# Kevin Risto v. Screen Actors Guild - American Federation of Television and Radio Artists

> District Court, C.D. California · June 14, 2021

URL: https://www.frixlaw.com/law-library/cases/10634007

## Case

- **Court:** District Court, C.D. California
- **Decided:** June 14, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

Present: The Honorable CHRISTINA A. SNYDER
Catherine Jeang Laura Elias N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
Nico Brancolini Andrew Thomas
Paul Kiesel Andrew Sullivan
Mariana McConnell
Neville Johnson
Daniel Lifschitz
Proceedings: DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT (Dkt.
103, filed April 23, 2021)
I. INTRODUCTION
On June 22, 2018, plaintiff Kevin Risto, on behalf of himself and all others similarly
situated, filed this action in the Los Angeles Superior Court against defendants the Screen
Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) and
the American Federation of Musicians of the United States and Canada (“AFM”)
(collectively, the “Unions”); Raymond M. Hair, Jr., Tino Gagliardi, Duncan Crabtree-
Ireland, Stephanie Taub, Jon Joyce, and Bruce Bouton (collectively, the “Trustees”); and
Does | through 10. Dkt. 1-1 (“Compl.”). On August 17, 2018, defendants removed this
action to this Court, pursuant to 28 U.S.C. § 1332(d). Dkt. 1. On November 20, 2018,
plaintiff filed the operative First Amended Complaint (“FAC”). Dkt. 26. The FAC alleges
that, by negotiating a service fee agreement with the Unions, the Trustee defendants
violated their fiduciary duties to their beneficiaries. Id. These beneficiaries include
plaintiff and other non-featured performance artists. Id. Plaintiff also alleges claims
against all defendants for (1) money had and received, (2) conversion, and (3) declaratory
relief. Id. Defendants answered the FAC on December 4, 2018. Dkt. 27.
On June 29, 2020, plaintiff a motion for class certification. Dkt. 56 (“Mot.). On
September 14, 2020, the Court granted the motion for class certification, and certified the
class under Federal Rules of Civil Procedure 23(b)(1) and 23(b)(2), defined as follows:

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

All non-featured musicians and non-featured vocalists, their agents,
successors in interest, assigns, heirs, executors, trustees, and administrators,
entitled to royalties under the Copyright Act (17 U.S.C. § 114 (g)(2)(b-c))
allocated for distribution for each distribution cycle after July 22, 2013.
Dkt. 78 (“Class Cert. Order”) at 14, 21, 23.
On April 23, 2021, defendants filed the instant motion for summary judgment, dkt.
103 (“Mot.”), and submitted a statement of uncontroverted facts in support thereof, dkt.
104 (“SUF”). On May 14, 2021, plaintiff filed an opposition, dkt. 111 (“Opp’n”): along
with a statement of genuine disputes of material facts, dkt. 111-1 at 1-114 (“GDF”); a
separate statement of undisputed facts, dkt. 111-1 at 115-138 (“PSUF’); and objections to
defendants’ declaration evidence, including a motion to strike the Declaration of Julie
Sandell,! dkt. 108 (“Sandell Decl.”), in its entirety, dkt. 111-2 (“P Obj.”). On May 28,

' Plaintiff seeks to strike the Sandell declaration on the grounds that it, in substance, reports
on the results of a “50 Song Study” conducted by defendants in January and February, 2021
that was not properly disclosed to plaintiff before fact discovery closed on March 1, 2021,
and that is thus inadmissible pursuant to Federal Rule of Civil Procedure 37(c). See P Obj.
Under Rule 37(c), a party that fails to properly disclose evidence may not “use that
information to supply evidence on a motion, at hearing, or at trial,” unless the failure to
disclose was “substantially justified or is harmless.” Hoffman v. Constr. Protective Servs..,
Inc., 541 F.3d 1175, 1179 (9th Cir. 2008), as amended (Sept. 16, 2008). “In determining
whether to preclude introduction of evidence pursuant to FRCP 37, courts consider (1) the
surprise to the party against whom the evidence would be offered; (2) the ability of that
party to cure the surprise; (3) the extent to which allowing the evidence would disrupt the
trial; (4) the importance of the evidence, and (5) the nondisclosing party's explanation for
its failure to disclose the evidence.” San Francisco Baykeeper v. W. Bay Sanitary Dist.,
791 F. Supp. 2d 719, 733 (N.D. Cal. 2011). Defendants explain that the study was not
disclosed during fact discovery because it was finalized only shortly before it was produced
on March 8, 2021, in connection with defendants’ expert disclosures, and argue that
plaintiffs cannot demonstrate prejudice based on that delay because they have not sought
to reopen Sandell’s December 9, 2020 deposition. D. Obj. Resp. at 6-7. Here, given that
the Court does not rely on Sandell’s declaration testimony, the failure to disclose appears
harmless. As such, the Court OVERRULES the request to strike the Sandell declaration.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

2021, defendants filed a reply, dkt. 113 (“Reply”); along with a response to plaintiffs
evidentiary objections and motion to strike the Sandell declaration, dkt. 114 (“D. Obj.
Resp.”); a response to plaintiff's separate statement of undisputed facts, dkt. 115
(“RPSUF’”); and objections to plaintiffs expert declaration evidence,” dkt. 116 (“D Obj.”).
The Court held a hearing on June 14, 2021. Having carefully considered the parties’
arguments, the Court finds and concludes as follows.
I. BACKGROUND
The following facts are not meaningfully disputed and are set forth for purposes of
background. Unless otherwise noted, the Court references only facts that are
uncontroverted and as to which evidentiary objections have been overruled.
A. The Fund
The Intellectual Property Rights Distribution Fund (the “Fund”) was formed on
September 16, 1998, with the execution of the Agreement and Declaration of Trust by
AFM, the American Federation of Television and Radio Artists, and the Fund Trustees.

