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Week In Review

By Chris Helsel

Appeals Court Vacates Decision on Unpaid Interns, Sets New Standard

This week, a three-judge panel of the U.S. Court of Appeals for the Second Circuit vacated a 2013 district court decision in favor of unpaid interns who had worked on the set of the 2010 Fox Searchlight film "Black Swan."

The suit, which was brought in 2011 by a group of interns who performed mostly menial tasks on set, alleged that Fox Searchlight had violated minimum wage laws and sought compensation for the workers' contributions. The plaintiffs were granted class certification and S.D.N.Y. Judge William H. Pauley held in 2013 that under the applicable set of criteria put forth by the Labor Department, the plaintiffs should have been classified as employees.

Judge Pauley's decision held that in order to qualify as a valid unpaid internship, the work done must be similar to training offered in a school setting; be performed entirely for the benefit of the intern, not the employer; and must not preclude work done by existing paid employees. By definition, this set of criteria required that, in order for the internship to comport with the "educational value" requirement, an unpaid intern must be enrolled at an academic institution at the time of his or her internship.

That ruling led to a rash of similar suits brought by unpaid interns against the companies for which they performed work. Many of these suits were settled for millions of dollars, including one against Warner Music discussed in the 6/23/15 edition of "Week in Review."

This week, a Second Circuit panel vacated the Fox Searchlight ruling and remanded the case to the lower court. The panel determined that the Labor Department criteria were both out of date and not binding on federal courts. The proper method to determine a worker's status, wrote Judge John M. Walker, is to employ a balancing test to consider whether it is the employer or the intern that benefits more from the working relationship between the two. "The proper question is whether the intern or the employer is the primary beneficiary of the relationship," said the court.

Judge Walker's opinion further held that the test should hinge mostly on the educational benefits received by the intern in question. In so holding, he upheld the notion that a properly-uncompensated intern must indeed be a student. For this reason, the specific plaintiffs in the instant case should still prevail on remand, because none of them were enrolled in school at the time of their internships.

Despite this silver lining, the ruling certainly raises the threshold for future claims by interns seeking compensation for their services. In addition, the new "primary beneficiary" balancing test presents an enormous obstacle for future suits seeking class certification, as such a test seemingly must be applied on a case-by-case basis.

Following the ruling, Fox released a statement celebrating the new criteria set forth by Judge Walker. "We are very pleased with the court's ruling, but the real winners are students," said the company. "Fox has always been very proud of its internship programs and continues to believe they offer tremendous benefits to those who participate in them."

Plaintiff Eric Glatt, who recently completed law school, offered a very different opinion on the case's outcome: "Instead of using the clear standards of the Department of Labor, it leaves it on a case-by-case basis. Every intern who thinks something is questionable has to litigate it. It's a terrible, terrible burden. Why burden the most vulnerable possible employee with all the heavy work?"

As someone who has worked an unpaid "internship" while attempting to pay rent and make ends meet, this writer finds Mr. Glatt's perspective considerably more convincing.


Donald Trump Sues Univision After Station Pulls "Miss USA" Broadcast

Republican presidential candidate Donald Trump filed suit in the New York Supreme Court this week against the popular Spanish-language broadcaster Univision after the company announced that it would not air the "Miss USA" beauty pageant. The broadcaster's announcement came after Mr. Trump, who is an owner of the Miss Universe Organization, denounced Mexican immigrants as "rapists" and "murderers" while announcing his presidential candidacy two weeks ago.

Univision's decision to drop the pageant mirrored that of NBC Universal (NBC), which also announced this week that it would no longer air "Miss USA." NBC also announced this week that Mr. Trump would no longer host "The Celebrity Apprentice." As of this writing, Mr. Trump has not sued NBC.

In addition, NYC Mayor Bill de Blasio ordered a review of the real estate mogul's city contracts, Macy's announced that it would drop his signature clothing line, and NASCAR is moving an annual banquet away from a Trump resort in Miami.

Mr. Trump, whose presidential platform includes constructing a wall on the U.S.-Mexico border (and somehow convincing the Mexican government to pay for it), contends that Univision's action is in breach of the five-year, $13.5 million contract it entered into this year to broadcast "Miss USA" and other Miss Universe pageants. In addition to breach of contract, the suit alleges defamation, breach of covenant of good faith and fair dealing and intentional interference of a contractual relationship. Finally, although none of the specific causes of action delineated by Mr. Trump reference the First Amendment, the complaint contends that Univision is trying to "suppress Mr. Trump's freedom of speech." The suit seeks $500 million in damages.

