1 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF … · 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 2 -----x 3 CAITLIN SANCHEZ, performing as "Dora The Explorer",

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1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

2 ------------------------------x

3 CAITLIN SANCHEZ, performing as

"Dora The Explorer", 4

Plaintiff, 5

v. 10 CV 7854 (TPG) 6

MTV NETWORKS, a division of 7 Viacom International, d/b/a

Nickelodeon, 8 NICKELODEON/VIACOM CONSUMER

PRODUCTS, INC. 9

Defendants. 10

------------------------------x 11 New York, N.Y.

November 1, 2011 12 11:15 a.m.

13 Before:

14 HON. THOMAS P. GRIESA,

15 District Judge

16 APPEARANCES

17 LAW OFFICES OF SUSAN CHANA LASK

Attorney for Plaintiff 18 BY: SUSAN CHANA LASK

19 BALLESTRIERE, PLLC

Attorney for Plaintiff 20 BY: JOHN BALESTRIERE

21 SHEARMAN & STERLING LLP

Attorneys for Defendants 22 BY: STEPHEN R. FISHBEIN

23

24

25

SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

Case 1:10-cv-07854-TPG Document 52 Filed 11/15/11 Page 1 of 40

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1 (In open court)

2 THE DEPUTY CLERK: Oral argument, Caitlin Sanchez v.

3 MTV Networks.

4 THE COURT: Good morning.

5 MR. BALESTRIERE: Good morning your Honor.

6 MS. LASK: Good morning.

7 THE COURT: I have a motion to vacate a settlement.

8 Who would like to speak for that motion?

9 MS. LASK: My name is Susan Chana Lask for the

10 plaintiff, your Honor. Good morning.

11 THE COURT: Go ahead.

12 MS. LASK: Your Honor, I am going to take the easiest

13 argument first, which would be with Viacom. This is an

14 infant's compromise, as you know. I'm not going to waste your

15 time. There are plenty of briefs and law in front of you that

16 Ms. Caitlin Sanchez, who is sitting behind me -- actually, she

17 is here in the courtroom behind me -- was coerced and defrauded

18 by her attorney in signing a settlement which, unfortunately,

19 the wool was pulled over this Court's eyes as well.

20 THE COURT: What did the settlement provide?

21 MS. LASK: The settlement provided for -- the

22 complaint asked for --

23 THE COURT: What did the settlement provide?

24 MS. LASK: It provided for $500,000. She ultimately

25 got $90,000 in her pocket. Mr. Balestriere took 37.5 percent



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1 plus.

2 THE COURT: Please answer my question.

3 MS. LASK: $500,000.

4 THE COURT: The settlement was for $500,000.

5 MS. LASK: Yes, 500 something thousand dollars.

6 THE COURT: Was there also an agreement about certain

7 future payments to her?

8 MS. LASK: In the settlement to go to her, yes, if

9 there were any future payments --

10 THE COURT: What were those payments to be?

11 MS. LASK: I'm pretty sure they were five percent

12 royalties due on any -- for a certain period of time; I think

13 for a period of ten years or five years.

14 THE COURT: Well, that's part of the settlement you're

15 trying to overturn. What is it you're trying to overturn?

16 MS. LASK: Mr. -- the settlement didn't follow one

17 rule of the infant --

18 THE COURT: I'm not asking you that.

19 MS. LASK: What am I trying to overturn --

20 THE COURT: Yes, I want to know the terms of the

21 settlement, and then I want to know what she has received.

22 MS. LASK: OK.

23 THE COURT: It was a total of $500,000 cash and

24 five percent royalties on what?

25 MS. LASK: On merchandise, future merchandise sales



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1 that had her name to it at the time.

2 THE COURT: All right.

3 What has she received, actually?

4 MS. LASK: They received the $500,000, and

5 Mr. Balestriere took 37.5 percent plus.

6 THE COURT: I didn't ask that.

7 MS. LASK: OK. She received --

8 THE COURT: She received the $500,000?

9 MS. LASK: Yes, she did.

10 THE COURT: When did she receive it? I think it was

11 to be in two stages, was it not?

12 MS. LASK: Yes, probably -- the settlement was

13 sometime in late October. I think she received her money by

14 November.

15 THE COURT: Of 2010?

16 MS. LASK: Yes, sir.

17 THE COURT: How much has she received in the way of

18 royalties?

19 MS. LASK: I think she received another check for

20 about maybe another $20,000, but I'm not -- I don't even think

21 it was that.

22 THE COURT: When did she receive that $20,000?

23 MS. LASK: No, I'm sorry. May I correct myself? She

24 did not receive that. May I ask my client?

25 THE COURT: Sure, please. Of course.



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1 MS. LASK: Thank you.

2 (Pause)

3 MS. LASK: Your Honor, I very much apologize. The

4 only thing she has received was the $500,000. There is no

5 future money. They received nothing in the future, and I

6 apologize.

7 THE COURT: Wasn't there an agreement to pay something

8 in the future?

9 MS. LASK: No.

10 THE COURT: Was there a written settlement agreement?

11 MR. FISHBEIN: Your Honor, I can answer some of those

12 questions, if you'd like. I am the attorney for Viacom which

13 was on the other side of the settlement.

14 THE COURT: You're Mr. --

15 MR. FISHBEIN: Fishbein.

16 THE COURT: OK. Go ahead.

17 MR. FISHBEIN: First of all, it was $545,000 in two

18 pieces. There was $455,000 was an advance.

19 THE COURT: Say that again.

20 MR. FISHBEIN: $455,000 was an advance on future

21 residuals --

22 THE COURT: Wait. How much was the cash settlement?

23 MR. FISHBEIN: There are two pieces. One piece is

24 455, and the other piece is 90, so a total of 545. 60. I'm

25 sorry. Give me one second, your Honor. I'm sorry. So it's



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1 455 is one piece, and 60 is the other piece.

