In the first decision interpreting the Screen Actors Guild 2009 Commercials Contract Allocation Guidelines, an arbitrator ordered a signatory to double its payments to the SAG-Producers Pension and Health Plans for a model/performer because they were less than the amounts set forth in the guidelines.

A model and performer contracted with Tommy Bahama to provide services in connection with various promotional materials in 2007, including print advertisements, television commercials, and in-store promotional materials. A dispute over terms led to a settlement agreement between Tommy Bahama (represented by Talent Direct, which helps clients produce commercials and pay talent) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA), on behalf of the performer, in which an allocation of 20 percent to the plans was established.

In April 2009, the contract was renewed between the parties, and Talent Direct continued to allocate 20 percent of the total compensation for the pension and health contributions pursuant to the settlement.

But on June 1, 2009, the new Commercials Contract took effect.

SAG-AFTRA argued that Section 46.E of the 2009 Allocation Guidelines required Talent Direct to make a 40 percent allocation, plus pay liquidated damages for late payments. Talent Direct countered that the settlement deal between the parties governed the allocation amounts.

An arbitrator sided with SAG-AFTRA, ruling that the proper allocation under the 2009 agreement between Talent Direct and the performer was governed by the 2009 Commercials Contract.

Emphasizing that arbitrators do not have the authority to ignore or modify any terms of a collective bargaining agreement, the decision said the services provided by the model/performer “fall squarely within” the 40 percent allocation.

Talent Direct’s defenses were unavailing, the arbitrator added. The prior 20 percent allocation “was in settlement of the dispute over the 2007 agreement under the 2003 Commercials Contract which contained no specific guidelines,” and the parties did not have an understanding that the compromise would apply to any future multiple service arrangements.

“It is recognized that [Talent Direct] and [the performer] may not have been aware of the Guidelines when the 2009 agreement was signed,” the arbitrator wrote. “But as signatory to the 2009 Commercials Contract, [Talent Direct] is charged with notice and compliance with its terms.”

The arbitrator also noted that the Allocation Guidelines are rebuttable, but found that Talent Direct failed to present sufficient rebuttal evidence simply based on an argument that the 20 percent allocation was more reasonable given the nature of the services performed.

Talent Direct must pay $15,500 to the relevant pension and health plans plus an additional $3,100 in liquidated damages for late payment, the arbitrator concluded.

To read the arbitrator’s opinion and award, click <a target="_blank" data-cke-saved-href="/uploadedFiles/Content/4_News_and_Events/Newsletters/AdvertisingLaw@manatt/Arbitrator" href="/uploadedFiles/Content/4_News_and_Events/Newsletters/AdvertisingLaw@manatt/Arbitrator" s-decision.pdf'="">here.

Why it matters: In the first decision interpreting the 2009 Allocation Guidelines, the arbitrator relied heavily upon the language of the 2009 Commercials Contract, noting that despite the agreement and settlement deal between the parties, the “most reliable indicator of mutual intent is the words used by the parties in their labor contract.”