UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

AMANDA MASTERS, SIMON BEARDMORE, SZUZANNA BOROS, THOMAS BRADLEY, BARBARA CHEESEBOROUGH, JENNIFER CURRAN, CAROLYN FEARS, VALARIE GARDANO, DONNA GIBBS, BILL GOINS, CARLA GROSS (d/b/a SEBASTIAN CARDON), JUSTIN KLENTNER, ELEANORA MILLER, (a/k/a ELLE MILLER), VIRGINIA NELSON, ALICIA PINE, ANNE ROGAN, LORELEI SHELLIST, ANGELA SHELTON, LAURA SHOEMAKER, SHARON SIMON, TODD SNYDER, HILLARY SWAY, and MONICA WALKER, and on their own behalf and on behalf of a class of similarly situated persons,

Plaintiffs,

v.

WILHELMINA MODEL AGENCY, INC., FORD MODELS, INC., f/k/a FORD MODEL AGENCY, GERARD W. FORD, ELITE MODEL MANAGEMENT, INC., CLICK MODEL MANAGEMENT, INC., NEXT MANAGEMENT COMPANY, THE MFME MODEL MANAGEMENT COMPANY, LTD, a/k/a COMPANY MANAGEMENT, BOSS MODELS, INC., ZOLI MANAGEMENT, INC., Q MODEL MANAGEMENT, DNA MODEL MANAGEMENT, LLC, IMAGES MANAGEMENT, IMG MODELS, INC., and MODEL MANAGEMENT CORPORATION, f/k/a INTERNATIONAL MODEL MANAGERS ASSOCIATION, INC.,

Defendants.

Case No. 02-CV-4911 (HB)

FIRST CONSOLIDATED AMENDED

COMPLAINT

NATURE OF THE ACTION

  1. This is a class action under federal and state law on behalf of present and former professional models who are or have been under contract to Defendants, various New York modeling agencies. As set forth in detail below, Defendants are and have for several years been engaged in an unlawful combination and conspiracy to violate federal antitrust law and state law, and have each violated state law, including by
    1. conspiring to set the fees they each charge to models, and to fix other terms and conditions of the models' contracts, in violation of federal antitrust law;
    1. concealing their unlawful conduct by drafting contracts purporting to characterize themselves as "managers" and disavowing any state licensing requirements – while advertising themselves as "agencies" and admitting (in court documents and elsewhere) that they regularly procure employment for models for a fee, making them employment agencies as a matter of law;
    1. knowingly violating state law limiting the fees that Defendants, as employment agencies, can charge; and
    1. deliberately violating their fiduciary duties to their models through various other unlawful practices, such as earning undisclosed profits from third parties, billing models for phony expenses, making a profit from services required to be provided at cost, and imposing excessive charges and fees, as detailed below.
  1. Defendants' violations of federal antitrust law and state law regulating employment agencies are legally distinct, but factually interwoven and mutually reinforcing. Defendants have not only conspired to fix their fees – itself a per se violation of federal law – they have also agreed to charge fees above what state law allows employment agencies to charge, which is also flatly unlawful; and they have worked together to affirmatively misrepresent their legal status in their dealings with Plaintiffs – to whom they owe fiduciary duties of honesty and full disclosure – through sham contracts and other dishonest tactics that have persisted for years.
  2. There are several reasons why Defendants have been able to maintain their conspiracy for a very substantial period of time. In particular:
    1. Throughout the Class Period, and continuing today, the domestic modeling agency business has been highly concentrated, both geographically (in New York City) and in terms of market share among the large agencies based in New York City;
    1. Throughout the Class Period, and continuing today, there has been a strong continuity in the ownership and management of the principal defendants, including particularly Defendant Ford, which (not coincidentally) has maintained its position as a market leader while taking a leading role in Defendants' unlawful conduct; and
    1. Throughout the Class Period, and continuing today, the nature of the domestic modeling agency business is such that the models are at a very large, structural disavantage in terms of bargaining power with the agencies: most models' careers are short; they are almost completely dependent on agencies to get them work; they are given form contracts, which the agencies claim are "standard" and not subject to negotiation; and they are told they will be blackballed if they complain.
  1. Thus while the domestic modeling agency business now involves hundreds of millions of dollars a year in bookings, it is still largely run as an unregulated private club, dominated by a handful of agencies that are owned and run by people who have known each other a very long time. Those club members occasionally complain about each other in public, or fight over the most successful models, but long ago recognized their mutual interest in setting standard terms and rates for the vast majority of models they have under contract. Few if any other large business in modern America have been run for such a long time by such a small group of persons with the power that Defendants have to dictate terms to the thousands of clients they purport to serve.
  2. Plaintiffs therefore bring this action on their own behalf and on behalf of a class of all models now or formerly employed by Defendants since the inception of Defendants' unlawful conspiracy, which began as of the early 1970's with regard to Defendants Ford and Wilhelmina, soon joined by Elite, and later joined by each of the other Defendants. Plaintiffs seek (i) damages under Section 1 of the Sherman Act in the form of treble damages for Defendants' price-fixing, (ii) damages under state law, (iii) return of the fees charged by Defendants in violation of state law, (iv) disgorgement of fees that were earned from other parties and which were not the subject of an express, knowing waiver, (v) refund of various illegal charges to the models' accounts, (vi) punitive damages, and (vii) interest and costs as allowed by law.