2 THE COURT: 60?

3 MR. FISHBEIN: Yes, for a total of 505 -- 515.

4 THE COURT: Has that all been paid?

5 MR. FISHBEIN: Yes. And that is two different pieces,

6 and it's important to understand. The first one, the 455, is

7 an advance against future income to her in the form of residual

8 and other payments for her performance as the voice of Dora.

9 So what happens is that going forward, once that 455

10 is used up, in other words, at the point in time in the future

11 where her residuals exceed the 455, then she will be paid in

12 the future.

13 THE COURT: What is she getting residuals for?

14 MR. FISHBEIN: Because she was the voice of Dora, and

15 in exchange for being the voice of Dora, she gets an appearance

16 fee, a session fee for actually recording, but then she gets

17 additional payments every time one of the shows that has her

18 voice runs on television.

19 And she gets a certain fee for the first run, you

20 know, the first time the episode is shown, and then when it's

21 shown in reruns, she gets slightly less and less and less over

22 time, and there is a whole schedule that lays that out.

23 So the anticipation is that this 455 will get used up

24 over time, and once she goes over the 455, then she will get

25 new payments for residuals. In addition to that --



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1 THE COURT: Is there any estimate of the total she

2 will get?

3 MR. FISHBEIN: She was provided with an estimate, your

4 Honor. I don't have the numbers right off the top of my head,

5 but during the negotiation of the settlement, she was given a

6 detailed accounting and schedule for what was expected in terms

7 of how many reruns there would be and what her residuals would

8 be.

9 THE COURT: Do you have --

10 MR. FISHBEIN: It was several hundred thousand

11 dollars.

12 THE COURT: Was it more than the 455?

13 MR. FISHBEIN: I believe it was. I believe the

14 anticipation was that the 455 would be used up, and that at

15 some point in the future she would get additional payments.

16 Now, there is -- separate from that, she made a claim

17 in the original lawsuit that she was entitled to compensation

18 for promotional appearances. We disputed that, but we ended up

19 agreeing in the settlement to pay her $60,000 to account for

20 those promotional appearances. That was a disputed issue, but

21 we paid her that in cash.

22 MS. LASK: Your Honor, if I may?

23 THE COURT: Just a minute. Now, she wishes to -- she

24 is attacking the settlement. Is she prepared to pay back the

25 $505,000?



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1 MS. LASK: Yes, your Honor.

2 THE COURT: She is?

3 MS. LASK: Mr. Balestriere would have to return his

4 37.5 percent that he took, and she is prepared to return what

5 he gave her. Yes, she is.

6 THE COURT: Wait. She is prepared?

7 MS. LASK: Yes, she is.

8 THE COURT: What does she want in the way of

9 settlement?

10 MS. LASK: She wants her case to be heard the way it

11 was supposed to be heard as --

12 THE COURT: No. No. No.

13 MS. LASK: In settlement she wants an accounting, a

14 proper acting. She is prepared to have a forensic person

15 account for what she is actually supposed to get, which,

16 thankfully, Mr. Fishbein explained exactly what our argument

17 is. She got the -- the settlement is what she was contracted

18 to get anyway. All she got was $60,000 above is what he's

19 saying, which she was already in contract to get.

20 So that is why she is here. Her purpose -- and when

21 you read the complaint Mr. Balestriere put together, there were

22 tens of millions of dollars alleged missing, and what we need

23 is discovery, we need a forensic accountant, which she is

24 prepared to have, and we need to find out what she is actually

25 due, because it is no secret, and it's in the press, and it's



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1 all over the place --

2 THE COURT: What's the basis for saying tens of

3 millions?

4 MS. LASK: Because Viacom -- and Mr. Balestriere said

5 he did this investigation in his complaint, but Viacom makes

6 billions of dollars off of the Dora franchise. So how is she

7 only getting $500,000 which, you know, on a settlement --

8 THE COURT: What is the basis for saying they're

9 making billions of dollars out of the Dora franchise? What is

10 the basis for that?

11 MS. LASK: Viacom puts that out there in all of their

12 press releases, and the basis is that Dora The Explorer is the

13 number one Nickelodeon show for children, with -- what do you

14 call it -- merchandising that all the kids and all the families

15 buy, and they can easily make billions of dollars, and they put

16 it out in the press that they do make billions of dollars off

17 of her franchise.

18 THE COURT: Is that right? Do you say you make

19 billions of dollars?

20 MR. FISHBEIN: Your Honor, I believe there has been

21 press reports to the effect it is a very valuable franchise.

22 You have to understand, that includes advertising and all sorts

23 of revenue streams that have nothing to do with merchandising

24 for the voice of this particular individual.

25 THE COURT: I don't understand what you're saying.



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1 MR. FISHBEIN: In other words, Viacom makes money from

2 Dora in a lot of different ways. One of the ways is by selling

3 advertising, for example, or, you know, if there are films or

4 anything else. Ms. Sanchez, her settlement was very, very

5 specific.

6 THE COURT: Did the show have a run for a certain

7 number of years?

8 MR. FISHBEIN: It's still ongoing.

9 THE COURT: What?

10 MR. FISHBEIN: It's still ongoing. It's been on for a

11 number of years, and it still goes on today.

12 THE COURT: But, I mean, was there a time when new

13 shows were produced?

14 MR. FISHBEIN: They're still being produced.

15 THE COURT: Oh, they are.

16 MR. FISHBEIN: Yes, but Ms. Sanchez was only the voice

17 of Dora for three years. She was only the voice for a limited

18 period of time.

19 THE COURT: Was she the voice at the beginning?

20 MR. FISHBEIN: No, she was not. There was another

21 Dora before her, and then she replaced the original.

22 THE COURT: When did the show start?

23 MR. FISHBEIN: Your Honor, I don't know.

24 THE COURT: Approximately.

25 MR. FISHBEIN: 2000.



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1 MR. BALESTRIERE: 2001, your Honor.

