SAG/AFTRA: Stakes are High in Merger Vote, Lawsuit (Analysis)

By March 30, it’s likely that the unions will either be permanently merged or that there won’t be a redo for at least three years – and probably longer.

The merger battle is joined, both at the ballot box and in the courts.

As previously reported, 131,000 ballot packets tumbled into the mail Monday, and SAG and AFTRA members have begun marking their ballots, even as they continue to absorb the messaging and the media reports.

The diligent – or adventurous – may even read the merger summary, ballot statements (pro and con), merger agreement, proposed constitution and pension and health feasibility report, and the pro-merger and anti-merger websites.

Meanwhile, litigation papers fly through the ether in the wake of an anti-merger lawsuit filed last week (more here, here, here, here, here and here), with the page count in the triple digits and climbing. Both sides will file further pleadings within the next couple weeks.

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Hovering above the blizzard of paper and the fog of war is a harsh truth: for both sides, it’s do or die. The situation is asymmetrical: to succeed, merger advocates have to prevail both in court and at the ballot box, whereas opponents need only find victory in one forum or the other. If the unions merge, it will probably never be undone; and if they don’t, merger probably can’t happen for at least three more years, at the earliest.

Here’s why.

If Merger Advocates Win

If merger advocates manage to repel the lawsuit at a March 26 hearing and turn out to have prevailed at the ballot box four days later, it’s probably game over for opponents.

That’s because – under the terms of the merger agreement – a Yes vote of 60% or more immediately merges the unions the moment the ballots are tallied. In addition, leaders have said they intend to proceed expeditiously with the logistics of combining staff and operations. There will be little chance at reversing the process if members decide by their vote that unification is what they want.

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A denial of the merger opponents’ motion for a preliminary injunction is non-appealable until a trial has concluded, litigators tell The Hollywood Reporter. That means that ballot counting would proceed, and if merger wins, the unions would merged immediately.

Perhaps merger opponents would seek a second preliminary injunction on some other basis, such a demand for a recount if the vote is close – or a new suit might be filed by other opponents with a similar demand. That sounds like it would be an uphill battle, particularly since the votes are tallied by an independent voting company, but perhaps a suit could have traction. Perhaps other opponents would instead (or additionally) file suit on another basis.

But assuming for the sake of argument that such lawsuits aren’t filed, or are quickly disposed of in favor of merger advocates, what options remain for merger opponents?

Probably none. The new constitution makes it difficult for a Local to disaffiliate from SAG-AFTRA, and provides that all assets are property of the parent union. A Hollywood Local without assets is pretty much a losing proposition.

In addition, all of the union’s national contracts – including the big ticket TV/theatrical, basic cable and commercials – repose in the parent, which would consign a disaffiliated Local to the difficult or impossible task of seeking to decertify the parent itself as the contracts expire.

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Likewise, dissolution of SAG-AFTRA is tough under the new constitution. Amendment of the constitution is also difficult. As for the Local’s own constitution, the initial version is specified as an appendix to the national constitution being voted on, and amendments are subject to approval of the national board.

Merger opponents currently possess only 13% of the voting power on the national board, so none of these seem like feasible options. Of course, that might not stop opponents from filing litigation, as they’ve done many times in the past, but success would seem to be elusive.

If Merger Opponents Win

If anti-merger activists prevail at the ballot box – or persuade the judge to delay balloting until an actuarial study of pension and health is performed – the window of opportunity for merger slams shut, most likely for at least three years, and maybe far longer.

To understand why requires examining the SAG calendar, a Rosetta Stone that decodes unspoken strategies and casts light on an otherwise murky future. It’s a longer analysis than the above scenario, because it’s necessary to traverse month by month.

Start at March 26. If the judge agrees with the plaintiffs, he’ll preemptively void the election and require that an actuarial study be done before a binding vote takes place. But that’s an order that SAG alone is powerless to fulfill, because it requires data from both the SAG and AFTRA P&H plans. The plans are legally separate from the unions themselves, and are governed by boards of trustees divided 50-50 between union and management.

There are actually two flavors of management trustee, since some are appointed by the studios and others by the advertising industry. And on the union side, SAG appoints trustees for its plan and AFTRA for its. So there are four distinct constituencies involved.

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Merger advocates say that obtaining the necessary data would require consent and cooperation from the management trustees, but opponents say that the union-side trustees have the necessary information and could use it without management trustees’ consent. Sorting that out might take some time. Then consultants to perform the study would have to be selected and engaged. Add in the time to conduct the study itself, and it would probably be 3-4 months by the time the work is complete.

Alternatively, suppose opponents lose in court but defeat merger at the ballot box when the vote is counted four days later. Some opponents have suggested that the joint SAG-AFTRA committee that developed the merger plan could be reconstituted and the terms of the package renegotiated between the unions.

That seems unlikely, since AFTRA and merger opponents are diametrically opposed on some key structural issues, most of which boil down to whether the new union’s Los Angeles local should be able to dominate the rest of the country (as is currently the case with SAG’s structure), or not. But even if some kind of revision were possible, it would certainly take 3-4 months of regrouping, reappointing, renegotiating, rewriting and reapproving.

