District Court Grants Hearst Interns’ Motion for Appeal to Second Circuit

Former unpaid interns at the Hearst Corp. may have their denial of class certification reviewed by the U.S. Court of Appeals for the Second Circuit. The District Court of the Southern District of New York (JudgeHarold Baer, Jr.) granted the interns’ motion to certify the court’s opinion and order of May 8, 2013 denying class certification for intermediate appeal to the Second Circuit. Wang v. Hearst Corp., 2013 U.S. Dist. LEXIS 92091 (S.D.N.Y. June 21, 2013). InMay,the district court denied plaintiffs’ motion to certify a class of unpaid interns alleging that the Hearst Corp. improperly classified them as exempt from federal and state wage and hour laws. Wang v. Hearst Corp., No. 12 CV 793 (HB) (S.D.N.Y. May 8, 2013). The former unpaidinternsat Hearst’s various magazines claim theyqualified as“employees” under the Fair Labor Standards Act (FLSA) and New York Labor Law (NYLL) and, as such,were entitled to minimum, overtime, and spread-of-hours wages. Plaintiffs had moved for partial summary judgment on whether they were, in fact, “employees,”and for class certification under Rule 23(a) and (b)(3). In theMay ruling, Judge Baerdenied the plaintiffs’ motion forsummary judgment with respect to “employee” status under the FLSA and NYLL finding a genuine issue of material fact. Thejudge denied the motionunder the totality of the circumstances test and based on the Department of Labor’s Fact Sheet #71 which provides the six-factors that should be applied when making a determination whether an internship programexcludes interns from the ambit of federal wage and hour protections. Judge Baeralso denied the plaintiffs’ motion for class certificationfor failing to establishcommonality under Rule 23(a)(2)and predominance under Rule 23(b)(3).“[W]hile a close question,”the district courtconcluded thatevidence of a corporate-wideinternship policy alone is insufficient to establish commonality. “[T]hat policy alone cannotanswer the liability question, which turns on what the interns did and what benefits they received during their internship.”Citing language from Wal-Mart Stores, Inc. v. Dukes, the courtemphasizedthat the nature of the tasks performed varied broadly among thetwenty magazines where the plaintiffsinterned. The court also expressed concernsabout the plaintiffs’inability to fix damages, citing Comcast Corp. v. Behrend. Notwithstanding the analysis in his May ruling, Judge Baer determined that the criteria for obtaining an order for intermediateappeal of his denial of class certificationhad been satisfied. For the judge, controlling questions of law with respect to commonality analysis under Dukes and predominance analysis under Behrend were present. The judgealso determined that there was substantial ground for a difference of opinion as evidenced by the contrary ruling by the same courtin Junein Glatt v. Fox Searchlight Pictures, Inc.,No. 11 Civ. 6784 (WHP)(S.D.N.Y. June 11, 2013)in whichthe district court grantedpartial summary judgment and certification ofa class of unpaid interns who worked on the production of thefilm “Black Swan” in 2010. Judge Baer wrote “questions . . . in this case and in Glatt are difficult and one of first impression” and “clearly provide fodder for different opinions and have spawned them” acknowledging that the courts in Wang and Glatt applied the totality of circumstances test and the DOL’s six-factor internship criteria, but reached antithetical results. We will continue to track the wave of intern wage and hour class action cases that have flooded the courts, especiallyin the district and state courts in New York. Employers, especiallyof for-profit businesses, shouldcarefully evaluate whether internship programs comply with federal and state law standards.