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Double-Cross at the WGA

(Illustrations by John Bent)

{mosimage} One day last June, Teri Mial warned Beth Paolozzi that she’d best keep her mouth shut about an ongoing federal Department of Labor investigation of the Writers Guild of America West — or she’d have to kill her.

“Beth was like a daughter to me,” says the 68-year-old Mial, an estates-trust manager with the WGA until the guild put her on permanent suspension. “I treated her as my daughter. I trained her.”

It didn’t seem to matter that Paolozzi, another employee in the trust division, was 30 years younger and “weighs about 200 pounds more than I do,” recalls the petite, scrappy grandmother. The whispered threat, clearly repeating the classic old joke, mushroomed quickly into a disciplinary confrontation with a WGA attorney, followed by Mial hiring her own lawyer and suing the guild for wrongful termination.

Mial’s forced departure was not set off by the purported death threat, she claims. Instead, she insists, she got the boot because she had recently blown the whistle on a growing scandal within the guild’s foreign-levies and estates-trust departments, in which the union was sitting on millions of dollars owed to member writers and nonmember writers alike, frequently withholding checks from both struggling and famous writers for decades.

The check-withholding scandal made headlines 18 months ago, when ex-guild member William Richert (The Man in the Iron Mask [1998], Winter Kills [1979], etc.) filed a class-action lawsuit against the WGA in federal court. Richert, a WGA maverick from Santa Monica who claimed to represent thousands of unpaid guild members and unaffiliated writers, as well as their widows and heirs, accused the venerable screenwriters’ union of systematically withholding, misappropriating and misspending tens of millions of dollars’ worth of writers’ foreign earnings over the past 15 years.

At first, then-WGA-president Dan Petrie Jr. heatedly denied the charges. But in response to a September 2005 New York Times story on the hoarding of so-called “foreign levies,” he admitted that the guild was holding a treasure-trove — over $20 million due to writers, most of them concentrated in Los Angeles and New York.

Since then, the WGA’s chief financial officer, Don Gor, has conceded that the union, headquartered in swank digs at Third Street and Fairfax Boulevard in Los Angeles, has had trouble getting the money out to an estimated 10,000 WGA members and nonmembers, claiming that the payees either could not be found or could not be verified as the right person. Gor admitted in a December deposition for the federal class-action lawsuit that the bustling office had no workable plan for handling the Internet-driven explosion in foreign earnings by American writers in recent years. “Most of the buildup occurred around 2000 where we got more money in — and our system was not capable of processing all of it,” he conceded.

But angry writers say they have evidence of an even more disturbing guild practice: its diverting of 92.5 percent of writers’ pay from foreign airings of their works to Hollywood studios, producers and, perhaps most galling, to the Writers Guild of America West itself. Since 1990, these critics contend, the guild has quietly been paying a king’s ransom in writers’ foreign earnings — far beyond the $20 million in withheld checks already acknowledged by Gor — to powerful Hollywood entities without the writers’ agreement or knowledge.

“The theft has been extraordinary,” declares WGA rebel Eric Hughes (Against All Odds [1984], White Nights [1985], etc.), who has led the charge against the guild hierarchy.

The L.A. Weekly has learned that the Department of Labor has been quietly gathering evidence and testimony about the guild’s payment practices for over a year — though it refuses to confirm or deny that it is investigating. Moreover, on April 12, a 27-page ruling by Los Angeles federal District Judge Margaret Morrow appears to have granted the writers some legitimacy, by rejecting the WGA claim that, as a labor union, it could collect and hold their money — and charge them hefty fees to boot. In sending the Richert suit back to state court, according to Hughes and Neville Johnson, the attorney spearheading the class action, Judge Morrow left the guild wide-open to charges of conversion and fraud.

The controversial but, to many, compelling argument made by Hughes, Richert and other critics is that foreign levies are being withheld by all of Hollywood’s talent guilds in a long-standing practice they see as a bizarre twisting of U.S. copyright law.

