* Pursuant to Local Rule 47.5, the Court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in Local Rule 47.5.4. UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 95-20344

PASTORINI-BOSBY TALENT, INC.;

ACTORS ETC; MAD HATTER INC.;

SHERRY YOUNG AGENCY INC.,

Plaintiffs-Appellees,

VERSUS

SCREEN ACTORS GUILD INC.,

Defendant-Appellant

and

AFTRA; PEGGY TAYLOR TALENT INC.; NEAL HAMIL

ENTERPRISES INC., doing business as Neal Hamil Agency;

INTERMEDIA CORPORATION INC.; J AND D TALENT INC.;

ROBERT BLACK AGENCY; LEIGHTON AGENCY; ACT GRISSOM;

DANI'S AGENCY; FOSL'S MODELING AND TALENT INC.; KRISTI'S

MODELING AND TALENT INC.; SIGNATURE MODEL & TALENT AGENCY

(TALENTS); TOR-ANN TALENT & BOOKING AGENCY,

Defendants.

Appeal from the United States District Court

For the Southern District of Texas

(5:93-CV-162-BrN)

February 28, 1996

Before POLITZ, Chief Judge, DeMOSS and DENNIS, Circuit Judges.

PER CURIAM: *2

This c ontract dispute arises out of a franchise agreement

between the defendant, the Screen Actors Guild, and the plaintiffs,

a group of talent agents authorized by that union to represent

actors who are members of the Screen Actors Guild. The decisive

issue present ed for review is whether the parties' agreement

requires that this dispute be arbit rated. The district court

denied the Screen Actors Guild's motion to stay this action and

compel arbitration. 9 U.S.C. §16(a)(1)(A). We affirm.

STRUCTURE OF THE CONTRACT BETWEEN THE PARTIES

In 1939 the Screen Actors Guild (SAG) promulgated a set of

regulations governing the represe ntation of SAG-member actors by

talent agents. Those regulations, referred to collectively as Rule

16(g), have been amended a number of times over the years and are

presently the result of ongoing negotiation between SAG and two

large talent agent associations, the Association of Talent Agents

(ATA) and the National Associatio n of Talent Representatives

(NATR).

SAG, ATA and NATR have also entered into a co ntract,

designated as the "Basic Contract," which governs an agent's right

to a SAG franchise. Rule 16(g) and the Basic Contract expressly

incorpora te each other by reference, such that each is a part of

the other.

Individual talent agents may apply to become a SAG-franchised

talent agent. An agent must be SAG-franchised to represent SAG

members. The basic terms of agreement between SAG and the

plaintiff talent agents are embodied in the "Application for Screen3

Actors Guild, Inc. Talent Agent's Franchise" and the "Supplemental

Application." The Application effectively incorporates Rule 16(g),

which in turn incorporates the Basic Contract. Therefore, the

regulations, the Basic Contract, the Application and the

Supplemental Application all combine to provide the terms of

agreement between the defendant, SAG, and the plaintiff talent

agents.

1990 AMENDMENTS TO RULE 16(g)

Article VII of the Basic Contract furnishes the procedure for

amending the Basic Contra ct and Regulations. Amendment or

modification requires the written consent of SAG, ATA and NATR and

written notice to SAG-franchised talent agents. Thereafter,

amendments are binding on franchi sed agents u nless the agent

notifies SAG in writing within 15 days that it refuses to be bound

by the amendment.

In 1990 SAG, ATA and NATR executed a "Memorandum of Amendment"

purporting to amend Rule 16(g) by specifying, inter alia

, (1) that

regulations limiting the fees and commi ssions earned by agents

representing SAG-actors apply equally when the agent is

representing a non-SAG actor, and (2) that agents cannot collect

booking fees from a producer, regardless of whether the producer or

the actor employed is a member of SAG.

SAG forwarded a form "Letter Agreement" to all franchised

agents for their acceptance. The Letter Agreement informed SAGfranchised agents in bold print that they could avoid the binding

effect of the amendmen ts by providing written notice of their1 Another issue briefed on appeal in our Court was whether

SAG's motion requested injunctive relief, such that the magistrate

judge would have been without authority to enter a binding order.

See 28 U.S.C. § 636(b)(1)(A) (district court may not designate a magistrate judge to determine a motion for injunctive relief). It

is unnecessary for purposes of this appeal to reach that issue.