However, the Court grants plaintiff leave to re-open the Sandell deposition, limited to the
topic of the “50 Song Study” and to no more than two (2) hours.
Plaintiff also asserts numerous other evidentiary objections to defendants’ declaration
evidence, including that it is irrelevant and not founded in personal knowledge. “In
motions for summary judgment with numerous objections, it is often unnecessary and
impractical for a court to methodically scrutinize each objection and give a full analysis of
each argument raised.” Capitol Records, LLC v. BlueBeat, Inc., 765 F. Supp. 2d 1198,
1200 (C.D. Cal. 2010). This is especially true where, as here, many of the objections are
“boilerplate” and made without analysis. Id, To the extent that the Court relies on
objected-to evidence, it has considered and OVERRULED plaintiff's evidentiary
objections.
? Defendants object to the expert declarations of Mark Bookman, Kerry Adams, and
Barrie Kessler on hearsay and relevance grounds. Because the Court does not rely on the
objected-to declarations, it need not reach defendants’ objections.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

SUF § 1. On July 26, 2012, AFM and SAG-AFTRA? entered into an amended and restated
Trust Agreement. SUF § 5.
The Fund was established pursuant to the Copyright Act, 17 U.S.C. § 114, which
provides for a statutory license that permits digital performance and reproduction of
copyrighted sound recordings. 17 U.S.C. § 114 (West). As part of that license, Congress
has established a specific statutory scheme to distribute royalties when copyrighted songs
are performed or otherwise reproduced publicly by means of a digital audio transmission.
Id. Pursuant to Section 114, the Copyright Royalty Board designated SoundExchange, an
affiliate of the Recording Industry Association of America, as the sole entity to collect
royalties for those digital performances. Id. Then, pursuant to Section 114(g)(2), the
royalties are distributed among the various artists, musicians, and copyright holders
associated with a given song, as follows:
(A) 50 percent of the receipts shall be paid to the copyright owner . . .
(B) 2 2 percent of the receipts shall be deposited in an escrow account
managed by an independent administrator jointly appointed by copyright
owners of sound recordings and the American Federation of Musicians (or
any successor entity) to be distributed to nonfeatured musicians (whether or
not members of the American Federation of Musicians) who have performed
on sound recordings.
(C) 2 2 percent of the receipts shall be deposited in an escrow account
managed by an independent administrator jointly appointed by copyright
owners of sound recordings and the American Federation of Television and
Radio Artists (or any successor entity) to be distributed to nonfeatured
vocalists (whether or not members of the American Federation of Television
and Radio Artists) who have performed on sound recordings.

3 In 2012, the American Federation of Television and Radio Artists (“AFTRA”) merged
with the Screen Actors Guild (“SAG”) to become SAG-AFTRA. References to “SAG-
AFTRA” in this order should be read to encompass the current union and its predecessor
entities.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

(D) 45 percent of the receipts shall be paid, on a per sound recording basis, to
the recording artist or artists featured on such sound recording . . . .
17 U.S.C.A. § 114(g)(2)(A)-(D) (West); SUF 9] 2-4. Since 1998, the Fund has operated
as the “independent administrator” to receive royalties from SoundExchange and distribute
those royalties to non-featured musicians and vocalists (collectively, “non-featured
performers”), pursuant to this statutory scheme. SUF {§ 2, 6. As the statutory
“independent administrator,” the fund is required to distribute royalties to non-Union non-
featured performers, as well as to non-featured performers who are Union members, and
may “deduct from any of its receipts, prior to the distribution of such receipts to any person
or entity entitled thereto ... [its] reasonable costs.” SUF 4 3-4.
The Fund is a tax-exempt 501(c)(6) organization for federal tax law purposes. Id. §
7. The Fund’s employees are not government employees and are not paid by the federal
government for their work at the Fund. SUF § 9. Likewise, the Fund’s officers and
Trustees are not appointed by the federal government. SUF 4 10.
The Trust Agreement requires that three of the Fund’s six Trustees be appointed by
each of AFM and SAG-AFTRA. SUF § 11. Under the Trust Agreement, at least one of
the three Trustees appointed by each Union must be a “rank-and-file” Union member, SUF
| 12, and provides that the “Trustees shall not receive compensation for the performance
of their duties.” SUF § 13; dkt. 109-1 at 59. By its own terms, the Trust Agreement
empowers the Trustees to construe its terms, vests the Trustees with authority to determine
the nature and amount of payments that are distributed to non-featured performers, and
provides that no non-featured performer “shall have any right, title, or interest in or to the
Fund” or any Fund assets except as determined by the Trustees. SUF 4] 14-17. In addition,
the Trust Agreement states that the Trustees are authorized to “purchase or obtain from the
AFM [or] SAG-AFTRA ... any data helpful for the identification and location of artists
eligible for renumeration or the identification of recorded or other performances covered
by an agreement for the receipt and distribution of renumeration.” SUF § 18.
B. The Fund’s Operations
Every year, SoundExchange delivers to the Fund the royalties allocated to non-
featured performers under the Copyright Act and a “Frequency Report” showing the
royalties attributed to each track based on the frequency of performance. SUF § 19. The

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

Fund then attempts to distribute royalties to as many non-featured performers as possible,
provided that the performer is entitled to an amount that is more than de minimus ($10).
SUF 4 20. At present, the Fund maintains its own staff of researchers to identify non-
featured performers to whom royalties are owed. PSUF [ff 5-6.
The manner in which the Fund’s distribution process is conducted varies based on
whether a particular “Covered Recording” (i.e. a song for which the Fund has allocated
royalties) matches any track in the Fund’s own database of tracks that have been researched
in prior years. SUF §§ 21-22. Covered Recordings that “match” with tracks in the database
are paid out without additional research conducted by the Fund, whereas other tracks must
be research by the Fund’s staff. SUF § 23. If a Covered Recording requires research, the
Fund’s research department looks to multiple sources to identify and locate the correct non-
featured performer(s) who performed on that Covered Recording, including session
reports, other information provided by the Unions, online resources, and claims received
from non-featured performers. SUF § 24; PSUF § 6, 56. If the Fund is unable to locate a
performer after research is conducted, the information about the performer that is known
to the Fund is entered into an Unclaimed Royalties list that is published on the Fund’s
website.
Royalties associated with a Covered Recording are divided among all of the non-
featured performers who can be identified as having performed on that recording. SUF §
26. If no non-featured performers performed on a given Covered Recording, then the
royalties associated with that track are allocated among the remaining non-featured
performers who performed on other Covered Recordings, based on the frequency with
which each track was played. SUF § 27.
For approximately the first ten years of its existence, the Fund was staffed by one-
full time employee and its Administrator, Dennis Dreith, and shared office space and
resources with the Film Musicians Secondary Markets Fund. SUF {§ 30, 31. During that
period, the Fund collected and distributed less than $10 million annually, and no more than
$5 million in each of its first five years. SUF 4§ 32, 33. Beginning in approximately 2010,
* The parties appear to dispute the extent to which the Fund’s research and distribution of
royalties is limited by staffing and resources; plaintiff contends that all performers with a
track on the frequency list will be paid “once the royalty amount crosses” the threshold
for non-de minimis payments specified by the fund’s guidelines. See GDF 23, 28.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

