14‐3845
Lola v. Skadden, Arps, Slate, Meagher & Flom
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UNITED STATES COURT OF APPEALSFOR THE SECOND CIRCUIT____________________
August Term, 2014
(Argued: May 29, 2015

Decided: July 23, 2015)
Docket No. 14‐3845‐cv____________________DAVID LOLA, on behalf of himself and all others similarly situated,

Plaintiff‐Appellant,v.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, TOWER LEGALSTAFFING, INC.,
Defendants‐Appellees.
____________________
Before: POOLER, LOHIER, DRONEY, Circuit Judges.
David Lola, on behalf of himself and all others similarly situated, appeals

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from the September 16, 2014 opinion and order of the United States District Court

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for the Southern District of New York (Sullivan, J.) dismissing his putative

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collective action seeking damages from Skadden, Arps, Slate, Meagher & Flom2

LLP and Tower Legal Staffing, Inc. for violations of the overtime provision of the3

Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”), arising out of Lola’s

4work as a contract attorney in North Carolina. We agree with the district court

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that: (1) state, not federal, law informs FLSA’s definition of “practice of law;” and6(2) North Carolina, as the place where Lola worked and lived, has the greatest

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interest in this litigation, and thus we look to North Carolina law to determine if

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Lola was practicing law within the meaning of FLSA. However, we disagree with9

the district court’s conclusion, on a motion to dismiss, that by undertaking the10

document review Lola allegedly was hired to conduct, Lola was necessarily

11“practicing law” within the meaning of North Carolina law.

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Vacated and remanded.
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D. MAIMON KIRSCHENBAUM, Joseph &Kirschenbaum LLP (Denise A. Shulman, on thebrief), New York, NY, for Plaintiff‐Appellant David
Lola, on behalf of himself and all others similarly
situated.
BRIAN J. GERSHENGORN, Ogletree, Deakins,
Nash, Smoak & Stewart, P.C. (Stephanie L.
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Aranyos, on the brief) New York, N.Y. for
Defendants‐Appellees Skadden, Arps, Slate, Meagher& Flom LLP and Tower Legal Staffing, Inc.
POOLER, Circuit Judge:
David Lola, on behalf of himself and all others similarly situated, appeals

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from the September 16, 2014 opinion and order of the United States District Court

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for the Southern District of New York (Sullivan, J.) dismissing his putative

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collective action seeking damages from Skadden, Arps, Slate, Meagher & Flom10

LLP and Tower Legal Staffing, Inc. for violations of the overtime provision of the11

Fair Labor Standards Act, 29 U.S.C. §§ 201 et seq. (“FLSA”), arising out of Lola’s

12work as a contract attorney in North Carolina. We agree with the district court’s

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conclusion that: (1) state, not federal, law informs FLSA’s definition of “practice14

of law;” and (2) North Carolina, as the place where Lola worked and lived, has

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the greatest interest in this litigation, and thus we look to North Carolina law to

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determine if Lola was practicing law within the meaning of FLSA. However, we

17disagree with the district court’s conclusion, on a motion to dismiss, that by18

undertaking the document review Lola allegedly was hired to conduct, Lola was19necessarily “practicing law” within the meaning of North Carolina law. We find

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that accepting the allegations as pleaded, Lola adequately alleged in his
31complaint that his document review was devoid of legal judgment such that he2

was not engaged in the practice of law, and remand for further proceedings.

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BACKGROUND
Lola commenced this FLSA collective action against Skadden, Arps, Slate,

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Meagher & Flom LLP and Tower Legal Staffing Inc. In his first amended

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complaint, Lola alleged that Skadden, a Delaware limited liability partnership, is7

based in New York City. He alleges that Tower is a New York corporation that8

provides attorneys and paralegals on a contract basis to various law firms and9

corporate law departments. Lola alleges that Skadden and Tower (together,10“Defendants”) were joint employers within the meaning of FLSA.

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Lola, a North Carolina resident, alleges that beginning in April 2012, he

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worked for Defendants for fifteen months in North Carolina. He conducted13

document review for Skadden in connection with a multi‐district litigation14

pending in the United States District Court for the Northern District of Ohio.

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Lola is an attorney licensed to practice law in California, but he is not admitted to16

practice law in either North Carolina or the Northern District of Ohio.

