LOS ANGELES—It's a case that would have reached its second anniversary this Friday, but today, Attorney for the California Labor Commissioner Patricia Salazar released her decision in the dispute which pitted five adult actresses against Direct Models, Inc. and its owner Derek Hay.
Finding as part of the decision that Hay unlawfully withheld the actress' commissions, Salazar ordered a full accounting of all commissions received by the performers for the period of June 2017 to June 2018 so as to properly determine return of said commissions.
Salazar also ordered the performers’ attorney fees and court costs, nearly $108,000, to be paid by Hay.
AVN first wrote about the controversy in July of 2018, when four "Jane Does," all represented by top litigator Allan B. Gelbard, filed their complaint with the Labor Commission against Hay and Direct Models (also known as LA Direct Models), and out of ten claimed Labor Code violations, Hay and Direct Models was found guilty of having violated seven of them. The actresses who won their cases are Charlotte Cross, Hadley Viscara, Sofi Ryan, Andi Rye and Shay Evans, and the Labor Commission decision details each actress's interactions with the company and Hay himself.
The first actress to have her charges detailed is Charlotte Cross, one of whose complaints was that Hay forced her to perform her first scene under her Direct Models contract with director Pierre Woodman, but when Cross told Hay that she did not think she could shoot the sexual scene with Woodman, and expressed concerns about the type of scene it was to be, Hay told her that if she refused to shoot it, she would have to pay Hay/Direct a $1,000 kill fee—a fee that is illegal under California law. Cross had a similar problem with a scheduled CamSoda shoot, and Hay again charged a kill fee, and when Cross said she wouldn't pay it, Hay told her he wouldn't book any more work for her until she did.
Next was Sofi Ryan, whom the Labor Commission attorney noted had commenced a sexual relationship with Hay. One of Ryan's complaints was that after Ryan failed to attend some of Hay's birthday festivities in August of 2017 because she was sick, Hay nonetheless charged her for flight and hotel expenses attendant to the festivities, and that she thereafter experienced a 50 percent reduction in work after Hay found out that Ryan was seeing another actor. Hay also allegedly forced Ryan to perform certain sex scenes with certain actors who were on her "no" list, threatening to charge her kill fees if she failed to perform. He also charged her for photos and banners that she used when attending conventions.
Andi Rye signed on with Direct Models in April of 2017, and soon afterwards was scheduled to do a two-part scene for Pierre Woodman. The first part had Rye working with two or more male performers, but the second part was to be a scene with Woodman himself, but when the male talent and Woodman's assistant left the room, Woodman had Rye perform with him in POV format. However, according to the ruling, "After completing the second sexual act, Woodman stated to Rye, 'You think it's finished? You think so?' Woodman then proceeded to have Rye engage in a series of graphic sexual acts that were nonconsensual. Rye left the scene as quickly as she could after completing the graphic sexual acts."
Rye also was charged kill fees and for photos and banners which were used at various conventions.
Hadley Viscara signed with Direct Models in late May of 2017, and since the actress had little money when she first got into the industry, someone suggested that she ask Hay about doing escorting work. She claimed to the Labor Board that she was charged fees to which she had not agreed, and other money for a "cat tree" which had been characterized as a gift, plus kill fees and various train and plane fees to which she had not agreed.
The final actress whose complaints were broken out was Shay Evans, who first signed with Direct in November of 2015. Later, after she got a dance gig at Sapphire Las Vegas, Hay texted her that he wanted her to "perform a sexual act on him when she got home," and thereafter, there was a sexual relationship between the two.
However, their relationship didn't stop Hay from booking two scenes for Evans with Woodman, even though the acts which she was to perform were on her "no" list, but after Hay told her she couldn't cancel, she performed the scene anyway.
Hay also sent Evans to a Karaoke party in downtown Los Angeles where she was groped and propositioned multiple times, and she witnessed other performers being subjected to the same insults. And along the way, Evans was charged kill fees and other non-contracted-for expenses.
In the end, the Labor Commission attorney considered the following possible violations:
• "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?"
The attorney found that Direct Models did not commit this fraud.
• "Did DIRECT MODELS knowingly issue an employment contract in violation of Labor Code section 1700.31?"
The attorney found that Direct Models and specifically Derek Hay did violate this section. The ruling states, "The preponderance of the evidence demonstrates HAY knowingly attempted to help procure employment for Petitioners with TLC, an escort service, in violation of Labor Code section 1700.31. HAY actively participated in helping book employment for VISCARA as an escort for TLC. HAY also had a role in brokering a relationship or connection with Petitioners RYAN, RYE and EVANS and TLC so they could work as escorts. HAY helped obtain this result by referring Petitioners to TLC, introducing them to TLC at social functions, [and] providing TLC with Petitioners' agency photos."
• "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?"
In answering this question, the attorney referred back to a previous case where Hay and Direct Models had been complained, this time involving actress Nadya Nabakova, who now performs under the name Bunny Colby. In that case, the attorney found that Hay had failed to secure the health, safety and welfare of the actresses, and found that the petitioners' attorney had met his burden on that charge.
• "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?"
In a ruling that seemed somewhat at odds with her finding no violation of Labor Code section 1700.23, the Commission attorney found that Hay/Direct Models had failed to file a complete "Schedule of Fees" with the Labor Commission listing all charges that could be assessed including kill fees, charges for photo shoots and banners, etc.
