After lengthy, hard-fought litigation, including a trip to the Second Circuit that produced a new standard for determining whether unpaid "interns" are "employees" entitled to statutory minimum wage and overtime protections, and the efforts of two private mediators to resolve the case, one of the earliest unpaid intern suits is poised to conclude. The litigation combines class actions brought by former unpaid interns at Fox Searchlight Pictures, Inc., and Fox Entertainment Group (FEG). Under a proposed deal, each unpaid intern who worked at least two weeks would receive $495—about 25 percent of what they would receive if they prevailed on their minimum wage claims at trial and through appeal, according to the memorandum in support of the motion seeking preliminary approval of the deal. While the amount that would go to each of the class members is at the low end of the range that courts have approved in other unpaid intern settlements (about $500 to $1,900), the memorandum points out, those cases were resolved before the Second Circuit adopted its new primary beneficiary standard. Unpaid interns at Fox. The FLSA collective action against Fox was brought by former production interns on the Oscar-winning movie Black Swan and a publicity intern at the company’s New York corporate office, the latter of whom also brought a Rule 23 class action under the New York Labor Law. The allegations were the same as to both claims: The interns should have been classified as employees and thus should have been compensated for their efforts. A later, related suit was brought on behalf of unpaid interns in California, alleging claims under California law; it was stayed pending the appeal to the Second Circuit. Two settlement classes. The settlement agreement provides for two settlement classes. The "FLSA Settlement Collective" would include all individuals who had an unpaid internship for at least two weeks between January 18, 2010, and September 1, 2010, with one or more of the following divisions of FEG: Fox Filmed Entertainment, Fox Group, Fox Networks Group, and Fox Interactive Media (renamed News Corp. Digital Media), and who had previously filed a consent to join in the litigation. The "NY Rule 23 Settlement Class" would encompass all individuals who had an unpaid internship for at least two weeks in New York State between September 28, 2005, and September 1, 2010, with the same FEG divisions, and who did not file an exclusion form in the litigation. While individuals might fall into both settlement classes, they would only receive one payment. More about the deal. In addition to the $495 that would go to each class member, the deal would permit the plaintiffs’ counsel to apply for up to $200,000 in attorneys’ fees and costs, subject to court approval. Three named plaintiffs would each receive payments of $7,500; $6,000; and $3,500, respectively. The defendants would be able to file a bill of costs after final judgment is entered, which the plaintiffs would have the right to oppose. The defendants also would pay up to $20,000 for the third-party administration of settlement claims. Highly complex case. Among the many assertions made in favor of the proposed settlement is the fact that the suit raised novel issues that very few courts had addressed. As a result, the parties had to expend significant time and effort litigating over the appropriate standard to evaluate an unpaid intern’s status under the FLSA, "a complex question on which courts and the U.S. Department of Labor have differed," the memorandum notes. Moreover, under any standard, the issues are fact-intensive, which requires substantial discovery and makes class and collective certification challenging. "Because few courts have applied the Second Circuit’s test, this would also have required extensive briefing by the parties," the memorandum states. "On the other hand, the settlement will provide all class members relief promptly, avoiding the significant risk that each side faces, particularly the Plaintiffs." The litigation, Glatt v. Fox Searchlight, Inc., was brought in the Southern District of New York; the case is No. 11-CV-6784 (WHP).
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