Entertainment Law Circular | March 2021 | How Film Investors Can Avoid Shady Film Producers

ENTERTAINMENT LAW CIRCULAR

March 2021

David Albert Pierce's most recent MovieMaker Magazine article

In this month's issue of MovieMaker Magazine online and on newsstands now, David Albert Pierce's latest Indie Law column appears titled "5 Ways Shady Producers Bilk Investors."

In this article, David explains how producers should not act toward their investors and tell-tale warning signs for which investors should be aware.

For example: A shady producer will say that if lawyers are brought into review a deal, it will greatly increase the expense of the small independent film, and will claim in any event there’s just no time. When a savvy investor insists on a lawyer’s review, the producer may ask for part of the money upfront and to sign the current deal memo (or no deal memo) with the assurance that a long-form contract will follow for which the attorney can the go over. A shady producer may also get the investor to agree that it’s a waste of money for a lawyer to make sure a deal complies with securities law.

To read about these common flimflams, click below to see the article on the MovieMaker.com website.

Read the full article here

PLG-LLP Speaking Engagements

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On February 20, 2021, David Albert Pierce was the moderator a panelist on International Film Financing for the Beverly Hills Bar Association The panel featured legal experts from Canada, the Dominican Republic, Ireland, Italy, China, and the USA-- each discussing their unique prospective on the current state and trending methods for raising money for motion pictures.

Click here to watch the recording of this Two and Half hour panel online-- its captivating and the time will fly.

David Albert Pierce, John Baldivia, and Anthony J. Hanna all participated and spoke at Pierce Law Group LLP's virtual legal clinic which was five distinct days of webinar discussions on various topics for independent filmmakers as part of this year's virtual Slamdance Film Festival, continuing our 23-year sponsorship of the Festival.

And additional congratulations to Festival Director Peter Baxter and the entire Slamdance team for their most-attended Slamdance of all time!

On March 25 2021, David Albert Pierce spoke to Cornell Law School on the topic how to negotiate Hollywood deals titled "Entertaining Negotiations For Show Business."

A merry cohort of 1Ls and 2Ls heard Mr. Pierce talk about the business of entertainment law, after which David devoted time to take individual questions from each attendee.

David also spoke at Loyola Law School's Entertainment Law Symposium held online on February 25, 2021. David was a panelist on the subject of How COVID-19 Has Affected the Entertainment industry.

In addition to David, the panel featured: Julie Nguyen of HBO Business Affairs and Joshua Binder of Rothenberg Mohr & Binder LLP.

Industry Wisdom:

A look at some recent news and lawsuits affecting the entertainment industry

Plaintiffs Must Prove "Animus" in

Employment Retaliation Claims

In Choochagi v. Barracuda Networks, argued before a California appeals court on January 28, 2021, a former employee of a company (Barracuda) experienced severe migraines and eye irritation requiring him to seek medical treatment and time away from work. After discussing an arrangement for this time off, the plaintiff was terminated. He subsequently sued his former employer alleging the termination was in violation of the California Family Rights Act (CFRA). Defendant moved for summary judgment, which was granted; plaintiff appealed, claiming the trial court improperly applied the test in McDonnell Douglas Corp. v. Green to his CFRA claims for interference and retaliation.

The appeals court affirmed, holding that under McDonnell Douglass, employers have the burden to show initial evidence showing that one or more elements of plaintiff’s prima facie case was lacking or that adverse employment action was based on non-retaliatory factors. The burden then shifts to the plaintiff to show a triable issue by substantial evidence showing an employer’s retaliatory animus. Burden shifting does not apply to CFRA interference claims, but does apply to retaliation claims.

The appeals court agreed with the trial court’s conclusion that defendant established a legitimate, non-retaliatory justification for plaintiff’s termination. Plaintiff failed to produce evidence suggesting defendant’s retaliatory animus.

This holding re-emphasizes the importance of documenting terminations and the reasons for them. Pierce Law Group LLP is well versed in employment law and is readily available to help make sure your termination are properly documented and done in a fashion that is least likely to lead to a disgruntled employee filing a lawsuit.

California Local Governments

Are Free to Remove Offensive Artworks

In a blow to artist's and their creative form of expression, the California Appellate Court in Schmid v. San Francisco, (argued on February 1, 2021) that the city and county of San Francisco had the right to remove a public statute deemed to be offensive to Native Americas. Two citizens sued the local authorities citing abuse of discretion in authorizing the removal, seeking writ of relief under Code of Civil Procedure Section 1094.5. The trial court sustained the defendants’ demurrer without leave to amend.

