA Entertainment Law Review Title "An Offer California Can't Refuse": How an Efficient and Adaptable Framework Can Improve Remedies Under the Talent Agency Act and Correct the Issues With its Interpretation Permalink https://escholarship.org/uc/item/6f89g4q9 Journal UCLA Entertainment Law Review, 21(1) ISSN 1073-2896 Authors Warren, Keith Wechsler, Ryan Publication Date 2014 DOI 10.5070/LR8211027177 Peer reviewed eScholarship.org Powered by the California Digital Library University of California "An Offer California Can't Refuse": How an Efficient and Adaptable Framework Can Improve Remedies Under the Talent Agency Act and Correct the Issues With its Interpretation Keith Warren and Ryan Wechsler* California has a longstanding issue with the Talent Agency Act, which states that only a licensed agent may seek out, or procure, em- ployment for an artist. The TAA has caused major headachesfor Hol- lywood's personal managers, who find their contracts with artists voided for engaging in even minor acts of procurement. Many com- mentators initially believed that Marathon Entertainment Inc. v. Blasi solved the dilemma. However, it turns out that the Labor Commission- er, who has exclusive jurisdiction to hear claims arising under the TAA, continues to void contracts between Calfornia'spersonal man- agers and their clients at an alarmingrate. Personalmanagers disap- prove of the Labor Commissioner 's failure to employ the doctrine of severability, as advised by the Blasi court, to these contracts. In re- sponse, the personal managers recently filed a challenge to the consti- tutionality of the TAA. The United States District Courtfor the Central District of California, however, dismissed the claim and upheld the Keith Warren is an associate at The Lomnitzer Law Firm, P.A. Keith practices entertain- ment law, intellectual property law, and civil litigation with an emphasis on music, film, and television representation; Florida State University College of Law, J.D. 2012; University of Central Florida, B.S. 2009. Ryan Wechsler is a third year law student and serves as the Articles & Notes Editor on the Florida State University College of Law Business Review for the 2013-2014 academic school year; Florida State University College of Law, J.D. 2014 (expected); Florida State University College of Business, B.S. 2010 (cum laude). 80 UCLA ENTERTAINMENT LAW REVIEW [Vol. 21:1 constitutionality of the controversial Act. Because this debate spans over one hundred years, and the constitutional challenge was unsuc- cessful, the authors of this comment advocate a two-fold approach to correcting the dilemma: (1) place the burden of production in Labor Commissioner hearings on the artist to prove that the entire manager contract should be voided, and (2) assess statutory civil penalties to those personal managers who willfully violate the TAA by procuring employment. The authors of this Comment argue that the California legislature should consider applying this approach because it is not only easily adaptable, but also in line with the true purpose of the TAA. I. INTRODUCTION.................................................. 81 II. AGENTS, MANAGERS, AND THE TALENT AGENCY ACT ............ 84 A. The Functional and Legal Dichotomy of Agents & Managers .......................... ........ 84 1 . Ag ents ....................................................................... 8 4 2 . M an ag ers .................................................................. 85 B. The Needfor the Talent Agency Act........ ................. 87 C. The TAA's Implications on Agents & Managers.............90 III. CONFUSION IN INTERPRETATING THE TAA's REMEDIES ............... 92 A. The Pre-BlasiLandscape ........ ............... 94 B. Marathon v. Blasi and Severability at Last! ........... 98 C. Post-Blasi: ContinuedFrustration Leads to a Challenge to the TAA's Constitutionality .............. ..... 101 IV. A Two-PART SOLUTION TO CORRECTING BLAsI'S MISAPPLICATION.. ......................................... 106 A. Shifting the Burden of Production.......... ...... 107 B. Statutory Penaltiesfor Willful Acts of Procurement.........110 1. Why Penalties are the Right Fit....... ............. 111 2. The Willfulness Requirement........................112 3. The Willfulness Framework: Actual and Constructive Willfulness ... ................. 114 a. Actual Willfulness.................. ...... 115 b. Constructive Willful Violations- Totality of the Circumstances & Factors.. ..................... 116 V. CONCLUSION ............................................... 