Judge Otero Denies Preliminary Injunction in Sheen v Screen Actors Guild
SAG and AFTRA Merger Ballots Will Be Counted March 30 as Scheduled
Los Angeles (March 28, 2012) – Federal Judge James Otero today denied the plaintiffs’ motion for preliminary injunction in Sheen v SAG clearing the way for Screen Actors Guild’s merger referendum ballot counting to go forward as scheduled on Friday, March 30.
The Judge’s ruling read in part, “Voting in favor of merger may or may not be in the best interest of the majority of Union Members. But the decision, for better or worse, belongs to the Members – not to Plaintiffs, and certainly not to the Court.” He also stated that, “It appears that SAG’s democratic process is functioning properly.”
As to the question of Pension and Health benefits, the Court ruled, “Although diminution of health and pension benefits is a serious matter, Plaintiffs have failed to demonstrate that such harm is likely to occur upon merger.”
Judge Otero also dismissed one of the four remaining causes of action. He decided not to dismiss the other three claims based on the legal presumption in favor of plaintiffs on a motion to dismiss, but found in his ruling on the injunction that the plaintiffs are unlikely to prevail on those claims.
SAG Deputy National Executive Director and General Counsel Duncan Crabtree-Ireland said, “We are pleased with the court’s action denying the requested injunction and dismissing one of the plaintiff’s major claims in this matter. We are are also gratified that the court has indicated that the plaintiffs are unlikely to prevail on their other claims. It has been our position all along that these complaints were completely without merit and that the members will ultimately decide the future of their unions.”
* The following clarification from Law Professor Steve Diamond as posted on SAG Actor Discussion board:
by Steve Diamond » Wed Mar 28, 2012 5:21 pm
The Ol’ SAG Watchdog
Posted: Wed., Mar. 28, 2012, 5:06pm PT
Judge OK’s SAG-AFTRA vote
Ruling denies attempt to block merger between unions
By Dave McNary
A federal judge has turned down an attempt to block the merger between the Screen Actors Guild and the American Federation of Television and Radio Artists.
In a 25-page ruling, U.S. District Court Judge James Otero found it was inappropriate to intervene in the internal affairs of the performers unions and denied a motion for a preliminary injuction Wednesday. The move came two days before the votes are slated to be counted on the formation of SAG-AFTRA.
The suit, filed on Feb. 22 by Martin Sheen and 60 other SAG members, alleges that SAG hasn’t adhered to its own regulations in promulgating the merger and is required to perform an actuarial study of the results of merging the plans. But Otero found that SAG had not violated any federal labor law and cited the principle of judicial non-interference in union affairs.
“Voting in favor of merger may or may not be in the interest of the majority of union members,” Otero wrote. “But the decision, for better of worse, belongs to the members — not to the plaintiffs and certainly not to the court.”
The judge also noted that granting an injuction would stop the merger process in its tracks, harm SAG and benefit the plaintiffs.
“Defendants would need to expend significant time and resources postponing the merger vote,” Otero said. “Even if plaintiffs eventually lost on the merits, the membership might interpret the preliminary injunction as an indication of defendants’ wrongdoing, lending an imprimatur of authority to plaintiffs’ dissenting position. Plaintiffs will have accomplished something through preliminary injunction that they would probably not be able to achieve through full disposition of the lawsuit.”
Otero denied SAG’s motion to dismiss the suit, allowing the plaintiffs’ claims of breach of fiduciary duty and breach of contract to proceed. David Cassleman, attorney for the plaintiffs, had no comment as to whether he’ll move forward to trial.
Otero also acknowledged that a merger could lead to changes in the pension and health plans even without the actuarial study. “The democratic process does not always yield the most desirable results for all,” he wrote.
The judge also ruled that the plaintiffs had failed to demonstrate the likelihood that pension and health benefits will decline if a merger goes through.
“Plaintiffs offer expert testimony that the merger of the plans is bound to occur in the future, without an opportunity for ratification by the membership,” he said. “Conjecture that a proposal to merge the SAG and AFTRA will develop does not rise to the level of immediate and likely irreparable harm necessary to justify a preliminary injunction.”
