Taking a Stand Against SAG Extortion

Today I had the pleasure of doing something I have wanted to do for the past twenty years: I walked out of a SAG (Screen Actors Guild) arbitration.

For those you who are unaware of the method in which disputes are resolved between the entertainment unions and producers, I need to give you a little primer before I tell you what happened today. Keep in mind that whenever a producer needs to hire any actor who is a member of SAG, they must agree to abide by all of the rules of the SAG Minimum Basic Agreement (“MBA”). The MBA appears on its face to be fair. It is not, however, as it is not enforced equally against both sides. The enforcement procedure is heavily biased against independent producers.

The method of enforcement is a grievance procedure in which a group of union-leaning arbitrators decide the facts and issue judgments. In fact, other than one or two of the approved arbitrators, the entire group is liberals and rarely find in favor of producers. There is an article on the internet about a certain SAG Arbitration in which the writer states that:

There is a basic assumption in SAG arbitrations that the producer is always wrong and only wants to cheat the actors out of their rightful compensation

I personally have been involved in a SAG Arbitration in which Arbitrator Sol Rosenthal ruled that an interoffice memo at a certain talent agency had more legal effect than an executed agreement with the actor, even though the executed agreement stated clearly that outside evidence could not be considered when interpreting the agreement. For those of you that have gone through law school, this is something you learn in First Year Contracts. Did Arbitrator Rosenthal care? Nope. He ruled that the actor had a two-week guarantee of employment even though the written agreement he signed had no guarantee at all.

One of the requirements of the MBA is that all employers (Producers) must put up “financial assurances” supposedly to protect union actors from not being paid for their services. These “financial assurance” provisions are used by SAG to extort large cash deposits (called a SAG Bond) from independent producers. However, I am not aware of a single instance in which a major studio has ever been called upon to provide such a deposit. Basically, this clause makes it much more difficult – if not impossible – for independents to make films. And, it amounts to giving the union the right to do anything to bully the producer at a time when the producer must cave because of the tremendous amounts of money at risk should the production stop just before actors are employed.

Before SAG will allow their members to work for a producer they demand payment of the SAG Bond. The amount of the bond is determined by some formula which only SAG knows and makes sure that no one else is ever told. In some cases an independent producer of a low budget feature may have to put up 30-40% of the entire budget of the film to secure not only payroll of the actors but residuals that might not accrue for years to come. This effectively prevents some movies from ever being made because independent producers have a difficult enough time raising enough money just to make the movie. If, on top of that, they have to pay a huge deposit to SAG – which they will hold onto for as long as they choose – that alone kills many small independent projects. What is the net effect? Very simply, fewer actors are employed because fewer movies get made.

This article is about one very specific cash bond. I work at Millennium Films and we produced a film called “The Expendables” in 2009.” The film was released in 2010. Prior to the beginning of principal photography, SAG demanded that we put over $700,000 as a cash bond to secure the payment of actors. This despite the fact that we have made over 300 movies and always paid everyone what they were due. We paid the bond, as usual, because we had no choice.

Since the movie finished shooting in mid-2009, we have tried to get our bond money back. After almost one year of asking SAG for our money they eventually gave back all but approximately $15,000. This they held onto because we were told there were “claims” from a few stunt performers who apparently alleged they were incorrectly paid for overtime, meal penalties, and stunt adjustments. We were first notified that there were these unspecified “claims” in August of 2009.

Since their initial claim letter, we consistently requested details and evidence of these so-called “claims” so that we could review and assess them. If we knew what the claims were, we could theoretically accept them, dispute them, and/or settle them. SAG, however, steadfastly refused to tell us who were making the claims, how much was being claimed, or any other specifics. Every demand for reimbursement of our SAG Bond was ignored by SAG who simply demanded more and more documentation from us.

Of course, we provided whatever documentation was needed. We then waited and after another period of between 30-60 days, we again demanded our bond money back. We were told to provide more information (sometimes it was information that had already been provided). This went on for almost a year until August of 2010. Finally, at that time, we were told by the SAG representative, “I think I can determine the claims now based upon what I have and what the performers have given me, please sign an agreement extending the statute of limitations so that we can make a determination and get back to you.”

We refused, as we have a corporate policy of never extending the statute of limitations. We were then met with a demand for arbitration in which no claimant was named or explained except for language in the demand stating that unspecified “performers in the film” had not been paid. We immediately filed our own grievance to get the remainder of our bond back.

For the eight months since, we have continued to request details, evidence, and proof of the claims to allow us to properly evaluate them. Eventually, we were given certain stunt performer’s names, but still nothing to show what the individual performers were actually claiming. We demanded in pre-arbitration motions that proof of the claims be given so that we could evaluate them. Still, nothing. We continued demanding and still received nothing.

Finally over the past weekend – with the actual arbitration scheduled for Tuesday – SAG provided allegations made by the seven stunt performers. Still we were given no calculation of the amounts at issue. We were just given vague claim forms stating what the performers felt they had not been paid. No calculations or amounts of any kind were even given at this point.

That brings us to today. We went to the arbitration planning on making a case for the return of our bond plus interest for the time it was wrongfully withheld. When we got there we found out that two stunt performers were going to testify and that another five could not make it and were going to make their claim via written declaration. Of course, there is no way we could cross-examine them or address the truth of their claim if they weren’t there!

We argued vehemently that the arbitrator had no jurisdiction over these claims as we were not given notice and it was a violation of due process. We argued and stressed that we had been asking for evidence of these claims for more than a year and had just been stonewalled while SAG kept our money. We argued until we were blue in the face. But, the arbitrator decided the arbitration would go forward and that he would determine the validity of our arguments after the hearing.

Now, keep in mind we are paying a lawyer to represent us in this action and the only thing we have to gain is $15,000 plus some interest on the bond if the arbitrator determines that SAG withheld the bond unjustifiably. Further, if the arbitrator determines he has no jurisdiction at that point, we have won and the legal bill stops. But, he decides to let the matter proceed even though we have had absolutely no notice of the claims up until this point.

After lunch and three hours of witness testimony, I get a call from Trevor Short and Avi Lerner, two of the owners of Millennium, saying they are coming to the hearing. Once they arrived we made a motion to dismiss the action because of SAG’s failure to present any substantial claims within the timeframes applicable and for failure to give us proper notice of the actual claims they were now ma;king for the first time. The arbitrator rules against our motion. We then stated our position forcibly that we had no intention of gracing these proceedings with any further credibility and, making sure the arbitrator knew exactly how we felt, we left.

Sometimes you have to make a stand against union bullying in the same way that Scott Walker is in Wisconsin and Chris Christie is in New Jersey. This is our stand. We know we will now probably have an arbitration award rendered against us and that the union will attempt to turn such award into a judgment. At that point, we will file a court action seeking to overturn the award because the arbitrator did not have proper jurisdiction and that the entire proceeding violated due process. Maybe, we will lose. Who knows? But we have to try and get this into a proper legal forum and out of the “closed shop” of union -ppointed arbitrators.

If you do not fight the unions whether they are entertainment unions or the SEIU or the teacher’s Unions, they will end up controlling the country.