    PARTIES

  1. Plaintiff Amanda Masters is a resident of Los Angeles, California. Ms. Masters had modeling contracts with Defendants, Wilhelmina Model Agency, Inc., Next Management Corp., Zoli Management Inc., and Click Model Management, Inc. during the Class Period.
  2. Plaintiff Simon Beardmore is a resident of Los Angeles, California. Mr. Beardmore had modeling contracts with Wilhelmina Model Agency, Inc. and Boss Models, Inc. during the class period.
  3. Plaintiff Szuzanna Boros is a resident of New York City. Ms. Boros had a modeling contract with Wilhelmina Model Agency, Inc. during the Class Period.
  4. Plaintiff Thomas Bradley is a resident of Los Angeles County, California. Mr. Bradley had modeling contracts with Ford Models Inc., Wilhelmina Model Agency, Inc. and Click Model Management Inc. during the class period.
  5. Plaintiff Barbara A. Cheeseborough is a resident of Arcadia, California. Ms. Cheeseborough had modeling contracts with Defendants Ford Models, Inc. and Zoli Management, Inc. during the Class Period.
  6. Plaintiff Jennifer Curran is a resident of Los Angeles, California. Ms. Curran had a modeling contract with Elite Model Management, Inc., during the Class Period.
  7. Plaintiff Carolyn Fears is a resident of Orange County, California. Ms. Fears had a modeling contract with Defendant Ford Models, Inc. during the Class Period.
  8. Plaintiff Valarie Gardano is a resident of New York, New York. Ms. Gardano had modeling contracts with Elite Model Management Inc. and IMG Models, Inc. during the class period.
  9. Plaintiff Donna Gibbs is a resident of Norristown, PA. Ms. Gibbs had a modeling contract with Defendant Wilhelmina Model Agency, Inc. during the Class Period.
  10. Plaintiff Bill Goins is a resident of New York. Mr. Goins had a modeling contract with Defendant Wilhelmina Model Agency, Inc. during the Class Period.
  11. Plaintiff Carla Gross, doing business as Sebastian Cardon, is a resident of Los Angeles, California. Ms. Gross had modeling contracts with Defendant Wilhelmina Model Agency, Inc., Company Model Management, and Elite Model Management, Inc. during the Class Period.
  12. Plaintiff Justin Klentner is a resident of Los Angeles, California. Mr. Klentner had modeling contracts with Defendants Boss Models, Inc., Wilhelmina Model Agency, Inc., Zoli Management Inc., and Ford Models, Inc. during the Class Period.
  13. Plaintiff Eleanora Miller (a/k/a Elle Miller) is a resident of Austin, Texas. Ms. Miller had modeling contracts with Elite Model Management Inc., IMG Models, Inc., Ford Models, Inc and Next Model Management during the class period.
  14. Plaintiff Virginia Nelson is a resident of Portsmouth, New Hampshire. Ms. Nelson had modeling contracts with Zoli Management, Inc., Next Management Company, Wilhelmina Model Agency, Inc. and Images Management during the Class Period.
  15. Plaintiff Anne Rogan d/b/a Anne Hopson is a resident of Swarthmore, PA. Ms. Rogan had a modeling contract with Defendant Ford Models, Inc. during the Class Period.
  16. Plaintiff Alicia Pine is a resident of Los Angeles California. Ms. Pine had modeling contracts with Ford Models, Inc., Elite Model Management Inc. and Wilhelmina Model Agency , Inc. during the class period.
  17. Plaintiff Lorelei Shellist is a resident of San Diego, California. Ms. Shellist had modeling contracts with Defendants Elite Model Management, Inc. and Ford Models, Inc. during the Class Period.
  18. Plaintiff Angela Shelton is a resident of Los Angeles, California. Ms. Shelton had modeling contracts with IMG Models, Elite Model Management, Inc., DNA Model Management and Wilhelmina Model Agency, Inc. during the Class Period.
  19. Plaintiff Laura Shoemaker is a resident of Woodstock, New York. Ms. Shoemaker had modeling contracts with Ford Models, Inc., Wilhelmina Model Agency, Inc. and Images Management during the Class Period.
  20. Plaintiff Sharon Simon is a resident of St. Petersburg Florida. Ms. Simon had a modeling contract with Wilhelmina Model Agency, Inc. during the class period.
  21. Plaintiff Todd Snyder is a resident of Los Angeles, California. Mr. Snyder had a modeling contract with Ford Models, Inc. during the Class Period.
  22. Plaintiff Hillary Sway is a resident of Fairfax. Virginia. Ms. Sway had a modeling contract with Wilhelmina Model Agency, Inc. during the class period.
  23. Plaintiff Monica Walker is a resident of Philadelphia, PA. Ms. Walker had modeling contracts with Defendant Click Model Management, Inc. during the class period.
  24. Defendant Wilhelmina Model Agency, Inc., ("Wilhelmina"), is a New York corporation with its principal place of business located at 300 Park Avenue South, New York, New York, 10010.
  25. Defendant Ford Models, Inc. ("Ford") is a Delaware corporation authorized to do business in the State of New York, with its principal place of business located at 142 Greene Street, New York, New York, 10012.
  26. Defendant Gerard W. Ford, a/k/a Jerry Ford, residence currently unknown, is Co-Chairman of the Board of Ford Models, Inc., located at 142 Greene Street, New York, New York, 10012.
  27. Defendant Elite Model Management, Inc. ("Elite") is a corporation duly organized under the laws of the State of New York with its principal place of business located at 111 East 22nd Street, 2nd Floor, New York, New York, 10010.
  28. Defendant Click Model Management, Inc. ("Click") is reported to be a corporation maintaining its principal place of business at 129 West 27th Street, New York, New York 10001.
  29. Defendant Next Management Corp. ("Next") is a corporation duly organized under the laws of the State of New York with its principal place of business located at 23 Watts Street, 5th Floor, New York, New York, 10013.
  30. Defendant The MFME Model Management Company Ltd. ("Company"), also known as Company Model Management, has its principal place of business located at 270 Lafayette Street, #1400, New York, NY 10012.
  31. Defendant Boss Models, Inc. ("Boss") is reported to be a corporation established under and pursuant to the laws of the State of New York with its principal place of business located at 1 Gansevoort Street, New York, New York 10014.
  32. Defendant Zoli Management, Inc. ("Zoli") is a corporation duly organized under the laws of the State of New York with its principal place of business located at 3 West 18th Street, New York, New York 10011.
  33. Defendant Q Model Management ("Q") has its principal place of business located at 180 Varick Street, New York, New York 10014.
  34. Defendant DNA Model Management, LLC ("DNA") is a corporation duly organized under the laws of the State of New York with its principal place of business located at 520 Broadway, New York, New York 10012.
  35. Defendant Images Management ("Images") has its principal place of business located at 30 East 20th Street, 6th Floor, New York, New York 10003.
  36. Defendant IMG Models, Inc. ("IMG") is a corporation duly organized under the laws of the State of New York with its principal place of business located at 304 Park Avenue South, New York, New York 10010.
  37. Defendant Model Management Corporation f/k/a/ International Model Managers Association, Inc. ("IMMA") is a New York corporation.

JURISDICITION AND VENUE

  1. The Court has jurisdiction over this action pursuant to Section 4 of the Clayton Act, 15 U.S.C. 15(a), 28 U.S.C. 1337, as well as principles of supplemental jurisdiction.
  2. All of the Defendants to this civil action reside in New York and regularly conduct business in this District.
  3. Venue is proper in this District pursuant to Sections 4 and 12 of the Clayton Act, 15 U.S.C. 15 and 22, and 28 U.S.C. 1391(b) and (c).

CLASS ACTION ALLEGATIONS

  1. Plaintiffs bring this class action on behalf of themselves and all current and former models who have or had oral or written contracts with any of the Defendants during the Class Period. Plaintiffs do not presently know the exact time when the unlawful conspiracy began, but are informed and believe – based, in part, on the sworn statements of Defendant Elite's own counsel, submitted as part of a lawsuit against Ford and Wilhelmina – that the unlawful conspiracy began between Defendants Ford and Wilhelmina no later than 1977, and later grew to include each of the other Defendants (including Elite itself, which decided to drop its lawsuit and join the conspiracy).
  2. Plaintiffs do not know the exact size of the Class because such information is in the exclusive control of Defendants. Nonetheless, there are thousands of Class members geographically dispersed throughout the United States. The Class is so numerous that joinder of all Class members, whether required or permitted, is impracticable.
  3. Plaintiffs' claims are typical of the claims of the members of the Class because Plaintiffs, like all Class Members, were models who entered into contracts, both written and oral, with various Defendants at various times during the Class Period, and have each been damaged by Defendants' unlawful conspiracy to fix prices in violation of federal antitrust law. Similarly, Plaintiffs, like all Class Members, have been damaged by Defendants' unlawful fees and charges, in violation of New York state law, during the class period.
  4. Plaintiffs will fairly and adequately protect the interests of the Class because Plaintiffs' interests are coincident with, and not antagonistic to, those of the Class. Plaintiffs have retained counsel with substantial experience in the prosecution of antitrust and class action litigations.
  5. Questions of law and fact that are common to the members of the Class predominate over questions that affect only individual members. Among the questions of law and fact that are common to the class are:
  1. Whether Defendants are engaged in a conspiracy to fix prices relating to fees charged to models and persons who employ models, and whether Defendants conspired to standardize other terms and conditions of the employment of professional models;
  1. Whether Defendants are employment agencies, as that term is defined under the New York General Business Law ("GBL");
  1. Whether Defendants have violated GBL 172 by operating as employment agencies without being licensed by the Department of Consumer Affairs;
  1. Whether Defendants have charged excessive fees, in violation of GBL 185;
  1. Whether Defendants have violated GBL 187(8) by operating other businesses from the same locations as their employment agency businesses;
  1. Whether Defendants have violated GBL 187(10) by requiring Plaintiffs to contribute to the cost of advertising materials intended to assist Defendants in procuring employment for Plaintiffs; and
  1. Whether Defendants have breached their fiduciary duties to Plaintiffs by failing to deal openly, honestly, and in good faith with Plaintiffs, including by (i) misrepresenting their services as management services, rather than employment services, (ii) acting in concert to evade state law regulating employment agencies, (iii) inducing Plaintiffs to purchase other services offered by Defendants, in violation of state law, and (iv) falsely representing to Plaintiffs that Plaintiffs were Defendants' clients, when in fact Defendants considered Plaintiffs' employers to be Defendants' real "clients."
  1. Class action treatment is superior to the alternatives for the fair and efficient adjudication of the controversy alleged herein. Such treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum simultaneously, efficiently, and without the duplication of effort and expense that numerous individual actions would entail. No difficulties are likely to be encountered in the management of this case that would preclude its maintenance as a class action.
  2. Defendants have acted on grounds generally applicable to the entire Class, thereby making final relief appropriate with respect to the Class as a whole. As discussed in more detail below, Defendants have collectively acted to fix prices, create standardized contracts and preclude new modeling agencies from entering the market. Defendants continue to coordinate their efforts by communicating through formal trade associations and through other less formal means. Prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class, which would establish incompatible standards of conduct for Defendants.