the amount of statutory royalties received by the Fund from SoundExchange began to
substantially increase due to the increased use of digital streaming services including Sirius
XM Satellite Radio and Pandora. SUF § 34. The Fund subsequently hired additional staff,
made Dreith its full-time Executive Director, paid by the Fund, and acquired its own office
space. See SUF 37-39. Dreith retired from the Fund in 2017. SUF fj 40-41.
C. Services Provided by the Unions
Since the Fund’s inception, the Unions have provided the Fund with information and
other services of the type that is necessary to identify and distribute royalties to non-
featured performers. SUF {| 43. Non-featured performers represent a small percentage of
each Union’s membership, and approximately half of the non-featured performers who are
Fund royalty participants are not members of either Union. SUF {jf 45-47.
The performer and track information provided by the Unions is derived from records
that have been collected, complied, and maintained as part of a large-scale, ongoing effort
by the Unions over the course of decades. SUF § 48. The Union’s records are derived
from session reports (also termed “B-forms”), which contain identifying information for
some or all of the non-featured musicians and vocalists who performed at the sessions
being reported. SUF § 49. Session reports are expected to compile information related to
both Union members and non-Union members.* SUF § 50. This data and identifying
information is maintained in the ordinary course of the Unions’ operations because
facilitate the Unions’ work to ensure that listed performers are paid for their work at
recorded sessions. PSUF §§ 8, 17. Session reports are also sent to the Unions’ pension
funds, without charge, and are shared with the Film Musicians Secondary Markets Fund
and Industry Sound Recordings Distribution Fund.®° PUSF §§ 18, 58.

> Plaintiff does not dispute that session reports that are completed are expected to include
this information. However, he contends that session reports are prepared only for Union
session recordings and that “the Union session forms are sometimes incomplete and are
not even reliably completed for all Union-session recordings.” GDF § 50.
© The parties appear to dispute whether the Film Musicians Secondary Markets Fund and
Industry Sound Recordings Distribution Fund receive these reports without cost, or provide
compensation covering access to this data via collective bargaining agreements. See
RPSUF 458.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

Over the lifetime of the Fund, the Unions have fielded thousands of requests from
the Fund for session and performer information. SUF §] 56, 57. Those requests are
handled by Union staff, using a mix of hard copy and electronic repositories located at
and SAG-AFTRA chapters in New York, Los Angeles, and Nashville. SUF □ 59-
60, 62. Fulfilling each individual data request from the fund can take a Union
representative anywhere from a few minutes to half an hour or longer; in instances where
the request concerns a hard copy form, the Union representative must locate and scan the
requested document to be delivered to the fund electronically. SUF fj 62, 64.
For the first 15 years of the Fund’s operations, the Unions did not charge the Fund
for any information or services they provided. SUF § 44.
D. The Trustees’ Approval of the Data Purchase and Service Agreement
On July 22, 2013, the Fund entered into a Data Purchase and Services Agreement
(the “Services Agreement”) with the Unions. SUF { 76. Pursuant to the Services
Agreement, the Unions agreed to provide the Fund with information from its member
databases, for the purpose of enabling the Fund to obtain contact information for Union
members who are entitled to receive royalties, and to provide the Fund with access to
session reports and other information of the type that is necessary to identify and contact
non-Union royalty recipients. SUF 77. In addition to the provision of data, the Service
Agreement provides that each Union shall make efforts to further the interests of the Fund
and its beneficiaries through participation in certain domestic and international music
industry forums, and with respect to activities related to the U.S. Copyright Office and
other U.S. governmental entities.’ Dkt. 109-1 at 266; see also SUF $f 66-73. In exchange
for these data and services, the Services Agreement provides that the Unions are to receive
compensation in the form of 3% of the royalty receipts allocated for distribution by the
Fund in each distribution cycle, with 1.5% going to SAG-AFTRA and 1.5% going to AFM.
SUF 4 78.
Discussions among Fund personnel regarding the concept that the Fund should
compensate the Unions for their data and services had begun at least by 2012. SUF 4 79.

7 The parties appear to dispute the extent to which the Unions would conduct this advocacy
work as part of their own core missions, irrespective of the requirements of the Service
Agreement. See GDF 4 66-73.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

Defendant Crabtree-Ireland testified at his deposition that the Trustees considered whether
the Fund should conduct a study of the time and effort expended by Union personnel in
providing information to the fund, prior to approval of the 3% fee, but determined not to
conduct such a study “to limit the costs associated with setting up the service fee
agreement.”® Dkt. 109-1 at 32; SUF § 81. Fund attorney Patricia Polach, who has also
represented AFM, participated in the process of drafting the service agreement. RSUF □
23, 28.
On May 30, 2013, Drieth (then the Fund’s Executive Director) circulated an email
to all of the Fund Trustees, which included materials listing “AFM & SAG-AFTRA
Service fees” as an item to be considered at the upcoming board meeting. SUF § 82. The
Services Agreement was proposed during the Board of Trustees meeting held on June 4,
2013, and subsequently approved. SUF § 83.
During the June 4, 2013 Board of Trustees Meeting, the Trustees and Dreith
considered whether the 3% fee would cause the Fund’s overall expense ratio to increase to
a level that was out of step with the overall administrative fee charged by certain similar
royalty distribution organizations, which in some cases have expense ratios in excess of
25%. SUF § 84. A concern was raised during the meeting as to whether the 3% fee would
impede the Fund’s ability to reach bilateral agreements with those other performing rights
organizations, and it was concluded that the 3% fee did not pose those risks. SUF 4§ 84-
84. The minutes of the June 4, 2013 Board of Trustees meeting do not reflect that any
concerns were raised about the Services Agreement or that anyone present stated any
objections to the Services Agreement. See dkt. 109-1 at 68-69: SUF 4] 86-87. Defendant
Joyce did not participate in the vote on the Services Agreement because he was out of the
country, PSUF 4 37, and defendant Crabtree-Ireland testified that he abstained from voting
on the Services Agreement without “reach[ing] a conclusion about having a conflict