Univision, to the best of this writer's knowledge, is not a state actor, so Mr. Trump's free speech argument does not appear to rest on entirely firm footing.

The suit also notes that Univision's principal owner is a staunch Hillary Clinton supporter and fundraiser, and contends that the company's withdrawal is a "thinly veiled attempt" to undermine Mr. Trump's presidential campaign, which has "dramatically risen in the polls" in recent weeks.

Mr. Trump's comments in question included the following: "When Mexico sends its people, they're not sending the best. They're not sending you, they're sending people that have lots of problems and they're bringing those problems. They're bringing drugs, they're bringing crime. They're rapists and some, I assume, are good people, but I speak to border guards and they're telling us what we're getting."

In response to the suit, Univision issued the following statement:

"We just reviewed Mr. Trump's complaint for the first time, and it is both factually false and legally ridiculous. We will not only vigorously defend the case, but will continue to fight against Mr. Trump's ongoing efforts to run away from the derogatory comments he made on June 16th about Mexican immigrants. Our decision to end our business relationship with Mr. Trump was influenced solely by our responsibility to speak up for the community we serve."


Spanish Soccer League Becomes the First to Legally Challenge FIFA's Decision to Host 2022 World Cup in the Winter

In 2010, the FIFA Executive Committee awarded the 2018 and 2022 World Cup tournaments to Russia and Qatar, respectively. While Russia was perhaps an unlikely choice, it was the decision to award the sport's marquis event to tiny Qatar - with its complete lack of soccer heritage and 120+ degree summers - that raised the most eyebrows among the international sporting world.

Unsurprisingly, allegations of bribery and vote-swapping quickly emerged. As recounted in numerous previous "Week in Review" posts, these allegations spawned a mostly-ignored internal investigation and ultimately resulted in the U.S. Department of Justice investigating and finally indicting numerous FIFA officials and related sports marketing executives for their roles in the alleged corruption.

Aside from the corruption allegations, the decision to award the 2022 World Cup to Qatar raised numerous other concerns among interested observers worldwide. Most importantly, the tiny Middle-Eastern nation has a tumultuous human rights record, and it is estimated that thousands of migrant workers whose passports are confiscated upon arrival to the country will die in their efforts to construct the infrastructure necessary to host the event.

Secondly, the logistics of hosting a summer soccer tournament in 120-degree heat defy reality. Despite this, Qatar insisted throughout the bidding process that it had developed (or had plans to develop) outdoor air conditioning technology that would render its as-yet-unbuilt stadiums suitable for some of the world's best athletes to compete safely throughout the tournament. When, after the country had been awarded the event, this technological miracle failed to materialize, many observers called for the tournament to be shifted out of the summer and into the cooler winter months.

It is important to note that since the event's inception in 1930, every World Cup has been staged during the summer. This arrangement allowed the vast majority of the world's domestic leagues (with U.S.-based Major League Soccer, the Russian Premier League and some Scandinavian circuits being the main exceptions) to adopt season schedules beginning in the fall and continuing through the winter and into spring. The summer, therefore, is traditionally soccer leagues' offseason, a time when international events such as the World Cup are staged.

It should come as no surprise, then, that many of Europe's powerful domestic leagues have steadfastly opposed calls to shift the 2022 World Cup out of the summer and into the heart of their seasons, the winter.

Undeterred, FIFA announced in March of this year that the 2022 event would be moved to the winter, in order to placate concerns over the extreme desert heat of Qatari summers. This decision came after joint a proposal by the European Club Association and European Professional Football Leagues to host the event in May - rather than June/July - was rejected earlier that month. In order to calm tensions associated with the drastic move, FIFA agreed to pay clubs worldwide $209 million to release players for both the 2018 and 2022 World Cups (despite the fact that FIFA rules expressly require clubs to do just that, without a fee).

The clubs and domestic leagues were not the only dogs in this fight, however. Fox Sports (Fox), which owns the U.S. broadcast rights to the 2022 event and was not a party to the $209 million payoff, now found itself owning the rights to a massive sporting event that would conflict with the National Football League (NFL) season. Under its current broadcast contract, Fox pays over $1 billion annually to air NFL games.