    FACTUAL BACKGROUND

The Business of Modeling and the Long-Standing

New York Law Regulating Employment Agencies

  1. The domestic modeling agency business is reported to involve over a hundred million dollars a year in bookings, and New York is one of the industry's worldwide hubs. Though market size and share data are private and within the control of Defendants, Defendants collectively are reported to be the largest modeling agencies in New York and the United States as a whole, and to control a substantial majority, and certainly well over half, of the market, measured by total volume of bookings, for models under contract to New York-based agencies.
  2. The primary service Defendants provide to the models they have under contract is to get the models work. This service is carried out through persons who are employed by Defendants and known as "bookers". As Defendant Wilhelmina admitted in a recent court pleading, "Bookers act as the liaisons between [the modeling agencies] and the models, and often provide the only contact and connection between [an agency] and its models. The bookers and models are the heart and soul of the modeling agency." Wilhelmina Artist Management LLC v. Fernandez, Index No. 01114665 (Aug. 1, 2001), Complaint 6.
  3. Wilhelmina's own pleadings admit that it is the booker's job to "negotiate and schedule bookings [or jobs] for models…[and] contact and procure clients who might be interested in hiring [the agencies'] models." Id.
  4. Wilehmina's admissions that (1) the booker's job is to get the model work, and (2) the bookers "often provide the only contact and connection between [an agency] and its models" are judicial admissions of facts that are well known to those in the business, which are repeated in numerous industry publications and textbooks endorsed by the other Defendants. For example:
    1. One industry publication, endorsed by Defendants Ford and Elite as a reputable guide to the modeling industry, claims that: "A model agent is commonly referred to as a booker. Your booker/agent will become one of the most important people in your career." Debbie Press & Skip Press, Your Modeling Career: You Don't Have to be a SuperModel to Succeed ("Your Modeling Career") 87 (Allworth Press 2000);
    1. Another publication, written by former Wilhelmina president Natasha Esch as a guide to the modeling industry, states: "Next we have the agents (bookers)…. The model-agent (booker) relationship is a vital one…. At the beginning of your career, your agent (or booker) will be your link with your agency and with the entire industry." Natasha Esch, The Wilhelmina Guide to Modeling ("The Wilhelmina Guide") 38-39 (Simon & Schuster 1996); and
    1. A leading textbook on the industry, to which Defendants Ford, Click, Wilhelmina and Zoli contributed, states: "A modeling agency employs bookers to act as the link between the clients and the models." Linda A. Balhorn, The Professional Model's Handbook A Comprehensive Guide to Modeling and Related Fields ("The Professional Handbook") 186 (Milady Publishing Company 1990).
  1. Acting on behalf of the agency, the booker speaks to third parties, such as photographers, casting agents, advertising agencies, magazines and retailers about employment opportunities for models; contacts the models on a regular basis to inform them of possible employment opportunities; schedules or "books" employment engagements and negotiates the model's fees for modeling engagements. In addition, the agencies bill the models' employers for the jobs their models have performed and collect money from the models' employers on the model's behalf.
  2. For these services, Defendants have for several years agreed to charge, and regularly charge, a 20% commission on all monies Plaintiffs receive for modeling. This "standard rate" applies to the vast majority of the models who are under contract to Defendants. A small percentage of highly successful models (usually defined as those who have earned over $200,000) are allowed to bargain their commission rate down to 15%, and a very small percentage of models (usually those who earn more than $500,000) are able to retain their own, actual managers and lawyers and negotiate their own contracts.
  3. Defendants have claimed that this variation in pricing among models who earn different amounts reflects the absence of a conspiracy, but Defendants' own statements show that the opposite is true – when such discounts began, Defendants sought to conceal them from the models and from each other, so as not to be seen to be undercutting the standard rate. Thus John Casablancas of Elite was quoted referring to rates lower than 20% as follows: "Everybody does it. But there is no point doing it unless it is secret. When we started we had telephones and nothing else. It was spooky. A few of the top girls got a . . . discount." (emphasis added) This kind of covert variation from a standard price is flatly contrary to what one would expect in a competitive market – and exactly consistent with the existence of an industry-wide agreement on prices that individual defendants might opportunistically violate to keep a particularly lucrative account.
  4. Another salient feature of the standard modeling contract – and one that is flatly contrary to Defendants' claim to be personal managers rather than employment agents – is the "mother agency" clause. The "mother agency" in a typical modeling contract recites that the agency shall act as the "mother agent" at all times, which means that Defendants claim a commission on any modeling job Plaintiff obtains, even if the job was procured by another agency. In such a circumstance – or when, as is often the case, one agency has agreed to send a model to work with another agency (such as IMG sending a model to work in Europe with Elite's European affiliate) – the "mother agent" gets its cut from the commission that the booking agent collects.
  5. Similar to a mother agent is a "scout", who discovers a model and has the model sign a contract then claims a percentage (such as 5%) of the model's earnings from the agency to which the scout refers the model. These "scouts" operate in many states in the country, and regularly charge aspiring models hundreds or thousands of dollars on the promise of an audience before the major agencies in New York, who might sign them to a contract.
  6. The Defendants have adopted the "mother agent" clause (and many other clauses) as a standard clause in their contracts. As stated in The Modeling Life, a book endorsed by Eileen and Katie Ford (Defendant Ford's founder and current president respectively) and Monique Pillard (Defendant Elite's president) as a reputable guide to the modeling industry: "When models sign with multiple agencies, one agency, usually the one that discovers or signs the model first is designated as the 'mother agent.'" Donna Rubenstein, The Modeling Life 244 (Penguin Putnam Inc. 1998). And, as stated in The Modeling Handbook, a publication endorsed by Defendant Company's owner, Michael Flutie, as a reputable guide to the modeling industry, "If a model signs a contract with Elite, New York, she might have ten other agencies she works with in Paris, Milan, Germany and Switzerland. Elite New York will still remain her 'mother' agency." Debbie Press & Skip Press, Your Modeling Career 92 (Allworth Press 2000). Similarly, Defendant Q's web page "modelsearch" asserts, "It is customary for your "mother"agency to arrange your placement with agencies in other markets." http://www.qmodels.com/modelsearch/modelsearch.html
  7. On top of the standard 20% commission, Defendants also charge Plaintiffs for:
    1. Incidental "services", such as advertising the models' portfolios to photographers, casting agents, advertising agencies, magazines, and others who might be interested in hiring the models; and
    1. Salary advances, charged against the models' anticipated but uncollected fee for a completed modeling job. (Ford claims on its website that "Ford was the first, and remains one of the few, to pay models at the end of every week rather than waiting for client payments." http:/www.fordmodels.com/content.cfm.) Defendants treat these payments as loans, to be repaid in the event Plaintiffs' employers do not pay.
    1. Defendants not only charge Plaintiffs a flat 5% fee for these "salary advances" (for a total fee of 25%), but do so regardless of how much time elapses between the time of the advance and the agency's receipt of the model's fee from the model's employer – even if it is just a matter of days.
  1. Defendants also earn substantial income from the employers who hire models. Defendants regularly charge the models' employers an additional 20% of the model's fee for a job. This double-dipping means that when a model is "paid" $100 for a job, the agency collects $20 from the model, plus another $20 from the employer, or $40 total, while the model takes home $80. In effect, on any given job, the agencies pocket one-third of the total amount paid by the employers who hire professional models.
  2. These and other of Defendants' practices described herein are exactly the types of "extortionate overcharges" 1 that the New York State Legislature long ago declared unlawful, enacting Article 11 of the New York General Business Law ("GBL"), 170–90, which set forth specific and clear rules regulating employment agencies. Among other things, that statute requires employment agencies to be licensed, limits their fees, and prohibits the operation of other business on the same premises as the employment agency.
  3. Specifically, GBL 171 defines an "employment agency" as any individual or company "who, for a fee, procures or attempts to procure employment or engagements for…modeling or other entertainments or exhibitions or performances." The statute excludes from the definition of "employment agency" "the business of managing…where such business only incidentally involves the seeking of employment." This exception to GBL 171 is commonly known as the "incidental booking exception", and has been repeatedly held by the courts to mean exactly what it says – that the seeking of employment must be incidental to the provision of management services.
  4. In short, to take advantage of the "incidental booking" exception, Defendants must not only be in the "business of managing", but must also show that their business "only incidentally involves the seeking of employment." As set forth in the following section, Defendants cannot possibly meet that very narrow exception, and yet have banded together to falsely represent to Plaintiffs that they are "managers" exempt from the statute.
  5. If a person or entity falls within the definition of "employment agency" in GBL 171, that person or entity:
    1. Must be licensed by the Department of Consumer Affairs -- GBL 172 requires all employment agencies conducting business in the city of New York to be licensed by the Department of Consumer Affairs;
    1. May not charge fees in excess of 10% -- GBL 185(8) provides in relevant part: "For a placement in class "C" employment (which includes the field of modeling) the gross fee shall not exceed, for a single engagement, ten percent of the compensation payable to the applicant";
    1. May not conduct any business other than that of an employment agency on its premises -- GBL 187(8) prohibits employment agencies from "engaging in any business on the premises other than the business of operating an employment agency…"; and
    1. May not pass on to the models the incidental costs of advertising the models' portfolios -- GBL 187(10) prohibits employment agencies from "requir[ing] applicants…to contribute to the cost of advertising."

