Wednesday, April 7, 2010

Northern District Certifies Misclassification Class in Brady v. Deloitte & Touche LLP

On March 23, 2010, Northern District Judge, Susan Illston, granted plaintiff’s motion to certify plaintiff’s misclassification claims in Brady v. Deloitte & Touche LLP (3:08-cv-00177-SI).  The certified class encompasses four distinct job positions (Audit Assistant, Audit Senior Assistant, Audit In-Charge, Audit Senior), all of which (1) were staffed by non-licensed individuals who (2) performed tasks contained within only one of the five distinct phases of the financial audit service performed by defendant. See Opinion, at 1-3. Plaintiff’s proposed theory alleges that such persons were improperly classified as exempt under the professional and administrative exemptions.

With regard to the professional exemption, plaintiffs maintained that the propriety of the exemption could be resolved on the singular legal question of whether Wage Order 4 requires that accountants have a license in order to qualify for the exemption. See Order, at 8.

With regard to the administrative exemption, plaintiffs maintained that the propriety of the exemption could be resolved “by inquiring whether or not class members worked ‘under only general supervision’ and whether class members’ work is ‘directly related to management policies or general business operations.’” See id. With regard to this issue, plaintiffs relied on statutes and defendant’s own policies as evidence that class member discretion was restricted on a common basis. Id.

As to both exemptions, plaintiff asserted a secondary argument claiming that the validity of every claimed exemption can be resolved through an inquiry of whether the proposed class members exercised discretion and independent judgment with respect to matters of significance. Relying on Campbell v. PricewaterhouseCoopers, LLP, 253 F.R.D. 586 (E.D. Cal. 2008), the plaintiffs maintained that this question could be resolved on a common basis due to the fact class members were restricted to performing limited tasks contained within a single phase of the audit process that were reserved solely for persons who were not certified CPA’s. See id., at 9.

Defendant maintained that certification was improper based on evidence which it maintained established a wide variation in tasks being performed, including (1) that different levels of the subject employees performed different tasks, and (2) that unlicensed employees performed work outside of their level, and (3) that tasks within a given level varied in complexity. See id., at 10.

The Court rejected defendant’s argument, reasoning that plaintiff’s theory of liability was framed on defendant’s own policies impacting the class as a whole, and that defendant’s evidence trying to disavow such policy evidence went to merits of the case:
The Court agrees with plaintiffs that common questions of law or fact predominate over individual questions. Most of defendant’s evidence regarding class members’ job duties and purported levels of discretion goes to the merits of plaintiffs’ claims, rather than whether certification is proper. Defendant asserts that plaintiffs will not be able to prove that the class members were exempt, because some unlicensed employees were able to exercise discretion while others were not. However, common questions are present in plaintiffs’ complaint, including whether accounting is a learned or artistic profession, whether plaintiffs worked under less than general supervision, and whether plaintiffs exercised discretion and independent judgment with respect to matters of significance. Resolution of these questions, according to plaintiffs, will not require factual inquiries into the experiences of every class member because the Court is only being asked to ascertain what effect the Deloitte policies and outside regulations have on the class as a whole. Without, at this juncture, evaluating plaintiffs’ likelihood of success on the merits, plaintiffs should have the opportunity to prove that Deloitte policies and procedures, along with other restrictive regulations mentioned in the briefs, produced such a restrictive environment that class members were not able to qualify for the professional and administrative exemptions.
See Opinion, at 11.

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