Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-04867/USCOURTS-cand-4_05-cv-04867-17/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1441 Petition for Removal- Labor/Mgmnt. Relations

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Case No. C05-04867

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

** E-Filed 03/04/2008 **

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

DAVID HO, on behalf of himself and all others

similarly situated and on behalf of the general

public and DOES #1-20,

 Plaintiffs,

 v.

ERNST & YOUNG LLP,

 Defendant.

Case Number C 05-04867 JF

ORDER GRANTING DEFENDANT’S 1

MOTION FOR SUMMARY

JUDGMENT

[re: docket no. 78]

Defendant Ernst & Young LLP (“E&Y”) moves for summary judgment as to the claims

of Plaintiff David Ho (“Ho”). For reasons set forth below, the motion will be granted.

I. BACKGROUND

After being terminated from E&Y, Ho filed the instant action seeking overtime

compensation. Ho alleges that E&Y improperly classified him as a salaried employee and then

exempted him from overtime pay under California law. He purports to represent a class of all

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

persons employed by E&Y in California who were performing the same functions and were

subject to the same salaried compensation system. 

Ho is a law school graduate with specialized training in tax law. Ho was hired by E&Y in

July, 2000 as a “staff 2.” This position is a above entry-level position and requires the employee

to review and analyze client data, identify and research tax issues arising from client situations,

conduct legal research and analysis, respond to client questions, and develop client relationships. 

Ho initially was hired at a salary of $75,000 and received a starting bonus of $10,000. 

E&Y asserts that during the two years that he was employed by E&Y, Ho was responsible

for researching various legal doctrines, analyzing complex international tax issues, drafting

lengthy client memos, and communicating to clients about problems and solutions. E&Y

contends that Ho’s deposition testimony, coupled with his self-assessments and performance

evaluations, establishes that Ho meets all of the criteria for the administrative exemption from

entitlement to overtime pay. E&Y also argues that any evidence that Ho spent less than fifty

percent of his time performing exempt duties is attributable to Ho’s own substandard

performance.

Ho alleges that he spent the majority of his time performing secretarial, clerical, and data

entry support work and thus is entitled to overtime compensation. Ho claims that he did not

perform work activities that were of an exempt nature for more than fifty percent of his time. 

II. LEGAL STANDARD

A motion for summary judgment should be granted if there is no genuine issue of

material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.

56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party bears

the initial burden of informing the Court of the basis for the motion and identifying the portions

of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that

demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986). 

If the moving party meets this initial burden, the burden shifts to the non-moving party to

present specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e);

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

Celotex, 477 U.S. at 324. A genuine issue for trial exists if the non-moving party presents

evidence from which a reasonable jury, viewing the evidence in the light most favorable to that

party, could resolve the material issue in his or her favor. Anderson, 477 U.S. 242, 248-49;

Barlow v. Ground, 943 F. 2d 1132, 1134-36 (9th Cir. 1991). 

III. DISCUSSION

An employee is considered administratively exempt under California law when he (1)

performs non-manual work directly related to management policies or general business

operations of his employer or his/her employer’s customers; (2) customarily and regularly

exercises discretion and independent judgment; (3) work[s] along specialized or technical lines

requiring special training, experience, or knowledge; (4) is primarily engaged in duties that meet

the test of exemption; and (5) earns a monthly salary equivalent to no less than two times the

state minimum wage for full-time employment. 8 Cal. Code Regs. §10040(2). 

1. Whether Ho performed non-manual work directly related to 

management policies or general business operations

An administratively exempt employee must perform work “directly related to

management policies or general business operations of his employer or his employer’s

customers.” 8 Cal. Code Regs § 11040(2)(a)(I). “The administrative exemption . . . refers

largely to activities that involve ‘advising the management, planning, negotiating, [and]

representing the company.’” Perine v. Abf Freight Systems, Inc., 457 F.Supp.2d 1004, 1013

(C.D. Cal. 2006) citing Paliacio v. Progressive Ins. Co., 244 F. Supp.2d 1040, 1046-47 (C.D.

Cal. 2002); see also 29 C.F.R. § 541.205(b). 

Ho argues that there is no evidence that he ever formulated any sort of advice or analysis

for E&Y’s clients. He contends that § 11040(2)(a)(I) requires that overtime-exempt

administrative work must relate directly to management policies or general business operations

and be of substantial importance, and that in contrast his work consisted of “mere assistance” and

“contributions.” Opp. at 11:3-6. Ho offers a declaration (“Ho Decl.”) in which he states that he

had significantly less meaningful client responsibilities than E&Y claims is supported by his

testimony. For example, Ho states that he spent more than eighty percent of his time for E&Y

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

performing clerical or secretarial support (often data entry) assignments that were given to him

by his superiors. Ho Decl. at ¶ 3. 

