The New York State Supreme Court’s Commercial Division for New York County (Judge O. Peter Sherwood) recently granted the model plaintiffs class-action status in a long-standing dispute over s ‘They are employees under New York labor laws, not independent contractors. Shanklin et al. v. Wilhelmina Models, Wilhelmina International, Ltd., Next Management LLC, MC2, MC2 Model Management LLC and Talent Miami LLC, 2020 NY SlipOp. 31337 (U) (Sup.Ct. NYCty. 5/8/20).
Since New York’s Section 9 class actions law became law 45 years ago, courts have underused Section 9, largely denying certification of class actions. It was only recently that the highest court in the state committed to allowing it, encouraging appeal divisions and trial courts to take a more aggressive stance on class certifications, particularly in the affairs of tenants, consumers and employees. [Borden v. 400 E. 55th St. Assoc. LP (2014)]. Now, with COVID-19 triggering the filing of numerous class action lawsuits across a wide range of industries, the Shanklin decision has important implications beyond the fashion industry.
The complainant category consists of models who, from 2007 to the present, have contracted with the country’s leading modeling agencies for counseling, career management and modeling jobs. The first of three related class actions began in 2012, Raske v. Ford Models et al., Index n ° 653619/2012. The models first sought compensation for the alleged unauthorized uses and re-uses of their photographs. Their breach of contract allegations then turned into broader allegations that the agencies violated New York employment law. Essentially, they allege that by requiring models to use the agency exclusively, and by controlling the time, manner and location of shoots and negotiations, vacations and medical appointments, and scrutinizing the appearance of the models, the agencies employed the models as employees, not as independent contractors, so the models are entitled to receive an hourly wage, respectful of their hours, benefits and accounting reports, under the laws of the New York work. (Few modeling agencies have secured the dismissal of the original complaint in the Raske class action, Ford Models among them, represented by Arent Fox).
After the models amended the complaint twice to add the labor law claims and filed two related class actions, pre-certification research began to determine whether the standards set out in section 9 for the treatment of class actions were respected (that is to say, if the representatives and lawyers can adequately represent the group, if the collective action mechanism is superior to individual actions, if the group is large, if the claims of the appointed representatives are typical of those of the proposed group, if the group mechanism is superior to the alternative (cases classified individually, each being dealt with on its own merits). Before Shanklin, the relatively few collective certifications granted concerned consumer-type class actions (for example, disputing deductions for equipment rental or telephone charges, for broken promises in solicitation documents or server claims for tips). Many cases have therefore been filed in federal court under Fed.R.Civ.P. 23 to end this failure of state courts to confer class action status.
The Court mainly focused on three statutory features – typicality (ie, whether the remaining claims presented problems common to all models regarding the respective degree of generalized agency control over the models and their deduction from suspected illegal expenses); adequacy of representation (whether the company representing the models was able and able to prepare the case, a factor on which the defendant modeling agencies did not dispute), and superiority (if the use of the collective action device was far superior to that of hundreds of models to file individual actions).
The agency’s defendants did not dispute the number requirement, and defendant Next Management lost the argument that the class action scheme was not superior to the labor commissioner charged with the lawsuits. The court ruled that since the facts regarding the breaches of contract (alleged unauthorized uses of photos of the models) were so individualized with respect to each model, the terms of the contract and in particular the damages, it could not grant group status with respect to these claims.
Regarding the employment law claims, the Court granted a class action certification finding that all statutory branches had been met, so that the models under contract with Wilhelmina Models, Wilhelmina International Ltd. and Next Management LLC, respectively, since October 24, 2007 (13 years), represent the models against the three agency classes on employment law claims.
Before Shanklin, class certifications have been almost exclusively in the area of consumer fraud (for example, disputing lowercase letters containing waivers of lease rights or obscure phone charges). Shanklin represents a departure from these cases and is likely to have repercussions beyond the immediate decision of a class action.
First, if a jury found that modeling agencies exercised such a degree of control and supervision over hundreds of models in the classroom, including the manner, type and location of model shoots, vacation schedules and medical appointments, so they were agency employees, so 13 years of potential damages plus attorney fees under employment law could be very significant. This suggests that other service industries which employ independent contractors and retain such control may also be affected.
Second, Shanklin has practical consequences. The way modeling agencies negotiate contracts with models, their contract renewals and reuse of their photoshoots, even information regarding their compensation may change, possibly by including additional notice or approval clauses in contracts. types or business procedures to protect the models and the agency from further litigation. It’s also clear that class action waivers recently sanctioned by the U.S. Supreme Court are likely to become the norm if they haven’t already. Finally, Shanklin suggests that agencies and other service providers consider requiring independent contractors to recognize and relinquish their employee status when they contract or renew contracts, again to avoid further litigation.
Third, the courts in New York State are showing affinity and greater acceptance of a greater variety of class actions than ever before in this post-COVID-19 era.