On June 1, the Industry-Wide Labor-Management Safety Committee Task Force (Task Force), composed of representatives of producers and the unions of the motion picture and television industries, submitted to the governors of California and New York a white paper proposing guidelines for the resumption of motion picture, television, and streaming production (White Paper). The White Paper presents the consensus of the Task Force regarding the circumstances under which content production can safely resume, with an emphasis on regular testing, sanitation, physical distancing, and education and training. The White Paper also addresses unique production-specific concerns, such as preventing infections from equipment that is commonly shared and not feasibly disinfected (e.g., lighting / electrical cables and certain props, costumes, accessories, wigs, and other specialty items), and special guidelines for casts that include minors or animals.
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California
Back to Business: Hollywood Producers Navigate the Choppy Waters of Reopening Plans and Labor Relations
Recently, California Governor Gavin Newsom raised some eyebrows when he announced that state government officials anticipated publishing guidelines for the reopening of Hollywood production facilities by Memorial Day. The Governor’s announcement took many in the industry by surprise, given that producers and unions continue to wrestle with the legal obligations and operational complexities involved in…
California Court Affirms Self-published Defamation Judgment
By Lee S. Brenner & Namita S. Dhawan on
California employers beware. In Tilkey v. Allstate Insurance Co., No. D074459 (Cal. Ct. App. Apr. 21, 2020) (Order), California’s Fourth District Court of Appeal recently affirmed a judgment on a theory of self-published defamation. In doing so, it held that the plaintiff, a former life insurance salesman for Allstate, was justly awarded damages based on his compulsion to recite the allegedly false allegations Allstate made for terminating his employment to prospective employers. …
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Counterclaims on the Cutting-Room Floor: How a Central District Court Cut Down the Writers Guild’s Countersuit Against Hollywood’s Talent Agencies
Posted in California, Talent Agency Issues
A California federal court recently dismissed the majority of the counterclaims asserted by the Writers Guild of America (the Guild) against William Morris Endeavor Entertainment, Creative Artists Agency, and United Talent Agency (the Agencies) in a highly publicized suit over the Agencies’ right to receive “packaging” fees.
The case arose from the Guild’s decision last year to prohibit talent agents from earning packaging fees on film and television projects. For decades, it was common practice for studios to pay talent agents “packaging” fees for acquiring and pooling talent (e.g., assembling writers, actors, and directors, as talent agencies have a substantial roster of such talent) for a given project. These fees frequently consist of a combination of license fees paid by studios for a project and a percentage of the project’s gross receipts. The Guild banned this practice last year, claiming that packaging fees create conflicts of interest between talent agents and the writers they represent. In the Guild’s view, enabling talent agents to participate in the profits of a film or television project through packaging (1) lowers production budgets (thereby reducing writer compensation) and (2) lowers the agents’ incentive to increase their writer-clients’ compensation. The Guild favors a commission-based system, where a talent agent takes a percentage of their clients’ earnings, which it believes better incentivizes talent agents to maximize their writer-clients’ compensation. Following the Guild’s ban, the Agencies filed suit, alleging the packaging prohibition amounts to an illegal group boycott in violation of the Sherman Act.…
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Man vs. Machine: Schwarzenegger Files Right of Publicity Suit Against Robot Builder
By Lee S. Brenner & Adam W. Kwon on
Posted in California, Right of Publicity
On March 4, 2020, Arnold Schwarzenegger (through his company, Oak Productions, Inc.) filed a lawsuit in a California state court against ASAP Group, LLC (doing business as Promobot). See Oak Prods., Inc. v. ASAP Grp., LLC, No. 20SMCV00347 (Mar. 4, 2020). According to the complaint, Promobot manufactures customizable service robots that can be made to look like real people, and it has “made Schwarzenegger the unwilling ‘face’ of Promobot” by marketing a robot made in the former governor’s likeness[1] without his permission.
Specifically, Schwarzenegger’s complaint lists four causes of action, based on (1) California Civil Code section 3344; (2) common law right of publicity; (3) unjust enrichment; and (4) unfair business practices (i.e., likelihood of confusion regarding whether Schwarzenegger has endorsed Promobot). And although the case is still in its infancy, it is worth noting that this is not the first time a celebrity has brought right of publicity claims against the use of a robot that resembles her or him.
