California Supreme Court, January 28, 2008
The California Supreme Court ruled that the Talent Agencies Act applies to managers as well as agents, and that a management contract can be severed and partially enforced even if a manager violates the Talent Agency Act.
The case was brought by a management company against a former client for non-payment of fees. The parties began their relationship with an oral agreement under which the manager would counsel the actress and promote her career; in exchange, the actress was to pay the manager 15% of her earnings from entertainment employment obtained during the course of the contract. Three years later, the actress unilaterally reduced her payment to her manager to 10% and eventually she ceased paying altogether and terminated her contract. When the management company sued for breach of contract, the actress argued that her manager violated the Talent Agencies Act, which allows only licensed agents to procure work for artists, and that she therefore was not obligated to pay. The actress filed a petition with the California Labor Commissioner who concluded that the management company violated the Talent Agencies Act; the Commissioner voided the contract and barred the management company from recovering any fees.
The management company appealed the Commissioner’s decision. The trial court granted summary judgment for the actress, finding that the Talent Agencies Act applies to managers and that the management company’s violation of the Act invalidated its entire agreement with the actress.
The court of appeal reversed in part, stating that, although the management company violated the Act, its agreement with the actress could be severed rather than invalidated completely. The California Supreme Court agreed with this conclusion. It examined the statutory basis of the doctrine of severability and concluded that it can apply to contracts for personal services and that it can be applied to partially enforce such contracts. The court summed up by saying:
“Blasi argues that once a personal manager solicits or procures employment, all his services--advice, counseling, and the like--become those of an unlicensed talent agency and are thus uncompensable. We are not persuaded.... 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.”