Fox Searchlight and Fox Entertainment brief

13-4478-cv(L), 13-4481-cv(CON)

United States Court of Appeals for the

Second Circuit

ERIC GLATT, on behalf of himself and all others similarly situated, ALEXANDER FOOTMAN, on behalf of himself and all others similarly situated, EDEN M. ANTALIK, DAVID B. STEVENSON, KANENE GRATTS, on behalf

of themselves and all others similarly situated, BRIAN NICHOLS,

Plaintiffs-Appellees,

v.

FOX SEARCHLIGHT PICTURES INC., FOX ENTERTAINMENT GROUP, INC.,

Defendants-Appellants.

ON APPEAL FROM THE UNITED STATES

DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK CASE NO. 1:11-CV-6784 (HON. WILLIAM H. PAULEY)

REPLY BRIEF FOR DEFENDANTS-APPELLANTS

ELISE M. BLOOM MARK D. HARRIS CHANTEL L. FEBUS AMY F. MELICAN JOSHUA S. FOX PROSKAUER ROSE LLP 11 Times Square New York, New York 10036 (212) 969-3000

NEAL KUMAR KATYAL MARY HELEN WIMBERLY FREDERICK LIU HOGAN LOVELLS US LLP 555 13th Street, NW Washington, DC 20004 (202) 637-5600

Attorneys for Defendants-Appellants

Case: 13-4478 Document: 139 Page: 1 07/11/2014 1269302 39

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TABLE OF CONTENTS

Page TABLE OF AUTHORITIES ....................................................................................... iii INTRODUCTION ........................................................................................................ 1 ARGUMENT ................................................................................................................ 3 I. THE PRIMARY-BENEFICIARY TEST GOVERNS

WHETHER AN INTERN IS AN EMPLOYEE UNDER THE FLSA AND THE NYLL. ................................................................................... 3

A. The Primary-Beneficiary Test Is Most Consistent With

Established FLSA Jurisprudence. ............................................................ 4 1. The Larger Framework Of FLSA Case Law,

Including Portland Terminal, Supports The Primary-Beneficiary Test. .............................................................. 4

2. The Vast Majority Of Courts Have Adopted

The Primary-Beneficiary Test. ...................................................... 12 3. This Court Should Adopt A Totality Of-

The-Circumstances Analysis And Reject The Rigid All-Or-Nothing Approach Of DOL............................................................................................... 16

B. The District Courts Award of Summary Judgment

To Glatt And Footman Should Be Reversed And Remanded. ............................................................................................... 18

II. THE CLASS WAS IMPROPERLY CERTIFIED UNDER RULE 23. ........................................................................................................... 21

A. Commonality Was Not Present. .............................................................. 21

B. The District Court Decision Did Not Come Close to

Meeting The Predominance Requirement. .............................................. 25


ii

III. THE FLSA COLLECTIVE WAS IMPROPERLY

CERTIFIED. ...................................................................................................... 27 A. This Court Should Apply Rule 23s Strictures To Post-

Discovery FLSA Conditional-Certification Decisions. .......................... 27

B. Irrespective Of The Standard, the District Court Ignored The Significant Differences Among The Collectives Members .................................................................................................. 28

CONCLUSION ............................................................................................................ 30


iii

TABLE OF AUTHORITIES Page(s) CASES

Archie v. Grand Cent. Pship, 997 F. Supp. 504 (S.D.N.Y. 1998) ......................................................................... passim

Barfield v. N.Y. City Health & Hosps. Corp., 537 F.3d 132 (2d Cir. 2008) .............................................................................................10

Blair v. Wills, 420 F.3d 823 (8th Cir. 2005) ......................................................................................14, 19

Brock v. Superior Care, Inc., 840 F.2d 1054 (2d Cir. 1988) ............................................................................... 10-11, 12

Brown v. N.Y. City Dept of Educ.,

No. 13-139-cv, 2014 WL 2749428 (2d Cir. June 18, 2014) ..............................11, 12

Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) .................................................................................................25, 26

Cuevas v. Citizens Fin. Grp., Inc., 526 F. Appx 19 (2d Cir. 2013) .......................................................................................22

Donovan v. Am. Airlines, Inc., 686 F.2d 267 (5th Cir. 1982) ......................................................................................12, 14

Espenscheid v. DirectSat USA, LLC, 705 F.3d 770 (7th Cir. 2013) ............................................................................................27

Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28 (1961) .............................................................................................. 10 Kaplan v. Code Blue Billing & Coding, Inc.,

504 F. Appx 831 (11th Cir.), cert. denied, 134 S. Ct. 618 (2013) .........................................................................................................12

McLaughlin v. Ensley, 877 F.2d 1207 (4th Cir. 1989) .........................................................................................12


iv

Miles v. Merrill Lynch & Co. (In re Initial Pub. Offerings Sec. Litig.), 471 F.3d 24 (2d Cir. 2006), clarified on rehg in part,

483 F.3d 70 (2d Cir. 2007) ...............................................................................................21

Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010) .......................................................................................25, 26

Petroski v. H&R Block Enters., LLC, 750 F.3d 976 (8th Cir. 2014) ......................................................................................12, 14

Reich v. Parker Fire Prot. Dist., 992 F.2d 1023 (10th Cir. 1993) .............................................................................9, 13, 16

Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947) .......................................................................................................6, 10

Shushan v. Univ. of Colo., 132 F.R.D. 263 (D. Colo. 1990) ................................................................................ 27-28

Singh v. City of New York, 524 F.3d 361 (2d Cir. 2008) ......................................................................................... 9-10

Solis v. Laurelbrook Sanitarium & Sch., Inc., 642 F.3d 518 (6th Cir. 2011) .................................................................................... passim

Steelman v. Hirsch, 473 F.3d 124 (4th Cir. 2007) ..............................................................................................8

Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590 (1944) .............................................................................................................9

Tony & Susan Alamo Found. v. Secy of Labor, 471 U.S. 290 (1985) .............................................................................................................9

Velez v. Sanchez, 693 F.3d 308 (2d Cir. 2012) ................................................................................. 13-14, 21

