[Update, 9:45 p.m.: Derek Hay released a statement earlier this evening, which is recapped below the published article.]
LOS ANGELES — California Labor Commissioner Patricia Salazar issued today a 50-page decision on the complaint brought fourth by five former LA Direct models against agency owner Derek Hay.
The commissioner's decision found against LA Direct on seven of ten complaints.
Originally, the petitioning performers went by “Jane Does 1-5,” but a stipulation — an agreement between both parties’ attorneys — before the first hearing allowed for their stage names to be revealed.
The “Jane Does” are Charlotte Cross (JD1), Sofi Ryan (JD2), Andi Rye (JD3), Hadley Viscara (JD4) and Shay Evans (JD5).
The attorney for the Jane Does, Allan Gelbard, spoke to XBIZ about today's decision.
"As you know it’s not my practice to try my cases in the media," he said. "I’m very proud of the girls for going through all the turmoil they went through in their private and professional lives to stand up to Derek Hay, but today the labor commission said that they were right and he was wrong."
Hay's attorney, Richard Freeman, told XBIZ he will file an appeal and thus considers today's decision against Hay by Commissioner Salazar "moot."
"Obviously, Derek and I are disappointed in the decision," Freeman said. "However, we recognize that it came after a hearing in which there was no opportunity to do any prehearing discovery of witnesses or documents and we intend to immediately file a notice of appeal in the Los Angeles County Superior Court which will have the effect of allowing us to re-litigate from the very start all these allegations and claims."
According to Freeman, the filing of the notice of appeal "renders the decision of the labor commissioner moot and will allow us the opportunity in the new Superior Court case to do full and complete discovery with the deposition of witnesses, complete production of documents including financial and phone records and to have an opportunity to more fully prepare and present our case."
"We are very confident that on the re-trial of this matter, Derek and Direct Models will achieve vindication," Freeman concluded, before clarifying that statutorily they have 10 days from today to file the appeal, but that he intends "to do it this week."
The Decision
The Commissioner’s decision addressed 10 “issues” filed by the Jane Does in 2018, following two rounds of hearings, in September and November 2019, closely covered by XBIZ at the time.
The 10 issues in question are:
- Did Direct Models’ violate Labor Code section 1700.23? Did Direct Models fraudulently mislead Petitioners into believing all documents they signed were one entire agreement submitted to and approved by the Labor Commissioner?
- Did Direct Models knowingly issue an employment contract in violation of Labor Code section 1700.31?
- Did Direct Models breach its duty as a licensed talent agency by failing to provide for the health, safety or welfare of Petitioners under Labor Code section 1700.33?
- Did Direct Models violate Labor Code section 1700.24 by failing to file with the Labor Commissioner a schedule of fees to be charged and by failing to keep a copy of the schedule of fees in its office?
- Did Direct Models breach its fiduciary duty to Petitioners by charging companies Agency Fees for Petitioners’ performance in shoots for the companies?
- Did Direct Models breach its fiduciary duty to Petitioners by refusing to book Petitioners for employment as punishment for Petitioners’ questioning Direct Models of its alleged unlawful actions, fees and/or penalties?
- Did Direct Models breach its fiduciary duty to Petitioners by booking Petitioners for scenes with other performers they did not want to work with and/or for certain types of scenes which they were uncomfortable performing?
- Did Direct Models breach its duty as a licensed talent agency under Labor Code section 1700.40?
- Did Direct Models breach its contract with Petitioners by taking the approved commission percentage and the additional Agency Fee without paying Petitioners their rightful share of the Agency Fee and/or by failing to take all “reasonable efforts to procure employment?”
- Can Derek Hay be held legally responsible in his individual capacity as owner of Direct Models for any violations committed by Direct Models as the talent agency?
Commissioner Salazar found against Hay regarding the following issues:
- Direct Models’ actions and/or omissions amount to a breach of its duty as a licensed talent agency pursuant to labor code section 1700.33, which states that “no talent agency shall send or cause to be sent, any artist to any place where the health, safety, or welfare of the artist could be adversely affected, the character of which place the talent agency could have ascertained upon reasonable inquiry"
- Direct Models breached labor code section 1700.24 by failing to file a complete schedule of fees with the labor commissioner and by failing to keep a copy of the schedule of fees in its office.
