The Bill That Could Blow Up Hollywood

Ketanji Brown Jackson
Photo by Drew Angerer/Getty
Eriq Gardner
February 28, 2022

Welcome back to my new column, which is still untitled. (Please keep the name suggestions pouring in to me at eriq@puck.news.) This week, I’m focusing on how Biden’s pick for the Supreme Court, Ketanji Brown Jackson, could have an impact on the entertainment industry. And I’m also interested in how some underappreciated activity in the California state legislature may have powerful activity in film and television. But, in the meantime, here’s some stuff on my docket…

  • The U.S. Copyright Office has ruled that an artwork entitled A Recent Entrance to Paradise, generated by algorithm, is ineligible for copyright registration for two reasons. First, human authorship is required. And second, artificial intelligence lacks legal personhood and thus can’t enter into binding work-for-hire contracts with human overlords. Read the decision here. It’ll be interesting to watch whether this determination is challenged in court.

  • The Institute of Free Speech is about to publish a report card for all 50 states on their anti-SLAPP laws, and I’ve gotten an advance look. For those unfamiliar, these statutes are designed to stop litigious people from using courts to bully someone else’s First Amendment rights. California gets an A+ from the think tank for the way the state allows judges to review a case’s merits quickly and shift legal fees to the winner. Nineteen states with no anti-SLAPP law get F’s. The states making strides to protect free speech by recently enacting new procedures to curb frivolous 1A-chilling suits, according to the Institute, are Tennessee (A), New York and Washington (both A-), and Colorado (B).

  • I’m hardly a crypto expert, but I can spot a bad copyright idea, such as the guy who created an NFT of a video of his daughter’s murder. He did so, according to The Washington Post, to “give him legal standing to sue the social media companies to remove the videos from circulation.” I empathize with him, of course, but unfortunately the NFT doesn’t give him copyright on the video, and if he’s claiming such in a takedown notice, he’s possibly committing an illegal misrepresentation.

  • I can also spot a potentially good idea, such as The BuyTheBroncos DAO, from former Cisco lawyer Sean O’Brien. For those not familiar with the term DAO—or “decentralized autonomous organization”—they’re basically the “Delaware C-corp of the crypto economy,” as Coinbase C.E.O. Brian Armstrong recently put it. Own a digital token, get a vote. Now imagine raising $4 billion from crypto enthusiasts where the hive then controls an NFL franchise. Fascinating, but there’s a hitch: “The NFL has a quirky ownership rule that the other major sports leagues don’t have,” reports one crypto site. “That is, the NFL requires a controlling owner to hold a minimum of a 30% stake in a team.” Oh well. Maybe Chelsea instead?

  • For those who missed my column last week on possible government intervention in a MLB lockout, I reported that the National Labor Relations Board was investigating an illegal lockout. I filed a public records request to obtain the charge that was sent to MLB Commissioner Rob Manfred. Here it is. The letter identifies the NLRB field attorney investigating the matter, gives MLB the opportunity to present evidence, and also commands the league to preserve potential evidence, too.


How Will Brown Jackson Impact Hollywood?

It will be a rollicking few weeks for Supreme Court watchers as Joe Biden’s nominee to fill Stephen Breyer’s soon-to-be vacant seat, Ketanji Brown Jackson, faces down a Senate confirmation committee. Her background and career will be scrutinized to a degree that very few individuals experience. Half the members of the committee will be desperate to trip her up with probing, uncomfortable questions about her judicial philosophy. And yet, we’ll likely hear very little about the areas in which she’ll probably make the biggest impact in the coming years.

Of course, that’s entirely understandable. While hyperpartisan cultural issues like abortion rights and gun control dominate the conversation anytime a new Supreme Court justice gets considered, there are entire legal spheres that are a lot less ideological, where a new Supreme Court justice might tip the balance in unpredictable ways: intellectual property, competition, civil rights, free speech.

