Preliminary Guidelines to Understand the Hollywood Strike and its Impact on Italian Independent Production Companies

In this particularly challenging moment for the entertainment industry due to the SAG AFTRA strike, we reached out in Los Angeles the Italian lawyer, Alessandra Tarissi De Jacobis, specialized in entertainment law, licensed and admitted to practice in California and in Italy, for a better understanding of how the strike is impacting the independent producers with a particular view to Italian independent producers.

Mrs. Tarissi De Jacobis, thanks to her qualified expertise in the US entertainment system, shared her thoughts on this hot topic, of great interest also for the Italian companies in the challenges surrounding the upcoming Venice Film Festival, just around the corner.

 

1.SAG-AFTRA and its “Guilds Sisters” ruling Hollywood. The Global Rule One

The American Federation of Television and Radio Artists (SAG-AFTRA) is an American labor union representing more than 150,000 media professional members worldwide, among which actors, announcers, broadcast journalists, dancers, disc jockeys, news writers, news editors, program hosts, puppeteers, recording artists, singers, stunt performers, voiceover artists (“Members”).

Nearly all US professional actors are SAG-AFTRA Members.

SAG AFTRA together with its two Hollywood Guilds “sisters” – WGA (Writers Guild of America) and DGA (Directors Guild of America) – are recognized to be the most powerful unions in the entertainment industry, and due to their size and influence, most major media firms have a collective bargaining agreement with SAG-AFTRA through the AMPTP (Association of Motion Picture and Television Producers)

The AMPTP is the official collective bargaining representing all major motion picture studios, broadcast televisions, streaming services, cable television networks and other independent film and television companies in collective agreement negotiations with entertainment industry trade unions, including SAG-AFTRA, DGA and WGA. Producers and companies signing an agreement with the Hollywood Guilds are called “Signatories”.

If an independent producer is not member of the AMPTP  or is not already a SAG-AFTRA Signatory and wants to hire one or more SAG-AFTRA Members for a project, it needs to submit an ad hoc signatory application and to provide detailed information and documents on the project; once SAG-AFTRA receives such application, it will assign one business representative to complete the signatory process for that project; until the project is granted clearance by a SAG-AFTRA business representative, no work with the performer can begin.

With specific respect to foreign productions, it is important to mention that, differently from WGA and DGA, SAG-AFTRA has adopted the so-called Global Rule One (“GR1”).

According to Global Rule One: “No member shall render any services or make an agreement to perform services for any employer who has not executed a basic minimum agreement with the Union, which is in full force and effect, in any jurisdiction in which there is a SAG-AFTRA national collective bargaining agreement in place. This provision applies worldwide.”

Global Rule One is a rule within the guidelines of SAG-AFTRA that bounds SAG-AFTRA Members (violators are subject to reprimands or fines, and expulsion from the Union is also possible), but it is not binding for production companies that are NOT Signatories. In other words, should the above rule be violated, there might be consequences for the Members in default and not for the production company that is not a Signatory.

In any event, if an Italian independent producer is looking to hire a Sag-AFTRA Member to perform in an Italian project, it is advisable to submit to SAG- AFTRA a specific signatory application under Global Rule one in order to have the relevant project cleared before the SAG-AFRA Member/performer is expected to travel to Italy. Also, the relevant performer’s agreement between the Producer and the performer needs to be consistent with the SAG- AFTRA rules and collective bargaining agreement provisions and it will be often subject to SAG AFTRA clearance pursuant to Global Rule One.

 

2. 2023 SAG-AFTRA STRIKE. Its impact on the 2023 Venice Film Festival

On July 13, 2023, SAG-AFTRA announced that SAG-AFTRA’s television, theatrical, and streaming contract with the AMPTP had expired without an agreement to replace it and the 2023 SAG-AFTRA strike (the “2023 Strike”) was officially declared.

The 2023 Strike follows the path of WGA that is on strike since May 2, 2023.  According to the opinion of many industry players, both WGA and SAG-AFTRA strikes are not going to finish any time soon. This is likely to heavily affect the entire industry while it is still bleeding and trying to recover from the pandemic.

