Intern Lawsuits Move to State Court; Face Class Decertification, Labor Test Uncertainties

“Never say never,” Virginia & Ambinder wage-and-hour litigation partner LaDonna Lusher said when asked whether her firm would bring new intern cases in state court after Justice Kern's ruling. The judge's decision marked a setback for Lusher in an intern case, Rodriguez v. 5W Public Relations, 156571/14 (Sup., NY, July 26, 2016), that her firm brought against one of the 20 largest public relations firms in the country. In Rodriguez, Kern relied heavily on Glatt to deny certification of a putative class of interns.

Lusher noted that her firm and the Leeds firm would appeal Rodriguez and said she expects the class certification issue to be taken up by a state appeals court. Still, she acknowledged that Rodriguez presents at least the appearance of a problem for her and the Leeds firm, as they drive forward their remaining lawsuits. According to docket searches, the firms have brought at least 80 state cases in recent years, many of which have since been resolved.

Intern Case Developments

The tale of proposed class actions on behalf of thousands of unpaid interns in New York has been rocky. There have been successes and failures in court, high-profile decisions and some less noticed developments that have altered the landscape.

The Glatt case gained the most attention. In the lawsuit, a collection of interns who worked for Fox Entertainment Group, including some on the movie Black Swan, claimed that they should have been paid employees under the Fair Labor Standards Act (FLSA) and New York Labor Law. In 2013, a federal district judge decided that two Black Swan interns should have been paid, while also granting class certification to a larger group of Fox interns. But in July 2015, the Second Circuit vacated that certification in an opinion that adopted the defendant's argument, saying that a “primary benefit” test must be used to determine whether unpaid interns qualify as employees.

The Second Circuit then listed some “non-exhaustive” factors to be considered in deciding who is the “primary beneficiary” in an intern/employer relationship, including the extent to which an intern receives beneficial training, whether the intern gets academic credit, and the extent to which the intern's work complements, rather than displaces, paid employees' work as he or she learns and grows.

In the wake of the circuit's decision, Robert Whitman, a management-side employment law partner at Seyfarth Shaw, said he saw fewer intern class actions being filed, and among those still brought, more were lodged in state court where Glatt “is not necessarily authoritative.”

But state trial court Justice Kern decided in Rodriguez that a putative class of interns had failed to show “that common questions of law or fact predominate over any questions affecting only individual members.” Justice Kern noted that “the issue of what test this court will adopt in order to determine whether an individual is an employee or an intern under the Labor Law is not presently before the court.”

She then went on to say that “whichever test the court adopts, it will be a test that balances a number of factors and one that takes into consideration both the benefit of the work to the employer and the experiences of the individual intern, similar to the test adopted by the Second Circuit in Glatt.”

Douglas Wigdor, the founding partner of Wigdor LLP, a mostly plaintiffs-side employment boutique in Manhattan, said, “it doesn't sound like the intern actions are viable class cases” in state court. He said that “these cases are not huge money cases anyway because, essentially, you are asking for minimum wage for the interns, who usually work only for a summer or a semester. These are not higher value overtime cases, so the numbers don't add up.”

Still, Whitman cautioned that Rodriguez is a trial level decision and not binding precedent, meaning lawyers could potentially persuade a different New York judge to go in a different direction.

Juno Turner, a litigation partner at Outten & Golden, a plaintiffs-side employment law firm and one of the lead plaintiffs' attorneys who handled Glatt, took issue with whether Glatt , or a state court ruling adopting it, truly undercuts the viability of unpaid intern class actions in New York. “I don't think Glatt was the death knell,” Turner said in an interview. “I think after Glatt, other cases might have to be pled using a narrower class focused on interns working in the same divisions.”

Jason Grant is a Reporter for the New York Law Journal, an ALM sibling of Entertainment Law & Finance.