10/25/13 12:10 PM Daily Journal

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Headlines Opinions Verdicts
TODAY'S HEADLINES
U.S. Court of Appeals for the 9th Circuit
Panel: US immune in suit over baby's
death
Judges urged Thursday for Congress or the
U.S. Supreme Court to bypass a legal
roadblock barring relief even though a
servicewoman was ordered to perform hard
physical training during pregnancy.
Securities
REITs look to private offerings
Some of the heavily regulated companies are
opting for cheaper and quicker private
offerings now that they can advertise, thanks
to a new SEC rule.
Criminal
Attorneys adjust to government
aggressiveness in insider trading
investigations
Regulators' increased use of powerful tools
such as wiretaps and sophisticated data
analysis to crack down on insider trading at
hedge funds are prompting defense
attorneys in California to advise caution.
Litigation
Sonic-Calabasas the hedgehog
The court is poised in Iskanian to overrule
Gentry. Whether the majority can hold onto
their sole long-term idea of saving another
ruling remains to be seen.
Health Care & Hospital Law
Court limits actions under medical
privacy act
The opinion should come as a relief to
medical providers, health care plans,
pharmaceutical companies and associated
contractors. By Michael Maddigan and
Michael Reynolds
Alternative Dispute Resolution
How to avoid impasse in settlement
negotiations
The consequences of impasse in mediation
can be significant and severe. By Patrick J.
Mahoney
Judicial Profile
Kelvin D. Filer
Superior Court Judge Los Angeles
(Compton)
Corporate
Thousands expected at in-house
convention in LA
From alternative fee arrangements to cyber
security threats, the Association of Corporate
Counsel is set to explore a wide range of
issues facing in-house counsel during its
annual meeting in Los Angeles next week.
Discipline
Disciplinary Actions
Here are summaries of lawyer disciplinary
actions taken recently by the state Supreme
Court or the Bar Court, listing attorney by
OCTOBER 24, 2013
Entertainment lawyers are not above the law
By Michael Garfinkel
The California labor commissioner recently issued a decision confirming what many
entertainment attorneys feared: When it comes to the Talent Agencies Act, attorneys are
not above the law. The act prohibits unlicensed "persons" from engaging in talent agent
activities. Personal managers know all too well that violating the act can invalidate their
client contracts and require disgorgement of commissions. Entertainment attorneys
have watched from the sidelines, assuming that they were protected by an unwritten
exemption. The labor commissioner has now made clear that they are not. While the
decision has been appealed to Los Angeles County Superior Court, attorneys should take
heed.
The Talent Agencies Act's purpose is to protect artists seeking professional employment from abuses. The
labor commissioner is responsible for enforcing the act and has original jurisdiction over any disputes. The
act establishes detailed requirements for how licensed talent agencies conduct their business, including pre-
approval of all forms of client contracts, posting of fee schedules, maintenance of trust accounts, thorough
background checks, and posting of a bond. Under the act, only licensed talent agents may procure or attempt
to procure employment for artists. It is long-settled that a violation of the act by an unlicensed person
renders his contract with the artist illegal and void. Styne v. Stevens, 26 Cal. 4th 42, 51 (2001).
In 1982, in response to complaints primarily from personal managers, the Legislature formed the California
Entertainment Commission to study the act. The commission was comprised of the labor commissioner,
artists, talent agents and personal managers. In 1985, the commission issued its report containing
recommendations for improving the act. The Legislature adopted all of the committee's recommendations
and amended the act to impose a one-year statute of limitations, eliminate criminal sanctions for violations
of the act, and establish a "safe harbor" for managers "to act in conjunction with, and at the request of, a
licensed talent agency in the negotiation of an employment contract." Labor Code Section 1700.44. The
Legislature agreed with the commission and rejected alternatives that would have allowed unlicensed
persons to engage in limited procurement activities, concluding that the act's prohibitions on unlicensed
procurement must remain, as they are intended to be, total and without exception. "There can be no
'sometimes' talent agent, just as there can be no 'sometimes' professional in any other licensed field of
endeavor." Entertainment Commission Report, pp. 11-12.
Thereafter, the act was increasingly asserted by artists to defeat commission claims brought by personal
managers. In a typical scenario, the artist and manager had a falling out, leading the manager to file a lawsuit
for post-termination commissions. In defense, the artist asserted the act, alleging that the personal
manager's procurement of engagements without the involvement of a talent agent constituted prohibited
unlicensed procurement. The artist then filed a petition to determine controversy to be determined by the
labor commissioner, while staying the personal manager's lawsuit.
If the labor commissioner found any procurement activities, including sending the artist to an audition for a
role he did not get, she deemed the agreement between the artist and personal manager void ab initio, not
only barring the personal manager from recovering any further commissions but also compelling him to
disgorge any commissions collected within the one-year statute of limitations. Under the act, such
determinations are appealable to the superior court for a de novo review. However, once the artist was
armed with evidence of illegal procurement, typically the case settled or the superior court reached the same
conclusion. While the outcome may seem a bit harsh or unfair, the result was often justified by the equities
involved and had the intended deterrent effect.
Over the years, the act has repeatedly survived constitutional attacks unscathed. However, years of
coordinated personal manager attacks finally paid off in part in Marathon v. Blasi, 42 Cal. 4th 974 (2008).
While the state Supreme Court again upheld the constitutionality of the act and its application to unlicensed
personal managers, it for the first time sanctioned the doctrine of severability as a defense - "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."