    Defendants' Concerted Efforts to Evade

    Regulation as Employment Agencies

    1. For decades after their enactment, GBL 170–90 were consistently understood to apply to "modeling agencies" such as Defendants – until the 1970's, when (according to court papers filed by counsel for Defendant Elite, which was then a newcomer challenging the duopoly of Ford and Wilhelmina) "the principals of the major modeling agencies of the City of New York, agreed among themselves to raise commissions charged to the models and to circumvent the licensing requirements required by the statutes of the State of New York." Ford Models, Inc. v. Pillard, Index No. 1148/77, Levinson Affidavit, Aug. 26, 1977, at 9 (emphasis added).
    2. This affidavit told the Court that Elite was prepared to present sworn testimony from a witness to the meeting at which Ford and Wilhelmina agreed to collude to raise prices above the 10% legislative cap.
    3. According to that affidavit from Elite's own lawyer, Ford led this coordinated move to circumvent GBL 170 – 190 when it returned its employment agency renewal notice in 1971 and claimed that the agency had "now become management." This statement appears in an April 15, 1971 letter from Jerry Ford to the New York City Department of Consumer Affairs in the Ford v. Pillard docket.
    4. While the affidavit is probative of whether Defendants Ford and Wilhelmina had entered into a price-fixing conspiracy in about 1971, there are several reasons why it was not the kind of public statement that would suffice to constitute notice to the Plaintiffs. First, the affidavit itself was submitted by Elite's own lawyer in a private civil litigation, which litigation was settled. No government agency brought any enforcement action based on the statement, as members of the public might think would follow from a credible accusation of price-fixing; in fact, the agencies were allowed to proceed in business as purported managers, instead of as licensed agencies. The affidavit was not publicized at the time, and when it was publicized, years later, it was in an article that had numerous quotes from the parties indicating their dislike of each other, from which one would reasonable infer the absence of any price-fixing conspiracy among any of the defendants, or at least that any such agreement which might have existed at the time the affidavit was made had since terminated.
    5. Lengthy research and detailed investigation of documents not readily available to the public, has determined that Plaintiffs have been the subject of a long-running price fixing agreement, and Defendants' concerted efforts to conceal that agreement from Plaintiffs and the public. These facts of concealment begin with the claim made by Ford and other agencies in the 1970s that they had "become management". Investigation shows that these claims were superficial: For example, work vouchers that used to read "Ford Model Agency Incorporated" were changed to read "Ford Models, Inc." The day-to-day operations of both Ford and Wilhelmina changed little if at all. Indeed, both Ford and Wilhelmina now represent to the public that they have been in business continuously as "model agencies" since before the purported change in their status. See http://www.fordmodels.com/content.cfm?content id=5&client id=&client email= (Ford's website) (May 23, 2002), http://www.wilhelmina.com/about/about_index01.html (Wilhemina's website) (May 23, 2002). And in fact, each Defendant continues to regularly procure employment for its models.
    6. Shortly after Ford returned its license to the Department of Consumer Affairs, Ford, Wilhelmina and Elite – which later decided to drop its lawsuit and join with Ford and Wilhelmina in their unlawful conspiracy – raised their standard fees charged to models above 10%, the maximum amount allowed under New York law.
    7. Today, no Defendant is licensed by the Department of Consumer Affairs and each Defendant routinely charges above 10% commissions.
    8. Defendants have also agreed and conspired to impose additional charges on Plaintiffs that would be unlawful if Defendants were licensed agencies and were required to abide by GBL 170 – 190. For example, Defendants, as unlicensed agencies, currently charge Plaintiffs for the costs incurred in advertising the Plaintiffs' portfolios, in violation of GBL 187(10), and operate "management" divisions and other ancillary businesses from their premises, often charging Plaintiffs additional fees, all in violation of GBL 187(8).
    9. Defendants' concerted efforts to evade state law applicable to employment agencies have damaged Plaintiffs and continue to damage Plaintiffs in their business or property in that Plaintiffs are required to pay non-competitive prices for Defendants' services in the form of artificially inflated commissions, and are charged other unlawful fees and costs.

    Defendants' Unlawful Price Fixing Scheme

    1. Defendants' scheme to evade state law limiting their fees, and their agreement on what fees to charge, is also a clear violation of federal antitrust law.
    2. As noted, evidence of the inception of this unlawful scheme comes from the sworn statement of Defendant Elite's own counsel, who stated in an affidavit that Wilhelmina and Ford had agreed in the 1970s "to raise commissions charged to the models". Ford Models v. Pillard, Levinson Aff. 9. Pursuant to that agreement, Defendants in fact did raise their commissions charged to models to 15%, and then to 20%, which Defendants represent to aspiring and current models as the "standard", non-negotiable rate for model contracts in New York.
    3. Since the inception of the price-fixing scheme between Ford and Wilhelmina, other Defendants – including Elite itself – agreed to join the conspiracy and charge the same rate to their models.
    4. The Defendants later agreed among themselves to start imposing charges on the clients who hired the models, and admitted that they had reached an agreement to do so before seeking to impose such charges.
    5. While Defendants continue to charge most models the standard 20% rate, Defendants have not acknowledged that an agency can lower that rate when the model begin to command a substantial amount of fees from clients. For example, the industry norm is now to charge models earning over $200,000 15% commissions.
    6. Defendants also agreed and conspired to implement and maintain additional price-related restraints, both individually and as an industry, that have unlawfully restrained competition and artificially inflated the price models must pay to retain an agency. For example, Defendants have collectively worked together to draft progressively more onerous "standard" contracts that currently:
      1. Require the models to reimburse the agencies for any out of pocket costs incurred by the agencies in advertising the models' portfolios;
      1. Require the models to pay the "mother" agency for any modeling job the models obtain, even if the models procured the employment without an agent or with the help of another agency; and
      1. Require the models to pay usurious interest rates on salary advances (As discussed above, Defendants treat these salary advances as loans, which is why the additional charge imposed by Defendants can be described as "usurious".)

