Summary
permitting 25 depositions from a 75-member opt-in class
Summary of this case from Ludlow v. Flowers Foods, Inc.Opinion
No. CIV S-08-0965 LKK GGH
09-25-2012
SAMUEL BRANDON KRESS, et al., Plaintiffs, v. PRICE WATERHOUSE COOPERS, Defendant.
ORDER
Previously pending on this court's law and motion calendar for August 16, 2012, was defendant's motion to compel depositions of 75 additional fact witnesses (opt-in class members and perhaps others), filed July 19, 2012. Daniel Thomasch represented defendant. Peter Muhic appeared for plaintiffs. After hearing oral argument and reviewing the joint statement, the court now issues the following order.
BACKGROUND
This case involves a proposed nationwide class action concerning overtime compensation and other wages. The discovery motion at issue seeks depositions of current or former PwC employees who have information concerning the work of Associates in the Attest division of the Assurance Line of Service or who have knowledge of the exemption status of these associates under the Fair Labor Standards Act ("FLSA"). PwC indicates that the number of opt-in plaintiffs in the class of unlicensed Attest Associates is 1,709. PwC anticipates filing motions to decertify the conditionally certified FLSA Attest Associate class. There is no discovery deadline; nor has the court set a schedule for the second stage collective action motion practice. (Jt. Stmt. at 12.) Thus far, PwC has taken the ten depositions permitted under Fed. R. Civ. P. 30(a)(2). Five fact witnesses, consisting of named plaintiff and class representative Le and four others who had submitted declarations in support of the motion to certify, were deposed in regard to the FLSA Attest Associate class; three fact witnesses, who had previously submitted declarations in support of motion to certify, have been deposed in regard to the putative Attest Senior Associate class; and two fact witnesses, named plaintiffs Kress and Kenny, have been deposed in regard to both the FLSA Attest Associate class and the putative Attest Senior Associate class.
There are fourteen named plaintiffs in this action. (Dkt. no. 214.)
DISCUSSION
Scheduling/Case Management Conference
PwC claims to need 75 more depositions to prepare for its motion to decertify the class to show that the named plaintiffs are not similarly situated to the other employees they seek to represent. PwC seeks this many depositions to demonstrate how the work of different Attest associates varies according to skill level, experience and initiative, industry sectors in which they work, and staffing model employed on the various engagements. For example, PwC will attempt to show that the nature of the work on large and small audits is different, that audits of public companies is different than audits of private companies and governmental bodies, and that the work of those associates who have met PwC's reasonable performance expectations is different from those associates who have not.
Plaintiffs, in resisting the taking of 75 depositions at this time, point out that PwC has refused to disclose the identities, job titles and locations of these individuals, as well as failed to provide a method for selecting the additional deponents or discuss the location and timing of the depositions. Furthermore, plaintiffs assert that any additional depositions should be part of a broader case management order which should be issued by Judge Karlton after he addresses these issues in a conference which results in an comprehensive schedule for the case.
Because the extent to which PwC's intentions to seek additional depositions after this round, which may include current and former employees who were putative class members but chose not to opt into the class, and other percipient witnesses who have direct knowledge of the work performed by class members, as well as plaintiffs' concern that PwC may seek to depose every single opt-in plaintiff prior to trial, and because the extent to which "class decertification depositions" may overlap with the merits of the case (assuming that the class is not decertified), the undersigned agrees that a case management conference and order may be very helpful. Such a schedule may be especially instructive in light of plaintiffs' suggestion that PwC seeks to depose associates who may be class members in the Campbell case (California plaintiffs), which would be in violation of Judge Karlton's orders prohibiting certain discovery affecting Campbell class members. If PwC succeeds, it could introduce this evidence in the Campbell case even though it has been prohibited and discovery is closed in that case.
All of the above statements lead to the instruction to the party(ies) seeking a scheduling/case management conference: ask Judge Karlton and you might receive. The undersigned is not going to adjudicate in this discovery dispute, and for the trial judge, the necessity of such a conference, nor will the undersigned ascertain whether a party initially avoided the idea of such a conference, and now wants one, or the inference to be drawn from that fact, if it is a fact.
The Number of Depositions to Be Permitted
Turning to PwC's request for 75 depositions, the determination of whether unlicensed Attest Associates meet overtime exemptions requires an "intensely factual" analysis of their actual job duties and responsibilities, at least initially. See Campbell v. PricewaterhouseCoopers, LLP, 642 F.3d 820, 833 (9th Cir. 2011). However, the undersigned is also cognizant that discovery, especially far-flung depositions, has the potential to be oppressive to the point of wiping out the ability of one party or another to continue a litigation. The issue here involves drawing the proper balance and is determined by looking at other cases in similar situations as well as the ability of the party seeking depositions to obtain substantially the same information from a collective source.