The doctrine's application addressed the seemingly most unfair situation where the personal manager loses
his commissions on employment lawfully obtained based upon another incidental procurement activity, such
as booking the artist for an unrelated promotional appearance. However, the Supreme Court also made clear
that there are instances where the doctrine cannot be applied, such as where the illegal procurement
activities are inseparable from the managerial services. "The doctrine is equitable and fact specific, and its
application is appropriately directed to the sound discretion of the Labor Commissioner and trial courts in
the first instance."
The Marathon court was not faced with, and did not specifically address, whether the act equally applies to
10/25/13 12:10 PM Daily Journal
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Court or the Bar Court, listing attorney by
name, age, city of residence and date of the
court's action.
ADR Provider
Michael D. Marcus
Attorneys say the ADR Services Inc. neutral
employs a foreful, direct approach, but his
affability helps soften the tone of his
sessions.
Solo and Small Firms
Salisian Lee LLP
To represent the kinds of clients they wanted
to help, Neal S. Salisian and Richard H. Lee
ditched big firm life more than three years
ago.
Investments
Orrick helps Pinterest secure $225 million
in financing
Silicon Valley attorneys at the firm helped the
San Francisco-based social scrapbooking
website pin down $225 million
Government
Riverside ends contract with law firm
The city terminated its contract Tuesday with
Nielsen Merksamer Parrinello Gross & Leoni
LLP in a dispute over its representation of a
company.
Mergers & Acquisitions
Dealmakers
A roundup of recent mergers and
acquisitions and financing activity and the
lawyers involved.
Military Law
Our warriors face unique challenges in
civilian courts
Understanding issues that are unique to
military families may help reduce the needs
for, and the costs of, civilian court
involvement with such families. By Thomas
M. Hall
Labor/Employment
Overly broad dress codes haunt
employers
With Halloween approaching, employers may
wonder if they can regulate what employees
may wear at work. By Eli Kantor
When essential skills begin to decline
For virtually every lawyer there will come a
time when essential skills erode to the point
that the duty of competence is impaired. By
Karen M. Goodman and Pearl Mann
The Marathon court was not faced with, and did not specifically address, whether the act equally applies to
attorneys. While there is no known labor commissioner decision on the issue, she has uniformly held that the
act prohibits any "person" from engaging in unlicensed procurement activities and has previously held that
the safe harbor cannot be invoked based upon the manager's collaboration with a transactional attorney. On
Sept. 30, 2013, the labor commissioner went one step further, rejecting the notion of an attorney exemption
in Solis v. Blancarte.
Mario Solis is a local Los Angeles sports reporter and news anchor on KNBC. He brought the KNBC
opportunity to his attorney and sometime manager, James E. Blancarte. Solis did not have an agent and
instead engaged Blancarte to negotiate several successive KNBC employment contracts. Blancarte filed a
lawsuit to recover commissions from Solis, and Solis countered by filing a petition to have the labor
commissioner determine their agreement to be unenforceable due to violations of the act.
In her decision, the labor commissioner concluded that there is no attorney exemption. Consistent with prior
decisions, the labor commissioner held that "procurement" includes the process of negotiating an agreement
for the artist's services, even if those services were performed by a licensed attorney. Since Blancarte
negotiated the KNBC agreements, and it was the KNBC commissions at issue, the doctrine of severability was
of no help to him. Since Solis did not have an agent and Blancarte acted alone in the negotiations, the safe
harbor provision was also unavailable.
Blancarte has appealed. While the superior court is entitled to review the matter de novo, the labor
commissioner's "interpretation of the statute he is charged with enforcing deserves great weight." Styne v.
Stevens, 26 Cal. 4th at 52-53. If the superior court reaches the same conclusion, expect the matter to be
appealed to the 2nd District Court of Appeal, and maybe even to the state Supreme Court. In the meantime,
entertainment attorneys should take note that in the labor commissioner's eyes, they are no different than
personal managers.
Since the entertainment attorney presumably will have some hand in negotiating each and every
employment agreement for his artist, the doctrine of severability will not be of much use. Like personal
managers, some attorneys will likely consider and decide against becoming a licensed talent agent because it
would subject them to the jurisdiction of the labor commissioner and the various guilds (AFTRA, DGA,
WGA), and require compliance with myriad requirements and restrictions.
Therefore, the best way for an entertainment attorney to protect himself or herself is to avail themselves of
the safe harbor, that is, working in conjunction with, and at the request of, a licensed talent agent. In several
pre-Marathon decisions, the labor commissioner has taken the position that the talent agent must make a
request to the attorney "each and every time" a negotiation occurs. A "blanket understanding" with the talent
agent is insufficient to shield the manager. Unless and until there is a California appellate decision to the
contrary, the labor commissioner's rules should be followed.
The Solis decision is important because it flatly rejects the commonly held belief that attorneys are somehow
exempt from the act. While you may not like it, the labor commissioner's interpretation of the act is not
surprising and will be given great deference. Unless and until the act is amended to add an attorney
exemption, or there is binding authority to the contrary, the best practice is work with a talent agent and
avail yourself of the act's safe harbor.
Michael Garfinkel is a partner in Perkins Coie LLP's Los Angeles office and Chair of its Media &
Entertainment Litigation Practice Group. He has a broad commercial litigation practice with particular
experience in entertainment, intellectual property, defamation and class action defense. Michael can be
contacted at mgarfinkel@perkinscoie.com.