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Force Majeure Clauses under California Law in Light of the Coronavirus
By Lee S. Brenner & Adam W. Kwon on
As the U.S. braces for the coronavirus COVID-19 pandemic, companies across a broad range of industries are increasingly affected by the growing restrictions on travel and trade. Practically speaking, concerns abound over issues like whether airlines will issue refunds for cancelled flights, or what happens to manufacturers who source materials from Asia. Indeed, the entertainment industry is not immune either. For instance, what if a production contract calls for filming in Hong Kong next week? What if talent is unable to leave their home country for a concert tomorrow? What if, heaven forbid, talent is under mandatory quarantine while recovering from the virus? At times like these, the answers usually lie in the contracts, specifically in a powerful provision that is often underestimated because it is only invoked in the unlikeliest of scenarios: the force majeure clause.…
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IRC Section 181 is Back!
By Shane P. Nix & Ilia Katz on
Posted in California, Tax
As quickly as cameras flash at the Oscars, Congress passed the Tax Cuts and Jobs Act (“TCJA”) and left taxpayers holding the bag in some areas. Unlike in the movies, taxpayers cannot do a reshoot if the first take is not perfect. After almost two years, Congress may again pass additional legislation within a 48-hour period, which may resolve certain issues that have arisen in Hollywood since the TCJA.
On December 18, 2019, the House passed tax legislation as part of an omnibus package that included, among other things, extending Internal Revenue Code Section 181 (“Section 181”) retroactively from 2018 through 2020, which ultimately means that taxpayers may be able to elect Section 181 treatment for the 2019 and 2020 tax years. The Senate is expected to pass this legislation on December 19, 2019. Many taxpayers may wonder, “why do we need Section 181 if qualified U.S. film/TV productions (and live theatrical productions) already are eligible for bonus depreciation under the TCJA?”
For those who have already forgotten about Section 181, prior to the TCJA production companies were eligible to elect to deduct production expenses of certain qualified U.S. film/TV productions (and live theatrical productions) as and when incurred (subject to a $15m cap) in lieu of recovering such costs over a 10-year period. While Congress did not renew Section 181 beyond December 31, 2017, the TCJA included such qualified productions as property eligible for bonus depreciation.
Does Elon Musk’s Defamation Defense Verdict Spell “Open Season” for Social Media Insults? Answer: Nope.
By Lee S. Brenner & Whitney L. Tolar on
On December 6, a federal jury in the Central District of California found that Tesla CEO Elon Musk did not defame cave diver Vernon Unsworth by referring to him in a tweet as “pedo guy.” Unsworth v. Musk, No. 2:18-cv-08048 (C.D. Cal. Dec. 6, 2019). Unsworth, who helped rescue a boys’ soccer team from a flooded cave in Thailand in July 2018, alleged that a series of tweets Musk published to his nearly 30 million Twitter followers were defamatory, falsely accused Mr. Unsworth of being a pedophile and child rapist, and caused Unsworth worldwide damage to his reputation and emotional distress. The jury deliberated for less than one hour before finding in favor of Musk.
During a CNN interview following the 2018 rescue, Unsworth had criticized Musk’s showing up to the cave site with a mini-submarine as a “PR stunt,” and said that the mini-submarine “had absolutely no chance of working” to save the boys. Unsworth’s complaint alleged that Musk retaliated against this criticism with a series of defamatory tweets and a series of defamatory emails sent to a Buzzfeed News reporter.
Assembly Bill 5: Guilds Issue Joint Statement Advocating for Continued Use of Loan-Outs
By Alan J. Epstein, Daniel P. Hoffer & Ilia Katz on
This Article is part of a series monitoring developments with regard to California Assembly Bill 5 and its impact on the entertainment industry.
California Governor Gavin Newsom recently signed into law Assembly Bill 5 (“AB5” or the “Bill”), which redefines the distinction between an employee and an independent contractor. AB5 is primarily targeted at gig economy companies such as Uber and Grubhub, whose workers had been classified as independent contractors up to this point. Proponents of AB5 argued that many gig economy workers worked full time but received none of the benefits commonly associated with full time employment—including overtime, minimum wage, and workers’ compensation. Consequently, AB5 was touted as providing increased benefits and rights to a growing gig economy workforce. An additional impetus for AB5 was the legislature’s desire to stem financial losses to the state as a result of worker misclassification, including the loss of tax revenues.