119 2014] TALENT AGENCY ACT 81 I. INTRODUCTION Eric Murphy, Vincent Chase's manager on the hit television series Entourage, runs into Harvey Weingard in the bathroom of an airport at the Sundance Film Festival. Harvey is a big time movie producer in Hollywood, and Eric jumps at the opportunity to introduce himself. Eric informs Harvey that he represents Vincent Chase as his personal manager. Harvey replies, "Tell me something. The managers, agents what the hell is the difference between you guys?" Eric quickly re- sponds, "Managersare the ones who care." Harvey laughs and wipes his brow with a paper towel, interpreting Eric's response as a joke. Then noticing Eric's stern expression, Harvey responds, "That's good. I like that. You're not serious, areyou?"' In this exchange, fictional film producer Harvey Weingard's dis- missal of Eric Murphy's role in Hollywood presages the reality of a personal manager's legal footing in California. Indeed, California con- tract law fails to clarify the distinction between agents and managers. Specifically, the Talent Agency Act (hereinafter referred to as "the TAA" or "the Act"),2 provides that only licensed agents are allowed to procure employment contracts for artists, and employment contracts procured by anyone else (including a personal manager) are deemed illegal.3 Under the Act, "procurement" encompasses a broad sweep of activities in which employment is sought for an artist. As a result, art- ists have exploited this provision to invalidate, in entirety, contracts procured by their managers.' With damages not limited to prevention of contracted-for future commissions, managers who procure employ- ment also endure disgorgement for all past commissions obtained through representing the artist,' irrespective of legality. This is how the situation plays out: when an artist fails to pay his personal manager money due under contract, the manager has the right to file a breach of contract action in state court. The artist, however, 1Entourage: The Sundance Kids (HBO television broadcast July 17, 2005). 2 CAL. LAB. CODE §§ 1700-1700.47 (West 2013). 3 Marathon Entm't, Inc. v. Blasi, 42 Cal. 4th 974, 984-86 (Cal. 2008) ("Any person who procures employment-any individual, any corporation, any manager-is a talent agency sub- ject to regulation." (citing CAL. LAB. CODE §§ 1700 (a), 1700.4(a) (West 2013)). 4 For a discussion regarding the exploitation of the TAA by artists at the expense of manag- ers, see infra Part III.A. 5 See, e.g., Waisbrenv. Peppercorn Prods., Inc., 48 Cal. Rptr. 2d 437, 446-47 (Cal. Ct. App. 1995) (holding that "the most effective weapon for assuring compliance with the Act is the power . to . declare any contract entered into between the parties void from the incep- tion."). 82 UCLA ENTERTAINMENT LAW REVIEW [Vol. 21:1 typically responds by filing a claim with the Labor Commissioner (who has exclusive jurisdiction to hear these causes of action) seeking to in- validate the allegedly breached contract on the grounds that the manag- er engaged in illegal acts of procurement.' The Labor Commissioner has jurisdiction to decide whether the manager has engaged in illegal acts of procurement and, if so, whether to void the entire contract be- tween the artist and manager. If the contract is voided, any claims by the manager arising from the contract are precluded, and any benefits conferred or commissions earned legally are, therefore, unattainable.' Regrettably for managers like the fictional Eric Murphy, the Labor Commissioner rules to void these contracts in their entirety in the vast majority of circumstances.' Consequently, grim ramifications befall managers, as they inescapably risk losing the commissions they earn and resources they invest while assisting in an artist's rise to fame and fortune. Responding to the conundrum, the Supreme Court of California addressed the issue head on in Marathon Entertainment Inc. v. Blasi.9 As an alternative to voiding the entire contract based on a manager's procurement, the court instructed the Labor Commissioner to first de- termine the central purpose of the contract and, if appropriate, apply the doctrine of severability.o The court emphasized analyzing whether the illegal act(s) of procurement frustrated the central purpose of the contract between the manager and the artist." According to the court, if the central purpose of the contract rendered managerial functions, the contract should be severed of any illegal procurement by the manag- er.'2 Hence, the Blasi court's ruling intended for contracts found to be centrally managerial to survive invalidation, with the doctrine of sever- ability voiding only the illegal acts of procurement rather than the en- tire contract. However, where the illegal procurement frustrates the central purpose of the contract, the contract should be voided entirely. Managers rejoiced in the aftermath of Blasi." Yet problems arose 6 Matthew Belloni, Hollywood Managers Back New Appeal Challenging Talent