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) ...........................................................................................22, 23, 24

Walling v. Portland Terminal Co., 330 U.S. 148 (1947) ................................................................................................... passim


v

Wang v. Hearst Corp., 293 F.R.D. 489 (S.D.N.Y. 2013) .......................................................................... 1

Wirtz v. Wardlaw, 339 F.2d 785 (4th Cir. 1964) .............................................................................. 14

Zavala v. Wal-Mart Stores Inc., 691 F.3d 527 (3d Cir. 2012) .............................................................................................28

Zheng v. Liberty Apparel Co., 355 F.3d 61 (2d Cir. 2003) .........................................................................................11, 12

STATUTES AND OHER AUTHORITIES

29 U.S.C. 203(e)(4)(A) ......................................................................................... 11

29 U.S.C. 216(b) ............................................................................................. 27, 28

Fair Labor Standards Act (FLSA) .....................................................................passim

29 C.F.R. 553.101 ................................................................................................. 11

U.S. Dept of Labor: Wage & Hour Div., Op. Letter (FLSA), 1995 WL 1032473 (Mar. 13, 1995) .................................................................... 17

U.S. Dept of Labor: Wage & Hour Div., Op. Letter (FLSA), 2004 WL 5303033 (May 17, 2004) .................................................................... 17


7863/27841-009 current/42198193v6 03/28/2014 2:27 am

INTRODUCTION

Plaintiffs merits brief should be recognized for what it is: a call to reject the

rationale of every other appellate court that has considered the issue of whether

unpaid interns or trainees are employees under the FLSA, as well as the long-

settled precedent requiring courts to evaluate employment status based on the

totality of the circumstances. Instead of following these uniform bodies of law (as

Judge Baer did in Wang v. Hearst Corp., 293 F.R.D. 489 (S.D.N.Y. 2013)),

Plaintiffs ask this Court to rigidly apply the DOLs six-factor test, or an even more

circumscribed single-factor test that focuses solely on whether the putative

employer received an immediate benefit. Yet Plaintiffs offer no sound reason

for this Court to depart from the well-established jurisprudence that has governed

this area. Thus, their request should be rejected.

By contrast, the primary-beneficiary test that Fox advocates is consistent

with FLSA precedent and the decisions of this and other appellate courts. That test

best comports with the economic reality of modern internships in a manner that

both prevents exploitative working relationships and allows for the type of

meaningful learning experiences that quality internships provide. That is the test

this Court should adopt.

As for the district courts certification of a Rule 23(b)(3) class represented

by Plaintiff Antalik, Plaintiffs do not even attempt to defend that decision on its


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merits. They largely ignore Foxs legal challenge, which was that the district court

minted a new rule whereby the identification of a vague and unsupported alleged

common policynamely, that Fox and dozens of its subsidiaries would use interns

to perform tasks previously performed by paid employeessatisfies Rule 23s

commonality and predominance requirements. That was flatly wrong.

Dukes requires courts to analyze dissimilarities within a class rigorously and

to determine whether the purportedly common questions can generate common

answers on a class-wide basis. And the precedent of this Court (in Myers) and the

Supreme Court (in Comcast) requires courts to engage in an even more searching

inquiry with regard to predominance. There is no indication that the district court

engaged in any such analysisfor commonality or predominanceand Plaintiffs

suggestion that this Court should presume otherwise is squarely foreclosed by

precedent. Had the district court engaged in the required analysis, it could have

reached only one conclusion supported by the evidence: Antaliks proposed class

fails to satisfy the requirements of Rule 23.

The district courts conditional certification of Antaliks collective action

under the FLSA is similarly indefensible. Plaintiffs fail to address the efficiencies

identified by the Seventh Circuit in analyzing similar proposed class and collective

actions brought in the same case under the same legal standardthat of Rule 23.

They also ignore the fact that the district courts own analysis indicated that the


3

collective action should not be conditionally certified because the internships

making up that collective action arose from disparate factual and employment

settings. (SPA35.)

For all of these reasons, the decision below should be reversed.

ARGUMENT

I. THE PRIMARY-BENEFICIARY TEST GOVERNS WHETHER AN INTERN IS AN EMPLOYEE UNDER THE FLSA AND THE NYLL.

Foxs opening brief demonstrated that the primary-beneficiary test best

comports with Supreme Court precedent, the law of this Circuit, and the well-

reasoned approach taken by the majority of courts that have addressed the issue.

Plaintiffs and their amici respond by asking this Court to take a marked departure

from mainstream FLSA jurisprudence, which applies a totality-of-the-

circumstances approach to determine whether an employment relationship exists,

and to reject the view of the majority of the courts of appeals that have considered

this question in the internship or trainee context and adopted the primary-

beneficiary test. Yet beyond asking the Court to reject the primary-beneficiary

test, Plaintiffs arent quite sure what test they want. Plaintiffs argue that the Court

should adopt DOLs rigid all-or-nothing approach; 1 they also contend that an

approach that considers the six DOL factors plus other relevant (undefined) 1 Although, confusingly, Plaintiffs and the district court dismiss the relevance of one factor of the DOL test. They do not believe the sixth factori.e., whether the intern expects to be compensatedshould be considered at all. (SPA25-26.)


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circumstances may be appropriate; and at times they advocate for a test that

effectively reduces the inquiry to a single factor (namely, whether the employer

receives an immediate benefit). Their uncertain defense of alternative tests wilts

in the face of the great weight of authoritynot to mention the expertise of the

educators who have filed an amicus briefthat decisively favors the primary-

beneficiary test.

A. The Primary-Beneficiary Test Is Most Consistent With Established FLSA Jurisprudence.

1. The Larger Framework Of FLSA Case Law, Including Portland Terminal, Supports The Primary-Beneficiary Test.

The basic dispute between the parties concerning the applicable test for

internships can be reduced to this: Did Portland Terminal identify for all

industries and circumstances the precise facts that must exist for a training program

to fall outside of the FLSA (as Plaintiffs assert); or does Portland Terminal instead

support a totality-of-the-circumstances approach whereby a court should evaluate

which party is the primary beneficiary of the relationship (as Fox contends)? The

answer under Portland Terminal, and confirmed by its legal and historical context,

is that the primary-beneficiary test controls.

