Author: Edwin F. McPherson1
The Talent Agencies Act (“TAA” or the “Act”) was enacted in California ostensibly to regulate talent agencies in the state, and to ensure that individuals and companies that were functioning as talent agencies were properly licensed by the state’s Labor Commissioner. However, the Act, as interpreted by the Labor Commissioner and the courts, has become much broader than simply a licensing statute, and has deprived honest entertainment professionals of millions of dollars. In fact, although traditionally used against managers, the Act has now been construed so broadly as to allow the Labor Commissioner, an unelected individual, to regulate licensed attorneys from all over the United States.
Following is a brief history of the Act, including the steps that the Act has taken to get to this very disturbing point.
In the Beginning
The Talent Agencies Act (the “TAA,” or the “Act”), California Labor Code Section 1700, et seq.,2 is a licensing scheme that was originally enacted to regulate and license talent agents (originally referred to as talent managers),3 and to protect entertainers from unscrupulous, unlicensed individuals.4
The Act was arguably designed to require anyone who wanted to open a talent agency, or at least engage in the profession of a talent agent, to obtain a license from the State of California.5 However, the Act has been construed to prohibit any unlicensed person – typically a manager – from doing anything that a talent agent does.6
The Act’s roots extend back to 1913, when the California Legislature passed the Private Employment Agencies Law for “employment agents.”7 The “exploitation of artists by representatives has remained the Act’s central concern through subsequent incarnations to the present day.”8
In 1978, the Legislature rejected a special exemption for personal managers to be allowed to procure work for artists that were already represented by licensed talent agents.9 The Legislature considered enacting a separate licensing scheme for personal managers that year, but ultimately abandoned that concept, shifted the regulation of agents to the Labor Commissioner, and renamed the Artists’ Managers Act the Talent Agencies Act.10
In 1982, the Legislature rejected a special exemption for a particular class of personal managers.11 That year, the Legislature restricted the Act by imposing a one-year statute of limitations for claims under the Act, thus eliminating criminal sanctions for violations thereof and establishing an exception to the blanket proscription by allowing managers to avoid liability under the Act if they worked “in conjunction with, and at the request of, a licensed talent agency.”12
The present Act, as embodied in § 1700.4 et seq. of the Labor Code, defines a “talent agency” as:
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.13
“Artists” are defined as:
actors and actresses rendering services on the legitimate stage and in the production of motion pictures, radio artists, musical artists, musical organizations, directors of legitimate stage, motion picture and radio productions, musical directors, writers, cinematographers, composers, lyricists, arrangers, models, and other artists and persons rendering professional services in motion pictures, theatrical, radio, television and other entertainment enterprises.14
The provisions of the Act, itself, do not appear to be particularly onerous. By its express terms, the Act prohibits individuals or entities from “engaging in the occupation” of procuring employment. “Occupation,” however, is not defined in the Act.15 One could argue that this proscription only prevents operating a talent agency whose primary function is to procure employment for “artists.” In fact, for at least a two-and-a-half year period from February of 1993 to December of 1995, the law in California was consistent with this interpretation.
Incidental Procurement and Wachs v. Curry
In Wachs v. Curry,16 the court held that procurement that is “incidental” to the manager’s primary function of guiding the artist’s career is not unlawful under the Act. The court noted that the standard dictionary definition of the term “occupation” is “the principal business of one’s life; a craft, trade, profession or other means of earning a living.”17
The court also noted the proscription in the Act of “the occupation of procuring” employment (with a sideline of counseling and directing careers).18 The court held that the key word, “occupation,” does not encompass managers and other individuals whose “employment procurement function” compared to his or her “counseling function” is not a significant portion of the manager’s business as a whole.19 The Wachs court held specifically that: “if counseling and directing the clients’ careers constitutes the significant part of the agent’s business then he or she is not subject to the licensing requirements of the Act.” 20
The Wachs court was careful to note that the primary concern was the nature of the business as a whole, as opposed to the specifics of the individual’s activity for that one client.21 In other words, as long as a significant portion of one’s business was devoted to counseling, as opposed to procuring, as a manager’s typically is, it would not matter that the manager did not engage in any counseling with respect to the one particular client. Similarly, as long as a significant portion of one’s overall business was procuring, just one procurement would violate the Act, even if all other activity (for that one client) was limited to counseling.
