Law Firms
Nonequity partner’s unjust enrichment suit against Duane Morris remains largely intact after judge’s ruling
A federal judge has refused to dismiss a proposed class action lawsuit alleging that Duane Morris saddles nonequity partners with business expenses and partnership taxes, even though they have no power in the law firm. (Image from Shutterstock)
A federal judge has refused to dismiss a proposed class action lawsuit alleging that Duane Morris saddles nonequity partners with business expenses and partnership taxes, even though they have no power in the law firm.
The Aug. 1 opinion by U.S. District Judge Cathy Ann Bencivengo of the Southern District of California allowed several claims by Black female nonequity partner Meagan Garland. Three claims were tossed, but Garland was given leave to amend two of them.
Besides shifting partner burdens to nonequity partners, the suit says, the firm also paid Garland less than white and male attorneys and failed to provide pay information in violation of California law.
Garland had alleged that her effective pay dropped after she was promoted to nonequity partner as a result of the misclassification scheme.
After her promotion, Duane Morris stopped withholding employment taxes from Garland’s compensation and began assessing her a share of the firm’s partnership taxes, the suit says. The firm withheld and directed back to itself a portion of fixed-fee compensation as a capital contribution and another portion to defray a year’s worth of operating expenses, she alleged.
Garland also claimed that nonequity partners were required to supply their own computers, internet and office supplies.
Garland claims that she didn’t know about the deductions to her pay until after she accepted the nonequity partner position.
Bencivengo refused to dismiss claims for breach of contract, fraud, violation of California law, conspiracy to commit fraud, negligent misrepresentation, breach of fiduciary duty, professional negligence, unjust enrichment, request for an accounting and quantum meruit recovery.
But Bencivengo tossed claims, with leave to amend, that sought a declaratory judgment and that alleged that the firm failed to withhold taxes.
She also tossed a claim seeking restitution under California law, without leave to amend. Bencivengo said Garland was making the same argument as an unjust enrichment claim, and she can’t assert both claims at once.
Duane Morris declined to comment when contacted by the ABA Journal. The firm previously said it strongly disagrees with the allegations.
Reuters and Bloomberg Law are among the publications with coverage of Bencivengo’s decision.
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