Millions of dollars at stake in settlement

The Writers Guild of America has reached a settlement in principle of a tangled 4-year-old suit over how it handles millions of dollars in foreign levies paid to writers.

Funds from the settlement could start to flow in the next three to five months if the settlement’s approved, said Los Angeles Superior Court Judge Carl West during a brief hearing Tuesday.

“All we have is an agreement in principle at this point,” the jurist added. He ordered the attorneys to file the preliminary settlement agreement by Sept. 21 and told them to return to court Oct. 1 for a hearing.

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.

Settlement talks in the suit have been going on for the past 1½ years and have broken down several times, most recently in June, when the WGA ditched efforts to settle and declared it was ready to go to trial.

“I think it’s a good result for writers and the best achievable solution,” Richert said after the hearing.

WGA attorneys had no comment, and Richert’s attorney Neville Johnson said he could not discuss terms of the settlement other than confirming it provides for an audit of the levies collected by the WGA.

“A situation that’s gone on for too long has been resolved in an equitable manner that resolves past issues and sets up a framework with accountability and transparency,” Johnson told Daily Variety. “Nonmembers will be compensated their rightful share of the funds.”

The WGA said in a statement Tuesday night that it was pleased with the agreement.

“The Guild is pleased that the parties have reached agreement in principle on a settlement that will end the litigation and strengthen the foreign levies program, which has already resulted in the distribution of $70 million to U.S. writers, including $13 million in the last year alone.”

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 have 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 Tuesday that it’s “inevitable” that a motion will be filed to decertify the suit as a class action based on individual questions of fact.

“The interests of members of the Writers Guild are not being represented in this lawsuit by the plaintiffs or by their counsel,” Hughes said. “When WGA members were certified, the allegations in the first amended complaint became federal questions. And Judge West himself has acknowledged that a class is always subject to being decertified.”

It’s uncertain how much the WGA has collected in foreign levies for distribution to writers.

The WGA disclosed recently in its annual report to members 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. That was up 23% from the $23.8 million figure in the prior year, but the WGA did not disclose any reasons for the increase, nor did it break out the amount of foreign levies accrued.

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.

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