Bit Parts

The U.S. District Court for the Middle District of Pennsylvania approved a motion by film production plaintiffs to make a protective order for the disclosure of information about the production company's operations more restrictive. Metcalf v. Merrill Lynch, Pierce, Fenner & Smith Inc., 4:11-cv-00127. The plaintiffs, which include Film West Productions, originally filed suit alleging violation of the federal RICO Act from failed financing for a movie titled Do You Know Where Your Parents Are? In the recent stage of the case, the plaintiffs sought to limit a protection order that stated: “Materials designated as CONFIDENTIAL may only be disclosed or made available by the party receiving such information to 'Qualified Persons,' who are defined to consist of the following: (c) the Parties and counsel of record to the Parties to this action and members and employees of the law firm of such counsel of record '” In discovery, the defendants sought information on “[a]ll films produced by Film West or for which Film West has provided production services or production support, including the nature of such services and the revenue or profits derived therefrom.” But the production plaintiffs claimed the information would allow defendant financing firm Merrill Lynch to compete with them. District Judge Matthew W. Brann noted the plaintiffs argued “that film 'production' services include the arranging of finance and that Plaintiffs ' are involved in finding sources of financing and managing relations with investors, much like Defendants' Entertainment Industries Group.” Judge Matthews concluded: “Defendants' argument that Plaintiffs' proposed modifications would 'unnecessarily and unfairly hinder Merrill Lynch's defense' because 'Merrill Lynch's counsel would be precluded from disclosing or discussing any information that Plaintiffs designate as “confidential” with Merrill Lynch' is exaggerated. The proposed modifications would allow disclosing of confidential information to the Merrill Lynch employees and representatives directly linked to this litigation. Defendants' counsel need not disclose Plaintiffs' confidential trade secrets to all 60,000 Merrill Lynch employees in order to properly defend this case.” The modified protective order clause restricts confidential information to “the individual Parties, the deposition designees for the entity Parties, the counsel of record to the parties to this action and members and employees of the law firm of such counsel of record.”

Tax Court Decides Production Set Builder Is Independent Contractor

The U.S. Tax Court decided that a “set dresser” [i.e., builder] hired to work on advertisements and TV commercials was able to deduct his business expenses as an independent contractor under federal Schedule C, rather than as an employee under the more limiting Schedule A. Quintanilla v. Commissioner of Internal Revenue, T.C. Memo 2016-5. Though the conceptual difference between an “independent contractor” and “employee” is an established one, Tax Court Judge Mark V. Holmes noted “it's often murky in application.” He went on to note: “A key question in contractor-v.-employee cases is 'who tells whom to do what?'” Judge Holmes added: “Quintanilla's situation is also complicated by his decision to work sometimes in his own name and sometimes through his corporation. We find that the production companies didn't much care ' they were hiring Quintanilla's expertise one way or the other. And we believed Quintanilla when he said it didn't matter to him whether they asked for [Quintanilla's corporation] Pre Call [Studios Inc.] or for Jorge Quintanilla ' all the calls went to the same cell phone number.” The tax court concluded about this: “[A]side from whom the check was made out to, there was little practical difference between the conditions where Quintanilla worked as himself and those where he worked through his corporation.” As to the ultimate question in the case, Judge Holmes ruled: “The most important [fact] is that [taxpayer/set builder Jorge] Quintanilla had a large degree of control as to how to accomplish the tasks he had to do throughout the year. A production company sometimes gave Quintanilla a sketch drawn by a set designer. And sometimes it just gave him the director's vision for the project. But in either situation Quintanilla had a large degree of independence in determining how to accomplish the project. He ordered props and modified them to the specs, he had authority to hire additional workers as needed, and he had the authority not to use workers that weren't performing. The Commissioner asserts that since the producers had a vision of the set in mind, the production companies retained a large degree of control over Quintanilla. We disagree ' we find that Quintanilla had a large degree of discretion in how to construct the set. He engineered sets from drawings and often told the producers that their initial vision needed to be modified. That he was given context for building a set doesn't translate into a lack of control.”

Stan Soocher is Editor-in-Chief of Entertainment Law & Finance. His new book is Baby You're a Rich Man: Suing the Beatles for Fun & Profit (ForeEdge/University Press of New England). For more, visit www.stansoocher.com.