Guild Settles With Non-Union Directors Over Foreign Levies

By Cortney Fielding

Daily Journal Staff Writer dailyjournal.com

LOS ANGELES -- William Webb, the director of low-budget, straight-to-video releases like "Delta Fever" and "The Hit List," has never held a guild card.

Like thousands of other smaller players in Hollywood who operate outside the studio system, he said he didn't have much use for any union that would hinder his courting independent financiers.

So Webb said it was news to him when he heard in 2006 that the Directors Guild of America had been collecting fees on his behalf from European countries that aired his films on cable and stocked them in video stores. The amount wasn't huge - somewhere around $1,400 collected over 16 years - but it was money he said the union never told him existed.

"I never got a letter in the mail. If they are sitting on millions that are owed to non-guild directors, I would think they have a moral and legal obligation to make the effort to distribute it," he said.

Last week, a Los Angeles County Superior Court judge signed off on a class action settlement between the DGA, Webb, and an estimated 1,200 other non-member directors who claimed the guild had been holding on to foreign levies due them. The proposed agrement. first reached by the parties in April, calls for independent auditing of the DGA's levy accounts and the contracting of a search firm to seek out non-members owed money.

The settlement will result in a disbursement between $2 million and $7 million in collected fees to the plaintiffs, pending an audit, said Webb's attorney, Neville Johnson of Johnson & Johnson LLP. "This is money these directors never would have seen otherwise," he said. "The settlement brings accountability and transparency to DGA's foreign levies program." The DGA denies that it failed to distribute foreign levies, and said it has already distributed almost $6.3 million to non-members. "The DGA never intentionally withheld money," said Daniel Scott Scheter, of Latham & Watkins, who is representing the union. Schecter said the union has been dealing with a series of obstacles, including trying to track down hard-to-locate artists who are, in many cases, owed less than $1.

The case is the first settlement of a series of class actions filed by Johnson & Johnson LLP accusing the DGA and other guilds in the entertainment industry of holding on to foreign levey money owed to talent.

The firm is currently in settlement talks in the highly publicized case against the Writers Guild of America, which it filed on behalf of both non-union and union members. In that case, plaintiffs accused the guild of only releasing half of the $50 million it has collected over the years from levies.

The firm also recently filed a third suit against the Screen Actors Guild, with Ken Osmond, the actor who played Eddie Haskell on Leave It to Beaver, as the lead plaintiff. The conflicts arise out of the differing views of copyright laws between the United States and Europe. The U.S. credits production companies as the sole owner of a work, while European nations credit writers, directors and to a lesser extent, actors, as "authors" of their movies and television shows. In the 1980s, various European countries adopted laws imposing levies on home video rentals, blank DVDs and cassettes and recording equipment designed to provide compensation to the "authors" of the movies and television programs shown in their countries. A dispute soon arose between the guilds and production companies. While the studios and production companies asserted that under U.S. copyright laws and collective bargaining agreements, they were sole authors and should receive 100 percent of the levies, foreign copyright laws dictated otherwise.

The guilds launched an aggressive campaign against the studios' stance. And in 1990, the companies and guilds signed off on the Foreign Levy Agreement of 1990 that provided for the allocation of foreign levies among writes, directors and the companies.

The guilds now receive about 50 percent of the levy money collected.

Under terms of the deal, they also distribute levies for all U.S. writers and directors regardless of whether they are members of whatever the work was covered by a collective bargaining agreement.