Writer's Guild Sued for Improperly Witholding Foreign Royalties

Posted on May 2, 2007

The Writer's Guild has $20 million sitting in its trust account. The money belongs to its members or their estates as compensation for movies or TV show that were shown in foreign countries. The WGA says it can't determine whose money it is, members say yes they can and it's a big mess.
The guild's failure to distribute such a big stockpile of cash has raised hackles in Hollywood, turning what might have been an arcane accounting matter into an embarrassing and potentially costly dispute for the union, which is just about to enter crucial contract negotiations with producers.

"They 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," said Jon Brown, a partner in Ensemble Entertainment, a literary management firm, who represents the estates of several writers.

Guild officials, who say they dispense millions in so-called foreign levies each year to authors who wouldn't otherwise be able to collect them, dismiss as "ridiculous" allegations that they are deliberately withholding the money. The officials do acknowledge some problems with foreign levies, though not in how they're distributed. The guild is turning over to prosecutors this week the results of an internal investigation that found that about $17,000 was missing from a foreign levies account.

When it comes to dispensing the foreign levies, guild officials say, it can be tricky to identify the people entitled to the money that comes in from overseas. Sometimes the entities that send the money to the guild don't provide enough information, the union says. Show titles often are listed in a foreign language, or the translation doesn't match the English title. "Do we wish we didn't have $20 million on hand? Sure. We wish it were a lot easier to distribute," said Tony Segall, general counsel for the Writers Guild of America, West. "We've done nothing but work at getting this money out."

Plaintiffs in a lawsuit disagree. Filed in state court in Los Angeles in 2005, the suit alleges that the union is improperly holding on to money that belongs to writers and heirs who aren't union members. The suit says that the money is owed to at least 1,000 individuals or estates. A similar complaint was filed against the Directors Guild of America.
It's a big mess and the lawsuits are still pending.

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