Appellants appealed, and the appeals court affirmed, holding that abuse of discretion is established if the court determines that the findings are not supported by substantial evidence in light of the whole record. Here, plaintiffs alleged nothing to support their allegations that local authorities acted in excess of their authority or abused their discretion.

As tastes and viewpoints of a community change so to can the elected city leaders adopt steps to change the artwork that dots their city.

Collateral Estoppel and Anti-SLAPP Lock Horns

Hoang v. Tran is an ant-SLAPP case that appeared before California’s Appeals Court for the 2nd District on February 1, 2021. The respondent sued BBC Global News and a Vietnamese journalist associated with BBC’s Vietnamese-language service, alleging his estimated net worth decreased by $1 billion as a result of a purportedly defamatory article published by the defendants to the BBC Vietnam Facebook page.

The BBC responded with an anti-SLAPP motion. The trial court granted the motion, concluding that BBC satisfied the statute’s first element, which requires that a respondent’s cause of action arise from protected activity in connection with an issue of public interest. It also found that respondent had failed to satisfy an element crucial to his own case; i.e., he had not demonstrated a probability of prevailing against the BBC due to the Communications Decency Act. Appellant then filed for his own anti-SLAPP motion.

The trial court denied the motion, ruling that defendant/appellant failed to satisfy the requirement of showing a cause of action arising from a protected activity in connection with an issue of public interest. The trial court likewise rejected defendant/appellant’s claim that he was collaterally estopped by prior rulings from relitigating that requirement.

The 2nd District reversed denial of the defendant/appellant’s anti-SLAPP motion, noting that the trial court made “a complete turnabout” from its position in an earlier BBC anti-SLAPP proceeding that involved the same facts; and additionally asserted that appellant was indeed collaterally estopped from claiming that the article in question did not concern an issue of public interest because the same issue was ruled against him in the prior BBC anti-SLAPP proceeding.

PLG-LLP is very experienced with defending Defamation claims, advising on First Amendment issues and the use of California's "Anit-SLAPP" law which punishes plaintiffs that make frivolous use of the state's defamation laws and other matters that involve public discourse.

Joint Liability Doesn't Mean Multiple Awards

Under the Copyright Act

In Desire v. Manna Textiles, argued in front of the U.S. 9th Circuit Court of Appeals on February 2, 2021, an apparel company sold another group of apparel companies alleging copyright infringement. The Action involved a floral print textile design. The plaintiff registered the design at controversy with the U.S. Copyright Office.

All parties moved for summary judgment. The district court upheld the plaintiff’s copyright interest, and asserted they could obtain a separate statutory damages award based on each of the defendants’ infringements. The jury returned a verdict in favor of the plaintiff for $480,000. One named defendant was jointly and severally liable with every other defendant, but the others were not completely jointly and severally liable with each other.

Defendants appealed on the grounds that the Copyright Act did not permit multiple statutory damages awards. The 9th Circuit reversed, holding that Section 504(c) of the Act precludes multiple awards of statutory damages when there is only one work infringed upon collectively by a group of defendants. The Act provides for an award of statutory damages for all infringements of a single work “for which any two or more infringers are liable jointly and severally,” and “an award” was interpreted to mean a single award.

While the case focuses on how damages are calculated and how they are allocated, this case also demonstrates to readers that more than one person/entity can be liable for copyright violations and it is important to understand the law when dealing with copyright issues.

Paying Employees Who Work "Principally" in California?

Be Sure to Issue Wage Statements!

In Ward v. United Airlines, argued before the federal 9th Circuit Court of Appeals on February 2, 2021, pilots and flight attendants (plaintiffs) alleged that their employer, United Airlines, violated Labor Code Section 226 by not providing wage statements to employees with each paycheck. The district court granted summary judgment for the defendant, asserting that Section 226 only applies to employees who “principally” work in California. The pilots and flight attendants in question were based all over the United States. On appeal, the California Supreme Court accepted a request for clarification on this issue and held that Section 226 applies where the employee’s “principal place of work is in California.” Defendant claimed compliance with this articulated test was unduly burdensome on corporate operations.

The case was reversed and remanded, with the Supreme Court holding that non-discriminatory laws that have only incidental effects on interstate commerce are generally upheld “unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.” Here, defendant offered no evidence as to what the scope of costs might be if compliance were imposed, and generally exaggerated the burden of complying with the Ward test. The Supreme Court held that defendant could have easily complied with the test by issuing Section 226-compliant wage statements to all pilots and flight attendants whose home-base airport was located in California.

