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Union Ducks Studio’s Spat Over Residuals

LOS ANGELES (CN) - A federal judge this week dismissed an independent film company's lawsuit against a film workers' union over payment obligations under a collective bargaining agreement.

U.S. District Judge Christina Snyder dismissed without prejudice Nu Image Inc.'s $5 million complaint filed last year against the International Alliance of Theatrical Stage Employees. Nu Image claimed the union made misrepresentations of the film company's payment obligations under a collective bargaining agreement.

Prior to 2006, Nu Image and the union entered into bargaining agreements on a per-film basis, which never required the film company to make residual contributions to the health and pension plans for the motion picture industry, according to the order. Residual contributions are derived from revenue earned in secondary markets, like DVD sales and paid TV.

In 2006 the two groups entered into negotiations for an overall agreement that would apply to every Nu Image film produced in the territory governed by the collective bargaining agreement, according to Snyder's summary of the complaint. Nu Image told the union it would not agree to an overall agreement if it were required to make residual health and pension contributions. During negotiations, union executives represented that neither they nor the plans would seek residual contributions under any future collective bargaining agreement, including the overall agreement, according to Nu Image.

But on May 13, 2013, the plans sued Nu Image for breach of the collective bargaining agreement based on the film company's failure to pay residual contributions from 2006 to 2010. Nu image said the union denied the existence of oral agreements that the film company would not have to make payments and refused to corroborate Nu Image's claims it wasn't required to make payments based on the overall agreement.

That lawsuit was settled in early 2015, but the plans filed a second lawsuit making the same claims for the years 2011-2014.

The film company sought to recover money it spent defending and settling the lawsuit.

The court found a lack of subject matter jurisdiction over the case because Nu Image does not assert a breach of contract claim in its complaint. Snyder cited the U.S. Supreme Court's decision in the Textron case, which held that because the union's complaint did not allege a violation of the collective bargaining agreement that neither the Supreme Court nor a Federal Court had subject matter jurisdiction over the case.

Accordingly, Snyder dismissed the case but did so without prejudice.

The union said it does not comment on litigation. Nu Image did not return an email request for comment.

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