Judge Rules Direct Models Agency License Not to Be Revoked

LOS ANGELES—In an April 26, 2022 decision by Administrative Law Judge (ALJ) Eric Sawyer of the Office of Administrative Hearings (OAH) concerning the licensure of adult industry talent agency Direct Models, Sawyer found that revocation of the agency's license as a result of its three-year dispute with the State of California Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE) would be "overly harsh and punitivie."   The just-made-public decision, rendered following 14 days of testimony from over 25 witnesses, with hundres of exhibits spanning thousands of pages, also rejected assertions that Derek Hay, the principal of Direct Models, had sexually assaulted models, as some had alleged. ALJ Sawyer ordered in the 63-page ruling that Direct Models' 2018 application for renewal of its agency license be granted, and that upon the effective date of its re-issuance, it is to be immediately suspended for a period of four months so as to "allow [Direct Models'] current clients to terminate their exclusice relationship with [Direct Models], if they so choose."   While ALJ Sawyer did find that Direct Models had violated some provisions of the Talent Agent Act relating to contracts and fees, he rejected claims that Direct Models had endangered the safety of its models in some job assignments or that it had financial connections or ties to an escorting business. Instead of the license rejection or revocation that DLSE Staff Attorney Barton L. Jacka sought, ALJ Sawyer arrived at the disciplinary ruling above due to there having been no previous discipline administered against Direct Models, and in light of both the agency and Derek Hay having presented substantial evidence of positive reputation within the industry.  Under California law, DLSE will have three months to consider its options on the decision, including whether to accept or reject, or whether to allow it to be adopted by operation of law (as it did recently in a separate temporary licensing case Direct Models initiated and won).  Meanwhile, Direct Models has filed a claim for damages against DLSE as well as a separate lawsuit for damages filed April 24 in Los Angeles Superior Court for DLSE abuses against Direct Models. The complaint alleges Intentional Interference With Prospective Economic Advantage, Abuse of Process, and Intentional Infliction of Emotional Distress arising from DLSE's refusal to continue issuing Provisional Talent Agent Act Licenses to Direct Models on April 23, 2021, while the licensing action it had initiated was still pending.  Direct Models’ suit follows a 15-page determination by ALJ Cohen of the OAH (following Hearings in September 2021) that DLSE had abused its discretion in refusing to provide an ongoing Talent Agent License to Direct Models as the agency contested allegations listed in the Statement of Issues DLSE filed in 2018.  The Statement of Issues was instigated by attorney Allan Gelbard, four of whose clients testified at the lengthy hearing on the Statement of Issues. In Direct Models’ suit against DLSE, attorney Jacka, and Labor Commissioner Lilia Garcia-Brower, it accuses the defendants of misusing the processes of the law by “corresponding and conspiring with Allan Gelbard, attorney for the Jane Does, to wrongfully manipulate evidence and discovery” and by “directly interfering and damaging the ongoing business relationships of Direct Models with its performers in an attempt to affect their ability to operate[,] to reduce their income, [and] to limit future signings." Direct Models’ attorney Richard Freeman commented: “While we view some of the conclusions and findings through a different lens than ALJ Sawyer, we do think it helps to put the allegations of the 'Jane Does’ and their Attorneys (Barton Jacka and Allan Gelbard) in perspective given their inability to establish many facts by a preponderance of the evidence.   “The Judge’s comments on the Claimants’ credibility are particularly telling and gratifying, and are only the beginning of the unraveling of the Does’ claims. The proposed ‘punishment’ of four months suspension, not license denial or revocation, are much more appropriate for what he found to be proven. We are gratified that the Judge did reject the claims of sexual assault and impropriety against Hay as asserted by the Does.” Direct Models is currently operating under a provisional talent agent license that took effect March 14 and expires June 12. It is expected that another 90-day provisional license will be issued to the agency upon the expiration of the current one, while DLSE weighs whether to accept or reject ALJ Sawyer's decision. View the agency's suit against DLSE here.