As a result, it was widely expected that Fox would bring suit to prevent the 2022 World Cup from moving to winter. However, FIFA conveniently placated the American network's concerns by awarding it the rights to the 2026 World Cup as well - in a no-bid contest with undisclosed terms.

Now, despite FIFA's pledge to compensate domestic clubs for the use of their players during the 2018 and 2022 events, Spain's top soccer league, La Liga, has appealed FIFA's rescheduling of the 2022 World Cup to the Court of Arbitration for Sport (CAS). CAS is an international quasi-judicial body headquartered in Switzerland established to settle disputes related to sports. Its jurisdiction, like all arbitrators, is established by contractual agreement. The FIFA bylaws, which all clubs, leagues and players must follow, designate CAS as the sole arbiter of international soccer-related disputes.

La Liga, which houses world powers FC Barcelona and Real Madrid C.F., claims that shuffling its schedule to accommodate a winter World Cup in 2022 will cost the league $70 million or more in revenue. The league's legal challenge has been criticized by European soccer's governing body, the Union of European Football Associations (UEFA), with the group's general secretary accusing La Liga president Javier Tebas of merely wanting "to get some publicity out of it."

UEFA, which represents not clubs or leagues but the national soccer associations of each country, has already signed off on the move to winter. This, it argues, precludes any challenge from any individual country or league. Said UEFA General Secretary Gianni Infantino, "The World Cup is the best national team competition in the world. It has to be played if at all possible in the best conditions. If this means that for one year in 150 years of history of football, we change the calendar ... it will not be the end of the world."

UEFA's backing of the move to winter seems odd, however, considering that the major European leagues could each suffer millions in lost revenue. It is perhaps telling, then, that UEFA's current president, Michel Platini, is considered a frontrunner to take over for Sepp Blatter as the next president of FIFA. Whether UEFA's reluctance to challenge FIFA on the 2022 issue has anything to do with Mr. Platini's desire to please FIFA voters - perhaps to the detriment of his European constituents - is something only he can answer.

Regardless of UEFA's position, the Spanish league has made it clear that it does not intend to sit idly by while FIFA tramples on the lucrative winter domestic season of 2022. Expect the world's other domestic powers to watch the case closely, with many publicly championing La Liga's efforts. At this juncture, the only thing anyone can be certain of is that the issue of when - and where - the 2022 World Cup will be staged is far from set in stone.


ISIS Destroys More Antiquities

Once again, the Islamic State (ISIS) has destroyed ancient and irreplaceable historical artifacts in northern Iraq and Syria. The latest public displays of destruction included militants sledgehammering numerous statues stolen from the ancient Syrian city of Palmyra, smashing a 2,000-year-old lion statue discovered in a hidden Palmyra museum garden and a demolishing a 13th-century tomb near the Iraqi city of Kirkuk.

The destruction was chronicled and publicized in photographs and statements on ISIS social media and has been corroborated by antiquities experts. On Thursday, in addition to revealing that it had destroyed the Palmyra statutes, the group claimed to have captured a smuggler attempting to remove items from an area of Aleppo (the largest city in Syria) controlled by ISIS operatives. The smuggler was allegedly found guilty by a Shariah court and punished with a public flogging.

In response to the report of the destroyed Iraqi tomb, heritage expert Ihsan Fethi of the Iraqi Architects Society said, "This is a terrible and tragic addition to ISIS's long list of never-ending and incomprehensible destruction of some of Iraq's and Syria's most important historic monuments."

At a meeting in London on Thursday, UNESCO general director Irina Bokova said that the antiquities destruction carried out by ISIS in recent months had "reached unprecedented levels in modern history."

ISIS has defended its practice of destroying cultural heritage sites and antiquities by deeming the artifacts to be sacrilegious idolatry that, according to the prophet Mohammed, must be destroyed.

Despite the group's outward appeals to religious fundamentalism, unconfirmed reports from sources within ISIS-controlled areas of Syria indicate that militants had in fact confiscated some of the aforementioned smuggler's statues "in preparation to sell them in one of the neighboring countries" to fund the group's activities.


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This page contains a single entry from the blog posted on July 6, 2015 10:44 AM.

The previous post in this blog was New Jersey Leading The Charge To Legalize Sports Gambling.

The next post in this blog is New York Employers Take Note: "Primary Beneficiary Test" to Determine Whether Interns Should Be Paid Under the Fair Labor Standards Act.

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