Wachs remained the law for approximately two and a half years, meaning that as long as “procuring” was not a “significant” part of a manager’s business, there was no violation of the Act. For two and a half years, managers could carry on their day-to-day counseling business without the risk of materially violating the Act – and losing all of their commissions – with one “procurement” indiscretion. In fact, during that time, the Labor Commissioner took the position that the relationship between the artist and the manager must be “permeated and pervaded by employment procurement activities” for there to be a violation of the Act.22
Waisbren v. Peppercorn
However, in December of 1995, in Waisbren v. Peppercorn Productions, Inc., the same division of the same court essentially overruled itself, and set forth the rules that are used today.23 In that case, the plaintiff admitted some procurement activities, but maintained that those activities were “minimal and merely incidental to his other responsibilities,”24 which was exactly the Wachs scenario.25
The court first described the primary functions of personal managers as advising and counseling the artist, at least agreeing with itself in Wachs.26 The court noted that, although, “as a practical matter, personal managers may occasionally find themselves in situations in which they would like to procure employment for their clients,”27 this was not an issue that was before the court; the primary issue before the court was whether the “occasional” procurer needs to be licensed, which the court handily resolved in the affirmative.28
The court then (again) looked to the definition of the term “occupation.” The plaintiff argued, consistent with Wachs, that the dictionary definition of “occupation” is “the principal business of one’s life,” and that, in order to violate the Act, procuring employment for an artist must be a person’s principal responsibility.29 The Waisbren court disagreed with its own previous analysis in Wachs, noting that one may have more than one “occupation,” and that the term is synonymous with “employment,” which includes “temporary or occasional work or service for pay.”30
The court then went on to quote Buchwald, which described the Act as a “remedial statute,” to “correct abuses that have long been recognized,” and “enacted for the protection of those seeking employment.”31 According to the court, the Act “should be liberally construed to promote the general object sought to be accomplished.”32 In order to “ensure the personal, professional, and financial welfare of artists, the Act strictly regulates a talent agent’s conduct.”33
The court then reviewed certain Labor Commission decisions that addressed the issue.34 In particular, both Derek v. Callan35 and Damon v. Emler36 specifically held that the Act is violated no matter how “incidental” or negligible the procurement activities are.37 The court noted that “the construction of a statute by an agency charged with its administration is entitled to great weight,” and that, because the Commissioner’s interpretation in this instance was reasonable (presumably, because it was consistent with the court’s interpretation), the court agreed with its analysis.38
The court then looked to the California Entertainment Commission’s Report of 1985 for guidance.39 The Commission was created by the California Legislature in 1982 in order to “study the laws and practices of this state, the State of New York, and other entertainment capitals of the United States relating to the licensing of agents and representatives of artists in the entertainment industry in general … so as to enable the Commission to recommend to the Legislature a model bill regarding this licensing.”40
Proposals to exempt from the licensing requirement those individuals whose employment-seeking function is only incidental to other obligations had been made by Senator Alfred H. Song in 1971 and 197241 and by Senator George N. Zenovich in 1978.42 However, none of these measures was adopted.43 The issue was raised again in 1985 by the Commission, which concluded that:
Exceptions in the nature of incidental, occasional or infrequent activities relating in any way to procuring employment for an artist cannot be permitted; one either is, or is not, licensed as a talent agent, and, if not so licensed, one cannot expect to engage, with impunity, in any activity relating to the services which a talent agent is licensed to render. There can be no “sometimes’ talent agent, just as there can be no “sometimes’ professional in any other licensed field of endeavor.”44
The Waisbren court then went on to discuss the Act’s limited exception for unlicensed persons – that is, when an unlicensed individual acts “in conjunction with, and at the request of, a licensed talent agency.”45 The court noted that such a provision would make no sense and would be unnecessary if incidental or occasional procurement did not require a license in the first place.46
The court went on to hold that any procurement by an unlicensed talent agent constitutes a violation of the Talent Agencies Act.47 That is the state of the law today.
Although the term “occupation of procuring,” which is not defined in the Act, has been construed quite broadly, the term “procure,” which similarly is not defined in the Act,48 has been construed even more broadly. The Labor Commissioner, followed by the courts, has defined procurement to include much more than the traditional definition of procurement, which is simply seeking out employment for an artist.49 The Commissioner has consistently held that any negotiation of any term of an employment agreement for an artist constitutes “procurement,” thus violating the Act.
For example, in Kearney v. Singer, the Commissioner recognized that “furthering an offer by negotiating the terms of an engagement” is an “essential element” of procurement within the meaning of Section 1700.4.50 Specifically, the commissioner noted:
We do not believe that an engagement is procured by opening or preliminary discussion alone. Procurement implies an arrangement including the determination of the specifics pertaining to the particular request for an artist’s service. The intention of the respondent to actively negotiate terms of specific proposed engagements … colors the intentions with regard to the entire agreement.51
Similarly, in Pryor v. Franklin,52 the Labor Commissioner refused to apply a narrow interpretation of “procurement,” ruling specifically that:
The furthering of an offer constitutes a significant aspect of procurement prohibited by law since procurement includes the entire process of reaching an agreement on negotiated terms where the intended purpose is to market an artist’s talents.53
In Arsenio Hall v. X Management, Inc.,54 the Labor Commissioner reiterated that procurement is:
either to secure employment or to bring about employment or to cause employment to occur … . It means to arrange employment. It means to negotiate for employment.55
The Labor Commissioner has therefore held that the mere negotiation of a single term of an employment agreement, even absent any actual, direct solicitation, is enough to constitute a violation of the Act.56
Voiding of Management Agreement
Also glaringly absent from the Act is any remedy or stated punishment for a violation of the Act, apart from revocation of one’s license.57 Nevertheless, the Labor Commissioner, again followed by the courts, determined that the appropriate punishment for a violation of the Act is completely voiding the agreement between the artist and the unlicensed agent. Prior to Marathon v. Blasi,58 just one violation, one negotiation of one term of one contract, at any time during the management relationship would result in the voiding of the entire management agreement (and possibly the disgorgement of monies as well, as discussed below).59
The Labor Commissioner’s Reach Is Not Limited to California
This phenomenon is not limited to California managers and California artists. There have been cases involving artists and managers from many states outside of California, including cases involving New York managers and New York artists, with none of the parties situated in California.60
Typically, any nexus to California is sufficient for the Labor Commissioner to accept jurisdiction – a concert in California; a publisher in California; a record label in California; filming in California; a movie studio in California.61 Many entertainment artists, managers, and deals have some relationship to California, and are therefore regulated by the California Labor Commissioner.