Although the district court first addressed the issue of the

magistrate judge's authority, its order concludes with the

alternative holding that "even if the magistrate judge did not have

the authority to deny a mot ion to stay action, the motion was

cor rectly decided . . . ." Moreover, the district court's order

dated April 12, 1995 does not deny "reconsideration" of the

magistrate judge's rul ing; it states that SAG's motion has been

reviewed and that the district court determined that it should be

denied. This alternative disposition adequately justifies the

conclusion that the district court also review ed the magistrate

judge's disposition de novo. As the parties concede, de novo

4 refusal to be bound within 15 days. There is no dispute that the

plaintiffs timely refused to abide by the proposed amendments to

Rule 16(g).

ARBITRATION PROVISIONS IN THE SAG/AGENT CONTRACT

The plaintiff talent agents in this case represent both SAG

and non-SAG actors. Plaintiffs admit they sometimes charge non-SAG

actors a higher commission for repre sentation than the 10% that

SAG-franchised agents may charg e SAG members. Plaintiffs also

admit they charge some non-SAG producers a "booking f ee" for

placing an actor with the producer. SAG challenged these practices

with an arbit ration proceeding, alleging that such practices

constitute a willful and intentional violation of Rule 16(g), which

is part of the SAG/agent contract. The talent agents filed this

federal action challenging SAG's allegedly illegal enforcement of

the 1990 amendments against them. SAG filed a motion to stay the

action and compel arb itration which was referred to a magistrate

judge 1 who held that the contract did not require that the disputereview by the district court cures any defect in the magistrate

judge's authority over the matter. S ee Estate of Conners v.

O'Connor

, 6 F.3d 656, 659 (9th Cir. 1993), cert. denied

, 114 S. Ct.

693 (1994); see also Longmire v. Guste

, 921 F.2d 620, 623 (5th Cir.

1991).

5 be arbitrated and denied such motion. The district court reviewed

the case and entered an order denying SAG's motion.

The gravamen of the p laintiffs' first amended complaint is

that SAG is attempting to enforce the 1990 amendments against the

named talent agents in violation of state and federal law and under

circumstances not permitted by the SAG/agent contract. The primary

issue, therefore, is whether the 1990 amendments ever became part

of the SAG/agent contract such that they can be enforced against

the plaintiff talent agents. There is no provision in the

SAG/agent contract which commits to arbitration a dispute between

S AG and an agent about the content of their agreement. C o mpare

Basic Contract, Article X (disputes between SAG, ATA and NATR about

terms of Basic Contract must be arbitrated); Rule 16(g), § VI(A)

(all disputes "of every kind and nature" between the agent and the

client must be arbitrated).

SAG argues that sections VIII and IX of Rule 16(g) require

that the allegations in the talent agents' federal court complaint

be arbitrated. Those sections clearly contemplate arbitration of

disciplinary ac tions brought by SAG against franchised agents.

SAG's complai nt in arbitration alleges a disciplinary violation

based on the talent agents' practices of charging non-SAG actors a

higher commission and charging non-SAG producers a booking fee. In

1990, SAG attempted to add contract terms that would prohibit these6

challenged practices. Those terms were refused by the talent

agents, in accordance with rights granted them by Article VII of

the Basic Contract. Thus, in effect, SAG's disciplinary proceeding

assumes the separate question to be decided in the federal court

action, i.e. whether the 1990 amendments were ever effectively

incorporated into the agreement between SAG and the plaintiff

talent agents.

We are persuaded that resolution of the threshold issue raised

by the plaintiffs' federal court complaint

-- what terms formed the

parties' agreement

-- is separate and distinct from SAG's

contention that the talent agents ' conduct violated Rule 16(g).

CONCLUSION

The plaintiffs' challenge to SAG's allegedly illegal

enforcement of the 1990 amendments to Rule 16(g) is a dispute

separate and distinct from SAG's arbitration alle gation that the

talent agents' practices amounted to a willful and intentional

violation of duties specified in Rule 16(g). The SAG/agent

contract does not require that the claims alleged in the agents'

complaint be arbitrated.

The district court's order denying the Screen Actors Guild's

motion to stay and compel arbitration is AFFIRMED.7

James L. Dennis, Circuit Judge, dissenting:

In this case, the plaint iffs

- appellees, Pastorini-Bosby Talent, Inc., and other actors’ agents’

firms, sought to prevent the Screen Actors Guild, a labor union for members of the acting profession,

from arbitrating a complai nt before an arbitration tribunal. Pastorini-Bosby Talent, Inc. et al, the

actors’ agents, filed this action seeking a declaratory judgment that the union has no right to arbitrate

its complaint based on the actors’ agents’ conduct and an order staying the arbitration. The union

filed a motion to stay the court proceeding. The plaintiffs, actors’ agents, moved for a preliminary

injunct io n enjoining the arbitration. Both motions were referred to a magistrate who denied t he

union’s motion to stay the court proceedings and held in abeyance the actors’ agents’ motion for a

preliminary injunction pending a report from the parties as to the status of the arbitration. The union

moved the district court for consideration de novo of the magistrate’s denial of its motion to stay the

court proceedings pursuant to 9 U.S.C. § 3. The district court denied the union’s motion, holding

that the magistrate had authority to enter the order denying the union’s motion for a stay and that the

magistrate had correctly decided the matter. The union appealed to this court.

