Major Model Management Inc.

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re:
MAJOR MODEL MANAGEMENT INC.,
Debtor.
FOR PUBLICATION
Chapter 11
Subchapter V
Case No. 22-10169 (MG)
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MEMORANDUM OPINION AND ORDER DENYING
MOTION TO FILE A CLASS PROOF OF CLAIM
A P P E A R A N C E S:
THE DUGGER LAW FIRM, PLLC
Attorneys for Jasmine Burgess, et. al.
Gotham Center
28-07 Jackson Avenue, 5th Floor
Long Island City, NY 11101
By: 	Cyrus E. Dugger, Esq.
NORRIS MCLAUGHLIN, P.A.
Attorneys for the Debtor
400 Crossing Boulevard, 8th Floor
Bridgewater, NJ 08807
By: 	Melissa A. Pena, Esq.
Anthony D’Elia, Esq.
HEIDI J. SORVINO, ESQ.
Subchapter V Trustee
White & Williams LLP
7 Times Square, Suite 2900
New York, NY 10036
By: 	Heidi J. Sorvino, Esq.
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MARTIN GLENN
CHIEF UNITED STATES BANKRUPTCY JUDGE
The issue pending before the Court is whether to permit a creditor to file a class proof of
claim under Rule 7023 (“Rule 7023”) of the Federal Rules of Bankruptcy Procedure
(“Bankruptcy Rules”). Class proofs of claim in bankruptcy cases are an exception to the normal
procedures in bankruptcy cases that require individual creditors to file separate proofs of claim.
If a creditor agrees with the scheduled amount of a claim and it is not listed as disputed,
contingent, or unliquidated, no proof of claim needs to be filed; the claim is deemed allowed and
will be entitled to a distribution in any confirmed plan of reorganization. See FED. R. BANKR. P
3003(c)(2) (detailing who must file a proof of claim).
Bankruptcy courts retain discretion to permit class proofs of claim pursuant to Rule 7023.
But applying Rule 7023 to permit class proofs of claim is not an absolute right; many of the
policy factors supporting class actions are absent in bankruptcy proceedings—specifically, the
costly barriers to litigation are reduced in the claims allowance process (i.e., proof-of-claim
forms are accessible, free and easy to fill out, and a claimant does not need to obtain counsel to
submit a proof of claim). Many courts have observed that class certification may be less
desirable in bankruptcy than in ordinary civil litigation. See In re Bally Total Fitness of Greater
New York, Inc., 402 B.R. 616, 621 (Bankr. S.D.N.Y. 2009), aff’d, 411 B.R. 142 (S.D.N.Y. 2009)
(quoting FED. R. CIV. P. 23(b)(3)) (finding that plaintiffs could not show that “a class action is
superior to other available methods for fairly and efficiently adjudicating the controversy”); see
also In re Ephedra Prods. Liab. Litig., 329 B.R. 1, 9 (S.D.N.Y. 2005) (noting that “superiority of
the class action vanishes when the other available method is bankruptcy, which consolidates all
claims in one forum and allows claimants to file proofs of claim without counsel and at virtually
no cost”) (quotation marks omitted). The bankruptcy claims resolution process allows creditors
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to assert claims cheaply and efficiently in a single forum without the expense of retaining
counsel unless the creditor chooses to do so. A bankruptcy court must decide in the exercise of
discretion whether a class proof of claim would be superior to the claims allowance process.
In this case, the Court concludes for the reasons explained below that the creditors
holding disputed, contingent or unliquidated claims must file separate proofs of claim and, unless
consensually resolved, any contested issues regarding their claims must be resolved in the claims
allowance process. As explained below, the Court DENIES the pending motion.
I. 	BACKGROUND
A. The Motion for Leave to File a Class Proof of Claim
Pending before the Court is the motion (“Motion,” ECF Doc. # 74-1) of Jasmine Burgess
(“Burgess”), seeking entry of an order pursuant to Rule 7023 and Rule 9014 of the Bankruptcy
Rules, and Rule 23 of the Federal Rules of Civil Procedure (“Rule 23”), authorizing Burgess to
file a class proof of claim against Major Model Management, Inc. (“Major Model” or the
“Debtor”) with respect to her late payment claim and her breach of fiduciary duty claim against
the Debtor. Burgess asserted those claims in a prepetition lawsuit, Burgess v. Major Model
Management, No. 20-cv-2816 (the “Burgess Litigation”), currently pending in the District Court
for the Southern District of New York (“District Court”). The Burgess Litigation names Major
Model and its President, Guido Dolci (“Dolci”), as defendants. In support of the Motion,
Burgess filed a declaration by her attorney Cyrus E. Dugger (“Dugger”). (“Dugger Declaration,”
ECF Doc. # 75.) The operative second amended complaint from the Burgess Litigation is
annexed to the Dugger Declaration. (“Second Amended Complaint,” ECF Doc. # 75-1, Ex. A.)
On May 5, 2022, the Debtor filed an objection. (“Objection,” ECF Doc. # 79.) In
support of the Objection, the Debtor filed two declarations: (i) a declaration by Anthony P.
D’Elia (the “D’Elia Declaration,” ECF Doc. # 80), which includes the second amended
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complaint from the case Stephanie Hoffman v. Major Model Management Inc., No. 20-cv-06941
(the “Hoffman Proceeding”) pending in the District Court (ECF Doc. # 80-1, Ex. A); and (ii) a
declaration by Debtor’s president, Dolci (“Dolci Declaration,” ECF Doc. # 81). Burgess’s
contract with the Debtor is attached to the Dolci Declaration as Exhibit F (“Burgess Contract,”
ECF Doc. # 85-6, Ex. F) and a form modeling contract used by the Debtor for women models as
Exhibit G (“Women Form Modeling Contract,” ECF Doc. # 85-7, Ex. G).
On May 9, 2022, Burgess filed a reply to the Objection (“Reply,” ECF Doc. # 84), and an
additional declaration of Dugger. (“Supplemental Dugger Declaration,” ECF Doc. # 85.) The
following relevant exhibits were annexed to the Supplemental Dugger Declaration: a unisex form
modeling contract used by the Debtor during the class period (“Unisex Form Modeling
Contract,” ECF Doc. # 85-2, Ex. B), emails produced to Burgess discussing the release of her
contract from the Debtor (“Burgess Contract Email,” ECF Doc. # 85-4, Ex. D), damages
calculations concerning amounts owed to models based on a Quickbooks Open Balance Report
produced in the Burgess Litigation (“Open Balance Report,” ECF Doc. # 85-5, Ex. E), a list
concerning the number of models with foreign addresses (ECF Doc. # 85-6, Ex. F), a table of
dates on which the Debtor received payment for several invoices (ECF Doc. # 85-6, Ex. G),
affidavits of other models complaining about the Debtor’s non-payment (“Model Affidavits,”
ECF Doc. # 85-7, Ex. H), the CV of Burgess’s accounting expert (ECF Doc. # 85-9, Ex. J), and
an example of the “model statements” the Debtor provided to Burgess (ECF Doc. # 85-10, Ex.
K).
The Court held a hearing on the Motion on May 12, 2022. (“Transcript,” ECF Doc. #
88.) During the hearing, the Court directed Debtor’s counsel to provide supplemental
declarations addressing the service of the Bar Date Order to putative members of the proposed
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class. (Transcript at 36:21–24; 37:4–9.) On May 20, 2022, the Debtor filed the following
supplemental declarations: (i) a supplemental Dolci declaration (“Supplemental Dolci
Declaration,” ECF Doc. # 90), (ii) a declaration of Jessica G. Berman, a director of Kroll
Restructuring Administration LLC (“Kroll”) (“Berman Declaration,” ECF Doc. # 90-1), which
contained a list of creditors whose mailed packages were returned as undeliverable; and (iii) a
supplemental declaration of Anthony P. D’Elia (“Supplemental D’Elia Declaration,” ECF Doc. #
90-2).
After receiving the Berman Declaration and the Supplemental D’Elia Declaration, the
Court directed Debtor’s counsel to provide further supplemental declarations addressing
additional questions the Court had regarding notice and the claims of putative class members.
