SUPERIOR COURT OF THE DISTRICT OF COLUMBIA

                                                          CIVIL DIVISION

MEGAN SAVAGE, et al

In behalf of themselves and all those similarly situated,

Plaintiffs,

v.

PRICEWATERHOUSECOOPERS LLP,

Defendant.

Civil Action No. 02-8167 Calendar #13; Judge Wright Next event: Hearing on Motion for preliminary Approval of settlement agreement: 4/18/03

PLAINTIFFS- MEMORANDUM OF POINTS AND AUTHORITIES IN

SUPPORT OF PRELIMINARY APPROVAL OF SETTLEMENT AGREEMENT

I. Introduction and Summary

This is a class action brought pursuant to Rule 23(a) and (b)(3) of the District of Columbia Superior Court Civil Rules . The parties have entered into a Settlement Agreement ("Agreement") that will resolve all claims raised by the Complaint. Now, with the consent of the Defendant PricewaterhouseCoopers LLP ("PwC" or "Defendant"), Plaintiffs seek this Court's preliminary approval of the Agreement, and also approval of a form of Notice ("Notice") to be sent to members of the class by first class mail. Copies of the Agreement and the Notice are attached hereto as Exhibits A and B. Plaintiffs also request that the Court schedule a fairness hearing, to consider the parties' request for final approval of the Settlement Agreement, as well as the contentions of any objectors thereto.

A. The Claims

The plaintiffs and the putative members of the class graduated from college in 2001, and were offered employment during their senior years by Pricewaterhouse Coopers Consulting ("Consulting"), then a line of service of Defendant, to work in Consulting's Eastern Business Unit ("EBU")or its Washington Consulting Practice ("WCP"). Plaintiffs bring this action in behalf of themselves and others similarly situated.

According to Plaintiffs' allegations, in the fall of 2000, Consulting embarked on a recruitment effort directed at college seniors, seeking to fill entry-level positions for the EBU and WCP. As part of its recruitment efforts, Consulting promised cash bonuses in return for the commitment to accept employment. Although the bonuses offered varied in amount, in most cases PwC offered a $3,000 "signing bonus" and a second "early acceptance" bonus in the amount of $4,000 if the recruit accepted the offer of employment prior to a certain date. Recruits were offered starting annual salaries of $52,000, sometimes higher depending on the locale of the job. See Complaint 8-11.

After a member of the class accepted the offer, he or she was given a written employment letter providing, among other things, that the proffered employment was "at-will;" that the bonus or bonuses would not be paid until employment commenced; and that the contract was to be construed in accordance with the law of the state ofNew York. The employment letters also contained a provision requiring assurances that the recruit did not have and would not seek any conflicting commitments elsewhere. Start dates were to be assigned later. Although it is Plaintiffs' understanding that Consulting did extend full-time employment to some recruits, the vast majority of recruits (those who comprise Plaintiffs' proposed class) received neither a job nor the bonuses. See Complaint ­­­­11,12, 14, 23.

The Complaint seeks damages for breach of contract and other "reliance" damages based on theories of estoppel, misrepresentation and fraud. It alleges that Consulting's actions were part of a successful effort to "secur[e] the commitment of a large number of graduating seniors to" accept employment, and that the "bonuses were offered as an additional inducement [that had the] purpose and effect of persuading the students to curtail their job searches, forego other opportunities and commit themselves to coming to work for" Consulting. See Complaint 13. The Complaint further alleges that "the class members uniformly stopped looking for jobs[,in some cases] turn[ing] down other specific job offers," in other cases incurring various expenses and even relocating to the city where the job was supposed to be. Id.

Defendant filed an answer generally denying all of Plaintiffs' substantive allegations and asserting various affirmative defenses. 

        B. The Settlement Agreement

The Agreement provides for the payment by Defendant of a lump sum of $1,815,500 into a settlement fund, and another $25,000 into an administrative fund, the latter to be used to defray the costs associated with giving notice to members of the class and other costs of administration. The Agreement further provides that attorneys' fees must be paid from the Settlement Fund, and the Notice informs class members that class counsel expect to seek an award in the amount of twenty per cent of the fund.[1]

Approximately forty class members have signed retainer agreements with the undersigned class counsel. This claimant group has in turn established a committee of five class members to make decisions as the litigation progressed (the "Committee"). The Committee, with the concurrence of class counsel, has determined that the proposed Agreement is fair and reasonable and has further determined that, if approved, the settlement fund will be distributed to class members in proportion to the bonuses they were promised. It is anticipated that after allowances for attorneys' fees and costs, class members will receive payments in amounts that are substantially equivalent to the amount of the bonuses promised them by PwC.[2]

The parties have developed a list of mail and e-mail addresses for members of the class. The Agreement provides that members of the class shall be notified of the terms of the settlement by first class mail and, where possible, e-mail. The Notice also will inform the members of the class of their right to opt out or, alternatively, to object to the terms of the settlement. 