As this Court recognized in a previous appeal, Smith Barney Shearson, Inc. v. Boone

, 47 F.3d

750 (5th Cir.1995) the principles necessary to decide a case such as this were set out by the Supreme

Court in a series of cases known as the Steelworkers Trilogy: Steelw orkers v. American Mfg. Co

.,

363 U.S. 564 (1960); Steelw orkers v. Warrior & Gulf Navigation Co

. , 363 U.S. 574 (1960); and

Steelw orkers v. Enterprise Wheel & Car Corp

. 363 U.S. 593 (1960). These precepts have served

t he labor relations community well, and have led to continued reliance on arbitration, rather t han

strikes or lockouts, as the preferred method of resolving disputes arising during the term of a

collective-bargaining agreement. There is no reason either to question their continuing validity, or

to eviscerate their meaning by creating an exception to their gene ral applicability. A T&T

Technologies v. Communications Workers , 475 U.S. 643 (1986).8

The first principle is that “arbitration is a matter of contract and a party cannot be required

to submit to arbitration any dispute which he has not agreed so to submit.” W arrior & Gulf

, supra,

at 582; AT& T Technologies v. CWA , supra at 648.

The second rule is that the question of arbitrability--whether a collective- bargaining agreement

creates a duty for the parties to arbitrate the particular grievance--is undeniably an issue for judicial

determination. Unless t he parties clearly and unmistakably provide otherwise, the question of

whethe r the parties agreed to arbitrate is to be decided by the court not the arbitrator. A T&T

Technologies , supra at 649.

The third principle is that in deciding whether the parties have agreed to submit a particular

grievance to arbitration, a court is not to rule on the potential meri t s of the underlying claims.

Whether “arguable” or not, indeed even if it appears to the court to be frivolous, the union’s claim

that the employer has violated the collective bargaining agreement is to be decided, not by the court

asked to order a rbit ration, but as the parties have agreed, by the arbitrator. I d

. at 649-650. “The

courts, therefore, have no business weighing the merits of the grievance, considering whether there

is equity in a particular claim, or determining whether th ere is particular language in the written

instrument which will support the claim. The agreement is to submit all grievances to arbitration, not

merely those which the court will deem meritorious.” American Mfg. Co

., 363 U.S. at 568 (f ootnote

omitted); AT& T Technologies , supra at 650.

Finally, when the contract contains an arbitration clause, there is a presumption of arbitrability

in the sense that “[a]n order to arbitrate the particular grievance should not be denied unless it may

be said with positive assurance that the arbitration clause is not susceptible of an interpretation that

covers the asserted dispute. Doubts should be resolved in favor of coverage.” W arrior & Gulf

, 363

U.S. at 582-583. Such a presumption is particularly applicable where the clause is as broad as the9

one employed in this case, which provides for arbitration of “[a]ll disputes and controversies of every

kind and nature whatsoever between an agent and his client arising out of or in connection with or

under any agency contract between the agent and his client

... as to the existence of such contract,

its execution, validit y, the right of either party to avoid the same on any grounds, its construction,

performance, non-performance, operation, breach, continuance, or termination ...”. In such cases,

[“i]n the absence of any express provision excluding a particular grievance from arbitration, we think

only the most forceful evidence of a purpose to exclude the claim from arbitration c an prevail.”

Warrior & Gulf

, supra, at 584-585; AT& T Technologies , supra, at 650.

This presumption of arb it rability for labor disputes recognizes the greater institutional

competence of arbitrators in interpreting collective bargaining agreements, “f urthers the national labor

policy o f peaceful resolution of labor disputes and thus best accords with the parties’ presumed

objectives in pursuing collective bargaining.” S chneider Moving & Storage Co. v. Robbins

, 466 U.S.

364 (1984), A T& T Technologies , supra at 650.

