Cases of Interest: Wang vs. Hearst Corporation

Case(s): Xuedan Wang v. Hearst Corp., 617 F. App'x 35 (2d Cir. 2015). 

Facts: Xuedan ("Diana") Wang, a former “head accessories intern" at Harper’s Bazaar, allegedly working five days a week, sometimes from 9 am to 8 pm, in the accessories department of Harper’s Bazaar Magazine from August - December 2011, slapped Hearst Corporation, Harper’s Bazaar’s parent organization, with a class action lawsuit in 2011. She is accusing the company of violating federal and state labor laws (including the Fair Labor Standards Act) by failing to pay its interns. The group of plaintiffs (which could include up to 3,000 former interns from various Hearst publications) claim they were really employees, but were classified as interns, and thus, were denied both minimum wage and overtime payment. 

Timeline of litigation: 

July 27, 2012: Judge Harold Baer granted conditional certification to the Hearst interns for a class action lawsuit. This means that the individuals at issue (generally, any unpaid intern that has worked at any of Hearst's magazines since 2009) will receive notice of the lawsuit and information about how to join the case and share in the monetary settlement. 

August 24, 2012: Last month, Hearst Corporation asked the S.D.N.Y. court to reconsider its order that granted conditional certification under the Fair Labor Standards Act for Xuedan "Diana" Wang's suit. Hearst also requested that in the event that the court failed to dismiss the claims, the court grant leave to seek interlocutory appeal pursuant to the U.S. Court of Appeals for the Second Circuit precedence.

In his order, Judge Baer denied Hearst’s motion to reconsider and its application for interlocutory appeal (an appeal of a ruling by a trial court that is made before the trial itself has concluded), stating that a motion for reconsideration is “properly granted only upon a showing of exceptional circumstances, such as that the Court has “overlooked” precedent in their circuit that could “alter” its conclusion. He held that the court had properly issued conditional certification, making Wang's suit a class action, as this required only a low standard of proof, namely: whether "similarly situated" plaintiffs do, in fact, exist. 

January 9, 2013: The New York federal judge presiding over the class action lawsuit that Xuedan "Diana" Wang, the former Harper's Bazaar intern initiated against Hearst Corp gave Hearst a victory today. Judge Harold Baer tossed one of the plaintiffs' claims out of the suit, holding that Hearst did not violate NY state labor and wage restrictions law (Section 193 of the New York Labor Law) by requiring its unpaid interns to be enrolled in college and receive college credit in lieu of compensation. The suit isn't over, though. Existing claims include Hearst's failure to pay minimum or overtime wages, in violation of federal and state labor laws.

February 28, 2013: Wang accused the publishing giant of withholding information this week in court. Wang is alleging that Hearst has failed to turn over contact information for possible class members and thus, is interfering with the notice process. 

What does this mean? Basically, because the court gave Wang's class action lawsuit the go-ahead, a reported 3,000+ other former Hearst interns, who worked entry-level jobs without being compensated, are allowed to join the lawsuit. As such, Hearst is required to turn over the contact information for these individuals to Wang's counsel to notify them that they may join the suit.

April 1, 2013: Last week, Wang (and several additional named plaintiffs that have joined the lawsuit), urged Judge Harold Baer to certify the class action suit, which would include every unpaid intern that worked at Hearst starting Feb. 1, 2006 through the date of the final judgment in the case. This number is reported to amount to about 3,000 individuals. In addition to seeking class certification, Wang filed a motion for partial summary judgment, asking the court to classify them as “employees” in accordance with New York state and federal law. Lastly, the interns requested liquidated damages, and a judgment that Hearst has “willfully” violated federal and state law.

April 24, 2013: Judge Harold Baer of the S.D.N.Y. court ruled on the plaintiffs' request for liquidated damages and for a judgment that Hearst “willfully” violated federal and state law “based on its utter failure to take any steps to determine whether its policy of not paying interns is legal." Baer held that Hearst did not willfully violate federal and state law by failing to pay its interns. This ruling means that the plaintiffs are not entitled to an increased amount of damages. The second unfavorable ruling for the plaintiffs, this follows a ruling in which Baer denied the plaintiffs' summary judgment motion. In this motion, the interns asked the court to rule that they qualified as employees as defined by the Fair Labor Standards Act and New York Labor Law.