A key issue in this litigation will be exactly what do attest associates do, and that is what the proposed discovery is supposed to ascertain/confirm. The undersigned is not sure that the parties in this action have ever attempted to define the difference between auditing, assurance and attest. As the undersigned understands these terms, auditing is a broad umbrella term that includes the practices of assurance and attest. Assurance and attest often do not involve verifying the correctness of financial statements per se (pure number crunching applied to established standards and procedures), but may involve independent opinions on procedures and processes of business/governmental entities (assurance), and the verification of information (an assertion) made by a third party (attest). In simple terms an assurance may involve an opinion, for example, on the best way for a certain entity to comply with Sarbanes/Oxley, Section 302 (disclosure controls) while an attest may involve verification that an assertion that one is in compliance with that section of Sarbanes/Oxley is true. See, e.g., Financial Accounting Information & Resources, financial-accounting-resources.blogspot.com/2010/03aicpa-and-institute-of-internal.html, defining the difference between the terms.
However, it is also probably true that not all accounting firms organize their business in conformance with the undersigned's understanding, and opining to the correctness of a financial document may well meet a definition of "attest." Previously in the related case, Judge Karlton generally defined what PwC attest associates do:
In essence, the Attest division performs audits. The audits seek to assure that a company's financial statements are prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), and are free of misstatements, whether caused by error or fraud. See Overstreet Decl. ¶ 7. The ultimate recipient of PwC's audit work is the client company's Board of Directors, often through the board's audit committee. These audits demonstrate clients' compliance with various regulatory mandates, and may also provide a necessary predicate for access to investment capital.
In addition to verifying compliance, the Attest division provides some advice to clients. The scope of this advice is limited by statutory and professional independence rules. These rules preclude PwC from performing management functions for clients of the attest division, although PwC may "provide advice, research materials, and recommendations to assist the client's management in performing its functions and making decisions."
PwC's cited cases permit the type, and to some extent the number, of depositions that are requested here in class actions where defendants were seeking discovery for the purpose of class decertification. In Williams v. Sprint/United Management Co., 2006 WL 1867471 (D. Kan. Jun. 30, 2006), the court permitted further depositions to go forward (after 300 had been taken) because plaintiffs did not contend that the opt-in plaintiffs to be deposed did not have information concerning pattern and practice which was at issue there. Although the court had previously permitted the depositions of 300 opt-in plaintiffs, plaintiffs had not objected to that previous ruling, and they did not currently object to the recently permitted depositions on the basis that defendants had exceeded the number of depositions contemplated by the court and the parties. Id. at n. 1. Rather, plaintiffs had objected to depositions of individuals not listed as witnesses on this issue. The court found that defendant could properly depose these individuals because they were plaintiffs in the action seeking damages regarding pattern and practice issues. Plaintiffs here attempt to distinguish the Williams case on this last point, it is actually similar in some respects in that there has been no case management or other order limiting the number of depositions in this case.
Other class action cases cited by PwC likewise allowed numerous depositions. See Renfro v. Spartan Computer Services, Inc., 2008 WL 474253 (D. Kan. Feb. 19, 2008) (permitting 27 depositions, and potential individualized discovery for all 100 opt-in plaintiffs) because plaintiffs had failed to show undue burden with particularized facts and because each plaintiff to be deposed had consented to participate in the lawsuit); Krueger v. N.Y. Tel. Co., 163 F.R.D. 446 (S.D.N.Y. 1995) (allowing 14 additional depositions in addition to the 19 depositions to which plaintiffs had agreed). The court distinguished that small number of class plaintiffs (162) from other class actions involving thousands of absent class members scattered around the country and perhaps unaware of the litigation. In Ingersoll v. Royal & Sunalliance USA, Inc., 2006 WL 2091097 (W.D. Wash. Jul. 25, 2006), the class consisted of 34 opt-in plaintiffs, "each of whom has freely chosen to participate and each of whom has relevant information with respect to the claims and defenses in this action." Id. at *3. The discovery requested was necessary to determine whether plaintiffs were "similarly situated within the meaning of the FLSA." Id. at *2. Individualized discovery as to all was permitted.
