Ho v. Ernst & Young LLP

Filing 322

ORDER by Judge Whyte denying 309 , 311 Motion to Add a New Representative Plaintiff. (rmwlc1, COURT STAFF) (Filed on 1/11/2012)

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E-FILED on 1/11/2012

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court
For the Northern District of California

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SAN JOSE DIVISION

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DAVID HO et al.,

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No. C-05-04867 RMW

Plaintiffs,
ORDER DENYING MOTION TO ADD A
NEW REPRESENTATIVE PLAINTIFF

v.

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ERNST & YOUNG LLP,

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Defendant.

[Re Docket No. 311]

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Plaintiffs move to add a new representative plaintiff, Stephen Morris, pursuant to Federal

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Rules of Civil Procedure 15 and 21. In the alternative, Mr. Morris moves to intervene under Rule

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24. Defendant opposes the motion. On January 6, 2012, the court held a hearing to consider the

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motion. Having considered the papers submitted by the parties and the arguments of counsel, and

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for the reasons set forth below, the court denies the motion.

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I. BACKGROUND
This case is the earliest-filed of three actions brought against defendant Ernst & Young LLP

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("Ernst & Young") that were consolidated for purposes of class certification. The other two cases

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are Landon v. Ernst & Young LLP, No. C-08-02853, and Richards v. Ernst & Young LLP, No. 08-

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04988. The plaintiffs in each action allege violations of California's overtime laws and seek to assert
ORDER DENYING MOTION TO ADD A NEW REPRESENTATIVE PLAINTIFF—No. C-05-04867 RMW
LJP

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claims on behalf of a class of similarly situated individuals who were employed in Ernst & Young's

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Tax group or Assurance group.

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This case was filed in 2005 by plaintiff David Ho. On July 17, 2007, the court granted Ho's

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motion to amend the complaint to add three plaintiffs, David Maxton, Nathan Lay, and Sarah

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Fernandez. On March 4, 2008, the court granted summary judgment against Ho. Soon after, the

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court dismissed Maxton and Lay without prejudice pursuant to stipulation, leaving Fernandez as the

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sole plaintiff. On January 15, 2009, the court denied defendant's motion for summary judgment

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against Fernandez. Addressing defendant's argument that any failure by Fernandez to spend at least

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fifty percent of her time on exempt duties was due to Fernandez's own substandard performance, the

United States District Court
For the Northern District of California

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court noted that defendant "submits substantial evidence that Fernandez's performance in fact was

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substandard." Dkt. No. 177 at 8. However, the court found it could not determine from the record

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whether Fernandez's position, performed as legitimately expected by Ernst & Young, met the

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administrative exemption for overtime requirements. Id.

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By this time, the Landon and Richards cases had been filed, and the parties in this case

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agreed that the three cases should be consolidated for the purposes of a motion for class certification.

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They submitted the following proposal to the court:

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Pursuant to Federal Rule of Civil Procedure 42(a)(1), the Fernandez, Landon, and
Richards actions shall be consolidated for the purposes of a motion for class
certification. The docket in Fernandez shall constitute the Master Docket and the file
in Fernandez shall constitute a Master File for every consolidated action until the
Court has made a ruling on any motion for class certification. A single motion for
class certification will be brought on behalf of all of the putative classes and/or
subclasses that each individual plaintiff seeks to represent. This Court’s ruling on that
single motion for class certification will be binding on all the putative classes and/or
subclasses that each individual plaintiff seeks to represent.

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Dkt. No. 180 at 2. While not addressing the specific details of the parties' proposal, the court

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consolidated the three cases "for class certification purposes only" on March 13, 2009. Dkt. No.

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181. The court thereafter set a deadline for plaintiffs to file the class certification motion, which was

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ultimately continued to August 20, 2010. Dkt. No. 229.

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Interim lead counsel moved to certify a class with Fernandez and Michelle Richards as class

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representatives. As part of the motion, plaintiffs submitted a declaration from Mr. Morris executed

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in early 2008. Dkt. No. 252. Defendant took Mr. Morris' deposition on October 22, 2010. Dkt. No.
ORDER DENYING MOTION TO ADD A NEW REPRESENTATIVE PLAINTIFF—No. C-05-04867 RMW
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316-1 ¶ 4. On September 20, 2011, the court granted in part and denied in part the motion for class

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certification. Dkt. No. 297. The court found that Fernandez failed to meet the typicality

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requirement because Ernst & Young had a defense particular to her, i.e., that she spent the bulk of

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her time engaged in non-exempt work because she failed to meet defendant's performance

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expectations. The court further found that neither proposed representative was typical of persons

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who worked in entirely different positions. The court certified a narrowed class of "staff" and

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"senior" employees in the Tax group, with Richards as the sole representative.