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Lola alleges that his work was closely supervised by the Defendants, and18

his “entire responsibility . . . consisted of (a) looking at documents to see what4

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search terms, if any, appeared in the documents, (b) marking those documents

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into the categories predetermined by Defendants, and (c) at times drawing black3

boxes to redact portions of certain documents based on specific protocols that

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Defendants provided.” App’x at 20 ¶ 28. Lola further alleges that Defendants

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provided him with the documents he reviewed, the search terms he was to use in

6connection with those documents, and the procedures he was to follow if the7search terms appeared. Lola was paid $25 an hour for his work, and worked

8roughly forty‐five to fifty‐five hours a week. He was paid at the same rate for any

9hours he worked in excess of forty hours per week. Lola was told that he was an

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employee of Tower, but he was also told that he needed to follow any procedures

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set by Skadden attorneys, and he worked under the supervision of Skadden

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attorneys. Other attorneys employed to work on the same project performed

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similar work and were likewise paid hourly rates that remained the same for any

14hours worked in excess of forty hours per week.

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Defendants moved to dismiss the complaint, arguing that Lola was exempt

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from FLSA’s overtime rules because he was a licensed attorney engaged in the17practice of law. The district court granted the motion, finding (1) state, not18federal, standards applied in determining whether an attorney was practicing
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law under FLSA; (2) North Carolina had the greatest interest in the outcome of2

the litigation, thus North Carolina’s law should apply; and (3) Lola was engaged

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in the practice of law as defined by North Carolina law, and was therefore an

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exempt employee under FLSA. Lola v. Skadden, Arps, Slate, Meagher & Flom, LLP,

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No. 13‐cv‐5008 (RJS), 2014 WL 4626228 (S.D.N.Y. Sept. 16, 2014). This appeal

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followed.

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DISCUSSION“We review de novo a district court’s dismissal of a complaint for failure to9state a claim, accepting all factual allegations in the complaint as true and10drawing all reasonable inferences in plaintiffs’ favor.” Freidus v. Barclays Bank

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PLC, 734 F.3d 132, 137 (2d Cir. 2013).

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Pursuant to FLSA, employers must generally pay employees working

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overtime one and one‐half times the regular rate of pay for any hours worked in

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excess of forty a week. 29 U.S.C. § 207(a)(1). However, employees “employed in a15

bona fide . . . professional capacity” are exempt from that requirement. Id. §16

213(a)(1). The statute does not provide a definition of “professional capacity,”

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instead delegating the authority to do so to the Secretary of the Department of

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Labor (“DOL”), who defines “professional employees” to include those6

1employees who are:(1) Compensated on a salary or fee basis at a rate of notless than $455 per week . . . ; and

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29 C.F.R. § 541.300. These requirements, however, do not apply to attorneys

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engaged in the practice of law. 29 C.F.R. § 541.304(d) (“The requirements of

17§ 541.300 and subpart G (salary requirements) of this part do not apply to the18

employees described in this section.”). Instead, attorneys fall under 29 C.F.R. §19

541.304, which exempts from the overtime requirement:(2) Whose primary duty is the performance of work:(i) Requiring knowledge of an advanced type in afield of science or learning customarily acquired by aprolonged course of intellectual instruction; or(ii) Requiring invention, imagination, originality
or talent in a recognized field of artistic or creative
endeavor.

Any employee who is the holder of a valid license orcertificate permitting the practice of law or medicine or
any of their branches and is actually engaged in thepractice thereof[.]

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Id. § 541.304(a)(1). While it is undisputed that Lola is an attorney licensed to26practice law in California, the parties dispute whether the document review he27

allegedly performed constitutes “engaging in the practice of law.”
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I.

“Practice of law.”2

Lola urges us to fashion a new federal standard defining the “practice of

3law” within the meaning of Section 541.304. We decline to do so because we4agree with the district court that the definition of “practice of law” is “primarily a5matter of state concern.” Lola, 2014 WL 4626228, at *4 (citation omitted).

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In Kamen v. Kemper Financial Services, Inc., 500 U.S. 90 (1991), the Supreme

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Court examined whether, in an action based on a federal statute, federal common

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law should incorporate state law. There, the issue was whether the contours of9

the demand futility requirement of the Investment Company Act of 1940 must be

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discerned by reference to state law or by reference to federal law. Id. at 97‐98. The

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Kamen Court explained “that a court should endeavor to fill the interstices of

12federal remedial schemes with uniform federal rules only when the scheme in

13question evidences a distinct need for nationwide legal standards, or when

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express provisions in analogous statutory schemes embody congressional policy

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choices readily applicable to the matter at hand.” Id. at 98 (citation omitted).

