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

i
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 J urisprudence. ............................................................ 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 J udgment
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. J une 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
J udge 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

2

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.)

4

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

5

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 J udge
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.)

7

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.
J une 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.

27

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.


31

Dated: J uly 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
neal.katyal@hoganlovells.com

ELISE M. BLOOM
MARK D. HARRIS
CHANTEL L. FEBUS
AMY F. MELICAN
J OSHUA S. FOX
PROSKAUER ROSE LLP
11 Times Square
(212) 969-3000
ebloom@proskauer.com

Counsel for Defendants-Appellants

32

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


33

CERTIFICATE OF SERVICE
I hereby certify that on this 11
TH
day of J uly 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
J UNO TURNER
OUTTEN & GOLDEN LLP
3 Park Avenue, 29th Floor
(212) 245-1000
RMB@outtengolden.com
atk@outtengolden.com
jturner@outtengolden.com

Counsel for Plaintiffs-Appellees
/s/ Elise M. Bloom
Elise M. Bloom


Fox Searchlight and Fox Entertainment Brief

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Fox Searchlight and Fox Entertainment Brief

Uploaded by

Copyright:

Available Formats

13-4478-cv

You might also like