(“May 27 Order,” ECF Doc. # 92.) In response, the Debtor filed the third Dolci declaration
(“Third Dolci Declaration,” ECF Doc. # 94) and the third D’Elia declaration (“Third D’Elia
Declaration,” ECF Doc. # 95).
B. Procedural Background and the Burgess Litigation
On February 11, 2022 (the “Petition Date”), the Debtor filed a voluntary petition for
chapter 11 relief under Subchapter V. (ECF Doc. # 1.) On March 10, 2022, the Court granted
the Debtor’s motion to assume 35 of its current models’ modeling contracts, along with the cure
amounts in order to assume the contracts. (ECF Doc. # 37.) On April 20, 2022, the Court
entered: (i) an order (“Bar Date Order,” ECF Doc. # 67) setting the bar date as June 6, 2022
(“Bar Date”), and (ii) an order appointing Kroll as the Debtor’s claims agent to administer
service (ECF Doc. # 68). The Bar Date Order specifies that “a copy of the notice . . . shall be
deemed adequate and sufficient if served by first-class mail at least thirty-five (35) days prior to
the Bar Date.” (Bar Date Order at 4.) The Bar Date Order did not require publication notice of
the Bar Date in a major newspaper or trade publication.
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On February 26, 2022, the Debtor filed its schedules of creditors who have unsecured
claims. (ECF Doc. # 30.) This was amended several times (see ECF Doc. ## 34, 51, 57, 64)
with the most recently amended version filed on April 21, 2022. (“Amended Schedules,” ECF
Doc. # 70.)
On April 3, 2020, prior to the Petition Date, Burgess commenced the Burgess Litigation
against the Debtor and Dolci in the District Court. (Motion at 8.) Burgess amended the
complaint twice to include (i) class-wide claims alleging independent contractor
misclassification under the Fair Labor Standards Act (“FLSA”) and New York Labor Law
(“NYLL”), (ii) individual retaliation claims under FLSA and NYLL for a retaliatory lawsuit, and
(iii) a class-wide breach of fiduciary duty claim under New York common law. (Id.)
On March 16, 2022, Burgess moved this Court to lift the stay to permit her to prosecute
the Burgess Litigation in the District Court against the Debtor, thereby bypassing the bankruptcy
claims allowance process. (“Lift Stay Motion,” ECF Doc. # 40.) Burgess asserted that the
Burgess Litigation was ready for a motion for summary judgment and would have been ready for
trial but for the Debtor dragging its feet in responding to discovery requests and court orders.
(Lift Stay Motion at 11–16.) A hearing was held on April 21, 2022, and the Court denied the
Lift Stay Motion without prejudice. (ECF Doc. # 69.)
C. Debtor’s Business Model
The Debtor’s business model is as follows: First, the Debtor asks a model whether she
would like to handle a job for a customer, typically via an email confirming the job’s rate.
(Dolci Decl. ¶ 9.) Second, the Debtor issues an invoice to the customer for work performed by
the model, which is set forth on the Debtor’s Quickbooks (both as an open invoice and on the
model’s account). (Objection at 14; Dolci Decl. ¶ 10.) Third, the Debtor receives payment from
the customer and the Debtor subtracts its 20% fee plus other fees advanced on behalf of the
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model. (Objection at 14; Dolci Decl. ¶ 11.) Fourth, the Debtor generally remits payment to the
model three weeks from its receipt from the customer. (Dolci Decl. ¶ 12.) The Debtor typically
advises the model when payment is received from the client on a weekly basis, and models
commonly inquire about payment. (Id. ¶ 13.) The Debtor states that there are times when a
payment from a customer is not promptly remitted to a model, often due to the model changing
their bank account information without informing the Debtor. (Id. ¶ 14.)
D. The Proposed Classes
Burgess proposes to file and seek certification of a class proof of claim as defined in the
Second Amended Complaint. (Motion at 13.) She proposes two classes which have purported
causes of action for breach of fiduciary duty against the Debtor: (1) a class seeking equitable
remedies, defined as persons who signed modeling contracts from April 3, 2014 to January 1,
2020, which the Debtor estimates as approximately 465 models; and (2) a class seeking
monetary remedies, defined as persons who signed modeling contracts from April 3, 2017 to
January 1, 2020, which the Debtor estimates as approximately 185 models. (Id.; see also
Objection at 11.)
Burgess asserts that she and the respective class members are entitled to the equitable
remedy of: (1) a constructive trust of the approximately $1 million that is currently owed to
them; (2) payment of disgorgement of Debtor’s ill-gotten profits/gains because of its breach of
fiduciary duty for (at least) the approximately $1 million amount plus 9% interest; and (3)
punitive damages of at least the same amount as actual damages. (Motion at 17, 19.)
Burgess represents that both causes of action are based on the fiduciary duty the Debtor
owed to models which arose from power of attorney clauses in the Debtor’s form modeling
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agreement.1 (Id. at 11.) Burgess argues that because the Debtor made no payment and/or late
payments to its models, the Debtor had breached its fiduciary duty. (Id.) Burgess asserts that
sources supporting that the Debtor owed a fiduciary duty to Burgess and the putative class
include: (i) the Hoffman Proceeding, where the Debtor was sued over a data breach of models’
personal identifiable information (“PII”) and Judge Swain concluded that the complaint in that
case adequately alleged that the attorney-in-fact relationship created by the contracts between
Major Model and the models created a fiduciary duty protecting the models’ PII from disclosure
to third parties (id. at 10–11);2 (ii) the Debtor’s compensation policies (id. at 12); and (iii) the
Debtor’s collection of commission fees (id. at 13).
1 	Burgess represents that certain form modeling agreement provide:
[The Debtor] is hereby authorized and empowered to be Model’s attorney-in-fact
in all matters . . . approving [Plaintiff] and permitting the copyright, license, use
and publication of [her] name, photograph, likeness and voice in connection with
[her] Services; (ii) signing bills of sale and photographic and other releases for
[her] in connection with the foregoing; (iii) collecting and receiving sums paid
to [her] in connection with [her] Services; (iv) endorsing [her] name upon and
depositing into accounts or cashing any and all checks payable to [her] in
connection with [her] Services; (v) deducting from such deposits all sums owing
to [Debtor] . . . .; and (vi) enforcing and protecting [her] rights with respect to
parties with whom [she] . . . had . . . contractual dealings . . . in such manner as
[Debtor] deem[ed] appropriate by, among other means, demanding, suing for
collecting, recovering, and receiving, on [her] behalf, all money, interest and other
times due [her] or belonging to [her].
(Motion at 9 (citing Second Amended Complaint ¶ 146).)
2 	Burgess cites the holding of an opinion in the Hoffman Proceeding, which provides, in relevant part,
To the extent Defendant’s motion could be construed to separately seek dismissal
of Plaintiff’s breach of fiduciary claim for failure to plausibly allege a fiduciary
duty, the Court finds that duty alleged adequately in Plaintiff’s assertion that the
attorney-in-fact relationship created by the contract imposed on Defendant a
“fiduciary duty requiring reasonable care, undivided loyalty, confidentiality, full
disclosure, and a duty to account”, and that Plaintiff’s provision of her PII to
Defendant resulted in a “power imbalance, which placed Plaintiff [ ] in a position
where [her] trust might be abused by [Defendant]”, in light of Daly and its
progeny, as well as the “fiduciary duties that courts have historically imposed on
attorneys-in-fact.
(Motion at 10 (citing Hoffmann v. Major Model Mgmt., No. 20-6941, 2022 WL 992795, at *5 n.5 (S.D.N.Y. Mar.
31, 2022) (quoting the amended class action complaint)).) But assuming such a fiduciary duty exists protecting PII
from disclosure, that would not necessarily establish a fiduciary duty supporting Burgess’ claims regarding delay in
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E. The Proposed Plan of Reorganization
On May 6, 2022, the Debtor filed its proposed plan of reorganization. (“Plan,” ECF Doc.