16“Otherwise,” the Court continued:

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we have indicated that federal courts shouldincorporate state law as the federal rule of decision,
unless application of the particular state law in question
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would frustrate specific objectives of the federal
programs. The presumption that state law should beincorporated into federal common law is particularly
strong in areas in which private parties have enteredlegal relationships with the expectation that their rights
and obligations would be governed by state‐law
standards.
Id. (internal citation, quotation marks and alterations omitted).
Applying these principles, the Supreme Court explained that “where a gap

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in the federal securities laws must be bridged by a rule that bears on the

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allocation of governing powers within the corporation, federal courts should

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incorporate state law into federal common law unless the particular state law in

14question is inconsistent with the policies underlying the federal statute.” Id. at

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108 (emphasis omitted). Thus, the Kamen court concluded that “the scope of the16

demand requirement” must be determined by the law of the state of17

incorporation. Id. at 108.

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De Sylva v. Ballentine, 351 U.S. 570 (1956), is also instructive in determining

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whether state or federal law should define the sweep of a federal right.. In De

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Sylva, the Supreme Court examined the question of whether an illegitimate child21

was a “child” within the meaning of the Copyright Act. Noting that “[t]he scope

22of a federal right is, of course, a federal question, but that does not mean that its
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content is not to be determined by state, rather than federal law,” id., the court

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also observed that “[t]his is especially true where a statute deals with a familial

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relationship; there is no federal law of domestic relations, which is primarily a4matter of state concern.” Id. The Court then relied on state law to define “child”

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within the meaning of the federal Copyright Act. Id. at 581.

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Just as “there is no federal law of domestic relations,” here there is no7

federal law governing lawyers. Regulating the “practice of law” is traditionally a8state endeavor. No federal scheme exists for issuing law licenses. As the district

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court aptly observed, “[s]tates regulate almost every aspect of legal practice: they10

set the eligibility criteria and oversee the admission process for would‐be11

lawyers, promulgate the rules of professional ethics, and discipline lawyers who

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fail to follow those rules, among many other responsibilities.” Lola, 2014 WL

134626228, at *4. The exemption in FLSA specifically relies on the attorney14

possessing “a valid license . . . permitting the practice of law.” 29 C.F.R. §15

541.304(a)(1). The regulation’s history indicates that the DOL was well aware that16such licenses were issued by the states. See Wage and Hour and Public Contracts

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Divisions, U.S. Department of Labor, Report and Recommendations of the18

Presiding Officer at Public Hearings on Proposed Revisions of Regulations, Part10

1541, at 77 (1949) (noting that the exemption for attorneys was based in part on2“the universal requirement of licensing by the various jurisdictions”). In rejecting

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a proposal to exempt librarians from the overtime rules, the DOL noted that4“states do not generally license the practice of library science, so that in this5

respect . . . the profession is not comparable to that of law or medicine.” Id. A

6similar distinction was drawn in a discussion of extending the exemption to7architects and engineers:
The practice of law and medicine has a long history ofstate licensing and certification; the licensing ofengineers and architects is relatively recent. While it is
impossible for a doctor or lawyer legally to practice his
profession without a certificate or license, manyarchitects and engineers perform work in these fields
without possessing licenses, although failure to hold alicense may limit their permissible activities to those oflesser responsibilities.

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Id. We thus find no error with the district court’s conclusion that we should look19

to state law in defining the “practice of law.”

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II.

Choice of law.

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We turn to the question of which state’s law to apply. “Where jurisdiction

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is based on the existence of a federal question . . . we have not hesitated to apply

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a federal common law choice of law analysis.” Barkanic v. Gen. Admin. of Civil
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Aviation of the Peopleʹs Republic of China, 923 F.2d 957, 961 (2d Cir. 1991). “The2federal common law choice‐of‐law rule is to apply the law of the jurisdiction

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having the greatest interest in the litigation.” In re Koreag, Controle et Revision S.A.,

4961 F.2d 341, 350 (2d Cir. 1992). Here, there are four possible forum states: North

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Carolina (where Lola worked and lived); Ohio (where the underlying litigation is

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venued); California (where Lola is barred); and New York (where Skadden is

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located).