May 8, 2013: Southern District of New York Judge Harold Baer has ruled that Wang and her fellow interns' claims are "without merit." According to Wednesday's decision, the plaintiffs failed to satisfy a key requirement in establishing a class action suit: that there is "a uniform policy among the magazines with respect to the contents of the internship, including interns’ duties, their training, and supervision."

While Judge Baer conditionally certified the class action suit last July, he denied certification on Wednesday. Wang sought to enable “all persons who have worked as unpaid interns at Hearst Magazines in New York between February 1, 2006 and the date of final judgment in this matter" to join the lawsuit. The magazines at issue include: Redbook, Cosmopolitan, Esquire, and Marie Claire, among others. On Wednesday, Judge Baer denied Wang's motion for partial summary judgment contending that she (and the other plaintiffs) were “employees” under the Fair Labor Standards Act and New York Labor Law.

Moreover, he held that Hearst successfully showed "with respect to each Plaintiff that there was some educational training, some benefit to individual interns, some supervision, and some impediment to Hearst’s regular operations, etc," thus satisfying the Fair Labor Standards Act's internship criteria. This follows a February ruling, in which Judge Baer tossed one of the plaintiffs' claims out of the suit, holding that Hearst did not violate NY law by requiring its unpaid interns to be enrolled in college and receive college credit in lieu of compensation. As for the trial, which was scheduled to begin on May 28, it is adjourned sine die.

May 29, 2013: Wang has filed an appeal with the New York federal court seeking an immediate appeal of its order, which found that no uniform policy existed amongst Hearst's various interns and thus, denied class certification. Wang asked S.D.N.Y. Judge Baer to permit immediate appeal of his order denying her (and a potential class of 3,000 former Hearst interns) class certification, saying the Second Circuit should weigh in on whether the unpaid interns are employees under federal and state law.

July 2, 2013: Judge Harold Baer granted Wang and fellow intern Erin Spencer's bid to certify for interlocutory appeal his ruling that denied them class action certification.

November 2013: The Second Circuit accepted Wang, Erin Spencer and six other plaintiffs' joint appeal on Thursday and as a result, will hear the case that Hearst won in May. Specifically, the court will rule on the standard for determining whether unpaid interns qualify as interns or whether they are actually employees.

April 1, 2014: Ex-Hearst Corp. unpaid interns fired opening salvos Friday in their Second Circuit case hinging on whether interns qualify as “employees” under wage-and-hour law, with the Hearst interns attacking a class certification denial. The Hearst interns, who are challenging U.S. District Judge Harold Baer's May ruling that refused to certify a class on state labor law claims, filed briefs at the appeals court, arguing that the trial court judges had erred.

July 14, 2014: In a Second Circuit reply brief, the former Hearst interns responded to the company's argument that the “primary beneficiary” test should also be used in their case. Specifically, the Hearst interns said a different test should be used, one that weighs several factors, including whether the interns displaced other employees that would have performed their tasks otherwise and whether the focus of the internship is on training the intern.

January 30, 2015: The Second Circuit Court of Appeals heard oral arguments from attorneys representing Hearst Corporation and the plaintiff interns. The Department of Labor and the interns argued in support of a six-factor test to be used to determine whether they were misclassified as interns, as opposed to entry-level employees. Hearst advocated for the use of the broader balancing inquiry.

The panel, Judges Walker, Jacobs and Wesley, indicated through their questioning that the 6-factor test was too rigid and failed to consider critical factors, including whether academic credit was received by the intern or whether the intern performed “real work.” The panel also agreed with the interns, however, on the issue that no educational benefit is gained from performing menial tasks such as running errands and getting coffee. The Second Circuit’s decision is likely months away.

July 2, 2015: The Second Circuit Court of Appeals issued a significant pro-employer decision, serving as a setback for the plaintiffs in the Wang v. Hearst case. On appeal, the Second Circuit adopted a balancing standard called the “primary beneficiary test” and held that district courts should use this test when analyzing whether an individual should have been classified as an intern or an employee.  The Second Circuit also held that the proposed class of interns in this case failed to satisfy the requisite standards in order to proceed on a class-wide basis.