Court Grants Plaintiff Eva Agerbrink’s Motion for Partial Summary Judgment Against MSA Models

As background, on September 26, 2014, Eva Agerbrink filed a class and collective action complaint in New York federal court against modeling agency MSA Models and MSA Models owner Susan Levine.  The complaint alleged that MSA and Levine misclassified their “fit models” as independent contractors in violation of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”).

Subsequently, on January 7, 2016, Magistrate Judge Francis granted Plaintiff Eva Agerbrink’s motion to amend her class and collective action complaint.  The amended complaint: (1) added a class claim of unjust enrichment arising from MSA’s purported liquidated damages provision in its modeling contract; (2) expanded the scope of the putative class action from only MSA fit models to include all types of MSA models with respect to the class claim for unjust enrichment; and (3) added MSA Models Chief Operating Officer Bill Ivers as an individual defendant.

On February 5, 2016, shortly after Magistrate Judge Francis conditionally certified a FLSA collective of exclusively signed MSA fit models, Ms. Agerbrink filed a motion for partial summary judgment as to liability on her individual claim for unjust enrichment.  Yesterday, on July 21, 2016, U.S. District Judge Oetken granted that motion.

In ruling for Ms. Agerbrink, the Court first rejected MSA's argument that Ms. Agerbrink’s unjust enrichment claim was precluded by the existence of a contract, because it was “the contract [that] imposed the allegedly unlawful penalty in the first place.”

The Court then concluded that MSA’s modeling contract contained an illegal penalty provision for several reasons.

The Court first concluded that the penalty provision was unenforceable because:

“The Clause purports to allow Defendants to retain any of Agerbrink’s earnings that it happens to have on hand, plus whatever additional such funds might come in after the breach.  This is the essence of a penalty designed ‘not to make a fair estimate of damages to be suffered but to serve only as an added spur to performance’ and is therefore unenforceable.”

The Court next concluded that the penalty clause was also unenforceable because:

“It purports to give Defendants the option either to ‘retain as liquidated damages all funds then held and/or subsequently received by MSA on [Agerbrink]’s behalf’ or, alternatively, to hold those funds as ‘security’ toward an anticipated judgment against Agerbrink, while Defendants pursue other remedies against her.”

In addition, the Court rejected MSA’s argument that its characterization of the penalty provision as a “security” somehow rendered the agreement enforceable:

“Ultimately, it makes little difference whether the withholding is styled as a security deposit or a liquidated damages provision courts look to the substance of such a provision in interpreting it.”

The Court concluded:

“Because the [provision] is unenforceable, Defendants may not continue to ‘invoke[] the liquidated damages provision’ as justification for withholding Agerbrink’s earnings. It follows that Agerbrink has satisfied the third and final requirement for a claim of unjust enrichment, as Defendants continue to hold funds to which she is entitled.  Accordingly, Agerbrink is entitled to summary judgment as to liability on this claim.”

The Court left for another day the measure of damages for Ms. Agerbrink's unjust enrichment claim.  The motion and decision also did not address Plaintiff’s collective and putative class action wage and hour claims.

A copy of the opinion is available here.  

The Court had previously: (1) denied the majority of Defendants’ 2015 motion to dismiss (available here); and (2) granted Plaintiff’s 2015 motion for Defendants to issue a corrective notice (available here).

The case is Agerbrink v. Model Service LLC d/b/a MSA Models, No. 14 Civ. 7841 (JPO) JCF) in the United States District Court for the Southern District of New York.

The litigation is currently stayed for mediation.

Court Grants Motion Expanding MSA Models Independent Contractor Misclassification Class Action to Include Unjust Enrichment Claim for All MSA Models and MSA COO Bill Ivers as an Individual Defendant

On September 26, 2014, The Dugger Law Firm, PLLC, on behalf of Eva Agerbrink, filed a class and collective action complaint in New York federal court against modeling agency MSA Models and MSA Models owner Susan Levine. 

On January 7, 2016, Judge Francis granted Plaintiff Eva Agerbrink’s motion to amend her class and collective action complaint to: (1) add MSA Models Chief Operating Officer Bill Ivers as an individual defendant; (2) add a class claim of unjust enrichment concerning MSA’s liquidated damages provision in its modeling contract between the company and its models; and (3) expand the scope of the putative class action from only MSA fit models to include all types of MSA models (i.e. fashion, lifestyle, showroom) with respect to the class claim for unjust enrichment.

As a result, the putative class in this litigation has been expanded from Fair Labor Standards Act and New York Labor Law wage and hour misclassification claims for all MSA fit models (from September 2008 to the present), to include all types of MSA models (i.e. fit, fashion, showroom, and/or lifestyle) concerning class claims for unjust enrichment related to MSA’s allegedly unenforceable contractual liquidated damages provision (from January 2000 to the present).

Specifically, with respect to the claim for unjust enrichment, the Court held:

“The crux of this claim -- that the defendants have been unjustly enriched by retaining payments from clients and owed to the plaintiff for work performed -- is that the defendants are not entitled to these monies because the MSA Contract’s liquidated damages provision is unenforceable. The Second Amended Complaint contains a number of assertions that plausibly suggest that the liquidated damage provision is an illegal penalty and therefore invalid, namely, that it is not ‘a reasonable measure of anticipated loss’ but rather is ‘a means by which Defendants . . . intimidate MSA models into compelled continued performance.’"

Accordingly, Plaintiff’s amended complaint alleges that, because this provision is unenforceable under New York law, all monies withheld by MSA under this provision from any MSA fit, fashion, lifestyle, and/or showroom model, since January 2010, must be paid back to these models.

A copy of the Court’s decision is available here.

Previously, on June 16, 2015, Judge Oetken denied the Defendants’ motion to dismiss with respect to Plaintiff’s wage and hour FLSA and New York Labor Law claims.  In addition, on October 27, 2015, Judge Francis ordered Defendants to provide a corrective notice to members of the putative class following his review of an email that MSA Chief Operating Officer William Ivers sent to members of the putative class regarding the litigation.

The case is Agerbrink v. Model Service LLC d/b/a MSA Models, No. 14 Civ. 7841, in the United States District Court for the Southern District of New York.