8“[W]hen conducting a federal common law choice‐of‐law analysis, absent

9guidance from Congress, we may consult the Restatement (Second) of Conflict of

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Laws.” Eli Lilly Do Brasil, Ltda v. Fed. Express Corp., 502 F.3d 78, 81 (2d Cir. 2007).

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The Restatement provides in relevant part that:

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The validity of a contract for the rendition ofservices and the rights created thereby are determined,
in the absence of an effective choice of law by theparties, by the local law of the state where the contract
requires that the services, or a major portion of theservices, be rendered, unless, with respect to theparticular issue, some other state has a more significant
relationship under the principles stated in § 6 to thetransaction and the parties, in which [ ] event the local
law of the other state will be applied.
Restatement (Second) of Conflict of Laws § 196 (1971). Here, the services were12

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rendered in North Carolina. Moreover, as the state where Lola resides, North

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Carolina possesses a strong interest in making sure Lola is fairly paid. We find no3

error in the district court’s decision to apply North Carolina law.

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III.

Definition of “practice of law” under North Carolina law.

North Carolina defines the “practice of law” in its General Statutes, Section
84–2.1, which provides that:
The phrase “practice law” as used in this Chapter
is defined to be performing any legal service for any
other person, firm or corporation, with or withoutcompensation, specifically including . . . the preparationand filing of petitions for use in any court, including
administrative tribunals and other judicial or
quasi‐judicial bodies, or assisting by advice, counsel, orotherwise in any legal work; and to advise or give
opinion upon the legal rights of any person, firm or
corporation . . . .

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N.C. Gen. Stat. § 84–2.1. North Carolina courts typically read Section 84–2.1 in20

conjunction with Section 84–4, which defines the unauthorized practice of law as21

follows:

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Except as otherwise permitted by law, . . . it shallbe unlawful for any person or association of persons
except active members of the Bar, for or without a fee or
consideration, to give legal advice or counsel, [or]perform for or furnish to another legal services . . . .

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Id. § 84–4; see N.C. State Bar v. Lienguard, Inc., No. 11–cvs–7288, 2014 WL 1365418,

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at *6–7 (N.C. Super. Ct. Apr. 4, 2014).

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The North Carolina General Statutes do not clarify whether “legal

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services” includes the performance of document review. Nevertheless, the North

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Carolina State Bar issued a formal ethics opinion shedding light on what is meant

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by “legal services.”1 The question considered in the ethics opinion was: “May a

7lawyer ethically outsource legal support services abroad, if the individual

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providing the services is either a nonlawyer or a lawyer not admitted to practice9in the United States (collectively ‘foreign assistants’)?” In its opinion, the Bar’s

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Ethics Committee opined that:
A lawyer may use foreign assistants for administrative
support services such as document assembly,
accounting, and clerical support. A lawyer may also use
foreign assistants for limited legal support services suchas reviewing documents; conducting due diligence;drafting contracts, pleadings, and memoranda of law;and conducting legal research. Foreign assistants may
not exercise independent legal judgment in making
decisions on behalf of a client. . . . The limitations on thetype of legal services that can be outsourced, in

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The ethics opinion technically referred only to “legal support services.”
Nothing in the opinion or in the relevant North Carolina caselaw suggests that
there is any meaningful difference between “legal services” and “legal support
services.”
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conjunction with the selection and supervisory
requirements associated with the use of foreignassistants, insures that the client is competently
represented. See Rule 5.5(d). Nevertheless, whenoutsourcing legal support services, lawyers need to be
mindful of the prohibitions on unauthorized practice of
law in Chapter 84 of the General Statutes and on theprohibition on aiding the unauthorized practice of law
in Rule 5.5(d).

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N.C. State Bar Ethics Committee, 2007 Formal Ethics Op. 12 (Apr. 25, 2008).

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The district court found that (1) under North Carolina law, document

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review is considered “legal support services,” along with “drafting contracts,

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pleadings, and memoranda of law[,] and conducting legal research;” (2) the15

ethics opinion draws a clear line between legal support services, like document

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review, and “administrative support services,” like “document assembly,

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accounting, and clerical support;” and (3) by emphasizing that only lawyers may

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undertake legal work, the ethics opinion makes clear that “document review, like19

other legal support services, constitutes the practice of law and may be lawfully

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performed by a non‐lawyer only if that non‐lawyer is supervised by a licensed

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attorney.” Lola, 2014 WL 4626228, at *11–12 (alteration in the original). Thus, the22

district court concluded, any level of document review is considered the “practice23

of law” in North Carolina. Id. at 12. The district court also concluded that because
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FLSA’s regulatory scheme carves doctors and lawyers out of the salary and duty

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analysis employed to discern if other types of employees fall within the3

professional exemption, a fact‐intensive inquiry is at odds with FLSA’s

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regulatory scheme. Id. at *13.

