Another Reason Why What a Word Means Matters in a Contract

Well here's a reason why one as a lawyer needs to be a creative psychic who can predict all the possible scenarios that can result from a deal:
New York's highest court has refused to reinstate the lawsuit by Duke Ellington's heirs against music publisher EMI.  
...The heirs have been seeking half the royalties from foreign sales of his music. Their 2010 suit alleges breach of the 1961 standard songwriter royalty contract. Ellington signed the deal with Mills Music, predecessor of EMI, now part of global Sony/ATV Music. The contract calls for an even split of net revenue. EMI deducts 50 percent commissions to foreign subpublishers, which it now owns, [my bold italics] before splitting the rest with the heirs. The heirs challenged that practice, but the Court of Appeals says the publisher can keep doing it. ~~Billboard
EMI is essentially double-dipping, paying itself half upfront and then with an additional 50% of the commissions before giving the rest to Ellington's heirs. Why did the court rule this way?
A sharply-divided Court of Appeals affirmed two previous decisions dismissing the case, which had accused the Sony/ATV Music subsidiary of exploiting decades-old contractual language on so-called "net receipts" and structural changes in the music industry in order to take two separate cuts from revenue generated overseas. 
Ellington's 1961 contract gave him 50 percent of any money the publisher received from sales outside the U.S., but only after foreign “subpublishers” had taken their own cut. Importantly, though, the music industry has changed since Ellington signed the deal: the foreign subpublishers taking a cut were independent entities in 1961; today, they're affiliated with EMI. 
The musician's heirs sued for breach of contract in 2010, claiming the modern arrangement meant EMI was effectively receiving sequential cuts of the same revenue. But a trial court, and later a mid-level appeals court, ruled that the plain language of the contract didn't care whether affiliated and unaffiliated subpublishers were getting that first cut.  
“We note that the globalization of the music industry has rendered this 'net receipts' arrangement much more favorable to music publishers than to artists,” the court wrote. “Nonetheless, we must examine the parties' intentions based on the plain language within the four corners of the agreement.” ~~Law360
A key point of contention was the meaning of the word "affiliate" which Ellington's heirs argued included the foreign subpublishers under EMI's wing.
Not so, said the high court, which found that the “other affiliates” language referred only to connected entities that had existed in 1961 — not those created since. 
“Absent explicit language demonstrating the parties' intent to bind future affiliates of the contracting parties, the term 'affiliate' includes only those affiliates in existence at the time that the contract was executed,” the court wrote.  ~~Law360
The dissenting judge did make the seemingly obvious point that "nothing in th[e] common definition suggests that an affiliate does not include a foreign affiliate," and questions the Court for accepting EMI's framing of the word and the issues.
As a final note, appellant's [Ellington's] claims should give us pause because they suggest this is not, as the majority seems to believe, the unintended results of "the globalization of the music industry" that renders the Agreement "more favorable to music publishers than to artists" (majority op at 11 [footnote omitted]). Indeed, I share the concurring opinion's sense that there is something troubling about interpreting "affiliate" in the context of this Agreement, as the majority does, to include only those affiliates in existence at the formation of the contract (concurring op at 1). This interpretation sets the stage for the type of abuse alleged here, namely corporate reconfigurations that avoid the understanding of the parties. ~~Justia
By now it seems like old news that artists are constantly at the mercy of the media conglomerates and their methods of dealmaking and accounting. And how harmful this imbalance is to the creatives.  Will this ever change? Or is the corporate power structure to slick and entrenched to ever have to?

Until then, its up to us as entertainment lawyers serving talent to do our utmost to protect our clients and their heirs with the power of the pen.  

To read the court's decision, click HERE.