That virtually unnoticed 1990 decision, by the guild’s board of directors, to funnel more than 90 percent of American writers’ foreign earnings to big studios and other fat cats, mirrors an old practice struck between screenwriters, actors, directors and the studios in the 1940s shortly after the WGA, Directors Guild of America and Screen Actors Guild were born — and conceded authorship of the movies they created to the studios.

This uniquely Hollywood practice, not observed in most of the rest of the world, has left guild members and nonmembers alike scrambling for tiny leftover scraps — with most American writers having no idea how much of their earnings from foreign lands is handed over to others.

“The judge’s ruling means that they can’t hide behind the collective-bargaining agreement,” says Richert’s attorney, Neville Johnson. “It looks more and more like a common fraud case.”

Hughes’ failed run for the WGA presidency in 2004 first alerted him to the WGA West’s byzantine and, in his eyes, suspect accounting and payment practices. He mounted a one-man crusade and, in the fall of 2005, after a year of poring over court documents, U.S. Labor Department records, WGA contracts and accounting ledgers, helped expose the WGA’s hoarding of millions of dollars in foreign levies. In addition to The New York Times, both Daily Variety and the Hollywood Reporter have covered the story. But the larger context didn’t surface until Teri Mial got fed up one day, a short time after news of the scandal broke. A furious Mial started smuggling out of the gleaming glass WGA headquarters records of “undeliverable” foreign levies — essentially, piles and piles of payment records and mysteriously uncashed checks reviewed by the Weekly, which she claims she rescued from the guild’s shredder.

As Mial has sworn in her deposition in federal court — and as WGA officials have since acknowledged — it is guild procedure to shred such records after six months. Mial turned boxes of these records over to Hughes, who, he says, in turn gave them to criminal investigators at the Department of Labor.

Mial testified in her deposition that federal investigators took her statement last spring about her nine years as a WGA insider and her allegation that guild members and nonmembers alike have been systematically denied their money for decades. On the one hand, the WGA maintains extensive membership files that date back 50 years, and deftly tracks financial information on members or their heirs. On the other, delivering those languishing checks has never been a priority.

In the decade Mial worked at the guild, the cash rolled in weekly via wire transfer from foreign countries, but only the largest sums made out to prominent living writers got attention, she says.

By the time she left last June, she says, the bookkeeping had become so egregious that checks were cut, held for several months, then declared “undeliverable” — after which they were escheated back into WGA bank accounts, allowing the known totals of undelivered payments to swell far beyond $20 million.

According to Mial, the “undeliverable” money included residuals as well as foreign levies, all of which are reflected in the records that she managed to smuggle out of the Guild — and which were provided to the L.A. Weekly.

Although she knew that money being held by the guild was owed to deceased people — famous names, such as the late directors Preston Sturges, Nicholas Ray and John Huston, and less well-known names, such as Ben Joelson, producer of TV’s The Love Boat, and veteran TV writer Sheldon Stark — Mial says she went along with the guild’s patently phony act of consoling widows who never got money she says was withheld by the guild.

“[Jacqueline Stark] grieved herself to death,” says Mial. “She grieved terribly about her husband anyway, but she said to me one day, ‘You know, Shelly was one of the founders of this guild, and he would not like the way you people are treating me.’ ”

The Weekly has learned that Stark was not the only widow who died without getting her money. Until her own death last November, Preston Sturges’ widow, Sandy, had been equally outspoken. At the same time that the guild invited her to unveil its new Preston Sturges Reading Room at the WGA West headquarters at Third and Fairfax in the summer of 2005, her late husband’s name appeared among the long roster of “undeliverables” in the guild’s foreign-levies division. Mial testified in her deposition in the Richert case that she knew of at least one check for $5,000 that Sandy Sturges was never paid — and had documents proving it, which were obtained by the Weekly.