E&Y argues that Ho’s declaration conflicts with his deposition testimony and that the

deposition testimony controls. E&Y points out that Ho testified at his deposition that he had

substantial client responsibilities, and that he served as the primary contact for several clients. 

E&Y cites to several specific portions of Ho’s deposition transcript (“Ho Tr.”) to support its

position. 

 Ho does not identify portions of his deposition testimony that contradict the portions

cited by E&Y. Rather, Ho relies solely on a subsequent declaration that is inconsistent with his

deposition testimony. A party “cannot create an issue of fact by an affidavit contradicting his

prior deposition testimony.” Kennedy v. Allied Mutual Ins., Co., 952 F.2d 262, 266 (9th Cir.

1991). To the extent Ho’s declaration conflicts with his deposition testimony, his deposition

testimony controls. See Freeman v. Corporate Express Delivery Systems, Inc., 1999 WL

1012331 (N.D. Cal. 1999) citing School Dist. No. 1J, Multnomah County v. Acands, Inc., 5 F.3d

1255, 1264 (9th Cir. 1993). 

Ho’s deposition testimony shows that he performed activities typical of a tax consultant. 

Ho testified in his deposition that he researched tax issues, regularly reviewed the Tax Code, and

translated complex tax issues into plain English for clients who did not have the tax expertise he

did. Ho Tr. 142:1-19, 145:24-146:24, 147:9-22, 158:1-17, 161:8-163:21, 167:12-15. While Ho

argues that these services “involved no innovation or creativity on his part,” that is not the

standard for the administrative exemption. According to his own testimony, Ho spent two to

four weeks researching, reviewing, and analyzing cases for Hewlett-Packard concerning the

“informal claims doctrine,” which permits a refund without filing a formal tax return, and then

writing a forty-to-sixty page summary of the cases he found. Ho. Tr. 209:9-212:6. This project

at least was indicative of the type of work E&Y expected its “staff 2” employees like Ho to

perform. Ho also testified at his deposition that he worked directly with E&Y clients. Even

viewed in the light most favorable to Ho, the evidence shows that Ho had substantial

responsibilities with respect to clients and served as the primary contact for several clients. Thus,

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

as a matter of law, he was engaged in duties that are “directly related” to “management policies”

or “general business operations.” 

2. Whether Ho customarily and regularly exercised discretion and 

independent judgment

“[T]he exercise of discretion and independent judgment involves the comparison and the

evaluation of possible courses of conduct and acting or making a decision after the various

possibilities have been considered.” 29 C.F.R. § 541.207(a). Ho argues that he is non-exempt

because he had no authority to do, or say, anything of substance unless it was approved in

advance by his superiors. However, “the fact that an employee’s decisions are subject to review”

does not preclude the exercise of discretion and judgment. Copas v. East Bay Municipal Utility

District, 61 F. Supp.2d 1017, 1026 (N.D. Cal. 1999). 

Again, Ho’s deposition testimony contradicts his subsequent declaration and legal

argument. Ho testified at his deposition that as part of his responsibilities he determined what

client questions to answer directly and what questions to relay to his supervisors. Ho Tr. 145:24-

146:24, 147:9-22, He also testified that he contacted one E&Y client on a monthly basis and

supervised the coordination of activities between foreign E&Y offices and the client. Ho Tr.

142:1-144:19. He testified that for one client he translated complex tax concepts into “plain

English” because the client was not a tax expert. Ho Tr. 149:7-150:6. Ho admitted that for at

least ten clients, he researched whether the information on the client’s website was sufficient for

purposes of completing an “in-depth write up of the client’s industry and line of products and

services” or whether further research was necessary. Ho Tr. 152:24-155:25. While Ho again

attempts to create an issue of fact with his declaration, this is improper. 

3. Whether Ho performed work along specialized or technical lines 

requiring special training, experience, or knowledge under only general 

supervision.

As noted previously, Ho is a law school graduate with prior tax experience. Prior to

joining E&Y, Ho also received additional tax experience and training at Price Waterhouse &

Coopers, and attended several continuing professional education classes. 

Ho does not dispute that at least some of the work he performed required such

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

professional training, but he claims that he used such training, experience, and knowledge only

twenty percent of the time. However, the law does not require that professional training be used

for a certain percentage of time. 8 Cal. Code Regs. §11040(A)(2)(d). Further, his deposition

testimony and other evidence shows that Ho performed such tasks for more than twenty percent

of his time.

4. Whether Ho spent more than fifty percent of his time performing work 

that qualifies as exempt.

