1 DAVID L. GURLEY, State Bar No. 194298 STATE OF CALIFORNIA 2 DEPARTMENT OF INDUSTRIAL RELATIONS DIVISION OF LABOR STANDARDS ENFORCEMENT 3 300 Oceangate, Suite 850 Long Beach, California 90802 4 Telephone: (562) 590-5461 Facsimile: (562) 499-6438 5 Attorney for the Labor Commissioner 6 7 8 BEFORE THE LABOR COMMISSIONER 9 OF THE STATE OF CALIFORNIA 10 11 RICKY BELL, an individual; MIKE CASE NO. TAC 37001 BIVENS, an individual; RON DEVOE, an 12 individual; JOHNNY GILL, an individual; DETERMINATION OF RALPH TRESVANT, an individual; and CONTROVERSY 13 NEW EDITION ENTERPRISES, LLC a Florida limited liability company, 14 15 Petitioners, 16 vs. 17 BENCHMARK ENTERTAINMENT, 18 LLC, a California limited liability company, 19 Respondent. 20 21 22 I. INTRODUCTION 23 The above-captioned matter, a Petition to Determine Controversy under Labor 24 25 Code section 1700.44, came on regularly for hearing in Long Beach, California, before 26 the undersigned attorney for the Labor Commissioner assigned to hear this case. 27 Petitioner RICKY BELL, an individual; MIKE BIVENS, an individual; RON DEVOE, an 28 1 DETERMINATION OF CONTROVERSY - TAC 37001 1 individual; JOHNNY GILL, an individual; RALPH TRESVANT, an individual; and 2 NEW EDITION ENTERPRISES, LLC a Florida limited liability company, (hereinafter, 3 referred to as "NEW EDITION" or "Petitioners") appeared and were represented by 4 5 Stephen D. Rothschild, Esq. ofKING, HOLMES, PATERNO & SORIANO, LLP. 6 Respondent BENCHMARK ENTERTAINMENT, LLC a California limited liability 7 company, (hereinafter, referred to as "BENCHMARK" or "Respondent") appeared 8 through Christiane Cargill Kinney, Esq. ofLECLAIRRYAN. 9 10 The above-captioned matter, a Petition to Determine Controversy under 11 Labor Code sectionl 700.44, came on regularly for hearing in Long Beach, 12 California, on January 21 and 22, 2016, before the undersigned attorney for the 13 14 Labor Commissioner assigned to hear this case. The matter was taken under 15 submission. 16 Based on the evidence presented at this hearing and on the other papers on 17 18 file in this matter, the Labor Commissioner hereby adopts the following decision. 19 II. FINDINGS OF FACT 20 1. NEW EDITION is a well-known group that was celebrating its thirty-year 21 22 anniversary and was the recipient of Soul Train's 2012 Lifetime Achievement Award. 23 2. BENCHMARK is an artist management company, also having decades of 24 experience managing many famous artists. BENCHMARK has never been a California 25 licensed talent agent. 26 3. In or about August 2012, the parties began discussing a management 27 28 agreement. BENCHMARK was eager to sign NEW EDITION who was fresh off a 2 DETERMINATION OF CONTROVERSY - TAC 37001 ( 1 successful 2012 tour. BENCHMARK met separately and collectively with members of 2 NEW EDITION in an effort to convince NEW EDITION to enter into a management 3 agreement and in doing so made many alluring representations. The representations made 4 5 by BENCHMARK included a promise the band would receive more money for 6 performances than they had in the past. In an effort to showcase BENCHMARK's 7 management acumen and to induce the band into signing, BENCHMARK's principals, 8 John Hammond (hereinafter "Hammond") and Kevin Gasser (hereinafter "Gasser") 9 10 created an 18-month plan ("the Plan"). The Plan was a hypothetical tour that included 11 venues both domestic and international. The hypothetical tour was presented to the band 12 in the form of a spreadsheet. The spreadsheet consisted of 125 performance dates along 13 with specific venues and corresponding dollar amounts the band could expect to receive 14 15 for each performance. It was clear from the testimony of both parties that the Plan was 16 created to induce NEW EDITION to enter into a management agreement. 17 4. Along with the Plan, BENCHMARK's principals discussed potential movie 18 and book opportunities. Additionally, Hammond promised to use his connections with 19 20 Live Nation, a concert promoter, to obtain more lucrative terms for NEW EDITION. In 21 short, BENCHMARK was selling themselves in every way possible as the management 22 firm that could provide premier opportunities for NEW EDITION and cumulatively these 23 representations proved to be a very effective sales tool. 24 25 5. In or around September of 2012, the parties entered into an oral agreement 26 whereby BENCHMARK would act as NEW EDITION's management in exchange for a 27 commission structure capping the fees paid to BENCHMARK to no more than the share 28 3 DETERMINATION OF CONTROVERSY -TAC 37001 1 of revenue received by each individual member of NEW EDITION. 