Statute of Limitations
Labor Code Section 1700.44(c) provides what the Labor Commissioner has referred to as a “very strict” statute of limitations for all cases filed under the Act.62 Section 1700.44(c) provides that:
no action or proceeding shall be brought pursuant to this chapter with respect to any violation which is alleged to have occurred more than one year prior to commencement of the action or proceeding63
Because of the statute of limitations, managers, like lawyers when they are suing a client for fees, would often wait for the one-year statute of limitations to expire before they would sue an artist, so that the artist could not counter-sue the manager for a violation of the Act.64 The court in Park v. Deftones,65 citing two Labor Commission cases (including one brought by Deftones against Park),66 responded to this issue by holding that the one-year limitations period gets revived when a manager files a lawsuit against the artist. As discussed in Deftones, the “Labor Commissioner’s interpretation … assures that the party who has engaged in illegal activity may not avoid its consequences through the timing of his own collection action.”67
That reviver, however, was soon to have its own limitation. In Styne v. Stevens the same district of the Court of Appeal held that, although a lawsuit by a manager revives the one-year limitations period, it is only revived for one year, meaning that an artist must commence a Labor Commission proceeding within one year from “when the artist was (or reasonably should have been) aware that the Act should be asserted as a defense,” the “earliest starting point” of which would be the service date of the lawsuit.68 The one-year limitation, according to the Court of Appeal, existed whether the Act was being used as a sword – to affirmatively seek damages – or simply as a defense to a breach of contract claim by a manager.69
The California Supreme Court granted review of the case, and reversed the decision of the Court of Appeal in Styne v. Stevens70 holding that the statute of limitations of the Act, as every other statute of limitations, did not apply to the defensive use of the Act.71 The Court first noted that statutes of limitations bar “actions or proceedings,” their object being to keep “stale litigation out of the courts.”72 Such statutes “act as shields, not swords.”73 The Court found that the object of such statutes “would be distorted if the statute were applied to bar an otherwise legitimate defense to a timely lawsuit.”74
The Court also noted that the Labor Commissioner, “whose interpretation of the statute he is charged with enforcing deserves substantial weight … has consistently held that the one-year limitations period of section 1700.44, subdivision (c) does not apply to pure defenses arising under the Talent Agencies Act.”75
Styne argued that Stevens was actually seeking affirmative relief, and not simply using the Act as a defense, because she was attempting to avoid paying his commissions going forward, and not just the commissions that were already due.76 The Court rejected this argument, ruling that, to the extent that a defendant simply seeks a declaration that she owes no obligations under an agreement, “the matter must be deemed a defense to which the statute of limitations does not apply.”77
The Court also rejected Styne’s claim that the Act limits “”actions and proceedings’ and contains no exception for the defensive use” of the Act, ruling that such language merely “parallels the universal statute of limitations reference to “actions,'” and that it must be “construed in the same fashion.”78
Styne therefore made it clear that a violation of the Act, irrespective of when it occurred, could be used as a defense to any claim by a manager against an artist for breach of contract. The practical effect of that was that an artist could be represented by a manager for thirty years, fire the manager in year thirty, file a petition with the Labor Commissioner, prove one violation in year one, and be excused from paying the manager any present or future monies that are owed.79
Styne also made another thing clear: any claims brought in accordance with the Act, whether used as an affirmative claim or simply as a defense to the action, “must first be referred to the [California Labor] Commissioner for resolution.”80 Although the Act itself makes this clear, superior courts in California had been ignoring the part of the Act that mandates initial submission to the Labor Commissioner for years.81
Ultimately, the Labor Commissioner adopted its own interpretation of the statute of limitations for affirmative claims (to actually disgorge commissions from managers). The Labor Commissioner’s position on the statute has nothing to do with when the actual violation occurred, contrary to the law with respect to virtually every other type of statute of limitations. For those artists who seek to disgorge from a manager monies that have already been paid, the Labor Commissioner has taken the position – inconsistently at first, but consistently since the mid-1990’s – that, irrespective of when the violation occurred, only those commissions that have been paid within one year prior to the filing of the petition to determine controversy may be recovered.82
Marathon v. Blasi
After Waisbren, the law in California reverted back to pre-Wachs days. Essentially, any solicitation or negotiation of employment was enough to violate the Act; only one violation was necessary – at any time during the relationship – in order to void all agreements between the manager and the artist, and therefore avoid paying any further commissions to the manager (and to disgorge money from the manager if the artist commenced the proceeding within a year of making payment thereto).83 This “one and done” approach, which was extremely unfair to managers, prevailed until 2008, when the California Supreme Court decided Marathon Entertainment, Inc. v. Blasi.84
In that case, actress Rosa Blasi had retained Marathon Entertainment as her personal manager. After her agent booked her on a role in a television series entitled “Strong Medicine,” she paid Marathon (and the agent) commissions on the show, until she terminated her contract with Marathon in 2001.85 She thereafter refused to pay Marathon any commission on any of the remaining episodes.86
Marathon then sued Blasi in state court, which precipitated a Labor Commission action by Blasi.87 The Labor Commissioner ruled that Marathon had violated the TAA on multiple occasions (but not with respect to “Strong Medicine”),88 and voided the entire management agreement.89 After de novo review, the Superior Court agreed with the Labor Commissioner, and Marathon appealed.90 Ultimately, the case was decided by the California Supreme Court, which held that severability (of legal activity from illegal activity), as applied in all cases not involving the Act, is also available in TAA cases.91 The holding was actually akin to a hybrid of Wachs and Waisbren.
The court discussed the practical ramifications of the severe enforcement scheme that it perceived was presently being used by the Labor Commissioner and the courts. According to the court, this has resulted in a “limited pool of licensed talent agencies,” which created a “black market for unlicensed talent agency services.”92 Although an artist can use the Act to combat “abuses” by unlicensed talent agencies, according to the court, “this is a blunt and unwieldy instrument.”93
The court further noted that unestablished artists may not ever utilize the Act because they fear blacklisting, and that the Act may very well “punish most severely those managers who work hardest and advocate most successfully for their clients, allowing the clients to establish themselves, make themselves marketable to licensed talent agencies, and be in a position to turn and renege on commissions.”94
The court noted that a personal manager who properly devotes ninety-nine percent of his time to counseling a client (a typical management duty) would still be seen as violating the Act if one percent of his time is spent procuring work for the client, consistent with Waisbren.95 However, according to the court, the one percent of his time that is spent soliciting should not render illegal the ninety-nine percent of time spent engaging in legal activity, particularly when that conduct “may involve a level of personal service and attention far beyond what a talent agency might have time to provide.”96
The court ultimately held that, if the central purpose of a management agreement is for procurement, or the manager engaged in substantial procurement activities that are inseparable from management services, the court may void the entire contract.97 “For the personal manager who truly acts as a personal manager, however, an isolated instance of procurement does not automatically bar recovery for services that could lawfully be provided without a license.”98
The practical effect of Marathon is that there is no more “one and done” rule; violations are analyzed one at a time, with the manager losing his right to commissions for each appearance that he unlawfully procures. However, if the violations pervade the relationship, the entire contract between the parties will be voided.