§ Plaintiff does not dispute that Defendant Crabtree-Ireland so testified. However, he relies
on the testimony of several Trustees who stated that they did not know how the 3% figure
was reached to dispute whether the appropriateness of a 3% fee was in fact analyzed and
whether a study to determine the reasonableness of that fee was in fact considered or raised
with other Trustees. See GDF § 81.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

because [he] felt it was better to not be in that position in the first place.”? Dkt. 111-4 at
65: see also PUSF 4 43.
Defendants Taub, Crabtree-Ireland, Hair, Bouton, Joyce, and Gagliardi each testified
in this action that they believe the Service Fee was reasonable and justified when it was
approved in 2013, citing reasons including the inherent value of the data to the Fund’s
mission, the Union’s lobbying activities on behalf of Fund members, and the work the
Unions conduct to provide data to the Fund. See generally SUF {§[ 92-111. Defendant
Taub testified that she did not evaluate the reasonable cost of the services provided or have
an expectation of how much money would be paid via the 3% Service Fee when voting for
the Services Agreement. Dkt. 111-4 at 647; see also PUSF 4 36.
Between 2014 and 2018, each of the Annual Reports issued by the Fund included a
statement disclosing the Service Fee. SUF □ 112-115. For example, the Fund’s 2015
Annual Report states that “[i]n June 2013, the Fund entered into a Data Purchase and
Service Agreement with the AFM and SAG-AFTRA” covering access to member
information and session reports, under which “the Fund agreed to pay each union 1-1/2%
of the amount distributed in each distribution. During the years ended March 31, 2015 and
2014, the Fund paid $272,845 and $193,814, respectively, to each union.” SUF § 113. To
date, the Fund has paid $10,229,756 in Service Fees to the Unions. PUMF 4 60.
Il. LEGAL STANDARD
Summary judgment is appropriate where “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The moving party bears the initial burden of identifying relevant portions of the
record that demonstrate the absence of a fact or facts necessary for one or more essential
elements of each claim upon which the moving party seeks judgment. See Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986).
If the moving party meets its initial burden, the opposing party must then set out
“specific facts showing a genuine issue for trial” in order to defeat the motion. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); see also Fed. R. Civ. P. 56(c), (e). The

° Plaintiff does not dispute that defendant Crabtree-Ireland so testified, but contends that
the minutes of the June 4, 2013 board meeting do not reflect such an abstention.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

nonmoving party must not simply rely on the pleadings and must do more than make
“conclusory allegations [in] an affidavit.” Lujan v. Nat’] Wildlife Fed’n, 497 U.S. 871,
888 (1990): see also Celotex, 477 U.S. at 324. Summary judgment must be granted for the
moving party if the nonmoving party “fails to make a showing sufficient to establish the
existence of an element essential to that party’s case, and on which that party will bear the
burden of proof at trial.” Id. at 322: see also Abromson v. Am. Pac. Corp., 114 F.3d 898,
902 (9th Cir. 1997).
In light of the facts presented by the nonmoving party, along with any undisputed
facts, the Court must decide whether the moving party is entitled to judgment as a matter
of law. See T.W. Elec. Serv.. Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631 &
n.3 (9th Cir. 1987). When deciding a motion for summary judgment, “the inferences to be
drawn from the underlying facts . . . must be viewed in the light most favorable to the party
opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986) (citation omitted); Valley Nat’] Bank of Ariz. v. ALE. Rouse & Co., 121 F.3d
1332, 1335 (9th Cir. 1997). Summary judgment for the moving party is proper when a
rational trier of fact would not be able to find for the nonmoving party on the claims at
issue. See Matsushita, 475 U.S. at 587.
IV. DISCUSSION
A. Breach of Fiduciary Duty
Plaintiff asserts a claim against the Trustee defendants for breach of fiduciary duty
owed to the Fund in connection with their approval and implementation of the Service Fee.
SAC 456. Specifically, plaintiff alleges that all of the Trustees who approved the Services
Agreement have affiliations with the Unions,’° a “significant conflict of interest,” and, as

10 The trustees are allegedly affiliated with the Unions as follows: (1) Hair is the President
of AFM; (2) Gagliardi serves on the Executive Committee of AFM; (3) Crabtree-Ireland
is the Chief Operating Officer and General Counsel of SAG-AFTRA; (4) Taub previously
served as the National Manager of Sound Recordings for SAG-AFTRA;: (5) Joyce is a
member of SAG-AFTRA and serves on the Board of SAG-AFTRAI:; and (6) Bouton is a
member of AFM and is the Intellectual Property Rights committee Chair of the AMF-
affiliated Recording Musicians Association. Id. 30-35.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

such, breached “their fiduciary duties of loyalty, reasonableness and good faith, diligence
and prudence” and to act solely in the interests of Fund beneficiaries, by implementing the
Service Fee. Id. § 62.
To establish a claim for breach of fiduciary duty, a plaintiff must prove: “(1)
existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately
caused by the breach.” Rothenberger v. Green, No. SACV 13-174-JST (JPRx), 2013 WL
12130035, at *4 (C.D. Cal. May 13, 2013) (citing Stanley v. Richmond, 35 Cal. App. 4th
1070, 1086 (1995)). While “the existence of legal duty in the first instance and its scope
are questions of law,” Kirschner Bros. Oil, Inc. v. Natomas Co., 185 Cal. App. 3d 784, 790
(Ct. App. 1986) (internal citations omitted), “the determination of whether a breach of
fiduciary duty occurs under a particular set of facts is mainly for the trier of facts.” O'Neal
v. Stanislaus Cty. Employees' Ret. Assn., 8 Cal. App. Sth 1184, 1215, 214 Cal. Rptr. 3d
591, 612 (2017) (collecting cases). “Breach may be resolved as a matter of law, however,
if the circumstances do not permit a reasonable doubt as to whether the defendant’s conduct
violates the degree of care exacted to him or her.” Id. Here, the parties do not dispute that
the Trustee defendants owed a fiduciary duty to the Fund. See Mot. at 8.
Defendants seek summary judgment on plaintiff's breach of fiduciary duty claim on
the grounds that undisputed evidence demonstrates that the Trustees made a “prudent,
informed and reasonable decision to approve the Service Fee”, including by relying on
Dreith’s expertise as Fund Executive Director, and therefore did not breach their fiduciary
duties owed to the Fund. See Reply at 9; Mot. at 1-2, 11. First, defendants argue that the
undisputed evidence demonstrates that the Service Fee, assessed as 3% of allocated
royalties, is reasonable and paid in exchange for session report data that is essential to the
Fund’s mission. See Mot. at 11-16. Defendants argue that plaintiff's conflict of interest
theory fails as a matter of law, contending both that the Trust Agreement explicitly
authorizes the Trustees to purchase “data helpful for the identification and location of
artists eligible for renumeration” from the Unions, and that it is beyond dispute that the
Trustees did not “benefit from the Service Fee in their personal capacities, |...] or set the
service Fee at a rate that unfairly favors the Unions at the expense of the Fund
beneficiaries.” Mot. at 16-19.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

