Wednesday, May 13, 2009

SAG Letter re Force Majeure Claims

SAG just sent members an email regarding force majeure claims. It's reprinted below.

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DUNCAN CRABTREE-IRELAND

DEPUTY NATIONAL EXECUTIVE DIRECTOR AND GENERAL COUNSEL

May 12, 2009

Dear SAG Member:

I am writing to update you on the status of certain “force majeure” claims filed on your behalf in relation to compensation owed to you in connection with the 2007-2008 WGA strike. This letter contains important information regarding the settlement of those claims. I urge you to read it carefully and contact the Guild or your professional advisors with any questions. Also, the Guild is hosting informational meetings regarding this settlement proposal for affected series regulars, including one in Hollywood on May 18, 2009 and one in New York on June 1, 2009. Please see the detailed information contained at the end of this letter.

As you know, the 2007-2008 Writers Guild strike resulted, over time, in the suspension of production on many Screen Actors Guild-covered television series, including yours. Shortly after the producers began suspending production on these series, the Guild began initiating claims for certain payments the Guild believes you are entitled to by virtue of the suspension of production during that strike. These claims arise under Section 61(c) of the SAG Television Agreement, which is the provision governing events of force majeure. The term “force majeure,” as used in our collective bargaining agreements, refers to certain events that are considered outside the direct control of the parties, such as natural disasters and strikes. The term is also used to refer to the contract provisions that define each party’s rights and obligations if such an event occurs.

While the Guild’s intention was to settle or arbitrate these claims independently of the recent TV/Theatrical contract negotiations, beginning in April 2008, the producers insisted on including discussion of force majeure issues in the negotiations. Over the past year there have been substantial discussions of the existing force majeure language, changes proposed by both the producers and the Guild, as well as the nature and status of the pending claims. In the weeks immediately preceding the announcement of a tentative agreement between the AMPTP and the Guild, it became clear that many of the producers wished to resolve the pending force majeure caims as part of a global resolution of all the collective bargaining issues between the parties. The Guild’s negotiators took on that challenge and, despite the producers’ demand that the Guild simply withdraw all the claims without payment, our negotiators achieved a settlement of the claims that results in significant payments to series regulars who were affected by the WGA strike.

Before discussing the details of the settlement, you should be aware that the studios and producers vehemently contest these claims. The Guild believes that any suspension of production resulting from a force majeure event automatically triggers the “suspension salary” that is called for by the agreement. The producers believe that there is nothing automatic about it – that instead the contract allows them to decide whether to suspend a performer’s services, and if they don’t affirmatively decide to do that, nothing at all is owed. While I cannot go into a detailed assessment of the merits of those positions due to the ongoing arbitration of these claims, it is critically important to realize that this issue has never before been tested in the history of the contract and there is very significant litigation risk – real risk of loss – in continuing to arbitrate these claims.

As part of the settlement agreement, each studio or producer will make payment to the affected series regulars in the amount of 33.33% of the face value of the suspension salary claims (which is calculated as five weeks at half-salary, or approximately 2½ episodes worth of compensation). The total value of this settlement across all the affected series regulars will be approximately $21.6 million. Each series regular’s compensation paid will depend upon their individual episodic compensation and will vary considerably. You should note that each company has the option to “opt-out” of this settlement on a companywide basis if they do so within 30 days after ratification of the proposed TV/Theatrical agreement. All claims that are not settled because a company opts out will continue to be aggressively pursued by the Guild to arbitration or separate settlement.

This settlement framework is final and has been approved by the Guild’s National Board of Directors, but is conditioned on the ratification of the proposed TV/Theatrical agreement. If for any reason that agreement is not ratified, this settlement will be automatically rescinded and the claims will remain pending and subject to arbitration or other settlement.

Your Guild counsel and negotiators believe that this settlement is both reasonable and appropriate independent of the TV/Theatrical agreement. We believe this for several reasons. First, as I mentioned above, this dispute is based on language that has never been tested before, which means that we have no prior arbitrations or cases that can confirm the validity of the Guild’s position. Second, these claims will be decided by a single arbitrator under the provisions of our arbitration clause, and there is no appeal from that arbitrator’s decision. This means that if we were to lose the case, it is likely there would be no recovery whatsoever, as opposed to substantial real money in actors’ pockets. Both of those factors make this a risky case to pursue when a substantial settlement offer has been made. Third, even if fully successful, resolving the ending claims through arbitration would likely take 18 – 24 months or even longer, during which time our performers would have no payment on their claims at all.

Guild counsel has already begun working with representatives of the producers and studios to prepare to process payments to series regulars as soon as possible after ratification of the TV/Theatrical contract. We will keep in touch with you to ensure that you are kept apprised of the progress of the resolution of these claims and timing of any payments. To further answer your questions and address any concerns, we hope you will attend our meetings for affected series regulars in Los Angeles or New York, the details of which are shown below. For those who are not able to attend one of the meetings, we are also available to discuss the details of the settlement and respond to any of your questions, or those of your agent or attorney, by telephone at your convenience. You or your representative can contact me at (323) 549-6043, or you can contact Deputy General Counsel Will Bensussen at (323) 549-6631 or Assistant General Counsel Russ Naymark at (323) 549-6629. You can also contact us by email at forcemajeure@sag.org. We look forward to speaking with you.

Sincerely yours,

DUNCAN CRABTREE-IRELAND

Deputy National Executive Director and General Counsel

SCHEDULE OF FORCE MAJEURE INFORMATIONAL MEETINGS

Attendance limited to affected series regulars and their agents or attorneys. Please RSVP to Jennifer Heater at (323) 549-6572 or jennifer.heater@sag.org.

LOS ANGELES:

May 18, 2009 at 6:30 p.m.

Mount Olympus Room (located on the 3rd Floor)

The Renaissance Hotel

1755 N. Highland Ave.

Hollywood CA 90028

NEW YORK:

June 1, 2009 at 5:00 pm

NY Board Room,

14th Floor Screen Actors Guild

360 Madison Avenue

New York NY 10017

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