Preston v. Ferrer
In the same year as the Marathon case, Preston v. Ferrer was decided by the United States Supreme Court.99 In Preston, the management agreement contained an arbitration clause that required the parties to submit all disputes between them to arbitration under the rules of the American Arbitration Association.100 The Labor Commissioner had previously taken the position that, to the extent that it was his function to determine whether an entire management agreement was void, if such agreement was void and unenforceable, then the arbitration provision (and choice of law provisions, and so on) would therefore be void as well.101
However, the Court determined that, when an artist and a manager (or any other representative) enter into an agreement that contains an arbitration clause, the Federal Arbitration Act (“FAA”) essentially supersedes the Talent Agencies Act.102 More specifically, although the California Supreme Court in Styne v. Stevens mandated that the parties submit all colorable controversies under the Act to the Labor Commissioner in the first instance,103 under the Preston case, all issues are submitted to the arbitrator, including the issue of arbitrability itself, the validity of the contract, and whether or not the Act has been violated. 104
Both Marathon and Preston had a significant impact on managers and the industry. For Marathon, an artist can no longer raise a violation that occurred thirty to forty years ago to void an entire contract, which is obviously very beneficial to managers. However, there is also much less certainty (as Blasi’s attorney argued before the Supreme Court), because there is no longer a “bright line” test to determine whether or not a contract will be voided, and disgorgement ordered.105
Prior to Preston, many managers (particularly A-list managers) did not require their artists to sign written agreements. After Preston, more managers have required their artists to sign written agreements, which include arbitration provisions, and many managers that already used written agreements have started to include arbitration provisions, under the assumption that they are bound to be better off with an arbitrator, who might not be completely familiar with the Act, than the Labor Commissioner.106
Regulation of Attorneys
In Solis v. Blancarte,107 a local Los Angeles sportscaster named Mario Solis, who had no agent at the time, was offered a position with KNBC as a sports anchor.108 He sought out an attorney named James Blancarte, who had represented other newscasters in contract negotiations, and asked Blancarte to represent him in the negotiations with KNBC. Blancarte agreed to do so.109
Blancarte did not solicit the engagement, but did negotiate the deal that was offered to Solis in exchange for five percent of Solis’s gross earnings under the agreement, which is a standard fee for attorneys in the entertainment industry. Blancarte negotiated a four-year deal for Solis, and charged the five percent, which Solis paid.110
At the end of the four-year term, Blancarte negotiated a three-year renewal agreement with the same studio, for which he was again paid five percent. However, after Blancarte negotiated a two-year renewal, Solis refused to pay Blancarte the five percent (or anything), and litigation ensued.111
In response to Blancarte filing in Los Angeles County Superior Court, Solis filed a petition to determine controversy with the California Labor Commissioner, the same petition that had been filed against managers for decades. The petition sought to void the retainer agreement between Solis and Blancarte so that Solis would not have to pay any of the fees that were otherwise due and payable to Blancarte.112
After a hearing, the Labor Commissioner first made a finding that Blancarte had definitely negotiated terms of an employment agreement for Solis, which Blancarte had readily admitted: “The principal and dominant activities that respondent performed on behalf of petitioner pursuant to the engagement contract involved the negotiation of the compensation and other terms of the agreements for the employment of petitioner by KNBC.”113 The Commissioner then determined that the negotiations that Blancarte conducted for Solis constituted “procurement” within the meaning of the Act, such that Blancarte, who did not have a talent agency license, was in violation of the Act:
By negotiating the KNBC agreements on petitioner’s behalf, respondent attempted to procure and procured employment for petitioner. As a consequence, respondent engaged in and carried out the occupation of a talent agency; because he did so without having first obtained a talent agency license from the Labor Commissioner, respondent violated the provision of Labor Code section 1700.5.114
Blancarte made the obvious and compelling argument that, as a licensed attorney who negotiates employment agreements for artists all the time, he should not be subject to the same requirements and prohibitions as managers.115 However, the Labor Commissioner was unpersuaded, and ruled decisively that attorneys are not exempt from the Act:
Respondent contends that because he is a duly licensed attorney, his activities in negotiating the KNBC agreements on behalf of petitioner should be treated as exempt from the licensing requirements of section 1700.5. The provisions of the TAA do not contain or recognize any such exemption. Moreover, respondent has provided no authority that would support the propriety of applying or creating such an exemption.116
The Labor Commissioner therefore declared the fee agreement between Blancarte and Solis to be “illegal, void and unenforceable,” and barred Blancarte from enforcing or seeking to enforce the agreement against Solis “in any manner.”117
The proverbial writing had been on the wall for years leading up to this case. The Act has never excluded or exempted lawyers, and Labor decisions from twenty years ago made it clear that a manager working “in conjunction with” an attorney was an insufficient defense to the Act.118 Nevertheless, Solis was a game changer, and underscored the absurdity of the Act.
When Solis was decided, there was much speculation among entertainment attorneys who had devoted their entire careers to negotiating complex talent agreements that Solis was an abomination – an outlier – and that it should not and could not be taken seriously.119 However, the Labor Commissioner doubled down on Solis as recently as 2017, in Doughty v. Hess.120
In Doughty, the attorney acted more as a manager than an attorney, and he actually solicited employment opportunities for his client, rather than simply negotiating the deals, as James Blancarte did in Solis. 121However, the Labor Commissioner was quick to void the management agreement and the “attorneys’ fees agreement,” and to excuse the artist from paying any further management commissions or attorneys’ fees.122
The Commissioner, quoting Solis, noted the following:
It is evident that the functional scope of the TAA admits of no exceptions and encompasses the procurement activities of respondent, even though he is an attorney. In this regard, it is of no moment that some of the skills respondent may have brought to the negotiations on behalf of petitioner are the result of skills for which he been licensed as an attorney. As Labor Code section 1700.44 makes unequivocally clear, when someone who is not licensed under the TAA wishes to bring such skills to bear on the negotiation of an artist’s contract, he must do so “in conjunction with, and at the request of, a licensed talent agency.”123
In theory, there must be a compelling reason for which the California Labor Commissioner feels that agents are better equipped than attorneys to negotiate complex talent agreements for artists, and that artists are somehow better off as a result. Certainly, a comparison of the relative qualifications for each license does not answer the question.