2 THE COURT: When did she start?

3 MR. FISHBEIN: She began on April of 2007.

4 THE COURT: How long did she last?

5 MR. FISHBEIN: For about three years through at some

6 point in 2010.

7 THE COURT: Are there still -- whatever this show what

8 is it called --

9 MS. LASK: Dora.

10 MR. FISHBEIN: Dora The Explorer. It is a cartoon,

11 and it's called Dora The Explorer. It's about a little girl.

12 THE COURT: It is it still being produced new

13 cartoons?

14 MR. FISHBEIN: Still being produced, still being

15 shown, yes.

16 THE COURT: Is somebody now --

17 MR. FISHBEIN: There is a new Dora now, that is

18 correct. So Ms. Sanchez was the Dora for three years. In

19 exchange for that, she gets a session fee for showing up and

20 doing the voice. She gets residuals every time the show that

21 she recorded a voice is played on TV, and then she gets

22 merchandising, which was referred to, which is a percentage of

23 the net profits that Viacom gets from the sale of products that

24 have her voice. A lot of products don't have her voice because

25 it has the voice of another Dora or it doesn't have a voice at



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1 all. But if there is a product that has her voice, then she

2 gets a percentage of the net profits that Viacom earns. Those

3 are basically the three revenue streams that she is entitled

4 to. Each of those was provided for in this settlement

5 agreement.

6 I should add, your Honor, that the one thing that was

7 left out is the settlement agreement also gives her the right

8 to an accounting, exactly what she is asking for. Paragraph

9 six of the settlement agreement which was a new negotiated term

10 during the settlement, her lawyer said we want to be able to

11 test your accounting of how you're calculating residuals and

12 merchandising, and we agreed. We said we have nothing to hide.

13 We're transparent. So there is a provision in here that says

14 she can hire a forensic firm. She can examine our books and

15 records. She can have a detailed accounting. If there is any

16 dispute, there is a dispute resolution procedure which

17 essentially sends it to arbitration, which is the same thing

18 that was under the prior agreement, that it had an arbitration

19 clause.

20 So, there is no basis to overturn the settlement. She

21 can get everything she wants according to what she just said,

22 which is an accounting that is provided for in the settlement

23 THE COURT: What would the accounting produce for her?

24 MR. FISHBEIN: Because her claim -- she is not arguing

25 that she is entitled to more than five percent of the



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1 merchandising. What she is saying is that the way Viacom

2 calculates the net profits from which her five percent is

3 calculated, that there's accounting shenanigans or other

4 mistakes in the accounting --

5 THE COURT: Let me just interrupt you. Was she

6 compensated during the years 2007 to 2010?

7 MR. FISHBEIN: Yes, she was.

8 THE COURT: And do you have any idea -- what kind of

9 compensation was it?

10 MR. FISHBEIN: It was several hundred thousand

11 dollars. I don't have an exact amount. That was made up of

12 the session fees, residuals, and some merchandising payments,

13 but in the future she's entitled to more. So, in the

14 settlement she was given a big advance against the future

15 payments. She is still entitled to the future payments to the

16 extent they end up higher than her advance. She got the

17 $60,000 on top of all of that for her appearances to promote

18 Dora, and then she got these accounting rights. And she

19 insisted on these accounting rights because, as Ms. Lask said,

20 her claim is that Viacom has not properly calculated the net

21 profits against which she --

22 THE COURT: Has she asked for the accounting?

23 MR. FISHBEIN: She hasn't, which is inexplicable. She

24 has the right to it. She negotiated it. It's exactly what she

25 wants.



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1 THE COURT: Why didn't she have an accounting?

2 MS. LASK: First of all, this is an after-the-fact

3 accounting on a $500,000 deal that should have never happened.

4 THE COURT: I don't know what is meant by after the

5 fact. Accountings are generally after the fact.

6 MS. LASK: If they are asking, it is not the kind of

7 accounting she needs. It is a limited acting, first of all.

8 THE COURT: What kind of accounting does she need?

9 MS. LASK: She needs a forensic accountant to go in

10 there.

11 THE COURT: You can send any kind of accountant in you

12 want.

13 MS. LASK: Your Honor, may I have my client stand by

14 me because she can explain to me very -- it's important that

15 she explains this accounting to me, so I can relate it to you.

16 THE COURT: You don't know what she's claiming?

17 MS. LASK: I do know. The accounting does not give

18 them the rights that they wanted; that they needed before --

19 what they should have done is an accounting before any

20 settlement, and then she wouldn't have gotten only $500,000,

21 that most of that went to Mr. Balestriere anyway. She could

22 have, if the accounting was done then, had a real case of

23 proving to the Court that, wait a minute, I'm due -- she might

24 have really been due the $10 million that Mr. Balestriere put

25 in his complaint and said she was due, tens of millions.



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1 THE COURT: I've heard -- let's hear from

2 Mr. Balestriere.

3 MR. BALESTRIERE: Good morning, your Honor. Thank

4 you.

5 Pages 6 and 7, as Mr. Fishbein notes, of the

6 settlement agreement, paragraph 6, go into detail about this

7 accounting, which, as Mr. Fishbein acknowledges, we fought hard

8 for, and it makes it clear that it can be a full audit. There

9 is some limitation on it being from a reputable audit firm, and

10 that it be during certain business hours. There was a concern

11 by a colleague of Mr. Fishbein's that we would try to go in and

12 make it difficult for them. But the point was the accounting

13 that Ms. Lask talks about is, if anything, the key aspect of

14 this settlement that we were able to get a significant portion

15 up front. As Mr. Fishbein noted, it was actually a colleague

16 of Mr. Fishbein's was arguing that Ms. Sanchez was due less

17 than the $455,000. But we came to an agreement. In order not

18 to worry about the litigation, there would be a payment now,

19 there would be the accounting there was supposed to be by

20 January 15. My firm was terminated before then. I did not

21 know to this day that there was no accounting performed.

