Defendants' Illegal Exchanges of Information
to Facilitate their Price-Fixing: Conspiracy
52. Defendants have maintained their collusive price structure through the years in various ways, including formal and informal meetings at which they have exchanged information on rates, charges, and other economic terms of the models' contracts, and in which Defendants have plotted strategy on how to respond to new competitors who have offered models lower rates than Defendants.
53. One principal means of this illegal information exchange has been the periodic meetings of the International Model Management Association (the "IMMA"), founded several years ago by Jerry Ford of Defendant Ford Models, Inc. As a purported trade organization. Membership in the IMMA is reported to comprised of the heads of all the established modeling agencies, and since 1991, the IMMA has included, ~m Defendants Ford, Wilhelmina, Elite, Zoli, and Next.
54. One of Ford's stated goals in founding IMMA was (as noted in an article written by a Ford employee, with Ford's cooperation and approval) the adoption of standardized industry contracts (particularly important given Defendants' need to refer to themselves as managers and not agents in their contracts) and other terms, such as the "mother agency" clause and the charging of a flat fee for salary advances.
55. On at least one occasion, the IMMA has purported to represent the leading agencies (including Defendants) to discuss uniform rates that Plaintiffs would be paid for their services. More generally, the IMMA has become - according to reports of its meetings that have been disseminated to persons involved in the modeling business - a clearinghouse for the Defendants' exchange of information regarding prices and terms and conditions of employment, and the organization through which Defendants have discussed how to respond to upstart agencies that seek to undercut Defendants' pricing structure.
56. As a direct and proximate result of Defendants' unlawful agreement to fix prices and their exchanges of information through the IMMA, Plaintiffs have been damaged and continue to be damaged in their business and property in that they have to pay supra-competitive prices for Defendants' services, in the form of artificially inflated commissions, and additional costs that are standard in the industry as a result of Defendants' conspiracy.
Defendants Have Admitted That They Are Unlicensed Employment Agencies
57. Though Defendants represent to the models whom they have under contract that they are "managers" exempt from GBL 170 - 190, there is overwhelming evidence - including numerous admissions in Defendants' own court papers, and Defendants' longstanding business practices - that they are, in fact, employment agencies. (As noted, to avoid "employment agency" status under New York law, Defendants must prove both that they are managers, ~ that the procurement of employment is incidental to their management services.
Even if Defendants could prove that their some aspect of their services to Plaintiffs are in the nature of management, they would still be liable to regulation because they cannot deny that the procurement of employment is one of their principal services.)
58. Defendant's status as employment agencies is proved by their admission in their own court pleadings that one of their principal roles is obtaining employment for their models. Wilhelmina recently admitted this fact in its own Complaint, filed in New York State Supreme Court, in Wilhelmina v. Fernandez. Gerry Ford made a similar admission in the late 1970s, in a sworn affidavit in Ford Models v. Pillard that described the function of a booker.
And Defendant Elite's Chairman, John Casablacas, has been quoted as saying: "We are just people who sell people to other people." Dun's Business Month, Oct. 1983 v123 p. L00 (3). 2 These statements confirm what every model expects, and the agencies know: the agent's main job is to find employment for the model.
59.in fact, the only place where Defendants consistently purport to characterize themselves as managers is in their form contracts with Plaintiffs. These contracts have steadily evolved over the years, first referring to Defendants as "managers" instead of, 'agents"; more recently, they have purported to include express "acknowledgements" by Plaintiffs that Defendants are not employment agencies under New York law. Defendants have adopted these clauses even though they know that GBL 170 -190 is not waivable by the model, and that courts look to the nature of the defendant's business, not the language in its contracts, to determine whether defendant is subject to the statute.
