Sir Peter Jackson, Fran Walsh and Philippa Boyens were shut out of a union-organised meeting in Wellington on Thursday night about their film The Hobbit.
The Actors Equity union says it had offered Sir Peter a private meeting but the gathering was for performers only.
Actors in Auckland met earlier this week and agreed not to accept work on The Hobbit until a collective agreement is negotiated.
However, those at the meeting in Wellington could not reach an agreement on how to proceed.
Sir Peter and his two producers would have attended the meeting, but were not allowed.
In a statement, Sir Peter said the union and its Australian backer, Media Entertainment and Arts Alliance, have now admitted their bargaining proposal is illegal.
He said the situation is bordering on farce and would be laughable, if there was not so much at stake.
Sir Peter has replied to claims that he pays low wages, saying New Zealand actors in supporting roles would be paid more than Screen Actors Guild members in the United States.
He said that over the past 10 years, the fees paid to actors have been fair and generous and those working on The Hobbit would have been the first in New Zealand to receive "residuals" from a film - known as profit participation.
But that and thousands of New Zealand jobs were now at risk because of the dispute.
Sir Peter said by blacklisting the film, the union is making it impossible to produce in New Zealand and so its financial backer Warner Brothers may be forced to move the film overseas. The studio is considering six locations outside New Zealand.
Sir Peter suggested that the Media Entertainment and Arts Alliance is just using The Hobbit to bring publicity to its own cause.
He said Actors Equity has lost its union status and questions why it is accusing The Hobbit of being a non-union production.
Union demands outrageous, says minister
Economic Development Minister Gerry Brownlee says the demands being made by the union representing actors are outrageous.
He says working as a contractor rather than an employee is part and parcel of the film business.
Mr Brownlee says applying heavy tactics in this situation will mean actors end up losing work in the future.
The minister says his priority is to make sure New Zealand does not lose filmmakers.
In a statement on Friday morning, Actors Equity's president Jennifer Ward-Lealand said she can assure the producers that the union requirements are entirely reasonable.
Ms Ward-Lealand said many of their demands have no cost implications for the movie and their overall impact was "miniscule" for a production the size of The Hobbit.
Green Party view
The Green Party rejects the Government's criticism of the union's position.
MP Keith Locke says the real outrage is that Sir Peter will not meet with Actors Equity and he needs a course in union relations.
Mr Locke says Sir Peter should not have tried to crash a union meeting, nor attack the union's legitimacy, nor hide behind legal advice.