22 THE COURT: January 15, 2011?

23 MR. BALESTRIERE: Yes, your Honor, within 90 days

24 before the November -- just to clarify some dates. The

25 agreement was entered into November 15. Your Honor issued an



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1 order on November 30. The payments came, I think, within a

2 week of that time, so very early December.

3 THE COURT: What was your complaint? What did you

4 allege?

5 MR. BALESTRIERE: We initially alleged in the Supreme

6 Court, and was removed to your Honor, that Ms. Sanchez could be

7 due millions.

8 THE COURT: That she was what?

9 MR. BALESTRIERE: That she could be due millions

10 because of the residuals in merchandising she did not receive.

11 Mr. Fishbein noted that she had received a few hundred

12 thousand dollars during the three-year employment period, but

13 she had only received $5,000 I think it was $4,950 in

14 merchandising. This is the reason why the Sanchezes came to my

15 firm. It didn't make sense that after all this time, that's

16 all that they had received.

17 We had many settlement discussions with a colleague of

18 Mr. Fishbein's. The name is Jerome Kauff where we reviewed

19 accounting records and so forth, and, clearly, Mr. Kauff and I

20 disagreed about what Ms. Sanchez was due. But, again, in order

21 to get to -- I think she is going to be due millions over time.

22 I disagree with their accounting. That's why I got them to

23 agree to an auditor we would hire. And my firm does direct

24 auditors all the time to go in review their books, I think I

25 say in the last line of my surreply declaration if we were



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1 wrong and they were right, we couldn't have gotten anything

2 more out of a trial or arbitration anyway. We got, I think,

3 the best result possibly from an arbitration.

4 THE COURT: Let me just back up.

5 MR. BALESTRIERE: Sure.

6 THE COURT: Is it true she started having her voice

7 used in 2007?

8 MR. BALESTRIERE: She started recordings, your Honor,

9 in 2007. My understanding from working on the case, there is

10 about a year lag before it gets on TV. So I think the first

11 episode with Ms. Sanchez that aired in the Dora The Explorer

12 show was 2008.

13 THE COURT: And then she recorded until sometime in

14 2010?

15 MR. BALESTRIERE: Until the summer of 2010. That's

16 the time at which Nickelodeon Viacom said that they might not

17 be working with her going forward.

18 THE COURT: The recordings using her voice or episodes

19 using her voice lasted until when?

20 MR. BALESTRIERE: They're still going on now, your

21 Honor. As someone with four small children, I know the way

22 that -- I think a lot of the merchandising comes from the DVDs

23 and that's what the residuals comes from.

24 THE COURT: I'm not talking about residuals.

25 MR. BALESTRIERE: OK.



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1 THE COURT: I'm talking about the episodes she

2 recorded. You said she started recording in '07.

3 MR. BALESTRIERE: Yes, your Honor.

4 THE COURT: But there is about a year lag.

5 MR. BALESTRIERE: Until they start, and, yes, they

6 continue. The first Dora, it's --

7 THE COURT: OK. There came a time when she stopped

8 any new recording?


10 THE COURT: That was summer of 2010?

11 MR. BALESTRIERE: That was the last time that she

12 actually recorded episodes, though she did do some kind of post

13 production work earlier this year.

14 THE COURT: But she stopped recording episodes in

15 2010?


17 THE COURT: I assume they're new episodes. They may

18 be reruns, but they're new episodes as long as a show runs,

19 right?

20 MR. BALESTRIERE: Yes, your Honor, but just to

21 understand, this is a TV show, Nickelodeon. They mix in the

22 old episodes and the new ones all the time. There are

23 ten-year-old Doras probably running this week on Nickelodeon.

24 It's simply the way they're doing it. Kids are growing up;

25 they watch it a few years; they move on.



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1 It's not like a serial where they only put 20 episode

2 on this year, then 20 new ones next year. There's constantly

3 reruns. So there may constantly be, for as long as Dora is

4 popular, Caitlin Sanchez Dora episodes running on Nickelodeon.

5 THE COURT: When did you file your lawsuit?

6 MR. BALESTRIERE: We filed it in early October, your

7 Honor.

8 THE COURT: Of?

9 MR. BALESTRIERE: We were engaged in August and filed

10 the lawsuit in early October of last year.

11 THE COURT: 2010.

12 MR. BALESTRIERE: Yes, after negotiations.

13 THE COURT: Now, look, what were you complaining

14 about?

15 MR. BALESTRIERE: At the end of the day, the lack of

16 payment from merchandising residuals. There was also a

17 complaint Mr. Fishbein referenced regarding the fact that

18 Ms. Sanchez, for a per diem that actually ended up costing her

19 money, was obligated go to appearances around the country,

20 especially on the West Coast and received a per diem which

21 didn't even always cover her baggage costs. So that was where

22 Mr. Kauff and I negotiated the additional settlement, for which

23 there will be no crediting. That's the $60,000.

24 THE COURT: But the main complaint was about -- when

25 you say residuals -- look, I don't watch TV, and I certainly



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1 don't watch cartoons, but I have watched Seinfeld reruns, and I

2 understand that there was a time over, I don't know how many

3 years, when Seinfeld made a new show every week, right?

4 MR. BALESTRIERE: Yes, your Honor, it's a similar

5 idea.

6 THE COURT: OK. And then that stopped. Then after

7 that, there were reruns. I only saw the reruns. I never saw

8 the original. I never saw an original one at all. But we saw

9 some reruns. Now, when you talk of residuals, I don't have any

10 idea what contract Seinfeld had with whoever he was contracted

11 with, but I assume that they were paid something for the new

12 shows, right?

13 MR. BALESTRIERE: Ms. Sanchez was paid something for

14 the new shows while recording them, and then she was also to be

15 paid something for the shows as they not only showed again on

16 Nickelodeon, but were shown in DVDs because new Dora DVDs come

17 out mixing both Dora --

18 THE COURT: In other words, she is supposed to get

19 compensated any time there is a showing or a DVD with her

20 voice?