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II. ANALYSIS
Plaintiffs move to add Mr. Morris as a new representative plaintiff pursuant to Rules 15 and

United States District Court
For the Northern District of California

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21, which govern amendment of pleadings and addition of parties, respectively. In the alternative,

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Mr. Morris seeks to intervene under Rule 24. Movants argue that adding Mr. Morris will allow the

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court to address whether an Assurance group class can be certified and, if it can, to allow the class to

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pursue their overtime claims. Movants urge that Mr. Morris is a suitable class representative who

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will overcome the deficiencies the court found in Fernandez's claim.

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A.

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As an initial matter, defendant argues that plaintiffs are barred from filing another class

Effect of the Court's Consolidation Order

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certification motion based on their proposal to the court to file a single motion and have the court's

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ruling be binding and preclusive as to each of the actions. Although the court did not explicitly

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adopt the parties' proposal, the purpose of eliminating duplicative or overlapping motions is closely

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related to consolidation, so there was at least an implicit understanding between the court and the

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parties that a single class certification motion would be filed. Plaintiffs argue that the agreement and

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consolidation could not be "preclusive of any and all other motions, by any or all other parties, in

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any or all other actions." Reply at 11. But the issue now is only whether the agreement and

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consolidation are preclusive in this case. It appears that the parties agreed there would be a single

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class certification motion with preclusive effect as to all three actions, and that the parties have acted

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in conformance with that agreement for almost three years. Thus, plaintiffs must make some

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showing that they should no longer be bound by their agreement. Cf. CDN Inc. v. Kapes, 197 F.3d

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1256, 1258 (9th Cir. 1999) ("Because stipulations serve both judicial economy and the convenience
ORDER DENYING MOTION TO ADD A NEW REPRESENTATIVE PLAINTIFF—No. C-05-04867 RMW
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of the parties, courts will enforce them absent indications of involuntary or uninformed consent.").

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Other than arguing that the agreement and the court's orders were "purely procedural," plaintiffs

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have not even attempted to do so.

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Even if the consolidation proposal were not binding, the parties were bound by the court-

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imposed deadline for filing a motion for class certification. Once a court sets a procedural schedule,

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it may be modified only on a showing of good cause. Fed. R. Civ. P. 16(b)(4). Thus, beyond

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satisfying other applicable rules, a movant must either comply with the scheduling order or show

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good cause to modify it. See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608-09 (9th Cir.

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1992) (holding plaintiff who moved to join a party after the binding cut-off date needed to show

United States District Court
For the Northern District of California

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"extraordinary circumstances" as required by the scheduling order or to show good cause to amend

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the scheduling order). Here, movants do not appear to have missed any deadline for amending the

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complaint or adding parties. However, their ultimate goal is to file another motion for class

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certification, for which they must show good cause. As to the present attempt to add a new plaintiff,

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the court notes that there appears to be substantial overlap between the diligence inquiry of the good

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cause standard and the undue delay prong of the Foman factors, discussed below.

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B.

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Rule 15(a) provides that a court "should freely give leave [to amend] when justice so

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requires." In addition, Rule 21 provides that a court "may at any time, on just terms, add or drop a

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party." In determining whether to allow amendment, courts often consider five possible reasons for

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denial, set forth in Foman v. Davis, 371 U.S. 178 (1962): "undue delay, bad faith or dilatory motive

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on the part of the movant, repeated failure to cure deficiencies by amendments previous allowed,

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undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of

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amendment." Id. at 182; see, e.g., Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). Similarly,

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in exercising its discretion to permit intervention under Rule 24, a court is to consider "whether the

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intervention will unduly delay or prejudice the adjudication of the original parties' rights." In

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opposing amendment, defendant focuses primarily on undue delay, prejudice, and futility.

