Home Box Office, Inc. v. Directors Guild of America, Inc.

In the 1970s, cable television entered the television market. One cable company, Home Box Office, Inc. (HBO) (plaintiff), mainly used freelance directors to develop its programming. The Directors Guild of America, Inc. (the guild) (defendant) allowed its members to work for HBO in the beginning without a collective-bargaining agreement in order to give HBO time to establish itself. After a number of years, the guild decided that enough time had passed and HBO ought to have a labor agreement with the guild just as the broadcast networks had. In 1977 HBO signed a contract with an actor’s union that enabled HBO to pay union members about 20 percent less than what broadcast networks paid. The guild refused to offer HBO a similar discount and insisted that HBO compensate directors even more than the networks did because the guild believed cable television would be more lucrative. HBO refused to pay directors more than the networks paid. As a result, the guild no longer allowed its members to work for HBO. HBO planned to hire directors from various nations, but the guild complained to the Immigration and Naturalization Service. HBO then filed suit claiming that the guild had violated antitrust laws. The guild responded that its actions were exempt from antitrust liability. The case went to trial, and a key question for the district court related to the status of directors who worked in different capacities. Some directors worked as freelancers rather than as employees. Some directors worked in dual capacities. For example, director-producers were independent contractors, and director-packagers were entrepreneurs. Despite this, the guild argued that these independent contractors and entrepreneurs should be subject to collective bargaining.