A federal judge has ruled SAG-AFTRA is on the hook for the $330,000 it paid to Ken Osmond and his attorneys to settle his class-action suit over foreign tax revenues.
The union had sued Federal Insurance Co. in Los Angeles in 2011 for refusing to reimburse the funds paid to the “Leave It to Beaver” actor.
U.S. District Court Judge Dolly Gee granted Federal Insurance’s motion for summary judgment on Thursday to settle Ken Osmond’s class-action suit over foreign tax revenues.
“In this case, SAG’s own coverage position and assertions lead to but one result, which is that, insofar as SAG is and was, prior to the Osmond action, obligated to account for and distribute the foreign levy funds to the plaintiff class, SAG fails to establish that the $330,000 award arises from a ‘covered’ claim under the policy,” she wrote.
The suit alleged that Federal was in breach of contract under the terms of the policy covering legal claims, which was in effect when Osmond filed his action in 2007. SAG, which became SAG-AFTRA last year, sought damages of $330,000 on each of two claims, plus its additional costs.
Osmond, who played Eddie Haskell in “Leave It to Beaver,” sued over SAG’s handling of “foreign levies” collected from countries through mechanisms such as taxes on video sales and rentals to compensate copyright holders for reuse. The guild finalized a settlement in February, 2011, under which he received $15,000 and his lawyers received $315,000.
Federal Insurance argued that settlement funds were not covered under its policy and that there was no coverage for a claim seeking “unpaid benefits.” SAG argued that the policy covered any sum was legally obligated to pay under the “incredibly broad” definition of a wrongful act.
“SAG’s argument is not persuasive,” Gee wrote.
Gee granted SAG-AFTRA’s motion to replace SAG as a plaintiff.
The Osmond settlement brought about judicial oversight of SAG’s handling of “foreign levies,” which started flowing in 1989 after the U.S. agreed to the terms of the Berne Convention establishing the right of authorship for individuals. SAG, the WGA and the DGA began collecting the funds in the early 1990s on behalf of members and nonmembers.
Osmond’s suit contended that SAG overstepped its authority to make those agreements and never disclosed them until he and Jack Klugman threatened to file suit. A similar suit on the foreign levies issue was filed in 2005 against the WGA West by William Richert and was settled in 2010; another was filed in 2006 against the DGA by William Webb, who settled in 2008.
SAG-AFTRA was sued May 24 by 15 members including former SAG president Ed Asner, alleging extensive misconduct in its handling of foreign levies and residuals they are owed. The suit, filed in federal court in Los Angeles by the United Screen Actors Committee, alleges SAG-AFTRA has improperly withheld funds and stonewalled requests for information about $110 million held in trust by the union.
The union has brushed off the allegations and insisted it has done nothing wrong.