60 MILLION TO WRITERS IN RICHERT V. WGAw SETTLEMENT

By Jean-Luc Renault

Daily Journal Staff Writer

LOS ANGELES - A judge has given preliminary approval to a settlement between screenwriters and the Writers Guild of America West, bringing to a foreseeable end a four-year legal dispute over tens of millions of dollars in revenue from foreign distribution levies that were never paid out.

The class-action suit was filed in 2005 on behalf of at least 1,000 non-union writers or their heirs who were owed money from the WGAW's foreign levy funds held in trust. The suit was later expanded to include union writers, bringing the plaintiff class to a total of about 17,000.

According to a guild report released in August, the WGAW had amassed a backlog of about $30 million in undistributed levy funds held in trust since it began receiving the foreign taxes in 1991. The guild said it could not disburse the accumulating money because it could not locate its recipients.

Los Angeles Superior Court Judge Carl West said in a hearing Thursday that the agreement was "fair and reasonable."

"This is an excellent settlement for the benefit of a lot of writers," he said, adding that his approval was conditional until he received an outline "within the next couple days" of how much it would cost to notify the class members of the agreement.

The suit is subject to final approval in March after the plaintiff class has been notified and given a chance to object or opt out.

The agreement not only stipulates that the guild must "use its best efforts" to distribute the money within three years of the settlement's final approval, but that the entire program become much more transparent.

Neville Johnson of Johnson & Johnson, which, along with Kiesel, Boucher & Larson, is representing the plaintiffs, said the agreement does not include a monetary settlement amount, but that over time, "well over $60 million is going to be paid out because of this."

Non-union writer William Richert, one of the three lead plaintiffs listed in the suit, wrote in an e-mail that the settlement means the guild will now "have to lift the lid of its crypt of concealment of foreign taxes intended for writers and allow outside investigation."

"When the checks start going out, people are going to have questions of their own," he added.

The settlement calls for a one-time audit of the program, "from inception to present," by one of the "big four" accounting firms-PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young or KPMG.

The audit - which will tally the total amount of money that's ever been brought into the program, the interest accrued and the amount distributed to writers - will be posted on the WGAW Web site for five years.

The agreement stipulates that the WGAW must use the same accounting firm to perform an annual audit of the foreign levies program.

The WGAW must also publish in industry publications notifications about the settlement next November. Notifications will also be mailed out. Writers and their estates have until February to object or opt out.

The guild is required to keep databases available on its Web site that include information about the specific source of all the foreign levies, the works from which the levies were generated and a list of writers or heirs who are eligible to collect levies but whom the union has not been able to locate.

The WGAW site will also host an online registration system for writers to register works that might one day generate foreign levies.

The plaintiffs and the WGAW must also discuss what to do with funds whose recipients can't be located. The agreement suggests using that money to "provide enhanced payments to writers whose payments of Foreign Levy Funds were previously delayed."

Interest accrued on the funds will offset administrative costs, including audits, published notices of the program and consultancy fees. The administrative costs associated with the settlement must not exceed 10 percent of the funds distributed to writers, according to the agreement.

The lead plaintiffs are also entitled to "enhanced compensation" for the time and effort they've put into pursuing the lawsuit. That includes $10,000 for Richert, $3,500 for Maude Retchin Feil and $3,500 for Ann Jamison.

Fees awarded to the plaintiff attorneys range between $500,000 and $1.75 million, subject to court approval.

Should a dispute arise over any of the terms at a later date, the parties are obligated to enter mediation talks with Joel Grossman of ADR Services. If 10 percent of the class intentionally opts out of the settlement, the WGAW can void the agreement.

Rothner, Segall, Greenstone & Leheny partner Emma Leheny, one of the WGAW's attorneys, said after the hearing that she was pleased the long-running case was coming to an end.

"We think the settlement is fair to the class," she said. "We hope it will get final approval."

The issue of foreign levies started when a number of European and South American countries began to impose taxes in the 1980s on distribution of copyrighted American works in television broadcasts and video rentals.

Starting in 1991, those funds were paid to WGAW, which placed them into a trust. The guild is supposed to disburse the money to recipients, whether they are union members or not.

Richert agreed to be named a plaintiff in the class-action suit in 2005 after Johnson, his lawyer at the time, told him the WGAW was involved in a "scandal" in which "people got defrauded," Richert said, referring to writers who were not sent money due to them.

Since then, the case, originally filed in Los Angeles Superior Court, has bounced between venues.

The guild pushed the case to federal court in 2006. It went back to Superior Court in 2007 after U.S. District Judge Margaret Morrow cited a lack of subject matter jurisdiction when she granted the plaintiff's motion to remand the case.

After the case was remanded to the Superior Court, both sides tried to settle several times, but couldn't see eye-to-eye. Last spring, West postponed a preliminary settlement hearing because he had not received a written copy of the agreement. In June, the WGAW backed out of agreement talks late in the negotiating process, citing issues over terms.

Johnson said the deposition of Teri Mial, a former WGA employee who said she was ordered by a union supervisor to shred checks intended for writers, was probably an impetus for the guild to settle.

Johnson was also the plaintiff's attorney on a similar lawsuit filed in 2006 against the Directors Guild of America, accusing the union of not properly distributing foreign levies. The case settled in September 2008.

Since then, the DGA has posted on a Web page databases similar to those outlined in the settlement agreement with the WGAW.

Actor Ken Osmond, who played "Eddie Haskell" on "Leave it to Beaver," also represented by Johnson, filed a similar lawsuit against the Screen Actor's Guild in 2007. The case is pending.

Although Richert was adamant that he wished he could pursue more legal action against what he called a "highly corrupt union," he said he was told a settlement was the best course of action.

"Two respected and thoughtful jurists advised me in their courtrooms that this settlement was best for my class, based on the narrow fundamentals of the case, and the fact that a trial was no guarantee of a better result," he said.

Still, Richert said he viewed the settlement as a partial victory.

"This is an uncovering of long hidden secrets."