According to the 2023 Strike rules, SAG-AFTRA Members are allowed to perform very few activities: among the activities that are strictly forbidden, there are not only casting and acting services but also promotional and publicity services. In particular, SAG-AFTRA Members cannot be present for film or television premieres, cannot complete interviews when the subject is completed work and cannot attend film festivals or awards shows or share content related to film and television projects on their social media.

Broadly speaking, this means that top talents that are also SAG-AFTRA Members are not allowed to walk, among others, the red carpets of the 2023 Venice Film Festival.

However, on a case-by-case decision, independent producers might be authorized to have SAG-AFTRA performers on red carpets by signing an Interim Agreement.

3. The Interim Agreement. A Useful tool for independent producers or a trojan horse?

Immediately before the 2023 strike was effective, SAG-AFTRA anticipated that it would have offered independent production companies the possibility to enter into an Interim Agreement that would allow such companies to engage SAG-AFTRA members to perform services that would be otherwise forbidden under the 2023 Strike.

The text of the Interim Agreement is now available on-line at

https://www.sagaftrastrike.org/_files/ugd/342467_1f8d78519a1245f7b8e14ed0bf558679.pdf

In order for an Italian Independent Producer to apply for the Interim Agreement, it is necessary to submit before to become a Signatory for the specific project and therefore to submit  the relevant application under Global Rule One. Once the Global Rule One Application will be assigned to a SAG-AFTRA representative for review and ID number will be assigned, then the applicant can also submit for the interim agreement.

According to SAG-AFTRA’s official statement, “The Interim Agreement is not a waiver. To be clear, it is a contract that includes all terms and conditions for producers looking to employ our members on their specific independent productions.”

In particular, the Interim Agreement contains all terms and conditions that SAG-AFTRA has proposed to AMPTP and that were not accepted by this latter. This means that, by signing the Interim Agreement, independent producers will be bound to the same terms and conditions that have been accepted from AMPTP (among others, wage increases, residuals, Artificial Intelligence). The Interim Agreement will apply until the new collective agreement will be finally signed between SAG-AFTRA and AMPTP and an MFN (most favor nation) provision is also set forth.

According to SAG-AFTRA, “After a ratified deal with the AMPTP, the Interim Agreement will conform to our final terms, which will fairly compensate and protect our members.”

SAG also clarified that “prior to a ratified deal with the AMPTP stemming from our negotiations, the [Interim] agreement will demonstrate that our proposed residuals formulas, including the streaming revenue-sharing, are economically viable within our industry” and that “the Interim Agreement is a vital part of our strategic approach to these negotiations and to the strike. If the AMPTP continues to refuse to bargain, our strategy denies them the ability to freely make their own original productions, allowing everyone other than the AMPTP to produce content with our members.”

Now, the main concern for many independent producers is that, once the Interim Agreement is signed for a specific project, they will not be able to sell that project to companies that are members of the AMPTP. This might happen if the AMPTP member/purchaser does not want to abide to the interim agreement terms and conditions. In this scenario, the fact that the project cannot be sold could be even greater damage than not being in a position to engage a SAG-AFTRA Member on that specific project.

To this respect, SAG-AFTRA CEO, Duncan Crabtree-Ireland, has clarified to this regards that if Independent Producers will be able “to distribute these projects in any platform, they’ll then have to do that in compliance with the residual provisions and all the other provisions of the interim Agreement. Whether it’s feasible, there’s a question as for a streaming platform to take on one of these projects, because, of course, the streaming revenue share proposal is part of that Interim Agreement, so that they would prepare to assume responsibility for making the streaming revenue share payment that are called for”.

Therefore, the opportunity to apply for the interim agreement for Italian (but not only Italian) independent production companies should be evaluated on a case-by-case basis and in any event, should such independent production company be already negotiating a distribution agreement with an AMPTM member (distributor or streaming platform), it would be prudent to share the strategy in advance with the relevant distributor or streaming platform. Also, the current timing for obtaining the interim agreement should be taken into due consideration.

To this respect it should be noted that, while SAG-AFTRA representatives  are making their best efforts to process all applications for the Interim Agreement, more than 500 applications have been apparently submitted as of today, thus causing great delays. In other words, it might be challenging for an independent producer to be able to sign the Interim Agreement and solid an interim agreement would be needed as  a “waiver”‘for promotion purposes it might be difficult to obtain such “waiver” timely before the opening of the 2023 Venice Film Festival.