Plaintiff responds that the Copyright Act and the Trust Agreement authorize the
Fund to deduct only “reasonable” costs from the royalties it collects, and argue that the
Services Agreement was contrived to give the Unions an equity stake in the Fund and the
3% fee “was not based on the cost or value of the services (i.e. whether said amount was
reasonable’”’).” Opp’n at 10. Plaintiff points to evidence to demonstrate the existence of
genuine factual disputes as to whether the Service Fee constitutes a “reasonable cost” in
exchange for the data provided by the Unions. Opp’n at 12. Plaintiff further argues that
the Service Agreement was implemented through a process replete with conflicts of interest
due to the Trustees’ employment at, and leadership of, the Unions and was structured to
“outstrip any reliable metric of reasonable cost or value, therefore favoring the Unions over
the Fund’s beneficiaries.” Opp’n at 17. Moreover, plaintiff argues that the Trustee
defendants are not entitled to rely on the business judgment rule or the language of the
Trust Agreement to negate their conflicts of interest because neither absolves a conflicted
fiduciary who acts in bad faith or unfairly. See Opp’n at 11 (citing F.D.LC. v. Faigin,
No. CV 12-03448 DDP CWX, 2013 WL 3389490, at *5 (C.D. Cal. July 8, 2013) (quoting
Cal. Corp. Code § 309)), 17 (citing Rest. 3d of Trusts § 78 cmt. c(2) (“no matter how broad
the provisions of a trust may be in conferring power to engage in self-dealing or other
transactions involving a conflict of fiduciary and personal interests, a trustee violates the
duty of loyalty to the beneficiaries by acting in bad faith or unfairly.”)
Triable questions of fact exist that preclude the Court from granting summary
judgment to the Trustee defendants.

1! Plaintiff further contends that the Service Fee is prohibited by 31 U.S.C. § 9701, which
provides that charges imposed by federal agencies must be fair and based on the “cost” or
“value” of services provided by the agency, in light of the “public policy or interest served.”
At oral argument, counsel for plaintiffs requested that the Court omit its discussion of §
9701 from this order, arguing that the statute’s applicability was not fully briefed on the
motion for summary judgment. Having further reviewed the parties’ filings and cited
authorities, however, the Court finds that § 9701 is inapposite here both because the Fund
is not a federal agency and because, even assuming arguendo that the Fund were a federal
agency, the statute applies to charges assessed by the subject agency, not fees paid by that
agency.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

For example, there are triable issues of fact as to whether the Trustee defendants
breached their duty of loyalty to the Fund by conceiving of and entering into the Services
Agreement to benefit the Unions, while employed by the Unions. The duty of loyalty
requires a trustee to “display throughout the administration of the trust complete loyalty to
the interests of the beneficiary and [...] exclude all selfish interest and all consideration of
the interests of third persons.” In re Northrop Grumman Corp. Erisa Litig., No. CV 06-
06213 MMM (JCx), 2015 WL 10433713, at *26 (C.D. Cal. Nov. 24, 2015) (citing G.
Bogert & A. Hess, The Law of Trusts and Trustees § 543 (3d ed. 2015) ) (emphasis added).
Moreover, “|t]he business judgment rule does not shield actions taken without reasonable
inquiry, with improper motives, or as a result of a conflict of interest.” Everest Investors
8 v. McNeil Partners, 114 Cal-App.4th 411, 430, 8 Cal-Rptr.3d 31 (Cal.Ct-App.2003).
Here, there is disputed evidence regarding the genesis of the Services Agreement and
whether the Trustees’ intended to provide a windfall to the Unions via the Service Fee. It
is undisputed that the amount of statutory royalties received by the Fund has increased
since 2010, due to increased use of digital streaming services such as Sirius XM Satellite
Radio and Pandora. SUF § 34. There is evidence, including testimony from the Trustees,
that supports the conclusion that the Service Fee was implemented in 2013 because it was
recognized that the Union’s data was valuable to the Fund’s efforts to distribute those
increased royalties. See e.g. SUF 79-81. However, other evidence suggests that
implementation of the Service Fee was motivated by Union financial interests. For
example, Dreith testified that defendant Hair (then President of AFM) told him repeatedly
that Hair:
felt it was unfair that the unions had invested a great deal of time and money
and energy to help pass the copyright law and establish the fund |...] but yet
the AFM was going through a lot of financial difficulties and didn’t have the
money to pay for a lot of things that he wanted to do, and he felt 1t was unfair
that the fund had all this money, and he felt he should have some of it.
Dkt. 111-4 at 184-185. Dreith further testified that, in about 2010 or 2011, Hair rejected
suggestions that the Fund should “basically compensate [the Unions] for the work they had
done and reimburse them for their expenses” because Hair did not believe a rermbursement
or “one-time fee” would be “fair” to the Unions. Id. at 156, 161. There is conflicting
evidence as to whether defendant Crabtree-Ireland (SAG-AFTRA COO and General
Counsel), who testified that he abstained from voting on the Services Agreement because