# 83.) The Debtor asserts its Plan proposes to pay administrative expenses and priority claims
from funds on hand as of the Plan’s effective date. (Objection at 10.) The Debtor states that it
will pay allowed unsecured claims from available cash flow generated by the Debtor’s
operations over a period of three years, and, assuming the Debtor’s projections are correct,
creditors should receive payment of 100% of their allowed claims. (Id.)
F. 	The Supplemental Declarations
1. 	May 20, 2022 Declarations
Dolci states that the Debtor’s Schedules identify 909 general unsecured creditors with an
aggregate claim amount of $11,421,855. (Supp. Dolci Decl. ¶ 3.) Of those 909 creditors, the
Debtor identified: (i) 156 creditors with undisputed claims aggregating to $475,977.10, (ii) 137
creditors with disputed claims aggregating to $10,945,877.90, and (iii) 616 creditors who were
identified for notice purposes—the majority of whom are models who are part of the putative
class in the Burgess Litigation. (Id. ¶¶ 3–4.) The Debtor states that most of the disputed claims
are (i) claims filed by Jasmine Burgess, individually and on behalf of a putative class in the
Burgess Litigation and (ii) claims filed by Stephanie Hoffman, individually and on behalf of a
putative class in the Hoffman Proceeding. (Id. ¶ 4.)
The Debtor states that in addition to the claims of Burgess and Hoffman, it disputes the
claims of 131 other models with an aggregate amount of $386,721.66. (Id. ¶ 5.) Of this amount,
the Debtor disputes the following claims: (a) 61 models, whose claims aggregate to $66,447.06,
which were not paid by the Debtor’s customers; (b) 11 models, whose claims aggregate to
payments due to models, which are essentially breach of contract claims. Burgess’ contract and other contract forms
used by the Debtor contain provisions regarding the timing of payments. See, infra, at 25.
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$56,244.87, who breached their contract with the Debtor; (c) 4 models, whose claims aggregate
to $8,420.35, as the model and the Debtor reached a settlement agreement which released the
amounts; (d) 8 models, whose claims aggregate to $13,587.45, who the Debtor is unable to pay
due to expired visas; and (e) 47 models, whose claims aggregate to $242,021.93, as the work
performed by these models occurred from approximately 2009 to 2019 and the models did not
collect payment despite the Debtor’s attempts to communicate with them. (Id.)
The Court inquired regarding amounts totaling $826,851.84 identified on the Open
Balance Report which references the models who were not paid by the Debtor as of December
31, 2019. (Id. ¶ 6.) Dolci asserts that, as of December 31, 2019, the Debtor had open invoices of
$358,460.00 due from its customers and had $63,216.00 in its bank account to be paid to the
models. (Id. ¶ 6.) Dolci notes the Debtor has not reconciled the specific jobs of each model
referenced on the Open Balance Report in conjunction with outstanding invoices because this
requires an audit via an outside accountant due to the Debtor’s accounting methods. (Id.)
Dolci notes that of the $826,851.84 that was due to models by December 31, 2019,
$453,188.61 was paid to the models in early 2020. (Id. ¶ 7.) Dolci lists several categories (the
“Nonpayment Categories”) which consisted of the remaining $373,663.23 that was not paid for
the following reasons: (a) $44,137.32 was monies that models released the Debtor from paying
via settlements but was not removed from the Debtor’s books and records; (b) $9,469.86 was not
paid to models as their visas expired; (c) $90,954.87 was not paid as the Debtor maintains that
these models breached their contract; (d) $197,101.72 was not paid as the Debtor could not
locate the models; and (e) $32,000 was not paid as the Debtor was unable to collect these
amounts from its customers. (Id.)
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Kroll states that as of the close of business on May 17, 2022, 136 creditors did not
receive a successfully delivered mailed package of the Bar Date Order. (Berman Decl. ¶ 4.)
Kroll states that, per its standard operating procedures, it: (a) re-serves any mailed packages
which are returned with a forwarding address; and (b) when a mailed package is returned as
undeliverable with no forwarding address, if the party in question is an entity and the party is
listed on the Debtor’s schedules of assets and liabilities, Kroll conducts internet research to
locate an updated address and then re-serves at that new address if one is found. (Id. ¶ 6.)
Mr. D’Elia states that on May 11, 2022, Debtor’s counsel emailed notice of the Bar Date
to 529 models out of 842 models identified on the Debtor’s Schedules. (Supp. D’Elia Decl. ¶ 3.)
The email addresses used were from the Debtor’s records. (Id.) Mr. D’Elia states that only
twenty of the notices sent via email were returned as undeliverable or rejected. (Id. ¶ 5.) Three
of the notices sent via email were rejected because the models’ mailboxes were full. (Id.)
Mr. D’Elia notes that Kroll served 1,138 copies of the Bar Date Order. (Id. ¶ 6.) Of
those mailings, 136 were returned as undelivered but the Debtor had email addresses for 96 of
these 136 creditors connected with undelivered packages. (Id.) Debtor’s counsel sent them
email notice on May 11, 2022. (Id.)
2. 	June 6, 2022 Supplemental Declarations
On May 27, 2022, the Court directed the Debtor to file further declarations by June 6,
2022 to account for (1) the last known mail and email address for models who are scheduled but
who did not receive notice of the Bar Date Order, (2) the names of the 136 creditors whose
packages were returned as undelivered, and whether the claim is scheduled as disputed, and the
reasons the claim is disputed, (3) the names of the 40 creditors who the Debtor does not have
email addresses for and who did not receive notice of the Bar Date Order, and (4) further
clarifications regarding the Nonpayment Categories listed in the Supplemental Dolci
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Declaration. (ECF Doc. # 92.) On June 6, 2022, the Debtor filed the Third D’Elia Declaration
and the Third Dolci Declaration.
The Third D’Elia Declaration responded to the Court’s inquiries via two annexed
spreadsheets. (Third D’Elia Decl. ¶¶ 4–5.) The first spreadsheet (“First D’Elia Spreadsheet”),
annexed as Exhibit A, responded to the first and second paragraphs of the May 27 Order. (Id. ¶
4.) The First D’Elia Spreadsheet indicates 136 creditors who were sent notice of the Bar Date
that were returned as undeliverable. (Id. at 4–6.) The spreadsheet shows that (i) there are 24
models with undisputed claims totaling $55,896.85 who did not receive mailed notice of the Bar
Date Order; and (ii) there are 20 models with disputed claims totaling $123,927.35 who did not
receive mailed notice of the Bar Date Order.3 (Id.) The First D’Elia Spreadsheet also indicates
that the Debtor does not have email addresses for 3 of the 20 models with disputed claims who
did not receive mailed notice of the Bar Date Order. (Id.) Those 3 models are included in the
second spreadsheet (“Second D’Elia Spreadsheet”) annexed as Exhibit B.
The Second D’Elia Spreadsheet responded to the third paragraph of the May 27 Order.
(Id. ¶ 5.) The Second D’Elia Spreadsheet indicates 40 models who did not receive notice of the
Bar Date Order via mail and for whom the Debtor does not have email addresses. (Id. at 8.) Of
those 40 models, only three models have disputed claims—valued at $200; $2,400; and $12,000,
totaling to $14,600—with the reason for the dispute being that “Debtor could not locate model.”
(Id. at 8.) The remaining 37 models on the Second D’Elia Spreadsheet include models who were
scheduled “[f]or notice purposes only.” (Id.)
The Third Dolci Declaration responded to the fourth paragraph of the May 27 Order via a
spreadsheet (“Dolci Spreadsheet”) attached as Exhibit A. (Third Dolci Decl. ¶ 3.) The Dolci
3 	It should be noted that creditors may file claims that exceed the amounts scheduled by the Debtor.
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Spreadsheet provides a substantive breakdown of which models are included in the Nonpayment
Categories listed in the Supplemental Dolci Declaration, what was owed to that model as of
December 31, 2019, whether the model was identified on the Debtor’s schedules, the claim
amount on the schedules, and whether the claim was disputed. (Id. at 4–9.) The total amount for
all Nonpayment Categories combined is $294,143.33 for amounts owed as of December 31,
2019 per the Debtor’s books and records. Nonpayment Category (a) totals $44,137.32 for
monies owed to models released via settlements and includes 7 models, with 3 models listed as
having undisputed claims totaling $15,088.30 and the remaining 4 models as having disputed
claims totaling $29,770.31. (Id. at 4.) Nonpayment Category (b) totals $9,420.79 for money not
paid due to expired visas and includes 6 models, with 1 model having an undisputed claim
totaling $1,368.34 and the remaining 5 models having disputed claims totaling $8,052.45. (Id.)
