"Paul Mitchell Students ask 9th Circ. to Revive Wage Suit" (online)
Law 360, April 26, 2017

By Joyce Hanson

A putative class of former cosmetology students who sued John Paul Mitchell Systems for allegedly treating the students like unpaid employees filed an opening brief in the Ninth Circuit, appealing a California lower court's decision that handed a quick win to the beauty school.

Lead plaintiff Claire Gerard, one of the tuition-paying students, told the Ninth Circuit on Monday that John Paul Mitchell Systems and its affiliates control the wages, hours and working conditions of the “student” salon workers who labored without getting paid, arguing the district court erred in granting summary judgment to the beauty school because it misapplied the standard for determining if the students were employees under the U.S. Fair Labor Standards Act and California law.

Gerard’s opening brief cited a 1947 Supreme Court ruling in Walling v. Portland Terminal, which sets a standard for determining whether a vocational student-trainee should be treated as an employee by using a “primary beneficiary” test. The brief said the district court in granting summary judgment misapplied the test, which weighs whether a company providing training or a student benefits more from the arrangement.

The California lower court should have looked to the test’s application in a 2016 Nevada district court decision favoring Aveda Institute beauty school students in Marni Guy v. Casal Institute of Nevada LLC, according to the brief.

“The court misapplied Walling, adopting a ‘primary beneficiary’ concept without Supreme Court or Ninth Circuit support,” the brief said. “Exemption from the wage laws extends only to student-trainees’ work solely for personal gain, with no immediate advantage to the corporation; it does not apply to any labor where the institution directly and immediately profited. The court should have applied the standard as it was applied, based upon similar facts, in Guy v. Casal Institute of Nevada.”

Plaintiffs Gerard and Melody Northrop originally filed their suit in California state court in April 2014, and John Paul Mitchell Systems removed the case to federal court months later. The district court granted summary judgment Aug. 22, 2016.

Gerard, Northrop and additional named plaintiffs Jessica Morales, Berenisa Cortes Palominos, Dyland Thomas and Frances Handcock filed an amended complaint in April 2015, accusing not just John Paul Mitchell Systems but a host of affiliates including Paul Mitchell Advanced Education LLC, PMV Las Vegas LLC, PMCA Bakersfield LLC, PMHBW LLC and P2W Learning Systems LLC of treating aspiring hairdressers as unpaid labor rather than as tuition-paying students.

Students who enrolled in the schools received very little individual guidance, performed essentially the same services on customers as licensed professionals and were pushed to sell Paul Mitchell beauty products as a way to maximize profits, according to the plaintiffs' June 2016 brief opposing summary judgment.

Before granting summary judgment, U.S. District Judge Dale Fischer in an August 2016 hearing said she was inclined to toss the putative class action, as several other district judges had done when dismissing similar suits filed by cosmetology students in recent years.

Bryan J. Schwartz, legal counsel to the students and an author of the opening brief, told Law360 on Wednesday that the Supreme Court in 1947 made it clear under the FLSA that if an employer receives an immediate benefit for the work of apprentices, students or interns, they should have to pay for that labor.

“All of these cases — and there are a lot of them around the country now in the appellate process and the district courts — are trying to flesh out 70 years later how Walling v. Portland Terminal applies in the modern workplace,” Schwartz said. “Students are really being taken advantage of in the beauty industry, which is making them pay a ton of money to get licensed but then making them serve customers and push products.”

Representatives for John Paul Mitchell Systems and affiliates did not immediately respond Wednesday to requests for comment.

The students are represented by Bryan J. Schwartz and Logan Talbot of Bryan Schwartz Law, Leon Greenberg and Dana Sniegocki of the Law Office of Leon Greenberg, Chaya M. Mandelbaum and Michelle G. Lee of Rudy Exelrod Zieff & Lowe LLP and Lee R. Feldman and Leonard Sansanowicz of Feldman Browne Olivares PC.

John Paul Mitchell Systems and affiliates are represented by Edward M. Cramp, Aaron T. Winn and Bryce A. Young of Duane Morris LLP and Gina H. Lindell and Don Willenburg of Gordon & Rees LLP.

The case is Claire Gerard et al. v. John Paul Mitchell Systems et al., case number 16-56281, in the U.S. Court of Appeals for the Ninth Circuit.

The underlying case is Claire Gerard et al. v. John Paul Mitchell Systems et al., case number 2:14-cv-04999, in the U.S. District Court for the Central District of California.

--Additional reporting by Kevin Penton and Daniel Siegal. Editing by Orlando Lorenzo.