For the second quarter of 1999, the WGA recorded a statement showing that it had issued checks totaling $5,125.65 for 59 showings in Germany of 11 of the late writer-director’s films, including The Lady Eve (1941), Sullivan’s Travels (1941) and Palm Beach Story (1943). But the checks were never mailed. Instead, they were deposited into the “undeliverable” account, according to Mial.

On the same “payee statement” for Preston Sturges, the guild listed six other nations that were then sending foreign levies to the WGA: Austria, Spain, France, Switzerland, Denmark and the Netherlands. And yet, on its own Web site, the WGA declared all moneys collected on behalf of Sturges “undeliverable funds.” Foreign levies never made it to Sandy Sturges. And, as was the guild’s procedure, even the record indicating that these checks had once existed was shredded after six months.

But the Sturges case was only one of the more prominent among thousands of others affecting writers and others in Los Angeles’ best-known industry. When Mial protested to her WGA West supervisors in the estate-trusts division, she says, she was told, “Deceased are not priority because they do not generate dues.”

Even lower on the list of priorities are those who do not pay dues because they don’t belong to the guild. Like scores of others, William Applegate Jr. came to Hollywood in 1995 to break into the movies. He intended to do so as a writer, but the only work he could find was in an audio-visual sweatshop in the San Fernando Valley called PM Entertainment: He could earn up to $500 a week writing straight-to-video screenplays.

“When I was writing my stuff, it was understood that PM was a nonsignatory company,” says Applegate, now 33 and executive producer of a morning TV talk show in Sacramento. “We wrote out of a warehouse in Sunland in an office without a ceiling. Then they moved us to a satellite office next to a dump. The stink was unbelievable.”

PM Entertainment, which is no longer in business, was one of dozens of non-guild independent production houses that popped up in and around L.A. during the 1980s and ’90s to take advantage of a video revolution first ignited by the creation of the VCR and, later, DVD technology. Most of these outfits belonged to the American Film Market Association, whose members were not bound by guild contracts as are members of the Motion Picture Association of America. The AFMA changed its name to the Independent Film and Television Alliance in 2004, but remains the strongest voice in the U.S. for nonunion production.

Applegate and his fellow scribes, who frequently were ordered to bang out 10 pages a day on their aging Macs, created for peanuts. One year, Applegate earned only $3,500. During his time at PM, he got screenwriting credit for seven movies (one of which starred Anna Nicole Smith) and a TV series — L.A. Heat — that still airs around the world.

But none of his efforts qualified him for WGA membership, and eventually he abandoned his dream of being a screenwriter to produce TV news, working his way up the ladder at a succession of stations across the country, bringing him to his present post in Sacramento. He isn’t bitter about his Hollywood experience by a long shot.

“These people gave me a break,” says Applegate. “I was 21 years old and I got to write movies for a living.”

Nonetheless, he’d pretty much put the screenwriting phase of his career behind him — until a check arrived in the mail a year ago for $4,000 in foreign levies. He was stunned. He called it “found money” that arrived just in the nick of time, after he’d left his Las Vegas job and didn’t know how he and his wife could afford to move to Sacramento for the new job.

“I was grateful,” says Applegate — that is, until he got a recent call from Eric Hughes, who suggested that the amount on the check was probably short by at least a couple of zeros.

Among the documents Mial turned over to the Labor Department are foreign-levy “batch sheets” for four of Applegate’s movies that show money rolling into the WGA from Argentina, the Netherlands, Spain and Germany for his work on The Sweeper (1996), The Silencers (1996), Pure Danger (1996) and the Anna Nicole Smith thriller Skyscraper (1997). On paper, the amounts sent in by foreign countries are minuscule — as little as a dime for a Spanish airing of The Silencers.

But the more troubling implication is that under international copyright rules, the dime should have been a dollar. Although he was not a member of the guild, the guild was draining 92.5 percent of the payments away and paying most of it over to studios and producers.