21 MR. BALESTRIERE: Correct, your Honor.

22 THE COURT: Presumably, that started in about 2008,

23 right?

24 MR. BALESTRIERE: Later, your Honor, because they

25 didn't do reruns initially, but sometime I think, based on my



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1 investigation from the fall, it was late '08 or early '09 that

2 she was supposed to start receiving residuals. Yet by late --

3 THE COURT: What does the term residuals mean?

4 MR. BALESTRIERE: As I understand it as applied to

5 this case, your Honor, it means a payment to an actor whose, in

6 this case, voice is being shown in what we are all calling a

7 rerun, but in the definition of rerun it includes something

8 that is put onto a DVD or --

9 THE COURT: Look, before you have a rerun, don't you

10 have an original run?


12 THE COURT: And I think you said that the recording

13 that was made in '07 actually started running in '08 because

14 there was about a year lag.

15 MR. BALESTRIERE: That's my recollection.

16 THE COURT: So that's starting some original runs.


18 THE COURT: So, was she to get paid for the original

19 runs?

20 MR. BALESTRIERE: She gets a recording fee or she

21 received a recording fee for the original run and then was

22 supposed to be getting what we're calling residuals for what

23 we're calling the reruns. That's when the family came in.

24 THE COURT: I'm sorry to get hung up on this, but the

25 original runs were run, right?



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1 MR. BALESTRIERE: You mean they were aired on

2 Nickelodeon?

3 THE COURT: Yes.


5 THE COURT: Was she simply to get a recording fee for

6 that? Before we get to reruns, the original runs, was she

7 merely to get the recording fee?

8 MR. BALESTRIERE: I believe so, your Honor, but if

9 not -- and, forgive me, I'm not sure of the detail right now --

10 it would be the same kind of residual calculation that applied

11 to it, to my knowledge. In the same way that Mr. Seinfeld got

12 paid something for, I think he was getting a million dollars an

13 episode at one point, and then it aired that first time, I

14 could be wrong, he didn't get money the first time, but then

15 with the reruns, he received more money.

16 THE COURT: Does anybody know the answer to my

17 question?

18 MS. LASK: A residual, your Honor, is basically --

19 you're on the correct track. You have an original run and then

20 maybe they'll --

21 THE COURT: What was she to get for the original run?

22 MS. LASK: She was supposed to get paid a certain

23 percentage. She got a fee. These are actors --

24 THE COURT: What was she to get paid for the original

25 run?



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1 MS. LASK: Mr. Fishbein?

2 THE COURT: Do you know?

3 MS. LASK: I don't have it in front of me.

4 THE COURT: You don't.

5 MR. FISHBEIN: Look, there is an exhibit to the

6 settlement agreement, Exhibit C2, which lays out the

7 calculation, and there is a minimum compensation by contract

8 that she gets for the original run. Now, if you're asking how

9 much it is, I believe it's something like $7- or 800,000 --

10 excuse me, $7- or $800.

11 THE COURT: So the original run when it is aired, she

12 has simply gotten $7- or $800.

13 MR. FISHBEIN: Right. And then for each successive

14 run or rerun, she gets a percentage of that.

15 THE COURT: Percentage of what?

16 MR. FISHBEIN: Of the $7- or $800. Now these are run

17 any time, so that can add up over time. And she did get paid.

18 She got paid for the first time it aired; she got paid that.

19 By the way, your Honor, this is pursuant to a

20 collective bargaining agreement that Viacom has with the union

21 that represents all voiceover artists. So these are standard

22 terms. She then negotiated her own contract which had slightly

23 better terms than the union contract. So she got --

24 THE COURT: Wait. Wait. There was compensation for

25 the original run, and there is compensation for the reruns?



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1 MR. FISHBEIN: Correct.

2 THE COURT: And I'm not sure that -- and whatever it

3 is, it is, and I am sure that that can all be specified, but

4 then she was also to get -- I'm going to go back to Mr. --

5 thank you very much, Mr. Balestriere -- she was to get

6 compensated if there were DVD sales, if there were some

7 merchandise sales that had her voice.

8 MR. BALESTRIERE: Correct, your Honor, especially,

9 say, video games, toys, things like that.

10 THE COURT: So as of the time you started the lawsuit

11 in October, you were complaining about what?

12 MR. BALESTRIERE: Chiefly what your Honor is focusing

13 on, the underpayment of residuals and merchandising. Up to

14 that time, if I'm recalling correctly, she received $4,950. We

15 had a settlement discussion where they said we made a mistake,

16 we said maybe it's more like 40,000 she was due, but they

17 weren't moving from that number, and we were forced to bring

18 the lawsuit. We tried to work it out prior to actually

19 initiating an action.

20 THE COURT: Now, obviously, just as an initial

21 proposition, there would be an issue about what she was due as

22 of the time you filed the lawsuit.

23 MR. BALESTRIERE: Correct, your Honor.

24 THE COURT: If she would do more than she had been

25 paid, then there would be presumably, at least as an initial



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1 proposition, there would be an issue about future payments.


3 THE COURT: Let's not talk about this $50,000 for the

4 moment. But the 455, how was that negotiated?

5 MR. BALESTRIERE: As Mr. Fishbein noted, there was a

6 calculation by internal Viacom accountants that said that their

7 expectation of what Ms. Sanchez would be due over the next 20

8 years was a number, frankly, below that. I think it was like

9 420,000 or something like that.

10 We had not had a chance to have an independent audit

11 at that point, so I couldn't credit the numbers that much, but

12 that began a starting point for our negotiations when, frankly,

13 it was when Nickelodeon came to us and said they wanted to

14 resolve it. We said there is no way we could for the amounts

15 they were talking about. And that's when I made the proposal

16 of the audit; that if we could work it out --

17 THE COURT: How broad is the audit? Does the audit

18 allow an examination that goes back to the beginning to see

19 what she was due?

