Directors Guild Pension Plans Sue MGM Over $540K in Unpaid Contributions
Alleged Underreporting of Revenue from Licensing to Affiliated Streaming Service
The Directors Guild of America – Producer Pension Plans and its trustees filed suit in the U.S. District Court for the Central District of California on June 26, alleging that Metro-Goldwyn-Mayer Pictures, Inc. (MGM) systematically underreported revenue from its licensing deals with its affiliated streaming service, Epix (later rebranded as MGM+), to avoid paying required pension contributions. The complaint seeks declaratory and injunctive relief, payment of $540,426 in unpaid contributions identified in a recent audit, interest, liquidated damages, and attorneys’ fees under federal pension and labor laws.
The Pension Plan, which covers approximately 25,000 participants and beneficiaries, alleges that MGM breached its obligations under the Basic Agreements and Sideletter 15 by failing to pay 0.4% of the "Employer’s gross" from New Media and Supplemental Market licensing as contributions. The complaint clarifies that this 0.4% figure represents a portion of a larger 1.2% of the "Employer’s gross" from these markets that MGM is required to share as additional compensation (Compl. ¶30, ¶73). "MGM was able to report artificially low license revenue to the Directors Guild of America... as well as to the Plaintiff Directors Guild of America - Producer Basic Pension Plan," the complaint alleges (Compl. ¶2). The Pension Plan further claims that MGM’s quarterly reports lacked sufficient detail to verify the "Employer’s gross" for contribution calculations, noting that "Defendant’s quarterly reports lack detail to verify Employer’s gross for contribution calculations" (Compl. ¶53). The company repeatedly refused to provide documentation to the Plan’s auditor, Nigro Karlin Segal and Feldstein LLP (NKSF).
"This action seeks an order requiring the Defendant to furnish information to the Pension Plan to allow it to obtain and audit the records necessary to determine the extent to which Defendant has breached its obligations," the complaint states (Compl. ¶3). The complaint also highlights that contribution obligations under the Basic Agreements are calculated as a percentage of wages paid to employees and revenue from the exploitation of motion pictures, including New Media and Supplemental Markets (Compl. ¶21, ¶29).
Epix Formed as Joint Venture Before MGM Buyout
Epix was originally formed in 2008 by MGM, Paramount/Viacom, and Lionsgate Studios as a pay television and SVOD service, created as an alternative to renewing existing Showtime licenses (Compl. ¶39). Until approximately 15-20 years ago, MGM’s Supplemental Market revenue came mostly from pay television under a linear model, but the rise of SVOD allowed on-demand streaming, fundamentally altering the revenue landscape (Compl. ¶35, ¶36). MGM later acquired the other studios’ interests in 2017 for just over $1 billion, a figure the complaint specifies as $1,000,000,000, making Epix a wholly owned subsidiary (Compl. ¶14, ¶41).
"The Epix licensing payment obligations to Defendant were lower than those in licenses Defendant had previously negotiated with Showtime for pay television rights," the complaint alleges, despite Epix including additional SVOD rights (Compl. ¶50). Under Sideletter 15, if revenue from New Media exploitation is received from a related or affiliated entity, the "Employer’s gross" must be measured by comparable arms-length transactions. The complaint alleges that MGM failed to comply with this requirement, instead using below-market rates to calculate its pension contributions. "The Employer’s gross received by the [Defendant] from the licensing of such rights shall be measured by the exhibitor/retailer’s payments to unrelated and unaffiliated entities in arms’ length transactions for comparable pictures," the complaint quotes from Sideletter 15 (Compl. ¶32). "Defendant has, since the beginning of the MGM-Epix license relationship, failed to report or pay contributions representing the value of the SVOD and subdistribution rights," the complaint states (Compl. ¶55).
NKSF conducted three audit periods (2010–2013, 2013–2017, and 2017–2022) but was repeatedly denied access to documentation verifying the "Employer’s gross" from Epix and MGM+. The 2017–2022 audit identified $540,426 in unpaid contributions, but the complaint alleges that additional delinquencies are suspected due to MGM’s refusal to provide records. "Defendant has refused to provide information sufficient to enable NKSF or the Pension Plan to determine the true Employer’s gross," the complaint states (Compl. ¶54). The complaint further notes that open-ended tolling agreements existed for the 2010–2013 and 2013–2017 audit periods, but MGM refused to renew a tolling agreement for the 2017–2022 audit period after December 7, 2024, preventing the Pension Plan from fully assessing MGM’s liability. The complaint quotes MGM’s position that "the statute of limitations period, and any other time bar, shall be" left unresolved due to this refusal (Compl. ¶62, ¶63).
