Posternak Blankstein & Lund LLP is now Arent Fox. Read the press release

Fashion Model Class Action Case a Bellwether For Other Industries

The Commercial Division of the New York State Supreme Court for New York County (O. Peter Sherwood, Justice) recently granted the fashion models-plaintiffs class action status to a long-simmering dispute as to whether they are employees under New York Labor Laws, and 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. N.Y.Cty. 5/8/20).

Since New York’s Article 9 class action statute became law 45 years ago, courts underutilized Article 9, largely denying class action certification. Only recently has the state’s highest court evinced a commitment to permitting it, encouraging the Appellate Divisions and trial courts to take a more aggressive stance regarding class certifications, particularly in tenant, consumer, and employee cases [Borden v. 400 E. 55th St. Assoc. LP (2014)]. Now with COVID-19 triggering the filing of many class action cases across a wide swath of industries, the Shanklin decision has significant implications beyond the fashion industry.

The Parties

The plaintiff class consists of those fashion models who, from 2007 to present, contracted with the nation’s leading modeling agencies for advice, career management, and modeling jobs. The first of three related class action lawsuits began in 2012, Raske v. Ford Models et al., Index No. 653619/2012. The models initially sought compensation for alleged unauthorized uses and reuses of their photographs. Their breach of contract style claims later morphed into broader allegations that the agencies violated New York Labor Law. Essentially, they allege that by requiring the models exclusively to use the agency, and by controlling the time, manner and location of shoots and negotiations, vacations and medical appointments and scrutinizing the models’ appearance, the agencies employed the models as employees, not as independent contractors, such that the models are entitled to receive hourly wages, respectful of their hours, benefits and accounting reports, under New York Labor Laws. (Few modeling agencies were granted dismissal of the initial Complaint in the Raske class action, Ford Models among them, which Arent Fox represented).

After the models amended the Complaint twice to add the Labor Law claims and filed two related class actions, pre-certification discovery began in order to determine whether the standards set out in Article 9 for class action treatment were met (i.e., whether the representatives and counsel can adequately represent the class, whether the class action device is superior to individual actions, whether the class is numerous, whether the named representatives’ claims are typical of those in the proposed class, whether the class device is superior to the alternative (individually filed cases, each processed on its own merits). Before Shanklin, the relatively few class certifications granted involved consumer-type class actions (e.g., challenging equipment leases deductions or telephone charges, for unfulfilled promises in solicitation materials, or waitstaff claims for gratuities). Many cases were therefore filed in federal court under Fed.R.Civ.P. 23 as a result to end-run this failure of state courts to confer class action status.

The Decision

The Court focused on mainly three statutory features – typicality (namely, whether the claims remaining presented common issues to all of the models about the agencies’ respective degree of pervasive control over models and their deduction of alleged illegal expenses); adequacy of representation (whether the firm representing the models were able to and capable of preparing the case, a factor as to which the defending modeling agencies voiced no dispute), and superiority (whether the use of the class action device was far superior than were hundreds of models to file individual actions).

The agency defendants did not dispute the numerosity requirement and Defendant Next Management lost the argument that the class action device was not superior to the Commissioner of Labor prosecuting the claims. The court decided that since the facts concerning the breaches of contract (alleged unauthorized uses of models’ photos) were so individualized as to each model, contract terms, and particularly the damages, it could not grant class status as to those claims.

As for the Labor Law claims, the Court granted class action certification finding all of the statutory prongs were met with the result that 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 the Labor Law Claims.

The Takeaways

Before Shanklin, class certifications have been almost exclusively in consumer fraud area (e.g., challenging minuscule print containing waivers of rights under a lease or obscure telephone charges). Shanklin represents a departure from those cases and is likely to have repercussions beyond the immediate class action ruling.

First, if a jury were to find that the modeling agencies exercised such a degree of control and supervision over hundreds of models in the class, including the manner, type and location of model shoots, vacation schedules and medical appointments such that they were agency employees, then 13 years of potential damages plus attorneys’ fees under the Labor Law could be very large.  This suggests that other service industries which employ independent contractors and retain such control may also be affected.

Second, Shanklin has practical consequences. How modeling agencies negotiate contracts with models, their contract renewals, and reuses of their photoshoots, even the information regarding their compensation may change, possibly by including additional notice or sign-offs provisions in model contracts or business procedures to protect models and the agency from further litigation.   It is also clear that waivers of the right to bring class actions sanctioned recently by the United States Supreme Court are likely to become standard if they have not already.  Finally, Shanklin suggests that agencies and other service providers consider requiring independent contractors to acknowledge and waive their status as employees at the time they contract or renew their contracts, again to avoid further litigation.

Third, New York state courts are evincing an affinity for and greater acceptance of a wider variety of class actions than ever before in this post-COVID-19 era.

Contacts

Continue Reading