Deloitte’s document review branch hit with $384-million class action lawsuit

A Toronto lawyer has filed a massive class action lawsuit against Deloitte LLP, seeking $384 million on behalf of lawyers who worked at the accounting giant’s document-review branch. 

Deloitte stormed into the document-review game last January, when it acquired ATD Legal Services, a start-up that specialized in outsourced legal work, often assisting on major files for the largest law firms in the city. Founded in 2010, ATD was the brainchild of Shelby Austin, a former partner at Davies Ward Phillips & Vineberg LLP, who continues to oversee the document-review team at Deloitte. Both ATD and Deloitte hired contract lawyers to perform much of the work on a project-by-project basis.

But according to the lawsuit, filed this week by Shireen Sondhi, ATD misclassified the lawyers as independent contractors, when they should have been employees. The suit alleges that this allowed ATD to deprive them of vacation and overtime pay — and to fire them from a project, at whim, without any financial recourse.

The plaintiff is suing Deloitte as a successor employer for the actions of ATD.

At both ATD and Deloitte, according to the statement of claim, some document-review “projects which were projected to last several weeks would end without warning after only a few days, leaving [lawyers] without expected income.” And, the claim continues, lawyers that worked too slowly were sometimes “sent home in the middle of [a] workday.”

If these lawyers were, indeed, independent contractors, this behaviour would be legally sound. But their work bore many of the hallmarks of employment, says Andrew Monkhouse, the lawyer for the plaintiff. None of the document reviewers, he notes, could work from home, use their own computers or negotiate their wages. As Monkhouse puts it, this is “sounding an awful lot like an employee relationship.”


Deloitte might “fall on its sword”

If Monkhouse has his facts right, then his legal analysis is “dead-on,” says David Whitten, a Toronto employment lawyer who has reviewed the statement of claim. “Deloitte had a bunch of ducks in the office and they were calling them geese for convenience,” he says. “If something quacks like a duck, but you call it something else, it’s still a duck.”

Whitten also speculates that Deloitte knows ATD had misclassified its lawyers for years. He points to the fact that, according to the statement of claim, after Deloitte bought ATD last year, the company started to deduct employment insurance and Canada Pension Plan contributions from each contract lawyer’s hourly rate. This is only necessary, he says, if the lawyers are employees.

“Someone behind the curtain realized that these people could be designated as employees, as opposed to independent contractors,” says Whitten. “So, to cover off on that liability, they started treating them like employees for payroll purposes, but without giving them any of the benefits that an ordinary employee would enjoy.”

The lawsuit also alleges that Deloitte did not warn the lawyers in advance of entering into an agreement that it would be making payroll deductions.

The decision to make those deductions, says Whitten, is likely to backfire if the lawsuit lands in a courtroom.

“It’s, in effect, an admission that these people could be employees,” he explains. If Deloitte’s legal defence is that the lawyers have always been contractors, he adds, then the company “is going to fall on its sword.”

The lawsuit names Deloitte and Procom Consultants, a placement agency that manages employment contracts for Deloitte, as co-defendants.

When given an opportunity to comment, Deloitte spokesperson Vital Adam said in an email: “We believe that the claim has no merit and we will vigorously defend the proposed class action. As the matter is now before the courts, it is not our intention to discuss the matter publicly.” Procom did not respond to requests for comment.


The value of the lawsuit is “insane”

Although Whitten agrees with the legal analysis in the claim, he says the damages sought by the plaintiff are “overblown.”

He cites the fact that the lawsuit seeks, on behalf of all potential plaintiffs, $260 million of pay “in lieu of reasonable notice.”

For that number to make any sense, he says, the class action would need to represent almost a thousand lawyers, all of whom earned $150,000 a year. Plus, he adds, they would need to convince a judge that they all deserve a full 24 months of paid notice — the chances of which are “slim to none” because the contracts were short-term, and most of the potential plaintiffs are at an early stage in their careers.

“There’s just no way that there’s going to be that many people out there that are entitled to that much money,” he says. “It’s insane. That part of the claim is so overblown that, on it’s face, it looks ridiculous.”

