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Directors of Motion Picture Industry Pension Plan v. Nu Image Inc.

United States District Court, C.D. California

November 10, 2014

DIRECTORS OF THE MOTION PICTURE INDUSTRY PENSION PLAN ET AL
v.
NU IMAGE INC

David Ahdoot, Peter Dickinson, Kirk Prestegard, Attorneys Present for Plaintiff.

Barbara Fitzgerald, Nicole Diller, Donald Havermann, Attorneys Present for Defendants.

CIVIL MINUTES - GENERAL

CHRISTINA A. SNYDER, District Judge.

Proceedings: PLAINTIFFS DIRECTORS OF THE MOTION PICTURE INDUSTRY PENSION PLAN'S MOTION FOR PARTIAL SUMMARY JUDGMENT (dkt. 65, filed October 6, 2014) DEFENDANT NU IMAGE INC'S MOTION FOR SUMMARY ADJUDICATION (dkt. 69, filed October 10, 2014) DEFENDANT NU IMAGE INC'S MOTION TO AMEND THE COURT'S SCHEDULING ORDER AND FOR LEAVE TO AMEND FIRST AMENDED ANSWER (dkt. 68, October 10, 2014)

I. INTRODUCTION

On May 6, 2013, plaintiffs Directors of the Motion Picture Industry Pension Plan and Directors the Motion Picture Industry Health Plan (collectively, "Plans") filed suit against defendant Nu Image, Inc., an independent film production company. Dkt. 1. The operative first amended complaint ("FAC"), filed December 13, 2013, asserts the following claims: (1) failure to comply with audit obligations pursuant to 29 U.S.C. §1132(g)(2)(E) of the Employee Retirement Income Security Act ("ERISA"); (2) violation of ERISA Section 515, 29 U.S.C. §1145, for failure to make residual contributions to the Plans; (3) violation of ERISA Section 515, 29 U.S.C. §1145, for failure to make certain payroll contributions to the Plans; and (4) breach of contract in violation of Section 301(a) of the Labor Management Relations Act ("LMRA"), 29 U.S.C. §185(a). Dkt. 25.

In brief, the Plans allege that pursuant to several collective bargaining agreements, defendant is obligated to remit pension and health contributions to the Plans when defendant makes films utilizing labor from certain unions. FAC ¶ 8. According to the Plans, defendant has failed to make certain payments on the following twenty-one films: 16 Blocks; Bad Lieutenant: Port of Call New Orleans; Beyond a Reasonable Doubt; Blonde Ambition; The Cleaner; The Code; Day of the Dead; The Expendables; Til Death; Homeland Security; King of California; Leatherface 3D (Texas Chainsaw Massacre); Labor Pains; Mad Money; Major Movie Star; Microwave Park; New Orleans; Olympus Has Fallen; Righteous Kill; Solitary Man; and Wicker Man. Id . ¶ 10.

On October, 6, 2014, plaintiffs filed a motion for partial summary judgment on defendant's affirmative defenses of estoppel and laches. Dkt. 65. Defendant opposed the motion on October 13, 2014, dkt. 70, and plaintiffs replied on October 20, 2014, dkt. 77.

On October 10, 2014, defendant filed a motion for summary adjudication. Dkt. 69. Defendant seeks summary adjudication of the following claims: (1) plaintiffs' first claim for an order compelling Nu Image to provide documents to plaintiffs' auditors; (2) plaintiffs' second and fourth claims as to residual contributions for the seven films Blonde Ambition, The Cleaner, Day of the Dead, King of California, Mad Money, Til Death, and Wicker Man; (3) plaintiffs' third and fourth claims for payroll contributions as to the nine films 16 Blocks, The Cleaner, The Code, Day of the Dead, Double Identity, Mad Money, [1] Rambo IV, Shark in Venice, and Wicker Man. Defendant argues that plaintiffs' first claim is moot, plaintiffs' second, third and fourth claims are barred by the statute of limitations, and plaintiffs' second and fourth claims are barred by the doctrine of laches. Id . Plaintiffs opposed this motion on October 20, 2014, dkt. 86, and defendant replied on October 27, 2014, dkt. 97.

In conjunction with their motion for summary adjudication, defendant also filed a motion for leave to amend the Court's scheduling order and to add an affirmative defense to their amended answer pursuant to Federal Rules of Civil Procedure 15 and 16. Dkt. 68. Specifically, defendant seeks to add a statute of limitations affirmative defense-a defense that forms the primary basis for defendant's motion for summary adjudication. Plaintiffs opposed defendant's motion on October 20, 2014, dkt. 79, and defendant replied on October 27, 2014, dkt. 98.[2] The Court heard oral argument on November 10, 2014. Having carefully considered the parties' arguments, the Court finds and concludes as follows.

II. BACKGROUND

The following relevant facts are not in dispute. Plaintiffs, Directors of the Motion Picture Industry Pension and Health Plans (the "Plans"), are responsible for jointly managing Taft-Hartley pension and health funds for the benefit of 56, 000 employees and retirees in the entertainment industry. Pls' Mot. Summ. J. at 1. The Plans are managed by a Board of Directors consisting of thirty-two Directors, equally divided between those appointed by participating labor unions and those appointed by management. Def's Response to Pls' Uncontroverted Facts ("DRPUF") ¶ 5. The unions that participate in the Plans include the International Alliance of Theatrical and Stage Employees ("IATSE"), the International Brotherhood of Teamsters, the Basic Craft unions, and a few others. Id . ¶ 6.

