December 4, 2020

Big 4 Lawsuits: Ex-Deloitte Switzerland Partner vs. Deloitte, NMC Health’s Administrators vs. EY, Floridians vs. Deloitte Consulting

On the docket: former Deloitte Switzerland partner takes the L … again, EY sued over its lack of auditing prowess, and Deloitte Consulting is a lawsuit magnet.

Ex-Deloitte Swiss Partner Loses Appeal Of Forced Retirement [Law360]
David Joseph took another L in court on Nov. 5 as a London appeals court ruled that the former Deloitte Switzerland partner had missed a legal deadline to fight the decision by the firm to remove him from the partnership by one day.

The Court of Appeal unanimously agreed that Deloitte was within its rights under the company’s partnership agreement to deny the request by David Joseph — who worked in Deloitte’s forensic services department in Switzerland until January — to have his termination notice reviewed.

The decision upholds a December ruling by High Court Judge Phillipa Whipple, who found Joseph had missed the deadline to call a special meeting of the approximately 1,700 Deloitte equity partners.

The appellate judges said Joseph is “entitled to feel harshly treated” by the decision and expressed their sympathy, but ultimately agreed that Deloitte had acted within its legal rights.

Deloitte NSE LLP gave Joseph notice after an investigation into his conduct, the details of which were not disclosed in court documents.

As we previously reported, Joseph was accused by whistleblowers at the firm of bullying employees and abusing the firm’s policy on expenses. After receiving a verbal warning in 2015, Joseph was told he was being kicked out of the partnership last year after a formal investigation into his conduct by an internal ethics panel, made up of senior Deloitte partners, which began in 2018, concluded that he should be fired.

The main issue in his appeal was a seven-day period between a member of the partnership challenging a termination notice before the board of directors and moving to a final stage of their appeal by calling a partners’ meeting.

Joseph claimed Deloitte “unfairly and unjustly” had refused him the right to appeal his dismissal because of a dispute over the seven-day deadline.

Joseph reportedly couldn’t meet with the board of directors at the arranged time because he was sick but sent a written memorandum disputing the claims against him.

Lawsuit: Ex-Deloitte Switzerland Partner Accused of Bullying Seeks Vengeance In Court
Judge and Ex-Deloitte Switzerland Partner Weren’t on the Same Page Apparently
Fired Deloitte Switzerland Partner Owes Deloitte Some Money After Defeat In Court
Big 4 Lawsuits: Ex-Deloitte Manager vs. Deloitte, Ex-Deloitte Switzerland Partner vs. Deloitte, Ex-PwC Employees vs. PwC

EY faces £1bn lawsuit over audit work for NMC Health [Financial Times]
The first shoe has dropped as a result of EY’s alleged atrocious auditing of NMC Health, which collapsed into administration this year after revealing more than $4 billion of hidden debt amid allegations of fraud.

The administrators to NMC Health are preparing to sue EY for more than £1bn over claims the Big Four audit firm was negligent when it signed off the group’s accounts during a “long term” multibillion-dollar fraud.

EY has overseen NMC’s accounts since the healthcare company floated in London in 2012. The quality of the firm’s audits has already been questioned due to the fact that NMC’s board included former EY partners.

Administrator Alvarez & Marsal said it had hired law firm Quinn Emanuel to make a claim against EY, and had already issued a preliminary notice informing the audit firm it intended to file a lawsuit.

In a progress report to creditors, Alvarez & Marsal said it was still investigating the size and scale of the fraud, how it had been perpetrated and by whom, as it sought to assess potential claims and recoveries.

Last May, the Financial Reporting Council said it had opened an investigation into the 2018 audit of NMC Health’s financial statements.

EY U.K. Is Waiting to Get Called to the Principal’s Office

State, Deloitte fight extension in unemployment case [WJXT-TV]
Last month we learned that a judge in Florida dismissed a potential class-action lawsuit against the state and Deloitte Consulting stemming from huge problems with Florida’s unemployment benefits system, which was built by Deloitte, amid the COVID-19 pandemic. But it was reported at the time that the state and Deloitte shouldn’t start celebrating just yet.

Why? Because the plaintiffs aren’t giving up:

The Florida Department of Economic Opportunity and Deloitte Consulting LLP are fighting a request by plaintiffs’ attorneys for an extension of time to file a revised class-action lawsuit related to problems in the state unemployment-compensation system.

Leon County Circuit Judge John Cooper on Sept. 30 dismissed the lawsuit, which was filed on behalf of people who had trouble obtaining unemployment benefits amid the coronavirus pandemic.

But Cooper gave plaintiffs’ attorneys 30 days to file an amended complaint, which would refuel the legal fight.

On the deadline last Friday, plaintiffs’ attorneys requested a two-week extension to file an amended complaint, pointing in part to needing “additional time to research certain issues raised by the defendants.”

But in documents filed Tuesday, attorneys for the Department of Economic Opportunity and Deloitte argued that Cooper should reject an extension, effectively scuttling the case. The state cited a June 22 hearing that went into detail about issues in the lawsuit.

QOTD: Florida Governor Is Not Impressed with Deloitte’s Handiwork
Deloitte Is Giving Unemployed Gig Workers In Some States Something Extra to Worry About
Deloitte Sued By Unemployed Ohioans Who Are Unhappy Their SSNs and Addresses Were Visible For All to See
Big 4 Lawsuits: Illinois Resident vs. Deloitte, Gridsum Investors vs. PwC, Ryan LLC vs. EY
Big 4 Lawsuits: Karen Ward vs. EY, Choppies vs. PwC, Floridians vs. Deloitte Consulting

Toronto software company Nulogy suing U.S. client for allegedly stealing trade secrets [The Globe and Mail]
Also named in the lawsuit: Deloitte LLP and Deloitte Consulting:

The Toronto supply chain management software company Nulogy Corp. is suing a client from Wisconsin, alleging it misappropriated Nulogy’s trade secrets as it developed similar software to make supply chains more efficient.

Nulogy’s software allows participants all across a supply chain to maintain constant communication and co-ordination. This has become more important during the COVID-19 pandemic, as demand for some products has become unpredictable and new safety precautions are in place across chains’ every link.

With clients including Procter & Gamble Co. and Kellogg Co., Nulogy says its revenue is about $20-million annually – and the company says that figure is expected to rise because of heightened supply chain scrutiny and safety because of the pandemic.

But in a filing with the Ontario Superior Court of Justice this past summer, Nulogy alleges that Wisconsin’s Menasha Corp. breached a software licence agreement that caused Nulogy to “lose a significant financing opportunity” that could have propelled its growth even further. The Toronto company is seeking $60-million in damages, plus costs and interest, from Menasha and its subsidiaries, as well as Deloitte LLP and Deloitte Consulting LLP – which Nulogy said in a legal filing had “induced” Menasha to breach the agreement and to take advantage of its trade secrets.

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