SAG/AFTRA: Former Mercer Official Rejects Anti-Merger Lawsuit's Reliance on 2003 Mercer Report

SAG AFTRA Logo - P 2012

SAG AFTRA Logo - P 2012

The former chief actuary of a consulting company that prepared a 2003 report that anti-merger activists rely on in their lawsuit has dismissed their reliance on the report, saying that it would be “impossible for any actuarial analysis” to produce the kind of results they envision.

The statement, by Ethan Kra – who was the chief actuary at Mercer at the time the company produced the report – came in declaration filed Monday in federal court, part of a blizzard of motions filed by each side in the dispute.

ANALYSIS: SAG/AFTRA: Stakes are High in Merger Vote, Lawsuit

The plaintiffs in the suit – anti-merger activists and various celebrities sympathetic to their cause – said “the Mercer actuarial study done in 2003 is exactly what was needed in 2009, 2010, 2011 or even in 2012 to satisfy the Appendix I and 2003 Board Resolution requirements,” which they say requires a report that would answer union members’ questions regarding the impact of SAG/AFTRA union merger on the SAG pension and health plans.

But Mercer’s Kra disagrees that such a study would answer questions regarding pension benefits under a merged plan, saying that plaintiffs’ expert Alex Brucker, an attorney but not an actuary, was asking for the impossible when he demanded that SAG prepare a report that would include “design of a benefit structure under the merged plans.”

Kra responded that “it would be impossible for an actuarial analysis to determine the benefit structure under a merged plan (because) yet-to-be-selected trustees (of a merged plan)” would be responsible for designing the merged plan and “would have to choose from innumerable possibilities” in doing so.

David Venuti, another actuary, declared on behalf of SAG that “any such actuarial study worthless as a guide to any participant.”

With regard to health benefits, health plan consultant Jackson Loos said “any effort now to determine what such a plan would look like would be an exercise of pure speculation.”

In the latest set of papers, Brucker reiterated his call for a report. In addition, another plaintiffs’ expert, actuary Patrick Byrnes, said on behalf of his firm that “it is at a minimum prudent to have the impact of the plan merger evaluated by a qualified actuarial organization under several different designs.”

Byrnes also said that “without performing a study to determine how the combined plans would be merged, there is no way to know precisely if or how much the benefits to SAG members would have to be reduced or if contributions by all members would have to be increased.”

Byrnes’ reference to “contributions by all members” appears to be a misunderstanding of the guild’s pension plan, since contributions are made by producers and studios, not the union members.

Even without a study, Byrnes concluded that “SAG pension plan is relatively richer and more beneficial to the SAG members, than the existing AFTRA plan” and said “in my experience, it is likely that combination of the existing SAG and AFTRA plans will either require additional funding or SAG benefits would have to be reduced.”

However, Byrnes makes no reference to the fact that the two plans’ most recent respective funding notices to members showed AFTRA’s plan better funded by a margin of 6%: i.e., 88.8% vs. 82.81%.

Byrnes also said that “it would be prudent for the Pension Trustees to meet before voting on merger of the unions to discuss cost and benefit implications to the pension plans associated with the merger.” That’s a condition that SAG may not be able to enforce, since half of the trustees are appointed by the studios and advertising industry.

The plaintiffs have claimed that the nine-year old Mercer report was still valid, apparently notwithstanding a myriad of intervening changes in the economy, plan details, the entertainment industry, and allocation of television work between the two unions.

“Based on the conclusions of the 2003 Mercer Report, Plaintiffs and the SAG membership will be imminently and irrevocably harmed” if merger proceeds, said the plaintiffs’ complaint, including by “diminution in value of member benefits, union funds, pension benefits, (and) health benefits.”

The report remained secret for nine years, until The Hollywood Reporter published it last week, along with an analysis.

As THR previously reported, the current lawsuit is the fourth filed by in the last six years against SAG by members of the MembershipFirst group, whose leaders are key plaintiffs in the current suit.

Defendants in the current suit are SAG, guild president Ken Howard, secretary-treasurer Amy Aquino and vice-presidents Ned Vaughn, Mike Hodge and David Hartley-Margolin. In addition, national executive director David White is listed in the caption (i.e., title) of the case, but omitted from the list of defendants in the body of the document.

The plaintiffs are Martin Sheen, Edward Asner, Ed Harris, Valerie Harper, Clancy Brown, James Remar, George Coe, Diane Ladd, Lainie Kazan, Nichelle Nichols, Renee Aubry, Jane Austin, Erick Avari, Steve Barr, Sara Barrett, Terrance Beasor, Michael Bell, Warren Berlinger, Joe Bologna, Ralph Brennen, Alexandra Castro, Jude Ciccolella, Cynthia Lea Clark, David Clennon, Joe D’Angerio, Patricia D’Arbanville, Dick Gautier, Dorothy Goulah, Marty Grey, Sumi Haru, Angel Harper, Basil Hoffman, David Huddleston, Anne-Marie Johnson, David Jolliffe, Kerrie Keane, Peter Kwong, Kurt Lott, Barbara Luna, Eric Lutes, Stephen Macht, Michael McConnohie, Peter Antico, Susan McNabb, Phyllis Timbes, Marguerite Moreau, Traci Murray, Nicole Mandich, Larry Newman, Barbara Niven, Kathleen Nolan, Jack Ong, Peggy Lane O’Rourke, Leslie Parrish, Scott Pierce, Robin Riker, Stephanie Rose, Alan Rosenberg, Alan Ruck, Wendy Schaal, Tascha Schaal, Nancy Sinatra, Cynthia Steele, Renee Taylor, Malachi Throne, Beverly Todd, Jessica WrightandMomo Yashima. In addition, there are a number of other clients in the litigation who are not listed as plaintiffs, including Paul Edney.

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