Are They or Aren’t They Covered?
Under the heading of “no good deed goes unpunished” comes Marathon Entertainment v. Blasi, 42 Cal. 4th 974, 174 P.3d 741 (Cal. 2008), which reached some conclusions about the application of the California Talent Agencies Act (Cal. Lab. Code, § 1700 et seq.) to personal managers. That statute governs talent agents in the entertainment world – those people who engage in the occupation of “procuring, offering, promising, or attempting to procure employment or engagements for an artist or artists,” (§ 1700.4(a)) but conventional wisdom has long held that the Act doesn’t apply to personal managers. As is so often the case, conventional wisdom missed it by a mile.
In 1998, Marathon and actress Rosa Blasi entered into an oral contract for Marathon to act as Blasi’s personal manager, providing a variety of management and counseling services, in exchange for a 15% commission from all her entertainment employment income. Over the next three years, Blasi obtained a role in the film Noriega: God’s Favorite and a lead role in the television series Strong Medicine. Among the management services Marathon said it provided during that time were making the down payment on Blasi’s home, paying her business manager’s salary, paying her travel expenses, and giving her professional and personal advice.
So far, so good – right?
Wrong! By the summer of 2001, Blasi unilaterally reduced the commissions she paid Marathon from 15% to 10%, and later stopped paying commissions altogether and terminated the management contract. Marathon then sued her on theories ranging from breach of contract to unfair business practices. As damages, they wanted to recover their unpaid commissions from Blasi’s role in Strong Medicine. Blasi got the action stayed, then filed a petition with the California Labor Commissioner and claimed that – and you could probably see this coming from a mile away – Marathon had violated the Talent Agencies Act by procuring work for her as an actress on Strong Medicine without being licensed as a talent agency. The Labor Commissioner agreed and invalidated the entire management contract between Blasi and Marathon.
Holy mackerel! Let me see if I got that straight: She said that Marathon got her a paying gig as an actress on a TV series, but by doing so, they violated the law so she doesn’t have to pay them for getting her the job in the first place because it was illegal for them to get her that job. And, in fact, the Labor Commissioner essentially said she didn’t have to pay them for anything they had done for her because the entire contract was invalid. If so, that would mean Blasi could have counterclaimed in the lawsuit to recover back all commissions she had already paid, wouldn’t it?
Fortunately, the California Supreme Court ultimately injected a heavy dose of common sense. In Marathon, the Court held that: (1) the Talent Agencies Act regulates conduct, not titles, so if a manager “procures employment” for a client, he/she is performing the services of a talent agency and must be licensed under the Act; but (2) although the Labor Commissioner may invalidate an entire management contract, it doesn’t have to; thus, applying the doctrine of severability, the courts and/or Commissioner may uphold those portions of a management contract that don’t violate the Act while only invalidating those that do.
The Court said: “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 strictures if he spends 1 percent of his time procuring or soliciting; conversely, however, the 1 percent he spends soliciting or procuring does not thereby render illegal the 99 percent of the time spent in conduct that requires no license and that may involve a level of personal service and attention far beyond what a talent agency might have time to provide. Courts are empowered under the severability doctrine to consider the central purposes of a contract; if they determine in a given instance that the parties intended for the representative to function as an unlicensed talent agency or that the representative engaged in substantial procurement activities that are inseparable from managerial services, they may void the entire contract. 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.” 42 Cal. 4th at 997-98.
The Court also said that it was not deciding, nor did the Act define, what “procure employment” actually meant, leaving open the question of whether Marathon had actually procured for Blasi the acting job on Strong Medicine. Noting that both parties to the case, as well as letters and briefs the Court received from personal managers, “indicate a uniform dissatisfaction with the Act’s application,” it then concluded by nudging the California Legislature: “We, of course, have no authority to rewrite the regulatory scheme. In the end, whether the present state of affairs is satisfactory is for the Legislature to decide, and we leave that question to the Legislature’s considered judgment.” Id. at 998-99.
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