        II. The Class

The parties contend that the following class is appropriate for certification under Rule 23, and request its provisional certification at this time.

All persons who satisfy each of the following criteria: (i) attended an undergraduate course of higher education in the 2000-2001 academic year; (ii) were offered employment to commence in 2001 with the PricewaterhouseCoopers Consulting Eastern Business Unit or Washington Consulting Practice; (iii) received, signed and returned to Consulting a letter of employment ("employment agreement"); (iv) whose employment agreement provided for a signing bonus and/or any acceptance bonus; (v) did not receive the bonus or bonuses provided for in his or her employment agreement; and (vi) who did not commence employment with PwC in 2001 or 2002.


Rule 23(a), which is identical in all pertinent respects to Rule 23 of the Federal Rules of Civil Procedure, establishes four requirements for all class actions. First, the proposed class must be "so numerous that joinder of all members is impracticable." (Numerosity) Second, there must be "questions of law or fact common to the class." (Commonality) Third, "[t]he claims . . . of the representative parties [must be] typical of the claims . . . of the class." (Typicality) Fourth, it must be shown that the "representative parties will fairly and adequately protect the interests of the class." (Adequacy of representation) See Amchen Products, Inc. v. Windsor, 521 U.S. 591, 613 (1997); Cowan v. Youssef, 687 A. 2d 594, 602 (D.C. 1996); Yarmolinsky v. Perpetual American Federal Savings & Loan Ass'n., 451 A. 2d 92 (D.C. 1982).

In addition to meeting the requirements of Rule 23(a), a proposed class action must also meet the requirements of Rule 23(b)(1), (2) or (3). The instant claims are brought under Rule 23(b)(3), which sets forth two requirements beyond those established by Rule 23(a): "questions of law or fact common to the members of the class [must] predominate over any questions affecting only individual members"; and a class action must be shown to be "superior to other available methods for the fair and efficient adjudication of the controversy."[3] The parties submit that the class definition fully meets the requirements of Rule 23(a) and (b)(3).

Numerosity: According to the records of Defendant, confirmed by the Committee, there are over 250 persons in the class. This is more than sufficient to satisfy the numerosity requirement of Rule 23(a). Generally, a showing that there are forty or more class members is sufficient. See James Wm. Moore, et al, Moore's Federal Practice 23.22(3)(a) (Matthew Bender, 3rd Ed. 1999). Moreover, class members reside at numerous locations up and down the East Coast of the United States. Thus, the number and locations of the class members in combination clearly make "joinder of all members impracticable."

Commonality and Typicality: The "commonality and typicality requirements of Rule 23(a) tend to merge," and are accordingly generally considered together. See Gen. Tel. Co. v. Falcon, 457 U.S. 147, 157 n. 13 (1982). See also Adair v. England, 209 F.R.D. 5 (D.D.C. 2002). The commonality/typicality requirement is generally met where the "named plaintiffs share at least one question of fact or law with the grievances of the prospective class." See Baby Neal for and by Kanter v. Casey, 43 F.3d 48, 56 (3d Cir. 1994); see also Lightbourn v. County of El Paso, 118 F.3d 421, 426 (5th Cir. 1997); In re "Agent Orange" Prod. Liab. Litig., 818 F. 2d 1435, 166-67 (2d Cir. 1987); In re Lorazepam & Clorazepate Antitrust Litig., 202 F.R.D. 12, 26 (D.D.C. 2001).

Here, there are a number of critical allegations common to the claims of the class representatives and the members of the class. Class members were provided offer letters and employment agreements that were in a standard format. See Complaint 12. Moreover, Consulting assigned recruiters on a regional basis to act as liaisons to the potential recruits at a number of colleges or universities within a given section of the eastern United States. The information transmitted by these recruiters to potential recruits appears to have been coordinated with Consulting's headquarters, and the language used in mail and e-mail messages to potential recruits tended to be the same. See Complaint 9, 10. Were it necessary to try the case, Plaintiffs assert that these common facts would be critical to a determination of liability.

