Part 1: Avoiding Disputes
California law makes a significant distinction between talent managers and talent agents, oftentimes with dire consequences for those who, wittingly or unwittingly, blur the line between the two roles. California’s Talent Agency Act requires anyone who solicits or procures artistic employment or engagements for artists to obtain a talent agency license. Labor Code §1700.4, 1700.5. Talent managers who have “solicited” or “procured” work for their clients may find their contracts voided by the Labor Commissioner (breach of contract), and may even be required to return some or all of their earned payments.
“Artists” that fall under the act include, but are not limited to, actors and actresses, radio artists, musical artists, directors, producers, writers, cinematographers, composers, lyricists, arrangers, models, and “other artists and persons rendering professional services in motion picture, theatrical, radio, television and other entertainment enterprises.” See Labor Code §1700.4(b). “Other entertainment enterprises” may seem to be an extremely broad category.
A talent agent is “a person or corporation who engages in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist or artists.” Marathon Entertainment, Inc. v. Rosa Blasi (2008) 42 Cal. 4th 974, 983, 986, citing Labor Code §1700.4(a). “In Hollywood, talent agents act as intermediaries between the buyers and sellers of talent… Generally speaking, an agent’s focus is on the deal: on negotiating numerous short-term, project-specific engagements between buyers and sellers.” Id. at 983.
Talent managers, on the other hand, focus “on advising and counseling each artist with an eye to making the artist as marketable and attractive to talent buyers as possible, as well as managing the artist’s personal and professional life in a way that allows the artist to focus on creative productivity. ‘Personal managers primarily advise, counsel, direct, and coordinate the development of the artist’s career. They advise in both business and personal matters, frequently lend money to young artists, and serve as spokespersons for the artists.’” Id. at 984.
Frequently, however, it is expected that “the development of the artist’s career” involves introducing them to greater and better opportunities. Talent managers find themselves helping their clients by reaching out to their entertainment contacts in the industry about opportunities for their clients, exploring terms, negotiating contracts, and potentially engaging in activities for the benefit of their clients which entertainment litigators might one day claim are technical violations of the Talent Agency Act.
Many of the cases that find their way to the Labor Board involve an artist who, for one reason or another, no longer wants to pay his or her talent manager, and so complains that the manager has violated the Talent Agency Act. Any dispute involving the act must be first heard by the Labor Commissioner and cannot be brought in a court of law unless the commissioner has issued its ruling. It is not a forum friendly to the manager. According to a recent study by Forbes Magazine, ninety percent of the cases that have been referred to the Labor Commissioner in the last twenty years have been decided in favor of the artist. See “Walking on the California Talent Agency Act’s Thin Ice: Personal Managers Beware!”, by Richard Busch, Forbes March 25, 2013.
One way managers address what may seem to be an uneven playing field is to insert an arbitration clause in the management contract, requiring that any and all disputes be referred to arbitration. In the case of Preston v. Ferrer (2008) 522 U.S. 340, the United States Supreme Court upheld such an arbitration clause, even though by doing so it took away the Labor Board’s “exclusive jurisdiction.” Mr. Boesch of the Boesch Law Group was the arbitrator selected by the entertainment lawyers for both sides in the case, who upheld the arbitration clause and whose ruling was affirmed by the Supreme Court.
If you are a talent manager, talent agent, artist, or are otherwise involved in entertainment litigation and need to know more about the laws surrounding California’s Talent Agency Act, avoid disputes by speaking to a Los Angeles entertainment litigator who knows the rules and exceptions, who is respected by reputation, and who will fight to get you a fair and just result.
Part 2: Handling Disputes
In “Part One,” we discussed the differences between talent agents and managers and the ways that Talent Agency Act disputes can be avoided. Here we will discuss the potential results that come from a Talent Agency Act violation, as well as one exception to the act’s strict regulations.
Consequences of a Talent Agency Act Violation
If the Labor Commissioner or arbitrator finds that there has been a violation of the Talent Agency Act, he or she has three options. First, the decision-maker can completely void the parties’ contract. If the central purpose of the contract is found to be illegal, then the contract as a whole cannot be enforced. Voidance of the contract is not mandatory, but if the entire contract revolves around the solicitation and procurement of employment by the talent manager, then voidance is very likely. (Note that in many instances, even where the contract is voided, the arbitration clause – if there is one – requiring that the dispute be decided privately by an arbitrator, is not void and survives.)
If the contract merely contains an illegal provision, and the illegality is collateral to the main purpose of the contract, then the commissioner or arbitrator can order that the illegal provision be stricken from the contract. For example, in Marathon Entertainment, Inc. v. Rosa Blasi (2008) 42 Cal. 4th 974, in declining to void the parties’ contract, the court ruled that a personal manager who spends 99 percent of his time engaged in counseling a client and organizing the client’s affairs is not insulated from the act’s requirements if he spends one percent of his time procuring or soliciting; conversely, however, the 1 percent of the time he spends soliciting and procuring does not thereby render illegal the ninety-nine percent of the time spent in conduct that requires no license. See id. at 997. The court concluded, for the personal manager who truly acts as a personal manager, “an isolated instance of procurement does not automatically bar recovery for services that could lawfully be provided without a license.” Id. at 998.
Separately or in addition to voidance or severance, the commissioner can order the talent manager to disgorge the profits that he or she gained from the violation. In other words, if a talent manager solicits a television role for a client and accepts a ten percent commission on the amount the client makes per episode, he or she may be forced to return those commissions. As one can imagine, this can be disastrous to a talent manager who isn’t well-advised.
The “Safe Harbor Exception”
In 1982, the California Legislature amended the Talent Agency Act to impose a one-year statute of limitations, eliminate criminal sanctions for violations of the act, and establish a “safe harbor” for managers to procure employment if they do so in conjunction with a licensed talent agent. However, the exception has been interpreted very narrowly by the courts, and will “only apply if the unlicensed person is acting ‘in conjunction with and at the request of the licensed talent agency,’ and the only covered activity that such unlicensed person may engage in consists of ‘the negotiation of any employment contract.’” Massey v. Landis, TAC 42-03 (emphasis supplied). The safe harbor exception “does not extend to nor encompass activities which consist of approaching third parties and soliciting them to offer engagements to an artist.” Todd v. Meagher, TAC 13418.
Navigating the Talent Agency Act and responding to Talent Agency Act disputes requires the services of an experienced and knowledgeable attorney who is intimately familiar with entertainment law. The Boesch Law Group has extensive entertainment & sports litigation experience, experience in advising clients how best to avoid Talent Agency Act disputes, and experience in dealing with such disputes as they arise – on behalf of managers, on behalf of talent, and as the decision-maker in a number of cases, including the leading case on the subject, Preston v. Ferrer (2008) 522 U.S. 340, where Mr. Boesch was retained by entertainment litigators on both sides of the dispute to arbitrate and decide the case. To speak to a Los Angeles-based attorney who can help guide you through the legal process, please use our contact form or call us today at (310) 578-7880.
DISCLAIMER: The materials on this website are for general information purposes only and should not be construed as legal advice, legal opinion or any other advice on any specific facts or circumstances. Readers should not act or refrain from acting upon this information without seeking professional advice.
Transmission of information on or by use of this website is not intended to create, and receipt does not constitute, a lawyer-client relationship between the sender and receiver. Such communications will not be treated as confidential. Photographs and other graphics may be for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.