{mosimage}“Residuals,” “foreign levies,” “net profits” — all are synonyms for cash that is supposed to find its way back into the pockets of the men and women who create movies and TV programs. That little or none of it gets there much of the time has evolved into something of a standing joke in Hollywood, where money vanishes as quickly as the mythical rolling break-even point that feature films, TV dramas and sitcoms seldom seem to reach.

Unlike every other form of expression in the U.S., from books to stage plays to musical compositions, the “author” of a Hollywood film is the studio, not the writer or director or producer. And studios don’t just own the movie; they also take the lion’s share of the profit — all with the approval of the guilds, which regularly negotiate contracts that establish basic minimums for their members.

Most of the world bases authorship on the terms of the Berne Convention, organized in 1886 by the French novelist Victor Hugo to establish a fundamental droit d’auteur, or “right of authorship,” for the individual or individuals who actually create a book, play, movie or other work of art. Over the following century, that international agreement gained acceptance with 162 member countries around the globe, but the U.S. lagged behind and did not sign on until 1989, when the World Trade Organization forced America’s hand.

But in exchange for a large up-front payday and the promise of future residuals, all of Hollywood’s guilds “assign” copyright to studios, and have done so for more than two generations. Thus, barely literate moguls like Columbia’s Harry Cohn or Paramount’s Adolph Zukor, who never created anything in their lives beyond enormous bank accounts, absurdly wound up as the “authors” of thousands of movies and television programs.

For example, the late screenwriter Philip Yordan, who died in 2003 at 88, wrote more than 60 movies and won an Oscar for his efforts with the classic Western Broken Lance (1954). But Twentieth Century Fox lays claim to authorship. The Berne Convention, however, says otherwise. Victor Hugo’s droit d’auteur does not allow for Hollywood’s creative schizophrenia, which may account in part for Faith Yordan’s ongoing frustration in trying to get at her late husband’s foreign levies.

In “privileged and confidential” form letters sent to Faith Yordan and obtained and reviewed by the Weekly, the WGA maintains that the delay in Yordan’s case is due to problems in “reissuing” foreign-levy checks. Faith Yordan puzzles over the fact that, to her knowledge, such checks were never issued in the first place. Why, she wonders, did they have to be “reissued”?

Mial says she knows why. The checks were cut but never delivered, the recurring excuse being that the WGA couldn’t locate the recipients. After six months, the checks were destroyed, while the money remained in WGA accounts earning an unknown amount of interest for the WGA.

“Every time I call the guild, they tell me they’re a little backed up, but very soon, they’ll be sending me a check,” says Yordan’s widow, who has been pestering the WGA for over a year. “I do not understand these people. They tell lie after lie after lie.”

Mial admits that, on orders from Don Gor and others, she herself played the delay game with Faith Yordan during her waning days at the WGA. She sympathizes with her and the scores of others who pleaded for their money. Mial says that the money is indeed there and that residuals are detailed in a computer system called “Hanna,” but Mial and other employees assigned to speak to inquiring heirs were never allowed to tell them the amounts.

In the current WGA brouhaha, however, the guild also began to control the money paid to nonunion members. Bill Richert’s lawsuit underscores this control by the guild over the foreign earnings of non–guild members, and his objection is echoed by Rutgers University law professor and intellectual-property expert Ellen Goodman.

“The Guild is wearing two hats, and I’m not sure they can do that,” says Goodman. “They argue they’re a union acting on their members’ behalf at the same time that they’re collecting money for nonmembers. I don’t think you can do both.”

At the very least, unaffiliated writer William Applegate Jr. should have been informed that the WGA was going to go after his money — and was also going to decide who, besides him, should get most of it. But Applegate, the true author of The Silencers and all of his other films, never knew because, incredibly, the guild rarely communicates with the thousands of nonmembers who write books, stage plays, material for the Internet, and TV shows, as well as screenplays for the better-known Hollywood productions typically scripted by WGA members.