Nonpayment Category (c) totals $90,954.87 that was not paid due to the model’s alleged
breached of contract and includes 13 models (one of which is Burgess) all of whom have
disputed claims.4 (Id.) Nonpayment Category (d) totals $197,101.72 that was not paid due to the
Debtor being unable to locate the models and includes 89 models, with only 1 model’s claim
being considered undisputed and unscheduled, totaling to $5,220.00, and the remaining 88
model’s claims being scheduled as disputed totaling to $191,881.72. (Id. at 5–7.) Nonpayment
Category (e) totals $32,000 that was not paid due to the Debtor being unable to collect these
amounts from its customers and includes 41 models, including 5 models with undisputed claims
totaling $1,454.43 and 36 models with disputed claims totaling $30,545.57. (Id. at 7–9.)
4 	Mr. Dolci notes that Burgess’ claim on their schedules includes the putative class claims. (Third Dolci
Declaration at 9.)
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II. 	LEGAL STANDARD
A. Application of Rule 23 in Contested Matters
Rule 7023 “expressly allows class certification in adversary proceedings by incorporating
Federal Rule of Civil Procedure 23.” In re MF Glob. Inc., 512 B.R. 757, 761 (Bankr. S.D.N.Y.
2014) (citing FED. R. BANKR. P. 7023.) “Application of Rule 23 is extended to contested matters
by Bankruptcy Rule 9014 which gives the Court discretion to apply Rule 23 to contested matters,
including claims objections.” In re MF Glob., 512 B.R. at 762.
“Although the Bankruptcy Code and Rules give no express guidance for the court’s
exercise of [its] discretion” in applying Rule 7023, “a pervasive theme is avoiding undue delay in
the administration of the case. It follows that a court sitting in bankruptcy may decline to apply
Rule 23 if doing so would . . . ‘gum up the works’ of distributing the estate.” In re Ephedra
Prods. Liab. Litig., 329 B.R. at 5 (quoting Woodward & Lothrop Holdings Inc., 205 B.R. 365,
376 (Bankr. S.D.N.Y. 1997)). “The exercise . . . is really a two-step process: First, the Court
must exercise its discretion whether to apply Rule 23 to the proposed class claim. Second, the
Court must determine whether the proposed class claim satisfies the requirements of Rule 23 for
class certification.” In re MF Glob., 512 B.R. at 763 (citing In re Motors Liquidation Co., 447
B.R. 150, 157 (Bankr. S.D.N.Y. 2011); 10 COLLIER ON BANKRUPTCY ¶ 7023.01 (16th ed. 2013)).
In addressing the second step, “[t]he party seeking class certification must satisfy the four
requirements under Federal Civil Rule 23(a), and one of the subparagraphs of Rule 23(b).” In re
Musicland Holding Corp., 362 B.R. 644, 652 (Bankr. S.D.N.Y 2007).
B. Musicland Factors in Deciding Whether to Apply Rule 23
Several factors (the “Musicland Factors”) inform a court’s decision whether to extend the
application of Rule 23 to a proof of claim, including: “(1) whether the class was certified pre-
petition; (2) whether the members of the putative class received notice of the bar date; and (3)
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whether class certification will adversely affect the administration of the estate.” Id. at 654–55
(citations omitted). Some courts have focused on the first two factors only—i.e., prepetition
certification and notice of the bar date. See In re Bally Total Fitness, 402 B.R. at 620 (citations
omitted) (“The filing of a class proof of claim is consistent with the Bankruptcy Code generally
in two principal situations: (i) where a class has been certified prepetition by a non-bankruptcy
court; and (ii) where there has been no actual or constructive notice to the class members of the
bankruptcy case and Bar Date.”), aff’d, 411 B.R. 142 (S.D.N.Y. 2009).
C. Rule 23 Requirements for Class Certification
Under Rule 23(a), four prerequisites must be met for a suit to proceed as a class action:
“(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions
of law or fact common to the class; (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and (4) the representative parties will fairly and
adequately protect the interests of the class.” FED. R. CIV. P. 23(a). Federal courts must
“conduct a rigorous analysis to determine whether the Rule 23 requirements have been satisfied
prior to certifying a class.” In re Bally Total Fitness, 402 B.R. at 621 (internal quotation marks
omitted).
1. 	Numerosity
“[N]umerosity is presumed when the class has at least 40 members.” In re MF Glob.,
512 B.R. at 765 n.6 (citing Cons. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir.
1995)) See also In re BGI, 465 B.R. 365, 375 (Bankr. S.D.N.Y. 2012) (citing Robidoux v.
Celani, 987 F2d 931, 935–36 (2d Cir. 1993) (noting that class size need not be specified, but it is
“presume[d] that joinder is impracticable where the prospective class consists of 40 members or
more”)).
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2. 	Commonality
“Commonality requires the plaintiff to demonstrate that the class members have suffered
the same injury.” Wal–Mart Stores, Inc. v. Dukes, 544 U.S. 338, 349–50 (2011) (internal
quotation marks omitted). “The requirement for establishing commonality sufficient to satisfy
Rule 23(a) is quite low.” In re MF Glob., 512 B.R. at 766. “Commonality is satisfied where a
single issue of law or fact is common to the class.” In re IndyMac Mortgage–Backed Sec. Litig.,
286 F.R.D. 226, 233 (S.D.N.Y. 2012). See also Lewis Tree Serv., Inc. v. Lucent Techs. Inc., 211
F.R.D. 228, 231 (S.D.N.Y. 2002) (stating that “the commonality requirement of Rule 23(a)(2) is
usually a minimal burden for a party to shoulder”). “A court may find a common issue of law
even though there exists some factual variation among class members’ specific grievances.”
Dupler v. Costco Wholesale Corp., 249 F.R.D. 29, 37 (E.D.N.Y. 2008) (internal quotation marks
omitted).
3. 	Typicality
“Typicality . . . requires that the claims of the class representatives be typical of those of
the class, and ‘is satisfied when each class member’s claim arises from the same course of
events, and each class member makes similar legal arguments to prove the defendant’s
liability.’” In re Connaught Grp. Ltd., 491 B.R. 88, 94 (Bankr. S.D.N.Y. 2013) (quoting Marisol
A. v. Giuliani, 126 F.3d 372, 376 (2d Cir. 1997)). “‘To meet the typicality requirement, the
putative class representatives must establish the bulk of the elements of each class members’
claims when they prove their own.’” In re FIRSTPLUS Financial, Inc., 248 B.R. 60, 75 (Bankr.
N.D. Tex. 2000) (quoting Durret v. John Deere Co., 150 F.R.D. 555, 558 (N.D. Tex. 1993)). In
re Drexel Burnham Lambert Grp. Inc., 960 F.2d 285, 291 (2d Cir. 1992) (citations omitted)
(“Rule 23(a)(3) is satisfied when each class member’s claim arises from the same course of
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events, and each class member makes similar legal arguments to prove the defendant’s
liability.”)
4. 	Adequacy
“Rule 23(a)(4) requires that ‘the representative party will fairly and adequately protect
the interests of the class.’” In re MF Global, 512 B.R. at 766 (quoting FED. R. CIV. P. 23(a)(4)).
“This requires two findings: ‘First, class counsel must be qualified, experienced and generally
able to conduct the litigation. Second, the class members must not have interests that are
antagonistic to one another.’” Id. (quoting In re Drexel Burnham, 960 F.2d at 291). “‘[A] class
representative must be part of the class and ‘possess the same interest and suffer the same injury’
as the class members.’” Amchem, 521 U.S. at 625–26 (quoting East Tex. Motor Freight System,
Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)).
