Lola v. Skadden Arps has settled (reports here and here). Lola is a wage-and-hour case with wide implications for the legal profession. To recap (see my previous post on the Second Circuit’s recent decision here), David Lola, a lawyer licensed to practice in California, took a job as a document reviewer for Skadden Arps in a large MDL venued in a federal court in Ohio. He was placed in that position with Skadden by a staffing agency, Tower Legal Staffing. (Tower Legal provides attorneys and paralegals to law firms on a contract basis, and thus remained Lola’s direct employer during his period of service to Skadden.) Lola spent 14 months reviewing documents in North Carolina for the case; his Complaint alleged he typically worked 45-55 hours per week. He was paid $25 per hour, without overtime.
After the engagement ended, Lola sued Skadden and Tower Legal in a Fair Labor Standards Act “collective action,” which is the FLSA’s statutory version of a class action (see 29 U.S.C. § 216(b)). Lola claimed that he and all those similarly situated were entitled to time-and-a-half for work in excess of 40 hours per week.
The FLSA exempts from overtime requirements any “employee employed in a bona fide professional capacity,” including “any employee who is the holder of a valid license . . . permitting the practice of law . . . and is actually engaged in the practice thereof . . . .” 29 C.F.R. § 541.304. Skadden and Tower Legal argued that Lola’s document review responsibilities constituted “the practice of law” within the meaning of the FLSA and supporting regulations, and he therefore was exempt from overtime pay.
Lola admitted that he was licensed to practice (the fact that it was in a jurisdiction with no connection to any aspect of his work doesn’t matter under the FLSA), so the wage-and-hour question boiled down to whether or not he was “actually engaged” in the “practice of law.” Lola alleged that his responsibilities as a document reviewer were completely mechanical and devoid of judgment—that he was given a list of key words and names and told to “code” documents in a specified way if those words or names appeared in the document. Period. On a motion to dismiss (where these allegations had to be taken as true), the District Court found that these activities constituted “the practice of law.” The Second Circuit reversed, finding that work that ministerial and rudimentary did not comprise the practice of law, though more typical document review work requiring “a modicum of judgment” likely would. (As related in my earlier post, most document review jobs do involve some degree of judgment in determining documents’ responsiveness to a request or potentially privileged status, judgments that a fair reading of the appellate opinion suggests would qualify as “the practice of law” under the standard the decision articulates. The Second Circuit agreed with the District Court that the FLSA borrows the law of the state governing the services at issue to determine whether they qualify as “the practice of law,” which in this case was North Carolina, though North Carolina’s definition is typical in most respects.) The case was remanded to determine whether Lola’s job required him to be the automaton he alleged.
I'll address the settlement and what it does and doesn't tell us about the future after the jump.