The opinion of the court was delivered by: MOTLEY
Defendant Actors' Equity Association ("Actors' Equity") is a labor organization representing actors working in the legitimate theatre. Defendant Donald Grody ("Grody"), as Executive Secretary, is the chief executive officer of Actors' Equity. The plaintiffs are employment agencies located in New York City who operate as theatrical agents.
Actors' Equity has collective bargain agreements with most major theatrical producers in New York and elsewhere, with most off-Broadway producers, and with many other theatrical producers throughout the United States. The terms negotiated with various producer groups are the minimum terms and conditions of employment. An actor is free to negotiate salary or terms more favorable than those prescribed in the collective bargaining agreement, but neither the actor nor the producer is permitted to diminish the wages set forth in the relevant collective bargaining agreement.
Theatrical agents are independent contractors in the business of placing their actor clients in jobs with producers. Theatrical agents receive commissions, based on a percentage of earnings of the client, only if they succeed in obtaining employment for their clients.
Theatrical agents who operate in New York City are required to be licensed as employment agencies and are regulated by the Department of Consumer Affairs of New York City pursuant to article 11 of the General Business Law of the State of New York, which sets the maximum commissions employment agencies may charge and has specific provisions dealing with theatrical agents.
As a matter of general industry practice, producers seek actors and actresses for their productions through agents. Testimony in this case convincingly established that an actor without an agent does not have the same access to producers or the same opportunity to be seriously considered for a part as does an actor who has an agent. Even principal interviews, in which producers are required to interview all actors who want to be considered for principal roles, do not eliminate the need for an agent, who may have a greater chance of gaining an audition for his client.
Under Actors' Equity agency regulation system, agents are required to secure licenses, also known as permits or franchises, from Actors' Equity in order to represent Actors' Equity members. Licensed agents must abide by a schedule of maximum commissions established by Actors' Equity and must adhere to other rules designed to protect Actors' Equity members. Actors' Equity members are forbidden from dealing through agents who are not licensed by Actors' Equity, and members are subject to discipline for dealing with nonfranchised agents.
Theatrical Artists Representatives Association ("TARA") is a trade association of agents working in the legitimate theatre field. Discussions between Actors' Equity and TARA have resulted in several revisions in Actors' Equity regulations over the years. While holding an Actors' Equity franchise is a condition of membership in TARA, membership in TARA is not a condition to obtaining an Actors' Equity franchise.
Discussions between Actors' Equity and TARA in the 1950's resulted in the promulgation by Actors' Equity of "Rule A," which governed relations between Actors' Equity members and theatrical agents between 1958 and 1977. Rule A prescribed the minimum terms of contracts between actors and agents, including the maximum commissions which could be charged, the maximum duration for exclusive contracts, and the conditions warranting release from an exclusive contract. Rule A also established procedures for the granting of franchises, the discipline of agents, and the arbitration of disputes under the agency regulations.
The current Actors' Equity agency regulations also resulted from discussions between Actors' Equity and TARA. The course of these discussions and related events follows.
Discussions between Actors' Equity and representatives of TARA commenced in or about 1975. In the course of the discussions, TARA gave six months notice to "terminate" Rule A; this termination date was extended several times by mutual consent.
A major subject of the discussions was Rule A's provision prohibiting agents from charging commissions on jobs paying the minimum scale salary provided for in the collective bargaining agreements between Actors' Equity and the producers. In addition, Rule A prohibited commissions on rehearsal pay, on pay for out of town expenses, and on "chorus" jobs. TARA demanded "10% From the first dollar," that is, a 10% Commission on all monies received by the actor, regardless of whether the actor's salary exceeded the minimum scale. When Actors' Equity submitted to TARA a proposal that, while increasing commissions, did not meet this demand, TARA rejected the proposal and officially terminated Rule A on January 6, 1977. Agents who "resigned" their franchises pursuant to TARA's termination of Rule A were not permitted to represent Actors' Equity members except under pre-existing agency contracts. Rule A remained in effect for those agents who agreed to abide by it these agents were permitted to represent Actors' Equity members for all purposes.
As negotiations continued, Actors' Equity drafted a revised commission schedule and new agency regulations, known as the "Equity Agency Regulations." These regulations provided that an agent could charge a 10% Commission, so long as that commission did not invade the negotiated minimum, that an agent could charge a commission on off-Broadway contracts, and that expense money negotiated by Actors' Equity was not commissionable.
In May, 1977, seven agents, including five who are plaintiffs herein, filed a lawsuit in the United States District Court for the Southern District of New York, challenging Actors' Equity's franchising system under the antitrust laws (Hidden v. Actors' Equity Association, 77 Civ. 2624 (JMC)). The lawsuit was initiated and financed by TARA.
The lawsuit was withdrawn without prejudice in August, 1977, and in or about October, 1977, TARA and Actors' Equity reached agreement on the new Equity Agency Regulations. Most agents then resumed their franchises and began complying with the current Equity Agency Regulations. The new Equity Agency Regulations prohibit commissions on minimum scale jobs, chorus jobs, rehearsal pay, and out-of-town expense money.
On or about August 31, 1977, a group of agents, including the plaintiffs, informed Actors' Equity that they had resigned from TARA and that they wished to be represented by the National Association of Talent Representatives, Inc. (NATR), a trade association whose members were talent agents representing actors. Most of the plaintiffs have not been franchised by Actors' Equity since January, 1977. Actors' Equity has invited plaintiffs to become refranchised, but plaintiffs have decided to remain unfranchised.
In order to enforce its rule that members deal only through franchised agents, Actors' Equity has advised members that they could be disciplined for dealing with nonfranchised agents. It was Actors' Equity's practice to send a letter to an actor dealing with a nonfranchised agent, warning the actor that he could be disciplined a copy of the letter was also sent to the nonfranchised agent. In 1979, Actors' Equity began disciplinary proceedings against members who were dealing with nonfranchised agents members who would not agree to cease dealing with nonfranchised agents were fined after hearings.
The court finds, however, that Actors' Equity has not required producers to refrain from dealing with nonfranchised agents. While Actors' Equity requested producers not to deal with nonfranchised agents and notified producers that Actors' Equity members could be disciplined for dealing with nonfranchised agents, Actors' Equity never imposed or threatened to impose any sanctions on producers for dealing with nonfranchised agents. In June, 1978, Actors' Equity amended the language of Rule 2(A) in collective bargaining agreements between Actors' Equity and producers; the amendment clarified that actors were the only persons subject to any sanctions for dealing with nonfranchised agents.
Actors' Equity provides standard form individual employment contracts, which the actor and producer must sign when the actor becomes employed by a producer. These individual employment contracts provide blanks for identifying the parties to the contract (including the agent), the production, and essential terms such as the salary, the starting date, and the role to be played. In particular, in 1975 TARA requested Actors' Equity to add a line for identification of the agent into the standard form employment contract used under the "Production Contract" and used in Broadway shows. In 1977, Actors' Equity did print new standard form employment contracts containing a line for identification of the agent.
This court finds that producers were not, in fact, required to fill in the agent identification line on any of the standard form contracts. Producers could leave the agent's line blank, incurring no penalties or further inquiry from Actors' Equity. Even where Actors' Equity has had knowledge that a producer has failed to identify an agent on the standard form employment contract, the evidence does not show that Actors' Equity has taken action against the producer. ...