An attorney is generally required to complete four years of college and three years of post-graduate school.124 Under the TAA, an agent is not required to complete a single college class, or even graduate high school.125 Attorneys, depending on the state, are usually required to complete a three-year degree and are required to study for and take a two to four-day state-wide examination that includes a comprehensive multi-state examination on the second day.126 The TAA does not require talent agents to take any examination or demonstrate any acumen on any subject.127 Attorneys in most states are required to take continuing education courses every year in which they actively practice law.128 An agent is not required to take any courses, on any subject, at any time.129
Although many agents may have college degrees, and even have advanced degrees, they are not required to have any such degrees under the TAA. The only requirements to obtain a talent agency license are essentially a driver’s license, an affidavit of character (by anyone), absence of a felony conviction (just for the immediate licensee; not for the dozens of agents that may work under that licensee), and a $ 50,000.00 bond.130
And it is just as absurd to suggest that attorneys in every state are allowed to negotiate any other conceivable agreement – even real estate agreements, for which non-lawyers must obtain a license from the state (subject to an actual examination) – but no attorneys in any state may negotiate agreements for actors and musicians (with any nexus to California). In fact, one could argue that the negotiation of an employment agreement, which the Labor Commissioner now says only licensed talent agents may do, involves rendering legal advice, and therefore may only be negotiated by licensed attorneys.131
Obtaining A Talent Agency License
One could argue that, if a talent agency license is so easy to obtain, entertainment attorneys should simply obtain such a license. However, one could also argue that they should not have to do so. Attorneys are much more regulated than agents; obtaining a talent agency license would not make an attorney any more qualified to negotiate complex talent agreements than he or she already is without a license.
More importantly, however, there are many practical problems associated with attorneys getting licensed as talent agents. First, the artist would have to sign directly with the attorney’s “agency;” there can be no “hip pocket” agent, as the Labor Commissioner has described them.132 Second, there may very well be attorney-client privilege issues. Among other things, the attorney, in order to obtain a license, would be required to submit a sample fee agreement to the Labor Commissioner for approval.133 There is certainly a risk that such a submission would constitute a waiver of the privilege with respect to that agreement.134
The most difficult hurdle that exists for an attorney/agent is the talent guilds. Certain guilds limit the total amount of commissions that can be paid by each artist to any and all agents to ten percent.135 As such, if a writer or actor has to pay his agent ten percent, which is fairly standard, his or her union will absolutely forbid him or her from paying anything to his or her attorney.136
Conclusion – For the Benefit of Artists?
The Act, in theory, was originally devised for the benefit of “artists” in the entertainment industry. One could argue, however, that, with approximately ninety-three percent of actors out of work in the United States, 137a law that actually restricts the number of people that are allowed to procure work for these artists is definitely not “for the benefit of the artists.” In fact, the Act has been strongly criticized for not really protecting anyone but agents138– and that was before Solis and Doughty.
If there was uncertainty before Solis and Doughty as to whether or not the Act was good for artists, that uncertainty has been resolved quite decidedly in the negative. It is utterly inconceivable that a law that (now) forbids licensed attorneys in any state from negotiating actor agreements, writer agreements, director agreements, music publishing agreements, and parts of recording agreements can possibly be good for artists.139
After Solis and Doughty, the only way that entertainment attorneys can lawfully represent talent is to work “in conjunction with, and at the request of, a licensed talent agency,” one of the two recognized exceptions in the Act.140 However, that would require an artist, who may or may not live in California, who may not have an agent, or who may have an agent, but not a California agent, to go out and find one – and pay one – and then for that agent to request that the artist’s attorney get involved with the negotiation. Moreover, there are some agreements – for example, music publishing agreements – that no agent would even know how to negotiate.141 Yet, this law is supposed to be good for artists.
The fact is that none of this helps artists. If the only way that an attorney may lawfully negotiate an agreement is to be requested to do so by a licensed California talent agent, that would require the artist to spend a lot of money in commissions that he or she might not otherwise have had to spend. However, more importantly, it makes the attorney dependent upon the agent. If the attorney is dependent upon the agent for legitimacy, such a relationship will certainly disrupt the “separation of powers” – the system of checks and balances that is necessary to keep each member of the artist’s “team” honest. This law not only does not help the artist, it is disastrous for the artist, and it is difficult to imagine a compelling, or even reasonable, argument to the contrary.
1 Edwin F. McPherson is a partner at McPherson LLP, in Century City, California, specializing in entertainment litigation, intellectual property litigation, and crisis management. He has written eleven law review and other articles on the Talent Agencies Act, and frequently speaks on the subject. He has been qualified by the Superior Court of California on several occasions as an expert on the Act, as well as an expert on management/artist and agent/artist relations in general. Many of the observations in this article reflect McPherson’s direct experience working on matters related to the Talent Agencies Act. Providing a citation to a direct source could in some cases jeopardize attorney-client privilege. For that reason, some material in this article will be supported by a reference to the first footnote.
2 For a detailed discussion of the Talent Agencies Act in general, and many of the reported and unreported cases that have been decided by the Labor Commissioner and by California courts, see Edwin F. McPherson, The Talent Agencies Act Is Alive, But Is It Well?, L.A. Law., Dec. 1999, at 60; Edwin F. McPherson, California Court Finds Violation By Manager, Despite Lack of Fees, Ent. L. & Fin., June 1999, at 1; Edwin F. McPherson, The Talent Agencies Act: Time For A Change, 19 Hastings Comm. & Ent. L.J. 899 (1997); Edwin F. McPherson, The Talent Agencies Act: A personal manager’s nightmare, L.A. Law., June 1994, at 17.