5. 	Predominance under Rule 23(b)(3)
Additionally, the representative must meet one of the three criteria outlined in Rule 23(b).
FED. R. CIV. P. 23(b). Rule 23(b)(3), which is implicated by the pleadings here, allows a class
action to proceed if:
the court finds that the questions of law or fact common to class
members predominant over any questions affecting only individual
members, and that a class action is superior to other available
methods for fairly and efficiently adjudicating the controversy. The
matters pertinent to these findings include:
(A) the class members’ interests in individually controlling the
prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the
controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the
litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
FED. R. CIV. P. 23(b)(3).
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“Predominance is satisfied ‘if resolution of some of the legal or factual questions that
qualify each class member’s case as a genuine controversy can be achieved through generalized
proof, and if these particular issues are more substantial than the issues subject only to
individualized proof.’” Roach v. T.L. Cannon Corp., 778 F.3d 401, 405 (2d Cir. 2015) (quoting
Catholic Healthcare W. v. U.S. Foodservice Inc. (In re U.S. Foodservice Inc. Pricing Litig.), 729
F.3d 108, 118 (2d Cir. 2013)).
III. 	SUMMARY OF THE PARTIES’ ARGUMENTS
A. Musicland Factors in Deciding Whether to Apply Rule 23
1. 	Lack of Prepetition Certification Arguments
Burgess argues that the Debtor’s bad faith and disobedience of the District Court’s
discovery orders in the Burgess Litigation is the sole reason plaintiffs did not seek class
certification pre-petition. (Motion at 21.) Burgess argues that the Debtor should not benefit
from strategic non-compliance with discovery requests and includes filing bankruptcy as part of
that strategic non-compliance. (Id. at 22.)
The Debtor asserts that Burgess had ample time to seek class certification before the
Petition Date but chose not to. (Objection at 18–19.) The Debtor states that Burgess relies on
allegations in the Second Amended Complaint—filed nearly a year before the Petition Date—to
make her case for a class proof of claim. (Id. at 19.) The Debtor reasons that Burgess could
have made substantially the same application in the District Court. (Id.)
In the Reply, Burgess realleges the Debtor’s alleged strategic steps to avoid discovery
requests in order to stall the Burgess Litigation. (Reply at 5.) Burgess argues that condoning
this behavior would foreclose the reach of Rule 23 in all bankruptcy cases. (Id. at 6.)
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2. 	Notice to Putative Class Members Arguments
Burgess states that service of the Bar Date via mail will result in putative class members
not receiving actual notice of the Bar Date because they: (1) worked for the Debtor between
eight years and sixteen months ago and may have moved; (2) may have been displaced by the
COVID-19 pandemic; and (3) consist of many non-Americans who likely live abroad. (Motion
at 22–23.) Burgess argues that email service would be more appropriate as email addresses tend
to stay the same. (Id. at 23.) Burgess asserts that more than 20% and likely more than 50% of
mailed notices will not reach putative class members in time to give actual notice of the Bar
Date. (Id.)
The Debtor asserts that Burgess’ argument is gamesmanship because she did not object to
the Debtor’s bar date motion or to the proposed form of notice. (Objection at 19.) The Debtor
states that Burgess’ counsel appeared at the hearing on the Bar Date Order without raising an
objection. (Id.) The Debtor asserts that Burgess’ assumption that between 20% and 50% of
putative class members will not receive actual notice of the Bar Date is unfounded. (Id. at 20.)
The Debtor states that its Amended Schedules identify models for notice purposes as far back as
2012 and that notice of the Bar Date was served via email to approximately 530 models.
(Objection at 21–22.)
In the Reply, Burgess asserts that the Debtor did not provide information regarding the
amount of: (1) undeliverable mailings; or (2) email bounce backs in response to its second
notice. (Reply at 7.) Burgess states that the Debtor does not have email addresses for 270
putative class members who will likely not be notified via priority mail given their addresses are
old. (Id. at 7–8.) Burgess concedes that notice here is sufficient for minimal due process with
respect to putative class members whose identities are known. (Id. at 8.)
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As detailed earlier in this opinion, the Debtor has accounted for undeliverable mailings
and which models could not be reached via email. The Second D’Elia Spreadsheet indicates 40
models who could not be served via email or regular mail with 3 of those models having
disputed claims and the remaining 37 models being served for “notice purposes only.” (Third
D’Elia Declaration at 8.)
3. 	Class Certification Affecting the Administration of the Estate Arguments
Burgess states that she obtained the Debtor’s extensive accounting records and retained
an expert accountant familiar with them. (Dugger Decl. ¶ 11.) Burgess contends that this
familiarity with the records for a class proof of claim is more equitable because: (1) hundreds of
claimants will need to file proofs of claim without assistance; (2) most creditors are unaware of
how much they are owed; and (3) most creditors will be unaware of the process because they
will not receive notice. (Motion at 25.)
The Debtor contends that the factors Burgess lists do not create an evidentiary basis to
establish that class certification will further administration of the Debtor’s estate. (Objection at
23.) The Debtor argues that the claim objection process afforded by bankruptcy is superior to
proceeding with a class action. (Id. at 25.) The Debtor notes that (i) completing a proof of claim
is a simple process that can be done without counsel, (ii) the record is devoid of any evidence
that the Debtor misrepresented non-payment, (iii) notice of the Bar Date in accordance with the
Bar Date Order is sufficient and, (iv) there was no showing that models relocated to new
addresses. (Id. at 23.) The Debtor also notes that models who received notice by mail contacted
the Debtor, and the Debtor emailed the Bar Date Order to 530 models. (Id.)
In the Reply, Burgess argues that a class proof of claim will not “gum up the works” via
the following steps: (1) Burgess’ submission of its expert’s calculation of the total class-wide
damages amount with the specific amounts owed to each class member—derived from the Open
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Balance Report for all models; (2) the Debtor’s response with a Quickbooks database export of
the model transactions database reports showing any post-2019 payments to putative class
members or amounts charged off the open balance calculations because they were never
collected from the client; and (3) the subtraction of (2) from (1) to obtain the total amount due to
the class. (Reply at 9.)
4. 	Deterrence Argument
Burgess argues that deterrence should be considered as there is no reason for the Debtor
to stop absconding with models’ money. (Motion at 27.) Burgess contends there is little
oversight to prevent the taking of funds. (Id.) Burgess contends that because the breach of
fiduciary duty claims are “based on an allegation that [the Debtor] is improperly reporting,
accounting for, and distributing” money received by it in trust pursuant to the power of attorney
language in its contract, “[i]mposing the class claim device could dissuad[e] the reorganized
companies from continuing with the same behavior.” (Id. at 27–28 (quoting In re Chaparral
Energy, Inc., No. BR 16-11144 (LSS), 2019 WL 4643849, at *9 (D. Del. Sept. 24, 2019).)
The Debtor contends that no evidence was presented to show the Debtor engaged in
improper conduct from which it needs to be deterred. (Objection at 25.) The Debtor asserts that
it is proceeding to restructure its business and eliminate past liabilities. (Id.)
In the Reply, Burgess argues that deterrence is needed because the bankruptcy filing, and
the amount owed to models is evidence of wrongdoing. (Reply at 9.) Burgess asserts that the
failure to pay 275 models is evidence of delayed payments and misrepresentation. (Id. at 10.)
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B. Rule 23 Arguments
1. 	Numerosity Argument
Burgess calculates that: (1) at least 300 models have breach of fiduciary duty claims for
failure to pay; and (2) at least 300 have breach of fiduciary duty claims for delayed payments.
(Dugger Decl. ¶ 13.) The Debtor concedes that numerosity is satisfied. (Objection at 26.)
2. 	Commonality Argument
Burgess argues that common questions of law or fact include: (1) whether the Debtor had
a fiduciary duty arising from its power of attorney language in its form contracts; (2) whether its
withholding of models’ funds beyond a reasonable period of time violated this fiduciary duty; (3)
whether its delay in paying models beyond a reasonable period of time violated this fiduciary
duty; (4) whether the Debtor’s use of models’ funds violated this fiduciary duty; (5) whether the
class is entitled to relief of: (i) a constructive trust; (ii) disgorgement; (iii) compensatory
damages; and/or (iv) punitive damages; and (6) the amount of pre-judgment interest owed from
damages. (Motion at 28–29.)