First, contrary to what Plaintiffs and DOL contend, the Court in Portland

Terminal declined to adopt a rigid test for employee status. Instead, the Court

considered whether trainees were work[ing] for their own advantage on the


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premises of another, Walling v. Portland Terminal Co., 330 U.S. 148, 152 (1947),

taking into account the benefits that both sides received. The Court reasoned that

[t]he Fair Labor Standards Act was not intended to penalize railroads for

providing, free of charge, the same kind of instruction [as a school] at a place and

in a manner which would most greatly benefit the trainees. Id. at 153.

Plaintiffs ignore this language and argue that Portland Terminal applies only

where the employer receive[s] no immediate advantage from any work done by

the trainees. (Opp. Br. 17-18.) Of course, Portland Terminal itself mentioned

that fact only in passing, without further elaboration or other signal that the fact

was decisive: Accepting the unchallenged findings here that the railroads receive

no immediate advantage from any work done by the trainees, we hold that they

are not employees within the Acts meaning. 330 U.S. at 153. Plaintiffs overread

that sentence, raising the absence of immediate advantage to singularly dispositive

status. According to Plaintiffs, a putative employer must show that it received no

immediate advantage from the services provided by a trainee to avoid running

afoul of the FLSA. (Opp. Br. 18.)

That is simply wrong. To be sure, Portland Terminal evaluated the facts

before it, but it gave no indication that such facts must be present in future cases

to foreclose an employment relationship. Solis v. Laurelbrook Sanitarium & Sch.,


6

Inc., 642 F.3d 518, 526 n.2 (6th Cir. 2011).2 Nor did the Court view the absence of

an immediate advantage to the railroads as the sole factor that dictated the result.

If it had, there would have been no point to considering the litany of other facts

that the Court considered, such as whether the trainees contemplated compensation

and whether the railroad provided training and instruction. 330 U.S. at 152-53.

The reason the Court labored on these questions is simple: the Court has

consistently held that the existence of an employment relationship must be

determined by the totality of the circumstances, with no one factor controlling.

Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947).

Plaintiffs are unable to muster any argument in response. Instead, Plaintiffs

set up a straw man and proceed to knock it down: They claim that Fox argued that

Portland Terminal held that the brakemen trainees did provide an immediate

advantage to the railroads. (Opp. Br. 18.) That is incorrect. Fox cited Judge

Baers opinion in Wang as recognizing that just because there was no immediate

advantage to the railroads in Portland Terminal does not mean the opposite is

truethat an immediate advantage to the employer alone creates an employment

relationship. (Fox Br. 31-32.) Plaintiffs misrepresentation betrays the weakness 2 For the same reason, the other key facts identified by Plaintiffs in their brief are not dispositive in every case. (See Opp Br. 17.) And as Fox explained in its opening brief, one of the facts that Plaintiffs identified was not actually found by the Court concerning the trainees in the case before it: namely, that the trainees worked solely for their own personal purpose or pleasure[.] (Id.; compare Fox Br. 31.)


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of their argumenttheir inability to reconcile their theory of Portland Terminal

with the actual text of the decision.

Moreover, as explained by amici, Plaintiffs one-dimensional immediate-

advantage test fails to take into account many factors relevant to internships, chief

among them their educational value. Plaintiffs test would prohibit businesses

from deriving any immediate advantage from the services performed by interns

and prevent interns from performing any productive work. (Chamber of

Commerce Br. 3-4.) If that view were to prevail, the benefits provided by an

internship would be substantially diminished, perhaps even limited to pure

shadowing experiences devoid of the type of hands-on, experiential learning that is

valuable and important to the students educational and professional development.

Companies would have no incentive to provide educational opportunities. This

would be a disservice both to interns, who would be unable to develop tangible and

intangible skills, and to businesses that would have a less well-trained potential

workforce (e.g., when the students graduate or later in their careers). The primary-

beneficiary test, by contrast, guards against the FLSAs exploitation concerns

while permitting stakeholders to develop and participate in varied types of flexible

learning experiences that benefit both students and the business community alike.

(American Council of Educ. Br. 5.)


8

Plaintiffs reading of Portland Terminal is flawed for yet another reason.

Plaintiffs suggest that the Court implicitly shifted the burden of proof in FLSA

cases by recognizing an exception to employment status, which requires defendants

to prove as a supposed defense that they did not receive an immediate advantage

from interns work. Plaintiffs test would create a presumption of employee status

under the FLSA that could be easily satisfied by showing the intern did some

productive work.3 A defendant could rebut that presumption only by proving that

the intern engaged in entirely unproductive work, and thereby provided it with no

immediate advantage. Such a view would turn the FLSA on its head.

It is well settled that the plaintiff bears the burden of establishing that she is

an employee under the FLSA. Steelman v. Hirsch, 473 F.3d 124, 128 (4th Cir.

2007). There is no presumption of employee status under the FLSA; Portland

Terminal made that clear. See 330 U.S. at 149. That is why in many of the cases

cited by Plaintiffs, the courts did not rest on the existence of productive work

alone, but instead considered the totality of the circumstances to determine whether

plaintiffs have satisfied each of the factors required to prove that they were

employees and not trainees under the law. Archie v. Grand Cent. Pship, 997 F.

3 DOLs views on this aspect of Plaintiffs argument is muddled. DOL acknowledges that Portland Terminal defined a relationship that was not an employment relationship and therefore not governed by the FLSA, but then later describes Portland Terminal as recognizing a trainee exception. (DOL Br. 5, 8-10.)


9

Supp. 504, 535 (S.D.N.Y. 1998) (emphases added); see also Tony & Susan Alamo

Found. v. Secy of Labor, 471 U.S. 290, 299-300 (1985); Reich v. Parker Fire

Prot. Dist., 992 F.2d 1023, 1028-29 (10th Cir. 1993). Portland Terminals

recognition of the Acts limitations did not create an exception to the definition

of employee that shifts the burden of proof, as Plaintiffs propose.