Defendant Nu Image is a full-service independent production company that produces and markets films domestically and internationally. Pls' Response to Def's Uncontroverted Facts ("PRDUF") ¶ 1. Nu Image typically produces films through single-purpose production entities that it owns or controls. Id . ¶ 2. Nu Image, like most other independent producers, earns revenues through licensing its films' distribution rights to multiple third-party distributors in territories around the world. Id . ¶ 3.

In May 2006, Nu Image negotiated and executed a collective bargaining agreement ("CBA") with IATSE, by the express terms of which Nu Image agreed to be bound by the IATSE-Producer Basic Agreement ("Basic Agreement") and separate Pension and Health Declarations of Trust ("Trust Agreement") (collectively, these three documents are referred to herein as the "Overall Agreement"). DRPUF ¶ 1. Also in May 2006, Nu Image executed the industry standard Agreement of Consent, a Trust Acceptance Agreement, and the 2004-2007 Low Budget Theatrical Agreement (collectively, the "Plan Signatory Documents"). Id . ¶ 2. These Plan Signatory Documents were submitted to the Plans as part of Nu Image's application to become a participating employer in the Plans. Id . ¶ 3. On September 13, 2006, the Plans' Legal Committee approved Nu Image's application. Id . ¶ 12. In executing these documents in 2006, Nu Image became a signatory to the Basic Agreement not for specific films, but with respect to all future films produced by Nu Image within the jurisdiction of the Basic Agreement. PRDUF ¶ 8.

The Plan Signatory Documents call for two types of employer contributions to the Plans-payroll contributions and residual contributions. DRPUF ¶ 15. Payroll contributions refer to payments typically tied to the number of hours worked by qualifying union members on any given production. Id . ¶ 17. Residual contributions are payments based on film revenue generated in secondary markets such as video, free television, and pay television. Id . ¶ 18. Employers are responsible for self-reporting residual contributions, and are required to submit self-generated reports showing their residual contribution payments and gross receipts on films. Id . ¶ 73. The Plans rely on employers to report this information. Id.

Between 2006 and 2009, Nu Image did not pay, and the Plans did not seek to collect, residual contributions. On or about October 12, 2009, the Plans' outside audit firm Nigro Karlin Segal and Feldstein ("NKSF") recommended to the Plans that it audit the residual contributions being made by Nu Image. Id . ¶ 42. NKSF's recommendation was most likely triggered when NKSF discovered a problem with residual contributions while examining the books and records of Nu Image during an audit of Nu Image's payroll contributions on a single film. Id . ¶ 43. On October 13, 2009, the Plans wrote to Avi Lerner, Nu Image's CEO, and informed him that the Plans had engaged NKSF to audit Nu Image's books and records concerning its residual contributions. Id . ¶ 44.

On November 10, 2009, Nu Image executive Trevor Short responded via letter to the Plans, objecting to the proposed audit and claiming that Nu Image had been assured by representatives of IATSE during the 2006 negotiations that Nu Image would not be required to make residual contributions. Id . ¶ 44; PRDUF ¶ 15. Ultimately, however, Nu Image cooperated with the audit, agreeing to toll the statute of limitations as to residual payments between December 17, 2010 and April 16, 2012. PRDUF ¶ 21. The Plans filed suit on May 6, 2013, seeking to collect residuals and payroll contributions allegedly owed by Nu Image as revealed by the NKSF audit.

The content, scope, and consequences of the 2006 negotiations between Nu Image and IATSE officials-which culminated in the signing of the Overall Agreement and Plan Signatory Documents in May 2006-are vigorously disputed by the parties. Nu Image contends that, in April 2006, Matt Loeb, an IATSE official, and Tom Short and Mike Miller-IATSE President and Vice President, respectively, as well as Directors of the Plans-promised that, in exchange for agreeing to be subject to the terms of the Overall Agreement and Plan Signatory Documents for all films produced in the future, Nu Image would be excused from making residual contributions to the Plans. See generally Def's Additional Uncontroverted Facts("DAUF"). The Plans dispute whether any of these promises were made and, even assuming they were made, assert that neither Loeb, Short, nor Miller had the authority to bind the Plans to such promises, let alone to contradict the plain language of the agreements ultimately signed by Nu Image in May 2006. See generally Pls' Statement of Ucontroverted Facts ("PSUF").

The parties also vigorously dispute the facts related to the pre-2006 relationship between the Plans and IATSE on one side, and Nu Image on the other. Defendant's executives testify that, between 1996 and 2006, Nu Image entered into a series of single-project agreements with IATSE on nearly 20 films, through which Nu Image agreed to be bound by substantially the same residual and payroll contribution requirements contained in the 2006 Overall Agreement and Plan Signatory Documents. Def's Statement of Undisputed Facts ("DSUF") ¶¶ 4-7. According to Nu Image, it never paid, and the Plans never sought to collect, residual payments for these pre-2006 films. See generally DSUF.

Defendant devotes significant time arguing that, because the Plans allegedly did not collect residuals on any of these pre-2006 films, Nu Image was justified in relying on the alleged promises of Loeb, Miller, and Short and in not paying residuals on post-2006 films made pursuant to the Overall Agreement and Plan Signatory Documents. However, defendant has not produced any of these single-project agreements, and plaintiffs dispute not only whether Nu Image signed them but, more fundamentally, whether any alleged pre-2006 course of conduct is relevant to the parties' rights under the 2006 agreements. The Court notes that the pre-2006 factual record is anything but clear.

III. 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 nonmoving party must not simply rely on the pleadings and must do more than make "conclusory allegations [in] an affidavit." Lujan v. Nat'l 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. P. 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. P. 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'l Bank of Ariz. v. A.E. Rouse & Co., 121 F.3d 1332, 1335 (9th Cir. 1997). Summary judgment ...


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