Ending a Horrible Film/TV Industry Practice: "Paying on an Unpaid Basis"

I have always admired the low-budget filmmaker who can make something beautiful or daring or entertaining with the tiniest budget.  Unfortunately, the low-budget filmmaker is not the rarity but the norm.  There is no shortage of filmmakers trying to create even if it means at negative cost to themselves because there is so much potential financial and personal reward in the end.  Maybe that's why the industry has been able to get away with paying nothing for highly creative and technical services and expensive equipment.  But it's done more harm than good in the grand scheme of things. 

That is why Charles Davis has done the industry a service by reporting on the internship abuse in the entertainment industry.  In a post for The Baffler, he tracks and outs the production companies that continue to perpetuate one of the worst practices of the film and TV industry: failing to pay workers a real wage by offering instead "pay on an unpaid basis."
The awkward phrasing may be new, forced on companies by the constraints of a popular entertainment-industry job board on Mandy.com, but the phenomenon of not paying people for their work in the television and film industry goes back years. The perceived glamour of Hollywood has long allowed companies to exploit the labor of desperate but fairly privileged young people by convincing them to accept “experience” and “networking opportunities” in lieu of dollars and cents.
You would think that after the Black Swan case, production companies and studios would know better. Especially since, based on the conclusions of the case, a studio or a network could be held responsible for the actions of a production company they farm out projects to. The reasoning behind it being that the studios and the networks are the ones to ultimately benefit the most from the production.  But search Mandy.com, like Charles did, and it's a different story:
If you search Mandy.com for the phrase “payment is on an unpaid basis,” you’ll find dozens upon dozens of opportunities to work as a film editor or a production assistant or even a puppet master where all that’s offered is the ability to add a credit to one’s IMDB page and maybe get a complimentary DVD of the production. The story’s the same everywhere. In late July, for instance, the United Talent Agency in Hollywood sent its members a list of more than one hundred job opportunities, a quarter of which were for positions described either as “unpaid” or as requiring employees to receive academic credit—which is typically code for unpaid. 
“Experience” is what people are increasingly being paid with—it’s a twenty-first-century currency that can be used to buy future “opportunities,” if not food and housing.
When Charles contacted networks like Showtime and Adult Swim about the ads that production companies they've made deals with have put out, they plead ignorance. 
[A] “Showtime documentary about Kobe Bryant was looking for Archive Interns to assist in the research process,” according to a job listing posted by Dirty Robber, a production company helping make the film, Kobe Bryant’s Muse, directed by Gotham Chopra (son of Deepak). “This is a full-time, three-week commitment starting as soon as possible,” the listing added. “Unfortunately it is no-pay.” Unpaid employees would, however, get the chance to add “a high-profile documentary” to their IMDB page.  
Experience and bragging rights aside, why weren’t they being paid in actual dollars? That’s what I asked a spokesperson for Showtime, who told me over the phone that the network does not condone unpaid labor, and never has.
As a result of Charles inquiry, Showtime contacted Dirty Robber and set them straight.
After I brought the ad for unpaid interns to her attention, she (Showtime representative) told me in a follow-up conversation that the network had acted swiftly, reaching out to the production company to get answers. According to Showtime, Dirty Robber said that the ad was an error, deleted the posting, and promised that all interns who were already brought on to the production would be paid.
Unfortunately, this practice is not just relegated to the "evil corporate types trying to take advantage of  the small guy."  Even filmmakers with a rep for social consciousness  and justice are playing foul.
A-Town Boyz is “a feature-length documentary about the growing up experiences of Asian American men in Atlanta, Georgia,” according to the promotional website from Delphin Films. Spike Lee is an executive producer for the film, which is looking to hire a production assistant who has “an interest in social justice [documentaries] as well as issues related to Asian Americans, immigration, masculinity, and marginalization of [people of color].” Despite the social justice angle, however, the position—which involves “proofreading grant applications, as well as creating social media content”—is not paid, though the eight-hour-per-week time commitment and option to work remotely makes it far from the worst opportunity out there.
These companies bank on getting away with it by flying below the radar even though what they do is an open secret.  However, outing the companies works:
Sometimes, in these cases, all that’s needed to fix the problem is a little exposure: rat out the production company and one just might get some change. So I tried that with Abso Lutely Productions after I saw that it was looking for “art department interns” to work on Hot Package, a television show that airs on the Adult Swim television network. According to the ad, interns are expected to work “a minimum of 12 hour days,” at least three days a week. The reimbursement: An “amazing opportunity to get hands-on experience,” plus lunch and snacks—and nothing else.
I wrote to a spokesperson at Adult Swim, which is owned by Turner Broadcasting, to ask about the ad. “It is Turner’s policy to pay our interns,” I heard back. “We cannot comment on the practices of Abso Lutely Productions.”
And so I reached out to Abso Lutely itself, to see whether Adult Swim may have come down on the smaller production company, which was founded by Adult Swim stars Tim Heidecker and Eric Wareheim. Almost immediately, I heard back from Abso Lutely producer Dave Kneebone, who told me that his company had not discussed staffing or internships with Turner or Adult Swim. He said the ad I had found “was posted in error by one of our associate producers and not in line with our hiring practices.” The ad had been taken down and would be corrected and reposted, Kneebone said, to reflect that “we do, in fact, pay our interns.”
The industry knows that as long as there are people with a desire and a dream to work on a film, there will be people exploiting them. The decision-makers in the industry need to put their foot down but it's not just their responsibility.  Everyone who works in film or television or aspires to needs to put a stop to it.  (As always there is a caveat in that there are people who "hire" their friends and family or find real professionals willing to work for free but usually the time commitment and responsibilities are modest and the filmmaker does their best to accommodate them in recognition of the favor they are providing.  It's a fine line but I think we can all agree that there are exceptions for situations like that.)

