Fashion Industry Internship Lawsuits: Where Are We Six Years Later?
On the heels of reports that Mary-Kate and Ashley Olsen’s label, The Row, is set to settle the unpaid internship lawsuit filed against it in 2015, Alice + Olivia founder Stacey Bendet has spoken out about the string of similar suits filed in recent years against the likes of Lacoste, Zac Posen, Burberry, Gucci, Calvin Klein, Marc Jacobs, Oscar de la Renta, Coach, Tommy Hilfiger, Fendi, Ralph Lauren and Donna Karan.
Designers have been vocal in their praise for the practice. Reflecting on one of his internships (a stint at Jean Paul Gaultier when he was 19 years old), Louis Vuitton creative director Nicolas Ghesqueire has said: “It started out as a super-small job, making coffee and dog walking, eventually doing color cards and photocopies, but it was fascinating." Haider Ackermann, who interned for John Galliano for five months before launching his own label, recalls the experience, saying: “You know, at the time, I had no money, nowhere to stay, so I was sleeping on the street and going every day to work. It was the best study ever."
Still yet, others have shared similar sentiments, speaking out against the barrage of strongly-worded lawsuits filed by former industry interns, who claim they provided immediate advantages to the fashion companies and publications at issue and received little benefit from their respective internships (thereby, entitling them to minimum wage).
Now, nearly six years after Diana Wang first filed suit against Harper’s Bazaar’s parent company, Hearst Corporation, in connection with her unpaid internship with the magazine – the lawsuit that kicked off the larger litigation trend, it is interesting to reflect on what, exactly, gave rise to the largescale pushback against this longstanding industry practice.
This string of lawsuits, in particular – all of which have contained similar claims, centering on fashion’s “systemic practice” of exploiting eager young people to do entry-level work for free by labeling them as “interns” – has proven compelling for a number of reasons. For one thing, the flurry of litigation does not appear to have arisen out of coincidence. Led in large part by Wang’s suit in 2011, the movement gained steam when “Black Swan” production interns Eric Glatt, Alexander Footman, and Eden Antalik filed suit against Fox Searchlight Pictures. Lauren Ballinger and Matthew Leib, former W Magazine and The New Yorker interns, sued Advance Publications shortly thereafter.
From there, a large number of the lawsuits seem to have come about as a result of the active efforts of two New York-based law firms to solicit ex-interns to agree to file suits. The same two firms, Virginia & Ambinder LLP and Leeds Brown Law PC, represented the plaintiffs in almost all of the cases filed in recent years in connection with fashion brands and industry publications.
The frequency with which cases have been filed by these two firms along with some interesting procedural history, suggests that they were aggressively trolling for potential plaintiffs to help them rake in large settlements from fashion companies after spotting a budding trend in litigation in this area.
In regards to this theory, a particularly damning bit of information came to light amidst the filings of the fashion industry intern suits: Mallory Musallam, who interned for David Letterman from September to December 2008 and subsequently filed suit because she did not receive compensation, spoke out, saying that she was “coerced” into filing an unpaid internship lawsuit by lawyers representing Virginia & Ambinder LLP and Leeds Brown Law PC.
After filing a wage and labor lawsuit against Letterman in New York state court in September 2014, Musallam filed to have the lawsuit dismissed, and issued a formal apology to Letterman, claiming she was approached by a “beguiling legion of lawsuit-hungry attorneys,” who saw her “Late Show” internship listed on her LinkedIn page and contacted her. She claimed that the “inveigling suit squad” of lawyers coerced her into filing the class action lawsuit, assuring her that her intern work was little more than indentured servitude.
In her letter, Musallam blamed her willingness to fold to the pressure to file suit as a result of being in a “weak, vulnerable time” and “facing student debt.” The firms have since denied such allegations.
Given how such class action lawsuits typically work, both procedurally and in terms of pay outs, Musallam’s claims of overzealous lawyers looking to enlist former intern plaintiffs may not be completely outlandish.
A class action lawsuit is a type of lawsuit filed on behalf of a group of people with the same or similar injuries. Such a suit is typically filed by one plaintiff and later joined by a group of “similarly situated” individuals. While class action suits have been praised as powerful tools, due to the fact that they enable the hearing of many claims that may otherwise never be litigated (due to cost of litigation, etc.), they have also been subject to widespread criticism. Such criticism is largely based on the percentage of the settlement that the plaintiffs’ lawyers receive at the end.