3 The predecessor to the Act was the Talent Managers’ Act of 1943. This moniker is confusing in light of the fact that the Act is typically used against personal managers, who have no licensing requirements and no means to obtain a license.
4 The specific purpose of the Act, and the licensing requirement in particular, is to “prevent improper persons from becoming artists’ managers and to regulate such activity for the protection of the public.” Buchwald v. Superior Court of San Francisco, 254 Cal. App. 2d 347, 351 (Cal. Ct. App. 1967).
5 Tucker v. Far Out Management, Ltd., No. TAC 14-79, 10 (Cal. Labor Comm’r 1981).
6 See Waisbren v. Peppercorn Prods., Inc., 41 Cal. App. 4th 246, 259 (Cal. Ct. App. 1995).
7 Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th 974, 984 (Cal. 2008).
9 Id. at 984-85.
10 Id.; Cal. Labor Code § 1700.44(d)
11 Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th at 985.
13 Cal. Labor Code § 1700.4(a)
14 Cal. Labor Code § 1700.4(b)
15 See id. § 1700.4(a).
16 Wachs v. Curry, 13 Cal. App. 4th 616, 628 (Cal. Ct. App. 1993).
17 Id. at 627.
18 Wachs, 13 Cal. App. 4th at 625 (emphasis added).
19 Id. at 628.
21 See id.
22 Thomas Haden Church v. Ross Brown, No. TAC 52-92 (Cal. Labor Comm’r June 2, 1994).
23 Waisbren v. Peppercorn Prods., Inc., 41 Cal. App. 4th 246 (Cal. Ct. App. 1995).
24 Id. at 251.
26 The court goes on to make an elaborate recitation of the general functions of a personal manager, as opposed to a talent agent: In essence, “the primary function of the personal manager is that of advising, counseling, directing and coordinating the artist in the development of the artist’s career.” The manager’s task encompasses matters of both business and personal significance. As business advisors, they might attend to the artist’s finances, and they routinely organize the economic elements of the artist’s personal and creative life necessary to bring the client’s product to fruition. The personal manager frequently lends money to the neophyte artist, thereby speculating on a return from the artist’s anticipated future earnings. The manager also serves as a liaison between the artist and other personal representatives, arranging their interactions with, and transactions on behalf of, the artist. On a more personal level, the manager often serves as the artist’s confidant and alter ego … By orchestrating and monitoring the many aspects of the artist’s personal and business life, the personal manager gives the artist time to be an artist. That is, managers liberate artists from burdensome yet essential business and logistical concerns so that artists have the requisite freedom to discharge their artistic function and to concentrate on their immediate creative task … In this regard, the personal manager is an indispensable element of an artist’s career. Waisbren, 41 Cal. App. 4th at 252-53 (quoting James O’Brien, Regulation of Attorneys Under California’s Talent Agencies Act: A Tautological Approach to Protecting Artists, 80 Calif. L. Rev. 471, 482-83 (1992)).
27 Id. at 253.
28 Id. at 259.
29 Id. at 253.
30 Id. at 254.
31 Buchwald v. Superior Court of San Francisco, 254 Cal. App. 2d 347, 350-51 (Cal. Ct. App. 1967).
32 Waisbren, 41 Cal. App. 4th at 254.
34 Although Labor Commission cases are not publicly reported, certain cases are accessible through the State of California Department of Industrial Relations’ website. See Talent Agency Cases, Cal. Dep’t Indus. Rels., https://www.dir.ca.gov/dlse/DLSE-TACs.htm (last visited October 11, 2019).
35 Derek v. Callan, No. TAC 18-80, SF MP 82-80 (Cal. Labor Comm’r Jan. 14, 1982).
36 Damon v. Emler, No. TAC 36-79, SF MP 63 (Cal. Labor Comm’r Jan. 12, 1982).
37 Id. (citing Waisbren, 41 Cal. App. 4th at 255).
38 Waisbren, 41 Cal. App. 4th at 255-56.
39 For a detailed discussion of the California Entertainment Commission and its Report, see McPherson, The Talent Agencies Act: A personal manager’s nightmare, supra note 2.
40 Waisbren, 41 Cal. App. 4th at 256. The Commission was appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee, each of which appointed three members, and consisted of the Labor Commissioner (Chairman of the Commission), three licensed talent agents (Jeffrey Berg, Roger Davis, and Richard Rosenberg), three personal managers (Robert Finkelstein, Patricia McQueeney, and Larry Thompson), and three artists (Ed Asner, John Forsythe, and Cicely Tyson). Cal. Ent. Comm’n, Report of the California Entertainment Commission to the Governor and Legislature 1-2 (1985) [hereinafter, Cal. Ent. Comm’n Rep.].
41S.B. 1464, 1971-72 Leg. Sess. (Cal. 1971); S.B. 686, 1971-72 Leg. Sess. (Cal. 1972).
42 S.B. 1764, 1977-78 Leg. Sess. (Cal. 1978).
43 See Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th 974, 984-86 (Cal. 2008).
44 Cal. Ent. Comm’n Rep., supra note 40, at 11-12. The Legislature adopted the bulk of the Commission’s recommendations in 1986.
45 Cal. Labor Code § 1700.44(d). This provision, first enacted in 1982 as a temporary measure, was made permanent as a result of the Commission’s Report. Cal. Ent. Comm’n Rep., supra note 40, at 19; see also Waisbren, 41 Cal. App. 4th at 259, n.14.
46Of course, it is the court’s analysis that makes no sense. If a personal manager’s procurement activities were more than “incidental,” this provision would then be used to allow the manager to work “in conjunction with” a licensed talent agent.
47 Waisbren, 41 Cal. App. 4th at 260-61.
48 See Cal. Labor Code § 1700.4(a).
49 The Merriam-Webster Dictionary defines “procure” as: “to obtain (something) by particular care and effort.” Procure, Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/procure (last visited Oct. 31, 2019).