It was because of U.S. acceptance of the Berne treaty, as well as the emergence of satellite, cable, videocassettes and DVDs, and the ease of digital theft over the Internet, that the concept of “foreign levies” was born. To ensure that an author gets his due, Berne Convention nations established so-called collecting societies: agencies convened, supervised and sanctioned by each country specifically to collect revenue due any author for his rightful share of any use of his work — and to get that money to him as quickly as possible.

The German collecting society, which paid William Applegate’s foreign levies, for example, is very specific about its duty to screenwriters: to provide for royalty payment to authors of films shown over cable TV. Similarly, Spain made La Sociedad General de Autores y Editores responsible for getting Applegate his money for airings of The Silencers. Argentina sanctioned the collecting society Argentores to pay Applegate for his seminal role in delivering Anna Nicole Smith’s dulcet dialogue to the unsuspecting TV audiences of Buenos Aires.

But none of these collecting societies are labor unions. Their purpose is solely to get authors’ money to authors, regardless of their union affiliation or national origin. Thus, when the WGA and the DGA first approached the collecting societies in 1990 shortly after the U.S. signed on to the Berne Convention, proposing that the guilds disburse that money on behalf of U.S. authors, it spawned the fundamental complaint now facing these guilds in Richert’s lawsuit: that neither guild can legally speak on behalf of writers or directors who aren’t guild members.

Based on the uncashed checks and foreign-levy income statements Mial removed from the WGA and supplied to the Department of Labor, which were later reviewed by the Weekly, the guild’s dead and disenfranchised range from W.C. Fields to Buster Keaton to Charles Bukowski, all of whom have money waiting at the WGA.

What is even more telling, however, is that, like William Applegate Jr., they were never members of the WGA. Nor were Frankenstein and Dracula screenwriter Garret Fort, or Porky Pig’s father, the animator Friz Freleng, or a host of other Hollywood talent who had nothing to do with the screenwriters’ union.

And yet, to this day, records show that the WGA holds their money in its coffers — a fact that might not play well before the state court to which the case now returns.

When a fellow identifying himself as a WGA “foreign-levies researcher” called Beverly Gray last September 29 seeking her Social Security number, the words “scam” and “identity theft” automatically leaped to her skeptical mind.

“I thought it was one of those Ugandan-dictator things that come over the e-mail,” says Gray, an author and writing instructor.

But after phoning the guild and verifying that the call was genuine, she sent the requested Social Security ID, and some weeks later, a couple of checks arrived — one for $29.70 and the other for $1.66. The amounts were negligible, but she thought it was quaint that she might get a little token something years after her brief incarnation in the early 1990s as a Roger Corman writer-producer-actress. (“He once told me I was the only woman left at the end of one of his films with my blouse still on.”)

The WGA checks might add up to only 30 bucks, but “when you work for Roger Corman, this is serious money,” she says, tongue planted firmly in cheek.

In over 50 years in Hollywood, the undisputed master of B-grade bilge never signed on with the guilds, which is why Corman has been able to produce nearly 400 features in his legendary career and still brag that he’s never lost a dime. But what his nonunion independence meant for Gray and dozens of other Corman writers, producers and directors is that, like William Applegate Jr., they got a microscopic up-front flat fee and nothing more.

Gray, who went on to become a Corman biographer and a screenwriting instructor at UCLA Extension, was never allowed to join the WGA and never saw any residuals, profits or cash of any kind from Immortal Sins (1991), Dragon Fire (1993) or an unfortunate early display of Sandra Bullock’s winsome talents in Fire on the Amazon (1993).

So Gray was particularly surprised when the Weekly e-mailed her a couple of “batch sheets” — documents that list screenings of her films and dollar amounts indicating that the guild has been holding hundreds of dollars in her name, perhaps thousands of dollars, some amounts for as long as 12 years — yet never mentioned a word about it to her.