    Defendants' Illegal Exchanges of Information

    to Facilitate their Price-Fixing Conspiracy

    1. Defendants have maintained their collusive price structure through the years in various ways, including through 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.
    2. One principal means of this illegal information exchange – but not the only means – has been the periodic meetings of the International Model Management Association (the "IMMA"), founded several years ago by (inter alia) Jerry Ford of Defendant Ford Models, Inc. as a purported trade organization. Membership in the IMMA is reported to be comprised of the established modeling agencies, and since 1991, the IMMA has included, inter alia, Defendants Ford, Wilhelmina, Elite, Zoli, and Next.
    3. The IMMA began out of meetings among at least Ford and Wilhelmina; by 1980, these meetings occurred once a month. Among the initial topics of discussion between the three agencies were how to set rates and respond to new competitors, as well as addressing the problem of models who sign with one agency then "switch" to another. Later discussions included newer agency participants and focused on issues such as setting client rates for big campaigns such as cosmetic company campaigns, where top models from various agencies compete for the most lucrative modeling job.
    4. Defendant Jerry Ford participated in the initial meeting among Ford, Wilhelmina, and others at which the agreement to fix prices was first made. Later, as an officer and controlling shareholder of Ford Model Agency, Jerry Ford helped found the IMMA. Both as an officer and controlling shareholder of Ford Modeling Agency and as a founder and officer of IMMA, Jerry Ford is represented to have played a leading role in facilitating the conspiracy between Defendants, and performed specific overt acts in furthering this price fixing scheme by spreading it to other agencies.
    5. One of Ford's stated goals in founding and seeking to build the 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 including such terms as the "mother agency" clause and the charging of a flat fee for salary advances.
    6. According to reports of its meetings that have been disseminated to persons involved in the modeling business, the IMMA functions as 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.
    7. The IMMA has also purported to represent the leading agencies (including Defendants) to discuss uniform rates that Plaintiffs would be paid for their services. Indeed, some smaller agencies have privately complained that the large agencies have used the IMMA as a vehicle for enforcing compliance by the smaller agencies with the conspiracy.
    8. Defendants and their officers and agents also regularly exchange information regarding other aspects of the market for professional modeling services, including the "day rate", which is the rate charged to a client for a full day's work by a model in New York City. Instead of seeking to use that knowledge to compete against each other, the agencies use such knowledge to ensure conformance with the price-fixing conspiracy, and to restrain competition.
    9. As a direct and proximate result of Defendants' unlawful agreement to fix prices and their exchanges of information, 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.

    Characteristics of the Market that have Allowed the Conspiracy to Continue

    1. There are several unique characteristics to the domestic model agency business that have allowed Defendants' unlawful practices to continue and thrive. First, the market is concentrated by geographically and in terms of market share. The domestic modeling agency business is largely run out of agencies headquartered in New York City, and dominated by a handful of large agencies (initially Ford, Wilhelmina, and Elite, joined more recently by Next and IMG); between them, these agencies are reported to control a large percentage of the total bookings for professional models in the United States.
    2. Many of these and other agencies have West Coast offices, but those offices report to management in New York City, and (for reasons that go to the heart of Defendants' misconduct) many if not most of Defendants' contracts with models in California are made subject to New York law; similarly, American models who are sent to work in Europe are often referred by New York-based agencies, pursuant to contracts that are subject to New York law. Thus Defendants' agreement
    3. The continuity of private ownership and management of the leading Defendants has also been a unique factor allowing their scheme to continue. Ford, which has been publicly identified as a leader in efforts to organize the agencies, through the IMMA and otherwise, has been owned or run by Eileen Ford, her husband Gerry Ford, or their daughter Katie Ford since 1947, with their daughter, Katie currently at the helm as CEO.
    4. From the early 1970s until the 1990s, Elite was owned or run by John Casablancas, who is reported to still be involved in the company.
    5. Monique Pillard was a top booker at Ford who left to join Elite in the 1970s, and is now a member of Elite's senior management.
    6. Fran Rothchild co founded the Wilhelmina Agency in 1967, with the agency's namesake, Wilhelmina. When Wilhelmina died in 1980, Rothchild continued to own and participate in management. The agency was acquired several years ago by Dieter Esch (who has been reported as having been convicted of financial fraud) and is now run by his daughter, Natasha.

    Defendants Have Admitted That They

    Are Unlicensed Employment Agencies

    1. 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 from Defendants themselves, in court papers and elsewhere – 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, and that the procurement of employment is incidental to their management services. Even if Defendants could prove that 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.)
    2. Most tellingly, Defendants have acknowledged in court pleadings that one of their principal functions is to obtain employment for the models. Wilhelmina has recently admitted as much in its own Complaint, filed in New York State Supreme Court, in Wilhelmina v. Fernandez. Nor is this admission new: Jerry Ford made a similar admission in the late 1970s, describing the function of a booker in a sworn affidavit in Ford Models v. Pillard. Models expect – and the agencies know – that the agent's main job is to find employment for the model. And Defendant Elite's Chairman, John Casablancas, has been quoted as saying: "We are just people who sell people to other people." Dun's Business Month, Oct. 1983 v123 p.100(3).

    3. 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.

    4. Contrary to the language of their contracts, in their daily parlance and in their solicitations to the public, Defendants regularly (and correctly) refer to themselves as agencies. For example:
      1. Defendant Wilhelmina's website boasts that "it is one of the leading modeling agencies in the industries… As agent for over 1000 models… Wilhelmina is a full service agency." http://www.wilhelmina.com (May 24, 2002) (emphasis added);
      1. 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." http://www.fordmodels.com (May 24, 2002) (emphasis added);
      1. 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 modern 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, 2002) (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." Id. (May 24, 2002) (emphasis added);
      1. 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." http://www.elitemodel.com (May 24, 2002) (emphasis added);
      1. Defendant Elite's founder, John Casablancas writes in his forward to The 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);
      1. Defendant Elite often refers to itself as the "Elite Agency Group". See, e.g., the website for John Casablancas Modeling and Career Centers http://www.jc-centers.com/faqs.html (May 24, 2002) and the cover of The Complete Guide;
      1. 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);
      1. 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, 2002) (emphasis added);
      1. 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, 2002) (emphasis added);
      1. 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 2000, was established in 1970 by Zoltan Rendessy." www.zolimodels.com/aboutus.html2 (November 9, 2001) (emphasis added);
        1. Defendant Q directs visitors to its web page titled "theagency" and makes clear, " While considered still in its infancy, Q has become known as the first agency to fuse a dynamic fully functioning web based virtual agency and a talented team of the newest most progressive agents." Its biography web page of Jeffrey Kolsrud, Director of Defendant Q, declares, "[Kolsrud's] enthusiasm and vision prompted him to branch off and develop a new innovative agency of his own. . . Kolsrud's new agency attracted high caliber models very quickly, including Armani campaign model Peter De Vries and supermodel Magali." http://www.qmodels.com/agency/agency.html (August 7, 2002) (emphasis added);
        1. Defendant IMG's "Models" web page boasts that it is "Ranked the world's number one international model agency by Models.com and Businesswire . . ." http://www.imgworld.com (August 7, 2002) (emphasis added); and
        1. Defendant IMG, through the 9/7/00 Models.com "Chat Event" assures that, "We look for all different types of models as we are a full service agency." (Kevin Apana, Men's Division) http://models.com/chats/transcripts/img.cfm. (August 7, 2002) (emphasis added)
        1. Defendants' senior executives also refer to Defendants as agencies. Joe Hunter, former 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, 2002) (emphasis added). The website also presents a list of Modelwire's "Model Agency Partners" that includes Defendants Ford, Click and Elite. Similarly, Natasha Esch, Defendant Wilhelmina's former 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." Id. at 33 (emphasis added).