Second, Plaintiffs and DOLs views lose sight of the fact that Portland

Terminal exists against the backdrop of established wage-and-hour law

fundamental principles. And as to these fundamentals, the parties appear to agree

on at least one: Whether an employment relationship exists depends on the

economic reality of the situation. (Fox Br. 9, 32; Opp. Br. 29.) The parties part

ways, however, on which test best answers that question here. But both the

Supreme Court and this Court have already signaled the correct answer.

The type of work that wage-and-hour laws are intended to regulate is that

done necessarily and primarily for the benefit of the employer and his business.

Tenn. Coal, Iron & R.R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944).4

This rule is well-settled. As this Court has recognized on multiple occasions, the

relevant question is whether the work at issue was done predominantly for the

employers benefit or for the employees [which] is a question dependent upon all 4 In Tennessee Coal, the Court concluded that miners were entitled to overtime compensation for time spent traveling under hazardous conditions to work at underground sites on the defendants property because the travel was not primarily undertaken for the convenience of the miners. 321 U.S. at 598-99.


10

the circumstances of the case. Singh v. City of New York, 524 F.3d 361, 367 (2d

Cir. 2008) (Sotomayor, J.) (brackets and citation omitted). The primary-

beneficiary test asks just that question, and is therefore entirely consistent with

long-established notions of the type of work that is compensable. Plaintiffs fail to

give this Court good cause to treat internships differently from other putative

employment settings. Instead, their response to this line of precedent is

noteworthy: They ignore it completely.

This Court has also already determined the nature of the analysis that a court

should undertake to determine whether an employer-employee relationship

exists. Barfield v. N.Y. City Health & Hosps. Corp., 537 F.3d 132, 141 (2d Cir.

2008). It has held that such determination should be grounded in economic

reality rather than technical concepts, determined by reference not to isolated

factors, but rather upon the circumstances of the whole activity. Id. (emphasis

added) (quoting Goldberg v. Whitaker House Coop., Inc., 366 U.S. 28, 33 (1961)

and Rutherford Food, 331 U.S. at 730) (internal quotation marks omitted). This

approach pervades wage-and-hour law. Fox cited a number of employment-

classification cases in its opening brief that apply a totality-of-circumstances test

cases that Plaintiffs again largely ignore. They have nothing at all to say about

Brock v. Superior Care, Inc., 840 F.2d 1054 (2d Cir. 1988), or Zheng v. Liberty

Apparel Co., 355 F.3d 61 (2d Cir. 2003), both cases where this Court held that


11

rigid adherence to a multi-factor test to determine economic reality was not only

misplaced, but inconsistent with the well-established principle that such analysis

must turn on all relevant circumstances.

Instead of addressing these cases, Plaintiffs cite this Courts recent decision

in Brown v. N.Y. City Dept of Educ., No. 13-139-cv, 2014 WL 2749428 (2d Cir.

June 18, 2014), for two propositions: Exceptions to the FLSA are to be narrowly

construed against the employer, and the totality-of-the-circumstances approach is

constrained by multi-factor tests. (Opp. Br. 16, 25, 29.) The first proposition is

fine as far as it goeswhich is not very far. Brown involved a specific statutory

exception from the FLSAs wage-and-hour requirements for volunteers of public

agencies. 2014 WL 2749428, at *4 (quoting 29 U.S.C. 203(e)(4)(A); 29 C.F.R.

553.101). Brown did not purport to characterize Portland Terminal as creating a

similar exception subject to narrow construction. To the contrary, the Court went

out of its way to clarify that it was making no findings concerning Portland

Terminals role in the context of a statutory exception. Id.


12

As for the second proposition, Brown reaffirmed the totality-of-the

circumstances approach. The Court explained that its discussion necessarily

focuses on discrete facts relevant to particular statutory and regulatory criteria.

Id. But the Court reiterated that our ultimate determination is based on the totality

of circumstances, id., holding that the totality of record circumstances, . . .

compels the legal conclusion that [the employee] rendered services . . . as a public

agency volunteer. Id. at *12. Brown is therefore entirely consistent with Brock,

Zheng, and the totality-of-the-circumstances approach Fox advocates.

2. The Vast Majority Of Courts Have Adopted The Primary-Beneficiary Test.

In the face of this ample precedent, Plaintiffs and DOLs argument that the

primary-beneficiary test is unsupported by Portland Terminal falls short. The

overwhelming majority of circuit and district courts that have considered whether

unpaid trainees and student interns are employees have adopted the primary-

beneficiary test, reasoning that the test is both rooted in Portland Terminal and

consistent with FLSA jurisprudence. Those courts universally apply a totality-of-

the-circumstances approach and assess the balance of benefits to the respective

parties. See, e.g., Petroski v. H&R Block Enters., LLC, 750 F.3d 976, 980 (8th Cir.

2014); Laurelbrook, 642 F.3d at 528-29; Blair v. Wills, 420 F.3d 823, 829 (8th Cir.

2005); McLaughlin v. Ensley, 877 F.2d 1207, 1209 (4th Cir. 1989); Donovan v.

Am. Airlines, Inc., 686 F.2d 267, 272 (5th Cir. 1982); see also Kaplan v. Code Blue


13

Billing & Coding, Inc., 504 F. Appx 831, 834 (11th Cir.), cert. denied, 134 S. Ct.

618 (2013); Parker Fire, 992 F.2d at 1028; Archie, 997 F. Supp. at 534-35.

Significantly, to date, no court of appeals has rejected the primary-beneficiary test.

Plaintiffs single out the Sixth Circuits decision in Laurelbrook for attack,

but fail to explain why it is wrong. Plaintiffs seem to think that Laurelbrook is

different because the case involved a vocational or educational program. (Opp.

Br. 22.) But that is merely to restate their conclusion as an explanation for the

purported distinction. Plaintiffs do nothing other than declare that the Sixth

Circuits adoption of the primary-beneficiary test was incorrect[], without

explaining why this is so. (See id. at 23.)

