Sullivan v. Oracle Corp.

• Citation: 557 F.3d 979
• Decision Date: 17 February 2009
• Docket Number: No. 06-56649.,06-56649.
• Parties: Donald SULLIVAN; Deanna Evich; Richard Burkow, Plaintiffs-Appellants, v. ORACLE CORPORATION, a Delaware corporation; Oracle University, form unknown, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

557 F.3d 979

Donald SULLIVAN; Deanna Evich; Richard Burkow, Plaintiffs-Appellants, v. ORACLE CORPORATION, a Delaware corporation; Oracle University, form unknown, Defendants-Appellees.

No. 06-56649.

United States Court of Appeals, Ninth Circuit.

February 17, 2009.

Charles Scott Russell, Robert Thompson, Esquire, Callahan, McCune & Willis, APLC, Tustin, CA, for Plaintiff-Appellant.

Stephen Berry, Esquire, Paul, Hastings, Janofsky & Walker, Costa Mesa, CA, Paul W. Cane, Jr., Paul, Hastings, Janofsky & Walker LLP, San Diego, CA, for Defendants-Appellees.

D.C. No. CV-05-00392-AHS, Central District of California, Santa Ana.

Before: W. FLETCHER and RONALD M. GOULD, Circuit Judges, and LOUIS H. POLLAK,^* Senior District Judge.

ORDER

We respectfully ask the California Supreme Court to exercise its discretion to accept and decide the certified questions below, pursuant to California Rule of Court 8.548.

I. Statement of Facts and Procedural Background

Defendant Oracle Corporation ("Oracle") is a Delaware corporation with its principal place of business in California. Plaintiffs are "Instructors" — to use Oracle's term — who trained customers to use Oracle software. The parties stipulated in federal district court that from April 1999 to June 2006 (the date of the stipulation) Oracle "utilized Instructors on a contract basis through its subsidiary, Oracle Corporation Canada, to perform work inside the United States [and] inside the State of California." According to the stipulation, Oracle provided the training materials used by Plaintiffs. Oracle "recognized revenue" for work performed by Plaintiffs in the United States (including California). Oracle "required its Instructors to travel to destinations within the United States away from their city of domicile for the purpose of performing work for Oracle." At all relevant times, all three plaintiffs resided in the United States. All three of them received their letters of employment in their home states.

Plaintiff Donald Sullivan worked as an Oracle Instructor from June 1998 to January 2004. During this period, Sullivan resided in Colorado. During 2001, Sullivan worked in Colorado "on at least 150 days"; he worked in California "on 32 days"; and he worked in other states "on at least" 52 days. During 2002, he worked in Colorado "on at least 150 days"; he worked in California "on 12 days"; and he worked in other states "on at least" 20 days. During 2003, he worked in Colorado "on at least 150 days"; he worked in California "on 30 days"; and he worked in other states "on at least" 19 days. The record does not reflect how many days, if any, Sullivan worked in Canada.

Plaintiff Deanna Evich worked as an Oracle Instructor from August 1999 to July 2004. During this period, Evich resided in Colorado. During 2001, Evich worked in Colorado "at least 150 days"; she worked in California "on 33 days"; and she worked in other states "on at least" 3 days. During 2002, she worked in Colorado "on approximately 30 days"; she worked in California "on 11 days." During 2003, she worked in Colorado "on approximately 30 days"; she worked no days in California. During 2004, she worked in Colorado "on at least 100 days"; she worked in California "on 36 days"; and she worked in other states "on at least" 4 days. The record does not reflect how many days, if any, Evich worked in Canada.

Plaintiff Richard Burkow worked as an Oracle Instructor from March 1998 to April 2002. During this period, Burkow resided in Arizona. During 2001, Burkow worked in Arizona "on at least 100 days"; he worked in California "on 15 days"; and he worked in other states "on at least" 68 days. During 2002, he worked in Arizona "on at least 60 days"; he worked in California "on five days"; and he worked in other states "on at least" 12 days. The record does not reflect how many days, if any, Burkow worked in Canada.

