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January 16, 2003


The opinion of the court was delivered by: Harold Baer, Jr., United States District Judge:



Plaintiffs, consisting of models who work or have worked at some point over the past three decades for New York modeling agencies, bring this lawsuit as a class action against the modeling agencies for allegedly violating federal antitrust and New York state laws by, inter alia, (1) conspiring to set the fees charged to models and to fix other terms and conditions of the plaintiffs' contracts; (2) knowingly charging plaintiffs fees in excess of the maximum amount permitted by New York law; and (3) deliberately breaching their fiduciary duties through various unlawful practices, incluing earning undisclosed profits from third parties, billing models for phony expenses, and making profits on services which were agree to be provided at cost. Defendants contend that the complaint should be dismissed for lack of subject matter jurisdiction over the state law claims, pursuant to Fed.R.Civ.P. ("FRCP") 12(b)(1), or failure to state a claim upon which relief can be granted, pursuant to FRCP 12(b)(6). I grant defendants' motion to dismiss plaintiffs' cause of action based on N.Y. General Business Law §§ 170-190 (1988) ("Article 11"). In addition, I dismiss without prejudice plaintiffs' non-Article 11 state law causes of action, and finally, those claims for antitrust damages before June 25, 1998 will be dismissed, with leave to replead within 20 days from the date thereof. I deny defendants' motion with respect to the remaining federal antitrust claims.


When considering a motion to dismiss pursuant to FRCP 12(b)(6), the Court is required to accept as true all of the facts alleged in the complaint and draw all reasonable inferences in the plaintiffs' favor. See Krimstock v. Kelly, 306 F.3d 40, 47-48 (2d Cir. 2002). A motion to dismiss should be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 63 (2d. Cir. 1997) (citations and internal quotations omitted). It is improper, however, "`to assume that the [plaintiffs] can prove facts that it has not alleged or that the defendants have violated the antitrust laws in ways that have not been alleged.'" Todd v. Exxon Corp., 275 F.3d 91, 198 (2d Cir. 2001) (citing Associated Gen. Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526 (1983)).

Defendants' motions to dismiss under FRCP 12(b)(1) challenges this Court's statutory or constitutional power to adjudicate a case. Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). When considering a Rule 12(b)(1) motion, the Court construes the complaint broadly and liberally in conformity with the principle set out in Rule 8(f), "but argumentative inferences favorable to the pleader will not be drawn." 5A Charles A. Wright et al., Federal Practice and Procedure § 1350, at 218-219 (1990 & Supp.1991). The mover and the pleader may use affidavits and other materials beyond the pleadings themselves in support of, or in opposition to, a challenge to subject matter jurisdiction. See Land v. Dollar, 330 U.S. 731, 735 n. 4 (1947); Exchange Nat'l Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126, 1130 (2d Cir. 1976), cert. denied sub. nom., 469 U.S. 884 (1984). Once challenged, the burden of establishing a federal court's subject matter jurisdiction rests on the party asserting jurisdiction. See Thomson v. Gaskill, 315 U.S. 442, 446 (1942). Unlike a motion to dismiss under Rule 12(b)(6), however, a dismissal under Rule 12(b)(1) is not based on the claim's merits. See Exchange Nat'l Bank, 544 F.2d at 1130-1131. With these standards in mind, I review defendants' motions to dismiss.


Defendants are collectively reported to be the largest modeling agencies in New York and the United States.*fn1 Compl. ¶ 53. Defendants provide models work by speaking to third parties, such as photographers, casting agents, advertising agencies, magazines, and retailers. Compl. ¶¶ 55, 57. In addition, defendants contact the models to inform them of possible employments opportunities, schedule or "book" modeling engagements, and negotiate the models' fees for the modeling engagements. Compl. ¶ 57. The modeling agencies bill and collect money from the models' employers for the jobs performed. Id. For these services, defendants for at least the past 25 years have colluded to charge a standard non-negotiable commission on all fees that plaintiffs received for modeling. Compl. ¶¶ 58, 128-129.