Plaintiffs also give short shrift to this Courts decision in Velez, presumably

because it undercuts many of their arguments. As Fox noted in its opening brief, in

Velez this Court endorsed the primary-beneficiary test in an analogous context,

holding that when determining whether an employment relationship exists, among

other relevant factors, a court should consider who is the primary recipient of

benefits from the relationship. (Fox Br. 3 (ellipsis omitted; quoting Velez v.

Sanchez, 693 F.3d 308, 330 (2d Cir. 2012)).) Plaintiffs try to minimize Velezs

language as mere dictum, but they cannot avoid what this Court expressly stated:

Examining who is the primary recipient of benefits from the relationship is the

approach taken by courts determining if trainees and students providing services as


14

part of their education are also employees. 693 F.3d at 330 (citing Laurelbrook,

642 F.3d at 528-29; Blair, 420 F.3d at 829).

Against this phalanx of case law, Plaintiffs seem unable to settle on a single

alternative test or to articulate a clear rationale why that test is preferable. They

urge this Court to adopt the DOLs six-factor test, which they contend would

require companies to meet all six factors to avoid coverage. (Opp. Br. 26.) But

they also seem to acknowledge that other factors beyond the six may be relevant.

(Id. at 28-29.) Then again, Plaintiffs contend that the entire test reduces to a single

factor, namely whether the employer derived an immediate or direct benefit

from the internship, or whether the intern performed any productive work. (Opp.

Br. 18-21.)5 Plaintiffs make no serious effort to reconcile these positions.

For most of their brief, Plaintiffs appear to support the DOL test. Given that

support, Plaintiffs policy arguments against the primary-beneficiary test are

incoherent. They correctly note that the primary-beneficiary test is roughly

analogous to the second factor of the DOL test, which compares the flow of 5 What is worse, Plaintiffs mischaracterize a number of cases as holding that a direct benefit to the employer alone creates an employment relationship. In each of those cases, however, the court applied some type of balancing test that weighed the relative benefits to the parties. See, e.g., Petroski, 750 F.3d at 980-81 (adopting Solis); Donovan, 686 F.2d at 271 (approving analysis of the relative benefits flowing to trainee and company during the training period) (citation omitted); Wirtz v. Wardlaw, 339 F.2d 785, 787-88 (4th Cir. 1964) (reasoning that the company, no less than [the trainees] themselves, benefited from [the trainees] labors); Archie, 997 F. Supp. at 532, 534-35 (applying a consideration of all the circumstances test).


15

benefits. (Opp. Br. 24.) But it is difficult to understand how Plaintiffs can criticize

the primary-beneficiary test as unmanageable, unpredictable, subjective, and

impossible to apply (id.), when it is a component of the very test that they

themselves advocate.

In any event, those criticisms dont hold water. Unlike Plaintiffs proposed

tests, the primary-beneficiary test takes into account the totality of the

circumstances, allowing a court to evaluate all of the facts and circumstances that

inform whether a particular internship falls within the ambit of the FLSA. This test

is a good fit for the intern context because it allows a court to evaluate additional

objective factors, including those related to the educational value of the experience,

e.g., whether the internship is guided by an academic curriculum and whether the

interns receive academic credit. Those factors do not render the test subjective;

rather, the test is an objective one applied to a particular case.6

6 Fox has never stated that the same internship position could make one person an employee while leaving another an intern. In claiming to the contrary, Plaintiffs cite the district courts characterization of Foxs position at oral argument. (Opp. Br. 26 (citing SA22.)) Fox there argued that a class should not be certified because each of the internships was markedly different from the others. (SA53-55.) Fox did not intend to suggest anything other than that objective criteria controlled the inquiry, regardless of interns subjective views about the value of their internships.


16

3. This Court Should Adopt A Totality-Of-The-Circumstances Analysis And Reject The Rigid All-Or-Nothing Approach Of DOL.

As demonstrated above, the primary-beneficiary test provides the proper

framework for determining whether an intern is an employee under the FLSA.

While the DOL factors may be useful to this inquiry, they should not be treated as

exclusive. Parker Fire, 992 F.2d at 1027.

DOL contends otherwise, arguing in its amicus brief not only that the factors

are exclusive, but also that each must be met in any given case to satisfy the FLSA.

But after over 20 years of trying, DOL has failed to convince even a single court to

adopt its all-or-nothing approach. The agency advocated that position in

Laurelbrook and Parker Fire, both of which rejected it as overly rigid and

inconsistent with Portland Terminals totality-of-the-circumstances approach.

Laurelbrook, 642 F.3d at 525; Parker Fire, 992 F.2d at 1026-27. Not even the

district court below was convinced to adopt such an approach; it purported to apply

a totality-of-the-circumstances approach instead of the more restrictive test

Plaintiffs urged. (Opp. Br. 25.)

Indeed, even DOLs own commitment to the all-or-nothing approach has

been shaky and inconsistent. The introductory language of the Fact Sheet itself

states that whether an intern qualifies as an employee under the FLSA depends

upon all of the facts and circumstances of each such program. (Fact Sheet at 1.)


17

Likewise, DOL opinion letters routinely suggest that the totality-of-the-

circumstances approach includes a focus on whether the intern or the putative

employee is the primary beneficiary of the relationship. See U.S. Dept of Labor:

Wage & Hour Div., Op. Letter (FLSA), 2004 WL 5303033, at *1 (May 17, 2004)

(finding that where educational or training programs are designed to provide

students with professional experience in the furtherance of their education, and the

training is academically oriented for the benefit of the students, an employment

relationship did not exist) (emphasis added); U.S. Dept of Labor: Wage & Hour

Div., Op. Letter (FLSA), 1995 WL 1032473, at *1 (Mar. 13, 1995) (stating that if

this internship program is predominantly for the benefit of the college students,

we would not assert an employment relationship).

The all-or-nothing approach is especially inappropriate with respect to

internships. Imagine an internship with all the hallmarks of a valuable educational

experienceit was designed to parallel a students course curriculum; it resulted in

academic credit; it did not cause the student to displace an employee; it offered

close supervision; it did not guarantee a job afterward; and it carried no expectation

of compensation. Despite those virtues, Plaintiffs claim that an employment

relationship would exist if the company received any benefit during the course of

the internship. That outcome would be highly perverse, as it would bar an unpaid


18

internship even where the overwhelming majority of the benefit undoubtedly went

to the intern.