Employment lawyers, he explains, often inflate the damages they are seeking “for the purposes of generating outrage.” But in this case, he says, it might be a strategic misstep, because, in general, judges evaluate lawsuits with “extra vigilance” if “it’s just not possible that there could ever be that amount of damages.”


Resentment has been “brewing” for more than a year

Monkhouse says his client’s frustration began when Deloitte acquired ATD last January.

After taking over, the lawsuit claims, Deloitte reduced the hourly rate for contract lawyers from $50 to $47. “I think there has been a lot of resentment brewing in the class members from that point,” says Monkhouse.

At the time, to justify the pay cut, Deloitte said that document-review done for its projects would not be legal work — and so, contract lawyers would no longer need to pay for their own legal insurance. (This is a controversial argument in its own right, as reviewers at ATD did have to buy insurance.)

But, according to the statement of claim, Deloitte had another reason for reducing the hourly rate for contractors: the company wanted to use the extra cash to pay placement “fees levied by Procom” Consultants.

So far, Sondhi is the only lawyer listed as a plaintiff, but Monkhouse says “many” of Sondhi’s colleagues have expressed support for the claim.

Now that the lawsuit has been filed, a judge will have to certify the class action, which, according to Whitten, might not happen for six months to a year. If the action is certified, then everyone who has performed document review for ATD or Deloitte as an independent contractor will automatically become a plaintiff, unless they opt-out of the lawsuit.

Photo: Grid Engine

Should Jian Ghomeshi’s alleged victims sue him for sexual assault?

After car accidents or botched medical procedures, most people know that, in addition to lodging a complaint with police, they can file a lawsuit to ease their suffering. Indeed, the courts are full of injured people suing reckless drivers and negligent doctors. 

But when it comes to sexual assault, most victims have no idea that they can sue their abusers, says Gillian Hnatiw, a partner at Lerners LLP, who specializes in sexual assault litigation. As proof, she points to how the media covered the recent allegations that former CBC radio host Jian Ghomeshi has a long history of sexual violence. The discussion, she says, centred on “whether the victims would go to the police,” as if they had no other legal tool at their disposal. 

Gillian Hnatiw

Gillian Hnatiw, partner, Lerners LLP

And yet, according to Hnatiw, when sexual assault victims do sue their attackers, they invariably prefer the civil system to its criminal counterpart. 

There is one obvious explanation for this preference: in civil trials, plaintiffs only have to prove that the assault is more than 50 percent likely to have occurred. A prosecutor, on the other hand, must establish guilt beyond a reasonable doubt to secure a conviction. 

And in cases of sexual assault, it is particularly difficult to meet that high burden of proof, says Andrew Faith, who served as Crown prosecutor for four years before launching his own civil litigation firm in 2010. In his experience, sex criminals are difficult to prosecute for two central reasons. One is that most victims go to the police well after the offence took place, so there is rarely any forensic evidence. Second, there are usually no witnesses. Most assaults, he explains, occur “without anyone around, so it often comes down to ‘he-said, she-said.’” 

Though he defends the philosophical underpinnings of the criminal justice system, Faith admits that, when he worked on sexual assault cases as a Crown, they could be disheartening. “You want a fair a result, and if the evidence isn’t there, then so be it,” he says. “But, it’s frustrating in the sense that you know the person was being honest, and telling the truth, and remembering horrible things and was becoming emotional on the stand and that, at the end of the day, that still might not be enough.” In that context, he concludes, if a victim is looking for “vindication from a judge, there’s no doubt that the lower burden of proof [in the civil system] is better.” 

Andrew Faith

Andrew Faith, partner, Polley Faith LLP

Some victims also find civil trials therapeutic, says Hnatiw. Unlike in the criminal system, the defendant in a civil suit does not have the right to remain silent. “When I sue abusers, I get to sit in a room with them for seven hours and ask them questions,” she says. “It’s hard to overstate the value of that to a victim: they are forcing their abusers to actually answer the allegations.” 

Another advantage of the civil courts is that victims can pull the plug on the lawsuit if the stress becomes too much to bear. In the criminal system, however, once the Crown moves forward with the charges, “the victim does not have the power to say ‘Stop,’” says Faith. “You have to be willing, if you make a complaint, to go through right to the end because you’ve essentially started a train without breaks.” 