Late Summer 2012

Either way, we’ve arrived somewhere between July 1 and August 1. Time to send out the ballots? Nope. Now we’ve fallen into SAG’s election season, the guild’s equivalent of the doldrums so dreaded by ancient mariners – a time during which the union sits becalmed on glassy seas while electoral dramas play out on land.

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Anything contentious gets put on hold lest it become a political football.

The dead period begins in June, as candidates and slates start to emerge, continues through the close of balloting at the end of September and then onward through the third week of October when the newly-elected national board holds its first meeting. A third of the national board seats are up each year.

In the wake of a failed or forestalled merger, those election dramas would be a ferocious exercise. Merger opponents might well pick up seats. The guild could scarcely run a board election and a merger vote at the same time in any case.

Now the calendar’s pages have turned – for those who still have paper calendars, that is – and we’ve reached the beginning of November. No one’s going to be sending out ballots then or in December.

The events of 2008 exemplify how this plays out. The guild’s stalemate over negotiations with the studios began prior to contract expiration on June 30, extended through the end of October and on until mid-January. Amazingly, half of SAG’s year is a dead zone, at least when the union is in turmoil – as it certainly would be in the wake of a failed or frustrated merger.

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In addition, by October of this year, preparations will be under way for what are expected to be contentious negotiations with the advertising industry. The SAG/AFTRA commercials contract expires March 31, 2013, and management is seeking a massive revamp of commercial residuals. Some fear a strike. It’d be a risky time to try to merge.

Would the ad industry agree to extend the contract for a year so that SAG and AFTRA could conduct a merger referendum? Not likely – or, at least, not on terms the unions would find palatable. That’s because the contract already was extended, and for exactly the same reason: it was set to expire March 31 of this year, and the price of the one-year extension to clear the calendar for the merger effort was a freeze on minimums and pension and health contribution levels. Enduring a second year of frozen session fees, and depriving the P&H plans of valuable contribution increases, would be a bitter pill both politically and economically.

Spring 2013

It would come as no surprise if the commercials contract negotiations went down to the wire, or even dragged on after March 31. The two unions – whose relations would probably have been further strained by the non-merger and yet another pilot season dominated by AFTRA – may then face a difficult choice: a bruising strike, which could be fruitless, or acceptance of a controversial contract. Either way, in fact, there are bound to be aspects of the contract for opponents to attack: that’s the reality of negotiating in a difficult economy.

Now we find ourselves at April 1, or beyond – and probably too close for comfort to the SAG election season yet again.

And if 2012 elections after a failed merger would have been ferocious, the 2013 elections would be even more so. It’ll be a presidential election for SAG, and most likely one without an incumbent since, if merger fails, current president Ken Howard will no doubt want to pass the baton – and hand over the battleground – to somebody else. (For that matter, if merger passes, he’ll probably go out on a high note rather than seek a third term.)

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All of these ingredients combined – a failed or frustrated merger attempt, further loss of pilots, a difficult commercials contract, a possible strike and the absence of an incumbent – could provide anti-merger forces with a pathway to winning the union presidency, as well as additional board seats.

Fall 2013

As with 2012, it would be effectively impossible to send out a merger referendum in fall 2013, simply due to the timing of the elections, followed by the holiday season. And that’s assuming that merger advocates retained enough control of the boardroom for it to even be feasible. The union president chairs the national board meetings, meaning that if an anti-merger candidate wins the presidency, a merger referendum might be stalled even if the board were still pro-merger.

In addition, if merger opponents gather strength, they’ll probably begin pressing the fight against AFTRA more vigorously, whether by opposing joint bargaining, seeking to decertify the union or exploring the “acquisition of actors of AFTRA,” in the words of a 2009 resolution sponsored by merger opponents. Such efforts may be enough to dissuade AFTRA from merger even if anti-merger activists don’t control the union.

January – June 2014

Once January 2014 arrives, merger is again blocked by contract negotiations, this time for the TV/theatrical contract. Talks are expected to be difficult: wages, pension and health, new media, and jurisdiction over performance capture work are some of the anticipated issues. The contract doesn’t expire until June 30, 2014.

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With a divided guild and heightened tensions with AFTRA, negotiations would likely go down to the wire – and joint negotiations might even collapse as they did in 2008.

Summer 2014 – January 2015

And then, once again, it’s on to the SAG elections. When the new board meets in late October, there will have been three annual elections since the failed merger attempt. All of the 69 national board seats will have come up for election, as will have the national president and secretary treasurer. All of these elections will have been hard fought.

The holiday season will once again intervene, pushing any possibility of a merger ballot into 2015. The actuarial study done in 2012 will have gone stale by now, but that may be least of merger advocates’ worries: merger opponents may once again control the guild, and the idea of combining the unions may become a dead letter for many years to come.

Five years elapsed between the failed 1998 attempt and the 2003 effort, and another nine years between that one and the current referendum. Whatever happens on March 26 and March 30 will likely determine the shape of Hollywood’s largest unionized group for years to come – and with it, the fate of Hollywood labor generally.

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Twitter: @jhandel