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SEEKING ATTORNEY’S FEES FOR THE CLASS ACTION PURSUANT TO THE FEDERAL FAIR LABOR STANDARDS ACT (FLSA) CONSTITUTED SEEKING INDEMNIFICATION WHICH IS PROHIBITED BY THE ACT, THE BREACH OF CONTRACT ACTION IS NOT DUPLICATIVE OF THE ACCOUNTANT MALPRACTICE ACTION (FOURTH DEPT).

The Fourth Department, modifying Supreme Court, determined the request for attorney’s fees in this accountant malpractice action constituted a request for indemnification which was prohibited by the Federal Fair Labor Standards Act (FLSA). Plaintiffs alleged they hired defendant-accountants to make sure plaintiffs were in compliance with overtime compensation and wage notice requirements of the FLSA. Plaintiffs were subsequently sued on related claims and sought recover of the attorney’s fees expended to settle the suit. The Fourth Department noted that the breach of contract action was not the same as the accountant malpractice action, but that the negligence and breach of fiduciary duty actions were duplicative of the breach of contract action:

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It is well established that “there is no right of contribution or indemnity for employers found liable under the FLSA” … , and the FLSA preempts any conflicting provisions of state labor laws, including those of New York … . A party may not avoid this bar on indemnity by seeking indemnification damages through other legal theories … . In view of the foregoing, we agree with defendants that seeking attorneys’ fees associated with that underlying class action is a request for indemnity … . * * *

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.. .[w]e reject defendants’ contention that the breach of contract cause of action is duplicative of the accounting malpractice cause of action. The breach of contract cause of action is based on allegations that defendants breached their agreements with plaintiffs by failing to perform certain services, and that plaintiffs are entitled to recover all compensation paid to defendants for those unperformed services. That is separate and distinct from the allegations in the accounting malpractice cause of action, which seeks damages based on allegations that defendants did perform services pursuant to the contract but failed to comply with the accepted standards of care. Delphi Healthcare PLLC v Petrella Phillips LLP, 2018 NY Slip Op 01012,  Fourth Dept 2-9-18

NEGLIGENCE (ACCOUNTANT MALPRACTICE, SEEKING ATTORNEY’S FEES FOR THE CLASS ACTION PURSUANT TO THE FEDERAL FAIR LABOR STANDARDS ACT (FLSA) CONSTITUTED SEEKING INDEMNIFICATION WHICH IS PROHIBITED BY THE ACT, THE BREACH OF CONTRACT ACTION IS NOT DUPLICATIVE OF THE ACCOUNTANT MALPRACTICE ACTION (FOURTH DEPT))/EMPLOYMENT LAW (FAIR LABOR STANDARDS ACT, SEEKING ATTORNEY’S FEES FOR THE CLASS ACTION PURSUANT TO THE FEDERAL FAIR LABOR STANDARDS ACT (FLSA) CONSTITUTED SEEKING INDEMNIFICATION WHICH IS PROHIBITED BY THE ACT, THE BREACH OF CONTRACT ACTION IS NOT DUPLICATIVE OF THE ACCOUNTANT MALPRACTICE ACTION (FOURTH DEPT))/FAIR LABOR STANDARDS ACT (FLSA) (SEEKING ATTORNEY’S FEES FOR THE CLASS ACTION PURSUANT TO THE FEDERAL FAIR LABOR STANDARDS ACT (FLSA) CONSTITUTED SEEKING INDEMNIFICATION WHICH IS PROHIBITED BY THE ACT, THE BREACH OF CONTRACT ACTION IS NOT DUPLICATIVE OF THE ACCOUNTANT MALPRACTICE ACTION (FOURTH DEPT))/ACCOUNTANT MALPRACTICE (THE BREACH OF CONTRACT ACTION IS NOT DUPLICATIVE OF THE ACCOUNTANT MALPRACTICE ACTION (FOURTH DEPT))

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