RONALD S.W. LEW, Senior District Judge.
On January 29, 2018, the Ninth Circuit issued a Mandate regarding this Court's prior decision on whether Third Party Myriad Pictures, Inc. ("Myriad") qualifies as an alter ego of Defendant BTG Productions, LLC ("BTG"). The Court had previously denied Plaintiffs Writers Guild of America, West, Inc. (the "Guild"); Mark DiStefano ("DiStefano"); and Guinevere Turner's ("Turner") (collectively, "Plaintiffs") Motion to Add Judgment Debtors on February 9, 2016, holding that Myriad was not an alter ego of BTG. The Ninth Circuit remanded the matter and ordered this Court to apply the alter ego test outlined in
The Court held an evidentiary hearing on June 12, 2018 with both parties offering testimony and exhibits into evidence. Having received, reviewed, and considered the evidence presented, as well as the parties' arguments at the hearing and in their respective briefs, the Court makes the following ruling:
The Guild is a labor organization within the meaning of 29 U.S.C. § 152(5), with its principal place of business in Los Angeles, California. Compl. ¶ 1, ECF No. 1. DiStefano and Turner are members of the Guild.
At all relevant times, the Guild and BTG have been parties to the Writers Guild of America Theatrical and Television Basic Agreement ("MBA"), an industry-wide collective bargaining agreement between the Guild and various employers in the motion picture and television industry. Compl. ¶ 9. Article 10 of the MBA calls for the submission of disputes to arbitration, including disputes over failure to pay compensation due to credited writers and to make required contributions on behalf of writers to the Writers Guild-Industry Health Fund and the Producer-Writers Guild of America Pension Plan (collectively, the "Plans").
In 2012, a dispute arose between Plaintiffs and BTG concerning BTG's failure to pay compensation owed in connection with Breaking the Girls to writers DiStefano and Turner (collectively, the "Writers").
On February 12, 2014, the arbitrator entered the award and judgment against BTG, requiring BTG to pay Plaintiffs over $300,000 relating to credit bonus provisions in the Writers' contracts for Breaking the Girls.
On July 25, 2014, Plaintiffs filed a Complaint [1] against BTG to confirm the arbitration award. On September 12, 2014, the Clerk entered default [14] against BTG. On October 30, 2014, Plaintiffs filed a Motion for Default Judgment against BTG, which included a Motion to Confirm Arbitration Award [17]. On February 3, 2015, this Court issued a Judgment [23], granting Plaintiffs' request for default judgment and confirming the award.
On October 21, 2015, Plaintiffs filed their Motion to Add Judgment Debtors [24], which sought to add D'Amico and Myriad as judgment debtors. On February 9, 2016, the Court denied Plaintiffs' Motion to Add Judgment Debtors in its entirety [36]. Plaintiffs appealed the Court's denial on March 3, 2016 [37]. Pursuant to the parties' stipulation, the Ninth Circuit dismissed the appeal as to D'Amico on October 14, 2016 [45].
On January 5, 2018, the Ninth Circuit issued its Memorandum [47] affirming in part and reversing in part this Court's denial of Plaintiffs' Motion to Add Judgment Debtors. The Ninth Circuit affirmed this Court's holding that Plaintiffs' Motion to Add Judgment Debtors was timely. Mem. ¶ 2, ECF No. 47. The Ninth Circuit held that this Action involves a collective bargaining agreement, thus requiring the application of the federal rather than the state test for determining whether Myriad is an alter ego of BTG.
To prove that a non-union entity is an alter ego of a union entity, and thus subject to a collective bargaining agreement, a plaintiff must make a showing (1) that the two entities were a single employer "and (2) that the non-union firm is used `in a sham effort to avoid collective bargaining obligations.'"
"The criteria for determining whether two firms constitute a single employer are (1) common ownership, (2) common management, (3) interrelation of operations, and (4) centralized control of labor relations."
The second prong of the
"The most important factor is centralized control of labor relations, which can be demonstrated either by showing common control of day-to-day labor matters or by showing that the person in charge of the union company's labor relations made the decision that the second company would be non-union."
On the other hand, D'Amico testified that BTG hired Melissa Wiley, a non-Myriad employee, as the line producer for Breaking the Girls. In that role, Ms. Wiley was responsible for hiring and firing production employees and negotiating rates with vendors. In addition to Ms. Wiley, Jamie Babbit (director of Breaking the Girls) and Andrea Sperling (independent producer of Breaking the Girls), who were also non-Myriad employees, worked with D'Amico to supervise the production staff working on Breaking the Girls. Ms. Babbit and Ms. Sperling also provided notes to the writers of Breaking the Girls. Ultimately, while D'Amico may have been involved in the day-to-day labor operations of both Myriad and BTG, there were at least three non-Myriad employees significantly involved in the day-to-day labor operations of BTG. Therefore, this factor does not strongly weigh in favor of finding Myriad and BTG were a single employer.