In order to qualify as a non-exempt employee, the employee must be primarily engaged in

duties that meet the test of the exemption. Ho contends that he spent “at least [eighty percent] of

his time while employed by the E&Y performing mundane, low level, tasks.” Ho Decl. at ¶ 3. In

support, Ho submits an analysis of a selection of his time records performed by Glenn

Pannenborg, C.P.A. Ho argues that he “spent at least [eighty perent] of his time while employed

by [E&Y] performing mundane, and low level, tasks such as entering data in spreadsheets;

arranging conference calls with clients; acting as a stenographer at meetings and writing down,

verbatim, everything that was discussed; copying or filing documents; proofreading documents

for numerical, grammatical, or formatting errors; retrieving materials for superiors, and similar

tasks.” Opp at 1:7-14. However, even if in the course of performing his work he was required to

perform routine tasks, such tasks are included in exempt work. 29 C.F.R. §541.208(b). See

Nordquist v. McGraw-Hill Broadcasting Co., 32 Cal. App. 4th 555, 562 (1995) (“Such activities

as gathering and summarizing the information and follow-through activities . . . if it is an integral

part of the administrative task, it may be counted as part of the exempt duties.” ); Copas, 61 F.

Supp. 2d at 10364 (“Any routine work that [plaintiff] performed, such as reviewing insurance

applications for completeness, was directly and closely related to the performance of his exempt

primary duties, and therefore exempt.”). The time record analysis does not show whether the

activities Pannenborg categorized as non-exempt in fact were activities that were performed in

connection with exempt duties.

Additionally, Pannenborg’s analysis does not account for 1,239 hours from time entries

that contain a “miscellaneous” description and entries that describe educational activities or

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 Ho alleges that it was Ernst & Young’s policy to not give his department any significant 2

number of [exempt] projects. However, Ho offers no evidence of such a policy beyond

allegation and accordingly does not create a factual dispute for the purposes of summary

judgment. Nelson v. Pima Community College, 83 F.3d 1075, 1081-82 (9th Cir. 1996) (“Mere

allegation and speculation do not create a factual dispute for purposes of summary judgment.”) 

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

internal organizational meetings. Pannenborg Decl. at ¶ 4. These hours could have been spent

performing exempt tasks or activities to facilitate exempt tasks, or they could have been activities

that were non-exempt. Additionally, at least nine months of time sheets are not included in

Pannenborg’s analysis at all. These time sheets were attached to Ho’s deposition and thus were

available to Ho and Pannenborg. Accordingly, Pannenborg’s declaration lacks probative value,

and Ho’s statement that he performed non-exempt tasks for eighty percent of his time is not

supported by admissible evidence. 

In any event, even if there were a dispute as to whether Ho was engaged in exempt

activities less than half the time, Ho cannot avoid summary judgment, because his performance

at E&Y was substandard for the position he held. Ho states in his declaration that he was

underutilized at E&Y. Ho Decl. at ¶ 27. E&Y admits that it underutilized Ho but explains that 2

Ho was not performing at the level expected of a “staff 2.” Ho Tr. 196:25-197:15. Ho’s

deposition testimony shows that his performance was criticized. For example, even though he

knew his position required him to begin work early in order to communicate with clients in

different time zones, Ho often arrived at work late. Ho Tr. 67:17-68:5. Further, Ho testified that

he sometimes would leave work early on Fridays. Ho Tr. 222:8-10. Ho was faulted for

substandard communication skills by a manager who reviewed his work. Ho. Tr. 175:9-15. Ho

states in his declaration that “[E&Y] observed that my data entry (spreadsheet) work products

and summaries could be improved as there were occasions when they had errors or appeared (at

least to my performance reviewer) to be sloppy or were not updated properly.” Ho Decl. at ¶ 25. 

Ultimately, Ho was fired for failing to meet E&Y’s performance expectations. Ho Tr. 197:15-18. 

“An employee who is supposed to be engaged in [exempt] activities during most of his working

hours and falls below the fifty 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,

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

802 (1999). 

5. Whether Ho’s monthly salary exceeded twice the state minimum wage

California’s Wage Order requires that an administratively exempt employee “earn a

monthly salary equivalent to no less than two (2) times the state minimum wage for full-time

employment.” 8 Cal. Code Regs. § 11040(g). Ho’s starting salary was $75,000, excluding the

$10,000 starting bonus. Eventually his salary was raised to $80,000. This salary was more than

six times the states minimum wage at the time in 2000. Thus, Ho exceeded twice the minimum

wage at all times that he was employed by E&Y. 

IV. ORDER

Because Ho meets all of the requirements of the administrative exemption, E&Y’s

Motion For Summary Judgment will be GRANTED. The Clerk shall enter Judgment and close

the file. 

DATED: March 4, 2008

 

JEREMY FOGEL

United States District Judge

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Case No. C 05-04867 JF

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

(JFLC3)

This Order has been served upon the following persons:

Mark R. Thierman laborlawyer@pacbell.net 

Leon Greenberg wagelaw@aol.com

Catherine A. Conway cconway@akingump.com

Gregory William Knopp gknopp@akingump.com

Stephanie S. Der sder@akingump.com 

 

 

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