Conde Nast, Interns Settle for $5.8 Million Suit Alleging Failure to Pay Minimum Wage

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By Kevin McGowan

Nov. 14 — Conde Nast Publications and two former interns Nov. 13 asked a federal district court in New York to approve a $5.85 million proposed settlement of claims the company violated the Fair Labor Standards Act and New York state law by failing to pay the minimum wage to a class of approximately 7,500 interns over several years.

Under the proposal submitted to the U.S. District for the Southern District of New York, the FLSA collective action class would consist of all individuals who had internships at Conde Nast between June 13, 2010, and the date the court preliminarily approves the settlement. The New York state law class would include individuals who were interns between June 13, 2007, and the court's preliminary approval date.

Class counsel is seeking $650,000 in attorneys' fees and an additional $10,000 for out-of-pocket costs to be paid from the settlement fund. Conde Nast admits no legal liability or wrongdoing by agreeing to the settlement, the pact provides. Class members who submit valid and timely claims forms would recover amounts ranging from $700 to $1,900 depending on the type of internship they held and whether Conde Nast paid them a stipend or the internship was completely unpaid.

Issue Pending in Second Circuit

Lauren Ballinger and Matthew Lieb, former interns at W Magazine and The New Yorker, respectively, had sued in June 2013, alleging Conde Nast's failure to pay its interns at least the minimum wage violated the FLSA and the New York Labor Law.

In addition to their monetary recoveries, Ballinger and Lieb would receive “service payments” of up to $10,000 each under the proposed settlement.

Conde Nast also is the publisher of Vanity Fair, GQ, Vogue, Details, Modern Bride and several other fashion and lifestyle magazines.

The parties said they settled in part because “the proper test for determining whether an intern is entitled to compensation” under the FLSA and state law is unsettled in New York courts and the U.S. Court of Appeals for the Second Circuit.

The Second Circuit currently is considering appeals in Glatt v. Fox Searchlight Pictures, Inc., 293 F.R.D. 516, 20 WH Cases2d 1436 (S.D.N.Y. 2013), and Wang v. Hearst Corp., S.D.N.Y., No. 12-cv-793, 5/8/13, two cases in which the Southern District of New York adopted different tests for deciding whether an intern has been properly classified as unpaid under federal and state law.

Approval Warranted, Plaintiffs Say

In their brief supporting preliminary approval, the plaintiffs said the court should conditionally certify the proposed settlement class regarding the New York state wage claims under Rule 23(b)(3) of the Federal Rules of Civil Procedure. That would permit the mailing of notices to prospective class members, who then would have 90 days to submit a valid clam form, opt out of the settlement or file objections to the proposal, the plaintiffs said.

The parties said they settled in part because “the proper test for determining whether an intern is entitled to compensation” under the FLSA and state law is unsettled in New York courts and the U.S. Court of Appeals for the Second Circuit.

A final fairness hearing on the proposed settlement would be held at the court's convenience after the claim period ends, the plaintiffs said.

Court approval is warranted under Second Circuit precedent because the proposed settlement terms are fair, reasonable and adequate, the plaintiffs said. Among other relevant factors, the plaintiffs said litigation through trial would be complex, costly and long, discovery has advanced for the parties to settle the case responsibly, the plaintiffs would face risk if the case proceeded because of the substantive law's uncertain state and the proposed settlement amount represents substantial value.

Rachel Bien, Juno Turner and Michael N. Litrownik of Outten & Golden LLP in New York represent the former interns. Elise M. Bloom and Amy F. Melican of Proskauer Rose LLP in New York represent Conde Nast.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the proposed settlement is available at http://www.bloomberglaw.com/public/document/Ballinger_et_al_v_Advance_Magazine_Publishers_Inc_Docket_No_113cv/1 and the plaintiffs' brief at http://www.bloomberglaw.com/public/document/Ballinger_et_al_v_Advance_Magazine_Publishers_Inc_Docket_No_113cv/2.