        2. 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." (Id. 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." (Id. at 239).

        3. 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, Wilhelmina, IMG, Q and DNA as modeling agencies (with their New York addresses and details), and Defendants Click, Ford, Next, Wilhelmina, IMG and Q appear in the directory in enlarged advertisements. See also 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, Click and IMG).

        4. Defendants' status as agencies is also confirmed by the fact that they occasionally agree to divide their commissions based on the geographic location in which a model works. For example, a commission agreement between two Defendants might be reached where one receives commissions for the model's work in New York, while the other reaps commissions for the model's work in Paris, France. By contrast, managers do not split their fees based on the location where their client earns professional income.

        5. 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 divisions would be redundant.

        6. 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.

        7. Any remaining doubt regarding whether Defendants are really employment agents or managers is erased by the fact that, with regard to their operations 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 agent." (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 same exact services in both states.
        8. 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:
        1. violation of BCL 172 by operating as employment agencies without a license;
        1. 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;
        1. 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;
        1. 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

          1. Defendants' wrongful conduct described above also constitute breaches of their fiduciary duties to Plantiffs, including the duties of loyalty, care, honesty, fair dealing and full disclosure.
          2. 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 Plaintiff's behalf with regard to their careers or their employment prospects.
          3. 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 (i.e., earning undisclosed profits from their dealings on behalf of any Plaintiff or using Plaintiffs' assets to their own benefit).
          4. Instead of honoring those obligations to Plaintiffs, Defendants's conduct and admissions show that they do not even consider Plaintiffs to be their clients. If Defendants truly were managers of the models, then they would refer to the models as their clients. If Defendants are employment agencies, they would regard the photographers, casting agencies, advertising agencies, magazines, retailers and other employers who hire models as their "clients". And, consistent with their operation as employment agencies, Defendants have repeatedly and consistently stated (in court pleadings and elsewhere) that their "clients" are not the models, but the employers who use the agency to hire models. Specifically,
            1. Defendant Wilhelmina noted in a recently filed court pleading that, "By reason of their key responsibilities, bookers have important and special relationships with the models who are affiliated with a modeling agency and to the clients who hire the models." Wilhelmina v. Fernandez, Complaint 6 (emphasis added);
            1. In another pleading, Ford acknowledged that "the defendant's position requires skill and professional adeptness since they must often select models that will satisfy a client's particular needs … [the bookers] were required to deal extensively with Ford's models, employees and clients desiring the services of said models from all across the country and in fact, the world. The defendants necessarily had to use discretion and skill in recommending particular models to certain clients." Ford Models v. Pillard, Plaintiff's Mem. In Supp. Prelim. Inj., Aug. 26, 1977 (emphasis added);
            1. Defendant Ford, through the affidavit of Jerry Ford, explained, "they [the bookers] were responsible for recommending models to our clients for particular assignments." Ford Models v. Pillard, Aff. of Jerry Ford 10, Aug. 26, 1977 (emphasis added);
            1. Defendant Ford on its web page entitled "Frequently Asked Questions" explains: "To remain competitive modeling agencies must contribute the right girls to this network of photographers, magazines and clients." http://www.fordmodels.com/content.cfm (May 24, 2002) (emphasis added);
            1. Defendant Click's website makes a clear distinction between models, whom it refers to as "talent" and the employers who hire the models, whom it regards as "clients" -- "Click Models remains committed to its successful strategy of…continual superior service provided to our talents and clients throughout the world." www.clickmodel.com/ny-aboutus.html (May 24, 2002) (emphasis added);
            1. Defendant Zoli's website makes the same distinction: "Zoli's reputation for respectful and competent service to advertising clients has persistently provided growth opportunities for the talent they represent. www.zolimodels.com (November 9, 2001) (emphasis added);
            1. Defendant Boss, through an interview with John Babin, Men's Division Director, states, "Over the years, the number of clients that are no longer in existence is unbelievable. If you look back at all of the stores that have closed, gone out of business, no longer use models or have been bought up by big conglomerates, it's frightening… There are more agencies and models than ever and fewer clients …" http://modellaunch.com (May 24, 2002) (emphasis added);
            1. Defendant Q's website reports that, "Its sharp cast of talent and staff and unique style of branding and imaging the models they have discovered and attracted is respected by clients, photographers, magazines and agencies globally." http://www.qmodels.com/agency.html (August 7, 2002) (emphasis added);
            1. Defendant Q's owner Jeffrey Kolsrud, commenting on a roster of celebrities who recently signed with Defendant Q observes, "Models are often just faces with no names attached but with these people, the client gets an immediately recognizable face." NY Pulse, 3/27/01 New York Post 41;
            1. Defendant DNA, through an interview with its owner, David Bonnouvrier featured in Models.com "Agency Spotlight" explains, "We have a high speed booking network system coupled with an imaging managing software which enables us to send via e-mail to our clients, portfolios of all the models represented by DNA." http://models.com/model culture/agency spotlight/DNA/ (August 7, 2002) (emphasis added); and
            1. Defendant IMG, through the 9/7/00 Models.com "Chat Event" advises that, "All reputable agencies in NY have contacts with important fashion clients." (Ivan Bart, Women's Division) and affirms that, "Every market demands different things so it is quite possible for a girl to be right for the clients in Paris but not in NY and visa versa." (Kyle Hagler, Women's Division) http://models.com/chats/transcripts/img.cfm. (August 7, 2002) (emphasis added).
          1. In addition to these direct admissions, Defendants also acknowledge, endorse and contribute to books that refer to the models' employers as the modeling agency's clients. For example:
            1. The Modeling Life (endorsed by Ford and Elite) states "the clients, meaning the companies who hire models – are likely to be familiar with the model and her work…the way the industry is set up, agents are in charge of finding out about all job possibilities and sending their models to clients to try to get those jobs." Id. at 239 (emphasis added);
            1. The Professional Handbook (contributed to by Ford, Click, Wilhelmina and Zoli) explains, "To best serve its clients, the agency should have complete and current information on the models it represents and be able to help the client to find the perfect model for the job." Id. at 204 (emphasis added); and
            1. The Wilhelmina Guide, written by Wilhelmina's former president Natasha Esch: "The agency head sheet is an excellent tool because it is designed so that clients will hang it on their office walls for easy reference. The head sheet is poster sized with the name and a beauty shot of each of the models represented by the agency. Id. at 53 (emphasis added);
            1. Wilhelmina's Modeling and Acting Dictionary, also written by Wilhelmina's former president, Natasha Esch, defines "client" as "an advertiser or company whose product or service is being promoted; the advertiser or company that is financing a job or shoot." (Career Press, 1994); and
            1. In another publication, "client" is defined as one of several alternatives: "[O]n a magazine shoot, the client is the fashion editor. On a catalog shoot, it's the representative or art director from the catalog company. On an advertising shoot, it's the corporate client." The Complete Guide (endorsed by Defendant Elite's Chairman, John Casablancas) at 364.
          1. The glossaries of industry publications also define "client" as:
            1. "[T]he company or entity hiring the model." Your Modeling Career (endorsed by Ford; contributed to by Ford and Wilhelmina and Elite) at 246; or
            1. "[T]he entity paying the costs of a shooting, or the individual representing the concern paying the model's fee" The Professional Handbook (contributed to by Ford, Click, Wilhelmina and Zoli contributed) at 480.
          1. The website for Modelwire, Inc., defines clients in the following manner: "Modeling agencies traditionally use overnight courier and messengers to hand deliver 'packages' of model portfolios to their clients (photographers, casting agents, ad agencies, magazines, retailers, etc.)… and underscores "Every model's go-sees options, and jobs, etc. are linked to an agency's clients." www.modelwire.com (May 24, 2002) (emphasis added).
          2. As discussed above, Defendants charge their "clients" – i.e., the models' employers – 20% commissions in addition to the 20% commissions Defendants collect from Plaintiffs. This presents a clear conflict of interest, which had to be waived expressly and in writing. Plaintiffs who had oral contracts with Defendants (comprising a substantial number of Plaintiffs) did not waive this conflict.
          3. As fiduciaries, Defendants are required to disclose to Plaintiffs all material information that they possess which is relevant to their relationship. Defendants have each consistently breached this duty in various ways, including by
            1. misrepresenting to Plaintiffs their true allegiance to the employers, not the models;
            1. failing to reveal that they were not licensed to act as employment agencies under New York Law, and thus were unlawfully engaging in the procurement of employment; and
            1. failing to disclose that the 20% commissions that Defendants charged were excessive and unlawful under GBL 170 - 190.
          1. Defendants have also breached their fiduciary duties to Plaintiffs by misallocating the monies that they receive on behalf of Plaintiffs. Specifically, Defendants have used a portion of the model's compensation to subsidize their own advertising and administration costs in violation of GBL 187, which states that an "employment agency shall not engage in any of the following activities or conduct: …(10) Require applicants for…employment to subscribe to any… incidental service or contribute to the cost of advertising."
          2. Defendants also violate GBL 187(8) by requiring Plaintiffs to pay for the cost of advertising the agency's models under contract. Defendants regularly pass on to Plaintiffs other expenses that should be borne by the agency, such as: (1) the cost of the modeling bag, which contains the essentials a model must bring to a shoot, (2) delivery costs incurred in sending a model's portfolio to employers and photographers, (3) costs associated with sending information or prints via fax, and (4) Plaintiffs' travel expenses when those expenses are not paid for by the models' employers. See Your Modeling Career at 95 - 96, The Modeling Handbook at 38, The Wilhelmina Guide at 143.
          3. Defendants also unlawfully require Plaintiffs to pay a portion of the costs earmarked specifically as "Agency Promotional Materials". The Complete Guide at 197 (endorsed by Elite's Casablancas). As stated in The Complete Guide, Plaintiffs are required to "pay for their own page in the agency promotion book" and "their share of the cost of the agency head sheet", which is circulated among the models' employers. Id. at 198. And while Plaintiffs pay for the costs associated with creating and maintaining the promotion books, Defendants admittedly reap the benefits. As stated by Wilhelmina's Natasha Esch, "The model book and head sheets sent out to clients reflect the agency's [as opposed to the models'] status in the industry." The Wilhelmina Guide at 53 (emphasis added).
          4. Defendants have also engaged in abusive and one-sided collection and reimbursement practices. Typically, a model gets paid when the model's employer pays the agency. However, a model may still get paid if the model's employer does not pay the agency promptly. In the latter case, the agency withholds a percentage of the model's fee representing the employer's commission and places this withholding in a "reserve fund." Once the model's employer pays the agency, the reserve fund is supposed to be released to the model. It is incumbent upon the model to determine if and when the agency has been paid in full and to advise the agency that it is time for the agency to pay the model. Often times the agency does not release the reserve fund and fails to repay the model.
          5. Defendants' ongoing, intentional breaches of fiduciary duty have harmed Plaintiffs in various ways, in amounts to be determined at trial.
          6. In addition, Defendants' repeated and deliberate breaches of their fiduciary duties to Plaintiffs were accomplished through false and fraudulent misrepresentations made to the public at large regarding the nature of their operations, and thus constitute an ongoing fraud on the public for which punitive damages are an appropriate remedy.
          7. The nature of Defendants' ongoing breaches of fiduciary duties, their affirmative concealment and misrepresentations of their true allegiances and conduct, were done with the purpose and effect of concealing their wrongdoing from Plaintiffs, and thus have tolled any applicable statute of limitations to Plaintiffs' claims.

