It’s a scandal right out of a movie plot. And it’s more than a little ironic that the people allegedly being scammed make a living writing movie plots. A Los Angeles-based union, the Writers Guild of America, West (WGA), has been deliberately withholding and/or siphoning off about $20 million in accumulated royalty checks to which screenwriters or their estates are legally entitled – or so a class-action suit filed in Los Angeles federal court in September 2005 alleges, a suit recently sent back to a state court. In the nearly two years since, accusations continue to fly. The guild stands accused by four parties of sitting on a huge pile of revenues from foreign levies rather than distributing them to their rightful claimants. Worse, though not the subject of the suit, the union may have funneled far greater sums of money to major studios and producers, and keeping some of it. Guild officials insist they want to mail all checks to their proper recipients, but can’t find them. A number of writers, led by ex-WGA member William Richert, say this is a fish story, another example of creative accounting, Hollywood-style.
American movies and TV programs attract large audiences abroad. And audiences in other countries, like those in our own, often record movies onto tapes, DVDs and computer hard drives. The problem is that our copyright law doesn’t necessarily apply to theirs. The U.S. allows employers who commission copyrighted work to claim authorship of that work. In other words, we do not adhere to a system of droit moral (i.e., the moral rights of authors). But the rest of the world doesn’t see eye-to-eye with us on that one. Back during the 1980s, foreign governments, especially in Europe and South America, placed levies (i.e., taxes) on the sale of blank videocassettes and, later on, blank DVDs and computer hard drives. The idea was to compensate screenwriters of taped movies and TV programs shown in their respective countries. This tax is intended solely to compensate U.S. authors. But there are logistic problems. How are these “blank media” royalties calculated? Who distributes them? And even more basic: How do these governments identify the authors? After going through various arrangements, the Writers Guild of America, along with the Directors Guild of America, eventually negotiated a settlement with the studios in 2001. They would share credit as co-authors for up to 25 percent of the foreign levies. The studios would get the rest.
Things haven’t worked out as planned, however – at least for a number of writers who believe the WGA is sitting on the money or worse, funneling it to the studios. That’s what precipitated the 2005 lawsuit. The class-action suit, which names the Directors Guild of America as a co-defendant, scored an advance this past April when U.S. District Judge Margaret M. Morrow ruled that the agreements under which the guilds distribute foreign levies “limited the plaintiffs to receive their full share.” She ordered the case tried in state court. Officials of both guilds have dismissed the charges as groundless.
William Richert, the Santa Monica, Calif.-based lead plaintiff, says underpayment of royalties has been a fact of life for thousands of writers, whether WGA-affiliated or not. Richert, whose film credits include A Night in the Life of Jimmy Reardon, Winter Kills, and The Man in the Iron Mask, recently received a $467 check for movies shown abroad during 2002-05. He thinks the real figure due to him is much higher. “The Writers Guild has been collecting money for years and not accounting for it,” he remarked. “I never gave any person or union the right to collect money for me, and to withhold money from me without my knowledge.” Richert isn’t the only writer who may have gotten the shaft. Jon Brown, a partner in Ensemble Entertainment, a firm representing the estates of several writers, puts it this way: “They [the WGA] have an account with a bunch of money in it that belongs to their members – and not them – and they’ve made no attempt to distribute it.” One of his clients, the estate of the late Paul Gallico (Pride of the Yankees, The Poseidon Adventure), received a foreign levy check for a mere $120. And Brown had to do months of legwork just to obtain that. “If they wanted to find me, they could have found me very easily,” he said.
Complicating the issue is a wrongful-termination suit filed last year in Los Angeles County Superior Court by Teri Mial, a former WGA estates trusts manager who alleges that she’d been fired for cooperating with a U.S. Labor Department investigation of the union’s handling of foreign levies. A former manager for ex-child actor Gary Coleman, Mial stated in a deposition that she previously had voiced “heavy, serious concerns” to her bosses about repeated delays and problems in sending foreign levies to writers and beneficiaries.
Guild officials respond that they would like nothing better than to send out the checks, but that they can’t find the recipients. “Do we wish we didn’t have $20 million on hand? Sure. We wish it were a lot easier to distribute,” said Tony Segall, WGA general counsel. “We’ve done nothing but work at getting this money out.” The guild’s chief financial officer, Don Gor, argues that because so many of the claims for back earnings have been filed over the Internet, it is difficult to process all the claims. “Most of the buildup occurred around 2000 where we got more money in – and our system was not capable of processing all of it,” he admitted. As for Teri Mial’s wrongful-termination suit, Segall denies the WGA took arbitrary action against her. He admits that she is owed $17,000, but that this is not the result of deliberate withholding. “We discovered in the last month financial discrepancies in the foreign levies department, and that they go back to December 2006,” he said. “We were unable to account for the funds.”
So what exactly is “missing?” Is it the money or is it the writers who are supposed to be receiving it? Ask the writers, their union, the studios or the “foreign-collection societies” who are supposed to be in charge of distributing the checks – you’ll get a different answer from each. Since 1991, the writers’ guild has received $47 million in foreign levies, paying out about $27 million. That leaves a gap of $20 million, the disputed sum. Guild officials say they have hired temporary employees to reduce the backlog, acquiring information from the foreign-based societies.
If theft is going on, the real story may be something independent of the suit. For years, the Writers Guild has diverted 92.5 percent of writer fees toward studios, producers and itself. Since 1990, critics charge, the union has taken tens of millions of dollars off the top without the writers’ consent or even their knowledge. “The theft has been extraordinary,” states WGA renegade Eric Hughes, who wrote the scripts for Against All Odds and White Nights. The Department of Labor, though reluctant to talk about it on the record, reportedly has been gathering evidence and testimony about this practice for more than a year. However the copyright suit turns out, that may turn out to be a sub-plot. (Los Angeles Times, 5/2/07; LA Weekly, 5/2/07; other sources).