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We disagree. The district court erred in concluding that engaging in

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document review per se constitutes practicing law in North Carolina. The ethics

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opinion does not delve into precisely what type of document review falls within

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the practice of law, but does note that while “reviewing documents” may be

9within the practice of law, “[f]oreign assistants may not exercise independent

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legal judgment in making decisions on behalf of a client.” N.C. State Bar Ethics

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Committee, 2007 Formal Ethics Op. 12. The ethics opinion strongly suggests that

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inherent in the definition of “practice of law” in North Carolina is the exercise of13

at least a modicum of independent legal judgment.2

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Were it an option, we might have opted to certify the question of how todefine “practice of law” to the North Carolina courts. See AGI Assocs. LLC v. Cityof Hickory, N.C., 773 F.3d 576, 579 n.4 (4th Cir. 2014) (“A lack of controlling
precedent on the state rule of decision can merit certification of the issue to thestate’s highest court. The State of North Carolina, however, has no certification
procedure in place for federal courts to certify questions to its courts.”).
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Although the parties do not cite, and our research did not reveal, a case2

directly on point, two decisions of the North Carolina courts that relied, in part,3

on the exercise of legal judgment to support a finding of unauthorized practice of4

law also support such a conclusion. Lienguard, 2014 WL 1365418, at *9–11 (lien5filing service engaged in unauthorized practice of law in preparing claims of

6lien); LegalZoom.com, Inc. v. N.C. State Bar, No. 11–cvs–15111, 2014 WL 1213242, at

7*12 (N.C. Super. Ct. Mar. 24, 2014) (noting that the “scrivener’s exception” to the8unauthorized practice of law allows “unlicensed individuals [to] record

9information that another provides without engaging in [the unlicensed practice10of law] as long as they do not also provide advice or express legal judgments”).

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Moreover, many other states also consider the exercise of some legal

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judgment an essential element of the practice of law. See, e.g., In re Discipline of13

Lerner, 197 P.3d 1067, 1069‐70 (Nev. 2008) (“exercise of legal judgment on a

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client’s behalf” key to analysis of whether a person engaged in the unauthorized

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practice of law); People v. Shell, 148 P.3d 162, 174 (Colo. 2006) (“[O]ne of the

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touchstones of Coloradoʹs ban on the unauthorized practice of law is an17

unlicensed person offering advice or judgment about legal matters to another18

person for use in a specific legal setting”); Or. State Bar v. Smith, 942 P.2d 793, 800
171(Or. Ct. App. 1997) (“The ‘practice of law’ means the exercise of professional2

judgment in applying legal principles to address another person’s individualized3

needs through analysis, advice, or other assistance.”); In re Discipio, 645 N.E.2d

4906, 910 (Ill. 1994) (“The focus of the inquiry” into whether person engaged in5

unauthorized practice of law is, in fact, “whether the activity in question required

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legal knowledge and skill in order to apply legal principles and precedent.”); In

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re Rowe, 80 N.Y.2d 336, 341–42 (1992) (authoring an article on the legal rights of

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psychiatric patients who refuse treatment did not constitute the practice of law

9because “[t]he practice of law involves the rendering of legal advice and opinions

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directed to particular clients”).

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The gravamen of Lola’s complaint is that he performed document review

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under such tight constraints that he exercised no legal judgment whatsoever—he13

alleges that he used criteria developed by others to simply sort documents into

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different categories. Accepting those allegations as true, as we must on a motion

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to dismiss, we find that Lola adequately alleged in his complaint that he failed to16

exercise any legal judgment in performing his duties for Defendants. A fair17

reading of the complaint in the light most favorable to Lola is that he provided

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services that a machine could have provided. The parties themselves agreed at18

1oral argument that an individual who, in the course of reviewing discovery

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documents, undertakes tasks that could otherwise be performed entirely by a3

machine cannot be said to engage in the practice of law. We therefore vacate the4judgment of the district court and remand for further proceedings consistent with5

this opinion.
CONCLUSION

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8For the reasons given above, the judgment of the district court is vacated,
and this matter remanded.

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