A simmering labor dispute is heating up over proceeds from foreign levies, and the manner in which the DGA and WGA are – and, in some cases, are not – paying out fees due to both guild and nonmember writers and directors.

text Stefan Avalos

In some circles, Kenneth Anger is a living legend. As an experimental filmmaker, the former child actor, cited as an influence on directors as varied as John Waters and Martin Scorsese, became a darling of the avant-garde via a string of audacious shorts – especially the infamous 1964 classic Scorpio Rising, a melding of gay fetish iconography, Nazism and the occult set to pop songs from the ‘50s and ‘60s. As an author, the notorious scandalmonger endeared himself to controversy-hounds worldwide with Hollywood Babylon, a compendium of lurid Tinseltown sexual indiscretions, drug and alcohol abuse, mental instability, murder, suicide and more.
Unfortunately, cult fame, while undeniably cool, seldom pays the bills, and today, at age eighty, living in a Hollywood hotel and recovering from serious surgery, Anger is a guy who could use a few extra bucks.
Ironically, he, along with countless other writers and directors – both rolling in dough and down on their luck – have been owed money by the Writers Guild and Directors Guild for years, and most of them don’t even know it.
The money in question is millions of dollars from foreign levies, and even though they have your name on lists, the guilds say they don’t know how to find a lot of you. This money is just a fraction of a much larger amount.
From epic features to personal documentaries, from animated children’s television to porn, the names on these lists represent the widest cross section of the film industry imaginable. If television rights were sold in any one of thirteen European and South American countries, including Argentina, Austria, Denmark, France, Germany, Hungary, Italy, Mexico, the Netherlands, Poland, Spain, Slovakia and Switzerland, there’s a good chance that the writers and directors’ names are on these lists.

CONTINUED .: .:

WHERE DID THE MONEY COME FROM?
The money comes from a levy that some countries place on blank videocassettes, DVDs, VCRs and DVD players, on video and DVD rentals and, in some cases, even computer hard drives. In 1985, Germany was the first to initiate these levies, which were created as a form of compensation for copyright holders of audiovisual products for the “reuse,” or copying by the public, of their work.
In the United States, the Motion Picture Association of America’s members, the studios, claimed to be the rightful copyright holders, and were quite prepared to take all of this newfound money. However, unlike American work-for-hire law, European copyright law specifies that the “author” – that is, the writer and director – always retains copyright.
A dispute between the guilds and the MPAA resulted in a settlement agreement in 1990 that initially heavily favored the MPAA: eighty-five percent for the studios versus seven-and-a-half percent for each guild – even though European law intended authors, not producers, to get it all.
In 2001, the guilds hired Robert Hadl, former counsel for MCA/Universal, as a consultant to negotiate a better percentage. Hadl successfully brokered an increase in the guilds’ portion to twenty-five percent to be split evenly among writers and directors, and in 2005 renegotiated the amount to fifty percent.
At last, the money started pouring into the guilds’ coffers – but it wasn’t going out to writers and directors at nearly the same rate.

