Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02376/USCOURTS-caed-2_06-cv-02376-11/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

JASON CAMPBELL and

SARAH SOBEK, individually,

and on behalf of all other

similarly situated current

and former employees of 

PricewaterhouseCoopers, LLP,,

NO. CIV. S-06-2376 LKK/GGH

Plaintiffs,

v.

PRICEWATERHOUSECOOPERS, LLP, O R D E R

a Limited Liability Partnership;,

and DOES 1-100, inclusive,

Defendant.

 /

This is a wage and hour action brought by plaintiffs Jason

Campbell and Sarah Sobek individually and on behalf of other

similarly situated individuals against defendant

PricewaterhouseCoopers LLP (“PwC”). Plaintiffs allege that PwC

misclassified them as exempt employees under California law and

failed to pay them overtime and other benefits that an employer

would normally be required to provide to non-exempt employees.

Pending before the court is plaintiffs’ motion for class

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 Plaintiffs seek to certify a class under Federal Rule of 1

Civil Procedure 23(b)(3), which provides for an "opt out" class

action as opposed to an "opt in" class action. Cf. 29 U.S.C. §

216(b) (Fair Labor Standards Act).

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certification. For the reasons explained below, the court 1

provisionally grants the motion with respect to a class comprised

of associates in PwC's Attest division.

I. Factual Background

A. General Background

Defendant PricewaterhouseCoopers LLP (“PwC”) is the largest

public accountancy partnership in the world. Decl. of William

Kershaw, Ex. 3. PwC has over 30,000 employees in its United States

offices, which currently include six California offices in Irvine,

Los Angeles, Sacramento, San Diego, San Francisco, and San Jose.

Decl. of Carl Overstreet ¶ 4. The present suit only involves

employees in PwC’s California offices.

PwC’s organizational structure is complex and multi-tiered.

PwC’s subdivision of its professional services begins with three

lines of service (“LOS”), which are Assurance, Tax, and Advisory.

Only Assurance and Tax are at issue in this action. Each line of

service is then further divided into divisions. Overstreet Decl.

¶ 3. The divisions within each line of service may focus on

specialized services, such as external audits, transaction

structuring (e.g., mergers and acquisitions, deals), information

technology, or consulting work. Id. 

There are several personnel job titles within PwC. These

include associate, senior associate, manager, senior manager,

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director, managing director, and partner, Decl. of Jason Campbell

¶ 4; Decl. of Sarah Sobek ¶ 4, with partners generally exercising

the greatest authority within PwC’s organizational structure.

Plaintiffs contend that while PwC requires employees in the

positions of manager, senior manager, director, managing director,

and partner to hold a Certified Public Accountant (“CPA”) license,

Campbell Decl. ¶ 5; Sobek Decl. ¶ 5, employees in the positions of

associate or senior associate need not be so licensed.

The named plaintiffs in this action, Jason Campbell and Sarah

Sobek, worked as associates in the Assurance line of service.

Campbell Decl. ¶ 2; Sobek Decl. ¶ 2. The proposed class, however,

consists of all unlicensed associates and senior associates who

worked for PwC in its Assurance and Tax lines of service in

California from October 27, 2002 to the present date. Plaintiffs

seek to certify the following class:

All persons employed by PricewaterhouseCoopers LLP in

California, from October 27, 2002 until the time when

class notice may be given, who: (1) assisted certified

public accountants in the practice of public

accountancy, as provided for in California Business

and Professions Code sections 5051 and 5053, (2)

worked as associates or senior associates in the

assurance and tax lines of service, (3) were not

licensed by the State of California as certified

public accountants during some or all of this time

period, and (4) were classified as exempt employees.

B. Assurance and Tax Lines of Service

Assurance and Tax are PwC’s two largest lines of service.

Kershaw Decl., Ex. 3. PwC serves two classes of clients: audit and

non-audit (or, in PwC’s nomenclature, Channel 1 and Channel 2

clients). Overstreet Decl. ¶ 7. For audit clients, PwC provides

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external auditing and financial reporting services in addition to

other limited services. Id. For non-audit clients, PwC provides

consulting services but no auditing or financial reporting

services. Id. This distinction is said to ensure an arm’s length

relationship between PwC and its audit clients.

There are three divisions within the Assurance line of service

in California: Attest, Systems Process Assurance (“SPA”), and

Transaction Services. Attest provides financial statement and

internal control audits, and only serves audit clients, id. ¶¶ 7-8,

while SPA provides services related to information technology

(“IT”) management controls. Decl. of Michael Corey ¶ 6. SPA

services include reviews of database security controls and

infrastructure security. Id. ¶ 5. Finally, Transaction Services

advises clients on such transactions as mergers and acquisitions

and initial public offerings. SPA and Transactional Services both

serve audit and non-audit clients. Decl. of Curt Moldenhauer ¶¶

5, 7; Corey Decl. ¶ 6.

Tax contains a greater number of divisions than Assurance.

These include divisions such as International Tax Services, Private

Company Services, and State and Local Tax. Decl. of Margaret

Barron ¶ 4. The services provided by Tax include tax estimate and

tax return preparation for a variety of entities, Decl. of Jacquie

Wilson ¶ 7; Decl. of Brian Hunt ¶ 8; Decl. of Joseph Hillsted ¶ 5,

advice on compliance with the Internal Revenue Code and

international tax treaties, Decl. of Paul Klopping ¶ 6, and review

of tax-related entries in quarterly and year-end reports, Decl. of

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Angela Lam ¶ 8. Tax serves both audit and non-audit clients.

Barron Decl. ¶ 5.

C. Recruiting, Education, and Training

PwC recruits candidates from a variety of backgrounds for its

various positions. PwC employs on-campus recruiting, targeting

students graduating in the near future, and experienced recruiting,

targeting individuals who have already worked at accounting and

professional services firms. Barron Decl. ¶ 7. PwC also recruits

internally. Moldenhauer Decl. ¶ 9.

Educational background is sometimes a factor in recruiting.

Id. at ¶ 10. For example, preferred candidates for Attest and Tax

either hold a degree in accounting or the requisite number of

college courses enabling that candidate to sit for the CPA exam.

Overstreet Decl. ¶ 11; Barron Decl. ¶ 8. PwC also generally

requires that SPA candidates hold a bachelor’s or master’s degree

in Accounting, Finance, or Computer Science. PwC, however, may

also hire recent college graduates with little or no prior work

experience. Moldenhauer Decl. ¶ 12; Campbell Dep., Ex. 1 (resume);

Sobek Dep., Ex. 1 (resume).

PwC requires a minimum 40 to 150 hours of annual training for

Tax associates and senior associates. Decl. of Keith Larson ¶ 7.

Nevertheless, prior work experience or a previous internship with

PwC may decrease the amount of training required for an employee.

Decl. of Daniel Goepp ¶ 10. In addition, training and continuing

education requirements vary between lines of service and between

divisions. For example, training offered to new employees in the

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Attest division may focus on the risk assessment and analytical

procedures used in audits, while Tax training may include technical

issues associated with tax and simulations focusing on client

interaction. Id.; Larson Decl. ¶¶ 7-12.

D. Duties of Associates and Senior Associates

PwC employed Campbell for a year, from August 2005 to August

2006, and employed Sobek for slightly less than two years, from

August 2004 to June 2006. Campbell and Sobek both characterize

their job duties as primarily assisting CPAs in performing audits.