Were internships judged by the sole factor of employer benefit, many of the

most valuable ones would simply disappear. For example, an unpaid internship for

culinary students could not allow them to work in the kitchen of a restaurant to

learn skills from an experienced chefno matter how beneficial the training to the

studentlest training in knife usage, food preparation, or cleaning incidentally

produce benefits for the restaurant.7 Similarly, an externship that gave medical

students an opportunity to perform daily functions in a hospitalwhich

undoubtedly would provide the hospital an immediate benefitwould be found

unlawful under this standard and would thus deprive those medical students of

critical, on-site training during school. The DOLs test would call all such

programs into question. It should therefore be rejected.

B. The District Courts Award of Summary Judgment To Glatt And Footman Should Be Reversed And Remanded.

The district court categorically dismissed the benefits that Glatt and

Footman received from their internships. As a result, it reached the erroneous and

unsustainable conclusion that the evidence demonstrated that all the benefits went

to Fox.

7 The culinary internship supervised by Fox employee Paul Werner involved just such training. (See Fox Br. 15.)


19

Plaintiffs spend a great many pages applying the six DOL Factors to Glatt

and Footman (Opp. Br. 32-42), but when left to defend the courts holding under

the primary-beneficiary test, they resort to disputing Foxs interpretation of the

evidentiary record. (Id. at 42-43.) That alone demonstrates the presence of

material issues of fact concerning who primarily benefitted. But Foxs main

challenge to the district courts decision is simpler: The district court erred as a

matter of law by excluding from its consideration an entire class of benefits to

interns.

The district court recognized that, over the course of the several months that

Glatt and Footman were interns, they received benefits such as resume listings,

job references, and an understanding of how a production office works. But it

dismissed those benefits as insubstantial because they were incidental to working

in the office like any other employee and the result of perform[ing] routine

tasks. (SPA24-25.) Neither of those reasons, however, justifies that result. Other

courts have found such benefits not only relevant but weighty. In Blair, for

example, the Eighth Circuit held that the students chores were intended to instill

in each student a sense of teamwork, responsibility, accomplishment, and pride

and ultimately benefitted the student. 420 F.3d at 825. And in Solis, the Sixth

Circuit found that students benefits included hands-on, practical training,


20

gaining a future competitive advantage in the workplace, and learning lessons

such as responsibility and the dignity of manual labor. 642 F.3d at 530-31.

The district court failed to appreciate the present-day application of Portland

Terminal in the internship context, particularly in a highly competitive industry

such as film production, in which students seek hands-on, day-to-day experience

that they could never obtain in a classroom. As amici have noted, an internship

constitutes an educational extension of the college program, and confers valuable

benefits for students and the entire educational enterprise. (ACE Amicus Br. 18.)

Internship opportunities enable students to try out career paths and potential

employers, obtain hands-on experience, develop professional skills, and make

interpersonal connections that traditional education cannot provide. (Chamber of

Commerce Br. 9.) Though Fox produced evidence that Glatt and Footman either

obtained or sought to obtain these tangible and intangible benefits through their

internships, the district court erroneously disregarded them. (Fox Br. 40-45.)

The district court also improperly discounted the fact that Glatt and Footman

had no expectation of wages because the FLSA does not allow employees to

waive their entitlement to wages. (SA25.) That conclusion fundamentally

misconstrues Portland Terminal, which of course placed special emphasis on the

expectations of trainees: The Acts purpose as to wages was to insure that every

person whose employment contemplated compensation should not be compelled to


21

sell his services for less than the prescribed minimum wage. 330 U.S. at 152

(emphasis added). This Court has said much the same. Velez, 693 F.3d at 330

(expectation of compensation is a significant factor in finding employment

relationship); see also Archie, 997 F. Supp. at 533 (expectation of compensation is

an important element[] in determining employment status).

Accordingly, the district courts summary judgment determination in favor

of Glatt and Footman must be reversed.

II. THE CLASS WAS IMPROPERLY CERTIFIED UNDER RULE 23.

Plaintiffs open their discussion of the district courts class certification by

arguing that this Court should apply a deferential standard of review. They are

wrong. The district courts certification determinations were based on a gross

misunderstanding of Dukes, Comcast, and Myers. Those errors are legal, not

factual, and thus subject to de novo review. Miles v. Merrill Lynch & Co. (In re

Initial Pub. Offerings Sec. Litig.), 471 F.3d 24, 33 (2d Cir. 2006), clarified on

rehg in part, 483 F.3d 70 (2d Cir. 2007).

A. Commonality Was Not Present.

Plaintiffs backend their response to Foxs primary argument, which is that

under Dukes the district courts certification decision cannot stand. Plaintiffs seek

to distinguish Dukes factually (Opp. Br. 51-52), though their discussion fails to

justify the district courts departure from the legal standard enunciated in that case.


22

As Foxs opening brief explained, the district court identified purported common

questions that fail as a matter of law to generate common answers apt to drive the

resolution of the litigation. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551

(2011). The court failed entirely to engage in the rigorous analysis that the

Supreme Court held was necessary. Id. And the court did not address or resolve

the material disputed facts, nor did it hold Antalik to her burden of proof. See

Cuevas v. Citizens Fin. Grp., Inc., 526 F. Appx 19, 22 (2d Cir. 2013). Plaintiffs

brief provides no answer for these fatal defects in the decision below.

First, Plaintiffs defense of the decision relies on revisionist history. That is

evident from the start: Plaintiffs identify two of the three common questions that

the district court noted Antalik had advocated, but they fail to mention the district

courts very next sentence: Some evidence Antalik claims may answer these

questions is either individualized proof or of little evidentiary value. (SPA30.)

The district courts actual holding was narrower than Plaintiffs represent; it held

only that [e]vidence that interns were recruited to help with busy periods, that

they displaced paid employees, and that those who oversaw the internships did not

believe they complied with applicable law is evidence capable of generating

common answers to questions of liability. (SPA31.)

