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Not a ruling!! Just A Proposal!!

March 19, 2012 (17:58) | 2012, Merger Mania, SAG Politics | By: Arlin Miller

(I have just been informed that this is NOT a Ruling( by someone I trust completely!)  I’m leaving it up to remind myself to be more careful.  And I apologize to all my readers!!!! (Arl)

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Paul Edney 6:44pm Mar 19
.
The document that has been circulating is not the final ruling by Judge Otero. It’s just a proposal. Let’s all remain calm about this until the ruling is officially announced.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
MARTIN SHEEN, et. al.
Plaintiff,
vs.
SCREEN ACTORS GUILD, a Labor
Union; KEN HOWARD, an Individual;
AMY AQUINO, an Individual; NED
VAUGHN, an Individual; MIKE
HODGE, an Individual; DAVID
HARTLEY-MARGOLIN, an
Individual; and DOES 1-50,
Defendants.
CASE NO. CV 12-01468 SJO (AJWx)
[PROPOSED] ORDER GRANTING
MOTION OF PLAINTIFFS FOR
PRELIMINARY INJUNCTION
Case 2:12-cv-01468-SJO-AJW Document 13-2 Filed 02/27/12 Page 1 of 5 Page ID #:401

1017914.1 1 CASE NO. CV 12-01468 SJO (AJWx)
[PROPOSED] ORDER GRANTING MOTION OF PLAINTIFFS FOR PRELIMINARY INJUNCTION WASSERMAN, COMDEN, CASSELMAN &
ESENSTEN, L.L.P. 5567 RESEDA BOULEVARD, SUITE 330
POST OFFICE BOX 7033
TARZANA, CALIFORNIA 91357-7033
ORDER

The above matter came before the Court upon Motion of Plaintiffs for
Preliminary Injunction. Having considered the evidence and legal arguments, this Court finds that Plaintiffs have demonstrated a likelihood of success on the merits oftheir claims and a likelihood of irreparable harm.
Plaintiffs have established that the Constitution of the Screen Actors Guild
(“SAG”) was amended in 1981, by the addition of Appendix I. It set forth clear
obligations and requirements to be followed in any future effort to merge SAG with another union, known as The American Federation of Radio and Television Artists(“AFTRA”).

The provisions of Appendix I, specifically paragraphs 12 and 13, require the
SAG National Executive Committee to recommend a series of studies to be
conducted before a merger, so that the results of those studies would inform thedevelopment and finalization of any ultimate merger proposal and the votes of the members on that proposal.

On of the merger requirements in the SAG Constitution concerns the need for
a study designed to determine “what, if any, merger plan can be achieved which will satisfy the requirements of law and the protection of all eligible members against loss of benefits, presently or in the future.” (SAG Constitution, Appendix I,paragraph 13 Plaintiffs have submitted the testimony of an ERISA law expert, Alex Brucker, and Actuary, Patrick Byrnes. These experts opined that, in order to fulfill their fiduciary obligations Defendants were required to exercise due diligence to
protect SAG member pension and/or health benefits. Such due diligence requiredthem to recommend and complete an actuarial study of the SAG and AFTRA pension and health plans prior to the merger proposal.

No such study was been recommended or completed. The so-called
“Feasibility Study”, prepared by Defendants consisted of letters from seven ERISA lawyers, sent only after the merger proposal had been designed and was being promoted by Defendants. These lawyers provide an overview of Labor law and a generalized discussion of mergers, without any review or analysis specifically directed to the actual SAG and AFTRA pension and health plans which, if merged, could well cause a loss of SAG member benefits.

Without the benefit of an actuarial study, SAG members are being promised
by Defendants that “merger is the best way to protect our benefits” and “merging the unions and the Plans would only benefit Plan participants.” These claims are, according to Plaintiffs’ experts, are false and unsupportable. The conclusions ofPlaintiffs’ experts are supported by a study previously prepared in 2003, known asthe Mercer report. The Mercer Report concluded that SAG benefits (as they then existed) would decline if the SAG and AFTRA plans were merged into one plan.

By comparison, Defendants have not consulted any actuaries, done no studies andthus have no basis to advise SAG members that merger of their benefit plans willnot negatively affect SAG member benefits.

Additional studies enumerated by Appendix I were similarly not
recommended or conducted. Board resolutions reaffirm the need for study of the issues articulated by the Constitution.