With these principles in mind, it is evident that the district court erred in not orderi ng the

parties to arbitrate the union’s claim that the actors’ ag ent s’ firms have violated the contract by

breaching their fiduciary duties of loyalty to their union member clients by treating them disparately

from their non-union clients. Specifically, the union alleged in its arbitration complaint that each of

the actors’ agents’ firms “charge non-member performers more than the 10% fee which is the

maximum they may charge [union] members, receive fees from employers for the same placement and

require such non-[union]member performers to pay for other services as a condition of finding them

employment”; that each actors’ agent firm has “acknowledged that it was treating member and nonmember clients disparately and reiterated its intent to refuse to eliminat e such disparate treatment and

honor the Regulations”; that “[t]he disparate treatment of member and non-member performers by

[the agents’ firms] violates the fiduciary duty an agent owes all clients and which is incorporated in10

the [contract] in that it creates a substa nt ial incentive for each [firm] to seek placement of nonmember clients in preference to such [firm’s union] member clients and it imposes a discriminatory

higher fee on non-member clients”; that “each [firm’s] acceptance of compensation from an employer

creates a conflict with the agent’s duty of l o yalt y t o t he performer client”; and that “each of the

[firms] has failed and refused to execute an acceptance of [a] 1990 Memorandum of Amendment and

thereby to confirm its acceptance of the agreed interpretation of the talent agent’s duty of loyalty.”

The issues raised by the union’s complaint against the actors’ agents’ firms are clearly within

the ambit of the disputes the parties agreed by contract to submit to arbitration. Section IV(H)(6)

provides that the agent firm’s relationship to the union actor shall be that of a fiduciary, and except

as otherwise express ly pro vided, t he firm shall have all the obligations of a trustee as set forth in

Sections 2228 through 2239 of the Civil Code of California. Section IV(H)(9) provides that the firm

shall owe the duty to the union actor to consider only the interests of the actor in any dealings for the

actor, and shall never consider or act upon the interests of the agent when such interests are adverse

to the interest of the actor. Section IV(A) provides that every agency contract entered into by an

agent firm with any member of the union covering representation in t heatrical motion pictures,

television motion pictures, and television motion picture commercials shall be in the forms attached

and marked “Exhibit E, ”“Exhibit G” and “Exhibit I”. Each exhibit provides that: (i) the collective

bargaining agreement (Rule 16(g) of the Screen Actors Guild, Inc.) “which contains reg ulations

governing the relations of its members to talent agents is he reby referred to and by this reference

hereby incorporated herein and made a part of this contract; (ii) both parties agree to be bound by the

Regulations and by all of the modifications made thereto pursuant to the Basic Contract; ( iii) any

controversy under this contract

... or as to the existence, execution or validity thereof or the right of

either party to avoid this or any such contract or alleged contract on any grounds or the construction,

performance, nonperformance, o perat io n, breach, continuance or termination of this or any such

c o nt ract shall be submitted to arbitration in accordance with the arbitration provisions in the11

Regulations or the contract. Exhibit F attached to the contract between the parties provides the rules

governing arbitration, including a provision that the “SAG shall be an ex o fficio party to all arbitration

proceedings hereunder in which any member of SAG is involved, and SAG may do anything which

a party named in such proceedings might do”, and in “arbitrations under Basic Contract Article X the

only parties shall be SAG and ATA or NATR.” Article X of the Basic Contract between the Screen

Actors Guild, Inc. (SAG) and Association of Talent Agents (ATA) and National Association of

Talent Representatives, Inc. (NATR) and other franchised talent agents provides that all “disputes

and controversies between the SAG and the ATA or NATR with reference to this Basic Contract and

its interpretation, or any breach or alleged breach thereof shall be referred to arbitration in accordance

with the procedure and with the effect set forth in the regulations.”

Consequently, the contract between the parties is susceptible to the interpretation that the

agents’ alleged violations of their fiduciary duties owed the union acto rs and t he agents’ alleged

persistent refusal to remove themselves from conflicts between their own financial interests and that

of the union

act ors have created disputes which the parties agreed to submit to arbitration.

Furthermore, the several broad arbitration clauses agreed to by the parties create a presumption of

arbitrability that has not been rebutted, because there is no forceful evidence of a purpose to exclude

these particular claims from arbitra t io n. The fact that the actors’ agents’ firms refused, after the

disputes had arisen, to accept an am endment requiring them to abide by the interpretation of the

contract upon

which the union’s claim is based does not provide any forceful evidence or positive

assurance that the contract between the parties does not plausibly call for the submissi on of such

controversies to arbitration. Even if the district court thought the union’s underlying claim was

frivolous, it was that court’s clear duty under the Supreme Court decisions to or der the m atter

submitted to arbitration and to refrain from ruling on the potential merits of the claim.