On July 23, 2015, the Second Circuit, in Lola v. Skadden, Arps, Slate, Meagher & Flom LLP, Tower Legal Staffing, Inc., revived (see our earlier blog posts dated March 11, 2015) a putative collective action brought by David Lola, a contract attorney, against Skadden Arps and Tower Legal Staffing, Inc., alleging violations of the overtime provisions of the Fair Labor Standards Act (“FLSA”).  The Second Circuit held that Lola adequately pled that document review may not necessarily constitute “practicing law” under North Carolina law.  The gravamen of Lola’s complaint was that he performed document review under such tight constraints that he exercised no legal judgment whatsoever and thus, could not be considered to be “practicing law.”  Specifically, Lola alleged his document review was closely supervised and primarily consisted of:

  • looking at documents to see which search terms (pre-determined by Skadden attorneys) appeared in those documents;
  • categorizing those documents into categories pre-determined by Skadden attorneys; and
  • redacting documents based on specific protocols devised by Skadden attorneys.

Lola was paid $25 an hour and generally worked between 45 and 50 hours per week.  He was classified as exempt under the FLSA and therefore did not receive overtime pay.

Lola brought suit against Skadden and Tower Legal Staffing, Inc. as putative joint employers, on behalf of himself and similarly situated employees, alleging that he was misclassified as exempt under the FLSA and seeking overtime pay.  While attorneys generally qualify for the FLSA’s professional exemption, Lola alleged that he and other contract attorneys performing document review for Skadden were not engaged in the practice of law because they “performed document review under such tight constraints that [they] exercised no legal judgment whatsoever.”  The defendants moved to dismiss the complaint, arguing that  Lola, as an attorney, was exempt under the FLSA’s professional exemption.

The district court (Judge Sullivan, S.D.N.Y.) granted the defendants’ motion to dismiss finding, first, that the definition of “practice of law” is “primarily a matter of state concern,” and that because Lola resided at all relevant times in North Carolina, that state’s law should apply when analyzing whether he was practicing law under the FLSA.  The court then concluded that Lola was engaged in the practice of law under North Carolina law, and therefore an exempt employee under the FLSA.  Lola appealed the decision to the Second Circuit.

As a threshold matter, the Second Circuit agreed with the district court that North Carolina law should control the question of whether Lola was practicing law within the meaning of the FLSA’s professional exemption.  Constrained to accept the allegations in the complaint as true for purposes of the defendants’ motion to dismiss, however, the Court of Appeals disagreed with the district court’s conclusion that by undertaking the document review Lola was necessarily “practicing law” within the meaning of North Carolina law. Rather, because North Carolina defines the “practice of law” as requiring “at least a modicum of independent legal judgment” and a fair reading of the complaint in the light most favorable to Lola is that he provided services that a machine could have provided, Lola cannot be said to be engaged in the practice of law within the meaning of the FLSA and therefore did not qualify for the professional exemption.  For this reason, the Court of Appeals vacated the judgment of the district court dismissing the complaint, and remanded the case for further proceedings.