Campbell Decl. ¶ 2; Sobek Decl. ¶ 2. Both claim that their job

duties on audits involved verifying financial statement items by

obtaining and reviewing the underlying documentation that supported

the items. Campbell Decl. ¶¶ 6-7; Sobek Decl. ¶¶ 6-7. Campbell

and Sobek both maintain that they worked in excess of eight hours

per day and worked on weekends and holidays without overtime pay.

Campbell Decl. ¶ 12; Sobek Decl. ¶ 12.

Plaintiffs also maintain that the scope of their duties were

necessarily constrained by two standards: (1) Section 5053 of the

California Business and Professions Code, which requires the

control and supervision of unlicensed accountants, and (2) the

professional standards set by the American Institute of Certified

Public Accountants, which contain a similar directive. Plaintiffs

allege that PwC’s compliance with these rules is evidenced in their

policies regarding who is allowed to sign various documents,

letters, and reports.

PwC has submitted approximately fifty declarations from

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individuals in a wide array of positions at PwC (e.g., from

associates and senior associates to managers and partners) and from

various divisions within both the Assurance and Tax lines of

service. They demonstrate not insignificant variations in the type

of work performed by division and by line of service. They show

that the work of the SPA division within Assurance, for example,

is centered around information technology (IT). Decl. of Irina

Majstrova ¶ 5. Similarly, they show that looking across lines of

service, Tax associates spend most of their time on the

significantly different task of preparing tax returns or tax

estimates. Decl. of Jesse Dang ¶ 7; Decl. of Jacquie Wilson ¶ 7

(80% of time spent on tax returns). One associate stated that

“[i]t is difficult to compare the job duties of, for instance, a

SPA Senior Associate with those of an Associate in the Tax line of

service because the nature and purpose of the duties are entirely

different.” Dang Decl. ¶ 7.

In addition, there are said to be significant differences

between the work performed by associates and senior associates,

because one of the primary duties of senior associates is to

supervise associates. See, e.g., Decl. of Joseph Gomez ¶ 11 (“When

I became a Senior Associate, I spent about 50% to 60% of my time

reviewing the work of other Associates.”). The degree of

supervision is limited by, inter alia, the legal and professional

standards that govern the accounting profession. As explained

below, however, whether the differences between associates and

seniors associates are material is a difficult issue, and not

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without uncertainty.

II. Standard

A party seeking to certify a class must demonstrate that it

has met all four requirements of Rule 23(a) and at least one of the

requirements of Rule 23(b). Zinser v. Accufix Research Inst.,

Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). Rule 23(a) allows a

class to be certified

only if (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. 

In other words, the class must satisfy the requirements of

numerosity, commonality, typicality, and adequacy.

Rule 23(b) provides for three types of class actions. Here,

plaintiff seeks to certify the class under Rule 23(b)(3), which

allows for a class to be certified if “the court finds that the

questions of law or fact common to the members of the class

predominate over any question affecting only individual members,

and that a class action is superior to other available methods for

the fair and efficient adjudication of the controversy.” Fed. R.

Civ. P. 23(b)(3).

The matters pertinent to the findings include:

(A) the interest of members of the class in

individually controlling the prosecution or defense of

separate actions; (B) the extent and nature of any

litigation concerning the controversy already

commenced by or against members of the class; (C) the

desirability or undesirability of concentrating the

litigation of the claims in the particular forum; and

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(D) the difficulties likely to be encountered in the

management of a class action.

Id.

The court must conduct a "rigorous analysis" of the moving

party's claims to examine whether the requirements are satisfied,

Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 161 (1982).

Generally, however, the court should not consider whether the party

seeking class certification has stated a cause of action or is

likely to prevail on the merits. Eisen v. Carlisle & Jacquelin,

417 U.S. 156, 178 (1974). Nevertheless, the court is not only “‘at

liberty to’ consider evidence which goes to the requirements of

Rule 23" but in fact is required to consider such evidence, “‘even

[if] the evidence may also relate to the underlying merits of the

case.’” Dukes v. Wal-Mart, 509 F.3d 1168, 1178 n.2 (9th Cir. 2007)

(quoting Hanon v. Dataproducts Corp., 976 F.2d 497, 509 (9th Cir.

1992)). If the court concludes that the moving party has met its

burden of proof, the court has broad discretion to certify the

class. Zinser, 253 F.3d at 1186. 

III. Analysis

A. Ascertainability of Class

Separate from the requirements under Rules 23(a) and (b), and

as a threshold to their analysis, defendant argues that plaintiffs

have failed to propose an ascertainable class.

An adequate class definition specifies "a distinct group of

plaintiffs whose members [can] be identified with particularity."

Lerwill v. Inflight Motion Pictures, Inc., 582 F.2d 507, 512 (9th

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Cir. 1978). One of the primary purpose of the class definition is

to make it "administratively feasible" for the court to determine

individual class membership. Aiken v. Obledo, 442 F. Supp. 628,

658 (E.D. Cal. 1977). The class definition should therefore

provide the court with objective criteria to discern the class's

members. See O'Connor v. Boeing N. Am., Inc., 197 F.R.D. 404, 416

(C.D. Cal. 2000). Such criteria may include, for example, a

defendant's own actions and the damages caused by such actions,

Int'l Molders' & Allied Workers' Local Union No. 164 v. Nelson, 102

F.R.D. 457, 464-65 (N.D. Cal. 1983), or even just geographical

boundaries, Berlowitz v. Nob Hill Masonic Mgmt., 1996 WL 724776,

at *5 (N.D. Cal. Dec. 6, 1996).

Nevertheless, the class definition may not consider the merits

of the action in determining individual class membership. See

Eisen, 417 U.S. at 177-78; Moore v. Hughes Helicopters, Inc., 708

F.2d 475, 480 (9th Cir. 1983); Hagen v. City of Winnemucca, 108

F.R.D. 61, 63-64 (D. Nev. 1985) (finding definition of class

insufficient when it involved violations of proposed members'

constitutional rights).

Defendant's attack on plaintiffs' motion stems from

plaintiffs’ partial reliance on two statutes to define the class.

The proposed class would include individuals who “assisted

certified public accountants in the practice of public accountancy,

as provided for in California Business and Professions code

sections 5051 and 5053.” Section 5051 defines seven acts that are

deemed as the “practice of public accountancy,” including holding

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oneself out to the public as skilled in public accountancy,

maintaining an office for the business of a public accountant, and

offering to perform certain services such as an audit for

compensation. Section 5053 states that nothing shall preclude an

individual who is not certified as an accountant from assisting one

who is, so long as the former is under the control and supervision

of the latter. 

Defendant argues that plaintiffs’ reliance of these statutes

makes it difficult to discern who should be included in the class.

For instance, defendant argues that some of the categories of work

in Section 5051 are nonsensical in this context (e.g., they argue

that a PwC associate cannot “assist” a CPA in holding himself or

herself out to the public as one skilled in public accountancy, or

“assist” a CPA in maintaining an office for his or her business).

The argument does not lie. It is far from clear that the proposed

ambiguities exist. Just as a matter of common sense, by assisting

the licensed accountant, the employees accomplish the tasks

enumerated in the statute, and attacked by defendant.