One of these sheets, dated January 25, 2002, listed foreign levies from Spain, Germany and Argentina for Dragon Fire and Immortal Sins, totaling $77.08. The other dates back to December 31, 1995, when the German collecting society paid $83.08 for an airing of the Spanish-language version of Immortal Sins. At the bottom of one batch sheet is the notation “Page 351 of 648,” indicating that the division of the guild that created the purloined batch-sheet document contains hundreds of pages listing checks due to hundreds of other writers.

In her deposition, Mial testified that these check “batches” rolled in to the WGA foreign-levy and residual departments by the score every month, but, she says, few made their way to writers’ heirs or to non–guild members like Gray and Applegate.

In his deposition, explaining why writers like Gray were never informed that they had money due, the WGA’s Gor admitted that, prior to 2004, the guild only had the titles of films that earned money overseas — but didn’t know who had written them. The guild had aggressively put itself forth as the earnings collector — yet had not even obtained the names of the authors to whom much of that money was supposed to be paid.

Yet Gray, a Santa Monica author of three books, could easily have been identified during all those years. Proof of that is contained in the heading stripped across the top of two WGA batch sheets — her name printed there in bold, black letters, just beneath a letterhead that reads: “Writers Guild of America, West, Inc. — Foreign Levies.”

She’s got an agent, a local address and a local phone number. Beverly Gray is not hard to find.

A middle-aged woman who still works to keep her foothold in Hollywood, Gray is currently attempting to scrape together enough to get a documentary made on classic films of 1967. She sat stunned by the news the Weekly delivered about one of her “batch sheets,” numbered Page 351, and began to consider the financial possibilities.

“This is serious money.”

Of the more than 8,000 members of the WGA West, only a few hundred are active in their union, and fewer still are privy to its inner workings. Even board members admit to being baffled at times. Former elected representatives like J.F. Lawton and Ted Elliott call the board little more than a “rubber stamp” for its lawyers and staff.

But most WGA rank and file are like veteran TV writer Tom Szollosi (The Incredible Hulk, The A Team, etc.), who pays scant attention to union politics and remains elated when the occasional foreign-levy check shows up unexpectedly in the mail.

“Hey, it’s money, and I’m real happy to get it,” says Szollosi, whose career has slowed in recent years and who shares a common gripe with older WGA members about his union’s apathy over Hollywood age discrimination.

“We are happy to enclose a check,” begins each form letter that accompanies checks like the ones that Szollosi has received. The letter then goes into considerable detail about how “for several years, the Guild has fought to ensure that you received an appropriate share of this money which we believe the foreign governments intended you to receive.”

What the letters do not say is how the WGA arrived at what an appropriate share for its members might be, nor do the checks specify where the money came from in the first place. Neither do they say how long the money has been in the hands of the guild, how much interest accrued, or that a hefty and unexplained 5 percent “handling fee” was deducted by the guild (the DGA assesses 2 percent) before the check was cut.

The fact is that most WGA members are like Szollosi: far too busy pursuing their main Hollywood chance before youth-obsessed studio and/or TV executives shut the window on them, and they do not bother with the details attendant to the welcome arrival of “free money.”

But when a strike looms or a new contract needs to be ratified, even the most desultory or desperate screenwriter stops hunting and pecking long enough to participate, even if it’s as minor as checking off a box on a mail-in ballot. When it came to foreign levies, however, they never got the chance to vote — another key issue in the case that now returns to Los Angeles Superior Court.

Guild vice president Carl Gottlieb, in a posting to a popular WGA members’ blog called Writer Action, says the foreign-levies diversion scheme was originally hatched in 1990 by two studio lawyers and then–WGA executive director Brian Walton. According to Gottlieb — and later confirmed by WGA general counsel Tony Segall — attorney Jay Roth (who later became DGA executive director and was paid over $1 million last year) and MCA/Universal general counsel Robert Hadl (now on annual WGA retainer at $150,000, plus $300 an hour and expenses) came to Walton with a proposition: If they could persuade foreign collecting societies to turn over their revenue to the WGA, this promising new income stream for writers could be shared with the guilds and studios, including Hadl’s.

