Thesp alleged Guild mishandled foreign tax revenue

The Screen Actors Guild is moving towards paying millions of dollars to actors as part of a tentative settlement of a class-action lawsuit over how it disburses money collected from foreign tax revenues.

The preliminary agreement, announced Friday, involves the 2007 suit by Ken Osmond (“Leave It to Beaver”), which alleges SAG mishandled those funds and lacked authority to oversee them in the first place.

A Sept. 8 hearing has been set before Los Angeles Superior Court Judge Carl West for motions for preliminary approval of the settlement. Final approval could come in early December, according to Osmond’s attorney, Neville Johnson.

Specific terms were not disclosed, but Johnson indicated that the consent decree would include deadline requirements covering when the payments would be made and provisions for judicial oversight.

What’s at stake in Osmond’s suit are “foreign levies” collected from countries through mechanisms such as taxes on video sales and/or rentals to compensate copyright holders for reuse. The foreign levies for American creatives began to flow in 1989 after the U.S. agreed to the terms of the Berne Convention, which established the right of authorship for individuals who create works of art.

SAG, the WGA and the DGA began collecting the foreign funds in the early 1990s on behalf of members and nonmembers who had a stake in films and TV programs.

Osmond contends SAG overstepped its authority to make those agreements and never disclosed them until he and Jack Klugman threatened to file suit.

A similar suit on the foreign levies issue was filed in 2005 against the WGA West by William Richert, which was settled earlier this year, and another was filed in 2006 against the DGA by William Webb, who settled in 2008.

SAG declined to comment on the specific terms of the latest settlement.

“Screen Actors Guild is proud of its efforts to claim and distribute foreign royalties on behalf of our members,” said SAG deputy national executive director and general counsel Duncan Crabtree-Ireland. “Since the inception of our program, we have distributed more than $7 million in royalty funds to more than 70,000 individual performers that would otherwise have gone unclaimed and been lost to them forever. We are pleased to have reached this tentative settlement and will continue our efforts to distribute funds as quickly and efficiently as possible.”

SAG has collected $16.37 million since the program began and has paid out $7.12 million through 237,448 individual checks to members.

Johnson, who was also the plaintiffs’ attorney in the WGA and DGA cases, said SAG should have paid the money long ago. “The guild has been hanging on to these funds for far too long, but we are pleased that we have gotten this far,” he added.

Judge West finalized the tangled WGA West foreign levies case in June — including a promise that he’ll closely monitor how those funds are distributed. The WGA estimates it has paid at least $80 million of the foreign funds to writers.

Key points of the WGA settlement included a promise by the WGA to use its “best efforts” to pay all foreign funds within three years. It disclosed last year 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 also agreed that it would have to allow the foreign money to revert to the state for works not covered under WGA contracts if it can’t locate the writers or their heirs after three years. Additionally, a Big Four accounting firm will review the foreign levies from their inception and issue a report analyzing how much has been collected and distributed.

The WGA West agreement also specified that it would review the foreign levies program annually and include it as part of its official annual report. It also required that the WGA West hire consultants for a one-time review to make recommendations on how to improve the processing and distribution of the funds.

Finally, the WGA West settlement doesn’t cover any employer association or representative, specifically naming the Motion Picture Assn. of America, the Alliance of Motion Picture & Television Producers and Fintage House — a Dutch-based company providing financial services to the entertainment industry such as rights collections for producers.

The WGA’s settlement, which followed extensive objections to last fall’s preliminary settlement, is much narrower than the WGA had sought.

It covers only the 50% of funds that foreign collecting societies have allocated to the WGA for distribution to writers — but not the 50% of funds allocated to producers under agreements approved by the WGA but never submitted to members for ratification.

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