Take copyright law, for example. In just the past 18 months, the Supreme Court has lost the two justices with probably the heaviest interest in the subject: Ruth Bader Ginsburg and now Breyer. Ginsburg wrote the majority opinions in Eldred v. Ashcroft (copyright term extension) and Petrella v. MGM (delay in filing a copyright lawsuit), among others; Breyer did the same in ABC v. Aereo (retransmission of live TV) and Google v. Oracle (computer code). As late as last week, Breyer was active on the copyright front, with a majority decision about mistakes in registration. It’s also probably true that given his take in Eldred, MGM v. Grokster (secondary liability), and Google, Breyer may have been the least favorite justice of the Motion Picture Association. In the eyes of the copyright industry, he’s a bit hostile towards expansive property rights and overly tolerant towards disruptive technology. But at least we knew where he stood. Jackson? I have no earthly idea. That introduces enormous uncertainty with respect to future enforcement, and I doubt the issue will get cleared up anytime soon.


The First Amendment is another area where Jackson doesn’t have a long track record to study. But, assuming she is confirmed by Senate Democrats, she’ll soon be presented with an important test case: 303 Creative v. Elenis, which the Court just agreed to review. Here, a Catholic web designer named Lorie Smith claims the Colorado Anti-Discrimination Act violates her religious beliefs by limiting her ability to refuse service to same-sex couples. Although Colorado urged the justices to decline a review based on Smith’s failure to show a credible threat of prosecution, it’s not surprising the high court took the case. After all, the conservative justices have shown a fervor lately for “religious liberty” disputes.

Religious issues aside, let’s focus purely on the literal issue presented: Whether applying a public-accommodation law to compel an artist to speak or stay silent violates the free speech clause of the First Amendment. That kind of sounds like it could be a big deal for Hollywood, the media, and anyone in the speech business.

In the past few years, there’s been a handful of cases where the First Amendment has clashed with anti-discrimination laws outside of the religious sphere. One example is when a deaf group sued CNN for refusing to caption videos uploaded to its website. CNN responded to the suit by arguing that the choice to forgo captioning was an editorial decision and that its free speech rights supported reporting the news how it wished. In 2014, the Ninth Circuit Court of Appeals agreed that First Amendment rights could be at stake here—though it asked the California Supreme Court to decide whether, under state law, websites were places of “public accommodation.” The case settled before any answer came, and since then, other disputes pitted allegations of age and gender bias on one side against First Amendment rights on the other.

I asked U.C.L.A. Law Professor Eugene Volokh, a constitutional law expert, if 303 Creative could hold significance for secular speech. “I entirely agree that this case is all about the speech, whether the speaker is religious or otherwise,” he told me. “Say, for instance, that the Scientologists ask a freelance web designer or freelance writer to write content for them, and the person objects, not because of his religious beliefs (he might have none) but because he thinks the Scientologists are a scam. Could he be held liable for violating laws banning discrimination in public accommodation based on religion?”

Volokh also mentioned that some jurisdictions ban discrimination based on political affiliation. A little-known law in Washington, D.C., for instance, forbids political bias in housing. So arguably, it’s illegal in the nation’s capital for a landlord to post online that he only wishes to rent to Republicans. Is that a First Amendment violation? Or is it kosher because the law applies to bias against any political party? Get ready, Justice Jackson.


California’s Under-the-Radar Labor Battle

A month ago, the California legislature failed to pass a plan for single-payer healthcare. What no one knew at the time, however, and what’s become the subject of chatter by policy insiders, is how the defeat has set up a gargantuan labor battle for Hollywood—and probably other California industries too. That’s because Assemblyman Ash Kalra, the San Jose Democrat who leads the progressive caucus and chairs the labor and employment committee, has moved on from single-payer healthcare to the Free Artists from Industry Restrictions (FAIR) Act. And, wow, the FAIR Act portends one hell of a lobbying fight in the coming months—and maybe a significant court battle afterwards.