- Direct Models unlawfully charged booking fees in violation of Labor Code sections 1700.2, 1700.24 and 8 C.C.R. section 12001(b).
- Direct Models breached its fiduciary duty to petitioners by booking petitioners for scenes with other performers they did not want to work with and/or for certain types of scenes which they were uncomfortable performing
- Direct Models unlawfully charged petitioners for agency photos, 8x10s and banners that amounted to “registration fees” under labor code section 1700.2(b)(3) in violation of Labor Code section 1700.40(a)
- Direct Models breached its contract with petitioners in violating Labor Code sections 1700.2, 1700.24 and 8 C.C.R. section 12001(b), and for its failure to take proper steps to procure employment for petitioners
Commissioner Salazar found Derek Hay personally "legally responsible in his individual capacity and/or as owner of Direct Models for any violations committed" and held the agent personally liable because, in the words of today's decision:
- he deducted a personal debt from Viscara’s earnings and by commingling Direct Models’s statements with his personal finances
- of his role between petitioners and another business described as "running an escorting service"
- he committed acts of sexual coercion against some of the petitioners
- Hay’s and Direct Models' acts and omissions resulted in the material breach of the agency contracts, and sufficient cause for petitioners to terminate their agency
LA Direct was also held responsible for the Jane Does’ legal fees and was ordered to pay a six-figure attorney fee to Gelbard.
However, Commissioner Salazar found that "petitioners failed to demonstrate Direct Models breached its fiduciary duty by refusing to book petitioners work after they questioned Direct Models’s unlawful actions, fees, and/or penalties."
Salazar's decision contains several passages of explicit condemnation of LA Direct and its owner's business practices.
"Direct Models failed to act with loyalty, care and in utmost good faith when working with Petitioners," Salazar wrote.
"Moreover, and perhaps most egregiously, Hay is personally liable because he abused his position of authority and power to sexually abuse the artists he was supposed to represent," Salazar added in another section. "The purpose of the Talent Agencies Act cannot be understated. It is to protect artists seeking professional employment from the abuses of talent agencies and from abusive talent agents. Petitioners sought the representation of Direct Models, including Hay, to develop and grow as artists in the adult entertainment industry."
Hay's Statement
Earlier this evening, after the initial publication of this article, Derek Hay shared a statement with XBIZ.
Hay started by questioning Gelbard's assertion that he "never seeks to try a case in the media," writing that the Jane Does' attorney "has in fact done exactly that throughout, as have his clients in a voluminous amount of postings on this case on social media and statements to many and varied adult industry media."
Hay reiterated his attorney's assertion that the case "ultimately will be heard and adjudicated in a fit and proper trial in Superior Court."
"The hearing before the Labor Commissioner had no pretrial discovery," the statement continued, "and it was therefore not possible to mount a meaningful defense, having no idea of the evidence that would be brought forth to support the charges, and not least of which, that much of the evidence brought forth was standalone testimony by the Jane [Does], unsupported by any relevant documentation or other evidence with which to support it, and much of which, would be classified as hearsay in any other courtroom."
Hay pointed out that himself and his legal team "always felt it would be very difficult to get a fair trial and a favorable outcome in the administrative hearing, and the nature of the hearing, finding us always working from the back foot, we are nonetheless very disappointed at this finding, as we do not feel that the counts found against us were sufficiently proven, whilst three of them were dismissed."
The LA Direct owner added that "we always knew that the 'trial de novo' [i.e., the Superior Courts appeal] is the avenue through which we will have an opportunity to examine the evidence in detail before trial and with the benefit of the provision of documents including phone and financial records aforehand and for which we will be afforded the opportunity to have pre- trial depositions of the plaintiffs (under oath), that is the process, by which this case will ultimately be determined."
Hay predicted that "the decision of the ‘trial de novo’ will be contrary to that of the Labor Commissioner, and that the name of Direct Models and that of my own personally, will be cleared of such charges at the final outcome of that trial."