SAG members cannot hold a meaningful vote for merger if their fiduciaries
have falsely advised them and/or omitted material disclosures concerning the
absence of necessary due diligence. Any proposal or election regarding mergerdeveloped in violation of the safeguards set forth in the SAG Constitution and Bylaws and Board Resolutions, would be an improper use of union funds inviolation of the fiduciary duties owed by Defendants to the SAG members. If thevote is allowed to proceed prior to the resolution of this action, it will be virtuallyimpossible to untie the knot and return the parties back to the status quo.

Accordingly, the balance of the equities weigh in favor of Plaintiffs, and the
public interest is served by enjoining Defendants from proceeding further with the merger vote until the necessary due diligence is completed and members areproperly informed. Therefore, the Motion of Plaintiffs for a Preliminary Injunctionis GRANTED.

NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
Defendants SCREEN ACTORS GUILD (“SAG”), KEN HOWARD, AMY
AQUINO, NED VAUGHN, MIKE HODGE, and DAVID HARTLEY-MARGOLIN and their officers, agents, servants, employees and attorneys are enjoined and prohibited from tallying the merger vote or publicly announcing the results of the merger vote until such time that Defendants can adequately verify for the Court thatthe following has been done:

a. The SAG National Executive Committee has recommended, in
conjunction with the development of any merger proposal to be voted upon by the members, all necessary studies required by Appendix I of the SAG Constitution, including an independent study detailing the actuarial effect of any proposed merger of the pension and/or health plans; and

b. A truthful and complete disclosure to the members of all aspects of the
proposed merger plan, acknowledging its limitations and omissions, including any potential adverse impacts.

Plaintiffs have no obligation to post a bond pursuant to Fed. R. Civ. Proc.,
Rule 65(c) because Defendants assumed the costs to proceed with an invalid
Case 2:12-cv-01468-SJO-AJW Document 13-2 Filed

—–

Arl

The Ol’ SAG Watchdog

 

 

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SAG/AFTRA Lawsuit Hearing Canceled !!

March 19, 2012 (13:17) | 2012, Merger Mania, SAG Politics | By: Arlin Miller

 (Exclusive)

The judge will decide the matter based on the motions filed in the last few weeks

Federal Judge James Otero has canceled the scheduled March 26 hearing in the lawsuit seeking to preemptively void the SAG/AFTRA merger vote. His decision will be based on the legal papers filed to date, and could come at any time.

The court’s docket entry says that the matter is “TAKEN UNDER SUBMISSION. Accordingly, the hearing date is VACATED.”

The vote count is scheduled for March 30, unless the court rules in favor of the plaintiffs. Taking the matter off calendar does not signal the judge’s decision, but may mean that he has reached one already.

Defendants in the suit are SAG, guild president Ken Howard, secretary-treasurer Amy Aquino and vice-presidents Ned Vaughn, Mike Hodge and David Hartley-Margolin. In addition, national executive director David White is listed in the caption (i.e., title) of the case, but omitted from the list of defendants in the body of the document.

The plaintiffs are Martin Sheen, Edward Asner, Ed Harris, Valerie Harper, Clancy Brown, James Remar, George Coe, Diane Ladd, Lainie Kazan, Nichelle Nichols, Renee Aubry, Jane Austin, Erick Avari, Steve Barr, Sara Barrett, Terrance Beasor, Michael Bell, Warren Berlinger, Joe Bologna, Ralph Brennen, Alexandra Castro, Jude Ciccolella, Cynthia Lea Clark, David Clennon, Joe D’Angerio, Patricia D’Arbanville, Dick Gautier, Dorothy Goulah, Marty Grey, Sumi Haru, Angel Harper, Basil Hoffman, David Huddleston, Anne-Marie Johnson, David Jolliffe, Kerrie Keane, Peter Kwong, Kurt Lott, Barbara Luna, Eric Lutes, Stephen Macht, Michael McConnohie, Peter Antico, Susan McNabb, Phyllis Timbes, Marguerite Moreau, Traci Murray, Nicole Mandich, Larry Newman, Barbara Niven, Kathleen Nolan, Jack Ong, Peggy Lane O’Rourke, Leslie Parrish, Scott Pierce, Robin Riker, Stephanie Rose, Alan Rosenberg, Alan Ruck, Wendy Schaal, Tascha Schaal, Nancy Sinatra, Cynthia Steele, Renee Taylor, Malachi Throne, Beverly Todd, Jessica Wright and Momo Yashima. In addition, there are a number of other clients in the litigation who are not listed as plaintiffs, including Paul Edney.

Bookmark The Hollywood Reporter’s Labor Page for the most in-depth coverage of entertainment unions and guilds.