Undue Delay

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Defendant argues that plaintiffs unduly delayed because they have long been aware of

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problems with Fernandez's ability to represent a class, which were raised during summary judgment.
ORDER DENYING MOTION TO ADD A NEW REPRESENTATIVE PLAINTIFF—No. C-05-04867 RMW
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Plaintiffs respond that they believed Fernandez would be a good representative and had good reason

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to believe that defendant's arguments during summary judgment did not undermine her typicality. In

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fact, plaintiffs argue, they believed Fernandez would be a good class representative precisely

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because she had survived summary judgment. In light of the record on this issue, the court finds that

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plaintiffs acted reasonably in putting forth Fernandez as a potential representative.
However, even if plaintiffs were confident in Fernandez's chances of being a class

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representative, they unduly delayed in exploring whether other individuals would also be suitable

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and whether they should be added to the case. Plaintiffs were aware of the court's deadline for filing

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a motion for class certification and had proposed to file a single motion for all three cases. Plaintiffs

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United States District Court
For the Northern District of California

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should have realized that this was likely their one opportunity to seek class certification and acted to

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ensure that all of their positions were put forward. At the hearing, plaintiffs counsel argued that it is

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not good case management to include all potential plaintiffs, but this is a question of tradeoffs, and

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plaintiffs must live by their strategic decisions. Notably, movants do not cite any cases in which

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addition or substitution of plaintiffs was allowed after the denial of a motion for class certification.

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On the other hand, courts have denied amendment or intervention where the movant is simply

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seeking another chance at certification. See Whittum v. Saginaw Cty., 2005 WL 3271810 at *6 (E.D.

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Mich. 2005); cf. Randall v. Rolls-Royce Corp., 637 F.3d 818, 827 (7th Cir. 2011) ("Intervention

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shouldn't be allowed just to give class action lawyers multiple bites at the certification apple, when

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they have chosen, as should have been obvious from the start, patently inappropriate candidates to

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be the class representatives.").

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Movants are correct that the court's denial of certification is not binding on the putative class

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and there appears no bar to Mr. Morris or another individual filing a separate suit and seeking

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certification of the same claims on behalf of the same class. However, plaintiffs have not shown

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how the court's denial of certification is not binding on this case. Plaintiffs cannot wait and present

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one potential representative after another until one succeeds, in the meantime forcing the court to

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conduct multiple individual adjudications—the antithesis of a class action. This case has moved

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past the stage in which it was a putative class action. What remains now are Fernandez's individual

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claims, trial of which would be delayed by the addition of a new plaintiff. The court in In re
ORDER DENYING MOTION TO ADD A NEW REPRESENTATIVE PLAINTIFF—No. C-05-04867 RMW
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Safeguard Scientifics, 220 F.R.D. 43 (E.D. Pa. 2004), denied a motion to intervene in a similar

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situation. The court had denied a motion for class certification because "the proposed class

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representatives were not typical of the class given that they all faced unique defenses." Id. at 46. In

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finding the motion to intervene untimely, the court noted that the matter had been pending for more

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than two and a half years, discovery was largely complete, and the motion for class certification had

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been decided. Id. at 47. The court concluded, "It thus appears that the next logical stage in these

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proceedings would be trial." Id.

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Movants acknowledge the court's discretion to deny their motion where adding a new
plaintiff "would serve to derail the progress of this case," but movants argue that adding a new

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United States District Court
For the Northern District of California

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plaintiff would get the case back on track to adjudicating the class claims. Reply at 4-5. Such

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arguments evince an assumption that this case is presumptively a class action. To the contrary, the

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burden is on a party seeking class certification, and plaintiffs were found to have failed to meet that

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burden. The class certification motion having been decided, it also follows that this case is no

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longer consolidated with Richards and Landon, and plaintiffs' wish to keep this case on track with

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the class in Richards does not support an argument that adding Mr. Morris would not delay

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proceedings. Because plaintiffs delayed in seeking to add a new representative plaintiff and such

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addition would delay the resolution of what remains of this case, the motion to add Mr. Morris is

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denied.

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III. ORDER
For the foregoing reasons, the court denies the motion to add a new representative plaintiff.

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DATED:

January 11, 2012
RONALD M. WHYTE
United States District Judge

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ORDER DENYING MOTION TO ADD A NEW REPRESENTATIVE PLAINTIFF—No. C-05-04867 RMW
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