Economic Damages: A Case Study – The Actor

February 10, 2015
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The large majority of lawsuits involving individuals in the entertainment industry revolve around lost wages or fees. These claims can often allege millions of dollars in lost earnings depending on the role the person plays within the industry. Given the exorbitant amount that some actors, writers, directors, and producers can earn, it’s easy to understand why these claims get made so often. However, the operative word in this scenario is some, as only a select group of individuals in the industry can command such fees.

The question one should ask in order to determine the value of damages in these cases is this: how do you best determine whether a particular individual should be categorized into that rare group of earners? In other words, how do you determine whether the claim is purely speculative, or if it can be proven within a reasonable degree of certainty?
When investigating lost wages claims in this unique context, one must understand that the entertainment industry is nothing like the traditional job market. A lawyer, banker, or accountant will have tax statements that show their earning capacity to date, and they can expect their salary to increase as they steadily progress up the ladder and gain vital experience and contacts.

This is not the case in the entertainment industry. Due to the volatile nature of the business, many outside factors can affect one’s marketability and earning capacity. As a matter of fact in some positions, particularly with the actor, there is no guarantee that you will ever get another job,  or that one’s next job will be higher paying than the last. There’s a reason why the phrase, “You’ll never work in this town again” was coined in this industry. Competition is stiff, buyer’s tastes shift on a dime and there are thousands of people ready to pounce on your position at any given moment. Additionally, so many people are party to the decision making process that one can be weeded out of contention for countless reasons entirely out of one’s control and unrelated to one’s talent or ability.

In this capricious industry, million dollar earners are rare.  Rarer still are those that can earn that type of income consistently over a long period of time. When attempting to determine an actor’s potential wages, it is critical to look at: 1) The earnings history and work consistency of the plaintiff; 2) Awards or accolades that may boost future earnings; and 3) Comparable earning capacities of the individual’s peers. This last point is crucial, because it is important to compare apples to apples in terms of actual work history and money earned. The amount of money the Plaintiff thought they would make throughout their career, based on self-comparisons with high achieving players of similar age and looks (the case of an actor) does not often play out in real life to their satisfaction. How many good-looking, young, and talented actors achieve the career status of Julia Roberts or Tom Cruise?

Let’s take a look at a class action lawsuit that included an actor as a Plaintiff. The Plaintiff alleged  that his career was brought to a premature end due to health issues allegedly caused by the Defendant’s products, and believed he incurred damages in the following areas:

•    Work Stoppage as an actor in feature films and television
•    Economic loss of between $10,814,191 and $35,206,874

It was my opinion that the Plaintiff did not incur economic damages in the amounts listed above due to any alleged injury caused by the Defendant’s products.  Rather, a myriad of other factors, including – but not limited to – career choices, acting talent, stiff competition, and the volatility of the industry, contributed to Plaintiff’s inability to gain significant work and earn income in the amounts stated above.
Many elements play into an actor’s success, and a successful career is a combination of talent, good looks, good management, and often just plain luck. Creating a noteworthy career as an actor is an uncertain and difficult journey.  The road is fraught with many obstacles and pitfalls that one must overcome to be successful. The choices one makes, and the response within the industry, both contribute to an actor achieving, or not achieving, critical and financial success.

In this particular case, the Defendant claimed he was an “A List” actor, and should have earned fees commensurate with the leading stars in Hollywood. An “A list” actor can be loosely defined as an actor, who by virtue of being in a film can cause the film to be financed, or “Greenlit.”  Greenlit is a term used by studios and financiers when enough essential elements are in place that the project is deemed ready to go into production and the funds are released to produce the film.

Examples of “A List” actors would be Bradley Cooper, Brad Pitt, Tom Cruise, Jennifer Lawrence, Sandra Bullock, and Julia Roberts, among others.  Prior to attaining “A List” status, these actors had to achieve a certain and unusual amount of success.  Measures of this type of success can include:

•    A leading or strong supporting role that earned positive reviews in major         consumer and trade publications
•    A significant role in a hit film
•    Nominations
•    Awards
•    Invitations to premiere film festivals (such as the Cannes Film Festival.)
•    Multiple new roles in quick succession  immediately following their break
out performance.

The Defendant in this case never had a leading role in a hit film, nor a significant role in a studio project. Many of the roles he listed as key roles in his career were in reality rather small. Although the Plaintiff acted in popular films, he did not play a pivotal role in the success of those films. As a result, his roles were not indicative of a person on the “A List,” did not indicate that he was en route to the “A List,” nor were they any indication that he would be guaranteed a role that would garner wages of $1 Million or more per year.  Additionally, the fact that he was not offered roles in major films, or leads with established directors, after his first small role in a blockbuster film demonstrates his “A List” stature was only theoretical.