FINDING THE LOST
“We have six staff [members] working on this problem,” says Jaret Johnston, foreign levies administrator for the Directors Guild of America.
For directors or estates still not located, Johnston says the DGA has thrown everything at the problem, going so far as to hire a search firm to find missing directors. “Some directors live in other countries or on islands,” he says. “Some just don’t want to be found.”
When asked about Anger, Johnston was able to retrieve information that the DGA had sent five different letters to Anger with no success. When asked what else the DGA was doing to alert directors, specifics were few.
Assuming a proactive nonguild director or estate actually knew about the concept of foreign levies, there was also a way for them to find out if they were owed money. Like the WGA, the DGA had a “Nonmember Directors Who Have Not Been Located” list online. Though buried deep in its website and accessible only via a search for the words “foreign levies,” once located, the list could be cross-referenced with projects for which money was owed.
In order to experience firsthand the task the guilds faced, Fade In took a random sampling of directors from the list. Indeed, some searches turned up ghosts – directors long since deceased, where even heirs were difficult to find. In other instances, directors were living outside the United States, with no obvious contact information. However, Catherine Margerin, director of the 1992 animated TV special The Wish That Changed Christmas, took approximately three minutes to locate, along with her phone number. A search for Frances Reid and Deborah Hoffman, co-directors of Long Night’s Journey Into Day, a 2001 documentary about South African apartheid, revealed an Academy Award nomination for Best Documentary – and contact information for their production company. Finding Rob Landeros, director of the 1997 thriller Tender Loving Care, required nothing more sophisticated than appending a “.com” to the end of his name to find his official website. Others were just as easy to find.
When Margerin learned about the money due to her, she was surprised. Margerin, whose most recent film, Hope, is more likely to be seen at film festivals and peace rallies than on foreign television, had never heard of foreign levies, let alone payments due for her work. “There is absolutely no way I would have found out,” she says. “Right now I’m a peace activist more than anything else.”
Margerin’s own search through the DGA list led to the discovery of three directors she recognized who were also unaware of foreign levies. Hank Whetstone, director of the 2001 action drama The Code Conspiracy, says, “My first thought is, it’s nice they’re collecting it for nonmembers; but my second thought is, they didn’t have to look very hard to find me.”
Upon being found, Scott Saunders’, director of The Lost Words, reaction was, “It’s great that [the money] has found its way to me. It’s just odd that notice of it should come from you rather than the Guilds. As an independent filmmaker, it’s all a fight. The fact that there’s money out there and you have to fight for it a little bit? That’s no surprise to me.”
As a former DGA member, Martin Goldman, who is owed money for his 1997 nonguild movie The Legend of the Spirit Dog, has an even more dubious case: “I get residuals from the Directors Guild every year for my first movie, which was done [for Paramount] thirty years ago,” he says. “They have me on their mailing list. If they wanted to get in touch with me, it would be easy because I’m already on their list for normal residuals.”
Anger took a little while longer to find – but he was found. Eight months before Fade In tracked the groundbreaking director down, he was presented with the tenth annual Outfest Achievement Award at Outfest. In perhaps the bitterest irony of all, the festival was headquartered in the Directors Guild of America building on Sunset Boulevard.
When informed of how easy it was to locate these randomly selected filmmakers, the DGA’s Johnston expressed surprise and concern, and promised to inform the guild’s chief financial officer. In an unfortunate and surprising turn of events, hours after Fade In’s interview with Johnston, the DGA removed the list of directors owed money, as well as levies department information, from its website. Subsequent requests to speak with Johnston were declined by DGA officials, who cited pending lawsuits.
With millions of dollars at stake, allegations are inevitable. In May 2006, director William Webb, whose credits include the 1984 comedy California Girls and the 2004 action thriller Target, filed a lawsuit against the DGA alleging the guild had no right to collect money on behalf of nonmembers, and was ineffective in getting the information regarding foreign levy payments to directors. More recently, a November 2006 lawsuit, filed by former trusts and estates manager Teri Madrid Mial, alleges that she was fired by the WGA after the guild discovered that she was talking to federal investigators.
The guilds argue that inefficiencies of the past are being worked out, and though they could be doing a better job, they are working hard to solve the problem – and they are finding authors more quickly than before. They also accurately point out that were it not for their efforts, guild and nonguild members alike would not be receiving any percentage of the levies.