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

“T didn’t feel like it would be great for me to participate in that and then sign the document
on behalf of SAG-AFTRA” in fact participated in a consensus approval of the service
agreement. Dkt. 114-1 at 61; see also GDF 86-87. In addition, the parties dispute whether
the Fund’s attorney, Patricia Polach, represented both the Fund and the Unions with respect
to the Services Agreement, and was therefore conflicted. Compare SUF 89, with dkt. 111-
4 at 203 (“she was counsel for the fund, counsel for the AFM, and counsel for SAG-
AFTRA”). These disputed questions of material fact preclude the Court from determining
as a matter of law that the Trustees did not breach their duty of loyalty to the Fund.
Nor can the Court determine, at this time, whether the amount of the Service Fee,
assessed as 3% of all royalties allocated to non-featured performers by the Fund, represents
a “reasonable” cost. The parties agree that the Trustees have a duty to administer the Fund
“diligently and in good faith, in accordance with the terms of the trust and applicable law.”
Rest. 3d of Trusts § 76 (2007). The record before the Court is replete with conflicting
evidence regarding the value of the Unions’ data and other services to the Fund, the
availability of alternate data sources, and the Trustees’ diligence in ascertaining the
reasonableness of setting the Service Fee at 3%. For example, defendants put forward
testimony stating that the Union data is “something that is not available anywhere else”
and losing access to that data would impair the Fund’s ability to locate and pay
beneficiaries, but other evidence suggests that the Fund conducts much of its research using
other records and online sources, and could purchase at least some sound recording
contracts from other entities, such as the Union pension funds, at a lower price.'!* See GDF
51-54. In addition, although each of the Trustee defendants has testified in this action that
they believe the amount of the Service Fee is justified, and there are communications from
Dreith to the Trustee defendants stating that a Service Fee was “highly warranted,” see e.g.
SUF 80, 90, defendant Taub also testified that she did not evaluate the reasonable cost
of the Union services, or the cost to the Unions in providing them, and did not “have an
expectation of how much money would actually be paid from The Fund to the unions under
the service agreement,” prior to voting to approve the Service Agreement. Dkt. 111-4 at
647-48. In light of these factual disputes, the Court cannot determine at this stage that the
Service Fee is reasonable as a matter of law. See Evanston Ins. Co. v. OEA, Inc., 566 F.3d
' Defendants contend that the contracts the Fund has previously purchased from the Union
Pension Funds are not “session reports,” but do not appear to dispute that the contracts are
a potential source of identifying information for non-featured performers.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

915, 920 (9th Cir. 2009) (“reasonableness becomes a question of law and loses its triable
character if the undisputed facts leave no room for a reasonable difference of opinion.)
(emphasis added).
Accordingly, the Court DENIES defendants’ motion for summary judgment with
respect to the breach of fiduciary duty claim.
B. Conversion
Plaintiff asserts a claim against all defendants for conversion. SAC 4] 71-79.
Specifically, plaintiff alleges that he and the class have an ownership interest in specific
royalties held by the Fund and that the “Unions and Trustees intentionally and substantially
interfered with Plaintiff’ s and Class Members’ rights by implementing a Service Fee which
prevented Plaintiff and the Class from accessing the full amount of their rightful property.”
Id. 72, 74. “Conversion is the wrongful exercise of dominion over the property of
another. The elements of a conversion claim are: (1) the plaintiff's ownership or nght to
possession of the property; (2) the defendant's conversion by a wrongful act or disposition
of property rights; and (3) damages.” Lee v. Hanley, 61 Cal. 4th 1225, 1240 (2015)
(citations omitted).
Defendants seek summary judgment on plaintiff's conversion claim on the grounds
that plaintiff and members of the class do not have a property interest in the royalties
distributed by the Fund or in the amount of the Service Fee, when deducted as a “reasonable
cost.” Mot. at 20-22. Specifically, defendants argue that because the Copyright Act
requires the Fund to collect and distribute royalties to non-featured performers as a class,
but does not does not explicitly proscribe how individual distributions must occur, plaintiff
and members of the class do not have a cognizable property interest sufficient to support a
claim for conversion. Mot. at 20. In addition to relying on the Fund’s discretion “to
distribute and allocate royalties” under the Copyright Act, defendants further contend that
the Fund’s authority to deduct “reasonable costs” in furtherance of “collection, distribution
and administration of the royalties” provides “a degree of discretion inconsistent with the
existence of an enforceable property right” in the “amount of the Service Fee.” Id. at 22.
Plaintiff argues in opposition that summary judgment is not warranted on his
conversion claim because, as the Court found at the motion to dismiss stage, the Copyright
Act grants non-featured performers a cognizable property interest in the royalties held by

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

the Fund. Opp’n at 19-20. Plaintiff also contends that that the “reasonable costs” provision
of the Copyright Act is not inconsistent with a finding of a cognizable property interest
because “[s]ection 114 does not merely entitle performers to “reasonable royalties,” such
that the measure is left entirely to the Fund, but to defined royalties of specified
percentages, with [d]efendants’ discretion cabined to only certain deductible costs.” Id. at
21.
a. Plaintiff's Property Interest In the Royalties
First, consistent with its reasoning at the motion to dismiss stage, the Court finds
that the Copyright Act supports plaintiffs claimed property interest in royalties due to him
via the Fund. To claim a property interest, one “must ... have a legitimate claim of
entitlement to it.” Bd. Of Regents v. Roth, 408 U.S. 564, 577 (1972)). Property interests
“are created and their dimensions are defined by existing rules or understandings that stem
from an independent source such as state law—tules or understandings that secure certain
benefits and that support claims of entitlement to those benefits.” Id. (citing, as an example,
the property interest created by welfare benefits, given the statute's clear eligibility
definitions). “Whether an expectation of entitlement is sufficient to create a property
interest ‘will depend largely upon the extent to which the statute contains mandatory
language that restricts the discretion of the [decisionmaker].’” Allen v. City of Beverly
Hills, 911 F.2d 367, 370 (9th Cir. 1990) (citing Jacobson v. Hannifin, 627 F.2d 177, 180
(9th Cir.1980) ). Accordingly, “a statute must contain ‘particularized standards or criteria’
to create a property interest.” Doyle v. City of Medford, 606 F.3d 667, 673 (9th Cir. 2010)
(citing Allen, 911 F.2d at 370-71). “A regulation granting broad discretion to a decision-
maker does not create a property interest.” Id. at 672-73.
The Court finds that the Copyright Act’s requirements are sufficiently stringent to
grant non-featured performers a cognizable property interest in royalties held in escrow
and payable by the Fund. Section 114 states with particularized precision that “a nonprofit
collective ... shall distribute [royalty receipts] as follows: ... (B) 2 % percent of the receipts
shall be deposited in an escrow account managed by an independent administrator ... to be
distributed to nonfeatured musicians ... [and] (C) 2 % percent of the receipts shall be
deposited in an escrow account managed by an independent administrator ... to be
distributed to nonfeatured vocalists.” 17 U.S.C_A. § 114 (West). Pursuant to the statute,
the Fund's administrators are considerably restricted in how they distribute royalties: the