On the other hand, cases cited by plaintiffs indicate that such discovery should be limited to a random sampling, especially where the number of class members is in the thousands. See Nelson v. American Standard, Inc., 2009 WL 4730166, *3 (E.D. Tex. Dec. 4, 2009) (citing cases). Class actions, whatever their "opt in" or "opt out" characteristics, or whether pre-or post certification, normally proceed in discovery on less than deposing the entire set of class members. See also Smith v. Lowes Home Centers Inc., 236 F.R.D. 354, 357-358 (S.D. Ohio 2006) (refusing to allow discovery directed to 1,500 "opt-in" class members):
Discovery was limited to an agreed-upon 91 opt-in class members. Although not clear, the discovery was written discovery as opposed to depositions.
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Other courts, however, have held that collective actions under the FLSA should be governed by the same standards as govern discovery in Rule 23 class actions and should be limited to only class wide and class based discovery. To permit individualized discovery, the reasoning goes, would undermine the purpose and utility of both class and collective actions. Adkins v. Mid-America Growers, Inc., supra, 141 F.R.D. 466. For example, some courts have limited discovery to only representative samples. See, e.g., Bradford v. Bed Bath & Beyond, Inc., 184 F.Supp.2d 1342, 1344 (N.D.Ga.2002)["[T]he parties were allowed to conduct discovery from 25 of the opt-in plaintiffs, including the named plaintiffs and six other opt-in plaintiffs chosen by defendant."]
This Court agrees that limiting discovery to a statistically significant representative sampling, at this juncture, will both reasonably minimize the otherwise extraordinary burden imposed on the plaintiffs and their counsel [footnote omitted] and yet afford the defendant a reasonable opportunity to explore, discover and establish an evidentiary basis for its defenses. The Court will therefore limit the discovery appropriate to the de-certification and class certification proceedings to a statistically significant sample. However, if, after conducting the discovery of the representative sample, defendants can demonstrate to the Court that broader discovery is appropriate and necessary, the defendants can so move.
Moreover, in response to the undersigned's question at hearing, defendant's counsel affirmed that PwC supervisors, who had personal knowledge of what duties were being performed by class members, had substantial information to impart on the nature of class member job duties. This information from a collective source has the potential to mitigate much of the need for numerous depositions from the supervised class members. See Pendlebury v. Starbucks Coffee Co., 518 F. Supp.2d 1345, 1350-51 (S.D. Fla. 2007). While "confirmation" discovery of what will be testified-to by the supervisors is important, that confirmation can be obtained with less than 75 further depositions.
Finally, while the undersigned is making no finding that PwC is seeking the 75 depositions as a means by which to bludgeon plaintiff's counsel financially, the fact remains that taking this number of depositions at far-flung locales is bound to test the financial resources of any plaintiff's counsel.
Therefore, PwC will be permitted only twenty-five more depositions for the time being. Defendants can move again before the undersigned if the necessary confirmation of its supervisors' testimony cannot be obtained with the taking of twenty-five further depositions, and the need for such is specifically demonstrated, i.e., something other than a general assertion. The court has attempted, as best it can, to balance the competing interests discussed above. This number of permitted depositions should be a useful sample which will have meaning. And, permitting twenty-five additional depositions for a class of 1,709 plaintiffs should not be unduly burdensome at this point in the litigation. This deposition number does not implicate concerns pointed out by plaintiffs in their cited authority. See Geer v. Challenge Financial Investors Corp., 2007 WL 1341774, *3-4 (D.Kan. May 4, 2007) (248 depositions too many in light of burden and expense).
CONCLUSION
Accordingly, IT IS ORDERED that: PwC's motion for leave to take additional depositions, filed July 19, 2012, (dkt. #292), is granted in part. PwC is permitted to take twenty- five opt-in class member or other person depositions, related to the class decertification issues. The logistics for such depositions was not at issue in the motion. The parties shall use their best efforts to minimize the expense of these ordered depositions.
Gregory G. Hollows
UNITED STATES MAGISTRATE JUDGE
Campbell v. PwC, 602 F. Supp. 2d 1163, 1167 (E.D. Cal. 2009), rvsd (but not on this definition), 642 F.3d 820 (9th Cir. 2011).
The undersigned, of course, does not make any rulings herein concerning the precise scope of the attest associates duties - that is the function of the trial judge. However, PwC strongly argues that a sufficient sampling of "opt-in" class member depositions is necessary in that the duties of attest associates are going to vary depending on the specific engagement. If so, these duties may involve all aspects of "attest." The issue in this motion is the amount of discovery necessary to demonstrate this variety, and the sophistication of the varied work.