The Debtor argues that commonality is not satisfied but addresses its arguments via Rule
23(b)(3) predominance of the issues. (Objection at 26, 29–33.) “Rule 23(a)(2)’s commonality
requirement is subsumed under, or superseded by, the more stringent Rule 23(b)(3) requirement
that questions common to the class predominate over other questions.” Amchem Products, Inc.
v. Windsor, 521 U.S. 591, 609 (1997) (internal quotations removed). The Debtor asserts that
Burgess cannot satisfy her “burden of establishing commonality because each putative class
member’s right to recovery is dependent on facts specific to that individual.” (Objection at 30–
31 (quoting In re Bally Total Fitness, 402 B.R. at 622).)
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In the Reply, Burgess ignores the Debtor’s contentions regarding commonality. Instead,
Burgess asserts that the Debtor concedes commonality as all putative class members had the
same power of attorney language in each of the Debtor’s form contract used. (Reply at 10.)
3. 	Typicality Argument
Burgess asserts that her breach of fiduciary duty claims is based on the same power of
attorney language as putative class members and spans two theories of liability: (1) failure to pay
and (2) delayed payment. (Motion at 30.)
The Debtor notes that Burgess’ situation is different from many other alleged putative
class members. (Objection at 27.) The Debtor relies on Burgess’ failure to provide written
notice of termination and her breach of contract when she signed with a competing agency while
still under the Debtor’s contract. (Id. at 28.) The Debtor asserts that, given her breach, it does
not need to pay Burgess, making her claim atypical to class members. (Id.) The Debtor asserts
that its defenses may render Burgess unable to establish the elements of the class’s claim. (Id.)
In the Reply, Burgess asserts that she provided written notice of termination and that the
Debtor knew Burgess was released from the agency by Katia Sherman (the Debtor’s previous
president). (Reply at 11 (citing Supp. Dugger Decl. ¶ 5; Burgess Contract Email).) Burgess
states the Debtor falsely asserted that in other litigation that a model it knew had been released
was still under contract. (Reply at 11 citing (Model Affidavits at 13–16).) The Burgess Contract
Email states: “I think Katia must have released [Burgess] . . . .” (Burgess Contract Email.) At
the hearing, Burgess’ counsel argued that she was released because the Debtor “cooperated in
sending her information to a different agency” when she wanted out of her contract but the
Debtor is changing the story “only now when they were sued . . . .” (Transcript at 33:7–9; 17–
18.)
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4. 	Adequacy of Representation
Burgess asserts she is putting the class’s interest before her own because she may receive
a reduced amount of payment. (Motion at 30.) Dugger states he is adequate to represent the
class given his work in class discrimination cases. (Dugger Decl. ¶¶ 14–17.)
The Debtor argues that Burgess is not an adequate representative because she has an
interest antagonistic to other putative class members. (Objection at 28–29.) The Debtor
contends Burgess is not entitled to collect money from the Debtor because she failed to provide
the required termination notice to the Debtor. (Id. at 29.) The Debtor notes cases providing its
defense has merit under New York law. (Id. (citing Mark IV Industries, Inc. v. Kerns, 2013 WL
12310665 at *8 (W.D.N.Y. July 18, 2013) (quoting Bausch & Lomb, Inv. v. Bressler, 977 F.2d
720, 727 (2d Cir. 1992)) (“‘Under New York law, . . . [w]here the contract specifies conditions
precedent to the right of cancellation, the conditions must be complied with.’”); see also Filmline
(Cross–Country) Prods., Inc. v. Nuclear Fuel Servs., Inc., 865 F.2d 513, 518–19 (2d Cir. 1989)
(affirming finding of breach upon failure to terminate contract in accordance with notice
provision)).) The Debtor argues that Burgess’ failure to provide notice of her termination and
the fact that she was represented by three other modeling agencies in the United States when the
Debtor represented her may affect decisions she makes in this litigation. (Objection at 29.)
The Burgess Contract included the following exclusivity provision:
I hereby engage Major Model Management Inc. (“You” or
“Manager”) as my sole and exclusive personal manager in New
York for the term of this Agreement (the “Term”) in connection
with the development of my career in the modeling , advertising,
licensing, entertainment , musical , theatrical , dramatic , artistic,
fashion, film, video, television and other visual media industries ,
and all services to be rendered or performed by me in connection
therewith ( all my work in such industries being referred to herein
as “Services”).
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(Burgess Contract at 2 (emphasis added).)5
In the Reply, Burgess notes that the Debtor’s defense—that it is not required to pay
models who breached contract after not being paid—is not a defense because the class claims are
for a breach of a fiduciary duty separate from the contract. (Reply at 11.) Burgess argues that,
even if the claims were for breach of contract, (i) the Debtor’s position would not be a basis to
withhold funds; (ii) all class members would have the common defense of the Debtor’s prior
breach of not paying; and (iii) all members have the common statutory defense under New York
law because the Debtor operates as an unlicensed employment agency. (Reply at 11.)
5. 	Predominance Argument
Burgess argues that predominance is satisfied for the same reasons as commonality.
(Motion at 31.) Burgess asserts that class damages—both class-wide damages and
individualized damages—can be calculated from the Debtor’s accounting information. (Id.)
The Burgess Contract contained the following terms regarding payment to Burgess:
MAJOR is not obligated to provide payment on any Service
rendered by me until payment for said Service has been received
from Client. I also understand that in order to receive payment, I
must call the Accounting Department in advance to place a request
for payment.
(Burgess Contract at 5.)
The Women Form Modeling Contract and the Unisex Form Modeling Contract contained
a similar provision regarding how models are paid. (See Women Form Modeling Contract at 5;
Unisex Form Modeling Contract at 7.) The Burgess Contract also provided procedures for
advances of up to 25% for a job given that “most clients pay between 60 and 180 days from the
5 	The Unisex Form Modeling Contract and the Women Form Modeling Contract both contain a near
identical exclusivity provision. (Unisex Form Modeling Contract at 5; Women Form Modeling Contract at 3.)
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date they receive billing, and foreign clients often take longer.” (Burgess Contract at 14.)
Burgess’ Contract also provided a provision that enabled the Debtor, at its discretion, to make a
personal loan to her. (Id. at 6–7.) The Women Form Modeling Contract and the Unisex Form
Modeling Contract did not contain a similar provision.
The Debtor argues that the Court would need to analyze factual questions for each model,
including: (1) does each model’s contract contain the exact “power of attorney” language
identified by Burgess; (2) did the Debtor actually withhold any money; (3) did the Debtor have a
basis to withhold the funds (4) how long did the Debtor hold the funds after receipt from its
customer before remitting funds to the model; and (5) did the Debtor fail to maintain accurate
records of each model’s earnings. (Objection at 31.) The Debtor contends that Burgess cannot
show that the class action is superior to the claim objection process. (Id.) Additionally, the
Debtor distinguishes Burgess’ case from MF Global, 512 B.R. at 768, because in that case there
was no issue whether common class issues predominated as the Trustee had conceded liability,
meaning the only step remaining was to calculate individual damages. (Id. at 33.) The Debtor
contends that Burgess’ counsel does not plan to forego compensation and will be an additional
cost to the estate. (Objection at 33.)
In the Reply, Burgess asserts that the Debtor is wrong to state that class claims will turn
into “mini-trials.” (Reply at 11.) Burgess asserts that these are class-wide issues, or not
contested issues, due to (1) deposition testimony and the Dolci Declaration establishing three
versions of the form modeling contracts which all contain the same power of attorney language
(Supp. Dugger Decl. ¶¶ 2–4 Ex. B–D); (2) whether money was withheld is already established
by the use of database evidence (Open Balance Report); (3) it is a breach of a fiduciary duty for
the Debtor to have failed to pay class members since December 31, 2019 (Reply at 12); (4) the
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Debtor can establish addressing returned payments through its class-wide accounting database
records (id.); and (5) the accuracy of the Debtor’s class-wide database productions is a common
issue (id.).
