Ed Asner
Debra L Rothenberg/FilmMagic

Union accused of misconduct in handling residuals, foreign royalties

More than a dozen members of SAG-AFTRA — including former SAG president Ed Asner — have sued the actors union, alleging extensive misconduct in its handling of foreign levies and residuals they are owed.

The suit, filed Friday in federal court in Los Angeles by the United Screen Actors Committee, alleges that SAG-AFTRA has improperly withheld funds and stonewalled requests for information about $110 million held in trust by the union. Those funds, the suit alleges, have been collected by the union through foreign collecting societies without authorization or knowledge of union members.

SAG-AFTRA brushed off the suit, which was assigned to U.S. District Court Judge Manuel Real.

“We are very proud of, and confident in, our unclaimed residuals and foreign royalties programs which distribute millions of dollars to performers every year,” a union spokesperson said. “The foreign royalties program has successfully distributed to performers more than $14 million — money that would otherwise go uncollected and be lost to them forever.”

The spokesperson noted that the  foreign royalties program was previously subject to a class action lawsuit, filed in 2007 by “Leave It to Beaver” actor Ken Osmond, leading to a resolution favorable to the union after “intense scrutiny” of the program.

“While we have not been provided with a copy of the current complaint, the claims as presented in the plaintiff’s earlier correspondence have been thoroughly reviewed and are completely without merit,” the spokespeson said. “We will vigorously respond in the appropriate forum in due course.”

The 52-page action seeks a jury trial, damages and a court order that would prevent SAG-AFTRA from continuing to collect foreign levies and set up an indepedent body to handle those funds.

“With foreign royalties, injunctive relief is sought for issuance of an order authorizing an independent body to collect and pay all monies received from foreign collecting societies, subject to court supervision, as SAG-AFTRA is clearly incapable of acting as a collecting society, not only on behalf of its own members, but non-members as well,” the suit said.

The suit alleges that SAG-AFTRA has often claimed an inability to locate the actors to whom it owes money and that such funds should have escheated to the state of California. Additionally, the action alleges that the union has withheld information by filing incomplete LM-2 annual reports with the U.S. Dept of Labor and by seeking to seal court records.

The suit alleges that SAG created a “producers share” of performers funds which it began disbursing to the employers of union members more than a decade before any member received any portion of the monies.

The action also accuses SAG of operating a slush fund via collected foreign royalties on behalf of AFTRA and other show business craft unions.

“Because of their actions and the deliberate withholding of said monies, while refusing to account for all receipts and disbursements involving foreign royalties, plaintiffs have reason to believe that SAG-AFTRA has now amassed a substantial slush fund that does not belong to the labor organization but instead belongs to members and non-members, and/or their estates, on covered and uncovered works,” the suit said.

Additionally, the action alleges that residuals and foreign royalties have been used for “increasing salaries to executive officers, to pay for first class travel and lavish parties” along with substantial retainers to outside consultants, legal counsel, accounting and information technology firms and other companies “purportedly” engaged in distribution of the funds.

The action also asserts that SAG-AFTRA had more than 75,000 unclaimed residuals checks as of April 13, 2012 and had claimed that the union had been unable to locate the heirs or estates of Frank Sinatra, John F. Kennedy, Larry Hagman and Sonny Bono.

The suit was filed eight months after most of the United Screen Actors Committee plaintiffs served the union with a “demand for accountability” letter seeking a “full and complete accounting” on foreign royalties and residuals.

The union strongly denied the allegations in September, reiterating its insistence that it had done nothing wrong in how it handled the funds — which began to flow two decades ago as compensation for reuse, such as taxes on video rentals, cable retransmissions and purchases of blank videocassettes and DVDs.

At issue is how SAG-AFTRA, which was created in March 2012 from the merger of SAG and AFTRA, accounts for and distributes funds it receives from foreign collecting societies.

The lawsuit filing comes three years after SAG settled the class-action suit by Osmond, who alleged that the guild lacked the authority to collect the funds and had mishandled them.

Besides Asner, the plaintiffs in the lawsuit include former board members Steve Barr, Clancy Brown and George Coe along with Tom Bower, Terrence Beasor, Dennis Hayden, Alex McArthur, Ed O’Ross, William Richert, Louis Reeko Meserole, Roger Callard, Russell Gannon, Stephen Wastell, James Osburn and Eric Hughes. Richert (“Winter Kills”) filed a similar suit against the Writers Guild of America in 2005 and settled in 2011, and Hughes consulted on the suit.

Asner served two terms as SAG president from 1981 to 1985. Coe was awarded the guild’s Ralph Morgan award for service in 2009.

The suit also alleges that Brown, while a SAG board member, wrote to SAG officials in January 2012 asserting that they had kept the panel in the dark by failing to fulfill requests for details on the foreign funds. “At no time was even the board of directors presented or allowed to examine the foreign levy agreement or the various collecting society agreements,” the suit said.

When the demand letter was served in September, 2012, SAG-AFTRA general counsel Duncan Crabtree-Ireland denied the assertions and noted PricewaterhouseCoopers audits the union’s distribution of the funds — which total $14.2 million since 2007 with $7.4 million to distribute.

“These claims are baseless and false,” he said at the time. “SAG-AFTRA’s foreign royalties program has been tremendously successful. We put significant time and energy into creating an automated system to track and speed up payment of the foreign royalties we collect on behalf of performers. The system is more efficient than ever.”

Crabtree-Ireland asserted at the time that the funds would not have been collected had SAG not pursued them.

“The court decided the settlement was fair and appropriate, so I don’t know what more anyone can expect,” Crabtree-Ireland said at that point. “If we hadn’t gone and collected the money, the money would have been lost to our members forever.”

The Directors Guild of America was also sued over alleged mishandling distribution of the foreign levies and reached a settlement in 2008. In a ruling last August, a judge found the DGA was in line with the class-action settlement, and there was no cause to modify it — over strenuous objections that the DGA has been stonewalling over how it handles millions in funds.

The DGA said last year that it had distributed more than $121 million in foreign levies, including over $13 million to more than 3,400 non-members. The WGA reported last year that it had collected nearly $130 million in foreign levies over the past two decades and distributed $104 million of those funds.

The suit was filed by Helena S. Wise. The case number is CV13-3741.

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