Given that Plaintiffs fail to address the common questions that the district

court actually identified, they certainly fail to explain how those questions are


23

capable of generating common answers under Dukes. Instead, Plaintiffs offer a

brief factual discussion of Dukes, which does nothing to rebut Foxs argument that,

under that Supreme Court precedent, the supposed common questions identified by

the district court fail to demonstrate the requisite common violation.

The only supposed common policy identified by the district court was an

alleged common policy to replace paid workers with unpaid interns. (SPA35.)

But under the balancing approach to the DOLs six-factor test that the district court

applied, that policy alone says nothing about at least two of the factors

(1) whether the intern received training similar to that available in an educational

environment; and (2) whether the internship was for the interns benefit. The same

is true under the primary-beneficiary test: The supposed common policy says

nothing about the quality of the internships experience. For each member of the

class, therefore, the court would need to decide whether the factors favoring

classification as an employee outweigh the ones favoring classification as an

unpaid intern. There is no way that analysis could produce the same answer for

every internship. See Dukes, 131 S. Ct. at 2552. Plaintiffs simply fail to explain

why the rationale of Dukes does not apply to this case.

Second, the district court failed to rigorously analyze the evidence or to

resolve factual disputes, as required by Dukes. Id. at 2551. Plaintiffs argue that

the courts familiarity with the issues and the facts demonstrates that it performed


24

such an analysis. It does not. There is no indication that the court engaged in a

searching inquiry to identify dissimilarities within the putative class or that it

resolved disputed factual issues. Plaintiffs suggest that this Court should assume

that the district court engaged in such an analysis, but that option is squarely

foreclosed by precedent that requires [a]ctual, not presumed, satisfaction of Rule

23. Id.

Third and finally, the absence of rigorous analysis is evident from the fact

that the district courts own findings of fact preclude commonality. The court

recognized that the evidence concerning a fundamental aspect of each internship

the duties of internswas inescapably individualized, stating that the FEG

internship guidelines did not create common answers to drive the litigation, and

that the completed [intern] request forms, which describe various internship

positions, constituted only individualized proof. (Opp. Br. 30.) That

determination necessarily precludes a finding of commonality; if individualized

proof is necessary to answer the crux of the inquiryhere, the balance of the

benefits or the DOL factorsthen those questions cannot be answered on a class-

wide basis. Dukes, 131 S. Ct. at 2552. Plaintiffs do not address (much less

resolve) the inherent contradiction between the district courts findings and its

commonality determination.


25

B. The District Court Decision Did Not Come Close To Meeting The Predominance Requirement.

In the two sentences that the district court devoted to its predominance

analysis, the court did not apply any discernible standard at all. The court simply

declared that predominance exists in wage-and-hour cases where there are at least

some common issues of liability. (Opp. Br. 33-34.) That is flatly incorrect. The

district court conflated commonality with predominancetwo distinct

requirements under Rule 23. It is black-letter law that the existence of common

issues by themselves is insufficient; courts have the duty to take a close look at

whether common questions predominate over individual ones. Comcast Corp. v.

Behrend, 133 S. Ct. 1426, 1432 (2013) (citation and internal quotation marks

omitted). Furthermore, courts must actually engage in a comparative analysis of

the balance between individual and common issues to determine whether

common issues are more substantial. Myers v. Hertz Corp., 624 F.3d 537, 549

(2d Cir. 2010) (citation and internal quotation marks omitted).

No such close look at the balance between individual and common

issues happened here. Id. All Plaintiffs can say in defense of the district courts

decision is that the basis for its ruling was obvious in context. But saying that does


26

not make it so. There is no indication that the court engaged in any analysis, and

Comcast precludes this Court from simply presuming it. 133 S. Ct. at 1433-34.8

Plaintiffs also fail to distinguish Myers. They make a conclusory assertion

that the alleged policy in this case (of using unpaid interns to perform tasks

previously performed by paid employees) is facially unlawful, and therefore unlike

the facially lawful policy (of treating station managers as exempt employees) in

Myers. That suggestion elevates one factorthe supposed displacement of paid

employeesto dispositive status, which is wrong for the reasons discussed in

Point I, supra. It is wholly inconsistent with a totality-of-the-circumstances

approach; indeed, even the district court acknowledged no one factor should be

dispositive. (SPA22 (quoting Archie, 997 F. Supp. at 532).) Rather, just like in

Myers, because there is no uniform corporate policy detailing employees [here,

interns] job duties, the evidence does not establish that substantial issues going to

the ultimate question of liability are provable in common as is necessary to show

predominance. 624 F.3d at 548, 550. Certification of the class was legal error.

8 Plaintiffs also claim that predominance exists because Foxs internship program was allegedly centrally controlled. (See Opp. Br. 11-12, 55.) The district court made no such finding.


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III. THE FLSA COLLECTIVE WAS IMPROPERLY CERTIFIED.

A. This Court Should Apply Rule 23s Strictures To Post-Discovery FLSA Conditional-Certification Decisions.

The Seventh Circuit correctly applied Rule 23s procedural requirements to

its post-discovery FLSA certification decision, and this Court should do the same.

In Espenscheid v. DirectSat USA, LLC, 705 F.3d 770, 771-72 (7th Cir. 2013)

(Posner, J.), the court found that merg[ing] the standards promotes judicial

efficiency, effective case management, and legal simplification, while avoiding the

potential inconsistency that could result if a court were to apply two different

certification criteria to identical state and federal claims.

Plaintiffs concede that combining the two standards under these

circumstances would be simpler, but nevertheless argue that courts should not do

so because Congress took a different approach. (Opp. Br. 61.) Their lone

argument in opposition is premised on the timing of various amendments to the

FLSA and Rule 23. But their conclusion does not follow from their proof.