It is clear from D'Amico's testimony that BTG and Myriad have common ownership. While Isabell Von Alvensleben owns thirty percent of Myriad, D'Amico owns the remaining seventy percent, and D'Amico is the sole owner of BTG. Accordingly, this factor weighs in favor of finding BTG and Myriad were a single employer.
"Under this factor, the court examines whether the entities have common officers, directors, and managers."
It is clear that BTG and Myriad shared common officers, who were involved in the day-to-day operations of both companies. Mr. Forester testified that he served as the chief financial officer for both BTG and Myriad and was responsible for overseeing the finances for both entities. D'Amico testified that he and Mr. Forester share in the final decision-making for hiring employees at Myriad. D'Amico was also a decision-maker in the decision for BTG to hire Myriad as a sales representative, as well as the decision to hire the bond company.
Additionally, Craig Kessler worked in business and legal affairs at Myriad and was also responsible for hiring writers for Breaking the Girls. David Ducar was an officer of BTG and served as counsel for both Myriad and BTG, handling legal issues for both, including grievances BTG had with the Guild throughout the production of Breaking the Girls.
However, D'Amico testified that Ms. Sperling, who was under contract with BTG, not Myriad, was also responsible for hiring and firing BTG employees. Further, BTG had a line producer, Ms. Wiley, who was not an employee or officer of Myriad, and Ms. Wiley was involved in many of the day-to-day operations of BTG, including serving as the production liaison with the unions.
Ultimately, while BTG may have had non-Myriad employees managing some of its day-to-day operations,
"Evidence relevant to a finding of close interrelationship of operations includes, but is not restricted to, shared use of office space, supplies and equipment, similar client base and operations, as well as any joint undertakings or financial relationships."
However, the invoices Myriad submitted to BTG for Myriad's services related to Breaking the Girls show a common address for both entities. Myriad's Ex. 4. The checks BTG wrote to Myriad for these services also show a common address for both entities. Myriad's Ex. 5. Further, Mr. Forester testified that in dealing with these invoices, he took them to another Myriad employee in Myriad's office who signed the checks to Myriad on behalf of BTG. Therefore, Myriad and BTG's accounting business took place in the same office; Myriad did not even have to leave the office to get paid for the services it was providing to BTG.
BTG and Myriad did not at any point share bank accounts, and there has never been any commingling of funds. However, as noted in the Completion Agreement, which the bond company provided regarding financing of Breaking the Girls, Myriad did invest approximately $88,000 into BTG for the production of Breaking the Girls. Myriad's Ex. 12 at 2. Mr. Forester signed the Completion Agreement on behalf of BTG as its chief financial officer.
Because at least three of the four factors weigh in favor of finding Myriad and BTG are a single employer, Plaintiffs have satisfied the first prong of the
While Plaintiffs have provided evidence sufficient to satisfy the first prong of the
This "reverse alter ego" scenario is the scenario here—Myriad, the non-union entity, was created in 1998, twelve years prior to BTG, the union entity. In such a situation, the Ninth Circuit has declined to recognize a "reverse alter ego doctrine," and instead only finds alter ego liability when there is "an indication that the union entity was using the non-union entity to avoid union obligations."
Plaintiffs have not provided sufficient evidence showing that BTG used Myriad to avoid BTG's union obligations. While BTG and Myriad worked closely together in producing Breaking the Girls, there is no evidence that BTG transferred union work to Myriad to avoid any of BTG's union obligations.
Further, BTG was not wholly reliant on Myriad for its existence; while Myriad performed sales representative services for BTG and invested money into the production, Myriad only invested approximately one-tenth of the budget of the movie, and non-Myriad employees, including Ms. Sperling, Ms. Wiley, and Ms. Babbit, had a hand in managing the production.
Finally, it is hard to show how BTG could even use Myriad to avoid its union obligations, especially since Myriad was created so many years prior to BTG.
Because Plaintiffs have failed to provide evidence of BTG's intent to use Myriad to avoid BTG's union obligations, Plaintiffs have failed to satisfy the second prong of the
Based on the foregoing, the Court declines to find Myriad is an alter ego of BTG, and therefore, Myriad cannot be added as a judgment debtor.