Fox Reaches Settlement in Landmark Lawsuit Over Unpaid Internships

The five-year-old case that redefined the legality of the controversial labor practice may be coming to an end.

A major labor lawsuit over unpaid internships in the entertainment and media industry has reached a proposed settlement. On Tuesday, court papers were filed revealing that Fox has agreed to pay many of those who completed an unpaid internship at its film, television and digital divisions. If approved by the judge, the deal would bring an end to a case that resulted in a landmark 2nd Circuit opinion that provided guidance on when unpaid internships might violate minimum wage and overtime standards in the Fair Labor Standards Act.

The original lawsuit came from Alex Footman and Eric Glatt, who worked on Fox Searchlight's Black Swan and contended that they performed the type of work typically handled by paid employees. The suit then got bigger, with amended claims brought by added named plaintiffs such as Kanene Gratts, who worked on Searchlight's (500) Days of Summer as well as Eden Antalik, who participated in the Fox Entertainment Group internship program. The legal dispute also invited exploration of privilege, fairness, and social justice in how individuals access prestige industries like entertainment and media.

These plaintiffs experienced a stunning success as the summary judgment phase in June 2013. The development had a sweeping impact across the nation as many companies adjusted their internship programs. And the ruling paved the way for the settlement of other follow-up lawsuits against the likes of Viacom and NBCUniversal.

But then in July 2015, the 2nd Circuit Court of Appeals vacated the summary judgment victory by the plaintiffs. It was held that the trial judge should pay less attention to the Labor Department's six criteria for determining whether an internship might be unpaid and more attention to factors like whether an internship ties into academic coursework, whether an intern is getting academic credit and whether the internship accommodates an intern's academic commitments by corresponding to the school calendar.

"In sum, we agree with the defendants that the proper question is whether the intern or the employer is the primary beneficiary of the relationship," stated the opinion authored by 2nd Circuit judge John Walker.

After a rehearing at the 2nd Circuit was denied, the case moved back to a New York federal court.

"Before they mediated, the parties were prepared to move again for summary judgment with respect to Glatt, Footman, and Antalik under the primary beneficiary test," states a memorandum in support of the proposed settlement. "Because few courts have applied the Second Circuit’s test, this would also have required extensive briefing by the parties. 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 settlement covers those who did unpaid internships during the first nine months of 2010 at Fox Entertainment Group, Fox Filmed Entertainment, Fox Networks Group and Fox Interactive Media. The settlement also covers those who had unpaid internships in New York at those same divisions between 2005 and 2010 as well as those in California who worked between 2009 and 2010. Those class members will each get $495. The total sum of money being paid is unknown.

Glatt would receive $7,500, Footman $6,000 and Antalik $3,500. The law firm of Outten & Golden, representing the plaintiffs, would be able to apply for up to $200,000 for their attorneys' fees and reimbursement of out-of-pocket costs with an additional $20,000 going for settlement claims administrator.

A fairness hearing could be coming as the judge weighs whether to approve the settlement. Here's the terms of the settlement and the memorandum arguing why it should be accepted.