Foreign levies program to also be reviewed

A proposed settlement in the foreign levies suit against the WGA calls for payment of all foreign funds within three years along with an independent accounting review of the program.

The settlement of the class-action, filed Monday in Los Angeles Superior Court, did not disclose how much writers would be paid but funds from the settlement could start to flow by next year.

At stake in the class-action suit filed by William Richert (“Winter Kills”) are millions of dollars in foreign funds due to scribes as compensation for reuse — such as taxes on video rentals, cable retransmissions and purchases of blank videocassettes and DVDs. Unlike in the U.S., a foreign distributor cannot assume total ownership of the copyrights on an artist’s work.

The Writers Guild of America West disclosed recently in its annual report that, as of March 31, it had $30.3 million in “funds held in trust for members,” including foreign levies, client trust accounts, undeliverable funds and a residuals trust fund – although it didn’t break out how much of that was from foreign funds.

The WGA reached a settlement in principle on Sept. 1 of the tangled 4-year-old suit over how it handles millions of dollars in foreign levies. A hearing on the proposed settlement has been set for an Oct. 1 hearing before Los Angeles Superior Court Judge Carl West.

“We are obviously very pleased about reaching a settlement,” WGA West counsel Anthony Seagall told Daily Variety on Monday. “We expect the judge to approve it, which would trigger notices being sent to all the class members.”

The settlement calls for the WGA to “use its best efforts” to pay all foreign levies within three years.

“The parties shall discuss, in good faith, and come to an agreement upon and establish the circumstances and facts under which foreign levies in the possession of the WGA shall be deemed incapable of distribution,” the agreement said. “The parties agree to submit to mediation if any disputes regarding these circumstances cannot be informally resolved.”

The one-time accounting review would analyze the amounts collected annually and remain on the WGA web site for five years. The foreign levies for American creatives began to flow after the U.S. agreement in 1989 to terms of the Berne Convention, which establishes the right of authorship for individuals who create works of art.

The settlement mandates that the WGA perform a review of the foreign levies program as part of its annual financial review and include that as part of its dicslosure of the annual review. And it orders the WGA to engage consultants to make recommendations to improve the processing and distribution of the levies.

Richert’s suit alleged the WGA has no authority to collect the funds for nonmembers, hasn’t communicated that information to the affected writers and hasn’t paid them. WGA officials said repeatedly that the suit was without merit.

The DGA settled a similar suit last year, declaring it had distributed $48 million in foreign levies to DGA members and $4.9 million to nonmembers. SAG’s facing a similar suit from Ken Osmond that’s yet to be resolved.

However, the Richert suit may hit another legal roadblock. Eric Hughes, who has been a consultant for the plaintiffs on the suit, told Daily Variety on Monday that if West approves the settlement, he will challenge it with a motion to decertify the suit as a class action.

“Counsel for the named plaintiffs are asking the court for a new class certification but class resolution remains impractical and impossible,” Hughes added. “The interests of members of the Writers Guild are not represented in this settlement.  Federal questions remain as do individual questions of fact.”

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