Even if the court were to agree that incorporation of these

two statutes into the class definition introduces an element of

ambiguity, courts retain the discretion to alter an inadequate

class definition. See Lamumba Corp. v. City of Oakland, 2007 WL

3245282, at *5 (N.D. Cal. Nov. 2, 2007); Hagen, 108 F.R.D. at 64

(altering definition to remove condition of constitutional

violation). Accordingly, the court could strike the reference to

Sections 5051 and 5053 from the class definition, although it

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appears to the court unnecessary. In any event, defendant does not

challenge the remainder of the class definition, which is

sufficiently definite, ascertainable, and administratively

feasible. 

B. Requirements under Rule 23(a)

As noted, Rule 23(a) lists the prerequisites for a class

action. These requirements are (1) the impracticability of joining

all members (“numerosity”); (2) the existence of common questions

of law or fact (“commonality”); (3) typicality of the claims and

defenses of the parties with respect to the proposed class

(“typicality”); and (4) adequate representation of the proposed

class by the parties before the court (“adequacy of

representation”). Fed. R. Civ. P. 23(a); see also Stanton v.

Boeing Co., 327 F.3d 938, 953 (9th Cir. 2003).

1. Numerosity

Rule 23(a)(1)’s requirement that an attempt to join all

parties be “impracticable” does not equate to “impossible.” See

Fed. R. Civ. P. 23(a)(1); Harris v. Palm Springs Alpine Estates,

Inc., 329 F.2d 909, 913-14 (9th Cir. 1964). Instead, an attempt

to join all parties must only be difficult or inconvenient.

Harris, 329 F.2d at 913-14. Although impracticability does not

hinge only on the number of members in the putative class, joinder

is usually impracticable if a class is “large in numbers.” Jordan

v. Los Angeles County, 669 F.2d 1311, 1319 (9th Cir. 1982), vacated

on other grounds, 459 U.S. 810 (1982). While there is no set

number of members required, courts have generally found classes

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 This remains true even if the class were limited to Attest 2

associates.

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numbering in the hundreds to be sufficient to satisfy the

numerosity requirement. See, e.g., Gay v. Waiters’ & Dairy

Lunchmen’s Union, Local No. 30, 549 F.2d 1330, 1332-34 (9th Cir.

1977) (reversing district court’s finding that 184 potential

members is insufficient to fulfill Rule 23(a)(1)’s requirements);

Sagers v. Yellow Freight Sys., Inc., 529 F.2d 721, 734-35 (5th Cir.

1976) (holding class of approximately 110 members satisfied

numerosity requirement); see also James Wm. Moore, Moore’s Federal

Practice § 23.22[1][b] (Daniel R. Coquillete et al. eds., 3d ed.

2007) (noting forty-one or more members is “usually sufficiently

numerous”).

Here, plaintiffs contend that they anticipate a class

numbering over one thousand members. Kershaw Decl. at ¶ 12.

Defendant does not challenge that the numerosity requirement is

met. The court therefore finds that plaintiffs have satisfied the

numerosity requirement.2

2. Commonality

Commonality exists when “there are questions of law or fact

common to the class.” Fed. R. Civ. P. 23(a)(2). Rule 23(a)(2)

does not require that every or all questions of fact or law be

common or identical. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019

(9th Cir. 1998). Rule 23(a)(2) is also more lenient than the

related requirement under Rule 23(b)(3) that common questions of

law or fact predominate. Id. In other words, common questions

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exist; but they need not be the predominant questions in the case.

Id. Commonality may exist where there is a common legal issue with

varied factual predicates, or where there is a common factual basis

with varied legal remedies. Id. at 1019-20.

Here, plaintiffs have adequately pled common questions of law

or fact. Common legal questions include whether a license is

required to satisfy the professional exemption, whether assistants

to licensed accountants may exercise discretion and independent

judgment under the laws and professional standards governing

accounting, and which duties performed by the class members, to the

extent they are shared, should be classified as exempt. Common

factual questions include whether defendant implemented policies

and procedures requiring the supervision of class members. These

questions are similar to those that other courts have found

sufficient to constitute common questions of law or fact for

purposes of Rule 23(a)(2). See, e.g., Sepulveda v. Wal-Mart

Stores, Inc., 237 F.R.D. 229, 242 (C.D. Cal. 2006). Accordingly,

the court finds that the requirement of commonality is satisfied.

3. Typicality

Typicality requires that “the claims or defenses of the

representative parties are typical of the claims or defenses of the

class.” Fed. R. Civ. P. 23(a)(3). For typicality to be met,

plaintiffs need not possess identical claims to those of the

putative class members. Hanlon, 150 F.3d at 1020. Instead,

plaintiffs’ claims need only be “reasonably coextensive” with the

claims of the putative class. Id. The inquiry focuses on the

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 Plaintiffs also allege violations of numerous other sections 3

of the California Code, including sections 17200 of the Business

and Professions Code and sections 203, 226, 510, 1174, and 1194 of

the Labor Code. However, these violations are contingent upon a

finding that plaintiffs were in fact misclassified as exempt

employees.

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claims themselves -- not the factual predicates from which the

claims arise. Hanon v. Dataprods. Corp., 976 F.2d 497, 508 (9th

Cir. 1992). “The test of typicality ‘is whether other members have

the same or similar injury, whether the action is based on conduct

which is not unique to the named plaintiffs, and whether other

class members have been injured by the same course of conduct.’”

Id.

Here, the named plaintiffs allege the same injury as that

allegedly suffered by the other class members, e.g., defendant’s

failure to pay overtime, as a result of the same conduct by

defendants, i.e., misclassification. Their legal claims (and the

corresponding statutory bases of such claims) are also the same as

those of the other class members. For example, in addition to

failure to pay overtime, plaintiffs also allege that defendant

failed to provide meal periods in violation of California Labor

Code § 512(a), and failed to provide the statutorily defined

compensation for missed meal periods in violation of California

Labor Code § 226.7.3

Defendant contends, however, that plaintiffs’ employment in

only a single division of a line of service precludes a finding of

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Defendant alternately argues that typicality is lacking 4

because the named plaintiffs would be preoccupied with unique

defenses pertaining to their poor job performance, but they have

failed to articulate how this performance impacts whether or not

they should have been classified as exempt.

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typicality. This argument is not without foundation. See Kelley 4

v. SBC, Inc., 1998 U.S. Dist. LEXIS 18643, at *43 (N.D. Cal. Nov.

13, 1998) (limiting certification to positions plaintiffs actually

held). Plaintiff responds that there need not be a named plaintiff

with respect to every possible job category. See Stanton, 327 F.3d

938, 957 (9th Cir. 2003) (finding named plaintiffs to satisfy

typicality with respect to fifteen thousand putative class members,

even though plaintiffs did not represent “various sub-groups” of

class); Cornn v. United Parcel Services, Inc., 2005 WL 588431, at

*7 (N.D. Cal. 2005) (no need for separate class representative for

certain positions). 

In Staton, however, there was a broad cross-section of thirtytwo named employee plaintiffs, which is not the case here. 327

F.3d at 957 ("'The named plaintiffs ... include a very broadly

selected cross-section of the different categories of Boeing

employees. Salaried and hourly, management and line-worker, union

and non-union are all represented, as are each of the major

geographic hubs . . . and each of the pre-merger companies.'").

Additionally, in Cornn, the court found that there was no material

distinction between the positions that were represented and those

that were not. 2005 WL 588431, at *7.