Plaintiffs rely on the 1966 Advisory Committee Notes to Rule 23, which provide

that [t]he present provisions of 29 U.S.C. 216(b) are not intended to be affected

by Rule 23, as amended. But that sentence was apparently included only to

ensure that the FLSAs opt-in provision would not be abrogated by the

subsequently enacted Rule 23. [I]t does not necessarily follow that every other

feature of [R]ule 23 is similarly irreconcilable with section 216, and there is no


28

evidence that Congress intended 216(b) to be completely excluded from Rule

23s requirements. Shushan v. Univ. of Colo., 132 F.R.D. 263, 266 (D. Colo.

1990). Particularly where a plaintiff is raising similar federal and state law claims

in a single case, applying the same standard would help streamlin[e] resolution of

the[] cases, see Zavala v. Wal-Mart Stores Inc., 691 F.3d 527, 538 (3d Cir.

2012)the ultimate goal for both class and collective actions.

B. Irrespective Of The Standard, The District Court Ignored The Significant Differences Among The Collectives Members.

Regardless of the appropriate standard, the district court ignored the

significant differences in composition between the Rule 23 class and the FLSA

collective. Those critical distinctions warranted a separate and thorough analysis

that was wholly absent from the district courts decision. Plaintiffs concede that

the two groups are different, but give no reason why the district courts failure to

recognize this is not error. (Opp. Br. 58-59.) While the FLSA collective covers a

shorter time period, its nationwide scope far surpasses the New York Rule 23 class

in terms of the number of departments, supervisors, and interns included. The

divergent experiences of each intern reflect the absence of common links that

would streamlin[e] resolution of the[] cases. Zavala, 691 F.3d at 538.

The district court rested its decision on the same supposed policy that

supported its class certification decision: the alleged common policy to replace

paid workers with unpaid workers. (SPA35.) Although that alone was


29

insufficient to demonstrate the interns were similarly situated, the courts

conclusion was particularly incorrect in light of the many supervisor declarations

that Fox submitted, which showed in great detail that no such policy ever existed

or was implemented. For example, Mark Grammatke, an intern supervisor,

attested that he was instructed that unpaid interns should not be given work that

the company would otherwise pay an employee to complete . . . [and he] took what

[he] learned in the training seriously. (A1365; 8). One will look in vain for any

mention of Grammatkes testimony in the district courts decision or in Plaintiffs

brief, or that of the other Fox employees who explained that interns did not

perform tasks typically performed by paid staff. (See, e.g., A1344, 12; A1352-

53, 18; A1359, 25; A1362-63, 41; A1367-68, 17; A1374, 16; A1378,

30.)

In any event, as with much of the decision, the district courts own logic

pointed to a conclusion contrary to the one the court reached. The court evaluated

only two of the three factors derived from Thiessen v. General Electric Capital

Corp., 267 F.3d 1095 (10th Cir. 2001), and it concluded that onethe existence of

disparate factual and employment settings, (SPA35)weighed against

certification, yet the court nevertheless certified the collective action. Plaintiffs do

not address this contradiction. Instead, they minimize the import of the district

courts finding of disparate factual and employment settings by contending that


30

Fox exaggerates those dissimilarities. (Opp. Br. 59.) But Plaintiffs fail to

engage in any meaningful analysis to support that conclusoryand erroneous

assertion.

To the contrary, Foxs largely undisputed intern supervisor declarations

demonstrated without exception that the interns had vastly dissimilar experiences.

For example, a student interested in a culinary career participated in a hands-on,

individually tailored internship that exposed him to all aspects of food services

(A1341-45, 3, 5-6, 8-10); a student studying for a masters degree at UCLA

learned photo archiving techniques under close supervision (A1348, 1351, 2,

14); and a student interested in theatrical marketing engaged primarily in job

shadowing (A1364-65, 3, 7, 9, 14, 16). Plaintiffs do not dispute these facts.

And while the district court found that disparate factual and employment settings

existed, it utterly ignored the impact of those differences on whether collective

treatment is appropriate. In so doing, the district court erroneously certified the

collective action.

CONCLUSION

For the foregoing reasons, Fox respectfully requests that this Court reverse

the district courts order certifying Antaliks class and collective actions and

granting summary judgment to Glatt and Footman.


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Dated: July 11, 2014 Respectfully submitted,

/s/ Elise M. Bloom NEAL KUMAR KATYAL MARY HELEN WIMBERLY FREDERICK LIU HOGAN LOVELLS US LLP 555 Thirteenth Street NW Washington, DC 20004 (202) 637-5600 [email protected]

ELISE M. BLOOM MARK D. HARRIS CHANTEL L. FEBUS AMY F. MELICAN JOSHUA S. FOX PROSKAUER ROSE LLP 11 Times Square New York, New York 10036 (212) 969-3000 [email protected]

Counsel for Defendants-Appellants


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CERTIFICATE OF COMPLIANCE

The undersigned hereby certifies, pursuant to Fed. R. App. P. 32(a)(7)(C)(i),

that the foregoing brief complies with the type volume limitation set forth in Fed.

R. App. P. 32(a)(5) and (7)(B)(ii), in that the brief uses the Times New Roman 14

point font and contains no more than 7,000 words.

Specifically, in accordance with Fed. R. App. P. 32(a)(7)(C)(i), the

Microsoft Word Word Count tool indicates that the brief contains 6,997 words.

That word count includes headings, footnotes, and quotations, but excludes the

table of contents, table of citations, statement with respect to oral argument, any

addendum containing statutes, rules or regulations, and any certificates of

counsel. Fed. R. App. P. 32(a)(7)(B)(iii).

/s/ Elise M. Bloom Elise M. Bloom


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CERTIFICATE OF SERVICE

I hereby certify that on this 11TH day of July 2014, I caused the foregoing to

be filed through this Courts CM/ECF appellate filer system, which will send a

notice of electronic filing to the following:

RACHEL M. BIEN ADAM T. KLEIN JUNO TURNER OUTTEN & GOLDEN LLP 3 Park Avenue, 29th Floor New York, New York 10016 (212) 245-1000 [email protected] [email protected] [email protected] Counsel for Plaintiffs-Appellees

/s/ Elise M. Bloom Elise M. Bloom


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Fox Searchlight and Fox Entertainment brief

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