Breaking News New York Times reports that “Conflict of Interest” suit filed against Pisano!


The following article is also posted below as a text only document—-

Actors Union’s Director Accused of Conflict

NY Times
Published: August 2, 2004

LOS ANGELES, Aug. 1 Members of the Screen Actors Guild have begun legal action against the executive director of their union, Robert Pisano, saying his membership on the board of an online DVD rental company creates a conflict of interest that makes him unable to negotiate on their behalf in critical coming labor talks.
The guild members, Scott Wilson and Tom Bower, in papers submitted last week to Federal District Court here, demand Mr. Pisano’s resignation, saying that his being a board member of the DVD rental company Netflix “creates a conflict of interest with his duties as the chief administrator” of the guild.

Mr. Pisano is to be the chief union negotiator in contract talks with Hollywood studios and producers expected to get under way this fall. Under labor law, a federal judge must decide whether the suit can proceed.

The suit points out that Netflix has negotiated preferential terms with five Hollywood studios, allowing Netflix to get low-cost DVD’s and the studios to share in the its revenue. As a shareholder and board member, Mr. Pisano benefits from increased revenue at Netflix, the suit says.

One of the chief areas of contention in Hollywood labor negotiations is the rate of residuals that actors, writers and directors receive from DVD’s, whose sales and rentals have exploded since the last contract was negotiated.

Negotiations with the Writers Guild of American that began in the spring have come to a standstill, in large part over this issue.

Mr. Pisano could not be reached for comment. But the president of the guild, Melissa Gilbert, said the question of a conflict of interest had already been investigated three times by outside lawyers in response to internal challenges.

“This has been brought up three times, and three separate opinions have been rendered by outside counsel that there is no conflict of interest,” she said. She said that a meeting of the national board of directors held on Saturday “reaffirmed our commitment to Mr. Pisano as our chief negotiator.”

But the lawsuit is not the first salvo against Mr. Pisano, a former studio executive at MGM and Paramount. In June the board of the union’s Hollywood branch passed a resolution demanding that Mr. Pisano step aside in the coming negotiations, which are scheduled to begin this fall, along with negotiations for a new contract between the studios and the Directors Guild of America.

“Mr. Pisano is a Trojan horse in our union,” said David Jolliffe, a board member of the Hollywood division. “Netflix has a responsibility to its shareholders to be as profitable as possible. Mr. Pisano’s interest there is to buy DVD’s at the cheapest rate possible. And at SAG, it’s his job to get the highest price possible. The man unequivocally sits in conflict of interest.”

Mr. Wilson said on Sunday, “We want him off the board, out of the guild.”

Hollywood unions have been in a position of weakness in recent years in relation to the Hollywood studios. The unions have been hoping that having the actors, writers and directors all negotiating at once would give them a position of strength. But the question of DVD residuals has highlighted their weakness. Although annual DVD sales and rentals now far exceed box office revenue, the studios have been unwilling to change the formula for calculating residual payments.

Ms. Gilbert said the issue would “most likely” be on the table in the coming talks. “It’s not going to be an easy thing to get,” she said. “It’s not been easy for the writers.”