For a number of years, Oracle classified its Instructors as "teachers," who are exempt from the overtime provisions of California's Labor Code ("Labor Code") and the federal Fair Labor Standard Act ("FLSA"). See Cal. Sch. of Culinary Arts v. Lujan, 112 Cal.App.4th 16, 4 Cal. Rptr.3d 785, 791-92 (Ct.App.2003) (describing regulations establishing exemption for teachers from the Labor Code's overtime provisions); 29 U.S.C. § 213(a)(1) (providing exemptions from the FLSA's overtime provisions); 29 C.F.R. §§ 541.303(a)-(b) (applying FLSA exemption to certain categories of teachers). The parties stipulated that Oracle's California offices were primarily responsible for the decision to classify the Instructors as "teachers" who were exempt from the overtime provisions of the Labor Code and the FLSA.

In 2003, Oracle reclassified its California-based Instructors and began paying them overtime under the Labor Code. In 2004, Oracle reclassified all of its Instructors working in the United States and began paying them overtime under the FLSA. Oracle has not retroactively provided overtime payments to the plaintiffs in the suit before us for work they performed in California prior to the reclassification.

Oracle's reclassification of its Instructors appears to have been prompted by a 2003 class action in federal district court for the Central District of California. Plaintiffs in that suit claimed that Oracle misclassified its Instructors under the Labor Code and the FLSA. Gabel & Sullivan v. Oracle ("Sullivan I"), Case No. SACV 03-348 AHS (MLGx) (C.D.Cal. Mar. 29, 2005). The district court certified two classes. The first was comprised of plaintiffs seeking damages under the Labor Code; the second was comprised of plaintiffs seeking damages under the FLSA. That suit was settled, resulting in a dismissal with prejudice of claims of both classes. However, claims brought by plaintiffs under California law "for periods of time they may have worked in the State of California when they were not a resident of the State" were excepted from the settlement. Those claims were dismissed without prejudice.

Plaintiffs brought the present suit in state court shortly after the settlement in Sullivan I. Oracle removed the suit to the federal district court for the Central District of California, where it was assigned to the same district judge as Sullivan I. Plaintiffs allege three claims in the present suit. They seek class certification for all three claims.

The first claim, brought by all three Plaintiffs, alleges a violation of the California Labor Code. See, e.g., Cal. Lab.Code § 510(a); see also Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1073 n. 18 (9th Cir. 2007). Plaintiffs allege that Oracle failed to pay overtime for work performed in California to Instructors domiciled in other states who worked complete days and complete weeks in California. Plaintiffs seek to apply the Labor Code to a full day's work when that work was performed entirely in California, and to a full week's work when that work was performed entirely in California. They do not seek to apply the Labor Code to only a part of a day's work or part of a week's work that was performed in California.

The second claim, brought by all three Plaintiffs, alleges a violation of California's Unfair Competition Law, commonly referred to as § 17200. See Cal. Bus. & Prof.Code § 17200 et seq. This claim is predicated on the violations of the Labor Code alleged in the first claim.

The third claim, brought only by Plaintiffs Evich and Burkow, alleges a different violation of § 17200. This claim is predicated on violations of the FLSA. Plaintiffs allege that Oracle failed to pay overtime under the FLSA for work performed throughout the United States. Class members in Sullivan I who settled their claims against Oracle are not included in the would-be class.

The district court granted summary judgment to Oracle on all three claims. On the first and second claims, the court held that California's Labor Code (and, derivatively, § 17200) does not apply to nonresidents who work primarily in other states. Further, the court held that if the Labor Code were construed to apply to such work, it would violate the Due Process Clause of the Fourteenth Amendment. On the third claim, the court held that § 17200 does not apply to work performed outside California for which payment was less than that required by the FLSA; to the extent the third claim involved work performed in California the claim failed "for the same reasons that Plaintiffs' § 17200 claim based on Labor Code provisions fails."

In a published opinion, we reversed in part and affirmed in part the decision of the district court. Sullivan v. Oracle Corp. (Sullivan II), 547 F.3d 1177 (9th Cir.2008). We reversed on the first and second claims, holding that the Labor Code and § 17200 apply to Plaintiffs' overtime work that was performed in California. Id. at 1181-86. We affirmed on the third claim, holding that § 17200 does not apply to Plaintiffs' overtime work performed outside of California even if the employer violated the FLSA. Id. at 1186-87.

Oracle filed a petition for rehearing en banc of our decision on the first and second claims. Plaintiffs filed a petition for rehearing by the panel on the third claim. The California Employment Law Council, the California Restaurant Association, and the Employers' Group each filed amicus briefs in support of Oracle's petition for rehearing en banc on the first and second claims.

II. Certified Questions

We certify the following questions to the California Supreme Court, corresponding to the three claims presented by the plaintiffs.

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside...