Legal News

Rulings change talent managing game

By Jason Siegel

Lawyers who represent the personal managers of actors, musicians and other performers anticipate a drop in client disputes following a pair of recent rulings in the California Supreme Court and the U.S. Supreme Court that substantially alter the state's Talent Agencies Act.

The act regulates licensed agents. Both rulings deal with disputes between artists and their personal managers, who, although not licensed agents, frequently end up before the California labor commissioner under the act's provisions because clients, in attempts to contest demands for unpaid commissions, make claims that their managers illegally procured work for them. Under the act, only agents are allowed to procure work for artists.

If the allegations prove to be true, as they often are, the labor commissioner typically voids the entire contract ? a powerful legal weapon used by artists over the years.

Now, the two recent rulings could weaken that strategy. On Jan. 28, the California Supreme Court issued a closely watched ruling that allows managers to "sever" the portions of a contract found illegal under the act so that they could obtain commissions for their legal work. Marathon Entertainment Inc. v. Blasi, 174 P.3d 741 (Calif.).

On Feb. 20, the U.S. Supreme Court dealt a second victory to managers in ruling that the state's act is pre-empted by the Federal Arbitration Act in cases involving arbitration agreements. Preston v. Ferrer, No. 06-1463 (U.S.).

"There will be a large chunk of these disputes that will disappear," said Donald Smiley of the Law Offices of Donald V. Smiley in Los Angeles, who represents the manager in the California Supreme Court case.

 In the California Supreme Court case, Marathon Entertainment Inc. sued Rosa Blasi, an actress on the cable television series Strong Medicine, for allegedly reneging on a contract in which she agreed to pay 15% of her earnings to her personal manager.

In its ruling, the California Supreme Court found that the labor commissioner, rather than voiding a contract, is allowed to sever the illegal acts of a manager from the legal ones in determining what commissions are owed. While the labor commissioner has the power to void contracts, "the power to so rule does not suggest a duty to do so in all instances," wrote Associate Justice Kathryn M. Werdegar.

The ruling eliminates most of the cases that involve small claims of procurement within large contracts, said Smiley, who represents Marathon.

Blasi's lawyer, Michael Plonsker, a partner at Dreier Stein Kahan Browne Woods George in Santa Monica, Calif., said the decision leaves disputes to be determined on a case-by-case basis. Further, the resolutions of those disputes won't be public given the U.S. Supreme Court's recent ruling, he said.

In that case, former Florida Circuit Judge Alex Ferrer, star of the syndicated television show Judge Alex, was sued by his manager for unpaid fees. Ferrer claimed that his manager, Arnold M. Preston, had violated the act by procuring work. Preston sought to arbitrate the dispute. The Supreme Court ruled that the Federal Arbitration Act pre-empts the California act when an arbitration agreement exists.

Bob Dudnik, an attorney at Los Angeles-based Mitchell Silberberg & Knupp who represents Ferrer, said the ruling means that "there will be far fewer disputes heard by the labor commissioner," which has more expertise in this area.

But Joseph Schleimer, a partner at Beverly Hills, Calif.-based Schleimer & Freundlich who represents Preston, agreed with the Supreme Court decision, saying that these disputes should have been handled by arbitrators.

- Amanda Bronstad

Full post as published by Legal Pad | LA on March 04, 2008 (boomark / email).