IV. 	DISCUSSION
A. The Court Will Not Exercise Its Discretion to Apply Rule 23
Burgess did not satisfy her burden for the Court to exercise its discretion to permit a class
proof of claim because (i) the class was not certified pre-petition despite ample opportunity to do
so, (ii) there is sufficient notice that complies with the Bankruptcy Code to potential class
members per the Bar Date Order, (iii) class certification would adversely affect the
administration of the estate, and (iv) there is no need to certify the class for the purposes of
deterring the Debtor from engaging in withholding funds to models. The Court believes the
claims allowance process provides an efficient mechanism for resolving any legally or factually
disputed claims in this case.
The Musicland factors inform a court’s decision whether to exercise discretion to extend
the application of Rule 23 for a class proof of claim. In re Musicland, 362 B.R. at 654–55. “A
court sitting in bankruptcy may decline to apply Rule 23 if doing so would . . . ‘gum up the
works’ of distributing the estate.” In re Ephedra Prods. Liab. Litig., 329 B.R. at 5 (quotations
omitted). In looking at the Musicland Factors, the Court finds that each factor weighs against
exercising discretion to permit a class proof of claim.
1. 	Lack of Pre-Petition Class Certification Weighs Against Exercising Discretion to
Apply Rule 23
The first Musicland Factor—whether there was a certified class prepetition—weighs
against the Court exercising discretion. In re Musicland, 362 B.R.at 654–55. In In re Bally
Total Fitness, 402 B.R. at 620, this Court noted that “a class proof of claim is consistent with the
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Bankruptcy Code generally . . . where a class has been certified prepetition by a non-bankruptcy
court . . . .” The class here was not certified prepetition by a non-bankruptcy court. (Objection
at 18–19.) Instead, Burgess relitigates her assertions that discovery has not been completed and
is the sole cause for the Burgess Litigation stalling.6 (Motion at 21–22.) Even in the Reply,
Burgess does not satisfactorily answer why she did not make an application for class certification
in the District Court more than a year ago. (Reply at 5–6.) Given that the arguments for class
certification appear to be substantially similar arguments to those made in the Second Amended
Complaint, the Debtor is correct that there is no discernible reason why Burgess could not have
made this application before the District Court prior to the Petition Date. (Objection at 19.)
Therefore, the lack of prepetition class certification WEIGHS AGAINST the Court exercising
discretion.
2. 	Notice to Class Members is Sufficient and Weighs Against Exercising Discretion
to Apply Rule 23.
The second Musicland Factor—whether class members received notice of the bar date—
weighs against exercising the Court’s discretion. In re Musicland, 362 B.R. at 654–55.
Although first class mailing may not be perfect, “the issue is not whether notice to class
members was unreasonable but whether any notice issues are sufficient to require that the class
motion be granted.” In re Northwest Airlines Corp., 2007 WL 2815917 at *4 (Bankr. S.D.N.Y.
September 26, 2007) (citing In re Jamesway Corp., 1997 WL 327105 at *8 (Bankr. S.D.N.Y.
June 12, 1997) (“The proper inquiry is whether [the debtor] acted reasonably in selecting means
likely to inform persons affected by the Bar Date and these chapter 11 proceedings, not whether
each claimant actually received notice.”)). Even if “perfect” service is not achieved, courts in
6 	It should be noted that Burgess made similar arguments in her Lift Stay Motion. This Court considered
those arguments and denied them without prejudice. (See ECF Doc. # 69.)
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this district have found service to be sufficient for the purposes of denying class certification.
See In re Musicland, 362 B.R. at 656 (finding that, even though the debtor had neglected to mail
notice of the bar date to the putative class’s counsel, and there was no evidence the debtor
published notice of the bar date despite being ordered to do so, such omissions were “harmless”
since the debtor sent actual notice of the bar date to putative class members).
If Burgess’ counsel believed that the proposed notice procedure was inadequate, he
should have raised the propriety of the Bar Date Order earlier in the case. (Objection at 19.)
Burgess contends, without evidentiary support, that 20% to 50% of the alleged class members
may not receive actual notice because they moved. (Motion at 22–23; see also Objection at 20.)
It is true that some putative class members may not receive actual notice of the Bar Date and
first-class mail may not always be perfect. However, the “proper inquiry is whether [the debtor]
acted reasonably in selecting means likely to inform persons affected by the Bar Date and . . . not
whether each claimant actually received notice.” In re Jamesway Corp., 1997 WL 327105 at *8.
Here, the Debtor acted appropriately to inform models who could be affected by the Bar Date
Order and even exceeded the requirements of the Bar Date Order by emailing 530 models in
addition to using regular mail. (Objection at 23.) The Second D’Elia Spreadsheet, attached to
the Third D’Elia Declaration, indicates that the Debtor lacks emails and current mailing
addresses for three models scheduled with disputed claims totaling to $14,600.7 (Third D’Elia
Decl. at 8.) Therefore, the Bar Date Order’s notice procedures are sufficient and WEIGH
AGAINST the Court exercising discretion.
7 	Notably, the other 37 models listed on the Second D’Elia Spreadsheet are models the Debtor does not have
current mailing addresses or email address for and were scheduled for “notice purposes only.” (Third D’Elia Decl.
at 8.) Granted, these 37 models may disagree, and could assert that they have a claim.
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3. 	Class Certification Would Adversely Affect the Administration of the Estate
The final Musicland Factor—whether the administration of the estate will be adversely
affected—weighs against exercising discretion. In re Musicland, 362 B.R. at 654–55. “[A]
bankruptcy case can proceed no faster than its slowest matter . . . and a class action may ‘gum up
the works’ because until complete, the bankruptcy court cannot determine the entitlement of
other creditors.” In re Woodward & Lothrop Holdings, 205 B.R. at 376. Here, certifying a class
proof of claim will require the Court to determine the appropriate amount for the class claim and
it will not be as easy as using an expert accountant as Burgess describes. (Dugger Decl. ¶ 11.)
At the hearing on the Motion, the Court noted that certifying a class proof of claim “leaves giant
questions where there could well be unique facts and circumstances behind any non-payment to
specific models. And many of those [disputes] would get sorted out consensually between the
debtor and the claimant [in the claims allowance process] and would require absolutely no
contested hearing in the bankruptcy court.” (Transcript at 23:14–19.) The Court further noted
that in the claims allowance process “resolving [a] common legal issue would very well lead to a
resolution of the other contested claims without having to go through the class certification . . . .”
(Id. at 24:10–12.) Certifying a class will take more time, effort, and energy away from the
administration of the estate than handling individual proofs of claims through the claim objection
process. See In re Bally Total Fitness, 402 B.R. at 621 (finding that “class certification would
adversely affect the administration of these cases adding layers of procedural and factual
complexity that accompany class-based claims, siphoning the Debtors’ resources and interfering
with the orderly progression of the reorganization” and also noting that “class status is
unnecessary to protect the rights of the various members of the putative class” because “their
rights are amply protected by the chapter 11 claims process itself”).
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This is a small business chapter 11 case, filed under Subchapter V, with an independent
Subchapter V trustee appointed to provide oversight and guidance to the Court and the parties.8
At the hearing on the Motion, the Court asked the experienced Subchapter V trustee, Heidi
Sorvino, Esq., whether she believed that claims of the models in this case could effectively be
adjudicated in the claims allowance process, or whether a class proof of claim should be
permitted. The Subchapter V trustee responded:
I do believe . . . that the claims, the bankruptcy process and the
objection process does allow for a very efficient process and I do
believe that can be done here. You’re not dealing with models with
millions of dollars of claims . . . [b]ut with the claims objection
process . . . and the way that the Bankruptcy Code has set it up, I do
believe it is the most efficient way to deal with the claims in this
matter. And, you know, based on the plan that has been filed, there
is a possibility here that the models will be paid close to 100 cents
on the dollar, so I don’t see the need for a class proof of claim and
that the efficient way to deal with the models’ claims is the claims
objection process set forth in the Bankruptcy Code.