            FIRST CAUSE OF ACTION

            (Price-Fixing as Per Se Violation of Section 1 of the Sherman Act)

            1. Plaintiffs repeat and reallege the allegations of Paragraphs 1 through 85 as if set forth fully herein.
            2. For least the last several years, Defendants have been engaged in an unlawful conspiracy to fix the commissions and charges to professional models and persons who employ professional models. This conspiracy began in or around the mid-1970's, when Defendants Ford (represented by Defendant Jerry Ford) and Wilhelmina agreed to fix the commissions that they charged Plaintiffs to an amount above the statutory limit as provided by GBL 185, and to charge uniform commissions to Plaintiffs. Defendants' agreement to fix prices was later expanded to include Elite and each of the other Defendants, at times and on terms that are known only to Defendants.
            3. Pursuant to Defendants' unlawful price fixing agreement, Defendants first raised the commissions they charged to their models to 15%, and then to 20%, which Defendants represent to be the standard commissions models pay in New York (although models earning over $200,000 generally receive a reduced commission rate of 15%). Defendants also conspired over the years regarding the commissions they would charge to the models' employers.
            4. Defendants also agreed to implement, and implemented, other price-related restraints that have artificially inflated the costs Plaintiffs must pay to retain an agent. For example, Defendants have worked together and through the IMMA to draft progressively more onerous "standard" contracts that:
              1. Require the models to reimburse the agencies for any out of pocket costs incurred by the agencies in advertising the models' portfolios;
              1. Require the models to pay the "mother" agency for any modeling job the models obtain, even if the models procured the employment without an agent or with the help of another agency;
              1. Require the models to pay usurious interest rates on advanced salaries.
            1. Defendants, Plaintiffs and members of the Class work in interstate commerce in the United States and elsewhere.
            2. As a direct and foreseeable result of Defendants' violations, Plaintiffs and other members of the Class have been damaged and continue to be damaged in their business or property in that they have to pay non-competitive prices for Defendants' services in the form of the standard 20% commissions (or 15% commissions for those Plaintiffs that are more successful), and revenue that they would otherwise be earning if Defendants did not also charge and collect their additional 20% commission to Plaintiffs' employers.
            3. Defendants' price fixing agreement is a per se violation of Section 1 of the Sherman Act. Pursuant to 15 U.S.C. 15(a), Plaintiffs are therefore entitled to recover treble their actual damages caused as a result of Defendants' unlawful price-fixing and such other and further relief as permitted by law, their attorneys fees and the costs of this action.

            SECOND CAUSE OF ACTION

            (Conspiracy to Evade State Price Regulation as

            Per Se Violation of Section 1 of the Sherman Act)

            1. Plaintiffs repeat and reallege the allegations of Paragraphs 1 through 85 as if set forth fully herein.
            2. For least the last several years, Defendants have been engaged in an unlawful conspiracy to evade state regulations that limit the commissions and charges that Defendants could collect as employment agencies.
            3. Defendants' conspiracy began in or around the mid-1970's, when Defendants Ford and Wilhelmina agreed to resign their licenses as employment agencies and declare themselves to be managers not subject to state regulation.
            4. Defendants' agreement to set prices above the state maximum was later expanded to include Elite and each of the other Defendants, at times and on terms that are known only to Defendants, and has been maintained through the years through various acts, including by the adoption of form contracts and terms that purport to disavow Defendants' legal status as employment agencies.
            5. As a direct and foreseeable result of Defendants' unlawful conspiracy, Plaintiffs and other members of the Class have been damaged and continue to be damaged in their business or property in that they have to pay non-competitive prices for Defendants' services in the form of commissions above 10%, and have been required to pay other unlawful charges.
            6. Defendants' concerted actions to avoid the price restrictions contained in GBL 170 – 190 – that is, to fix prices – constitute a per se violation of Section 1 of the Sherman Act. Pursuant to 15 U.S.C. 15(a), Plaintiffs are therefore entitled to recover treble their actual damages caused as a result of Defendants' unlawful price-fixing and such other and further relief as permitted by law, their attorneys fees and the costs of this action.