• "Did DIRECT MODELS breach its fiduciary duty to Petitioners by charging companies Agency Fees for Petitioners’ performance in shoots for the companies?"
Again, the Commission attorney found that Hay/Direct had violated this allegation because such "booking fees" should have been included in a schedule of fees filed with the Commission.
• "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?"
Hay was found "not guilty" of this violation due to what the Commission attorney felt was insufficient evidence.
• "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?"
The Commission attorney found that Hay/Direct had committed this violation, noting that, "An agency relationship is a fiduciary one, which obligates the agent to act with diligence, care and loyalty to the principal ... HAY and DIRECT MODELS breached their fiduciary duty in booking shoots with performers on Petitioners’ No List, with companies they were uncomfortable performing for, and/or for scenes they were uncomfortable performing. Petitioners did not consent to working with certain artists or to performing certain types of scenes and, contrary to industry standards, DIRECT MODELS blatantly disregarded Petitioners’ boundaries often with the threat of kill fees if Petitioners objected. DIRECT MODELS failed to act with loyalty, care and in utmost good faith when working with Petitioners."
• "Did DIRECT MODELS breach its duty as a licensed talent agency under Labor Code section 1700.40?"
The Commission attorney found that Hay/Direct had breached this section by having charged the actresses "registration fees" for such things as "[p]hotographs, film strips, video tapes, or other reproductions of the applicant."
• "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?'"
The Commission attorney found that Hay/Direct did in fact breach its contracts with the petitioners, and moreover, the attorney listed the dates on which each contract was breached, allowing the petitioners to collect all the money Hay/Direct had illegally withheld, including all of the commissions he had charged.
And finally, the Commission attorney responded in the affirmative to the question, "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?" That means that whatever monies the attorney decided were due to the actresses could be taken from Derek Hay personally, in addition to debiting Direct Models, in part because "As a talent agent in a position of power, HAY began sexual relationships with three of the five Petitioners." Most notably, the attorney found that Hay had "demanded RYAN perform a sexual act on him"; that "EVANS received a message from HAY asking for a sexual act in what amounted to, at a minimum, a high level of discomfort"; and "VISCARA credibly testified to accounts of sexual assault by HAY."
"Rather than diligently representing the artists who trusted him with their careers, HAY abused his position through sexual acts, including coerced sexual acts, for his personal gain," the ruling reads in part.
The attorney also voided any existing contracts between the petitioners and Direct Models.
"Hay is personally liable because he abused his position of authority and power to sexually abuse the artists he was supposed to represent," the Labor Commissioner’s Office wrote. "The purpose of the Talent Agencies Act (TTA) cannot be understated. It is to protect artists seeking professional employment from the abuses of talent agencies and from abusive talent agents."
"I'm incredibly proud of the five women that stood up to Derek Hay," Gelbard told AVN. "This kind of activity cannot be countenanced in any industry, especially one where sexual consent is as important as it is here. These women stood up and said they were sick and tired and they weren't gonna take it anymore, and today, the Labor Commission agreed with them. I'm incredibly proud of them.
“A reminder that Hay [in this case] is also facing the revocation of his agency license and criminal charges,” Gelbard added.
Hay, who operates in Las Vegas, also faces troubles of another matter. He was charges in March with two counts of pandering by procuring in connection with a 12-count indictment in California.
Derek Hay issued his own statement in response to the ruling:
"Contrary to the claims of the counsel of the Jane Doe women, 'that he never seeks to try a case in the media,' he 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. This was self-evident from the very outset, when AVN was informed that the suit existed, some 17 days prior to the suit being served to us, even before we ourselves were able to actually read it.
"Nonetheless, this case will not be tried in the media, but 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, 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 stand-alone 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.
"Whilst we 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. That said, at the same time, we always knew that the 'trial de novo' 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.
"We are very confident 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."
Hays/Direct Models' attorney Richard Freeman also provided AVN with a statement regarding the outcome of the ruling as follows:
"Today, June 15, 2020, the State Labor Commissioner issued a Decision in the Matter of Jane Does 1-5 vs. Direct Models, Inc. and Derek Hay following a hearing conducted in September and November, 2019. In a 55-page Decision, the Hearing Officer rejected 3 of the 10 Claims brought by the five Adult Entertainers. However, the Commissioner awarded an aggregate amount of $24,206.49 for various breaches of the Exclusive Agency Agreements of the five performers, holding both Direct Models and its Owner, Derek Hay, liable for the award.
"Direct Models and Derek Hay will immediately file an Appeal for 'trial de novo' in the Los Angeles County Superior Court where the entire matter will be re-adjudicated after full and complete pre-trial discovery is permitted and conducted. (The Labor Commission Hearing proceeded with no pre-hearing discovery, depriving Respondents of a meaningful opportunity to address the allegations and charges). The filing of the Appeal renders this Decision moot.
"Derek Hay and his Attorney are disappointed in the initial findings of the Labor Commissioner but are confident that Derek Hay and Direct Models will be completely vindicated after a full and complete opportunity to answer the allegations in an actual Trial (a jury trial) with all the witnesses and all the evidence heard according to the Superior Court rules of evidence."
Rhett Pardon contributed to this story.