Still, the civil system has a big downside: it costs a fortune to sue someone. Indeed, Hnatiw says the cost of going to trial often exceeds $100,000. (“I couldn’t afford myself,” she admits.) So victims rarely go forward with a lawsuit unless the accused is either wealthy or connected to an institution that is, in some way, liable for the assault. “I’ve had situations where I have to say, ‘What’s happened to you is terrible, but I don’t want to put you through this process to have you come out the other end with nothing.’” 

Also, in both civil suits and criminal trials, victims still have to recount, in painstaking detail, their story of abuse.  

But Hnatiw’s point is not that the civil system can solve every problem. Rather, she wants victims — including those who have accused Ghomeshi in the press — to know they have more than “just a choice between going to police and not going to the police. There is another option.” 

While there is a two-year statute of limitations for sexual assault claims, Hnatiw says “the passage of time should not deter [a victim] from consulting a lawyer as there is almost always a way around the limitation issues.”

Photography: Jian Ghomeshi/Brenda Lee; Andrew Faith/Margaret Mulligan

Badass Lawyers: Meet the lawyer who won the IKEA monkey trial

In December 2012, a small monkey wearing a puffy shearling coat sauntered into a Toronto IKEA, having just escaped from a car in the parking lot. Once shoppers spotted the well-dressed primate, known as Darwin, they snapped his picture and posted the photographs online. Almost instantly, the images circulated far and wide, triggering a media storm around the world. The commotion ended when Toronto Animal Services apprehended Darwin and transported him to Story Book Farm Primate Sanctuary in Sunderland, about an hour northeast of Toronto.

At this point, the light-hearted story turned into a nasty legal battle. Darwin’s owner, Yasmin Nakhuda, sued the sanctuary to regain possession of the animal.

This past September, a Superior Court judge ruled in the sanctuary’s favour, explaining that Nakhuda lost ownership of the monkey as soon as Darwin left her car. And in February, Nakhuda, a lawyer herself, decided not to appeal.

Here, Precedent speaks to Kevin Toyne, lawyer for the sanctuary and partner at Brauti Thorning Zibarras LLP, about the case and how he managed the “extremely intense” media exposure.

How did you get involved in the case?

Kevin Toyne: My fiancée and I started to volunteer at the sanctuary in the fall of 2012. Right away, I hit it off with the founder of the sanctuary. She’s a police officer in the Durham region and my firm specializes in defending police officers, so we had a lot to talk about.

Now, fast-forward a couple of months. I’m working late one Sunday night and I take a break and start browsing the Internet. And I see that a cute little monkey has just been found at an IKEA store. After I learned the monkey had been taken to the sanctuary, I sent an email to the sanctuary saying, ‘If anything happens and you guys get sued, please give me a call.’ Sure enough, the next day I got a call. Then things took a turn for the interesting.

You also took the case on a pro bono basis. Did you expect it to last for more than a year?

KT: When I took the case, I thought, ‘Well, it’s a charity that does good work. It might take a day or two of my time to throw some material together and go to court.’ I had no idea it was going to be a four-day trial that would take hundreds of hours of my time.

What’s it like to be part of a case that becomes a punch line on social media?

KT: It was unlike anything I’d experienced before. The media interest, particularly in the first couple of months, was extremely intense. I was deluged with emails, voicemails and phone calls from all media. I was trying just to get work done on that file and other files and, literally, the phone wouldn’t stop ringing.

That would be hard, in particular, for lawyers who aren’t used to being the centre of a media storm.

KT: And most people aren’t. Years ago, in university, I was involved in a radio show. I’ve done a bit of politics as well, so I had some experience interacting with the media. Not necessarily fielding calls from Anderson Cooper, but any experience I had did make it easier.

Do you think the media went beyond the sensational headlines and grappled with the legal facts of the case? 

KT: At first, I think a lot of people saw the dispute as a custody fight over a child — even though that’s not how litigation over animals works. But once you explain to people that an animal is a piece of property, at least from the law’s eyes, it made sense. Then people stopped thinking it was a fight over who the best parent is going to be.

Did you enjoy working on the case?

KT: It was a lot of fun. Not a lot of people get to work on a case where the media are live-blogging the questions being asked during the trial. So, it was a unique experience.