California Supreme Court Rules That Talent Agencies Act Applies To Personal Managers

The California Supreme Court has finally decided that the Talent Agencies Act, which regulates the activities of talent agents, who procure employment for their clients, also applies to the activities of personal managers, who may sometimes do so (even though they are not supposed to do so). In the past, clients have attempted, and have sometimes succeeded in voiding agreements with personal managers, by showing that managers have “procured employment” even though they didn’t have licenses as required under the act. In Marathon Entertainment v. Blasi, the Court considered whether an actor should be allowed to make that argument once again.

In 1998, Marathon and Blasi entered into an oral contract for Marathon to serve as Blasi’s personal manager.  Marathon was to counsel Blasi and promote her career; in exchange, Blasi was to pay Marathon 15 percent of her earnings from entertainment employment obtained during the course of the contract.  During the ensuing three years, Blasi’s professional appearances included a role in a film, Noriega: God’s Favorite (Industry Entertainment 2000), and a lead role as Dr. Luisa Delgado on the television series Strong Medicine.

According to Marathon, Blasi reneged on her agreement to pay Marathon its 15 percent commission from her Strong Medicine employment contract.  In the summer of 2001, she unilaterally reduced payments to 10 percent.  Later that year, she ceased payment altogether and terminated her Marathon contract, stating that her licensed talent agent, John Kelly, who had served as her agent throughout the term of the management contract with Marathon, was going to become her new personal manager.

Marathon sued Blasi for breach of oral contract, quantum meruit, false promise, and unfair business practices, seeking to recover unpaid Strong Medicine commissions.  Marathon alleged that it had provided Blasi with lawful personal manager services by providing the downpayment on her home, paying the salary of her business manager, providing her with professional and personal advice, and paying her travel expenses.

After obtaining a stay of the action, Blasi filed a petition with the Labor Commissioner alleging that Marathon had violated the Act by soliciting and procuring employment for Blasi without a talent agency license.[The Labor Commissioner agreed, finding that Marathon had violated the Act by providing talent agency services without a license, including “procur[ing] work for [Blasi] as an actress on the . . . television series, Strong Medicine.”  It voided the parties’ contract ab initio and barred Marathon from recovery.

Marathon appealed the Labor Commissioner’s ruling to the superior court for a trial de novo….It also amended its complaint to include declaratory relief claims challenging the constitutionality of the Act.  Marathon alleged that the Act’s enforcement mechanisms, including the sanction of invalidating the contracts of personal managers that solicit or procure employment for artists without a talent agency license, violated the managers’ rights under the due process, equal protection, and free speech guarantees of the state and federal Constitutions.

Blasi moved for summary judgment on the theory that Marathon’s licensing violation had invalidated the entire personal management contract.  Blasi submitted excerpts from the Labor Commissioner hearing transcript as evidence that Marathon had violated the Act by soliciting or procuring employment for her without a talent agency license.  Blasi did not specifically argue or produce evidence that Marathon had illegally procured the Strong Medicine employment contract.

The trial court granted Blasi’s motion for summary judgment and invalidated Marathon’s personal management contract as an illegal contract for unlicensed talent agency services in violation of the Act, denied Marathon’s motion for summary adjudication of the Act’s constitutionality, and entered judgment for Blasi.

The Court of Appeal reversed in part.  It agreed with the trial court that the Act applied to personal managers.  However, it concluded that under the law of severability of contracts (Civ. Code, § 1599), because the parties’ agreement had the lawful purpose of providing personal management services that are unregulated by the Act, and because Blasi had not established that her Strong Medicine employment contract was procured illegally, the possibility existed that Blasi’s obligation to pay Marathon a commission on that contract could be severed from any unlawful parts of the parties’ management agreement.  In reaching this conclusion, the Court of Appeal distinguished prior cases that had voided management contracts in their entirety… and in some cases expressly refused to sever the contracts….