Shelton v. Elite Model Mgt., Inc

In Shelton v. Elite Model Mgt., Inc.( 11 Misc 3d 345 Sup Ct, NY County 2005), the plaintiffs alleged that the defendants, which were modeling agencies, violated the General Business Law by charging models excessive fees in violation of the employment agency statute. The defendants moved to dismiss the plaintiffs' causes of action that were based on, or derivative of, article 11 of the General Business Law. The Shelton court determined that article 11 expressly provides for a private right of action. Shelton, 11 Misc 3d at 356.) Looking at General Business Law 177-178, the bond requirement provisions, the Shelton court determined that the language of Section 178 expressly provides for a private right of action against a licensed employment agency for violation of the bond requirements. Section 177 requires licensed employment agencies in the City of New York to file a bond, through a surety or sureties, with the Commissioner of Consumer Affairs. Section 178 provides that "all claims or suits brought in any court against any licensed person may be brought in the name of the person damaged upon the bond deposited by such licensed person." The Shelton court noted that, in 1975, the Legislature enacted a comprehensive overhaul of article 11, but did not specifically enact a private right of action to the enforcement provisions of article 11. The Shelton court did not conclude that the omission was telling, reasoning, "It was unnecessary since General Business Law 178 already provided for one, albeit limited." (Id.) The Shelton court pointed out that, in 1975, the Legislature added to Section 178 that "the commissioner may institute a suit against the bond." (Id.) The Shelton court also ruled that the general private right of action against licensed employment agencies also extended to a nonlicensed employment agency as well. The court looked to General Business Law 186, which requires a refund for excessive fees within seven days of demand. The Shelton court noted that General Business Law 186 applied to "any employment agency," and concluded that it was therefore not limited to licensed employment agencies. (Id. at 357.) The Shelton court also noted that General Business Law 186 does not specify who can make a demand for a refund of excessive fees, and cited cases where the statute was successfully invoked as an affirmative defense to collection cases by unlicensed employment agencies against their own employees.