The court finds that class certification is appropriate as to

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the positions that plaintiffs actually held. As noted below, this

issue might be better framed as a problem of predominance.

Regardless of how the issue is framed, the fact remains that

plaintiffs have virtually no knowledge of what associates in other

divisions do. Moreover, based on the evidence submitted by PwC,

there appear to be significant differences between the work

required by an audit versus the work involved in securing a

client's IT infrastructure, or in creating tax provisions for a

trust. In light of the such differences, the court finds that

certification is only appropriate to a class of Attest associates.

4. Adequacy of Representation

Adequacy of representation requires that “representative

parties will fairly and adequately protect the interests of the

class.” Fed. R. Civ. P. 23(a)(4). In order for plaintiffs to

adequately represent the putative class members, they must

demonstrate, first, that they do not possess any conflicts of

interest with the class members and, second, that both plaintiffs

and their counsel will work to “prosecute the action vigorously”

with respect to the entire class. Stanton, 327 F.3d at 957. 

Here, there is no serious dispute as to either part of the

analysis. There is no purported conflict of interest between

Campbell and Sobek, on the one hand, and the putative class

members, on the other. Turning to the second part of the analysis,

a key consideration is the competency of counsel. Hanlon, 150 F.3d

1020. Plaintiffs’ counsel has ample experience in California wageand-hour class action suits. Kershaw Decl. ¶ 2, Ex. 1.

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Additionally, both of the named plaintiffs have participated in the

litigation process -- a relevant factor to determining adequacy of

representation. See Sepulveda, 237 F.R.D. at 244. The court

therefore finds that plaintiffs satisfy the adequacy of

representation requirement.

B. Requirements under Rule 23(b)(3)

In addition to the requirements set forth in Rule 23(a),

plaintiffs must also satisfy one of the requirements set forth in

Rule 23(b). Here, plaintiffs seek certification pursuant to Rule

23(b)(3), which requires that common questions of law or fact

“predominate over any question affecting only individual members”

and that a class action be “superior to other available methods for

the fair and efficient adjudication of the controversy.” Fed. R.

Civ. P. 23(b)(3). As with the other components of the class action

inquiry, the court’s function is not to pass on the merits. Eisen,

417 U.S. at 178.

1. Predominance

The predominance requirement “tests whether proposed classes

are sufficiently cohesive to warrant adjudication by

representation." Hanlon, 150 F.3d at 1022 (internal quotation

marks omitted). The inquiry “presumes that the existence of common

issues of fact or law have been established pursuant to Rule

23(a)(2).” Id. “‘When common questions present a significant

aspect of the case and they can be resolved for all members of the

class in a single adjudication, there is clear justification for

handling the dispute on a representative rather than on an

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 Though predominance may be marginal, actions addressing what 5

are, in reality, several individual claims may not be practically

pursued unless a class action is authorized. Indeed, such may be

true in the instant case.

 Section 515 of the California Labor Code states, “[t]he 6

Industrial Welfare Commission may establish exemptions from the

requirement that an overtime rate of compensation be paid.” The

regulation for the professional exemption is found in Wage Order

No. 4-2001, which governs “PROFESSIONAL, TECHNICAL, CLERICAL,

MECHANICAL AND SIMILAR OCCUPATIONS.” The same regulation is also

published in the California Code of Regulations at title 8, section

11040.

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individual basis.’” Id. (quoting 7A Wright & Miller, Federal 5

Practice & Procedure § 1778 (2d ed. 1986)). 

Defendant argues that three exemptions -- professional,

administrative, and executive -- may apply to each proposed class

member. The court first discuses the requirements unique to each

exemption, and then separately addresses the requirement common to

all three exemptions regarding the exercise of independent judgment

and discretion. The latter requirement is arguably the single most

important issue, because it is required for every exemption. In

other words, if an employee does not exercise independent judgment

and discretion, then that employee is not exempt from overtime,

regardless of whether other exemption requirements may be

satisfied.

a. Requirements Unique to Each Exemption

i. Professional Exemption

Plaintiffs first argue that common proof can establish that

no class member is entitled to the professional exemption. This 6

common proof consists of the nonexistence of a CPA license from

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 The exemption provides: 7

(3) Professional Exemption

A person employed in a professional capacity means any

employee who meets all of the following requirements:

(a) Who is licensed or certified by the State of

California and is primarily engaged in the

practice of one of the following recognized

professions: law, medicine, dentistry, optometry,

architecture, engineering, teaching, or

accounting; or

(b) Who is primarily engaged in an occupation

commonly recognized as a learned or artistic

profession. . . .

Cal. Code Regs., tit. 8, § 11040(A). In addition, the employee

must satisfy other requirements, such as exercise independent

judgment and discretion.

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the State of California for each member of the class. It is true

that, with respect to one avenue for satisfying the requirements

of the professional exemption, a license is required. Cal. Code

Regs., tit. 8., § 11040(1)(A)(3) (exemption applies to those who

are licensed or certified in the practice of law, medicine,

dentistry, optometry, architecture, engineering, teaching, or

accounting). 

7

This is not, however, the only avenue for satisfying the

requirements of the professional exemption. The exemption

provides for two separate avenues: the first (the professional

exemption) applies to employees who are duly licensed or

certified, whereas the second (the learned professional

exemption) applies to those who are “primarily engaged in an

occupation commonly recognized as a learned or artistic

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 Piscione did not address the threshold question of whether 8

an unlicensed employee working in the field of accounting can

qualify for the learned professional exemption, or if the nonlearned professional exemption essentially preempts the field for

accounting-related work. In this regard, it would be instructive

to consider whether unlicensed employees working in other

enumerated professions (e.g., medicine, dentistry, optometry, etc.)

have been found to qualify for the learned professional exemption.

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profession.” Id. at § 11040(1)(A)(3)(b). Clearly, the proposed

class cannot possibly satisfy the first avenue -- since, by

definition, it only encompasses unlicensed employees.

Predominance, however, is measured by the significance of the

issue. Wamboldt v. Safety-Kleen Systems, Inc., 2007 WL 2409200,

at *13 (N.D. Cal. 2007).

Plaintiffs argue that this second avenue (the learned

professional exemption) cannot apply to the facts of this case,

because it would require disregarding the specific requirements

for the recognized profession of accounting in favor of the more

general requirements for learned professions. The argument has

great force. Defendant notes that in Piscione v. Ernst & Young,

L.L.P., 171 F.3d 527, 543-46 (7th Cir. 1999), the Seventh Circuit

upheld a finding that an unlicensed employee at an accounting

firm qualified for the learned professional exemption based on

his B.S. in Mathematics and the twenty hours of continuing

education required by his employer. Nonetheless, the court need 8

not engage in detailed examination of the issue at the present

juncture. Even if the learned professional exemption were

applicable, it would also present a common predominant question.

To satisfy the learned professional exemption, defendant

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would need to prove that the class members are primarily engaged

in an “occupation commonly recognized as a learned or artistic

profession” (as distinct from the non-learned professional

exemption, which requires a license). Cal. Code Regs., tit. 8,

§ 11040(1)(A)(3)(b). A “learned or artistic profession” is

defined to include “[w]ork requiring knowledge of an advanced

type in a field or science or learning customarily acquired by

a prolonged course of specialized instruction and study, as

distinct from a general academic education and from an

apprenticeship and from training in the performance of routine,

manual, or physical processes.” Id. at § 11040(1)(A)(3)(b)(i).