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

Copyright Act specifically determines the percentages to which the various artists and
copyright holders, including “nonfeatured musicians” and “nonfeatured vocalists” are each
entitled.
The Court is unpersuaded by defendants’ arguments that the degree of discretion
exercised by the Fund in selecting which recordings to research, allocating royalties to
performers on those royalties, or setting a “de minimus” threshold under which it will not
cut checks compels a contrary conclusion or otherwise suggests that reading the Copyright
Act to confer a property right would “lead to an absurd result.” See Mot. at 21-22 (citing
Andrews v. Sirius XM Radio Inc., 932 F.3d 1253, 1260 (9th Cir. 2019)). As an initial
matter, although the text of the Copyright Act does not in so many words entitle each non-
featured performer to “his or her pro rata share” of the royalties generated by each sound
recording, it entitles the non-featured musicians and vocalists appearing on the sound
recording each to a specific amount: “2 '2 percent of receipts” less only “reasonable costs,”
even if only one non-featured musician or vocalist appears on the track. Defendants do not
point to any authority suggesting that the Fund could, for example, identify five non-
featured musicians who performed on a particular sound recording, but choose to allocate
the 2.5% in royalties to only two of them, and the Court finds that, given the royalties’
similarity to earned but unpaid wages, such a reading of the Copyright Act would create
the “absurd result” that defendants seek to avoid. Likewise, defendants present no
authority to support their argument that a finding that non-featured performers have a
cognizable property interest in royalties held in escrow by the Fund would “impose a legal
duty on the Fund to identify each recipient and distribute funds to him or her—whether or
not it was economically sensible or administratively feasible to do so,” nor is the Court
aware of any such authority.'? See Reply at 19.
As such, summary judgment is not warranted on the grounds that plaintiff and the
class lack a cognizable property interest in royalties held by the Fund.
b. Deduction of “Reasonable Costs”
As noted above, defendants also contend that, even assuming plaintiff has a
cognizable property interest in his royalties, the Fund’s authority to deduct “reasonable

‘3 For example, defendants would also be under no legal obligation to “boil the ocean”
seeking out the owner of a book misplaced in their offices.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

costs” in furtherance of “collection, distribution and administration of the royalties”
provides “a degree of discretion inconsistent with the existence of an enforceable property
right” in the “amount of the Service Fee.” Mot. at 22-23. As such, defendants argue that
summary judgment on plaintiff's conversion claim is appropriate because the Service Fee
is a “reasonable cost” within the meaning of the Copyright Act. Id. at 23.
The Court is unpersuaded that plaintiff's property interest is eliminated by the
Copyright Act’s “reasonable costs” provision.” See 17 U.S.C. § 114(g)(3). As an initial
matter, none of the cases upon which plaintiff relies to argue that the appearance of the
term “reasonable” in the statute precludes a property interest addresses a fact pattern or
statutory scheme that is similar to the circumstances presented here, in which the Fund acts
as the “independent administrator” of an escrow account holding royalties payable to non-
featured performers and may deduct only “reasonable costs.” For example, Baumgardner
v. Town of Ruston, concerns the amount of fees that a State of Washington municipal land
use board may charge as a matter of Washington state law, and found plaintiffs had not
“convincingly shown” a federal due process interest in the fees charged both on the grounds
that the municipality possessed discretion to determine the reasonable fee, and as a matter
of federal constitutional avoidance. 712 F. Supp. 2d 1180 (W.D. Wash. 2010) (quoting City
of Los Angeles v. County of Kern, 581 F.3d 841, 846 (2009)). Likewise, neither the
Supreme Court’s holding in Town of Castle Rock v. Gonzalez that a statute directing that
police “shall use every reasonable means to enforce a restraining order” does not create a
property interest depriving police of their discretion in making arrests, 545 U.S. 748, 761,
125 S. Ct. 2796, 2806, 162 L. Ed. 2d 658 (2005), nor the Ninth Circuit’s holding in
Jacobson v. Hannifin that there is no due process right to a Nevada gaming license because
the Nevada Gaming Commission has discretion to deny a license to any applicant provided
that “the basis for its decisions be reasonable,” 627 F.2d 177, 180 (9th Cir. 1980), stands
for the proposition that a performer has no property interest in the amount of “reasonable
fees” deducted from their royalties.
Moreover, a finding that plaintiff may not assert a property interest in the precise
amount of “reasonable costs” assessed by the Fund would not be sufficient to support
summary judgment in defendants’ favor here. That is because, as the Court has identified
with respect to plaintiff's breach of fiduciary duty claim, there are significant unresolved
factual disputes as to whether the Service Fee is a “reasonable cost” within the meaning of
the Copyright Act. See infra at IV.A; see also MTD Order at 9 (17 U-S.C. § 114(g)(3)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