Email: jhandel@att.net

 

——

Hmmm……

Arl

 

The Ol’ Watchdog

 

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Actor Scott Wilson “Call-Out” SAG’s Deputy NED & Gerneral Counsel Crabtree-Ireland!!!!

March 18, 2012 (21:59) | 2012, Merger Mania, SAG Politics | By: Arlin Miller

Following by Scott Wilson:

The Voting Rights Act of 1965, signed into law by President Lyndon Baines Johnson, ensured that every citizen would be able to exercise his/her constitutional right to a vote. The Act has been extended 3 times, most recently in 2006 by President George W. Bush. Now that right is under attack yet again in states such as Wisconsin, Ohio, Arizona, Texas, Georgia and others, and it seems that the Screen Actors Guild has joined the assault by denying to members their right to vote on a matter of major importance to the life and livelihood of our membership.

Our right to residuals has been summarily waived by a Standing Committee of the Screen Actors Guild on the recommendation of staff. This waiver applies to residuals paid by the cable station, TV Land, a subsidiary of Viacom. We are told by staff that it only applies to productions with a budget so small that there are currently no productions that would qualify.

What is wrong with this picture? Why would TV Land, a subsidiary of Viacom, with access to a raft of highly paid attorneys, be asking for a waiver of currently non-existent residuals? Any member with an ounce of common sense can see where this is leading. There will be more waivers. It is no minor matter.

This waiver has breached an important principle. It is no minor matter. Residual income is of primary importance in the lives of performers. It must never be waived.

If staff and a majority of this Standing Committee’s members can, against the vigorous objections of the minority, secure a waiver of these non-existent residuals, then more will follow and they will be real residuals, lost to real people.

Our Screen Actors Guild constitution protects the right of our members to vote in a referendum on collective bargaining agreements (Article XI, section 1) and on rules and regulations governing our relations with “persons, firms or corporations connected with the motion picture industry” (Article XVI). Amendments “of a minor nature” can be approved without referendum but only “by a vote of the majority of the Board of Directors voting thereon”. This amendment is not minor and it was not voted on by the Board of Directors. This waiver contravenes the provisions of our constitution. Any waiver of residuals is a waiver of an important principle and requires a referendum of the membership.

Staff recommended this waiver to the Standing Committee. Staff will not suffer any loss of income or of contributions to their Pension and Health Plan from this waiver or any future waivers. I would like to ask Mr Duncan Crabtree-Ireland, who sits on the Board of Trustees, to explain why Staff continues to receive a 3.5% accrual rate in their pensions even after members have been reduced to 2.0%. Are we to expect this to continue after merger? What more advantages will be given to staff after merger while members benefits continue to diminish?

If merger is approved, the right to vote in a referendum now present under the SAG constitution will be significantly diminished. In a circuitous and subtle fashion, the constitution of SAG-AFTRA has altered the provisions requiring a referendum and/or a vote of the Board so that these requirements become very much weakened or lost altogether.

Protect your residuals and your Pension and Health benefits.
Vote NO to merger

Scott Wilson
3/17/12

—–

Way to go Scott!!!!!

Arl

The Ol’ Watchdog

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“Much ado about nothing”?

March 17, 2012 (18:04) | 2012, Merger Mania | By: Arlin Miller

By Law professor Steve  Diamond

Is the audit of the SAG pension and health plan really “much ado about nothing”?

Posted on March 17, 2012

After stories surfaced of a possible “raid” by federal agents on SAG’s pension and health plan, the Plan trustees themselves responded with an unusual statement denying that any such raid had taken place. They claimed that all that was happening was a “routine” field audit by the Department of Labor. This led pro-merger advocates to rush to a judgment that really there was nothing to see here, so move along.

The problem with this story is that audits by the Department of Labor and the IRS, which have regulatory authority to monitor employee benefits plans, may take place on a regular basis but they are never “routine.” And of course the Plan trustees do not know now what the outcome of the audit will be so it is a mistake for them to claim that this audit is “no different” than prior audits. If the employees of the SAG plan or the trustees are treating this multi-year investigation, the 10th in the last 25 years, as routine they are likely doing so only for public consumption. Otherwise, they would likely be in violation of their fiduciary obligation to the plan’s beneficiaries and participants.

Audits by a federal agency are not the same as the audits by a plan’s outside auditing firm. The latter are required every year in order to prepare reporting statements to federal agencies and to participants and beneficiaries. But audits by the DOL or the IRS are aimed at finding out if there is fraud or incompetence or weak internal plan controls at work.  A “field” audit, where government agents come on site to review documents and meet with Plan staff, is the most stringent of the several forms that an audit can take. Other less demanding audits could include a questionnaire, compliance check or correspondence audit.