Defendant seizes upon the element of specialized instruction

and study to argue that the exemption will involve individualized

questions. For example, defendant notes that its educationrelated hiring requirements vary by division and that it offers

a multitude of training courses for its employees, which are

utilized to varying degrees from individual to individual. But

the test considers whether an employee is “primarily engaged in

an occupation commonly recognized as learned.” Id. at §

11040(1)(A)(3)(b) (emphasis added). In other words, the

predicate for the learned professional exemption is a qualifying

occupation, not a particular individual level of educational

attainment. But see Piscione, 171 F.3d at 544-45 (focusing on

individual educational attainment). This inquiry presents a

common question because it focuses on whether the individual is

employed in a qualifying occupation.

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Defendant’s interpretation of the learned professional

exemption, which focuses on the education and training possessed

by each individual employee, cannot be reconciled with the

language of the exemption. To illustrate, one component of the

exemption may be satisfied by a prolonged course of specialized

instruction. Accepting defendant’s interpretation of the

exemption would mean that an associate who takes a several monthlong training course is potentially employed in “an occupation

commonly recognized as learned,” whereas that associate’s

colleague down the hall who works in the same division and line

of service but who takes a two-week long training course, is not

employed in such “an occupation.” The court cannot accept

defendant’s interpretation, which would embrace such inconsistent

results. 

Rather, the court finds that the requirements unique to the

professional exemption -- setting aside, for the moment, the

requirement of discretion and independent judgment -- are

susceptible to common proof.

ii. Administrative Exemption

California law also exempts employees who are primarily

engaged in the “performance of work directly related to the

management policies or general business operations of [their]

employer or [their] employer’s customers.” Cal. Code Regs., tit.

8, § 11040(1)(A)(2)(a)(i). Employees who work as advisors and

consultants to an employer’s customers may qualify for the

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These regulations have been revised under federal law but 9

the Wage Orders adopted these regulations as effective on the date

the Wage Orders were adopted. Cal. Code Regs., tit. 8, § 11040

("The activities constituting exempt work and non-exempt work shall

be construed in the same manner as such terms are construed in the

following regulations under the Fair Labor Standards Act effective

as of the date o this order . . ."). These former regulations are

therefore the legally relevant ones. A copy of the former

regulations can also be found in the current California Division

of Labor Standards Enforcement (DLSE) Manual.

In light of this fact, plaintiffs’ reliance on the 10

administrative/production worker dichotomy is less than helpful.

Plaintiffs argue that the dichotomy distinguishes between (a)

employees whose duties directly relate to the management policies

or general business operations of its clients versus (b) those

employees whose duties relate to producing the commodity (whether

goods or services) that the enterprise exists to produce and

market. See Nordquist v. McGraw-Hill Broadcasting Co., 32 Cal.

App. 4th 555, 563 (1995); Dalheim v. KDFW-TV, 918 F.2d 1220, 1230

(5th Cir. 1990). But the example of a tax consultant, which the

regulations list as an example of one who qualifies for the

administrative exemption, blurs that dichotomy. The tax

consultant’s work directly relates to the client’s business

operations, but the tax consultant’s duties also relate to

producing the commodity of his or her enterprise, tax advice.

Similarly, an auditor's work directly relates to the client's

business operations, but the commodity of the auditor's enterprise

is audit advice.

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administrative exemption. See Former 29 C.F.R. § 541.205(d).9

In order to qualify for the exemption, the work must be directed

to “matters that involve policy determinations, i.e., how a

business should be run or run more efficiently, not merely

providing information in the course of the customer’s daily

business operations.” Bratt v. City of Los Angeles, 912 F.2d

1066, 1070 (9th Cir. 1990). The regulations interpreting the

Wage Orders expressly contemplates that “many persons employed

as advisory specialists and consultants of various kinds

[including] . . . tax experts” may qualify for the exemption.10

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Former 29 C.F.R. § 541.205(c)(5); id. at § 541.205(c)(2) (“[A]

tax consultant . . . is ordinarily doing work of substantial

importance to the management or operation of a business.”).

Here, plaintiffs contend that, for two reasons, "no

unlicensed associate within PwC spends more than 50 percent of

his or her time providing advice to PwC’s clients on matters of

significance.” Reply at 14. First, plaintiffs argue that the

rules of independence governing the accounting profession

prohibit even licensed professionals from functioning as

administrators of a customer’s business. But, as even

plaintiffs’ expert admitted, these rules do not prohibit licensed

professionals from providing advice or making recommendations “to

assist the client’s management in performing its functions and

making decisions.” Carradero Decl., Ex. 3, Ueltzen Dep. 111:8-

114:12 (agreeing with opinion rendered by defendant’s expert);

see also Decl. of John Toriello ¶ 12 (drafting memorandum to

evaluate client's position of keeping separate financial

statements for itself and a company in which it had fifty percent

ownership). The regulations make clear that those who give

advice, such as consultants, may qualify for the administrative

exemption. 

Second, plaintiffs note that PwC’s company policy directs

who may and may not sign various documents, letters, and reports

-- the effect of which is to limit giving direct advice to

clients to those above the senior associate level. Because this

policy is not only relevant to determining whether PwC associates

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and senior associates are performing work directly related to

their client's general business operations under the

administrative exemption, but also whether the class members

exercise discretion and independent judgment, it is discussed

below in that latter context.

iii. Executive Exemption

PwC also argues that application of the executive exemption

will require case-by-case analysis. The executive exemption

requires, among other things, that an employee: (1) manage a

customarily recognized department or subdivision thereof; (2)

customarily and regularly direct the work of two or more other

employees; and (3) make recommendations as to the hiring or

firing, and advancement, promotion, or change of status of other

employees that carry particular weight. Cal. Code Regs., tit.

8., § 11040(1)(A)(1).

Here, defendant notes that many, but not all, of the

proposed class members serve as the “in charge” (PwC’s

nomenclature) on engagements and thereby manage a team of other

employees. But a team of employees assembled for a particular

engagement is not a “recognized department.” The California

Division of Labor Standards Enforcement (DLSE) Manual cautions

that “the term ‘customarily recognized department or subdivision’

has a particular meaning. The phrase is intended to distinguish

between ‘a mere collection of employees assigned from time to

time to a specific job or series of jobs’ and ‘a unit with

permanent status and function.’” DLSE Manual at § 53.3.1.

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Although the question of whether a team of employees working on

an engagement constitutes a “recognized department” is one on the

merits, there is little dispute as to its answer. There is no

evidence that the teams over which some associates may have “in

charge” status are units with permanent status and function.

Accordingly, because the executive exemption does not apply at

all, it does not pose an individualized question for the class.

b. Requirement Common to All Exemptions: Discretion

and Independent Judgment

Above the court determined whether certain requirements for

the professional, administrative, or executive exemptions posed

individualized questions. The court has not yet addressed the

requirement common to all three exemptions, however, which is

whether the employees at issue “customarily and regularly

exercise discretion and independent judgment.” Cal. Labor Code

§ 515(a).

It is this requirement that requires further analysis, for

clearly if the class members exercise such powers differently,

class certification is suspect. The term discretion and

independent judgment "implies that the person has the authority

or power to make an independent choice, free from immediate

direction or supervision and with respect to matters of

significance." Former 29 C.F.R. § 541.207(a). "Discretion and

independent judgment involves the comparison and evaluation of

possible courses of conduct, and acting or making a decision

after considering various possibilities." Nordquist, 32 Cal.