Subdistribution Revenue Allegedly Excluded from Contributions
The complaint alleges that MGM failed to include revenue from Epix’s subdistribution of MGM content to other SVOD platforms in its "Employer’s gross" calculations. The complaint specifies that Epix’s subdistribution of MGM content to other SVOD platforms was approved by MGM and should have been included in the "Employer’s gross" (Compl. ¶49, ¶80). "The Defendant’s Employer’s gross should include the worldwide total gross receipts derived by the subdistributor," the complaint contends (Compl. ¶78). However, MGM allegedly excluded these revenues from its reports to the Pension Plan. The complaint further details that licensing to Epix from April 1, 2010, to January 15, 2023, and to MGM+ since January 15, 2023, constitute transactions with a "related or affiliated entity," requiring arms-length valuation under Sideletter 15 (Compl. ¶74-75).
The Pension Plan’s auditor, NKSF, submitted final audit reports for the 2010–2013 and 2013–2017 periods on August 29, 2017, and May 12, 2021, respectively. The 2017–2022 audit report was submitted on February 5, 2026, identifying the $540,426 in unpaid contributions. The complaint notes that MGM’s refusal to provide documentation has left unresolved "Open Issues" and "Undetermined" amounts in the audit reports, as noted in NKSF’s findings (Compl. ¶56). "Defendant has refused to provide the Pension Plan documents and records from which the Pension Plan could make a determination of the correctness of Defendant’s Supplemental Market and New Media payments," the complaint states (Compl. ¶81).
Liquidated Damages and Audit Obligations
The complaint seeks liquidated damages for delinquent contributions, specifying that under the Trust Agreement, liquidated damages are the greater of 20% or accrued interest, with the 20% figure explicitly tied to delinquent contributions over 60 days (Compl., amounts section). The Pension Plan alleges that MGM’s failure to comply with its audit obligations constitutes a distinct breach of the Basic Agreements and Trust Agreement. Count Four of the complaint alleges this failure under both LMRA § 301 and ERISA § 502(a)(3), specifically targeting MGM’s refusal to provide records necessary for audits (Compl. ¶4). The complaint also asserts that the provisions of the Trust Agreement are "terms of the plan" within the meaning of Section 502(a)(3) of ERISA, reinforcing the Plan’s right to enforce these obligations (Compl. ¶22).
The complaint further alleges that MGM’s underreporting of revenue and failure to provide documentation have resulted in significant underpayments. "Defendant’s artificially understated Employer’s gross... has resulted in Defendant underpaying the Pension Plan the full amounts of contributions owed," the complaint states (Compl. ¶82). The Pension Plan seeks payment of the full amount of delinquent contributions, plus interest, liquidated damages, attorneys’ fees, and costs. The complaint specifies that these underpayments constitute a breach of MGM’s obligations under the Basic Agreements and Trust Agreement, as MGM failed to include SVOD subdistribution revenues by Epix in the "Employer’s gross" reported to the Pension Plan (Compl. ¶83).
Seven Counts Allege Violations of Federal Pension and Labor Laws
The complaint asserts seven counts against MGM:
- Count I: Breach of fiduciary duty under ERISA § 502(a)(3) (29 U.S.C. § 1132(a)(3));
- Count II: Failure to make required pension contributions under ERISA § 515 (29 U.S.C. § 1145);
- Count III: Breach of contract under LMRA § 301 (29 U.S.C. § 185(a));
- Count Four: Failure to comply with audit obligations as a distinct breach of the Basic Agreements and Trust Agreement under LMRA § 301 (29 U.S.C. § 185(a)) and ERISA § 502(a)(3) (29 U.S.C. § 1132(a)(3));
- Count Five: Breach of contribution obligations for SVOD/subdistribution licensing under the Basic Agreements and Sideletter 15, specifically alleging that MGM failed to pay the 0.4% of the "Employer’s gross" from these transactions (Compl. ¶73);
- Count Six: Breach of contribution obligation by the Trustees under ERISA § 515 (29 U.S.C. § 1145) and ERISA § 502(g)(2) (29 U.S.C. § 1132(g)(2));
- Count Seven: Breach of contribution obligation for 2017–2022 Supplemental Market audit liquidated claims under LMRA § 301 and ERISA §§ 502(a)(3), (g), 515.
The complaint also references an ongoing DGA-MGM Arbitration regarding the accounting for the "Employer’s gross" under the Basic Agreements, noting that MGM has taken the position that "disputes related to the MGM-Epix licensing arrangements 'are being handled separately from resolution of other issues'" (Compl. ¶57, ¶58).
The complaint requests declaratory relief that MGM’s failure to provide records violates the Basic Agreements and Trust Agreement, injunctive relief ordering MGM to produce all requested records for audits from April 1, 2010 to present, and judgment for the full amount of delinquent contributions, plus interest, liquidated damages, attorneys’ fees, and costs. "Defendant is liable to the Pension Plan to pay the full amount of its delinquent contributions as determined in these proceedings, plus interest, liquidated damages, attorneys’ fees, and costs," the complaint states (Compl. ¶100).