Xuedan Wang v. Hearst Corp.

• Decision Date: 08 December 2017
• Docket Number: Docket No. 16-3302,August Term, 2017
• Citation: 877 F.3d 69
• Parties: Xuedan WANG, on behalf of herself and all others similarly situated, Matthew Jordan Wagster, Erin E. Spencer, on behalf of herself and all others similarly situated, Alexandra Rappaport, Sarah Wheels, Plaintiffs-Appellants, Jessica Ann Best, Paul Vance, Courtney Holt, Janet E. Glazier, Rebecca E. Dixon, Erin D. Sullivan, Carly Rockwell, Dana Lynn Vogel, Elizabeth Mancini, Stephanie Lauren Skorko, Caitlin Leszuk, Plaintiffs, v. The HEARST CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

877 F.3d 69

Xuedan WANG, on behalf of herself and all others similarly situated, Matthew Jordan Wagster, Erin E. Spencer, on behalf of herself and all others similarly situated, Alexandra Rappaport, Sarah Wheels, Plaintiffs-Appellants,Jessica Ann Best, Paul Vance, Courtney Holt, Janet E. Glazier, Rebecca E. Dixon, Erin D. Sullivan, Carly Rockwell, Dana Lynn Vogel, Elizabeth Mancini, Stephanie Lauren Skorko, Caitlin Leszuk, Plaintiffs,

v.The HEARST CORPORATION, Defendant-Appellee.

Docket No. 16-3302

August Term, 2017

United States Court of Appeals, Second Circuit.

Argued: September 11, 2017

Decided: December 8, 2017

Rachel Bien (Juno Turner, on the brief), Outten & Golden LLP, New York, New York, for Plaintiffs-Appellants.

Rachel Geman, Lieff Cabraser Heimann & Bernstein, LLP, New York, New York, for amici curaie American Federation of State, County and Municipal Employees; Communications Workers of America, AFL-CIO; Economic Policy Institute; Intern Worker Alliance; National Employment Lawyers Association; National Employment Law Project; Service Employees International Union; United Food and Commercial Workers International Union; Writers Guild of America, East, AFL-CIO; Professor Scott Moss; Ross Perlin; and Professor David C. Yamada, in support of Plaintiffs-Appellants.

Eve Burton, Jonathan R. Donnellan, Kristina E. Findikyan, Jennifer D. Bishop, Hearst Corporation, New York, New York, office, for Defendant-Appellee.

Before: JACOBS, CABRANES and WESLEY, Circuit Judges.

DENNIS JACOBS, Circuit Judge:

Five participants in internship programs offered by defendant Hearst Corporation ("Hearst") sue for minimum wage under the Fair Labor Standards Act ("FLSA") and the New York Labor Law ("NYLL"). At issue is whether the unpaid interns were "employees" of Hearst for the purposes of the FLSA under Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016). We affirm the judgment of the United States District Court for the Southern District of New York, Wang v. Hearst Corp., 203 F.Supp.3d 344 (S.D.N.Y. 2016), for the reasons stated in Judge Oetken's thorough opinion.

I

The question is whether Hearst furnishes bona fide for-credit internships or whether it exploits student-interns to avoid hiring and compensating entry-level employees. The factual record is voluminous and advances multiple narratives, some of them contradictory; but the following essentials are undisputed.

Hearst maintained dozens of internship programs with its various print magazines. Each of five named appellants worked at one time as interns in one of these programs. These internships were unpaid, carried no expectation of eventual full-time employment, and required intern candidates to receive prior approval for college credit to participate. No intern alleges that Hearst promised compensation or a future job.

The interns' individual experiences varied, but there are groupings. Four of the appellants–Alexandra Rappaport, Erin Spencer, Matthew Wagster, and Sarah Wheels–were enrolled in college during their internships. Rappaport, Spencer, and Wheels completed their internships during the summer between academic years, and Wagster interned (with Esquire ) during his fall semester. Lead plaintiff Xuedan Wang interned for one semester between her graduation from college and the start of her graduate program in the Fashion Marketing program at Parsons School of Design. Each intern received prior approval for college credit, although not all of them ultimately received credit from their degree-awarding institution: Wang had received permission for continuing education credit but ultimately did not pursue it, Wagster was denied credit from his institution because his internship was not applicable to his major, and Wheels received credit from a local community college.