Another indicator of success are the awards and nominations that an actor receives over the course of his or her career.  At the time of this case, the Plaintiff had not received a significant nomination or award for any of his performances, nor had he received an official invitation to represent his films at any of the significant festivals.

In the Plaintiff’s reports, the damage calculations listed above were based on a significant fee base of $1 Million to $3 Million per year, and a consistent work schedule over the span of 30 years, both of which are outside the realm of the typical working actor. These fees are certainly not fees that the Plaintiff had ever earned, or came close to earning, in any of the jobs he took pre or post incident.

Consistently earning million-dollar fees over a 20 year career  is unique to only a select few such as Tom Cruise, Bruce Willis, and Julia Roberts—actors who have achieved world-wide recognition and are duly paid for such status.  Even these actors do not work every year, year in and year out.  Therefore, it is highly speculative that any actor would receive a million dollar salary consistently. Without a meteoric rise in popularity and recognition, without any fee precedent set, and without any acting contracts in place outlining a fee structure of that magnitude, there is no basis to believe that the economic damages Plaintiff was asking for would have been earned.

The career of a working actor, either widely known or virtually unknown, is typically sporadic and unpredictable. Rarely does a career consist of working 50 weeks a year, from the age of 18 until the age of 65. Many “working” actors may work much one year, and then not work at all in another year.  Some may go several years without work, even though they are auditioning, and then get a job that can carry them financially for several years. Others do not work very much at all, and must rely on other forms of income to survive.  The lean years can be mixed in with good years, and one can never be sure when or where the next job will come from.

To highlight the reality of the Defendant’s career; one needs to look at what he was actually paid for the films he acted in during his healthy years.
•    $125,000 for a leading role in a lower budget studio film
•    $175,000 for small role in a studio film
•    $7500 per episode for recurring role in a popular television series

These are solid figures, but nothing near the projected $1 Million per project or year.  The Defendant also acknowledged that he made very little money on the television series, particularly in comparison to the other “bigger” stars on the show. It is common in the television industry for leads in Network shows to earn between $15,000 and $25,000 per episode, even if one is not a big star.

The maximum amount that the Defendant ever made on a film was $300,000 on an independent horror film.  He was able to command that fee due to his cult status from the television series, and he was well known overseas. Fees of $1 Million or more for the Defendant were extremely speculative in nature, and were not based on fact or precedent whatsoever.  Additionally, the Defendant did not have any projects or offers in the pipeline that would lead one to assume he would have been paid that fee in the future.

Fees don’t escalate solely because someone believes you have talent – Hollywood doesn’t work like that.  You may get a great role, but you won’t be paid large dollars until you have proven yourself as an earner at the box office. Every monetary decision is driven by revenues. If the production company or studio believes they will get a substantial return on a movie, they will set a fee structure that is commensurate with their projected revenue. It is a step-by-step process, based on box office receipts in the case of feature films, and ratings of a particular television or cable show. On each successive project, an actor is normally paid the same rate or a little more than the previous project he/she worked on.

In some rare cases, a fee can skyrocket, for example if the last project was a huge success, but the majority of actors never enjoy this kind of feat. Conversely, if a film doesn’t do well, one’s fee can come down, creating a new and lower precedent for that actor.  Fee structures rise and fall with market demand; they are not set in an arbitrary manner without box office receipts to support it.

Rave reviews of a particular film, or consistently good reviews over time, can help an actor’s career and push him or her towards the “A List,” ultimately affecting his or her fee structure.  Reviews reflect the perception of the buying audience, as well as the powerful marketing forces, such as newspapers and magazines, which can have a strong impact on fees.  On the flip side, bad reviews of a film, or bad reviews of a performance, particularly from well-known magazines and newspapers, can shatter any career, even for those with promising beginnings.

Additionally, bad box office performance of a film can have a significant negative impact on an actor’s career. If this happens more than once, it can even derail it.  In the Defendant’s case, two of his bigger films in which he had starring roles did poorly at the box office, which didn’t bode well for his future earnings potential.

As you can imagine, with the amount of evidence mounted against his claim, , the judge dismissed Defendant’s lost earnings claim because it was just too speculative.  This is the case with most working actors in today’s marketplace, and therefore it is important to understand the nuances of the industry when making or defending this type of claim.

In summation, certain key elements need to be examined within the specific context of the individual case and its particulars, in order to determine the viability and merit of the claim. Because the industry can provide such high paydays, and the career trajectory of certain rare individuals can be so meteoric, it is enticing for a person, with even a little bit of experience or credibility, to assume that they will be the next big thing. A single successful project, a few good reviews or a string of good references, do not automatically translate into future box office success or consistent high salaries. It’s important to do extensive due diligence and work with professionals in the industry who have significant experience in the related field to help navigate the wild and wooly world of film.

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