“The alternative to the deal was to leave the money offshore while fighting a protracted global legal battle with an uncertain outcome, which included strong arguments on all sides over which contract and national law was applicable,” Gottlieb argued.

According to Gottlieb and Segall, Walton informed the WGA board what he had done — but there was never a board vote on the matter. Nor were the pacts that the WGA negotiated with each foreign collecting society and the Hollywood studios ever submitted to guild members. Further, no one among the WGA hierarchy explained to member writers — or nonmembers — what they had done.

“Under labor law, ratification is not required,” the WGA’s Segall tells the Weekly. “We don’t read it as requiring ratification.”

Hughes maintains otherwise, saying, “No union has the right to go in and negotiate without the consent of the membership” — not to mention nonmembers or the heirs of dead members.

Nevertheless, Gottlieb has sided in the past with general counsel Segall, the WGA official to whom all press inquiries about foreign levies are now referred. He blamed the board’s 1990 failure to seek a vote from writers on the “mind-numbing detail” that the staff and board wanted to spare the writers.

In fact, the arithmetic wasn’t all that hard, even for a writer, to grasp. The powerful trio divided the booty three ways: 85 percent for the studios, 7.5 percent for the DGA and 7.5 percent for the WGA — to disburse to often-struggling writers in the manner the WGA wished and when the WGA wished, with no disclosure of the diverted 92.5 percent required.

Part of the “detail” that the WGA board (then led by the late board president George Kirgo) apparently wanted to spare writers in 1990 was a prescient indemnification clause, which foreign collecting societies forced the WGA to include with each pact. The clause held the guild liable in the event that any author due foreign levies decided to sue one of the three entities over the deal Roth, Hadl and Walton had cut.

There was good reason to believe American writers might one day sue, since the contrast with the way foreign-levy payments are handled in Europe and other nations is so stark. Under terms of the Berne Convention, in France, for example, foreign levies have been divided equally among authors, performers and producers since 1985, when the French government established Literary and Artistic Property statute No. 57-298. Similar statutes were enacted elsewhere: one-third to authors, one-third to performers and one-third to producers.

But in Los Angeles, the studios were not satisfied with one-third. They demanded the authors’ and performers’ shares as well — and got most of it.

“The MPAA companies have the great bulk of money collected by the collecting societies,” acknowledges the WGA’s Segall to the Weekly. “If we hadn’t stepped into this breach, the companies would have gotten all of this money,” he maintains — a proposition that Hughes, Richert and their attorneys say is false on its face because Berne signatories forbid an author’s share being paid to anyone but the author.

“The rights are unassignable,” argues Hughes, but the studios, producers and union believed otherwise, and assigned them anyway. The WGA and DGA effectively agreed that moguls like Rupert Murdoch, Sumner Redstone and the late Lew Wasserman were to be awarded the status of having written their studio’s screenplays and directing their studio’s movies. Faceless corporations like Disney, MGM and Universal got away with the fairy tale that they were “authors.”

After losing a prolonged and nasty battle with screenwriter Aaron Sorkin over writing credit for The American President (1995), Bill Richert was so furious over the WGA’s decision to side with Sorkin that he quit paying dues and sued the union. He lost the suit — but not his anger.

So when Westside-based plaintiff’s attorney and class-action specialist Neville Johnson called him last year to ask if he’d like to join a class-action lawsuit against the WGA over unpaid foreign levies, Richert recalls, he spoke just three words: “Sign me up.”

He had no idea, until the following day, when he read a New York Times article about the WGA’s failure to pay foreign levies, that he was, in fact, the sole plaintiff named in Johnson’s lawsuit — a common and legal practice in class-action lawsuits.