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App. 4th at 564.

There are two potential components to whether (and how

often) an employee exercises independent judgment and discretion:

one based on the employee’s actual duties and one based on the

employer’s expectations. As the California Supreme Court

explained it, both these components are problematic: 

On the one hand, if hours worked on [an exempt

activity] were determined through an employer's job

description, then the employer could make an employee

exempt from overtime laws solely by fashioning an

idealized job description that had little basis in

reality. On the other hand, an employee who is

supposed to be engaged in [an exempt activity] during

most of his working hours and falls below the 50

percent mark due to his own substandard performance

should not thereby be able to evade a valid exemption.

Ramirez v. Yosemite Water Co., 20 Cal. 4th 785, 802 (1999).

Accordingly, Ramirez instructed trial courts to “steer clear of

these two pitfalls by inquiring into the realistic requirements

of the job.” Id. (emphasis in original). “In so doing, the

court should consider, first and foremost, how the employee

actually spends his or her time. But the trial court should also

consider whether the employee's practice diverges from the

employer's realistic expectations.” Id. Ramirez thus envisions

the synthesis of two components, one directed at the employee and

one directed at the employer.

The California Supreme Court has also clarified the import

of Ramirez in the class action context: an employer’s realistic

expectations are “likely to prove susceptible to common proof,”

but how employees actually spend their time “has the potential

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A problem with the latter requirement is that it will 11

almost always limit class actions to jobs that are precisely the

same, and which are performed in the same manner. Such a

conclusion would defeat the effect of class actions which permit

suit in cases where unlawful conduct would otherwise go uncorrected

because of the limited recovery available in individual suits.

In Sav-On, for example, it appears that the duties between 12

class members did not vary significantly; rather, the only question

was whether each task fell on the exempt or non-exempt side of the

ledger. See Sav-On, 34 Cal. 4th at 330-31 (“As plaintiffs argued

to the trial court, ‘[t]he only difference between Defendant's

declarations and Plaintiffs' evidence is that the parties disagree

on whether certain identical work tasks are “managerial” or

“non-managerial.”’”).

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to generate individual issues.” Sav-On Drug Stores, Inc. v. 11

Superior Court, 34 Cal. 4th 319, 337 (2000). Of course, whether

these individual issues materialize in any particular case turns

on whether the job duties at issue vary from employee to

employee, or whether they are uniform across employees.12

i. Employer’s Realistic Expectations

Plaintiffs argue that the question of whether the proposed

class members exercise independent judgment and discretion can

be answered by common proof. The purported common proof is PwC’s

policy that unlicensed associates must be under the control and

supervision of licensed accountants, which plaintiffs contend is

a necessary product of the statutes and professional standards

governing the practice of public accountancy. See Cal. Bus. &

Prof. Code § 5053 (nothing shall preclude an individual “who is

not a [CPA] from serving as an employee of, or an assistant to,

a [CPA] . . . if the employee or assistant works under the

control and supervision of a [CPA].”). Section 5053 and its

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The PwC-specific policies to which plaintiffs allude are 13

those pertaining to who may sign various documents, letters, and

reports.

 As discussed above, this is only half of the issue, because 14

the court must also consider “how the employee actually spends his

or her time.” Ramirez, 20 Cal. 4th at 802. But the notion that

the company rules may be disregarded must be rejected. The fact

that in an individual case or number of cases an employee is

working contrary to the company's rules would not necessarily

undermine the propriety of class certification.

30

implicit incorporation into PwC’s corporate policies is 13

therefore arguably instructive as to PwC’s realistic expectations

as an employer.14

PwC also has a policy that employees should be compliant

with applicable professional standards. Kershaw Decl., Ex. 6 at

00661. Similar to Section 5053, the pertinent professional rules

promulgated by AICPA address generally the supervision of

unlicensed accounting employees. Davila Decl., Ex. I (AICPA §

311.11) (“Supervision involves directing the efforts of

assistants who are involved in accomplishing the objectives of

the audit and determining whether those objectives were

accomplished.”). These rules envision, however, that the amount

of supervision that is appropriate varies on an individual basis.

“The nature and extent of supervision and review must necessarily

reflect wide variances in practice. The auditor charged with

final responsibility for the engagement must exercise seasoned

judgment in varying degrees of his supervision and review of the

work done and judgment exercised by his subordinates.” Id., Ex.

G (AICPA § 210.03). The factors to be taken into consideration

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In an earlier motion, defendant argued that Ruiz 15

collaterally estopped class certification here, but the court

denied the motion since Ruiz was brought as a private attorney

general suit, rather than as a class action, precluding the

necessity of showing “identity of issues.”

31

include the complexity of the project and the qualifications of

the employee. Id., Ex. I (AICPA § 311.11). 

In order to prove that the requirement of discretion and

independent judgment is susceptible to common proof based on

these standards, plaintiffs must prevail on its argument that

compliance with Section 5053 and related professional standards

necessarily means that all unlicensed employees are performing

non-exempt work. Put slightly differently, the question is

whether being under "control and supervision" precludes the

exercise of meaningful discretion and judgment. 

Defendant relies upon a California Superior Court decision,

which it argues is persuasive authority for the issues presented

here. Ruiz v. PricewaterhouseCoopers LLP, Case No. BC 287920

(Cal. Sup. Ct. December 8, 2003), involved a trio of overtime

lawsuits against several accounting firms, including PwC. They

were brought as private attorney general suits under California’s

Unfair Competition Law (prior to its amendment by Proposition 64,

which subsequently required that all representative actions

proceed as class actions). The plaintiff in that case, like 15

the plaintiffs here, argued that the cases were appropriate for

representative treatment because of Section 5053.

The Ruiz court noted that Section 5053 “is part of the

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Accountancy Act, which regulates the licensing and practice of

accountants . . . and is not part of the Labor Code of the Wage

Orders, which regulate overtime and work conditions.” Id. at *5.

The court characterized plaintiff’s position as requiring an

“illogical leap between two completely unrelated statutory

schemes.” Id. The court also noted that Ramirez required the

court to examine “how the employee actually spends his or her

time,” presumably requiring an individualized inquiry. 20 Cal.

4th at 802. Finally, it held that “as a matter of common sense,

exercising discretion and independent judgment is not

incompatible with being under the control and supervision of

someone else.” Id. at 6 (noting that even high-ranking company

officers are under the control and supervision of a board of

directors or shareholders). 

It appears to this court that there is something less than

logic in refusing to recognize the relationship, for cases of

this type, between the Accountancy Act and the California Labor

Code. The question tendered is whether, given the limitations

imposed by the Accountancy Act, defendants violated the

California Labor Code in treating associates as exempt employees.

Clearly, to the extent that the statutes and professional

standards are implicitly incorporated into the company's rules,

they bear directly on the issues tendered by this motion.

PwC's company rules prohibit the putative class members from

signing their names to various documents, letters, and reports.

The pertinent regulation states, however, that "[t]he fact that

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an employee’s decision may be subject to review and that upon

occasion the decisions are revised or reversed after review does

not mean that the employee is not exercising discretion and

independent judgment." Former 29 C.F.R. § 541.207(e)(1). For

example, an assistant to the president of a large corporation may

regularly reply to correspondence addressed to the president.