20 MR. BALESTRIERE: Yes, your Honor. I'm reading from

21 paragraph 6 of the settlement agreement, pages 6 and 7. It

22 says that Ms. Sanchez may engage an external auditor to audit

23 Uptowns; that was the name of the production company. So

24 Nickelodeon books and records relating only to Dora The

25 Explorer in order to verify statements of accounting rendered



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1 for residuals and back-end merchandising revenue due under the

2 employment agreements.

3 The employment agreements are those agreements which

4 Mr. Fishbein referenced earlier: Her own agreement, a personal

5 services agreement, and the collective bargaining agreements.

6 There is no limitation. It doesn't say only a certain

7 time period. It doesn't say only a certain kind of

8 merchandising. It is extremely broad. Anything with

9 residuals, or the term that's used in the industry I've

10 learned, back-end merchandising. It was supposed to be

11 conducted within 90 days of the effective date of the

12 agreement. In other words -- excuse me, I think it's actually

13 January 13 -- but within 90 days of the November 15 execution

14 of this agreement.

15 MS. LASK: Your Honor, may I please just expand on

16 that --

17 THE COURT: Why hasn't the audit -- why haven't you

18 asked for the audit?

19 MR. BALESTRIERE: We were terminated before the 90

20 days.

21 THE COURT: What?

22 MS. LASK: There was a limitation in the audit. He

23 stopped right at this paragraph: Such right to audit is

24 limited to the episodes of the series and related products to

25 which Caitlin's voice is embodied, and under no circumstances



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1 shall Sanchez or her representatives have the right to examine

2 records relating to Uptown's business generally or with respect

3 to any other projects for purposes of comparison or otherwise.

4 The importance of that limitation completely knocks

5 out her right to an accounting because --

6 THE COURT: I don't think it does at all. Not at all.

7 MS. LASK: Your Honor, one second, please.

8 THE COURT: No.

9 MS. LASK: In Hollywood, there is something called

10 vertical integration. It's complex accounting form that

11 studios use in such cases as in Caitlin's case, Dora The

12 Explorer, where they show these losses that don't really exist.

13 And, your Honor, in my brief I gave you four cases,

14 Nash Bridges and some other recent cases where actors, like

15 Ms. Sanchez, brought these very vertical integration accounting

16 cases, went into the books and records without settling within

17 30 days of filing the lawsuit and found out that they were due

18 millions. Some of them got $10 million. Some of them got --

19 THE COURT: But they went into the books.

20 MS. LASK: That's right. That's the purpose why we're

21 here.

22 THE COURT: You had a right to go.

23 MS. LASK: Because Mr. Balestriere stopped -- stayed

24 discovery immediately in this case in less than 30 days and

25 settled the case.



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1 THE COURT: This isn't a matter of discovery. This is

2 an audit provided in the agreement.

3 MS. LASK: No. No. In this agreement, this audit

4 doesn't give her the right to go into the books and records

5 that she really needed to go into in the first place; and as

6 Mr. Balestriere admitted, as he just stood here, he admits he

7 did not credit their numbers --

8 THE COURT: It seems to me a very --

9 MS. LASK: Yes.

10 THE COURT: -- simple way to resolve this dispute --

11 we've got this dispute about the attorneys fees, but if there

12 is a dispute about the nature of the audit, we can discuss

13 that. If you feel that there is some limitation in the terms

14 that there shouldn't be, that can be discussed; but to

15 overthrow a settlement agreement which provides for the audit,

16 that isn't in the interest of your client at all. And then

17 start in on a trial? It isn't -- this is not in the interest

18 of the client in any way, shape or form. And there is also the

19 other side to the agreement. But what can be done, which is in

20 the interest of your client, is to discuss the nature of the

21 audit.

22 MS. LASK: Your Honor --

23 THE COURT: And if you don't want to do that, I am not

24 going to continue, I'm sorry.

25 MS. LASK: We can -- that was the purpose of her case,



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1 a vertical integration, she wanted to audit everything.

2 THE COURT: I am not concerned about terms. I'm not

3 concerned about -- I'm concerned about simply having your

4 client exercise her rights, which she has not done, to get an

5 audit. And if she feels her rights are too narrow, we can

6 discuss that. Do you want to discuss that? If you don't,

7 why--

8 MS. LASK: Of course --

9 THE COURT: -- I'm not going to continue this.

10 MS. LASK: Yes, they want their audit, but they don't

11 want it limited.

12 THE COURT: I am not -- please --

13 MS. LASK: Yes, we are willing.

14 THE COURT: If you can just stop arguing and let's

15 have something constructive so that if there is an issue about

16 the terms of the audit, it can get resolved; but if we just

17 keep arguing and arguing, I am not going to continue it.

18 MS. LASK: Your Honor, I don't mean to come off as

19 arguing with you. Yes, they do want their audit --

20 THE COURT: What is the problem you see with how the

21 audit is provided for?

22 MS. LASK: She needs to audit --

23 THE COURT: What is the problem? Can I see the

24 language?

25 MS. LASK: "Such right to audit is limited to the



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1 episodes of the series." They limited her right only to the

2 episodes of the series and series-related products. When you

3 do a vertical integration audit case in Hollywood accounting,

4 you need a forensic expert, which they are willing to get --

5 I'm sorry, did you want to see these? It's page 7. She needs

6 to be able to audit everything: The merchandising, what they

7 were receiving during those three years, everything that was

8 related to her.

9 MR. FISHBEIN: We have no objection to that. That's

10 what it says. It says she's entitled to the audit for the

11 programs that she worked on.

12 THE COURT: If you want to do something

13 constructive -- if you don't, then I am not here to overturn a

14 settlement agreement which provides for an audit, and if the

15 audit uncovers that monies are due, then monies will be due;

16 but it would be absolutely responsible for me to overturn a

17 settlement agreement and start afresh when the settlement

18 agreement provides for an audit. It would be utterly --

19 imagine, what do you think would happen? You tell me. I grant

20 your motion to void the settlement agreement. Where are we

21 then?