SAG deputy national executive director and general counsel Duncan Crabtree-Ireland said in a statement that the guild was pleased with the denial of the injunction. “It has been our position all along that these complaints were completely without merit and that the members will ultimately decide the future of their unions,” he added.
The lawsuit alleged that SAG and its leaders are attempting to merge “without conducting the necessary due diligence.” SAG has labeled the suit “a clear attempt at circumventing the will of the membership” and “a public relations stunt.”
Merger backers assert that a SAG-AFTRA combo would increase bargaining strength and represent a first step toward solving the problem of performers not qualifying for coverage under separate SAG and AFTRA health and pension plans. SAG and AFTRA have touted the merger by telling members that the new SAG-AFTRA will have increased power at the negotiating table.
Plaintiffs included Martin Sheen, Ed Harris, Nancy Sinatra and former SAG presidents Ed Asner, Kathleen Nolan and Alan Rosenberg.
SAG and AFTRA mailed out over 130,000 ballots last months to SAG and AFTRA members. To be approved, the merger must receive at least 60% of the votes from each union.
SAG plans to announce the results of voting at its Los Angeles headquarters at 1 p.m. PDT Friday
SAG members voted down proposed mergers in 1999 and 2003, when opponents complained that the combination would create a negative impact on the pension and health plans. Pro-merger candidates have dominated SAG’s elections in recent years.
The suit included a declaration by Robert Carlson, a trustee of the pension and health plans for the past seven years, that merging the SAG and AFTRA would create a “staggering” burden. SAG’s Hollywood board removed Carlson from the post earlier this week.
Carlson took specific issue with SAG statements in ballot materials that “merging the unions would only benefit plan participants” and “merger is the best way to protect our benefits.”
The unions’ summary of the feasibility study in ballot materials — which contains opinions of seven attorneys with experience in the field — also notes that several hundred multiemployer pensions have merged over the past 25 years, and there is no legal obstacle to merging the SAG and AFTRA pension and health plans. In addition, it says that multi-employer plan mergers do not pose any increased risk of loss of benefits.
Merger backers are asserting that the SAG-AFTRA combo will increase bargaining strength and represent a first step toward solving the problem of performers not qualifying for coverage under separate SAG and AFTRA health and pension plans. Carlson asserted that if the plans were to be merged, they would then be required to pay out more benefits without accruing additional income.
SAG currently has 120,000 members while AFTRA has 70,000 including deejays, broadcasters and musicians. About 40,000 thesps belong to both unions.
Cassleman said he’s concerned that a year from now, members who voted for the merger will find out that pension and health benefits will be diminished.
“Members will still be unable to qualify for benefits because their combined earnings will likely have to exceed an increased earnings threshold,” he added. “Plaintiffs continue to believe that the decision of the union not to conduct a professional, actuarial study, was done intentionally to hide those findings from a membership that needed to know the truth.”
Cassleman also warned that SAG had opened itself to further legal problems.
“The bottom line is the decision to press for merger, claiming that lawyers, not actuaries, could assure the members that their benefits will be safe, may well end up creating legal liability for the consequences of things to come,” he concluded. “Assuming the merger passes and benefits decline as predicted, there is ample information in the record to justify class-action lawsuits against those responsible for inducing “yes” for merger votes.”
Link to judges complete ruling: http://www.save-sag.com/Judge-Otero-ruling.pdf
|Paul Edney||10:43pm Mar 28|
This is the official statement from David Casselman regarding Judge Otero’s ruling today:
“The Court issued a thoughtful, 25 page, single spaced opinion. It overrules the SAG defendants motion to strike the breach of fiduciary duty cause of action, seeking a recovery of attorney’s fees. It also rejects defendants motions to dismiss the federal breach of fiduciary duty claim, the California breach of fiduciary duty claim, the federal breach of contract claim and reserves jurisdiction to address all of those causes of action by trial on the merits. Therefore, the litigation continues on the merits, even though the Court declined to grant the requested preliminary injunction.”