The National Conference of Personal Managers (NCOPM), with the support of the Music Managers Forum - US and the Talent Managers Association, has petitioned the U. S. Court of Appeals for the Ninth Circuit to declare the California Talent Agencies Act (TAA) unconstitutional and enjoin California officials from continued enforcement of the TAA. The NCOPM lawsuit (Nat'l Conf. of Personal Mgrs v. Edmund Brown, Jr., et al, Case No. 13-55545) is currently awaiting oral arguments, which are scheduled for April 2017.The TAA mandates that, "No person shall engage
in or carry on the occupation of a talent agency without first procuring
a license therefor from the Labor Commissioner." The TAA 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..." California does not
require a license for the occupation of any employment agency other than
a talent agency.For decades, celebrities have invoked the TAA to avoid paying personal managers by claiming that their managers had acted as unlicensed talent agents. This injustice has subjected managers to bankruptcy, foreclosure, divorce, suicide and other personal tragedies. Plus, the TAA has had a chilling effect on the willingness of managers to sign younger talent who do not have agency representation. Personal managers nationwide have forfeited an estimated $500,000,000 due to either the California Labor Commissioner voiding management contracts and ordering disgorgement of compensation or managers being forced to settle artist disputes rather than face the risks and legal costs of a TAA hearing and subsequent litigation.For example, according to court documents, personal manager Matthew Katz forfeited more than $12 Million in compensation in his TAA controversy with Jefferson Airplane. (Buchwald v. Katz, 8 Cal.3d 493 - 1972.) Talent manager Brad Waisbern forfeited nearly a half-million dollars in a TAA dispute. (Waisbern v. Peppercorn Productions, 43 Cal.App.4th 246 - 1995.) David Park lost hundreds of thousands of dollars in his dispute with The Deftones. (Park v. Deftones, 71 Cal.App.4th 1465 - 1999.) And Howard Wolf, who revitalized the career of The Platters, forfeited more than $800,000 in personal management compensation. (Yoo v. Robi, 126 Cal.App.4th 1089 - 2005.)Two recent artists who have invoked the TAA in disputes with their managers include electronic duo LMFAO in a dispute over $7 million reportedly owed to their ex-management firm RPMGRP and sci-fi writer Orson Scott Card who reportedly owed manager Wendi Niad 10 percent of his income from the film adaptation of Ender's Game.The TAA's roots extend back to 1913, when the CA Legislature passed the Private Employment Agencies Law and imposed the first licensing requirements for employment agents. The law was created to stop employers from masquerading as
employment counselors. Purporting to obtain “work” for
their clients, “agents” would send clients out
to houses of prostitution or other unsavory venues, which they
controlled and/or owned. In reality,
these ‘agents’ were actually employers, hoping to find new employees for
their burlesque halls or bordellos. In 1937, the Legislature adopted the Artist Manager Law, which enacted further protections for artists by establishing criminal penalties for agents who employed their artist/clients in exploitative activities.In 1943, the Legislature amended the statute, renaming it the Artist Managers’ Act (“AMA”). At that time, talent agents were referred to as artist managers. Under the AMA, only true employment counselors could hold themselves out as talent employment agencies.While the AMA was filled with restrictions of what an artist’s manager could and could not do, only one provision (Sec. 1700.30) offered any notice of penalty: “No licensee shall sell, transfer or give away any interest in or the right to participate in the profits of the artists’ manager without the written consent of the Labor Commissioner." A violation was a misdemeanor punishable by a fine of not less than $100, nor more than five hundred dollars $500, or imprisonment for not more than 60 days, or both.Similarly, the only penalty provision ever included in the TAA, adopted in 1978, was the recodification of the AMA’s 1700.30, making it a criminal offense – a misdemeanor – should someone transfer ownership or offer interest in the profit participation of a talent agency without first obtaining the written consent of the Labor Commissioner. In 1982, the Legislature removed the criminal penalty and created the California Entertainment Commission to determine how the TAA should be enforced. The Commission recommended, “that the criminal sanctions which were removed from the Act by AB 997, not be restored to the Act” after a majority of the Commission concluded “the industry would be best served without the imposition of civil or criminal sanctions for violation of the Act.” There have been no written, codified changes to the TAA since 1986 and today the TAA contains no penalty provision and specifically states that the "failure of any person to obtain a license... shall not be considered a criminal act." However, since the adoption of the TAA in 1986, the CA Labor Commissioner has routinely voided personal management contracts and ordered disgorgement of managers' compensation despite the lack of any penalty provision in the TAA.In two landmark court cases, personal managers have successfully challenged the Labor Commissioner's enforcement of the TAA:
- In January 2008, the CA Supreme Court ruled that the CA Labor Commissioner had failed to apply the legal principle of severability in a TAA controversy and a that a management contract can be partially enforced even if a manager violates the Talent Agency Act. (Marathon Entertainment, Inc. v. Blasi, 174 P. 3d 741 - 2008.)
- In February 2008, the U. S. Supreme Court ruled that the Federal Arbitration Act overruled a provision of the TAA which mandated that the CA Labor Commissioner determine
controversies under management contracts, which included arbitration provisions. (Preston v. Ferrer, 128 S. Ct. 978 - 2008.)
Despite these victories, personal managers continue to be victims of the TAA. For instance, in a 2012 TAA Determination, the CA Labor Commissioner ordered a 45% reduction in compensation to the management firm of pop singer Ke$ha. (Kesha Rose Sebert v. DAS Communications, TAC 2012-03-29.)
The CA Labor Commissioner has even ruled that a television producer (Krutonog v. Chapman, (TAC 3351) and an attorney (Solis v Blancarte, TAC 27089) had acted as unlicensed talent agents in violation of the TAA.
In the federal lawsuit, NCOPM claims that defendants CA Governor Edmund G. Brown Jr.and CA Labor Commissioner Julie A. Su, in their official capacities, have under color of law deprived NCOPM members and personal managers nationwide of their civil rights as guaranteed under the U. S. Constitution. NCOPM claims:
- The TAA is unconstitutionally vague in violation of the Equal Protection and Due Process clauses of the 14th Amendment of the U. S. Constitution.
- The TAA burdens and interferes with interstate commerce in violation of the Commerce Clause of the U. S. Constitution.
- The TAA burdens and restricts commercial speech in violation of the First Amendment of the U. S. Constitution.
- The TAA impairs the obligations of contracts in violation of the Contracts Clause of the U. S. Constitution.
- The CA Labor Commissioner's enforcement history of voiding personal management contracts and ordering disgorgement of managers' compensation without findings of fraud or non-performance violates the prohibition against involuntary servitude in the 13th Amendment of the U.S. Constitution.
In support of the NCOPM lawsuit, Southwestern Law School filed an amicus brief on behalf of the Music Managers Forum - US, the Talent Managers Association and several leading entertainment attorneys and law professors, which argued: "The Talent Agencies Act was intended to protect artists; it
should not be sanctioned as a weapon against their managerial
representation, producing or business partners, or lawyers. The
prohibition on unlicensed employment procurement is wholly disconnected
from the harms that the Legislature is rationally interested in
protecting. There is nothing rational about voiding contracts that were
freely bargained for because procurement was unlicensed when the
requisite license requires no training or education whatsoever. This
Court should find the prohibition on procurement of employment to be
inconsistent with rational basis