60. Contrary to the language of their contracts, Defendants regularly describe themselves to the public (and to potential models) as agencies. For example:
A. Defendant Wilhelmina's website boasts that "it is one of the leading modeling agencies in the industries... As for over 1000 models. Wilhelmina is a full service agency." http://www.wilhelmina.com (May 24) (emphasis added);
B. Defendant Ford's website touts, "Eileen and Jerry [Ford] went on to create the world's most recognized and respected modeling agency" and explains, "Katie Ford took over in 1995 after working in the agency for 15 years." htm://www.fordmodels.com (May 24) (emphasis added);
C. Defendant Boss's website advertises that it is "World renowned as the agency that invented the male supermodel. One of the world's most progressive and modem model agencies..." and that "[ u ]ntil the agency changed the industry, even the most successful male models only served as backdrops for their female counterparts." http://www.bossmodels.com (May 24) (emphasis added). Boss's website also states that "Boss Models is a fashion model agency representing professional models only. The agency negotiated an ever larger deal for Polo/Ralph Lauren, " and refers to "... 100 of the agency's top boys", and its "annual agency portfolio." M (May 24) (emphasis added);
A. Defendant Elite claims on its web page that "In the world of modeling, few agencies have the recognition, respect and reputation of Elite Model Management, Inc." The website goes on to proclaim that, "Elite, more than ever, has positioned itself as an agency built on a solid foundation of history and experience... Elite has launched the careers of more industry superstars than any other agency in the world."
htm://www.elitemodel.com (May 24) (emphasis added);
E. Defendant Elite's founder, John Casablancas writes in his forward to ~ Complete Idiot's Guide to Being a Model ("The Complete Guide"), "... For a lucky few, all they need to do is send a couple of snapshots to an agency, or drop by when the agency is seeing new models." Roshumba Williams, The Complete Idiot's Guide to Being a Model (MacMillan, Inc. 1999) (emphasis added);
F. Defendant Elite often refers to itself as the "Elite Agency Group" the website for John Casablancas Modeling and Career Centers http://www.ic - centers.com/faqs.html (May 24) and the cover of The Complete Guide;
G. Defendant Company's owner, Michael Flutie, is quoted in a book he endorsed as referring to "... An agency like Company..." The Modeling Handbook at 47 (emphasis added);
H. Defendant Click's website claims that, "Prior to founding the agency, Ms. Grill was an agent for fashion photographers.."
www.clickmodel.com/ny-aboutus.html (May 24) (emphasis added);
I. Defendant Next's website broadcasts, "... Next has grown from a small group of models into the second largest international modeling agency." http://www.nextmodels.com (May 24) (emphasis added).
J. Defendant Zoli's web page "About Us" begins with the sentence, "Zoli Management Inc. Which celebrates its 30th year as one of New York's most dynamic model agencies in October of was established in 1970 by Zoltan Rendessy." www.zolimodels.com/aboutus.htmf (November 9) (emphasis added).
61. Defendants' senior executives also regularly refer to Defendants as agencies. Joe Hunter, fonner President of both Defendant Ford and the IMMA, and "visionary" of Modelwire, Inc., is described in Modelwire's website as "the model industry legend who helped build the Ford Agency." www.modelwire.com (May 24) (emphasis added). The website ~lso presents a list of Model wire's "Model Agency Partners" that includes Defendants Ford, Click and Elite. Similarly, Natasha Esch, Defendant Wilhelmina's fonner president, presents in her book, The Wilhelmina Guide, "A Portrait of an Agency" in which she assures, "Most major agencies are divided along lines similar to those at Wilhelmina Models." ~ at 33 (emphasis added).
62. Major publications in the modeling industry, including publications endorsed by Defendants, consistently refer to Defendants as modeling "agencies" and state that Defendants are, or function like, employment agencies. For example, The Professional Handbook (contributed to by Click, Wilhelmina and Zoli), in the chapter called "The Modeling Agency and its Functions", states that "A modeling agency is an employment agency for models." (Id at 181.) Your Modeling Career (endorsed by Ford, contributed to by Ford, Wilhelmina and Elite), in a chapter entitled "All about Agencies", states that Defendants "functions like an employment agency, obtaining work for models by providing models for clients." M at 86). And The Modeling Life (endorsed by Ford and Elite), in the chapter entitled "The Agency", states that "The agency is a model's link to jobs." (~ at 239).