A BUREAUCRATIC NIGHTMARE
Craig Mazin, a former WGA board member whose screenwriting credits include Scary Movie 3 and Scary Movie 4, says the reports associated with foreign levies from Europe were often a mess of inaccurate, incomplete information running more than 40,000 line items in length. “Most problematic,” Mazin says, “the foreign nations were not interested in just sending the money for Writers Guild writers. They said if you want to process this stuff, you have to process it for everyone.”
The guilds had caught a tiger by the tail, and were overwhelmed.
In 2005, the WGA admitted that the amount of money undelivered to screenwriters had ballooned to $23 million. Some members questioned whether the guild was doing enough to disburse this money, and on September 16, 2005, William Richert, writer and director of the 1979 thriller Winter Kills and a 1998 version of The Man in the Iron Mask, filed suit against the WGA; he was joined by the heirs of writers Norman Retchin and Thames Williamson, Pearl Retchin and Ann Jamison. The suit charged that foreign levy money should not be collected by the guilds, and the money wasn’t going where it should – namely, to the writers. The suit also claimed the guilds were doing little or nothing to inform nonmembers of the money owed them.
The WGA suffered public humiliation when a 2005 New York Times article about the lawsuit by reporter Dennis McDougal revealed that the list of “unlocated” writers included the late Preston Sturges, writer and director of such classic comedies as The Lady Eve and Sullivan’s Travels, as well as other major names like Tom Clancy and the estates of Vladimir Nabokov and Charles Bukowski. In the case of Sturges, the WGA would have had to look no further than a photograph in its monthly magazine of the June 18 ribbon-cutting ceremony at the Preston Sturges Lounge – where the filmmaker’s widow, Anne Margaret “Sandy” Sturges, had been present for an unveiling of a portrait of her legendary husband. Sadly, Mrs. Sturges died this past November.
Clearly, the guilds were not doing a great job of distributing the money. Shortly after Richert, et al. filed suit, WGA President Daniel Petrie Jr. sent a perturbed letter to all of the guild’s members that objected to accusations against the guild, addressed complaints and listed the sums owed to unlocated luminaries like Sturges, Nabokov and Alan J. Pakula as small amounts between $2.38 and $205. At the time, Petrie stated that the guild was neither concealing nor trying to steal anything whatsoever.
However, Against All Odds screenwriter Eric Hughes, who has watched the foreign levies situation very closely – and critically – noted that payments from Germany to the Sturges estate totaled more than $5,000 for one quarter in 1999 alone. “They wanted to create the illusion of small amounts,” Hughes says, “but the numbers are actually quite huge.” Indeed, amounts owed to writers of even B movies were often significantly more than Petrie had stated.
Whether due to the McDougal article, Richert’s lawsuit, the Sturges embarrassment, Hughes’ website, www.erichughes.net, or mere coincidence, the guilds began to have more success in finding “missing” writers and directors. Finally, after five years, the WGA actually distributed more money than came in: $7.9 million for the fiscal year of 2005.
“Since the beginning of the program we’ve distributed something like $27 million dollars – and that’s just writers’ share,” says Anthony Segall, general counsel for the WGA, of the amount disbursed thus far.
Even so, foreign levy money is still not getting to many writers and directors quickly, if at all. According to Segall, about $20 million is currently in the WGA account. “Some of that is very new money,” says Segall, “and some of that is quite old money that frankly we’ve had a hard time distributing because the data we originally got from the foreign collections societies was insufficient.”

HOLDING ON TO THE MONEY
In 2003, that old money was of concern to the guilds, as the seven-year statute of limitations was approaching, and money was in danger of escheating, or reverting, to the state if it remained unclaimed. According to the July 2003 edition of the WGA’s Member News, the board of directors “approved the policy of transferring all funds undeliverable after seven years [including foreign levy payments to nonmembers] into the guild’s treasury to defray the costs of guild operations.”
The precise meaning of “defray the costs of guild operations” is not clear. But at least the move would prevent the money from going to the state. The guild would continue to search for the writers, and pay them from the guild treasury, if and when they were found – an IOU of sorts that kept the money theoretically safe from escheatment.
According to the same edition of Member News, “The board also approved the collection of an administrative fee on foreign levy funds to be received in the future as well as on foreign levy funds previously received but not yet disbursed.” The fee was to offset the costs of negotiating and administering the foreign levies program. Currently, the fee is five percent.
Keeping undistributed money from escheating to the state seemed a reasonable attempt to keep it safe for the writers not yet found, especially if “escheat” were synonymous with “forfeit.” Unfortunately, that was not the case.
According to the California state controller website, “The Unclaimed Property law was enacted to prevent holders of Unclaimed Property from using your money and taking it into their business income. This law gives the State an opportunity to return your money and provides California citizens with a single source, the State Controller’s Office, to check for Unclaimed Property that may be reported by holders from around the nation.”
And unlike the WGA’s five percent administrative fee, the state charges nothing to a claimant. Its service is free.
Wouldn’t it therefore have made more sense for the WGA to let the unclaimed money escheat instead of holding on to it? Eric Hughes questions the legality of the guilds’ policy of keeping the money: “Unions do not have to allow money to escheat if it’s ‘dues-able’… Once the member dies, the member no longer pays dues, so that money must escheat. Money for nonguild [members] has to escheat immediately.”
Contradicting the 2003 WGA newsletter, Segall denies that any principal amount of undisbursed money has ever moved from the levies fund into the general fund. “The only money that has ever flowed into the general account is interest on the money held in trust and, in the last couple of years, the five percent administrative fee.” Segall wouldn’t elaborate on how money, undelivered for more than seven years, had avoided escheatment, but felt the guild was handling it properly.