4. Global Rule One and the 2023 Strike. Foreign Productions

SAG-AFTRA  has clarified in its website that “The strike order includes work on foreign productions that have signed to the full Codified Basic Agreement and Television Agreement, including new media. If you are working on a foreign production in a foreign country and that production is covered by a performers’ union in that country, even if you have a GR1, please contact SAG-AFTRA for more information “.

From this statement it can be argued that SAG-AFTRA Members that are engaged in productions that have been previously cleared by SAG-AFTRA under Global Rule One (GR1) are bound to follow the 2023 Strike Rules.

Notwithstanding the above, it seems that there  are still some outstanding questions left that would need to be considered when dealing with foreign production and foreign SÁG-AFTRA members, Among others: what about  Italian performers that are SAG-AFTRA Members  but that are not US citizen nor US permanent residents? Will such individuals be allowed to perform their professional services, attend the festivals and promote a project produced by an Independent Italian Producer when the relevant project has NOT been cleared before pursuant to Global Rule One? Should the independent producers evaluate the idea of applying for an interim agreement also in this case?

In order to try to answer the above questions it should be taken into consideration also the limits of the geographical jurisdiction of SAG- AFTRA. According to section 1 of the SAG-AFTRA Basic Agreement the following cases fall within the scope of such Agreement: “When Producer employs a performer in the United States and transports him anywhere outside of the United States for a motion picture, the terms of the Basic Contract shall apply. Suppose a performer whose services are utilized is a permanent resident of the United States but is temporarily resident abroad and negotiations are carried out in the United States by the performer’s attorney, agent or other representative (including the Union) in the United States. In this case, such agreement for the services of the performer shall be within the scope and coverage of this Agreement. The foregoing test of coverage shall be met as long as the representative, agent or attorney of the performer is in the United States when the Agreement is negotiated, even if it is negotiated by telephone with, or mailed or cabled to a representative of the Producer who is not within the United States during all or any part of said negotiation. “

The above provision limits the geographical jurisdiction of SAG-AFTRA: this might be one a grounded argument to sustain that it would not be reasonable that SAG-AFTRA can affect Italian independent producers’ (that are not SAG-AFTRA signatories) projects when engaging an Italian SAG-AFTRA members unless such members are somehow connected with the USA in the terms outlined in section 1 of the Basic Agreement, as quoted above. Likewise, it might be reasonable to sustain that Italian performers will not violate the 2023 Strike rules if they engage in professional activities for non-US projects during the 2023 Strike or if they have worked for independent producers’ projects for which no Global Rule One application has been originally (in good faith) submitted.

A similar approach has also been taken also in other non-US jurisdictions (such as UK). In particular, as to UK, Equity (ie, the UK performers’ Union) members who aren’t SAG-AFTRA members working in the UK on Equity contracts for a US producer should “continue to work and should not be prevented from doing so by a SAG-AFTRA picket.

The primary legal problem is that, while the SAG-AFTRA may be lawful according to U.S. law, Equity’s lawyers have said “it isn’t under UK law”. As such, Equity says actors in this situation would have “no protection against being dismissed or sued for breach of contract by the producer or your engager if you take strike action or refuse to cross a picket.”

Also, it should not be forgotten that it is always possible for SAG-AFTRA members to resign at any time from the Guild and that they could  also decide to “downgrade” their  position to Financial members (so called FI Core members), ie those members that are only fee paying non-members  of the union and that allowed to work both on union and non-union jobs, as they are considered “non-members” of the Guild. These Financial Members  do not have the same privileges of the core members, but they are technically able to work in both union and non-union jobs.

However each of the above possible solutions  should be carefully evaluated by the performers on a case-by-case basis also considering their present and future projects that might involve SAG-AFTRA.

To conclude, as you have surely appreciated, the entire subject is really complex and needs to be handled with the due diligence and care. While I hope that I have been able to provide with some useful general guidelines, the readers are encouraged and recommended to double check, also engaging a legal advisor, each specific situation taking into due account the peculiarities of the project involved. The above is not meant in any case to be a legal opinion

Alessandra Tarissi De Jacobis, Esq.
Attorney (State Bar of California) ~ Avvocato (Italian Bar), principal at AxM – Business and Legal Affairs Boutique, Los Angeles.