22 MS. LASK: Discovery, forensic audits, right there.

23 THE COURT: Discovery and forensic audits. That is

24 very interesting. And how would it differ from the audit that

25 is provided?



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1 MS. LASK: She would have the opportunity in addition

2 to take the depositions of certain senior high level

3 accountants, find out what they were doing and how they are

4 accounting for -- so you know in your --

5 THE COURT: Why do you have to take depositions?

6 MS. LASK: Your Honor, I am agreeing with you though.

7 You were asking me questions, if we can get a full-scale audit

8 on a vertical integration theory that they wanted without

9 limitation to find out everything that they were making on the

10 Dora franchise during the time that she was there, instead of

11 saying, well, we paid her a hundred thousand dollars in three

12 years, but we were making billions every of dollars over a

13 period of time on the franchise, then we will go for the audit.

14 That was one of the complaint -- or the motion, your Honor. I

15 apologize.

16 The biggest part was the whole infant's compromise and

17 the attorney's fees that were taken from her --

18 THE COURT: I'll come back to the attorney's fees.

19 MS. LASK: Yes, OK. So, your Honor, yes, I agree with

20 you.

21 THE COURT: I don't know enough about the details of

22 what would happen in an audit, but it seems to me that what

23 ought to happen -- otherwise we will spend time talking about

24 abstractions -- but it seems to me that you ought to employ

25 whatever kind of auditor you want and have that auditor go to



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1 Viacom, is it?

2 MR. FISHBEIN: Yes.

3 THE COURT: And propose what he wants to do by way of

4 audit. And then if they say yes, then that's fine. If they

5 say no to something, we have an issue.

6 MR. FISHBEIN: That's right, your Honor.

7 THE COURT: That's the way to do it, so we don't sit

8 around court arguing about abstractions.

9 MR. FISHBEIN: The only point I would make, your

10 Honor, is the audit rights are quite broad. They entitle her

11 once a year to do this audit. There is a dispute resolution

12 mechanism, so if there is a disagreement about the audit, then

13 she --

14 THE COURT: But we take it one step at a time. The

15 thing is we're in court now, and there is the motion. And I

16 think there is an agreement to attempt to conduct the audit

17 that they wish. The only way to do that is to do it and not

18 have any more arguments about abstractions in court.

19 Now, consequently, I will say on the record, I am

20 denying the motion to overturn the settlement agreement

21 provided that -- and I am assuming that the plaintiffs will

22 conduct the audit or audits they are allowed to do, and they

23 can do what one would expect, and that is to send an auditor or

24 audit team to Viacom to carry out that audit.

25 And if there is a dispute about the terms or the



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1 nature of the audit, then that dispute can be resolved in an

2 appropriate way. But there is no concrete dispute before me

3 now because the plaintiffs have not even attempted to send an

4 auditor, so I have no concrete dispute. That's the ruling.

5 Now, we come to the issues of attorney's fees. I want

6 to come to that, but I am finished with the issue about the

7 motion to overturn the settlement agreement. Thank you.

8 Now, on the attorney's fees. Yes? Go ahead

9 MS. LASK: You know, I'm not going to waste your time

10 because it's all in there, but as much as I could say, is it's

11 very, very clear, and the law is there in these infants

12 compromises, they are supposed to protect the child, a lot of

13 times because of their own attorney, and this attorney

14 particularly did not give this Court one piece of evidence why

15 he should satisfy 37.5 percent, nor the $3,000 in meals and

16 taxicabs that he took from them. Then he went further, and

17 it's in my reply -- and he did a surreply, Mr. Balestriere --

18 and he went further and tried to take more money from her

19 future income.

20 THE COURT: Well, I will say this, then I think I was

21 remiss as a judge to approve the settlement agreement without

22 inquiring about the fees. So it wasn't just Mr. Balestriere.

23 It was certainly my oversight, and that can be rectified.

24 MS. LASK: Thank you your Honor.

25 MR. BALESTRIERE: Your Honor, may I?



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1 THE COURT: Yes, please.

2 MR. BALESTRIERE: I was remiss, clearly. I will be

3 blunt. This was my first infant compromise, and CPLR Section

4 1207 did obligate us to present something on our fees, and I

5 made a mistake there in not doing so.

6 I note, your Honor, that we have a good settlement.

7 Your Honor is denying the Rule 60 motion, and that I think we

8 got a good settlement where we were going to have to, I

9 certainly thought at the time, continue to work on this case

10 for many years managing those audits.

11 THE COURT: Let me just interrupt you.

12 MR. BALESTRIERE: Sure.

13 THE COURT: I think that it will be appropriate to

14 have a further submission by you regarding fees, but let me

15 just ask some questions on the basis of what is known today.

16 MR. BALESTRIERE: Sure, your Honor.

17 THE COURT: How much in fees did you collect?

18 MR. BALESTRIERE: My estimate, your Honor -- I could

19 get numbers to your Honor -- but it's $193,000.

20 THE COURT: What is the basis for that?

21 MR. BALESTRIERE: A contingency fee at the end of the

22 day, your Honor. We were hired initially by the hour.

23 Ms. Sanchez's mother said it would be difficult to continue to

24 pay by the hour, so we worked out a new engagement arrangement

25 where we were paid on a contingency fee basis, but where any



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1 previous fees paid would be credited toward and thus reduce

2 from the actual amount of the fee that we received at the end

3 of the day. This was well negotiated.

4 THE COURT: What was the contingency?

5 MR. BALESTRIERE: I believe -- and you do have this in

6 the papers, your Honor, but I believe -- I think it started at

7 35 percent. Once we went into discovery, it went up to

8 37.5 percent, and it could go up from there, which, I must say,

9 in my experience, is standard in business disputes.

10 We did enter a discovery here. Your Honor did stay

11 discovery after we had begun it, but we entered into discovery,

12 and, of course, we were going to be conducting these audits,

13 which is a kind of discovery as well.