50 Kearney v. Singer, No. MP-429 AM-211-MC (Cal. Labor Comm’r Dec. 1, 1977). Kearney was decided under a prior (but similar) version of Section 1700.4, which defined “artist’s manager” as “a person who engages in the occupation of advising, counseling or directing artists in the development or advancement of their professional careers and who procures, offers, promises or attempts to procure employment or engagements for an artist only in connection with and as a part of the duties and obligations of such person under a contract with such artist by which such person contracts to render services of the nature above mentioned to such artist.” Id. at 3.
51 Id. at 6 (emphasis added).
52 Pryor v. Franklin, No. TAC17 MP114 (Cal. Labor Comm’r Aug. 12, 1982).
53 Id. at 15 (emphasis added).
54 Hall v. X Management, Inc., No. TAC 19-90 (Cal. Labor Comm’r Apr. 24, 1992) (alteration in original).
55 Id. at 31 (emphasis added).
56 See id.
57 See Cal. Lab. Code § 1700.21; see also Cal. Lab. Code §§1700-1700.47 (indicating that the TAA does not specify remedies for violations) [hereinafter the TAA].
58 Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th 974 (Cal. 2008).
59 See Rogers v. Art Minds, No. TAC 28-00 (Cal. Labor Comm’r Jan. 22, 2002); see also Pole v. Sheffield, No. TAC 14-91 (Cal. Labor Comm’r Nov. 18, 1996).
60 See, e.g., Webb v. Rosen, No. TAC 36-03, 2 (Cal. Labor Comm’r June 29, 2007).
61 See Styne v. Stevens, 26 Cal. 4th 42, 59 n.10 (Cal. 2001) (alteration in original) (“If a dispute in which the Act is invoked plausibly pertains to the subject matter of the Act, the dispute should be submitted to the Commissioner for first resolution of both jurisdictional and merits issues, as appropriate.”).
62 For a detailed discussion of the statute of limitations in the Talent Agencies Act, see Edwin F. McPherson, The Talent Agencies Act: Does One Year Really Mean One Year?, 22 Hastings Comm. & Ent. L.J. 441, 442 (2000).
63 Cal. Lab. Code § 1700.44(c) (alteration in original).
64 See McPherson, supra note 1.
65 Park v. Deftones, 71 Cal. App. 4th 1465 (Cal. Ct. App. 1999).
66 Moreno v. Park, Case No. TAC 9-97, 4 (Cal. Labor Comm’r Jan. 20, 1998).
67 Park v. Deftones, 71 Cal. App. 4th at 1469.
68 Styne v. Stevens, 78 Cal. App. 4th 17, 26 (Cal. Ct. App. 2000).
69 Id. For a detailed discussion of the Court of Appeal decision in Styne v. Stevens, and why the one-year limitation for the defensive use of the Act was not proper and should be overturned, see McPherson, The Talent Agencies Act: Does One Year Really Mean One Year?, supra note 62.
71 For a detailed discussion of the California Supreme Court decision in Styne v. Stevens, see Edwin F. McPherson, Styne v. Stevens: The California Supreme Court Has The Final (But Not The First) Word On The Talent Agencies Act, 31 Sw. L. Rev. 737 (2002).
72 Styne, 26 Cal. 4th at 52 (citing Beach v. Ocwen Fed. Bank, 523 U.S. 410, 415-16 (1998)).
73 Id. (citing French v. Construction Laborers Pension Trust, 44 Cal App. 3d 479, 485 (1975)).
74 Styne, 26 Cal. 4th at 52.
75 Id. at 53 (citing Kelly v. Methodist Hosp. of S. Cal., 22 Cal. 4th 1108, 1118 (Cal. 2000)). Of course, the Labor Commissioner was not as “consistent” as the Court indicated. The Court cites as authority several Labor Commission decisions, but suggests that the Commissioner has not consistently applied the one-year statute of limitations. Id. at 53 (alteration in original) (citations omitted) (identifying one case in which “pure defenses [were] not untimely though invoked more than one year after both challenged contracts and commencement of agent’s superior court action,” another case in which a defense [was] not untimely because [it was] not raised within one year after plaintiff’s demand for arbitration, and a third case in which the Commission found that the “Act’s statute of limitations does not bar Commission petition seeking declaration that contract is void based on Act “violation’ that occurred more than one year earlier; limitations period does not apply to defenses.”).
76 Styne, 26 Cal. 4th at 53.
79 See Stone v. Richardson, No. TAC 7-02, 12-13 (Cal. Labor Comm’r Jan. 3, 2003).
80 Styne, 26 Cal. 4th at 47 (alteration in original).
81 See id. at 47-49; see also Buchwald v. Superior Court of San Francisco, 254 Cal. App. 2d 347, 353 (Cal. Ct. App. 1967).
82 See Johnson v. Healey, No. TAC 16243 (Cal. Labor Comm’r Oct. 8, 2018); Gordy v. McLean,No. TAC 27195 (Cal. Labor Comm’r Aug. 29, 2017); Bautista v. Romero, No. TAC 3-04 (Cal. Labor Comm’r Aug. 22, 2005); Blanks v. Greenfield, No. TAC 27-00 (Cal. Labor Comm’r Mar. 11, 2002); Behr v. Dauer, No. TAC 21-00 (Cal. Labor Comm’r Aug. 16, 2001); Baker v. BNB Assocs., Ltd., No. TAC 12-96 (Cal. Labor Comm’r Dec. 27, 1996); Rogers v. Portnoy, No. SF MP 40 (Cal. Labor Comm’r Mar. 8, 1978).
83 See Rogers v. Art Minds, No. TAC 28-00 (Cal. Labor Comm’r Jan. 22, 2002); see also Pole v. Sheffield, No. TAC 14-91 (Cal. Labor Comm’r Nov. 18, 1996).
84 Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th 974, 981 (Cal. 2008).
87 See id.
88 Blasi v. Marathon Entm’t, Inc., No. TAC 15-03, 2-3 (Cal. Labor Comm’r Jan. 30, 2004).
89 Id. at 7-8.
90 For a detailed discussion of the Court of Appeal decision in Marathon, see Edwin F. McPherson, Double Agent: Is The Penalty Of Declaring A Contract Void Ab Initio Too Harsh For Managers Who Procure Employment?, L.A. Law., May 2007.
