## Facts

- Directors Guild of America (DGA) was the labor union representing certain television directors.
- Millennium Television Network retained DGA-represented directors for a planned live television broadcast.
- To obtain financial backing, Millennium was required to secure a performance and payment bond.
- Millennium obtained a $10 million bond from Frontier Insurance Company and NAC Reinsurance Corporation, intended to assure repayment for work or labor done in connection with the broadcast.
- About one week before the scheduled air date, the broadcast was canceled.
- Under the parties’ agreement, the directors’ entitlement to compensation for the canceled project was submitted to arbitration.
- Millennium did not appear at the arbitration hearing, and the arbitrator awarded monetary relief to the directors (including related benefit contributions).
- Millennium did not pay the award. DGA made a written demand on Frontier and NAC under the bond, and the sureties refused, asserting the directors had not performed any “work or labor” because the broadcast never went forward.
- DGA filed suit in federal court against Millennium and the sureties. The court entered a default judgment against Millennium, and DGA pursued relief against Frontier and NAC, including summary judgment.
- The sureties also argued that some directors failed to mitigate damages by seeking alternative employment.

## Issues

1. Whether the payment bond obligated Frontier and NAC to pay the directors’ arbitration award even though the telecast was canceled and the sureties claimed no “work or labor” was performed.
2. Whether the sureties could reduce or avoid liability by arguing the directors failed to mitigate by seeking other employment during the contracted period.

## Decision

- The court entered default judgment against Millennium for the arbitration award.
- The court ruled for DGA against the sureties and required payment under the bond for the amounts awarded in arbitration.
- The court rejected the sureties’ contention that cancellation meant no covered “work or labor” occurred, reasoning that the directors’ contractual commitment to be available for the engagement supported the payment obligation.
- The court did not accept the sureties’ mitigation theory as a basis to defeat the directors’ recovery under the bond in light of the contractual/arbitral determination of what Millennium owed.

## Legal Principles

- A payment bond is construed by its terms, read alongside the bonded arrangement and relevant industry practice, to determine the scope of the surety’s obligation.
- A surety may be liable for pay-or-play style compensation tied to a worker’s contractual commitment and reserved availability, even if the project is canceled before services are used in the final production.
- An arbitration award that fixes the principal’s debt provides a concrete measure of what is owed; a court enforcing collection against a surety generally focuses on whether the debt falls within the bond rather than re-litigating the labor dispute’s merits.
- Mitigation arguments do not defeat recovery where the governing contract and arbitration decision treat reserved availability and forgone opportunities as compensable and set the amount due.

## Conclusion

The court enforced the directors’ arbitration recovery after the live broadcast was canceled, entering default judgment against Millennium and holding that the Frontier/NAC bond required the sureties to pay amounts owed for the directors’ contracted engagement, despite the sureties’ “no work performed” and mitigation arguments.


Directors Guild of America v. Millennium Television Network, 2001 WL 1744609 (2001)