The Future of Hollywood Internships Now in Hands of Appeals Court

Fox Entertainment will argue that a judge was wrong to see its interns as employees.
Fox Searchlight Pictures
"Black Swan"

Sometime next year, the 2nd Circuit Court of Appeals will likely hand down a ruling that could determine the fate of internships in the entertainment and media sector.

On Tuesday, the appellate circuit agreed to review two cases -- one involving former interns on Fox Searchlight's Black Swan and the other involving former interns at publications owned by Hearst. (Because the disputes are ongoing, the 2nd Circuit had discretion on whether to grant the interlocutory appeals.)

It was a summary judgment on July 11 by U.S. District Judge William Pauley in the Fox case that had corporate America'a lawyers scrambling to review their internship programs. In the ruling, the judge determined that Searchlight was the "employer" of Alex Footman and Eric Glatt as that term is defined in the Fair Labor Standards Act. As a result, the company was on the hook for violating minimum wage and overtime laws. The judge also certified a class action over the internship programs of Fox Entertainment Group.

EARLIER: Fox Urges Appellate Court to Review Internship Ruling 

Fox appealed the ruling, calling the "employer" determination an issue of "first impression" for the appellate circuit, and pointed to other pending internship cases involving NBCUniversal, Warner Music, Sony Corporation of America, Gawker Media and elsewhere where judges have been asked to clarify employment standards over unpaid labor. The U.S. Labor Department has articulated six criteria for determining whether an internship might be unpaid -- such as whether an intern displaces regular employees -- but Fox argued it was merely guidance and "not an official statement of the DOL’s position on the standard for determining whether interns are employees."

Meanwhile, another ruling went the other way, and has also been challenged.

In May, U.S. District Judge Harold Baer refused to certify a class action after determining that not enough commonality existed among some 3,000 fashion magazine interns at Hearst. Since each individual case offers little damage rewards, the practical effect of the ruling would make it tough to challenge internship programs.

In agreeing to hear both cases, the 2nd Circuit has given something that both sides will both like and dislike.

Although Fox will be thrilled to get another shot at addressing the legality of its internship programs, it isn't quite coming in its most preferable form. The entertainment giant had told the 2nd Circuit that its case shouldn't be consolidated with the Hearst one.

"The cases have no factual overlap and they raise distinct legal questions separate from the intern test," it said in papers filed last month. "The defendants in the two cases have separate and independent legal interests, and Fox does not consent to consolidation."

The 2nd Circuit didn't agree, ordering the two cases be heard in tandem. As a result, a panel of three appellate judges will soon consider the appropriate standard for determining whether an unpaid intern qualifies as an employee as well as the proper standard for FLSA certification.

Twitter: @eriqgardner