Adequacy of Representation: According to the District of Columbia Circuit the "[t]wo criteria for determining the adequacy of representation are [that] 1) the named representative[s] must not have antagonistic or conflicting interests with the unnamed members of the class, and 2) the representative must appear able to vigorously prosecute the interests of the class through qualified counsel." Twelve John Does v. Dist. of Columbia, 117 F. 3d 571, 575 (D.C. Cir. 1997).

As previously noted, although the salaries and bonuses offered sometimes varied, all members of the class, including the class representatives, received employment offers and employment contracts containing similar provisions. See Complaint 12. Class representatives are not receiving any premium for their contributions as representatives, even though such premiums are proper. The Committee, which includes the class representatives, has determined that the fund shall be distributed to each class member, pro rata, by reference to the amount of the bonus he or she was offered. Thus, all members of the class, including the class representatives, had similar experiences in their dealings with Consulting and are being treated in precisely the same fashion under the Settlement Agreement. In these circumstances, there can be no serious suggestion of any conflict between the interests of the class representatives and the class as a whole.

The question of whether Plaintiffs' counsel is sufficiently able is essentially moot, since the parties have reached a settlement. However, were it an issue, it is noted that Messrs. Osborne and Cashdan are both senior lawyers with extensive experience litigating employment law claims in the District of Columbia. Mr. Cashdan has considerable class action experience. Mr. Montague is a senior partner of Berger and Montague, a leading national plaintiffs¿ class action law firm based in Philadelphia, Pennsylvania. Mr. Montague has over thirty years experience litigating plaintiffs' class action cases in courts across the country.

The proposed class also meets the requirements of Rule 23(b)(3). Common questions of law and fact "predominate over any questions affecting only individual members." As stated, the offer letters and employment letters to the members of the class contain similar--frequently identical--language, and the recruiters are alleged to have made common representations to class members by letter and electronic mail. The legal effect of these written communications is critical to the claims of the entire class. There can also be no question that a class action is "superior to other available methods for the fair and efficient adjudication" of these claims. The claims of individual class members are small and would simply be impractical to litigate on an individual basis.

III. The Settlement Agreement is Within the Range of Reasonableness

        and Should be Preliminarily Approved by the Court.

A. The Settlement Agreement will Fairly Compensate all Class Members

The Committee and class counsel submit that the proposed settlement is fair and reasonable because it provides class members nearly full compensation for the bonus claims. Class counsel estimates that each class member will receive a payment equal to approximately ninety per cent of the bonus he or she was promised. Although some class members may have additional claims for "reliance" damages over and above the bonus payments, the prosecution of such claims--on an individual or a class basis--would present very significant legal, factual and practical difficulties.[4] Indeed, liability for bonus claims are subject to legal challenges, and Defendant has denied all liability whatsoever.

Considering all these factors, together with the relative costs and promises of ongoing litigation, class counsel is confident that the proposed settlement is in the best interests of the class. We set forth briefly below the legal considerations and the history of the negotiations between the parties.

The issues raised in defense by PwC include, inter  alia: 

        1. whether the obligation to pay bonuses is enforceable in an "at-will" employment contract if there has been a breach by never offering the plaintiff a starting date. 

        2. whether "reliance" damages will lie for an "at-will" employment agreement if there has been a breach by never offering the plaintiff a starting date. 

        While recognizing the potential defenses available to PwC, Plaintiffs and their counsel nonetheless believed that there were strong equities supporting their claims and that viable and persuasive legal arguments were available to them, especially in support of the contention that the bonus promises were enforceable.

Although PwC was willing to discuss settlement, its position was that Plaintiffs had no supportable basis for seeking reliance damages, and that the claim for enforcement of the bonus promises was also tenuous. By way of background, PwC sold its Consulting line of service in or about October 2002, and appeared interested in putting the instant claims to rest. While PwC explained that jobs had not been offered to class members due to the exigent economic circumstances then confronting the consulting industry, it appreciated the difficulties that the Plaintiffs had experienced. Nevertheless, Defendant denied, and continues to deny, all legal liability to the Plaintiffs and the putative class members.