The court-awarded fees and expenses, usually between 25-35 percent of the total settlement, are paid to the lawyers out of the settlement fund, and almost always represent a far larger sum of money than any of the individual plaintiffs receive. For instance, the former intern plaintiffs in the Advance Publications settlement each received between $700 and $1000 dollars, whereas the attorneys reportedly recovered roughly 30% of the $5.8 million settlement.
With such compensation up for grabs, litigation-hungry activity on behalf of legal counsel in connection with potential class action lawsuits (while questionable) is not entirely uncommon, and very well may be part of why so many suits were filed against fashion entities on the heels of Diana Wang’s suit against Hearst, which kicked off the litigation spree.
While such practical concerns almost certainly helped give rise to the larger push for litigation in connection with unpaid internships, the ex-interns, themselves, argue that there are real issues at play here. Namely, the roles at issue are not really internship positions at all, but those of entry-level employees.
Both New York state and federal law (Department of Labor regulations) set forth rather stringent requirements that must be met in order for a position to be labeled an internship and therefore, exempt from minimum wage requirements.
The federal test consists of the following factors: 1) The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; 2) The internship is for the benefit of the intern; 3) The intern works under close staff supervision and does not displace regular employees; 4) The employer derives no immediate advantage from and may in fact be impeded by the intern; 5) The intern is not necessarily entitled to a job after the internship; and 6) The employer and the intern understand that the intern is not entitled to wages.
As for the New York state test, the Second Circuit Court of Appeals fashioned a new approach, a notably employer-friendly one, which stands to make it more difficult for ex-interns to pursue legal action. In connection with the Glatt et al. v. Fox Searchlight Pictures case, the Second Circuit vacated a Federal District Court’s 2013 ruling that employers must derive “no immediate advantage from the activities of the intern.” Moreover, the court promulgated an entirely new set of legal rules based on a so-called “primary beneficiary test,” and raised the bar required to certify a class of workers.
Despite the new standard, many companies - from major publishers and design labels to some smaller, independent companies - have decided to start paying their interns. Others have decided to do away with their internship programs altogether (exactly what Condé Nast did), which may be damning for fashion industry hopefuls, particularly since many industry insiders swear by the practice as helping them get their foot in the door.
According to Fast Co., “Data on unpaid internships is scarce, but studies indicate that internships as a whole can be beneficial for both companies and workers. A recent survey from the National Association of Colleges and Employers found that the overall conversion rate from interns to employees is almost 62%, a 13-year high.” The same survey further held, though, that paid internships are more likely to lead to a job offer and a higher salary than internships that do not pay.
While the slew of lawsuits that followed Wang's initial suit seems to have forced at least some publications and brands to reevaluate their internship positions and begin paying them, it is still completely common to encounter companies seeking unpaid intern help. Kering-owned Bottega Veneta, Hugo Boss, Rebecca Taylor, adidas, Clique Media (parent company to WhoWhatWear), Marchesa, Halston Heritage, and power public relations firm PR Consulting, for instance, are all currently advertising unpaid internships. On the other hand, Tory Burch, VICE, Moda Operandi, Kenneth Cole, Guess?, Perry Ellis, Rent the Runway, and Refinery 29 are offering paid internship positions.
The significant split between companies paying interns and those still opting to utilize unpaid help seems to suggest that while progress has been made, this is still very much an unsettled area of the fashion industry. Moreover, as indicated by Bendet’s outrage in connection with The Row lawsuit, the industry has not necessarily made peace just yet with the onslaught of such litigation, which took fashion by storm beginning six years ago, even if this legal trend does appear to be winding down.
UPDATED (December 11, 2017): Almost exactly five years after Xuedan "Diana" Wang and five other named plaintiffs filed a headline-making lawsuit against Hearst Corp., claiming that it violated federal and state law by failing to pay thousands of interns, the publishing giant has been handed what may be the case's final victory. Late last week, the U.S. Circuit Court of Appeals for the Second Circuit upheld a lower court's ruling and rejected Wang's claims that Hearst “systemically" exploited eager young students by getting them do entry-level work for free by labeling them as “interns."