Fox Searchlight Pictures has lost a key ruling in its long-running legal fight with former interns who worked on 2010's "Black Swan" and other movie productions.
U.S. District Judge William Pauley issued a summary judgment on Tuesday in New York, saying Fox Searchlight violated minimum wage laws by not paying interns. The judge also certified a class action for interns who worked for Fox Entertainment Group, the parent of Fox Searchlight.
The matter stems from a September 2011 lawsuit filed by former interns Eric Glatt and Andrew Footman, who alleged they performed menial tasks -- such as retrieving lunch for other workers -- that should have been assigned to paid employees of Fox Searchlight. The former interns alleged that the internship program violated minimum-wage and overtime laws.
Pauley wrote in his ruling that Fox Searchlight should have paid the interns, saying: "Considering the totality of the circumstances, Glatt and Footman were classified improperly as unpaid interns and are 'employees'" under New York labor law and the federal Fair Labor Standards Act.
"It's an important ruling because it reinforces the well established principle that you have to get paid when you work," said Justin M. Swartz, an attorney with law firm Outten & Golden LLP who represents the plaintiffs. "There is no internship exception to this country's labor laws. We are happy that the judge recognized that our clients did work to the benefit of the company and the company was responsible for pay for them."
The Fair Labor Standards Act includes six criteria for differentiating between an employee who is entitled to pay and an individual who can be unpaid. Under the criteria, an unpaid intern would need to derive a benefit from the work and not displace a regular employee. The training is meant to be similar to what could be had at a vocational school.
The case is a significant one for the entertainment industry, which is populated by companies that have long relied on internship programs for staffing.
"We are very disappointed with the Court's rulings," 20th Century Fox spokesman Chris Petrikin said in a statement. "We believe they are erroneous, and will seek to have them reversed by the [U.S. 2nd Circuit Court of Appeals] as quickly as possible."
After Glatt and Footman filed their lawsuit, two other former Fox interns joined the matter: Eden Antalik, a corporate intern at Fox Entertainment Group; and Kanene Gratts, who worked on Fox Searchlight's 2009 film "(500) Days of Summer."
Antalik sought to include in a class action unpaid interns who worked at various Fox Entertainment Group units from Sept. 28, 2008 to Sept. 1, 2010. Her motion for certification was granted by Pauley.
"Antalik has put forth generalized proof that interns were victims of a common policy to replace paid workers with unpaid interns," Pauley wrote. "Though there are disparate factual and employment settings, the common issues of liability predominate over individual issues and defenses."
Attorneys for the defendant has argued throughout the case that independent companies hired and managed interns who worked on productions -- and not Fox Searchlight. One such entity was Lake of Tears Inc., which handled production of "Black Swan."
A May 2012 deposition of Glatt, who worked in accounting on the production of "Black Swan," said that his boss made regular reports to Fox Searchlight.
Glatt said Fox personnel were included on "regular daily emails that were sent out to everyone involved" in the production of the movie, directed by Darren Aronofsky.
Pauley wrote in his Tuesday ruling that "Searchlight's power to fire 'Black Swan' production staff was unbridled."