The Screen Actors Guild & Unclaimed Royalties (a Sequel)

Hollywood loves sequels.

The Associated Press is reporting today that the Screen Actors Guild has settled a lawsuit with Ken Osmond (better known as Eddie Haskell from Leave it to Beaver) regarding foreign royalties relating to videos and cable reruns.  These moneys were collected by foreign "royalty societies" but never paid to, or claimed by, the owners/performers due the royalties.  Instead, these moneys were allegedly held by the Screen Actors Guild.

According to the The Hollywood Reporter, part of the problem was that "some shows, especially older programs, make it difficult to determine the payments based on compensation. The typical payments will be less than $50, with a minimum requirement of $10 to trigger the cutting of a check."  In other words, this was the typical high volume, low dollar amount property that generally winds up in the hands of the state as unclaimed property.  According to the SAG's General Counsel the royalties represented "money that would otherwise have gone unclaimed and been lost to [the actors] forever . . . ."  Certainly that is disputable as a matter of unclaimed property law, but it's good that the performers will get the money to which they are entitled.

Notably, this is not the Screen Actors Guild's first time at the unclaimed property rodeo.  One of the most well-known cases in unclaimed property law is Screen Actors Guild v. Cory, a 1979 California case that is one of seminal judicial opinions on "private escheat."  Generally, the prohibition against private escheat is an unclaimed property law doctrine that a holder cannot enforce contractual terms which have the effect of transferring ownership of unclaimed property from the owner to the holder.  While this is a judicially recognized doctrine in some states, in others it is codified in the law.  For example, under Delaware law "[a]ny provision in a certificate of incorporation, by law, trust agreement, contract or any other writing . . . relating to property . . . which provides that upon the owner's failure to act or make a claim regarding property . . . that such property reverts to or becomes the property of the holder, in contravention of this chapter, shall be void and unenforceable."

In Screen Actors Guild v. Cory, the SAG claimed that certain undistributed royalties were not escheatable to California because of a SAG membership bylaw "if after six years a member does not claim his residual funds, they are automatically assigned to plaintiff for the use of its membership."  The California court determined that the bylaw was contrary to public policy, reasoning that it was "void as a private escheat law obviously designed to frustrate operation of the UPL."  While the Court's opinion is worth reviewing, its logic is succintly summarized in its last sentence:"In short, a private escheat law cannot circumvent the effect of a public one." 

Let's hope that there is not a third installment of this story.

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