Avi Lerner Goes to War With Union Over "No Residuals" Promise

Avi Lerner & Sylvester Stallone
Anne Marie Fox

Stallone and Lerner take in the Mississippi from Lerner's hotel room, just seven weeks before "Expendables 2" begins.

On Tuesday, Avi Lerner's Nu Image filed a lawsuit against a technicians union that has the potential to drag in much of the independent film community.

The complaint in California federal court targets the International Alliance of Theatrical Stage Employees and alleges that when Nu Image entered into a collective bargaining agreement in 2006, top union officials made representations that Nu Image would not be obligated to pay residual contribution to health and pension plans.

"Without these representations, Nu Image would not have entered into the CBA with IATSE," states the complaint (read here). "However, these representations were false and they were made to induce Nu Image to enter into the CBA."

Nu Image has produced The Expendables, Hercules, Olympus Has Fallen, Texas Chainsaw 3D and Trespass, among other films.

In May 2013, the directors of the health and pension plans filed a lawsuit against Nu Image to collect residual contributions.

The dispute was on the verge of trial this past February when both sides agreed to settle. Before that happened, Nu Image planned to call to the witness stand many prominent independent producers including Pierre David (who worked on many of David Cronenberg's films), Paul Herzberg (My Week With Marilyn) and Brad Krevoy.

According to Lerner's testimony in a deposition in the prior case, he had regular discussions with other independent producers who told him they weren't asked to pay residuals to IATSE. As an example, Lerner said, "Brad [Krevoy] is a good example because he was making also a movie with a studio, like Dumb and Dumber. It was New Line, and he said 'They'll have to pay residual, New Line.' But when he used to do independent producing which he did a lot, nobody asked him. Nobody wanted him to pay residual[s]."

Nu Image tried to assert an affirmative defense of fraud based on the promise Lerner says he got from union officials, but couldn't due to labor law limitations. Before settling, Nu Image also defending itself by saying IATSE waited too long to make its pension and health contribution claims.

Now, just months after the settlement and represented by attorney Martin Katz, Nu Image is seeking to recover the amounts it paid to resolve claims in the prior lawsuit and also gather other damages resulting from the alleged "no residuals" misrepresentation. Meanwhile, IATSE has been conducting an audit of Nu Image's more recent films, including the Expendables series, so Nu Image also wants assurances it won't have to make contributions going forward.

And the uncertainty could lead Nu Image to approach its production of films differently. According to the complaint, "If Nu Image had known it would have to pay Residual Contributions, it would not have agreed to the Overall CBA or it would have produced these motion pictures in locations outside the reach of the Overall CBA."

In other words, Nu Image could take production outside the United States.

The case was just filed, so IATSE hasn't responded yet. However, the union's likely defense is provided by arguments made in the prior legal fight. There, IATSE said that when Congress passed the Labor Management Relations Act and the Employee Retirement Income Security Act of 1974, "Congress expressed an unequivocal intent to protect workers’ benefit contributions and thereby eliminated many of the concerns typically found in most commercial contract disputes. To ensure that these protections hold, Congress precludes employers from altering the written terms of trust arrangements, based on purported representations not found in the express terms of the agreement."

IATSE continued by slamming "a tale of backroom Hollywood dealings in and around the San Fernando Valley and the Sunset strip" and to what Lerner said happened, IATSE "vigorously [denied] the veracity of this narrative."