A good explanation of the FAIR Act first requires a trip back in time, to just before World War II, when a labor shortage had employers locking down their talent with onerous contracts. The reaction by California’s lawmakers, in 1937, was to limit the maximum contractual term for one’s personal services to seven years. The following decade, Gone With the Wind actress Olivia de Havilland famously tested the new law when Warner Bros. kept extending her contract upon suspensions for refusals to take roles. She sued and prevailed in a case that would help bring down the old studio system. 

In the following decades, others would try to leverage the “de Havilland law”—everyone from NBA great Rick Barry to comedian Redd Foxx. The use of the “seven-year limit” became particularly frequent in the music industry when artists such as Olivia Newton-John and Teena Marie exploited the rule to escape record deals, leading labels to successfully lobby for a change whereby they can sue musicians for the “lost profits” of undelivered albums.

In recent years, a more nuanced application of the rulebook was tested. What if the record label deems an album not commercial enough within the contracted term? Or what if the contract is renegotiated—does it reset the seven-year clock?

Given how entertainment is changing, there’s been a push to update this eight-decade-old law. Recently, SAG-AFTRA complained about how Netflix, Amazon Prime, and other streamers haven’t been renewing or canceling their shows in any sort of timely way. Instead, these streamers dithered while exercising contractual “holds” on actors regardless of whether these performers were ultimately working. The streamers were taking full advantage of their ability to wait as long as possible before greenlighting production. Meanwhile, actors were kept off the market due to the need to keep their schedules free for possible shooting. That was interfering with other potential jobs.

So last year, then-Assemblywoman Lorena Gonzalez sponsored the FAIR Act. Cheered on by SAG-AFTRA, she proposed new amendments to the 1937 law. The bill would also place a 12-month time limit on the exercise of contractual options for an actor’s exclusive services. 

The industry went ballistic. Netflix told lawmakers last April that the FAIR Act would have “significant negative impacts on the quality and quantity of series produced in California” by “creating overly strict and artificial timelines for the completion and orders of subsequent seasons of episodic series.” The Motion Picture Association warned it would be susceptible to a legal challenge since working conditions are collectively bargained. The potential new statute, they warned, could be preempted by federal labor laws.

Gonzalez backed down, and just after the New Year, she resigned from the Legislature to join the California Labor Federation. SAG-AFTRA lost its sponsor—and scrambled for someone else who could lead the charge. Then, single-payer healthcare collapsed, and Ash Kalra, the Assemblyman leading the labor committee, became available.

Kalra has now proposed a new version of the FAIR Act. It’s received almost no press attention, despite going further than last year’s model to regulate personal service contracts. In fact, if it passes, it’ll be much tougher to hire an independent contractor on an exclusive basis. The proposal only allows contracts to prohibit anyone from working for multiple employers under very specific circumstances—namely when it presents some sort of conflict for an employer or would interfere with performance obligations for an employee. What sort of conflict? For artists, the bill continues, an employer would have to show that secondary employment would “pose a direct scheduling conflict” or “materially interfere with the employer’s business.”

This means that if an actor works on a TV series on Monday through Thursday, but not Friday, it might not be legal to prevent that actor from performing elsewhere that last day of the work week. And the bill doesn’t define “artist,” potentially meaning it’s not just actors who would be affected. Could Netflix, for instance, claim exclusivity on the production services of Shonda Rhimes or Ryan Murphy? Probably not, if this bill passes without change. And think beyond entertainment, too, as the legislation appears to encompass computer programmers, university professors, journalists, and anyone who contracts employment in California.

The scope of the bill will likely get narrowed in the months ahead, upon furious lobbying and legislative debate. But there are other aspects that are sure to gather industry attention, too. For those in the music business, for example, the ability to recover damages for undelivered albums is repealed. And the  seven-year clock will only reset if the renegotiated contract provides a “material improvement” upon the existing contract, and the terms are “consistent with, or better than, the terms applicable to artists of similar commercial success.” This sort of regulation of employment contracts, if adopted, may revolutionize the entertainment business and become the focus of frenzied court attention. In the meantime, I hear, the Chamber of Commerce is evaluating how to push back.