In other words, the SAG plan is now being subjected to the closest form of scrutiny allowed under ERISA which empowers both the DOL and the IRS to investigate benefits plans for civil and criminal violations.

While an audit’s existence does not mean that there is, in fact, a problem at the plan it usually is triggered, according to experts in the area, by one of several possibilities, including complaints by plan participants (and of course at the SAG plan there is the now infamous whistle blowing letter by Craig Simmons), red flags because of the way in which the plan has described its assets or benefits on its filings with the government or concerns about whether the plan’s own auditors have done an adequate job.

In the case of SAG, for example, the investigation into the Simmons complaint led to a disclosure of a multi-million dollar fraud that was not prevented by internal controls at the plan.  Both the DOL and the IRS have become more aggressive in audits of benefits plans and in 2010, when the SAG plan says the current audit began, the DOL first set up its “Contributory Plans Criminal Project” to target fraud against participants and beneficiaries.

While no one can know now the outcome of the current audit, it is over the top to conclude that is it much ado about nothing or is simply routine. The weaknesses in internal controls admitted by the plan itself in response to the Simmons letter (the Plan told participants and beneficiaries that it had created a new board committee with its own independent counsel), a statement by pro-merger SAG Watch site that the Plan had to strengthen internal controls after a prior incident of malfeasance, the public declaration by Bob Carlson (a merger opponent and trustee) that the merger would place a “staggering burden” on the plan, and now the admission of an ongoing multi-year investigation by the Department of Labor all point to the fact that SAG went into the merger negotiations with AFTRA at a time of weakness. If the merger is approved there will be very difficult internal battles to resolve the problems that merger does not touch, including the future of the vitally important health care and pension plans built over so many years by the hard work of SAG members.

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Arl

The Ol’ SAG Watchdog

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Monday, March 19th.
7:00p.m. to 10:00 p.m.
Catalina Jazz Club   6725 Sunset Blvd (Hollywood).

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SAG plans deny report of government raid!!!!

March 16, 2012 (17:04) | 2012, Merger Mania, SAG Politics | By: Arlin Miller

SAG plans deny report of government raid

‘Absolutely no validity to the story’

By Dave McNary
The Screen Actors Guild – Producers Pension and Health Plans has issued a statement denying recent reports that their offices were raided by government officials.

The trustees of the plans, operated independently of SAG, made the announcement Friday to counter what they call “erroneous” claims. Move comes in the wake of unsourced reports of a March 7 raid by federal law enforcement officers at their Los Angele’s offices.

“Contrary to recent reports, there is absolutely no validity to the story or to the underlying claim that any governmental officials have ‘raided’ the Plans or otherwise have taken any documents from the Plans,” the org said in a statement. “In fact, it is important to understand that despite the mention of a ‘raid’ of an office in Massachusetts, the Plans do not have an office in Massachusetts.”

*Old Dog Clarification on word games of SAG officials:  http://www.sag.org/branches/boston

The group also said the U.S. Dept. of Labor had announced a field audit in 2010, noting that such audits of multi-employer plans of this sort are routine for benefit plans across the country.

“In fact, since 1987, this is the 10th Dept. of Labor audit of the SAG-PPHP,” the statement said. “This current audit is no different than previous audits, which have resulted in our staff working with the DOL to ensure that Plan procedures are up-to-date and in compliance with various adjustments in Federal guidelines and recent changes in the law.”

The plans were hit last year by allegations of misconduct and financial problems by fired plan exec Craig E. Simmons. The trustees announced in December that “an extensive and independent investigation” had found no validity to the allegations.

Simmons filed a complaint last year with the federal government asserting that he was terminated for acting as a whistle blower. The board of trustees of the plans denied the allegations in September and retained outside counsel to review the matter.

Simmons alleged in a complaint filed with the U.S. Labor Dept. that he was fired in March by chief executive Bruce Dow due to Simmons’ refusal to mislead board trustees and government investigators about embezzlement by the plans’ former chief information officer, Nader Karimi. Simmons also alleged in the complaint that Dow and other execs had misused funds for personal benefit.

Dow took a 60-day medical leave of absence in January after he initiated a request for a leave to deal with what he termed a “chronic healthcare problem.” The exec said at that point that he intended to return to his post.

The trustees said Friday that the plans are safe.