If you are a college student or in a film school, discuss an internship with your guidance counselor or film department advisors.  Know what the expectations and time limits of your internship are. REMEMBER, an internship is supposed to benefit you with knowledge, not benefit the employer with free labor.

If you are a freelancer (cast or crew), don't take a job that pays you nothing.  Your skills, creativity, equipment and presence are worth something and you should be compensated for it.  I am a firm believer that if starting today, everyone would stop taking unpaid jobs from filmmakers who can actually pay something, the practice would be eradicated and it would be a good thing.  But I understand that it's hard to command a price when you are starting out or when there are still so many people willing to take that unpaid job.  So until the practice is eradicated, if you are tempted to take a free job just for the credit, have clear and defined limits. YOU are doing the filmmaker a favor and they should be appreciative of that fact.  They shouldn't be trying to force you to do nudity or work 14 hour days for 2 weeks straight.  They shouldn't bitch about your unavailability because your paying job is not as flexible as they'd like. 

If you are a low-budget filmmaker and producer, stop looking for free labor.  If it means raising more money or paying yourself less or renting out cheaper equipment, do it.  People are worth more than a fancy prop.  Besides, you might end up getting sued by someone who you "hired on an unpaid basis" and has hit rockbottom and wants nothing more to do with the industry. What's that person got to lose?  Don't just offer deferred compensation, credit and pizza; offer profit participation.  Share in the sacrifice and be willing to give. Without the talents and work of your cast and crew, your directorial debut wouldn't exist.

If you are a producer or production company with a mid to high budget or studio and network money, the only people working for free on your set should be the 1 or 2 college interns who you hired for THEIR benefit. Not to replace the production coordinator you chose not to hire to save money or something like that.  Everyone else should be paid their worth for their time and labor.

If you are a studio or network, demand that your producers and production companies get their act together.  You're the one with the big cheese that the abused mice are coming after. FOX may be appealing their case but there is now a precedent that studios and networks can be held responsible for intern and unpaid labor abuse. 

If you come across an ad on Mandy.com or Indeed.com or wherever looking to "pay on an unpaid basis," out them.  If they are attached to a major studio or network, contact them and tell them what that particular producer is doing in their name.

The less people work for free, the more people will have to start paying for it. It's that simple.


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