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A federal appeals court panel has ruled SAG-AFTRA is on the hook for the $330,000 it paid to Ken Osmond and his attorneys five years ago to settle his class-action suit over foreign tax revenues.

In a Jan. 15 ruling, the three-judge panel denied the union’s appeal of a 2013 ruling siding with the Federal Insurance Co., which refused to reimburse the funds paid to the “Leave It to Beaver” actor.

It’s the latest development in a long-running dispute over “foreign levies,” which are collected for performers from countries through mechanisms such as taxes on video sales and rentals to compensate copyright holders for reuse.

SAG, the WGA and the DGA began collecting the funds in the early 1990s on behalf of members and nonmembers. Starting in 2005, several legal actions have been filed over alleged mishandling of the funds with SAG-AFTRA brushing off the allegations and insisting it’s done nothing wrong.

Duncan Crabtree-Ireland, chief operating officer and general counsel, said, “SAG-AFTRA strongly disagrees with the unpublished decision of the appellate court in this matter. The decision is based on erroneous factual assumptions that are directly contradicted by the record and the judicially-approved settlement in the case. SAG-AFTRA is presently evaluating its options for further judicial review.”

The Screen Actors Guild — the predecessor union to SAG-AFTRA — sued Federal Insurance in 2011 alleging breach of contract under the terms of the policy covering legal claims, which was in effect when Osmond filed his action in 2007. SAG sought damages of $330,000 on each of two claims, plus its additional costs.

Osmond, who played Eddie Haskell in “Leave It to Beaver,” sued over SAG’s handling of “foreign levies” collected from countries through mechanisms such as taxes on video sales and rentals to compensate copyright holders for reuse. The guild finalized a settlement in February 2011, under which he received $15,000 and his lawyers received $315,000.

The appeals panel ruled that union’s claim for reimbursement violates state law because it’s required to pay the foreign funds to members.

“Under California law, a pre-existing obligation is not a covered loss,” the panel wrote.

“As SAG admittedly had a pre-existing obligation to pay the foreign levy funds to the state court plaintiffs, SAG’s failure to honor that obligation is not a covered Loss as a matter of law. Accordingly, SAG is not entitled to coverage for the $330,000.00 in attorney’s fees assessed against SAG in the state court case,
because the award was based on state court plaintiffs’ success in securing payment of the pre-existing obligation.”

The Osmond settlement brought about judicial oversight of SAG’s handling of “foreign levies,” which started flowing in 1989 after the U.S. agreed to the terms of the Berne Convention establishing the right of authorship for individuals.

Osmond’s suit contended that SAG overstepped its authority to make collection agreements with the collecting societies 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 and was settled in 2010; another was filed in 2006 against the DGA by William Webb, who settled in 2008.

SAG-AFTRA was sued in 2013 by 15 members including former SAG president Ed Asner, alleging extensive misconduct in its handling of foreign levies and residuals and had improperly withheld funds and stonewalled requests for information about $132 million held in trust by the union. A federal judge dismissed the suit in 2014 but said the plaintiffs could re-visit the issue.

SAG-AFTRA said in 2013 that it had paid $17.5 million to actors over the prior six years that would have otherwise never been paid out.

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