Each student had an academic or aspiring professional connection to fashion. Wang and Spencer studied fashion in college, and Spencer's internship satisfied a graduation requirement (the Fieldwork course) for his major; Rappaport and Wagster were majoring in the social sciences, but hoped to break into the fashion industry; Wheels was an English major who interned in the editorial department of Cosmopolitan to advance her writing career. All of them testified or declared that they performed a range of tasks related to their professional pursuits in the Hearst internship programs, and gained valuable knowledge and skills. See, e.g., J. App'x 148 (Rappaport gained knowledge "vital" to a fashion career and accomplished her goal of receiving "a real-life experience"), id. at 748-751 (Spencer had "a very valuable learning experience"), id. at 775-76 (Wang's internship was a "rich and well-rounded learning experience" providing "unrivaled skills").

At the same time, the interns share common complaints. They describe many tasks in Hearst's fashion closets as menial and repetitive. Several claim that they did not receive close supervision or guidance and that the internships offered little formal training—in contrast to their academic experiences in school. One common grievance was that the interns mastered most of their tasks within a couple weeks, but did the same work for the duration of the internship.

In February 2012, lead plaintiff Xuedan Wang filed suit alleging that she and a putative class of interns across Hearst's magazine departments were deprived of wages in violation of the FLSA and NYLL. Seven other interns opted in after the district court granted the case collective certification. The district court's denial of plaintiffs' motion for partial summary judgment was vacated in this Court for reconsideration in light of Glatt v. Fox Searchlight Pictures, Inc., which was heard in tandem with Wang. Wang v. Hearst Corp., 617 Fed.Appx. 35 (2d Cir. 2015) (summary order).

Hearst moved for summary judgment against the six remaining plaintiffs under the Glatt test. The district court granted the motion, and five plaintiffs filed a timely appeal. We review de novo a district court's grant of summary judgment. Mathirampuzha v. Potter, 548 F.3d 70, 74 (2d Cir. 2008).

II

The FLSA defines "employee" by tautology: an "individual employed by an employer." 29 U.S.C. § 203(e)(1). The standard for "employee" is broad, but the Supreme Court has long recognized that not every individual who performs a service for an employer qualifies as an "employee" under the FLSA. See Walling v. Portland Terminal Co., 330 U.S. 148, 149-53, 67 S.Ct. 639, 91 L.Ed. 809 (1947). "[E]mployee" status depends upon the "economic reality" of the relationship between the putative employer and employee. Glatt, 811 F.3d at 534, 536.

Last year in Glatt, we recognized the "primary beneficiary" test as the way to distinguish employees from bona fide interns. Id. at 536. To guide our "flexible" analysis, we provided seven non-exhaustive considerations specific to the context of unpaid internships:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa;

2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions;3. The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit;

4. The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar;

5. The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning;

6. The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern;

7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Id. at 536-37.

The court applies these considerations by weighing and balancing the totality of the circumstances. Id. at 537 ; Barfield v. N.Y.C. Health & Hosps. Corp., 537 F.3d 132, 141-42 (2d Cir. 2008) (Employee status is a "flexible concept to be determined on a case-by-case basis by review of the totality of the circumstances."). "No one factor is dispositive and every factor need not point in the same direction for the court to conclude that the intern is not an employee." Glatt, 811 F.3d at 537.

The totality of the circumstances should be considered in view of the "purpose of a bona fide internship ... to integrate classroom learning with practical skill development in a real-world setting." Id. In a break from previous tests, courts applying Glatt have acknowledged that the internship may provide a direct benefit to the employer so long as the intern receives identifiable educational or vocational benefits in return. See, e.g., Mark v. Gawker Media LLC, 2016 WL 1271064, at *8 (S.D.N.Y. Mar. 29, 2016).

Judge Oetken analyzed each Glatt factor and determined that all of them except the sixth (displacement of paid employees) either favored Hearst to some degree or were neutral. Wang, 203 F.Supp.3d at 354-55. In assessing the totality of the circumstances, the court concluded that the "Plaintiffs were interns rather than employees as a matter of law." Id. at 355.

III

A. Factors One and Seven

The appellants concede that factors one and seven (expectation of payment and entitlement to a job, respectively) favor Hearst. They argue, however, that these factors bear little weight because FLSA rights cannot be waived. The interns' reading of these factors defies the clear mandate of Glatt, which explained that "[a]ny promise of compensation, express or implied, suggests that the intern is an employee—and vice versa ." 811 F.3d at 537 (emphasis added). These factors are...