Id. Although the president may on occasion alter or discard the

prepared reply and direct that another one be sent, this action

does not destroy the exempt character of the assistant's

function. Id. Similarly, a "management consultant who has made

a study of the operations of a business and who has drawn a

proposed change in organization, may have the plan reviewed and

revised by his superiors before it is submitted to the client."

Id. at § 541.207(e)(2). In addition, "[t]he policies formulated

by the credit manager of a large corporation may be subject to

review by higher company officials who may approve or disapprove

these policies." Id.; see also Copas v. E. Bay Mun. Util. Dist.,

61 F. Supp. 2d 1017, 1030 (N.D. Cal. 1999) (finding that employee

exercised independent judgment and discretion even though his

written work and reports were subject to review by supervisors).

Accordingly, the court finds that the fact that the work of

PwC associates and senior associate is subject to review is not

sufficient to prove that they are performing non-exempt work.

Nevertheless, as noted below, the court need not rely upon this

fact in certifying a class. Instead, the court finds that based

on the similarity of duties performed by Attest associates, class

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certification is appropriate.

ii. Employees’ Actual Duties

Regardless of what policies an employer may establish from

the top-down, and regardless of what professional standards may

apply at an industry-wide level, what employees actually do, on

a day-to-day basis, is a separate matter. For example, simply

because PwC does not have a policy expressly prohibiting

discretion and independent judgment does not mean that its

employees actually exercise such discretion and independent

judgment. Under Ramirez, the court must inquire “first and

foremost” into “how the employee actually spends his or her

time.” 20 Cal. 4th at 802. Of course, on a motion for class

certification, the issue is narrower: the question is whether

that inquiry is susceptible to common proof.

Where the relevant duties performed (i.e., those that

arguably constitute exempt activity) vary from class member to

class member, many courts have found that individual issues,

rather than common issues, predominate. See Jimenez v. Domino's

Pizza, 238 F.R.D. 241, 251 (C.D. Cal. 2006) (no predominance of

common question where “there were many variable[s] which affected

a particular manager's mix of duties”; “the predominating issue

in this case is the actual mix of duties worked which entails a

need to conduct an individual inquiry for each class member”);

Sepulveda, 237 F.R.D. at 249 (no predominance of common question

where there was “voluminous evidence that there actually was a

great deal of variance in [assistant manager] duties”); Pfohl v.

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Farmers Ins. Group, 2004 WL 554834, at *9 (C.D. Cal. Mar. 1,

2004) (“The differing job duties and the individualized inquiry

to determine whether these varying duties meet the administrative

exemption preclude a collective action in this case.”); Perry v.

U.S. Bank, 2001 WL 34920473, at *7 (N.D. Cal. Oct. 16, 2001) (no

predominant common question “in light of the differences in

individual job duties”); Dunbar v. Albertson’s, 141 Cal. App. 4th

1422, 1431 (2006) (class treatment inappropriate where findings

as to one grocery manager could not be extrapolated to 900 other

grocery managers due to significant variation in work performed).

Conversely, in cases where class treatment was deemed

appropriate, the job duties between the class members were

similar. In Tierno, for example, one of the cases relied upon

by plaintiffs, the employer argued that the class members’ job

duties varied from store to store, but upon examination of the

record, the court determined that “the Store Manager position at

Rite Aid is, in fact, sufficiently similar from store to store

in all important respects such that class treatment is

appropriate in this case.” Tierno v. Rite Aid Corp., 2006 WL

2535056, at *9 (N.D. Cal. Aug. 31, 2006). Similarly, the primary

dispute between an employer and its employees may focus on how

a single activity undertaken by all class members should be

treated. See, e.g., Morillion v. Royal Packing Co., 22 Cal. 4th

575 (2000) (class action by agricultural workers alleging that

time spent commuting on employer’s bus counted as “hours

worked”).

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 One court has noted that a "[d]efendant's initial, uniform 16

classification . . . has only minimal relevance to the facts that

ultimately must be determined at trial." Vinole v. Countrywide

Home Loans, Inc., 246 F.R.D. 637, 641 (S.D. Cal. 2007). Proving

a uniform classification is akin to proving the element of

standing: naturally, an employee must have been classified as

exempt to bring a misclassification claim. But once that initial

hurdle is cleared, the case will ultimately turn on whether the

employee was wrongly classified as exempt.

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The fact that an employer classifies all or most of a

particular class of employees as exempt does not eliminate the

need to make a factual determination as to whether class members

are actually performing similar duties. In Walsh, for example, 16

the employees argued that if they could prove that the employer

deliberately misclassified them as exempt, this policy would

constitute a common, predominant issue, “even if individualized

proof of a . . . member’s work was required to evaluate whether

each member’s work was exempt.” Walsh v. IKON Office Solutions,

Inc., 148 Cal. App. 4th 1440, 1461 (2007). The court rejected

the argument:

[Plaintiffs] assume that an employer is liable if it

classifies employees without regard to the law or

investigating what work they do, even if the employees

were, in fact, subject to the exemption. While such

action on the part of an employer may be ‘deliberate’

and ‘willful,’ [which might be relevant for waiting

time penalties] it is not ‘misclassification.’

In other words, [plaintiffs] cannot recover under

Labor Code section 1194 unless the Account Manager

Subclass members were not, in fact, subject to the

outside salesperson exemption; that determination

requires consideration of the individual circumstances

of each Account Manager Subclass member.

Id. 

Some courts, however, have determined that it is unfair for

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It may be intuitively unfair to permit an employer, who has 17

historically classified a particular group of employees as exempt

based on a uniform rule, to argue in the context of litigation that

the exemption inquiry will require an individualized analysis. But

the assumption behind such an intuitively appealing argument is

that an employer should somehow be bound by its prior position --

which is foreclosed by Walsh. "[I]n resolving questions of

California law, this court is bound by the pronouncement of the

California Supreme Court . . . and the opinions of the California

Courts of Appeal are merely data for determining how the highest

California court would rule . . . [but] the opinion of the Court

of Appeals on questions of California law cannot simply be

ignored." Brewster v. County of Shasta, 112 F. Supp. 2d 1185, 1188

n.5 (E.D. Cal. 2000) (internal quotation marks omitted).

37

an employer to “on the one hand, argue that all [class members]

are exempt from overtime wages and, on the other hand, argue that

the Court must inquire into the job duties of each [class member]

in order to determine whether that individual is 'exempt.’" See,

e.g., Wang v. Chinese Daily News, 231 F.R.D. 602, 613 (C.D. Cal.

2005). But, under Walsh, there is no estoppel effect given to

an employer’s decision to classify a particular class of

employees as exempt -- whether right or wrong, or even issued in

bad faith; instead, the only legally relevant issue to alleged

misclassification is whether the exemption in fact applies. If 17

the duties between class members are similar, the exemption

inquiry is likely susceptible to common proof, e.g., Tierno, 2006

WL 2535056, at *9, but if the duties are not sufficiently

similar, then the inquiry is unlikely to be susceptible to common

proof, e.g., Jimenez, 238 F.R.D. at 251. 

Here, both parties have submitted evidence pertaining to the

job duties performed by class members. Plaintiffs have submitted

two employee declarations (their own) and defendant has submitted

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This issue is also raised in defendant's motion to strike. 18

The court discusses the relevant issues raised by that motion but

finds that the arguments primarily go to the weight of the evidence

rather than its admissibility.