2 6. In or around October of 2012, BENCHMARK obtained a business manager 3 and a talent agent for NEW EDITION. Talent agent, Mark Siegel (hereinafter "Siegel") 4 5 of International Creative Management Partners (hereinafter “ICM”), testified that when he 6 joined the NEW EDITION team, he worked closely with BENCHMARK and booked the 7 "vast majority” of NEW EDITION'S performances. 8 7. In 2013, BENCHMARK along with Siegel booked three concert events for 9 10 NEW EDITION. In 2014, BENCHMARK along with Siegel organized and booked an 1 1 entire tour, the "All Six Tour” which consisted of 27 performances. 12 8. In organizing the "All Six Tour”, BENCHMARK's services to NEW 13 EDITION, included marketing, public relations, advertising and interfacing with other 14 15 members of NEW EDITION's team, including but not limited to their business manager 16 and talent agent. 17 9. In or around June of 2014, just prior to NEW EDITION embarking on the 18 "All Six Tour”, NEW EDITION terminated the management agreement and, according to 19 20 BENCHMARK, refused to pay BENCHMARK's earned commissions associated with the 21 "All Six Tour”. 22 10. On or around September of 2014, BENCHMARK filed a complaint in the 23 Supreme Court of the State of New York alleging a material breach of the management 24 25 agreement seeking unpaid commissions. In defense of the New York action, NEW 26 EDITION filed the instant petition to determine controversy on September 16, 2014 27 alleging the BENCHMARK violated the Talent Agencies Act (hereinafter "the Act”). 28 4 DETERMINATION OF CONTROVERSY - TAC 37001 1 11. In their Petition, NEW EDITION seeks a determination that (1) 2 BENCHMARK violated the Act; (2) That BENCHMARK'S alleged agreement with 3 NEW EDITION is illegal, unenforceable void ab initio and that BENCHMARK has no 4 5 rights or privileges thereunder; (3) an order requiring BENCHMARK to disgorge and 6 repay NEW EDITION all monies and things of value received by BENCHMARK directly 7 or indirectly and pursuant to the alleged agreement with NEW EDITION, including all 8 commissions fees, profits, expenses costs or other monies plus interest at 10% per annum; 9 10 (4) awarding NEW EDITION's costs and attorney fees incurred; (5) and that NEW 11 EDITION is entitled to such other and further relief in their favor as the Labor 12 Commissioner may deem just and proper. 13 12. Specifically, NEW EDITION alleges that BENCHMARK violated the Act 14 15 by repeatedly procuring, offering, negotiating, promising and attempting to procure 16 engagements or employment for NEW EDITION without a California talent agency 17 license and therefore in violation of the Act. The allegations include the following: 18 Allegations of Procurement 19 20 A. Offers and Promises Prior to Representation 21 1. "The Plan" 22 23 BENCHMARK presented the Plan to NEW EDITION one month before 24 representation commenced. The Plan included a list of 125 proposed engagements and 25 included not only specific dates and venues, but also specific dollar amounts NEW 26 EDITION could expect to receive for each performance. In short, the Plan was a promise 27 28 for millions of dollars in revenues. 5 DETERMINATION OF CONTROVERSY - TAC 37001 1 It was clear from the testimony of both parties that the purpose of the Plan was to 2 communicate to NEW EDITION that BENCHMARK could arrange these dates and NEW 3 EDITION could expect the amounts paid as reflected in the Plan. According to 4 5 Hammond, the purpose of the Plan was to show the members of NEW EDITION what 6 BENCHMARK could do for them. NEW EDITION was persuaded by the Plan and the 7 Plan was an instrumental vehicle inducing NEW EDITION to enter into the management 8 agreement with BENCHMARK. 9 10 2. Other Promises 11 12 In addition to the Plan, Hammond told NEW EDITION that he had a 13 close relationship with Live Nation and could use that relationship to obtain benefits for 14 NEW EDITION. Siegel confirmed Hammond's representations and remembered 15 Hammond saying he had a "terrific" relationship with Live Nation, that he "could do 16 17 things above and beyond," and that he had obtained good deals for other clients. 18 Hammond did not deny that he had a good relationship with Live Nation and it was 19 credible that he did. Notably, BENCHMARK also promised to procure tour bonuses for 20 live performances, and television and movie deals. 21 22 B. Benchmark's Alleged Solicitation of Offers for New Edition to Perform in 23 Baltimore, Washington D.C., New Orleans and Indio 24 25 NEW EDITION argued BENCHMARK solicited several engagements without the 26 assistance of NEW EDITION'S talent agent, Siegel. Specifically, NEW EDITION 27 suggested BENCHMARK solicited two shows for the "All Six Tour" on July 19 and 20, 28 6 DETERMINATION OF CONTROVERSY - TAC 37001 1 2014, in Washington D.C. and Baltimore, and February 8 and 9, 2013 in New Orleans and 2 Indio, California. 3 As to the Baltimore and D.C.