63. Defendants are also referred to as "agencies" in the major industry directories. Model and Talent.international Directory of Model and Talent Agencies and Schools (peter Glenn Publications 2002), lists Defendants Boss Models, Click, Company, Elite, Ford, Next and Wilhelmina as modeling agencies (with their New York addresses and details), and Click, Ford, Next and Wilhelmina appear in the directory in enlarged advertisements. Ill. Q First Option. A Directory of Legitimate U.S. Modeling Agencies (Tear Sheet Publications Inc. 2000) (listing all defendants as agencies, and including ads for Defendants Elite, Ford, Next and Click).
64. Defendants' status as employment agencies is also confirmed by various of their practices that are consistent with the conduct of agencies, but inconsistent with the conduct of bona fide managers. For example, Defendants occasionally agree to divide their commissions based on the geographic location in which a model works (e.G., one agency receives commissions for a model's work in New York, while the other reaps commissions for the model's work in Paris). Bona fide managers do not split their fees based on the location where their client earns professional income.
65. Similarly, when Plaintiffs are booked to appear in broadcast ads where their work is governed by union agreements that limit an agent's commission to 10%, Defendants reportedly evade this union rule by splitting their 20% fee into a 10% "management fee" and a 10% "booking fee", charged to a captive "booking agency" that is in reality just another part of Defendants' operations. This practice is both unlawful under GBL 187
(8) and contrary to Defendants' claim to be managers entitled to a flat 20% fee regardless of any limitation on an agent's fee.
66. Reports that some of Defendants, including at least Wilhelmina, have recently started to operate "management divisions" within their agencies (such as Wilhelmina Artist Management LLC) simply underscores the fact that the rest of Defendants' business is that of an employment agency: If the Defendants were already acting as Plaintiffs' managers, the new management division would be redundant.
67. And when Defendants do business in California (which does not have the "incidental booking exception" of New York law or the 10% cap on fees), Defendants enter into "talent agency contracts" with models to "act as [the model's] sole and exclusive (emphasis added). Thus while Defendants refer to themselves as "managers" in New York, they admit that they are "agents" in California - even though Defendants perform the San1e exact services in both states.
68. For the reasons set forth above, Defendants have each engaged in, and agreed and conspired with the other Defendants to engage in, the following unlawful conduct:
A. Violation of BCL 172 by operating as employment agencies without a license;
B. Violation of BCL 185 (8) — which prohibits agencies from taking more than 10% of models' earnings — by regularly charging Plaintiffs 20% commissions; in fact, the typical modeling contract explicitly requires Plaintiffs to pay Defendants 20% of any monies that Plaintiffs receive for modeling, even if Plaintiffs obtained employment without Defendants' help or with the help of another agency;
C. Violation of BCL 187 (8) — which prohibits agencies from engaging in any business on its premises other than the business of operating an employment agency;
D. Violation of BCL 187 (10) — which prohibits agencies from charging models for incidental services or the cost of advertising — by charging Plaintiffs for various expenses, such costs associated with sending a model's portfolio to perspective employers.
Defendants' Breaches of Fiduciary Duty
69. Defendants' wrongful conduct described above also constitute breaches of their fiduciary duties to Plaintiffs, including the duties of loyalty, care, honesty, fair dealing and full disclosure.
70. There are several reasons why Defendants are fiduciaries of Plaintiffs as a matter of law, and regardless of their status as agents or managers. For example, the typical modeling contract appoints the Defendants as the models' "attorney-in-fact", empowered to collect the models' fees, take their appropriate commission, and disburse the remaining balance to the models. Defendants are also fiduciaries by operation of law insofar as they purport to act on Plaintiffs behalf with regard to their careers or their employment prospects.
71. As fiduciaries, Defendants are obligated to act only for Plaintiffs' benefit and are prohibited from profiting at Plaintiffs' expense. Thus, absent a clear and express waiver, Defendants are barred from self-dealing (~, earning undisclosed profits from its dealings on behalf of any Plaintiff or using Plaintiffs' assets to their own benefit).
Dave
Orlando, Florida
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