“only allows the deduction of “reasonable,” rightful costs”). Those disputed questions of
material fact as to whether the amount of the Service Fee is unreasonable preclude the
Court from determining as a matter of law that plaintiff and the class have no cognizable
property interest in any of the Service Fees that have been deducted by the Fund.
For the foregoing reasons, defendants’ motion for summary judgment as to
plaintiff's conversion claim is DENIED.
C. Money Had and Received
Plaintiff asserts a claim against all defendants for money had and received, alleging
that the Trustees and the Unions have received and are currently retaining royalties that
belong to plaintiff and the class, have benefited from their receipt, and are indebted to
plaintiff and the class for that money. SAC 4 65-66. “The count for money had and
received states in substance that the defendant is indebted to the plaintiff in a certain sum
“for money had and received by the defendant for the use of the plaintiff.’ ” 4 BLE. Witkin
et al., Cal. Proc. § 561 (5" ed. 2008).
Defendants move for summary judgment on plaintiff's money had and received
claim only on the grounds that “if [p|laintiff cannot establish that the decision to approve
the Service Fee constituted a breach of fiduciary duty” then he necessarily cannot “establish
that “equity and good conscience’ requires the return of the Service Fee, which is fatal to
his claim for money had and received.” Mot. at 19-20. In reply, defendants concede that
“a common count for money had and received rises and falls with the underlying” claims
for breach of fiduciary duty and conversion because a common count presumes that the
money is owed. Reply at 9 (quoting King v. Bumble Trading, Inc., 393 F. Supp. 3d 856,
870 (N.D. Cal. 2019)).
Because the Court concludes that triable issues of fact remain with respect to
plaintiff's underlying claims for breach of fiduciary duty and conversion, it cannot resolve
the question of whether defendants are indebted to plaintiff and the class for any certain
sum of money. Accordingly, the Court DENIES defendants’ motion for summary
judgment with respect to the money had and received claim.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

D. Declaratory Relief
Plaintiff seeks declaratory relief “determining that the statutory scheme prohibits the
Trustees from diverting three percent of Royalties collected to the Unions, and declar[ing]
the Data Purchase and Services Agreement void and unenforceable.” SAC § 70.
The Declaratory Judgment Act provides that “[i]n a case of actual controversy within
its jurisdiction,” any federal court “may declare the rights and other legal relations of any
interested party seeking such declaration, whether or not further relief is or could be
sought.” 28 U.S.C. § 2201. The Declaratory Judgment Act “does not create new
substantive rights, but merely expands the remedies available in federal courts” such that
parties may “determine whether they have any legal obligations to their potential
adversaries.” Shell Gulf of Mexico Inc. v. Ctr. for Biological Diversity, Inc., 771 F.3d 632,
635 (9th Cir. 2014).
Defendants seek summary judgment as to declaratory relief only on the grounds that
[plaintiff lacks any ‘viable underlying claim’ against [d]efendants, he cannot be entitled
to declaratory relief.” Mot. at 20 (citing Shaterian v. Wells Fargo Bank, N.A., 829 F. Supp.
2d 873, 888 (N.D. Cal. 2011)).
Here, because the Court finds that triable issues of fact remain as to plaintiffs
underlying claims, summary judgment as to his claim for declaratory relief is not
warranted. Moreover, to the extent that defendants argue in reply that declaratory relief is
unavailable here because it is “duplicative of [plaintiff's] remaining claims,” the Court
notes, as it explained at the motion to dismiss stage, that “[t]he fact that a declaratory
judgment may be granted “whether or not further relief is or could be prayed’ indicates that
declaratory relief is alternative or cumulative and not exclusive or extraordinary.” Fed. R.
Civ. P. 57 advisory committee's notes.
Accordingly, defendant’s motion for summary judgment as to declaratory relief is
DENIED.
E. Punitive Damages
Plaintiff prays for punitive damages as to his claims for breach of fiduciary duty and
conversion. SAC at Prayer for Relief (f). Plaintiff's punitive damages claims arise under
California Civil Code § 3294, which authorizes punitive damages “in an action for breach

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘oO’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

of an obligation not arising from contract, if the plaintiff proves by clear and convincing
evidence that defendant has been guilty of oppression, fraud, or malice.” Scott v. Phoenix
Sch., Inc., 175 Cal. App. 4th 702, 715, 96 Cal. Rptr. 3d 159, 169 (2009). Claims for
punitive damages require an examination of the allegedly wrongful conduct at issue to
determine whether “defendant’s acts are reprehensible, fraudulent, or in blatant violation
of law or policy.” Pac. Gas & Elec. Co. v. Superior Court, 24 Cal. App. 5th 1150, 1170,
235 Cal. Rptr. 3d 228, 244 (2018), as modified on denial of reh'g (July 26, 2018), review
denied (Oct. 17, 2018).
Defendants move for summary judgment as to plaintiff's request for punitive
damages, arguing that no evidence supports a finding that the Fund or its Trustees engaged
in “despicable” conduct as is required to make a showing of “oppression, fraud, or malice.”
Mot. at 24, quoting In re First Alliance Mortg. Co., 471 F.3d 977, 998 (9th Cir. 2006).
Further, defendants contend that “evidence of fraud, malice, or oppression [...] must be
supported by clear and convincing evidence, even at the summary judgment stage.” Mot.
at 24 (quoting Haley v. Cohen & Steers Cap. Mgmt., Inc., 871 F. Supp. 2d 944, 962 (N.D.
Cal. 2012) (granting summary judgment because “a paucity of evidence establish[ed] the
type of conduct that would adequately support an award of punitive damages.”). In
opposition, plaintiff argues that the factual record here is “rife with clear and convincing
evidence that the Trustees knowingly and purposefully violated their fiduciary duties to the
class,” citing to evidence showing that the Trustees acted to benefit the Unions at the
expense of Fund beneficiaries without regard for the appropriateness or legality of the
service fee. Opp’n at 24.
“Summary judgment on the issue of punitive damages is proper only when no
reasonable jury could find the plaintiff's evidence to be clear and convincing proof of
malice, fraud, or oppression.” Madrigal v. Allstate Indem. Co., No. CV 14-4242 SS, 2015
WL 12747906, at *20 (C.D. Cal. Sept. 30, 2015) (internal quotations omitted). Here,
drawing inferences from the facts in a light most favorable to plaintiff, the Court concludes
that a rational trier of fact could find that defendants acted with the requisite malice in
breaching their core fiduciary duties to the Fund’s beneficiaries. Accordingly, the Court
DENIES defendants’ motion for summary judgment as to plaintiff's prayer for punitive
damages.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:18-cv-07241-CAS-PLAx Date June 14, 2021
Title KEVIN RISTO v. SCREEN ACTORS GUILD-AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS, ET AL.

V. CONCLUSION
In accordance with the foregoing, defendants’ motion for summary judgment is
DENIED.
IT IS SO ORDERED.
00 : 18
Initials of Preparer CMJ

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10634007. Public record. Not legal advice.