Facts

Various foreign countries have laws imposing levies on home video rentals, blank cassettes, and recording equipment, which were designed to provide compensation to performers in motion pictures and television programs for consumer copying of those works onto blank tapes, DVDs and other media. Laws enacted in various European nations authorized "collecting societies" in each country to allocate and distribute the levies to the rights holders of the affected works.

Screen Actors Guild Inc. (SAG) began collecting these monies from foreign societies in 1992 and began making payments to performers in 2007 (prior to the filing of the litigation) of which nearly $8.5 million has been paid.

A class action complaint was filed on Sept. 18, 2007 on behalf of actors who were entitled to share in these monies. Plaintiff Ken Osmond was named as class representative (best known for his role of Eddie Haskell on the television show "Leave it to Beaver").

The complaint filed was for conversion, unjust enrichment, accounting, and violations of Business and Professions Code 17200 et seq.

SAG acknowledged collection of the levies, claiming a right to do so pursuant to their rules and regulations (which was disputed).

As of November 2010, $16,368,000 had been collected, and $8,467,000 had been paid out.

PLAINTIFFS' CONTENTIONS:
Plaintiffs contended that SAG had been collecting and earning interest on foreign monies clandestinely, and was now required to disburse the funds to its constituents. Plaintiffs further contended that SAG, a union, was effectively operating as a collection society, without any of the indicia thereof, namely transparency and accountability.

DEFENDANT'S CONTENTIONS:
SAG contends that the suit was without basis and sought only a result that was already in progress. The Guild argues it had expended considerable time and effort on seeking out the foreign collecting societies, identifying funds and securing their payment on behalf of performers, as well as creating an accounting and payment system and initializing payment to performers. By the time of the settlement, millions of dollars had been paid out to tens of thousands of performers

Result

Non-monetary terms of settlement, including an annual review and accounting of foreign levies program, information for performers seeking foreign levies on the SAG website. Lead plaintiff was given an enhancement award of $15,000; plaintiffs' lodestar fees were $278,369 and they were given a multiplier of 1.132 for a total of $315,000.

Other Information

The action was removed to the USDC Central District of California on Oct. 30, 2007, with SAG asserting that Federal labor laws preempted state jurisdiction. Judge Margaret M. Morrow granted a motion to remand, and the case was remanded to state court on March 11, 2008 on the grounds that labor law had no connection with the common law and state statutory claims. A settlement agreement was entered into, with final approval granted on March 2, 2011. TERMS OF SETTLEMENT: Evaluation of SAG's Foreign Levies Program by Consultants: SAG and plaintiffs' counsel shall engage independent consultants to make recommendations as to how to improve processing and distribution of foreign levies. (These consultants are now in the process of doing their evaluation.) Annual Review of SAG's Foreign Levies Program: As part of its annual financial review, SAG will have a review performed of their foreign levies program, which is to be performed by one of the "Big Four" accounting firms, and is to be published on the SAG website. The review will include amounts and interest collected, as well as the amount distributed to performers. Publication Of SAG's Foreign Levies Program: SAG is to make significant effort to publicize the foreign levy program including: publication of the existence and availability of the program for 3 years in "Screen Actor Magazine," and publication on their website for the duration of the program. SAG is to also publish the names of performers who they cannot locate. SAG is to maintain and improve its existing website explaining the program and a procedure for performers to register for payment. SAG is to post the names of all actors eligible for payment but who cannot be located and this is to be updated on an annual basis. SAG is to post the name(s) of a contact person regarding these monies, and must timely respond to all written and telephone inquiries. SAG is to publish on its website and update bi-monthly, a list of all performers who are owed more than $10. Payment of Foreign Levy Funds by SAG: SAG will use reasonable efforts to pay out 90 percent of all Foreign Levy Funds collected, within 36 months of date of settlement, and will use reasonable efforts to follow up with the various European collection societies. Payment for Administrative Costs of SAG's Foreign Levies Program: The cost of administering the foreign levies program shall be paid from interest earned on collected Foreign Levy funds, and an administrative charge by SAG to performers who received royalties. Cy Pres: Monies not distributed within 36 months of the later of receipt of funds and distribution information from collecting societies will be donated one half to the Actor's Fund, one-half to the SAG Foundation. This was the third of three class actions brought against the entertainment guilds, the others being the Richert v. Writers Guild of America, West, Case No. LASC NO. BC339972, final approval granted September 1, 2009; and the Directors Guild of America, Webb v. Directors Guild of America, Case No. BC 352621, final approval granted October 13, 2007. The Writers Guild has collected over $100 Million, including on behalf of non-members, which is now being paid out on similar terms. $33 remains to be paid out. The Directors Guild was collecting on behalf of non-members, and was not paying out these monies, but now is doing so. In each of the other cases, defendants removed and were remanded back to state court by Judge Morrow. The Court has scheduled a hearing on September 30, 2011 to review the progress of the payments due the recipients in the three cases.