 “Q. Do you know what associates do in the [Transactional 19

Services] division?

A. No, I do not.

Q. Do you know what associates do in the [Systems Processing

Assurance] division do?

A. Specifically, no, I do not.”

38

approximately fifty employee declarations (from a mix of

associate, senior associate, and higher-level employees). The

Campbell and Sobek declarations state that their “daily

activities involved assisting CPAs in performing audits for PwC’s

clients” and that “[e]very audit was essentially performed in the

same way.” Campbell Decl. ¶ 6; Sobek Decl. ¶ 6. They also

describe how their duties were prescribed by the “audit plan,”

a computerized program with a list of financial statement items

that needed to be verified. Id. Sobek and Campbell both stated

that neither they nor “any other associate or senior associate

had the authority to prepare or deviate from the audit plan.”

Sobek Decl. ¶ 8; Campbell Decl. ¶ 8. 

Crucially, however, their personal knowledge appears

limited, in large part, to one division (Attest) within one line

of service (Assurance). But there are other divisions within 18

Assurance in addition to Attest: Systems Processing Assurance and

Transactional Services. Campbell testified during his deposition

that he did not know much about the job duties of associates in

these other two divisions. Campbell Dep. 22:22-23:2. Sobek’s 19

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“Q. Do you know what the duties were of a [Systems 20

Processing Assurance] associate, generally? 

A. They basically did SAS-70 type work, the controls. I’m not

sure. That’s all I knew of them.”

Of course, plaintiffs need not personally possess such 21

information, but Campbell and Sobek’s depositions and declarations

are the only pieces of evidence submitted by plaintiffs on the

duties performed by PwC associates and senior associates.

39

testimony was slightly more informed than Campbell’s on this

issue, but she too only possessed general information. Sobek

Dep. 229:19-230:6; 231:4-7. With regard to the duties 20

performed by associates in the Tax line of service, Sobek and

Campbell said that the associates help to perform tax returns,

but could not offer any specific details whatsoever. Campbell 21

Dep. 22:11-21; Sobek Dep. 230:7-13.

PwC has submitted a small mountain of declarations. Upon

review, two consistent findings emerge, both of which dovetail

with the limitations in Sobek and Campbell’s testimony. First,

they attest to significant differences in the work performed

between divisions and between lines of services. Some employees

work on IT, some work on tax returns, some work on reviewing

quarterly and year-end reports, some work on transactions, and

some work audits. See, e.g., Majstrova Decl. ¶ 5; Dang Decl. ¶

7; Wilson Decl. ¶ 7. Whether framed as an issue of typicality

under Rule 23(a)(3) or predominance under Rule 23(b)(3), the

court finds that certification would be improper if not limited

to the Attest division where plaintiffs actually worked.

Second, it appears that there is a meaningful distinction

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between associates and senior associates' duties. A significant

if not primary responsibility for senior associates is to review

the work of associates. See, e.g., Gomez Decl. ¶ 11 (“When I

became a Senior Associate, I spent about 50% to 60% of my time

reviewing the work of other Associates.”); Decl. of Ryann Lucas

¶ 17 (“As an associate, I spent 50% of my time on an engagement

preparing the documentation, whereas as a Senior Associate, I

spent less time preparing (no more than 30%) and more time

reviewing the work of others.”). Senior associates also tend to

spend more time helping to prepare the audit plan, interacting

with clients, and communicating with PwC managers and partners.

See, e.g., Decl. of Michael Anderson ¶¶ 8-9. The question is

whether these duties potentially involve the exercise of

independent judgment such that the inclusion of senior associates

would render class treatment inappropriate. Under the

circumstances, there does seem to be a sufficiently significant

difference between associates and senior associates to warrant

exclusion of the latter group from the class.

Although there is also some evidence of variation in the

duties performed by associates within the same division, the

duties are nevertheless sufficiently similar to warrant class

treatment. For example, it appears that many Attest associates

test the client's “internal controls,” such as the requirement

that checks be signed by someone other than the person who draws

it. Decl. of Ashlee Pierce ¶ 10; Decl. of Blair Krebs ¶ 11.

Similarly, many Attest associates perform "detail testing," in

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 These include, for example, waiting time penalties, Cal. 22

Labor Code § 203, wage statement claims, Cal. Labor Code § 226, and

meal and rest break claims, Cal. Labor Code §§ 512(a) & 226.7. 

41

which a sample of items from major account balances is selected

and a search of hard evidence of those items is performed. Decl.

of Denise McCurry ¶ 16; Decl. of Michael McCarvel ¶ 11. Based

on the similarities in duties performed by Attest associates, the

court finds that there is a common, predominant question of law

or fact. Cf. Tierno, 2006 WL 2535056, at *9.

c. Other Claims

Plaintiffs also allege a host of claims that are derivative

of, or dependent upon, a finding that PwC misclassified its

employees. Although the parties dispute whether each of these 22

claims presents individualized or common issues, even in the

aggregate these claim are not particularly significant. Rather,

the key issue upon which certification must rise or fall is

whether common questions of law or fact predominate in the main

exemption inquiry.

2. Superiority of Class Resolution

Rule 23(b)(3) also requires that class resolution be

"superior to other available methods for the fair and efficient

adjudication of the controversy." The relevant inquiry is

determined by analyzing the four factors in Rule 23(b)(3)(A-D).

Hanlon, 150 F.3d at 1023. Most these factors indicate that class

resolution is a superior method in this case. 

First, “the interest of members of the class in individually

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controlling the prosecution or defense of separate actions” must

give way to two competing concerns: the reality that class

members may fear reprisal in pursuing individual claims against

their employer, and the fact that individual litigation against

a well-funded defendant would be cost prohibitive. See Scott v.

Aetna Servs., Inc., 210 F.R.D. 261, 268 (D. Conn. 2002).

Second, “the extent and nature of any litigation concerning

the controversy” is not a concern, as neither party has

identified any related, pending litigation. 

Third, “the desirability or undesirability of concentrating

the litigation of the claims in this particular forum” does not

weigh heavily on either side. 

Fourth, although there may be manageability issues, they are

significant only if they create a situation that is less fair and

efficient than other available techniques. In re Sugar Industry

Antitrust Litigation, 73 F.R.D. 322, 358 (E.D. Pa. 1976).

Manageability concerns must be weighed against the alternatives

and "will rarely, if ever, be in itself sufficient to prevent

certification of a class." Klay v. Humana, Inc., 382 F.3d 1241,

1272 (11th Cir. 2004). 

Accordingly, the court finds that the requirements of Rule

23(b)(3) are satisfied here.

IV. Conclusion

For the reasons set forth above, the court GRANTS the motion

with respect to Attest associates but DENIES the motion with

respect to senior associates and non-Attest associates. 

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 The court also calls the parties' attention to Federal Rule 23

of Civil Procedure 23(f).

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The court notes that the above determination is one

involving a controlling question of law and there is substantial

ground for difference of opinion and that an immediate appeal

from the order will materially advance the ultimate termination

of the litigation.

ACCORDINGLY, the court certifies the matter for

interlocutory appeal pursuant to 28 U.S.C. § 1292.23

IT IS SO ORDERED.

DATED: March 24, 2008.

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