THE BIG PIECE OF THE PIE
All of this raises the question of who is getting the rest of the money – the big piece of the pie?
In 2005, the guilds were receiving twenty-five percent of all foreign levy money. The guilds’ undistributed money (approximately $40 million at the time) was largely nonmember money. Union law would dictate that it came from nonsignatory (non-MPAA) projects. If so, then where is the other seventy-five percent of that money – a theoretically staggering $120 million that should go to independent producers?
Many people – including some guild board members – assume the MPAA takes the rest of the money, but that is not the case, even though they had initially bargained for it. The rat’s nest of paperwork associated with foreign levy money might create an opportunity for the producers’ piece of the pie to simply vanish into their coffers. The MPAA declined to be interviewed for this article – citing the pending lawsuits.
The reality is not any simpler or less frustrating. Unlike the authors, producers don’t have a labor union working on their behalf, making their road quite a bit rockier. For producers who actually know about foreign levies, there are few options for collecting the money. It’s a trail that travels worldwide, and no one is eager to explain the workings of the levies payouts.
Around the same time that the foreign levy deals were struck between the MPAA and the guilds, similar deals were made between the guilds and the American Film Marketing Association to address “independent” product. AFMA changed its name, and is now known as the Independent Film & Television Alliance, or IFTA.
IFTA, best known for its AFM markets each year in Santa Monica, created an agency called IFTA Collections. Its website, http://ifta-online.org/NewsEvents/Default.aspx, claims to have recovered more than $50 million in levies since its inception. However, IFTA’s 184 members represent a small percentage of independent producers making movies. In fact, the majority of IFTA’s members are sales agents – not the true producers (or copyright holders) of the movies they represent. Though the IFTA website touts itself as “the spokesperson for the worldwide independent film and television industry,” attempts to speak with a representative about foreign levies proved fruitless. Direct questions were not answered, and interviews were declined. No reason was given.
Writer-director-producer Charlie Ahearn is now on the hunt for the producer’s share of his money. In speaking to IFTA about where it might be, he only learned two things: “We [IFTA] represent our members only and we don’t accept money for nonmembers.” Though Ahearn’s first movie, Wild Style, had at one point been listed in the IFTA database, neither one of his movies is currently listed. IFTA reps offered no suggestions about where he might go to continue his search. Ahearn, like many independent filmmakers, is not an MPAA, IFTA or guild member. Though the guilds are holding money for him, the majority of it is unaccounted for – simply missing.
Eventually, all fingers point vaguely to the agencies in the various countries collecting the levies initially. Perhaps the easiest to blame, these agencies, by guild and trade association accounts, are not eager to give up the money either. If intrepid producers try to hunt for their money without the aid of IFTA or for-profit agencies, international fees and taxes quickly devour much of it. When speaking of the collection plight for small producers, the guilds and trade groups are quick to say that it’s a lot of work for not a lot of money. So tens of millions of dollars remain missing.

UNANSWERED QUESTIONS
Nobody disputes that these millions of dollars are not with their rightful owners. With little governmental administration, and with so few people aware of the money owed them, it is hard not to believe that corruption exists at some level, and questions do bear asking.
• In the age of the Internet, why is this process so lacking in transparency and efficiency? That, in itself, seems to suggest “funny business.”
• Did the guilds, MPAA and IFTA have the right to negotiate levy payments on behalf of all authors, considering that a significant portion of the money didn’t belong to guild members or members of the trade associations?
• Should the guilds have given up any percentage of authors’ rights – costing writers and directors (both guild members and nonmembers) millions of dollars?
• Isn’t it ironic that Robert Hadl, the consultant hired by the guilds to negotiate the foreign levies agreement on their behalf against the MPAA, was former counsel for MCA/Universal – an MPAA member?
• With approximately $40 million currently earning interest or perhaps being used to “defray guild costs,” and with no penalty for not delivering the money in a timely manner, is it impossible to imagine the slow pace of delivery being somewhat intentional?
When asked about the WGA’s dispersal of levy money, former board member Mazin says, “Conspiracy theories have to happen. I wouldn’t have thought it would be over this. This seems pretty cut and dried and obvious as to what the problem is. No one’s profited.”