Plaintiffs allege that the conspiracy began between defendants Ford Models Inc. ("Ford") and Wilhelmina Model Agency, Inc. ("Wilhelmina") no later than 1977, and that this conspiracy was exposed by defendant Elite Model Management, Inc. ("Elite"), resulting in a law suit brought by it to challenge the duopoly of Ford and Wilhemina. Compl. ¶ 46. According to court papers filed by Elite, "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." Id. (quoting Levinson Affidavit, ¶ 9, Ford Models, Inc. v. Pillard, Index No. 1148/77). In an affidavit submitted by counsel for Elite, it represented that it was prepared to present sworn testimony that Ford and Wilhemina had agreed to collude to raise prices above the 10% legislative cap on commissions imposed by Article 11, which regulates employment agencies. Compl. ¶ 70. The affidavit further alleges that to circumvent the legislative cap imposed on employment agencies, Ford led a coordinated effort with other modeling agencies to disclaim their status as employment agencies, and to call itself "managers" instead. Compl. ¶ 73. Article 11 requires employment agencies to be licensed and places restrictions on the amount of commissions they may charge. Little other than the defendants' name changed, however. Id. Elite eventually dropped its lawsuit and joined with other defendants to conspire to charge the same non-negotiable commission to models at a rate that exceeded the amount permitted under New York law. Compl. ¶ 74. Pursuant to the conspiracy, defendants raised the commissions charged to models to 15% and then to 20%. Compl. ¶ 79. The defendants further agreed to implement and maintain additional price related restraints by collectively working together to draft increasingly onerous "standard contracts," including requiring the models to reimburse the agencies for any out of pocket costs incurred by the agencies in advertising the models' portfolios, pay the "mother agency" even for jobs the models obtained without the help of the agency, and pay usurious interest rates on salary advances, which defendants treated essentially as a loan. Compl. ¶ 83. In contrast to defendants' contracts, which refer to defendants as "managers," defendants, including Wilhelmina, Ford, Boss, Elite, Click Model Management, Inc. ("Click"), Next Management Co. ("Next"), Zoli Management, Inc. ("Zoli"), Q Model Management ("Q"), MFME Model Management Co. ("MFME"), DNA Model Management, LLC, and IMG Models, Inc. ("IMG"), hold themselves out as modeling agencies (e.g., modeling employment agencies). Compl. ¶¶ 102, 105.

Defendants currently charge most models an industry standard 20% for commission, and 15% if the model makes more than $200,000. Compl. ¶ 82. Defendants apparently maintained its collusive prices through various formal and informal meetings, including periodic meetings of the International Model Management Association ("IMMA"), which was founded by Gerald Ford to help implement the adoption of standardized industry contracts and fix prices. Compl. ¶¶ 85, 87, 88. By 1980, these meetings between members of IMMA which included defendants Ford, Wilhelmina, Elite, Zoli, and Next, occurred once a month. Compl. ¶¶ 85, 86. As a result of defendants' alleged unlawful agreement to fix prices on commission and charges to models, plaintiffs have been damaged and continue to be damaged by having to pay inflated prices in a non-competitive setting. Compl. ¶ 92.


1. Adequacy of Pleaded Antitrust Claims

Defendants assert that plaintiffs' antitrust claims fail to provide sufficient factual allegations to make out violations Section 1 of the Sherman Act. 15 U.S.C. § 1. To make out their claims under Section 1 of the Sherman Act, plaintiffs must plead: (1) a combination or some form of concerted action between at least two legally distinct economic entities; (2) that such combination or conduct constituted an unreasonable restraint of trade either per se or under the "rule of reason"; and (3) injury in their business or property by reason of defendants' antitrust violations. In re NASDAQ Market-Makers Antitrust Litigation, 894 F. Supp. 703, 709 (S.D.N.Y. 1995) ("NASDAQ"). Plaintiffs allege two per se violations of the Sherman Act (for fixing commissions and other charges to models), and one rule of reason claim relating to terms and conditions of employment. Defendants contend that the plaintiffs' "bare-bones" complaint fails to provide any specific allegations of unlawful conduct committed by them. I disagree.

According to plaintiffs, defendants are and have for several years been engaged in an unlawful combination and conspiracy to violate federal antitrust laws. Summarizing the factual allegations provided above, plaintiffs' complaint identifies the conspiracy's scope and purpose, its participants, examples of how defendants devised and implemented the conspiracy, an economically plausible motive for defendants to engage in the conspiracy, the manner in which defendants coordinated their restraint of trade, and the injury suffered as result of the illegal collusion, I find the allegations contained within plaintiffs' complaint more than amply meet the minimum pleading standard required by the Federal Rules to support their antitrust claims. To the extent that there may exist shortcomings in the factual allegations as to specific defendants, "in antitrust cases, where the proof is largely in the hands of the alleged conspirators . . . dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly." Hosp. Bldg. Co. v. Trustees of Rex. Hosp., 425 U.S. 738, 746-47 (1976); see also In re NASDAQ, 894 F. Supp. at 712 ("[a]n overt act need not be pleaded against each defendant because a single overt act by just one of the conspirators is enough to sustain a conspiracy claim"). Taking the allegations of uniform pricing, participation in a ...

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