Still, Richert says he didn’t mind being the WGA’s Lone Ranger — until the following summer, when it became clear to him that Johnson was angling for a settlement instead of a courtroom victory that Richert believed would unmask the diversion of writers’ money to studios, and the languishing writers’ checks at the WGA. At about the same time that Mial showed up at the U.S. Department of Labor in downtown Los Angeles to unload the boxes of documents she’d sneaked out of the WGA, Richert ordered Johnson to halt settlement talks and take the suit to trial — or withdraw him as a plaintiff.

“That’s the only reason I got involved in the first place,” says Richert. “The only way we’re going to force open the books is by getting this in front of a jury. You settle, you sign a confidentiality statement, and you’re saying that what they’ve been doing all these years is okay. It’s a lot of things, but it’s not okay.”

In the meantime, Johnson found two other plaintiffs — each of them heirs of long-dead screenwriters — and forged ahead with settlement talks, during which he got the reticent WGA to admit it was holding millions of dollars owed to nonmembers, heirs and members. In his deposition last December, the WGA’s Don Gor said it would take three to five years to get everyone paid — an indication of what a mess exists.

At first, Johnson took Gor at his word. He told the Weekly he did not demand to see the guild’s books or investigate its contractual relationships with the Motion Picture Export Association, the IFTA, two Dutch banks — Annahold B.V. and ABM Trust — and a European collection agency called Fintage House, which raked in over 700 million euros (about $830 million) for clients last year.

According to Richert, Johnson told him and his other clients that they ought to forget about a jury and accept the WGA offer to pay out all foreign levies within the three to five years the guild claimed it needed.

But after federal Judge Margaret M. Morrow handed down her 27-page ruling on April 12, Johnson appears to have changed his mind. Without taking sides, Judge Morrow sent Richert v. WGA West back to Los Angeles Superior Court — but not before clearly spelling out the central argument, “that defendants [the WGA and DGA] have illegally converted funds that rightfully belong to plaintiffs by holding themselves out as having the right to collect foreign levies on behalf of non-members without having obtained non-members’ authorization to do so.”

Says Johnson, “Both the WGA and the DGA have argued that they did what they did based on a collective bargaining agreement, and the judge said no.”

Johnson tells the Weekly he now plans to expand the suit to include the Screen Actors Guild and has already heard from actor Ken Osmond (Eddie Haskell in Leave It to Beaver) and from Emmy Award–winning Jack Klugman (The Odd Couple, Quincy M.E.) about being part of it. He is looking to add the demands of WGA and DGA members to the nonmembers’ lawsuit and says he will take more depositions, beginning with WGA president Patric Verrone, who, as secretary-treasurer before winning the presidency in 2005, signed the checks and oversaw the books. Verrone and other guild officials referred Weekly inquiries to general counsel Segall.

While the Department of Labor refuses to confirm or deny any investigation, Hughes continues to supply federal investigators with documents, witnesses and a road map through the “mind-numbing detail” that Gottlieb described. Calculating how much money the writers have lost since WGA members were summarily awarded a 7.5 percent cut from the guild — while their European counterparts were accorded one-third — and adding to that the long-delayed foreign levies withheld from nonmembers, says Hughes, “When you see what has taken place over the past 17 years, what we’re actually talking about is the theft of half a billion dollars.”

The WGA’s Segall remains confident that the union will prevail. He holds that the guild has collected $46 million over the past 15 years, has distributed $22 million of it, and will continue to act as foreign-levy distributor for members and nonmembers alike, sending most of the authors’ earnings to the studios. He sees the WGA as the hero for stepping in to get a cut for the writers, not the villain, declaring, “The unaffiliated documentary writers of the world don’t have the clout to go off to Europe and do this.”

That Hollywood’s writers were never afforded the opportunity to cut their own deal and take their own meeting doesn’t seem to matter. As always in Hollywood, writers get a few crumbs and learn to shut their traps, hoping the next check in the mail will be the big one.

Dennis McDougal is co-author of Fatal Subtraction: How Hollywood Really Does Business (Doubleday, 1992) and author of The Last Mogul: Lew Wasserman, MCA and the Hidden History of Hollywood (DaCapo, 2001).


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