SO WHAT MIGHT APPEASE THOSE CRYING FOUL?
All of the parties agree: The distribution of the authors’ share of the money is still far from perfect. The best-case scenario for slow delivery is that it’s due to guild ineptitude. But most nonguild writers and directors remain unaware of foreign levy money. The WGA says it is involved in a huge reworking of its website, and promises to make the levies area much more prominent. But what’s most needed is an immediate good-faith measure of public outreach to the creative community at large – not just guild members. Advertisements in various trade publications with an explanation of foreign levies and transparency in the process would go far to dispel some of the conspiracy theories. These ads would state plainly that anyone, guild member or not, who has written or directed work distributed to foreign countries may be due foreign levy payments.
A long-term solution might be to place collections of foreign levies with a third party. As Richert says of the slow guild payouts, “People have died: widows, people that could have paid their mortgage or rent – it’s very wrong.” And he’s right. Catherine Margerin gratefully acknowledged the newly found money and explained, “I’m in between jobs right now, so I’m actually on a really tight budget.” She, like others, doubts the guild was doing much to find her. “I don’t really blame them, but it really wouldn’t take that long to go through the list and Google all those people. If they’ve been keeping it for a long time, and some other people might need it, they could actually make a little bit more of an effort.”
With regard to procedure, however, WGA general counsel Segall thinks it would be a mistake to outsource the collection of levies: “It’s our conviction that if we assigned it to a third party, the customary rate they would charge is between twenty-five and fifty percent. We think we’d be doing a huge disservice to the people we’re trying to get money out to.” He continues, “We have the most comprehensive database of writers of audiovisual material. Anybody else who is distributing this money would have to get that information from us. They don’t have it.”
Of the five percent fee charged by the WGA, director Hank Whetstone notes, “They got $27 million [per guild] – five percent of that is almost three million dollars. That’s a good return for the guilds. I’d like to be in the business of distributing that money.”

THE BATTLE CONTINUES
In mid-April, with regard to the Richert and Webb lawsuits against the guilds, U.S. District Court Judge Margaret Morrow set the stage for a possible criminal investigation, noting that the actions of the guilds would be illegal if it could be proven “that defendants have illegally converted funds that rightfully belong to plaintiffs by holding themselves out as having the right to collect foreign levies on behalf of nonmembers without having obtained the nonmembers’ authorization to do so.”
Additionally, she pointed out in her ruling: “By providing that the guilds would receive less than 100 percent of the author’s share, the agreement clearly limited plaintiffs’ right to receive their full share of the foreign levies. The court therefore concludes that the agreement contains ‘clear and unmistakable language’ circumscribing plaintiffs’ rights.”
Judge Morrow remanded the lawsuits from federal to state court. This move, explains Eric Hughes, would eliminate certain protections the guilds have in federal court because the lawsuit is not a labor dispute. “Did [the guilds] violate the labor act?” Hughes asks. “Sure, but what they did was make violations way outside the labor act. This is crime. It’s fraud, it’s theft, it’s money laundering, it’s tax evasion.” He continues, “They can no longer invoke how they are protected as a union.”
Segall, with some unhappiness, says, “Nobody seems to be focusing on the real issue – which is that the guilds alone were able to get writers [and directors] this money, which otherwise wouldn’t have been collected or would have all gone to the companies or would have all stayed in foreign countries.”
If courts decide at some point in the future that 100 percent of “authorship” belongs to the writers and directors – that the bargaining away of these rights was illegal – the implications are huge. Most obvious, writers and directors would be due double the amount they presently are supposed to receive.
However, some contractual language could be disastrous for the guilds. The AFMA/Writers Guild agreement with Italy states, “WGA agrees to hold SIAE [the agency] harmless from its members or third-party claims for any payment of monies derived in whole or in part from authors’ claims made by WGA.”
This standard clause, likely in all the foreign agreements, could theoretically make the guilds responsible for millions of retroactive dollars in addition to the millions already owed. Would the guilds have luck in getting the money back from MPAA producers, IFTA producers, or that unknown place where much of it has vanished?
For now, it behooves writers and directors to go to the guilds to get the money owed them. With foreign backlash against levies on blank media, and with digital-rights management and the Internet rapidly changing the landscape of movies and television, this money may not last forever. In Europe, there is some public outcry to cease the levies altogether. Perhaps this money, derived from foreign levies, is bound to always be shrouded in some mystery and obfuscation. After all, when the entertainment industry, not known as the most forthright business to begin with, places a levy on what is essentially piracy, is it unfair to expect anything less?

List of “Unlocated” Directors Owed Foreign Levy Money

List of “Unlocated” Writers Owed Foreign Levy Money

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Stefan Avalos is a screenwriter, director and producer. He just learned of foreign levy money due to him by both guilds for his 1994 feature film The Game. He plans to pay the rent with the money when he gets it. You can find him online at www.stefanavalos.com.