The issue presented in United as to what state laws apply to workers has become of increasing importance during COVID-19 while employees work for remote locations including locations outside of the state in which their employer normally operates. PLG-LLP is well versed in wage-hour law and can help provide you with this guidance on wage-hour issues.

A Look at Fee Shifting Provisions When Dealing with Right of Publicity Claims

In Varney Entertainment v. Avon Plastics, litigated in a California appeals court on February 23, 2021, an actor and entertainment executive sued a plastics company for breach of contract for unauthorized use of his name and likeness in violation of state Civil Code Section 3344 governing misappropriation of likeness (aka "Right of Publicity").

The defendant company served the actor with a Code of Civil Procedure Section 998 compromise offering to have judgment entered for the plaintiff in the amount of $250,000. While that offer was pending, defendant offered to enter into a stipulated judgment with plaintiff for $191,626.03 on the contract claim only, and further offered that plaintiff would be the prevailing party on that claim for purposes of awarding attorney’s fees. Plaintiff accepted.

At the start of trial, plaintiff dismissed his Section 3344 claim without prejudice to file in another jurisdiction. Defendant moved for attorney’s fees based on the Section’s fee-shifting provision, claiming it was the prevailing party on that claim due to plaintiff’s dismissal without prejudice. The trial court denied defendant’s motion, finding no prevailing party on the Section 3344 claim. Defendant appealed. The appeals court affirmed, holding that prevailing party status under Section 3344 is determined by examination of whether a party prevailed on a practical level and the extent to which each party realized litigation goals. Because neither party here realized their objectives, no party prevailed and award of attorney’s fees was not justified under Section 3344.

Break's Over! Keeping Your Employees on Time

On February 25, 2021, the California Supreme Court in Donohue v. AMN held rounding up or down time clock entries for meal period is unlawful and it also recognized a presumption of meal period violations if time records fail to meet difficult standards.

The Supreme Court's decision has raised the stakes significantly where employees are given flexibility concerning their breaks and timekeeping practices are lax.

Every California employer should re-examine their timekeeping policies with regard to the impact of this decision on how meal and rest periods are calculated, general timekeeping practices, and how errors or truly voluntary waiver of a meal or break period is documented. PLG-LLP is well versed in wage-hour law and can counsel and advise you on how to best comply with California's sometimes complex timekeeping procedures.

PLG-LLP CLIENT PROJECTS AND NEWS

The Golden Pony Hits

Milestone With His 500th Podcast

PLG-LLP's longtime comedy client Tony Hinchcliffe will be recording his 500th episode of his live stand-up comedy podcast "Kill Tony" live at the Paramount Theater in Austin Texas on April 8th.

Watch the show live on Youtube here.

Brain Academy: Los Angeles becomes Stockholm Syndrome

The Long time PLG-LLP client which was the Los Angeles subsidiary of Swedish production company known as Brain Academy has been fully spun off as fully independent production company from its parent company. After many successful years as part of Nordic Entertainment Group (NENT), their focus is now entirely on the global market including the United States. To mark this new chapter in the life of the business, they have changed their name to Stockholm Syndrome.

However, it shall continue to maintain its great relationships in the Nordics and continue to serve as a gateway to the US and worldwide market for some of Scandinavia’s most interesting writers and producers. In addition, they have several exciting international ventures and projects to be announced.

The new website, www.stockholmsyndrome.tv, is currently under construction.

Legion M announces The Man In The White Van

PLG-LLP client Legion M Entertainment is producing the upcoming feature "The Man In The White Van".

The Man In The White Van is an elevated thriller based on a true story and helmed by a stellar creative team, including director and scribe Warren Skeels (Siesta Key), and co-writer Sharon Y. Cobb with producer Anne Marie Gillen (Fried Green Tomatoes) alongside Legion M's Terri Lubaroff (Excelsior!).

Check out Legion M's announcement video here.

OTHER NEWS YOU CAN USE

SBA Announces New Digital Platform for women-owned businesses.

Small Business Administration has launched a new interactive digital platform aimed at women-owned businesses. SBA's Ascent will provide a resource to help women business owners and entrepreneurs tackle issues that have arisen due to COVID-19.

For more information click this link

Instructors at Second City Take Steps to Unionize

More than 80 instructors at the Hollywood location of The Second City have submitted union cards to form the Association of International Comedy Educators (AICE) within the Communications Workers of America (CWA) Local 9400. They follow the 160 educators at the Chicago location of The Second City, who have have filed cards to join AICE under the Illinois Federation of Teachers.

