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Unpaid Intern Decision May Provide Second Circuit the Opportunity to Clarify its Position on Class Certification in Light of Comcast

By Michael  A. Arnold

As we wrote about previously, the legality of unpaid internships is a hot issue this summer, with courts struggling over two issues: (1) whether employers must classify entry-level “interns” as employees under the law, and therefore pay them at least minimum wage and overtime, and (2) whether the job conditions of groups of interns are similar enough so that class action treatment is appropriate.  Nowhere is this debate more pronounced than in the Southern District of New York.

In May, Judge Baer, in Wang v. Hearst Corporation, found that interns utilized by Hearst were not necessarily employees under the law, so it would be for a jury to resolve the underlying factual disputes and, in any case, class treatment was inappropriate because the interns’ working conditions differed across the group.  One month later, a different Southern District judge, Judge Pauley, in Glatt v. Fox Searchlight Pictures, Inc., (which we wrote about here) reached a different result finding, as a matter of law, that Fox should have classified its interns as employees, and granted class status to all interns working for four of Fox Entertainment’s subsidiary corporations, including Fox Searchlight.

The Wang plaintiffs and the Glatt defendants both sought permission to immediately appeal those decisions to the Second Circuit Court of Appeals so that the Second Circuit could clarify the proper test for courts to apply in conducting any unpaid intern (mis)classification analysis.  While the Glatt petition remains outstanding, Judge Baer recently granted the Wang petition citing in part the divergent result with Glatt on the unpaid internship classification analysis. 

What I found more interesting however – and the focus of the remainder of this blog entry – is that Judge Baer’s order also appears to seek for the Second Circuit to address how the United States Supreme Court’s Comcast decision should impact the class certification analysis – an issue neither the Wang plaintiffs nor the Glatt defendants raised in their petitions. 

Comcast is the much talked about decision that the Supreme Court issued in March invalidating a certified class in an anti-trust matter in part because the plaintiffs could not show that damages were capable of measurement on a class-wide basis.  The following month, and in light of its Comcast decision, but without any written analysis, the Supreme Court vacated and remanded a Seventh Circuit Court of Appeals decision (RBS Citizens N.A. v. Ross) that had previously certified an overtime class.  The Comcast decision coupled with the Ross remand has left courts (and commentators) split over Comcast’s import. 

Some view the Comcast decision as relatively non-controversial: If the plaintiffs can show that the proposed class was damaged in the same way (i.e. they did not receive overtime payments) because of the employer’s actions that created the legal liability (i.e. the employer misclassified the employees as overtime exempt) – even if the specific damage amounts vary from class member to class member (i.e. because each class member worked a different number of hours) – then, consistent with Comcast, a court should grant certification.  This was the exact view the Ninth Circuit Court of Appeals took in a May 28, 2013 decision (Leyva v. Medline Indus., Inc.).  Otherwise, the Ninth Circuit concluded, the very fact that each class member’s actual damage amounts may vary, even though each class member was damaged from the employer’s single act, would effectively sound the death knell of the wage and hour class action. 

Others view the Comcast decision as significant: If the plaintiffs must rely on individualized proof to prove each class member’s damages (i.e. individualized proof regarding the number of overtime hours worked by each class member), even though each class member was damaged by the employer’s single act, then the court should deny class certification – so, yes, something like a possible death-knell of a plaintiff’s ability to certify a wage and hour class.  For example, a Northern District of New York court in Roach v. T.L. Cannon Corp. adopted this argument in denying class certification.  There, even though the employer failed to factor “spread of hours pay” into the weekly wage calculation, the plaintiffs would have to rely on individualized proof to demonstrate entitlement to spread of hours pay on different shifts worked. 

In April, the Roach plaintiffs petitioned the Second Circuit to review the Northern District’s class certification denial, and in turn, address Comcast.  And now Judge Baer, by permitting the Wang plaintiffs to appeal his order, appears to want the Second Circuit to do just that.  To date, the Second Circuit has only made a passing comment on Comcast (see Cuevas v. Citizens Fin. Group, Inc.), but in another context.  Hopefully, in light of Roach and now Wang, the Second Circuit will offer a full interpretation of Comcast – one that could significantly impact wage and hour litigation in this Circuit for years to come. 

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Martha Zackin