            THIRD CAUSE OF ACTION

            (Violation of Section 1 of the Sherman Act)

            1. Plaintiffs repeat and reallege the allegations of Paragraphs 1 through 85 as if set forth fully herein.
            2. Defendants possess significant market power. Collectively, Defendants are reported to be the largest modeling agencies in the industry and are reported to control well over half of the market, measured by total volume of bookings, for models in New York.
            3. As noted above, through Defendants concerted actions, Plaintiffs are required to pay (i) 20% commissions for any modeling engagements, (ii) usurious interest rates for salary advances, and (iii) for the costs incurred by the agencies in advertising the models' portfolios.
            4. Defendants have been able to maintain their anti-competitive prices through various formal meetings, such as the IMMA meetings, and through various less formal meetings, at which information on rates, charges, and other terms are discussed, and in which Defendants recently discussed how to respond to new competitors who have offered lower rates than Defendants.
            5. Because of Defendants' market power, Defendants have been able to maintain these restraints on competition in violation of Section 1 of the Sherman Act.
            6. As a direct and foreseeable result of Defendants' violations, Plaintiffs and other members of the Class have been damaged and continue to be damaged in their business or property in that they have to pay non-competitive prices for Defendants' services in the form of commissions above 10%.
            7. Defendants' standardization practices constitute a violation of Section 1 of the Sherman Antitrust Act. Pursuant to 15 U.S.C. 15(a), Plaintiffs are therefore entitled to recover treble their actual damages caused as a result of Defendants' unlawful price-fixing and such other and further relief as permitted by law, their attorneys fees and the costs of this action.

            FOURTH CAUSE OF ACTION

        (Violations of GBL 170 – 190)

        1. Plaintiffs repeat and reallege the allegations of Paragraphs 1 through 85 as if set forth fully herein.
        2. GBL 186 provides in relevant part, "Any employment agency which collects, receives or retains a fee or other placement contrary to or in excess of the provisions of this article shall return the fee" no matter how they characterize themselves.
        3. Because Defendants more than incidentally procure employment for Plaintiffs, Defendants are employment agencies within the meaning of GBL 171(2) and do not fall within the exclusionary provision of GBL 171(8).
        4. As such, Defendants must be licensed pursuant to GBL 172, may not charge over 10% commissions pursuant to GBL 185, may conduct only employment agency business on the premises pursuant to GBL 187, and may not impose charges for the incidental costs associated with advertising the models' portfolios.
        5. Because Defendants are not licensed, charge over 10% commissions, conduct other businesses on their premises, and charge Plaintiffs for the costs associated with advertising Plaintiffs' portfolios, Defendants are in violation of the aforementioned sections.
        6. Pursuant to GBL 186, Defendants are required to return all of the wrongfully obtained fees from Plaintiffs.

          FIFTH CAUSE OF ACTION

          (Breach of Fiduciary Duty)

          1. Plaintiffs repeat and reallege the allegations of Paragraphs 1 through 85 as if set forth fully herein.
          2. As specified in the agreements between the parties, and as matter of law, Defendants' relationship with Plaintiffs was that of a fiduciary. Plaintiffs reposed trust and confidence in Defendants that they would discharge their various obligations to Plaintiffs in an honest, diligent, and loyal manner. In exchange for their various services, Defendants have received millions of dollars in excessive commission fees from Plaintiffs.
          3. As fiduciaries, Defendants had a duty to deal candidly and in good faith with Plaintiffs. Above all else, Defendants' fiduciary duties required them to disclose to Plaintiffs the fact that they were operating as employment agencies without a license in contravention of New York State Law.
          4. By failing to disclose that they were in fact acting as employment agencies, and by charging excessive fees for their principal service – procuring employment – Defendants breached their fiduciary duties owed to Plaintiffs.
          5. In addition, Defendants failed to disclose to certain Plaintiffs their conflict of interest in their dual representation of Plaintiffs and Plaintiffs' employers such as photographers, casting agents, advertising agencies, magazines and retailers.
          6. As a direct and proximate result of Defendants' breaches of duty as alleged above, Plaintiffs have suffered and will continue to suffer substantial damages, including but not limited to the excessive compensation wrongfully obtained.
          7. Defendants have acted willfully, maliciously, and with intentional disregard for Plaintiffs' rights under the agreements. Accordingly, they are liable to Plaintiffs for exemplary and punitive damages in an amount to be determined at trial.

          SIXTH CAUSE OF ACTION

          (Unjust Enrichment)

          1. Plaintiffs repeat and reallege the allegations of Paragraphs 1 through 85 as if set forth fully herein.
          2. As discussed above, Defendants are employment agencies as defined by GBL 171. Thus, Defendants must, among other things, be licensed by the Department of Consumer Affairs, limit their commissions to 10% or less, and are prohibited from charging for the incidental costs associated with advertising the models' portfolios.
          3. Defendants, however, are not licensed by the Department of Consumer Affairs. Moreover, Defendants have entered into oral and written contracts with Plaintiffs that require Plaintiffs to pay at least 20% commissions in violation of New York state law.
          4. Because these oral and written contracts violate GBL 172 and 185, the contracts are unenforceable.
          5. Defendants have been unjustly enriched by these unlawful contracts. Thus, Plaintiffs are entitled to an award of damages equal to the fees that Defendants have unlawfully retained.

          SEVENTH CAUSE OF ACTION

          (Accounting)

          1. Plaintiffs repeat and reallege paragraphs 1 through 85 as if set forth fully herein.
          2. Defendants have acted willfully, maliciously and in bad faith, in a manner designed to undermine Plaintiffs' efforts to earn a living as models.
          3. By charging an excessive and unlawful fee in connection with their services, and engaging in other wrongful practices regarding their billing, expenses and reimbursement practices, Defendants have made a substantial profit at Plaintiffs' expense.
          4. Defendants have been unjustly enriched from their wrongful conduct, and should therefore account to Plaintiffs for their profits during the class period.

          RELIEF REQUESTED

          WHEREFORE, Plaintiffs demand judgment against defendants as follows:

          1. That the Court determine that this action may be maintained as a Class Action under Rule 23 of the Federal Rules of Civil Procedure and that Plaintiffs be certified as a Class Representatives and their attorneys as Class Counsel;
          1. That the unlawful conspiracy alleged herein be adjudged and decreed a per se restraint of trade or commerce in violation of Section 1 of the Sherman Act;
          1. Forfeiture and disgorgement of all fees paid to Defendants, and all secret profits that the Defendants have received as a result of their wrongful conduct;
          1. Punitive and exemplary damages to the extent permitted by law;
          1. An accounting of all costs and expenses claimed to be incurred on behalf of Plaintiffs;
          1. Pre-judgment interest and post judgment interest from the date of entry until the date of satisfaction at the highest rates allowable by law;
          1. Reasonable attorneys fees and costs incurred by Plaintiffs in this action; and
        1. Such other and further relief as this Court deems just and proper.

        Armonk, New York

        September 23, 2002

        BOIES, SCHILLER & FLEXNER LLP

        By: ____________________________________

        Andrew W. Hayes (AH-2570)

        80 Business Park Drive

        Armonk, New York 10504

        Tel: (914) 273-9800

        Fax: (914) 749-8265

        Paul R. Verkuil

        570 Lexington Avenue

        New York, New York 10022

        Tel: (212) 446-2300

        Fax: (212) 446-2350

        Neville Johnson

        Brian Rishwain

        JOHNSON & RISHWAIN LLP

        12121 Wilshire Boulevard, Suite 1201

        Los Angeles, California 90025

        (310) 826-2410

        Co-Lead Counsel for Plaintiffs


        1

      See Society of Models, Inc. v. Moss, 53 N.Y.S.2d 424, 425-426, (N.Y. Sup. Ct., 1944). ("Especially laudable is [the Commissioner's] obvious sincere desire to protect models against stratagems and machinations to mulct them of illegal fees for procuring jobs. The elaborate law regulating employment agencies bespeaks the necessity of such protection…although there were other evils, the business was subject to the abuse of extortionate overcharges. The legislators regarded this as one of the principal reasons for regulation.")

      2 This website for Defendant Zoli is no longer accessible.