The Screen Actors Guild has agreed to an independent audit of its foreign levies program as part of a proposed settlement of a class-action lawsuit filed by Ken Osmond.
SAG reached a preliminary agreement a month ago but had not previously disclosed details of the settlement of Osmond’s 2007 suit, which was filed over how it disburses money collected from foreign tax revenues.
SAG has asserted that it has collected $16.37 million since the program began and has paid out $8.47 million through more than 237,000 individual checks to members — including $1.3 million over the past month.
Attorneys for Osmond filed the motion for preliminary approval of the settlement Monday in Los Angeles Superior Court. A hearing has been set for Sept. 20 before Los Angeles Superior Court Judge Carl West. Osmond’s attorneys, Neville Johnson and Paul Kiesel, asked that a final hearing take place on Nov. 16.
The agreement between the two sides requires the hiring of an independent consultant to perform a one-time review of the program and make recommendations to improve the processing of the funds to SAG members. This must be done within three months of finalizing the settlement. It also provides for:
• an annual review of the program by a Big Four accounting firm;
• publication of the existence of the program and availability of the funds;
• “reasonable efforts” by SAG to pay 90% of the funds to members within three years.
• administrative costs of the program be paid from interest of collected levies and from an administrative fee charged to performers who receive the payments.
The proposed settlement is similar to one reached by the Writers Guild of America in June.
The suit by Osmond alleged SAG mishandled those funds and lacked authority to oversee them in the first place. SAG has long denied that it has done anything wrong.
“In this action, plaintiff alleges, in essence that SAG has collected substantial amounts, and earned interest theron, of foreign levy funds without authorization,” the settlement filing said. “SAG has denied and continues to deny each and every claim and contention alleged in the action.”
What’s at stake in Osmond’s suit are “foreign levies” collected from countries through mechanisms such as taxes on video sales and 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’s suit contends SAG overstepped its authority to make those agreements and never disclosed them until he and Jack Klugman threatened to file suit.
SAG general counsel Duncan Crabtree-Ireland said, “Although we vehemently dispute the fundamental premise of the litigation, we are pleased to have resolved this dispute in its early stages and look forward to continuing our efforts to distribute funds as quickly and efficiently as possible.”
SAG and WGA member Eric Hughes, who has tracked the issue on his http://www.screenrights.net site, said Monday the proposed settlement is confusing, in that it appears to exclude several classes of performers for whom foreign levies are collected – those who collect residuals under AFTRA agreements; documentaries and reality shows; and performers in the adult film industry. He also said the proposed settlement fall short in not containing a requirement that SAG allow funds to revert or “escheat” to the state if performers can’t be located.
Hughes contends SAG hasn’t resolved the issue of “unpaid residuals” due to nonmembers, two years after announcing a “Get Your Money” program to distribute $25 million in unpaid residuals to 66,000 people it could not locate. Hughes has asserted those funds have actually come through foreign royalties while SAG’s denied that assertion.
“I’m still trying to figure out what audiovisual works produced under a SAG collective bargaining agreement President Kennedy appeared in or plaintiffs’ counsel Neville L. Johnson,” he added. “Or why SAG can’t locate Johnson.”