91 Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th 974, 995-96 (Cal. 2008).
92 Id. at 998
94 Id. (citing, e.g., Kilcher v. Vainshtein, No. TAC 02-99 (Cal. Labor Comm’r May 30, 2001)).
95 Id. at 997.
96 Id. at 997.
97 Id. at 997-98.
98 Id. at 998 (citing Lindenstadt v. Staff Builders, Inc., 55 Cal. App. 4th 882, 894 (Cal. Ct. App. 1997)).
99 Preston v. Ferrer, 552 U.S. 346 (2008).
100 Id. at 349.
101 Id. at 353-54 (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006)).
102 Id. at 362-63.
103 Styne v. Stevens, 26 Cal. 4th 42, 47, 58-59 (Cal. 2001).
104 See Preston, 552 U.S. at 928-29.
105 Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th 974, 995 (Cal. 2008).
106 See McPherson, supra note 1.
107 Solis v. Blancarte, No. TAC 27089 (Cal. Labor Comm’r Sept. 30, 2013).
108 Id. at 2.
109 Id. at 3.
110 Id. at 3-4.
111 Id. at 4-5.
112 Id. at 5.
113 Id. at 6.
114 Id. at 7.
115 Id. at 8.
117 Id. at 10.
118 Id. at 7.
119 See McPherson, supra note 1.
120 Doughty v. Hess, No. TAC 39547 (Cal. Labor Comm’r Apr. 4, 2017).
121 Id. at 2.
122 Id. at 3, 8.
123 Id. at 7 (citing Solis, No. TAC 27089 at 8).
125 See Talent Agency License and Fee-Related Talent Services, Cal. Dep’t Indus. Rels., https://www.dir.ca.gov/dlse/Talent%20Agency_License_and_Fee-Related_Talent_Services.htm (last visited Nov. 25, 2019) (demonstrating that agents are not required to submit a college diploma or any documentation of higher education attained when applying for a license in California); see the TAA, supra note 57 (indicating that the TAA does not have any explicit requirement with regard to the education of talent agents).
126 See, e.g., Bar Exam Eligibility, N.Y. State Board of Law Examiners, https://www.nybarexam.org/eligible/eligibility.htm (last visited Nov. 25, 2019) (explaining how applicants can qualify for the New York Bar exam); Bar Admissions Basic Overview, ABA (June 26, 2018) https://www.americanbar.org/groups/legal_education/resources/bar_admissions/basic_overview/ (providing a basic overview of what the bar admission entails in most states)
127 See the TAA, supra note 57 (indicating, through its absence from the statute, that the TAA imposes no examination requirement).
129 See the TAA, supra note 57.
130 See Talent Agency License Database, Cal. Dep’t Indus. Rels., https://www.dir.ca.gov/databases/dlselr/talag.html (last visited Nov. 25, 2019); see the TAA, supra note 57.
131 The State of California mandates that the regulation of attorneys is solely within the province of the State Bar of California, which is a division of the California Supreme Court. See Our Mission: What We Do, State Bar of California, http://www.calbar.ca.gov/About-Us/Our-Mission (last visited Nov. 24, 2019). When theSolis decision was issued, the State Bar was contacted to solicit its assistance in enforcing its exclusive regulation of California attorneys by challenging the Labor Commissioner’s overstep. The State Bar did not appear at all concerned that the Labor Commissioner was usurping the State Bar’s function to regulate attorneys, responding: “the “fix,’ if there is to be one, does not appear to be in the form of an appeal of the Labor Court Commissioner decision, but rather an amendment to the Talent Agencies Act … . Having duly considered this matter, the State Bar does not foresee itself becoming involved in the substance of the issue. We refer you either to a substantive appeal of the Solis vs. Blancarte case through the appropriate civil courts, or in the alternative, a legislative initiative sponsored by a bar association or other entity representing the interests of attorneys.” Letter from Robert A. Hawley, Deputy Exec. Director, The State Bar of California, to Edwin F. McPherson, Partner, McPherson Rane LLP (Nov. 5, 2013).
132 See, e.g., Anderson v. D’Avola, No. TAC 63-93, 3 (Cal. Labor Comm’r Feb. 24, 1995).
133 Talent Agency License Database, Cal. Dep’t Indus. Rels., supra note 130.
134 Some of the State Bar issues that might arise include potential violations of the California Rules of Professional Conduct, including Rule 5.5 (“Unauthorized Practice of Law”), Rule 5.4 (“Financial and Similar Arrangements with Nonlawyers”), Rules 7.1-7.4 (“Communications Concerning a Lawyer’s Services,” “Advertising,” “Solicitation of Clients,” “Communication of Fields of Practice and Specialization”), Rule 1.5.1 (“Fee Divisions Among Lawyers”); Rule 1.15 (“Safekeeping Funds and Property of Clients and Other Persons”), and Rule 1.5 (“Fees for Legal Services”). See California Rules of Professional Conduct (Cal. State Bar 2018).
135 See, e.g., GSA Contract Update, SAG-AFTRA, https://sagaftra.org/contracts-industry-resources/agents-managers/gsa-contract-update (last visited Nov. 25, 2019).
136 See id. (providing a comparison between union agency contracts and market general services agreements that indicates the amount payable to agents, and therefore attorneys, is restricted by the union).
138 See, e.g., McPherson, The Talent Agencies Act Is Alive, But Is It Well?, supra note 2. To be sure, the Association of Talent Agents (“ATA”) is the negotiating body for California talent agents. The ATA has consistently resisted any attempts to amend the TAA, including, quite astonishingly, attempts to exempt attorneys from the law. See McPherson, supra note 1.
139 It is simply inconceivable that the California Legislature intended this result.
140 Cal. Lab. Code § 1700.44(d).
141 See Booking Agent, Music Jobs, https://music-jobs.com/usa/jobtypes/bookingagent-jobs-408195.php (last visited Nov. 25, 2019).