This move for unionization comes at a time of change, as private equity firm ZMC recently purchased The Second City corporation from co-owners Andrew Alexander and D'Arcy Stuart.

H-1B Visa Filing Deadline Expired March 25

(but does not affect current H-1B recipients)

New skilled worker H-1B visas were afforded a window starting Tuesday, March 9, 2021 through March 25th. However, this deadline does not apply to individuals who already work under H-1B visas and who are either extending it or transferring to a new employer. Individuals working in the U.S. under a different immigration status for a currently incorporated or prospective company should consider applying for an H1-B (th next round of new applications would be in 2022).

H-1B eligible workers are in “specialty occuptions,” which are legally defined as role that normally require a minimum of a U.S. bachelor’s degree or its overseas equivalent in a field related to the occupation. Work experience may count as equivalent to a U.S. bachelor’s degree in some circumstanances.

COVID-19 CA Update: Californians can opt-in to receive Apple or Google notifications if they've been exposed to someone with COVID-19. CA Notify, the new statewide exposure notification system, is completely anonymous and will never track your location. To help protect your community against COVID-19, please go to canotify.ca.gov and add to your phone today.

PIERCE LAW GROUP OFFERS COVID COMPLIANCE KITS

Restarting production during COVID-19 means extra obligations and new liabilities for producers and production companies. Avoid getting stuck with thousands of dollars in unexpected costs while shooting during COVID-19. Our firm has the resources and expertise to streamline your production.

Contact our Client Director for more information by clicking here.

THE COMEDY STORE

Comedian's Assistance Fund

The Comedy Store is committed to helping out artists and comedians during this pandemic.

Help us help them during these unprecedented times. Following the passing of Mitzi Shore, our firm assisted The Comedy Store in establishing a Comedian's Assistance Fund in conjunction with the Motion Picture Television Fund (MPTF). That fund has never been more needed during the COVID-19 pandemic.

Donations can be made to the fund with proceeds benefiting comedians who have been hindered from performing on stages during the time of COVID. To donate click below:

DONATE HERE

Looking for Home Entertainment? Check Out Podcasts & Other Online Events from Pierce Law Group Clients

Catch a peek into the lives of Steve Treviño and his wife, "Captain Evil", where they discuss life, marriage, and parenting. More importantly, you get to see what the two put up with. Click here to listen to Steve Treviño and Captain Evil: The Podcast.

Reminisce on the "Good Times" with Steve Simeone's podcast where he hangs out with his buddies reliving childhood memories, high-school mishaps, and the simple "good times" that make life worth living. Click here!

Catch Dennis Feitosa's podcast "Def Noodles", a satirical take on internet news commentary.

A mix between "The Soup" and "The Colbert Report", a satirical take on Internet news. Find out why he has 350,000 subscribers and over 50 millions views: click here!

Don't miss a show where you'll never know who you will see! Stephen Glickman hosts "The Night Time Show", a top rated podcast where comedians interview a wide range of influential people, comedy gurus, and award winning artists. Click here to listen!

Every Monday our client Tony Hinchcliffe presents "Kill Tony" at the world famous Comedy Store. Listen to the podcast. To listen to the podcast, click here!

Brian Moses and DJ Coach Tea host the official Roast Battle podcast giving an in-depth look at the hit international TV series as well as weekly live shows from the world-famous Comedy Store in Hollywood, CA. Click here to listen to Roast Battle!

Looking for a good laugh? Live from the world famous Comedy Store, Rick Ingraham and Eleanor Kerrigan talk with national headliners and Comedy Store regulars. Click here to access the latest!

Whoa! You won't want to miss Nikki Bon's new podcast "Whoa, Dad!" where she reunites with her absentee, rock and roll, space cadet dad. Listen to her attempt to mend their relationship and teach him how to be a good dad here!

Live from the World Famous Comedy Store, the most dominant faction of pro wrestling fans (Producer Chris Burns, Comedians Tony Hinchcliffe, Johnny Skourtis, Mat Edgar and Josh Martin) weigh in on the state of the industry past and present.

Its a real barnburner of comedy and insight into all our WWE favorites from today and yesterday Wooo! To listen:

click here

Learn about moviemaking with enjoyable analysis & real-life tips about the business of producing feature films by listening to our client StudioFest's "Demystified" Podcast. Click here!

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DISCLAIMER

The information you obtain in this newsletter is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters, and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.