Jay Martel, a former showrunner for Key & Peele, is seeking class action status for a lawsuit against ViacomCBS and the WGA which he alleges signed a secretive deal that slashed royalties due writers for streaming views of dozens of ViacomCBS series including Key & Peele, The Daily Show with Trevor Noah, and Tosh.0.
The suit — read here — filed yesterday in U.S. District Court for the Central District of California alleges breach of a collective bargaining agreement and breach of duty of fair representation.
It claims that ViacomCBS for years violated royalty payment terms of the WGA’s Basic Agreement “by improperly computing or simply not paying residuals owed for “new media” use, in particular ad-supported video-on-demand services.
Between late 2019 and early 2020, the media company negotiated a collective settlement with the WGA for “systemic underpayment and nonpayment of royalties.” However, the suit claims, the settlement reached — which wiped out all claims by the defendants — was “a single paltry lump-sum payment“ that remained confidential. (In fact, the suit does not give a figure.)
The WGA in statement called Martel’s suit “meritless” but acknowledged that fixed residual payments for streaming are too low under the current agreement.
ViacomCBS reaped “massive windfalls” from exploitation of the series in the AVOD market “while simultaneously obfuscating and failing to remit the full balance of royalties for which the Series’ writers were to be paid,” the suit says, and the settlement “represents a colossal failure of the WGA to adequately discharge its duty of fair representation to Plaintiff and the Class.”
“The Employer Defendants’ massive AVOD exploitation of the Series has resulted in content from the Series being streamed billions of times on revenue-generating digital platforms, such that the paltry Settlement Payment cannot possibly provide adequate compensation for the Employer Defendants’ conduct across the Series’ affected writers.”
“The inexplicable nature of the foregoing renders the WGA’s conduct as alleged not only arbitrary, but possibly made in bad faith. From the amount of the settlement, it would appear that the WGA prioritized its ongoing working relationship with the Employer Defendants ahead of the rights of the Basic Agreements’ intended beneficiaries, rolling up and cleansing the Employer Defendants’ years-long violations of the Basic Agreements for pennies on the dollar.”
In its statement, the WGA West noted the claim it filed against ViacomCBS for failure to pay proper residuals on a number of shows “was settled prior to arbitration for the full amount owed to writers, plus interest payments and penalties for failure to report.”
“The writer’s frustration with the outcome stems from the fact that current industry collective bargaining agreements provide a fixed payment for the first year of free streaming and allow companies to exclude significant ‘promotional’ use of program excerpts from residuals payments. That’s a frustration the WGA shares, but it can only be solved in collective bargaining, not via arbitration, and much less by meritless lawsuits.”
However, the guild also acknowledged that, “There are a variety of fixed residual payments for streaming that are too low. They are all candidates for 2023 negotiations proposals, but it’s far too early to know where the Negotiating Committee might focus.”
ViacomCBS did not respond to request for comment on the suit when contacted by Deadline today.
The suit specifically raised the issue of how ViacomCBS’ used excerpts, which is allowed under the WGA agreement to promote a series. However, excerpts can’t be longer than five minutes or be used on sites that archive the contents of prior seasons of a series and are set up to let viewers easily search the archives.
“Such excerpts do not qualify as promotional use and must be paid for,” it said. “For numerous years leading up to the Settlement, the Employer Defendants uploaded thousands of episodes and excerpts of the Series for AVOD exploitation, yet failed to properly compensate Plaintiff and the Class for these exploitations under the terms of the Basic Agreements. Additionally, the Employer Defendants’ use of excerpts was so prolific that, in many instances, they represented substantial portions of the Series being streamed for free, thereby failing to serve a bona fide promotional purpose and, in fact, cannibalizing other compensable markets (such as home video sales).”
“Employer Defendants” refers to ViacomCBS and a handful of smaller corporate entities.