The Artists Agency represented Grammer from the 1980s to 1998, when its most recent contract with him expired. The validity of that contract, and the term of the one that preceded it, were the primary issues determined in the case.

Grammer claimed that his most recent contract with The Artists Agency was completely invalid, and that their prior contract ended in January 1995. The Artists Agency contended that their most recent contract was perfectly valid, and that the prior one didn't end until May 1996. The commissions in dispute were those due in connection with Grammer's earnings from work done pursuant to acting and consulting contacts entered into during the term of their most recent contract and during the period from January 1995 to May 1996.

The reason the dispute arose is that Grammer became dissatisfied with The Artists Agency because it hadn't gotten him roles in theatrical feature films. Grammer wanted the right to hire another talent agency for feature film work. In January 1995 - almost a year and a half before his film and television contract with The Artists Agency was due to expire - The Artist Agency agreed that he could hire another agency for film representation, if he renewed its contract with him for television representation for an additional two years, to 1998.

The renewal agreement was signed in January 1995, and post-dated to May 1996 when their existing contract expired. The Artists Agency submitted the renewal agreement to SAG, as required by SAG rules. Initially, SAG rejected the contract, apparently because it violated certain SAG rules. But after The Artists Agency explained to SAG how and why the agreement came about, SAG was satisfied that it was in Grammer's best interests, and SAG accepted the renewal agreement.

Grammer nevertheless terminated The Artists Agency completely in 1996 and stopped paying commissions in 1998. The Artists Agency initiated a SAG arbitration to collect the commissions it alleged were still due; and it won.

There was no dispute that the 1995 agreement "was at variance from [SAG] Rule 16(g)" in at least three respects. The rule requires representation agreements to take effect on the date they are signed; it permits renewals to be signed only during the last third of a prior agreement; and it requires agreements to be filed with SAG within 15 days of being signed. Grammer argued that the agreement violated the rule in a fourth way too: by exceeding the Rule's three-year limit on duration.

Nevertheless, the arbitrators determined that SAG "had de facto granted a waiver" of these provisions. And their award was confirmed by a federal District Court.

On appeal, Grammer renewed his argument that the 1995 agreement was invalid because it violated the terms of Rule 16(g). Grammer's strongest argument may have been that Rule 16(g) itself provides that its terms may not be waived "except with written consent of SAG". In his case, SAG had not consented in writing. This means, Grammer asserted, that the arbitrators' decision was "patently inconsistent with the plain language of Rule 16(g)," and should have been vacated for that reason.

However, in a decision by Judge Wallace Tashima, the court of appeals disagreed with Grammer. The arbitrators had characterized Rule 16(g) as "sometimes contradictory," and the Court of Appeals concurred. While one provision of the rule does require waivers to be in writing, another provision says that "if SAG fails to indicate its disapproval of [contract] modifications within ten days from the date of filing, it shall be deemed approved." Moreover, the arbitrators heard testimony that "SAG occasionally overlooks Rule 16(g) violations of the exact type asserted by Grammer, without the use of formal waivers."

For these reasons, the Court of Appeals held that the arbitrators' conclusion that "SAG had granted a waiver … easily meets the deferential standard of review that this court must apply." For the same reason, the appellate court concluded that it was reasonable for the arbitrators to conclude that Grammer's prior contract with The Artists Agency remained valid between January 1995 and May 1996, even though he had signed a new contract in January 1995.

Finally, the appellate court upheld the arbitrators' decision that The Artists Agency was entitled to a commission on a $36,000 "consulting fee" Grammer earned while working on "Frasier." Rule 16(g) applies "to the representation of actors by agents in connection with their employment…in the television…" And the court agreed that it was reasonable for the arbitrators to determine that Grammer's consulting services were "in connection with" his television employment.

The Artists Agency was represented by Marcia J. Harris and Andrew F. Kim of Alschuler Grossman Stein & Kahan in Los Angeles. Grammer was represented by Martin D. Singer and Lynda B.Goldman of Lavely & Singer in Los Angeles. The William Morris Agency (Grammer's new agents, and also a party to the case for reasons not revealed in the court's opinion) was represented by William T. Rintala of Smoot Jaenicke & Rees in Los Angeles.

Grammer v. The Artists Agency, Case No. 00-56994 (9th Cir., April 29, 2002), available at www.ca9.uscourts.gov