14 When we were terminated, I spoke to the clients to

15 say, well, my opinion is you are still going to get a lot of

16 money down the line, we would be due fees, let's try to work

17 something out. They ignored several letters and emails. This

18 started in early January until I first heard from Ms. Lask in

19 May.

20 My position is, your Honor, that we have obtained a

21 great settlement, which I believe will get Ms. Sanchez a lot of

22 money going down the line, and that we would be due a portion

23 of that consistent with the engagement agreement. I have also

24 said to Ms. Sanchez's parents that I would be willing to

25 negotiate something differently going down the line.



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1 I do note, your Honor, and we put this in the papers,

2 that had we billed by the hour, our fees would have been about

3 50 percent more than they actually were. So it's not like we

4 got a so-called windfall where we didn't put a lot of time into

5 it and got this nice, big fat contingency in the beginning of

6 the case. It was, in fact, the opposite.

7 THE COURT: Here is what I feel -- let me interrupt

8 myself. I have dealt with a lot of fee applications in class

9 action lawsuits. I don't recall dealing with a fee application

10 or a fee approval issue in a infant settlement. I just don't

11 recall it. I probably have. I have been on the bench a long

12 time. I just don't recall. But what happens in the class

13 action --

14 MR. BALESTRIERE: I am very familiar your Honor.

15 THE COURT: -- situation is, you know, what the

16 lawyer will do is to submit some reasonable description of the

17 hours spent. And I say reasonable, it doesn't help me to have

18 every last detail about every last tenth of an hour. But some

19 reasonable description so that I can get an idea of what was

20 done and how much time was spent, and then I get a statement of

21 the normal hourly rate of either the particular lawyers working

22 on the case or that kind of lawyer because sometimes lawyers

23 almost are exclusively on contingency fee cases.

24 So if you've got the amount of time, what the time was

25 spent for, and then some idea of the hourly rate if you were



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1 going to go by hourly rates, you know that.

2 MR. BALESTRIERE: Yes, your Honor. I would say with

3 that -- using it --

4 THE COURT: Let me just finish.

5 MR. BALESTRIERE: I'm sorry, your Honor.

6 THE COURT: And then what happens is that usually the

7 application is for a percentage or very often the application

8 is for a percentage of the proceeds of the settlement or some

9 lump sum if the fees are going to be paid apart from that

10 settlement.


12 THE COURT: And very often what is requested is more

13 than the hourly rate would justify, and courts have routinely

14 approved such awards for the reasons courts expressed, there's

15 been an investment in an uncertain case, etc., etc.

16 MR. BALESTRIERE: I understand, your Honor.

17 THE COURT: So, what courts have -- not always but

18 very it is very standard to approve something that is over and

19 above what would be the billing on an hourly rate basis.

20 But what I would like -- I think the record really has

21 to have from you something comparable to that.

22 MR. BALESTRIERE: Yes, your Honor. I've worked on

23 many class action fee applications like that.

24 THE COURT: So, we have to leave the matter open as

25 far as the attorney's fees. I think I have to approve whatever



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1 is paid. I think that's my obligation, which can still be

2 taken care of and should have been done initially, but it can

3 be done now, and that's the way we'll leave the attorney's

4 fees. When do you think you can have your --

5 MR. BALESTRIERE: That's the one thing, your Honor,

6 I --

7 THE COURT: You might just couch it as a motion to

8 approve your fees, and then obviously the other side can

9 respond to that. When can you do that?

10 MR. BALESTRIERE: Would it be OK if I get a long time?

11 I have four appeals this month and some depositions. Could I

12 get till December 14, your Honor.

13 THE COURT: Certainly.

14 MR. BALESTRIERE: Thank you. Your Honor, one note

15 using our lode star multiplier idea, our lode star multiplier

16 in this case is about a .7, meaning well under one. So in fact

17 there was no multiplier. So we will put that in our papers,

18 but just to give your Honor a preview.

19 THE COURT: All right. That can go in the papers.

20 I think it would be a good idea if somebody sent in an

21 order which would reflect the terms on which the motion was

22 denied and then reflect the fact that the court will examine

23 the attorney's fee situation and will approve a fee.

24 Thank you very much.

25 MR. BALESTRIERE: Thank you, your Honor.



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1 MS. LASK: Your Honor, I will file that order, by the

2 way, the plaintiff, just so everybody --

3 MR. FISHBEIN: Well, I'm sure we'll confer about it

4 and come up with an agreed order.

5 THE COURT: I'm sure you will.

6 MR. BALESTRIERE: Right. Your Honor, I just want to

7 be clear, since it's attorney's fees, that I get a chance to

8 see the order as well before it's sent to your Honor.

9 Ms. Lask?

10 MS. LASK: Well -- of course.

11 THE COURT: Yes. Yes. I think I have some papers.

12 MR. FISHBEIN: Yes, those are mine.

13 THE COURT: Loaned to me. I think we can work this

14 out and put some harmony into the situation and --

15 MS. LASK: Your Honor, may I ask, if there is an issue

16 in the accounting, can we revisit it here with your Honor,

17 since you have the experience with the case.

18 THE COURT: Well, I said appropriate. If the -- if

19 any dispute is supposed to be subject to arbitration, I don't

20 want to interfere with that. Obviously, my intention is if

21 there is a dispute about the method of the accounting, that

22 should come to either the court or to arbitration. I would

23 think it would be better to have it come to the court.

24 MS. LASK: Thank you, your Honor.

25 MR. FISHBEIN: Your Honor, again, we reserve our



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1 rights on that. Let's see what happens, but as I said, there

2 is a dispute resolution mechanism that calls for arbitration.

3 THE COURT: We'll see. But one step at a time. Thank

4 you very much.

5 MS. LASK: Thank you very much, your Honor.

6 MR. BALESTRIERE: Thank you.

7 (Adjourned)

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Documents

1 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF … · 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 2 -----x 3 CAITLIN SANCHEZ, performing as "Dora The Explorer",