“As before, we want to reaffirm that the fiscal integrity of the Plans remains absolutely sound and that participant benefits are secure,” the trustees said. “There has been no change in the status of the Plans’ assets. The Trustees and staff will continue our efforts to reinforce the internal controls at the Plans to ensure that they are in line with best practices. While we cannot control the spurious stories that surface as a result of allegations made by a former employee, we can assure participants that their assets have never been at risk.”

The SAG health plan covers about 40,000 participants and has assets of more than $2 billion, while the retirement plan pays pensions to an estimated 9,000 beneficiaries.

Contact Dave McNary at dave.mcnary@variety.com

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Hmmmm…Those in charge at SAG deny a RAID…but, but, but they don’t deny that someone came by and left with boxes of stuff.  Hmmm…again!!!

 

Arl

The Ol’ SAG Watchdog

Here’s the latest from Niki Finki on the story

EXCLUSIVE: Feds Investigating SAG P&H Plan Embezzlements And Cover-Ups Allegations

By NIKKI FINKE | Thursday March 15, 2012 @ 4:32pm PDTTags: Craig Simmons, SAG AFTRA Merger, SAG P&HP, SAG Pension & Health Plan, Screen Actors Guild

EXCLUSIVE: I’ve learned that whistleblower Craig Simmons has been telling federal authorities what he knows about the Screen Actors Guild Pension & Health Plan scandal. During October 2011, November 2011, and December 2011, he testified under oath during three sessions in Los Angeles with the FBI, IRS, Securities & Exchange Commission, Department Of Justice, and Department Of Labor inside the Federal Building in Westwood. My information is that the authorities were taking copious notes while Simmons spoke. Insiders also tell me that federal investigations are now ongoing into not just one embezzlement and cover-up inside the SAG P&H Plan but also another fraud and cover-up there which makes two scandals altogether. I understand the FBI asked Simmons not to go public about the probes and he has not spoken publicly about his whistleblowing. [See Simmons’ letter here to the SAG P&HP 36 Board Of Trustees, and Simmons’ letter here to the Department Of Labor, which led to the federal probes.] So Deadline is the first to break this important news.

My understanding is that when Simmons went in to testify, the feds already had documents in their possession outlining what embezzlements and cover-ups may have taken place.  However, I can also now confirm that federal investigators last week and this week arrived at SAG P&H Plan offices in Southern California and in Massachusetts and carried out several dozen boxes of paperwork to unmarked cars waiting outside. (Did Federal Officials “Raid” The SAG P&H Plan Offices?) New information reaching me is that this visit took place on Wednesday, March 7th, and not on Friday, March 9th, as I’d previously reported. And a few weeks earlier a man identifying himself as an investigator came into the offices at 4 PM with a copy machine on big dolly and spent 4 to 5 hours Xeroxing documents. And today New England SAG member James McIsaac wrote on Facebook from Massachusetts that “My local pres just confirmed the FBI picked up some papers at the P&HP office.” I’ve received more confirmations that the visits were in connection with official probes into the SAH P&HP wrongdoing.

In my opinion, it’s a day late and a dollar short for the SAG P&H Plan to come clean about exactly what is going on regarding any and all city, county, and/or federal investigations into allegations of embezzlements and cover-ups. (In fact I am in a possession of an internal SAG P&HP memo instructing staff to tell any callers about my article to say, “No, nothing happened on Friday” — because it took place that Wednesday. Talk about parsing!) Nothing worse than if that organizations is accused of trying to cover-up the cover-up of the fraud. And nothing worse than these probes intensifying during the membership vote on the pending SAG-AFTRA merger. Because no future plans for the two unions’ pension and health plans – not even whether they’ll be operated separately or combined — have been revealed or even formally studied by SAG and/or AFTRA leaderships. (SAG always points out that the SAG P&H Plan is run separately from the guild.)

Craig Simmons, of course, is the veteran SAG P&H Plan high-ranking executive and attorney who first discovered what he alleges are several embezzlement schemes and cover-ups inside the organization. He maintains that the fraud involved tens of millions of dollars and that, when he discovered it, he was asked to stop his investigation  and lie to authorities about the wrongdoing. When he refused, he was fired. On August 23, 2011, Simmons wrote personalized private letters detailing the scandal to all 36 members of the SAG P&H Plan Board Of Trustees — read it here.

Simmons gave the Trustees two weeks to remedy the situation or warned he was going to federal authorities. Which he did and sent a September 14, 2011, letter directly to the U.S. Department Of Labor. (Read it here…) His Fall testimony in front of various federal authorities is a direct outgrowth of his whistleblowing.

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