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Walking on the California Talent Agency Act's Thin Ice: Personal Managers Beware!

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Entertainers’ personal managers have long been haunted by California’s Talent Agency Act (TAA), the law enacted in 1978 that requires a person to have a license if they are acting as an agent (you can learn about the TAA and how to obtain a license here). Unlike the comparable New York law, California does not provide an exception for personal managers who incidentally procure employment for their client (and the phrase “procure employment” covers a broad range of activities). Artists like the Deftones have used the TAA to escape the obligations of their California management contracts by claiming that their manager has violated the statute.

Dave Park, former manager of the Deftones, sued the band in 1996 for breach of his then-existing management agreement with the band, claiming the Deftones had not paid him commissions that he had earned. The Deftones responded by filing a complaint with the California Labor Commissioner seeking to cancel the management agreement because Park had violated the TAA. When the Labor Commissioner determined that Park had procured performance engagements for the band on eighty-four occasions without a license, she sided with the band and cancelled each of the three management agreements that Park had entered into with the band in 1992, 1993, and 1994. The court also sided with the Deftones. After an unsuccessful appeal, Park was left with no commissions and no valid management agreements.

What did Park do wrong? The TAA defines a talent agent 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.” The TAA originally had contemplated requiring a separate license for personal managers, but those provisions were deleted. Many managers say the line between the roles of an agent and a manager is blurred and that the division exists only in theory. Primary responsibilities of personal managers include advising, counseling, and shaping the artist’s career. But managers also take phone calls from concert promoters and labels, handle the artist’s scheduling, set up meetings, facilitate communications with various representatives, and engage in many other activities that could arguably be the procurement of employment. In the case of the Deftones, the Labor Commissioner and the court took issue with the fact that Park had procured performance engagements for the band without a license. Park argued that his reason for procuring the engagements was to obtain a recording agreement for the band, and that his actions were therefore exempt from the TAA because they were incidental to his overall goal of managing. However, this reasoning was rejected.

As reflected in the Deftones case, the penalties for procuring employment without a license include forfeiture of commissions, loss of future earnings, and cancellation of management contracts. It comes as no surprise then that personal managers despise the TAA, claiming that it allows artists to use it as a shield to escape paying the commissions rightfully earned. The National Conference of Personal Managers (NCOPM) even went so far as to bring a lawsuit against the California Governor, Attorney General, and Labor Commissioner in November of 2012, challenging the TAA on the basis of unconstitutionality (the press release issued by the NCOPM can be found here).

The NCOPM lawsuit alleged that the TAA is unconstitutionally vague because it does not define “procure employment,” that it results in involuntary servitude due to improper compensation, that it discriminates against out-of-state personal managers, and that it restricts commercial speech. Among federal Judge Pregerson’s many responses were that the term “procure employment” is used in numerous California statutes, which indicates that it is well-understood, and that not being compensated for work does not equate to involuntary servitude. Rather, managers have the choice to refrain from procuring employment or to obtain a license. Despite the NCOPM’s valiant effort, Judge Pregerson characterized the arguments as “futile,” and dismissed the lawsuit earlier this month, leaving personal managers to tiptoe around procuring employment.

NCOPM’s battle against the TAA is not the first we have seen. In 2008, personal manager Judy Coppage challenged the statute as unconstitutional when her client, Patti Davis (Ronald Reagan’s daughter), asked the California Labor Commission to cancel their contract on the basis that Judy had procured employment for Patti without a license. About thirty of these types of complaints are filed by artists each year that claim a manager crossed the line into job procurement, and at least ninety percent of the cases in the last twenty years have been determined in favor of the artist. President of the NCOPM, Clinton Billups, estimates that the California Labor Commission has cancelled over $250 million in personal management commissions throughout the last four decades due to these kinds of complaints.

Many managers have urged California lawmakers to revise the TAA to provide an exception for personal managers, similar to the one provided in the comparable New York statute. Section 171(8) under Article 11 of the New York General Business Law mandates that anyone acting as an agent or procuring employment must obtain a license, just like the TAA. However, Section 171(8) contains an exception for personal managers who procure employment when such procurement is only incidental to the business of managing. This is commonly referred to as the “personal manager exception,” and has repeatedly been cited by New York judges when artists attempt to have their personal management contracts voided on the basis that their manager procured employment for them without a license.

Until the California Legislature revises the TAA to provide an exception for personal managers, we will see more cancellations of management contracts. For now, managers must continue walking on the TAA’s thin ice. Beware!