October 22, 2020

Big 4 Lawsuits: Ex-PwC Partner vs. PwC, Deloitte Partner vs. Deloitte Australia, EnviroNet vs. EY

Plus, two Deloitte partners implicated in U.K. insolvency lawsuit, and KPMG gets out of $1.1 billion suit in Oceanografia scandal.

A former PwC partner who sued the firm for $15 million just had a major setback in his case, pushing the pay spat behind closed doors [Business Insider]
Big 4 firms salivate when a lawsuit filed against them by a former employee is sent to arbitration because the spat gets dealt with behind closed doors instead of out in the open in a courtroom trial. And the Big 4 is going to prevail in arbitration more often than not.

So ex-PwC partner John Cahill—who alleges in a $15 million lawsuit against P. Dubs that he was wrongfully deprived of credit for a client he brought to PwC that now does more than $10 million in business with the firm annually—is probably screwed now that a judge approved PwC’s request to send the case to arbitration:

John Cahill, whose lawsuit against PwC revealed details about how the firm evaluates and compensates its partners, sued the firm in Minnesota last month. But PwC asked a New York court to halt the case, saying Cahill had ignored his agreement to arbitrate, and the Big Four advisory giant won the decision it was seeking on Tuesday [Sept. 8].

“The court’s going to grant the petition,” Justice O. Peter Sherwood said on an oral argument held via Skype on Tuesday.

Cahill said in the lawsuit he’s lost out on more than $15 million in potential income because PwC forced him off the engagement, causing him to miss performance requirements that led to his firing.

PwC contends that Cahill’s allegations have no merit, that he was fired because he failed to meet performance expectations, and that he agreed to arbitrate his claims, therefore the court filing violates that agreement.

Deloitte told to justify bid to shut down age discrimination case [Australian Financial Review]
Here’s an update on Deloitte Australia partner Colin Brown’s lawsuit against Big D, in which he alleges Deloitte is unfairly making him leave the partnership because he recently turned 62 years old:

The Federal Court has given consulting firm Deloitte until next Friday to provide further evidence to back up its attempt to knock out the bulk of an age discrimination case brought against the firm by partner Colin Brown.

The firm is trying to strike out large sections of the case, which challenges Deloitte’s alleged policy of retiring partners when they reach the age of 62, in a way that would stop any adverse judgment from applying to partners other than Mr Brown.

In the landmark action, Deloitte partner and auditor Mr Brown is seeking damages of more than $3 million over claims Deloitte Australia illegally tried to force him out of the lucrative partnership.

He also wants the Federal Court to force Deloitte Australia and its CEO Richard Deutsch to acknowledge they have committed age discrimination and to say the firm will no longer have a “mandatory retirement age” for partners.

According to AFR, Deloitte wants the court to:

  • Limit any findings to Brown’s specific circumstances rather than the firm’s broader policy on partner retirements;
  • Delete from Brown’s statement of claim allegations that he was misled when he was initially recruited into the Australian partnership; and
  • Remove Brown’s compensation claim under consumer law for economic loss because of the firm’s age-based retirement policy, and allegations that Deloitte’s retirement policy is ageist and unlawful.

Consultant Accuses Ernst & Young Of Fraud To Gain Contract [Law360]
As if EY didn’t have enough problems—both here and abroad—that it’s dealing with right now:

A Massachusetts environmental consulting firm accused Ernst & Young LLP on Tuesday [Sept. 22] in Massachusetts federal court of obtaining compliance information under false pretenses in order to poach a contract worth roughly $2.1 million in profits.

Ernst & Young allegedly asked for information from EnviroNet LLC when they were both doing work for a Dupont entity, but instead of honoring the understanding that the information wouldn’t be used to win a contract with the company, Ernst & Young turned around and used EnviroNet’s help to win the business, EnviroNet claims in a complaint filed Tuesday.

“EY used the information and analysis which it improperly obtained from EnviroNet LLC in preparing its own bid on the Dupont RFP for providing labeling operations and support,” EnviroNet said in its complaint. By misusing the information, “EY obtained the contract for labeling operations and support which would otherwise have been awarded to EnviroNet LLC.”

EY said in a statement to Law360 on Wednesday that it “does not believe this claim has any merit, and we intend to vigorously defend ourselves.”

Not only did EnviroNet lose the $2.1 million in anticipated profits when EY won the contract, but it also allegedly lost “the opportunity of obtaining additional contracts for Dupont’s E&I [Electronics and Imaging] business unit,” the complaint states.

The complaint alleges fraud, intentional interference with advantageous business relations, and violations of state law.

Other lawsuits against the Big 4:

  • Pharmally lawyers file lawsuit against Deloitte auditors [Taipei Times]
  • Deloitte partners face £19m insolvency lawsuit [Accountancy Age]
  • KPMG escapes billion-dollar lawsuit over Oceanografia scandal [Reuters]

Related article:

Big 4 Lawsuits: Ex-PwC Partner vs. PwC, Deloitte Partner vs. Deloitte Australia, Watchstone vs. PwC U.K.

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Related articles

KPMG Must Really Like This Bill Thomas Fellow

Is Bill Thomas the most under-the-radar Big 4 global CEO right now? Everyone knows Bob Moritz, Punit Renjen, and Carmine Di Sibio. But if you don’t work at KPMG, or even if you do, did you even know Bill Thomas is the firm’s head chairman? I just now had to create a Bill Thomas tag for […]

Florida Gives Deloitte Consulting a Happy Ending

The saga between Florida and Deloitte Consulting—a relationship bizarre enough to be reported by TMZ or covered by Perez Hilton—keeps on keeping on, as the state’s Agency for Health Care Administration is going ahead with Big D on a potential $135 million contract to overhaul Florida’s Medicaid data system, according to the Tampa Bay Times. […]