After a number of negotiating sessions spanning several months, in both Washington and New York, the agreement now being submitted was agreed to and approved by Plaintiffs' Committee. The Committee members considered PwC's offer carefully, weighing the factors outlined above, and concluded that it constituted a fair resolution of their claims. 

        B. The Notice Provisions will Provide Due Process to Any Dissenting Class Members 

        The parties have available from the records of Defendant a reliable list of all persons within the class, together with current or recent mailing addresses and e-mail addresses gathered by the Committee. Accordingly, notice by mail will be adequate. The Agreement provides for the provision of a Notice in a specified form (Ex. B), to be sent to all class members by mail and e-mail (when possible). Class counsel will follow up on any addresses that prove incorrect. 

        The Notice explains the terms of the settlement, offers members of the class an opportunity to examine the Agreement, and affords them a reasonable period of time either to opt out of the class (thirty-five days) or to file objections to the Settlement Agreement (sixty days). The Notice also offers members of the class the option of entering the case on their own through their personal counsel. In short, the Notice provisions fully comply with the requirements of Rule 23(e) and the due process requirements that are implicit in that rule. See Moore¿s Federal Practice, 23.62, 23.63; Phillips Petroleum v. Shutts, 474 U.S. 797 (1985); Peters v. National R.R. Passenger Corp., 966 F. 2d 1483 (D.C. Cir. 1992); Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974).

                            CONCLUSION

For the foregoing reasons, Plaintiffs, with the consent of the Defendant, hereby requests entry of an order, in a form herewith submitted:

1. Provisionally approving certification of the following class, pursuant to Rule 23 (a) and (b)(3):

All persons who satisfy each of the following criteria: (i) attended an undergraduate course of higher education in the 2000-2001 academic year; (ii) were offered employment to commence in 2001 with the PricewaterhouseCoopers Consulting Eastern Business Unit or Washington Consulting Practice; (iii) received, signed and returned to Consulting a letter of employment ("employment agreement"); (iv) whose employment agreement provided for a signing bonus and/or any acceptance bonus; (v) did not receive the bonus or bonuses provided for in his or her employment agreement; and (vi) who did not commence employment with PwC in 2001 or 2002.

2. Directing the Plaintiffs' counsel to mail notice to the foregoing class in the form attached as Exhibit B.

3. Directing Plaintiffs' counsel to file an Affidavit with the Court, within five days of the entry of the Court's order, certifying that notice to class members has been accomplished.

4. Preliminarily approving the terms of the Settlement Agreement, including the proposed plan of distribution and the provision for the payment of Attorneys' Fees and litigation expenses, as fair and reasonable.

5. Scheduling a hearing to hear the contentions of any objectors and further to consider whether the Settlement Agreement should be finally approved and judgment entered dismissing the Complaint.

Respectfully submitted,

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Woodley B. Osborne Bar no. 043406 OSBORNE & DEUTSCH Suite 325 1666 Connecticut Avenue, N.W. Washington, D.C. 20009 202-728-0820 H. Laddie Montague, Esq Berger & Montague, P.C 1622 Locust Street Philadelphia, PA 19103 215-875-3000

David Cashdan, Esq. Bar no. 051342 Cashdan, Kane & Seltzer, pllc Ninth Floor, Connecticut Building 1150 Connecticut Avenue, N.W. Washington, D.C. 20036 202-862-4330

Counsel for the Plaintiffs

Dated: April 14, 2003

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[1] This is a so-called "common fund" case, in which attorneys' fees must be paid from the same fund as is recovered for the benefit of the class members. Attorneys' fee awards are based on a percentage of the fund, with the percentage usually ranging from twenty to thirty-five per cent. See Swedish Hospital Corporation v. Shalala, 1 F. 3d 1261, 1269, 1272 (D.C. Cir. 1993). A more complete presentation will accompany the parties' application for final approval.

[2] Specifically, class counsel estimates that, after allowances for attorneys' fees and costs, each class member will receive a payment that is about ninety per cent of the amount of the bonus payments he or she was offered.

[3] Rule 23(b)(3) also sets forth four factors relevant to the court's inquiry into the applicability of these requirements: 

        (A)The interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of the class action.

[4] In accordance with the requirements of Rule 23 (b)(3) the Settlement Agreement permits members of the class to opt out of the settlement and pursue their own claims.