(Transcript at 52:13–53:3.)
The Court finds the Subchapter V trustee’s observations to be persuasive. The Court
believes that the claims allowance process is the most efficient, cost-effective mechanism to
address any disputed claims in this case. Certifying a class claim would adversely affect the
administration of this Debtor’s bankruptcy case and WEIGHS AGAINST the Court exercising
discretion.
8 	Judge Paul A. Bonapfel, a respected bankruptcy judge in the Northern District of Georgia, has provided an
excellent analysis of Subchapter V and the role of the Subchapter V trustee, where he explained that “[i]n general,
the role of the trustee is to supervise and monitor the case and to participate in the development and confirmation of
a plan.” Hon. Paul A. Bonapfel, A G UIDE TO THE S MALL BUSINESS REORGANIZATION A CT OF 2019 (Revised July
2021), at 44 & n.82. Judge Bonapfel also points to THE S UBCHAPTER V TRUSTEE H ANDBOOK, prepared by the
Executive Office of the United States Trustee. The Handbook provides that “The subchapter V trustee is an
independent third party and a fiduciary who must be fair and impartial to all parties in the case.” See U.S. D EP ’ T OF
J USTICE, H ANDBOOK FOR S MALL B USINESS C HAPTER 11 S UBCHAPTER V TRUSTEES (Feb. 2020),
https://www.justice.gov/ust/private-trustee-handbooks-reference-materials/chapter-11-subchapter-v-handbooks-
reference-materials, at 2-2.
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4. 	Class Certification is Not Warranted for the Purpose of Deterrence
The Debtor is correct that nothing has been brought forth to indicate the Debtor filed
bankruptcy in bad faith or as a litigation tactic to stall discovery. (Objection at 25.) Thus far,
only Burgess has made protestations in her Lift Stay Motion and this Motion that this bankruptcy
was a means to stall litigation. There has been no motion seeking to dismiss this case citing bad
faith as a basis. Additionally, Burgess ignores the appointment of the Subchapter V trustee who
has a fiduciary duty to ensure compliance with the Bankruptcy Code. See 11 U.S.C. § 1183
(describing the duties of the Subchapter V trustee). Therefore, it is NOT NECESSARY to deter
the Debtor via certifying a class proof of claim.
B. Even If the Court Exercised its Discretion, Burgess Does Not Satisfy the
Requirements of Rule 23
Rule 23 requires four prerequisites for a class action to proceed: “(1) the class is so
numerous that joinder of all members is impracticable; (2) there are questions of law or fact
common to the class; (3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class; and (4) the representative parties will fairly and adequately
protect the interests of the class.” FED. R. CIV. P. 23(a). Here, Burgess SATISFIES element 1
(numerosity), but DOES NOT SATISFY elements 2 (commonality), 3 (typicality) and 4
(adequacy of representation).
1. 	Rule 23(a)(1): Numerosity Is Satisfied
Given that members for each putative class exceeds 40 members, Burgess clearly
SATISFIED Rule 23(a)(1)’s numerosity requirement. In re MF Glob., 512 B.R. at 765 n.6.
2. 	Rule 23(a)(2): Commonality Is Not Satisfied
Burgess argues that each model’s contract contained the same power of attorney language
and would implicate common questions of fact and law. (Reply at 10.) However, the Debtor
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articulated multiple scenarios and reasons why certain models were not timely paid. (Supp.
Dolci Decl. ¶ 7.) This negates Burgess’ contention that common issues of law and fact are
implicated and indicates that each putative class member needs to be evaluated individually. See
Wal–Mart Stores, Inc., 544 U.S. at 349–50 (“Commonality requires the plaintiff to demonstrate
that the class members have suffered the same injury.”) Therefore, Burgess DOES NOT
SATISFY Rule 23(a)(2)’s commonality requirement.
3. 	Rule 23(a)(3): Typicality Is Not Satisfied
The Debtor’s assertion that Burgess was the breaching party is muddied by the Burgess
Contract Email, which raises the possibility the Debtor released Burgess from her contract. (See
Burgess Contract Email.) However, it is unclear whether other models in the putative class were
represented by other modeling agencies while they were represented by the Debtor. Burgess’
Contract specifically contains an exclusivity provision (see Burgess’ Contract at 3), as does the
Unisex Form Modeling Contract (see Unisex Form Modeling Contract at 5) and the Women
Form Modeling Contract (see Women Form Modeling Contract at 3). Burgess was represented
by at least three modeling agencies when the Debtor represented her. (Objection at 28.) That
alone renders her claims atypical of putative class members because it is unclear if putative class
members were also represented by multiple agencies when the Debtor represented them. See
Connaught, at 491 B.R. at 94 (“Typicality . . . requires that the claims of the class representatives
be typical of those of the class, and ‘is satisfied when each class member’s claim arises from the
same course of events, and each class member makes similar legal arguments to prove the
defendant’s liability’”) (quotations omitted). Therefore, Burgess DOES NOT SATISFY Rule
23(a)(3)’s typicality requirement.
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4. 	Rule 23(a)(4): Adequacy of Representation Is Not Satisfied
Under Rule 23(a)(4), the Court finds that Burgess’ counsel, Mr. Dugger, is qualified,
experienced, and able to conduct further litigation in this matter. (Dugger Decl. ¶¶ 14–17.)
However, Burgess appears to have interests antagonistic to other putative class members. “‘[A]
class representative must be part of the class and ‘possess the same interest and suffer the same
injury’ as the class members.’” Amchem, 521 U.S. at 625–26 (quotations omitted). Here, it does
not appear that Burgess suffers from the same interest, or the same injury. The Debtor may be
able to argue that Burgess is an inadequate representative because she breached her contract first.
(Objection at 29.) Although that argument is less clear given that Burgess has provided some
evidentiary support to show that she was released from her contract via the Debtor’s previous
president. (Burgess Contract Email.) That said, the Debtor will be able to argue that she worked
for three modeling agencies while the Debtor represented her, possibly in violation of the
exclusivity provision naming the Debtor as her “sole and exclusive personal manager in New
York.” (Objection at 29; Burgess Contract at 2.) The Debtor asserts that Burgess was
represented by three other modeling agencies in the United States. (Objection at 29.) There is a
possibility that Burgess was represented by modeling agencies located outside of New York.
Neither the Debtor, or Burgess herself, named the other modeling agencies in their pleadings.
Nevertheless, it is unclear whether other class members worked for other modeling agencies
while represented by the Debtor; or what percentage of models engaged in such activity. These
facts surrounding Burgess’s claim preclude her from adequately representing the proposed class.
Therefore, Burgess DOES NOT SATISFY Rule 23(a)(4)’s adequacy of representation
requirement.
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5. 	Rule 23(b): Predominance is Not Satisfied
The Debtor is correct that each model’s claim in the putative class will require a mini
analysis before permitting each alleged class member into the class proof of claim. (Objection at
31.) There are likely unique circumstances behind why each model who could potentially be a
member of the proposed class was initially denied payment or why payment was delayed. (See
Supp. Dolci Decl. ¶ 7 (articulating why funds were withheld for certain models).) Each putative
class member may not necessarily have the same issue or facts predominating over their
individual claim. See T.L. Cannon Corp., 778 F.3d at 405 (quotation marks omitted)
(“Predominance is satisfied if resolution of some of the legal or factual questions that qualify
each class member’s case as a genuine controversy can be achieved through generalized proof,
and if these particular issues are more substantial than the issues subject only to individualized
proof.”) To the extent that common factual or legal issues exist, the claims allowance process
can be tailored to deal efficiently with those common issues in resolving disputed claims.
Therefore, the legal and factual issues presented DO NOT PREDOMINATE over the
claims of the putative class members.
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V. 	CONCLUSION
For the reasons explained above, the Court DENIES the Motion to permit Burgess to file
a class proof of claim. Any disputed claims will have to be resolved in the claims allowance
process.
IT IS SO ORDERED.
Dated: 	June 21, 2022
New York, New York
_____Martin Glenn____________
MARTIN GLENN
Chief United States Bankruptcy Judge
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