Sullivan v. Oracle Corporation

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DONALD SULLIVAN; DEANNA EVICH;  No. 06-56649

RICHARD BURKOW, D.C. No.

Plaintiffs-Appellants, CV-05-00392-AHS

v.

ORACLE CORPORATION, a Delaware  ORDER

CERTIFYING

corporation; ORACLE UNIVERSITY, QUESTIONS TO

form unknown, THE SUPREME

Defendants-Appellees. COURT OF

 CALIFORNIA

Filed February 17, 2009

Before: William A. Fletcher and Ronald M. Gould,

Circuit Judges, and Louis H. Pollak,*

Senior District Judge.

ORDER

We respectfully ask the California Supreme Court to exer-

cise 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 stipu-

*The Honorable Louis H. Pollak, Senior United States District Judge

for the Eastern District of Pennsylvania, sitting by designation.

1841

1842 SULLIVAN v. ORACLE CORP.

lated 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 “rec-

ognized 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 perform-

ing 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 Colo-

rado “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 Colo-

rado “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 Colo-

rado “on approximately 30 days”; she worked no days in Cali-

fornia. During 2004, she worked in Colorado “on at least 100

days”; she worked in California “on 36 days”; and she worked

SULLIVAN v. ORACLE CORP. 1843

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, 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 stipu-

lated that Oracle’s California offices were primarily responsi-

ble 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 pay-

ments to the plaintiffs in the suit before us for work they per-

formed 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

1844 SULLIVAN v. ORACLE CORP.

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 seek-

ing damages under the FLSA. That suit was settled, resulting

in a dismissal with prejudice of claims of both classes. How-

ever, claims brought by plaintiffs under California law “for

periods of time they may have worked in the State of Califor-

nia 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 vio-

lation 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

SULLIVAN v. ORACLE CORP. 1845

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 Bur-

kow, 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 per-

formed throughout the United States. Class members in Sulli-

van 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 out-

side California for which payment was less than that required

by the FLSA; to the extent the third claim involved work per-

formed 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 per-

formed in California. Id. at 1181-86. We affirmed on the third

claim, holding that § 17200 does not apply to Plaintiffs’ over-

time 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

1846 SULLIVAN v. ORACLE CORP.

rehearing by the panel on the third claim. The California

Employment Law Council, the California Restaurant Associa-

tion, 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 out-

side California for a California-based employer by out-of-

state plaintiffs in the circumstances of this case if the

employer failed to comply with the overtime provisions of the

FLSA?

By separate order, we today withdraw our published panel

opinion in this appeal, pending a decision by the California

Supreme Court on the questions of California law that we

now certify. If the California Supreme Court decides any or

all of the certified questions, we will accept and rely on the

Court’s decision of that question or those questions in any fur-

ther proceedings in this court.

III. Explanation of the Importance of the Certified

Questions

Answers to the three certified questions by the California

Supreme Court will determine the outcome of the summary

judgment motion made as to Plaintiffs’ three claims.

SULLIVAN v. ORACLE CORP. 1847

The answer to the questions will have considerable practi-

cal importance. A large but undetermined number of

California-based employers employ out-of-state residents to

perform work in California. If those workers are covered by

the overtime provisions of the California Labor Code, this

will have an appreciable economic impact on these employers

and employees. There may also be an appreciable economic

impact on the overall labor market in California, given the

competitive cost advantage out-of-state employees may have

over California-resident employees if overtime pay under Cal-

ifornia law is not required for work they perform in Califor-

nia.

As we read the decisions of the California appellate courts,

there is no directly controlling precedent on the question

whether the overtime law of California or the overtime laws

of the home states of Plaintiffs should apply to work per-

formed by Plaintiffs in California for a California-based

employer. The general choice-of-law principles under Califor-

nia are long established and relatively clear. See Sullivan II,

547 F.3d at 1182. Their application to this case, however, is

unclear. We have inferred from Tidewater Marine Western,

Inc. v. Bradshaw, 14 Cal. 4th 557 (1996), and Campbell v.

Arco Marine, Inc., 42 Cal. App. 4th 1850 (1996), that the

overtime provisions of the California Labor Code are intended

to cover full days and full weeks worked in California by out-

of-state residents employed by California-based companies,

but we have not been able to discover any appellate decision

of a California court directly addressing that question. See

Sullivan II, 547 F.3d at 1183. Nor have we been able to dis-

cover any appellate decision dealing with the application of

§ 17200 to the work performed by Plaintiffs in and outside

California. Further, although the issue directly before us con-

cerns only overtime pay, we are aware that there are broader

implications of a holding that the Labor Code covers in-state

work by out-of-state residents employed by California-based

employers, given the multifarious provisions of the Labor

Code.

1848 SULLIVAN v. ORACLE CORP.

IV. Administrative Information

The caption of the case is:

No. 06-56649

DONALD SULLIVAN; DEANNA EVICH; RICHARD

BURKOW,

Plaintiffs - Appellants,

v.

ORACLE CORPORATION, a Delaware corporation;

ORACLE UNIVERSITY, form unknown,

Defendants - Appellees.

Counsel for the parties are as follows:

For Plaintiffs - Appellants: Charles S. Russell, Robert W.

Thompson, CALLAHAN McCUNE & WILLIS, 111 Fashion

Lane, Tustin, CA 92780.

For Defendants - Appellees: Stephen L. Berry, Paul Gross-

man, PAUL, HASTINGS, JANOFSKY & WALKER, 55 Sec-

ond Street, 24th Floor, San Francisco, CA 94105; Paul W.

Cane, Jr., Kirby C. Wilcox, PAUL, HASTINGS, JANOFSKY

& WALKER, 695 Town Center Drive, 17th Floor, Costa

Mesa, CA.

If the California Supreme Court grants the request for certi-

fication, Donald Sullivan, Deanna Evich, and Richard Bur-

kow should be deemed the petitioners, as they are the

appellants before our court.

V. Conclusion

We recognize that the California Supreme Court has a

heavy caseload, and we do not make our request lightly. We

SULLIVAN v. ORACLE CORP. 1849

hope that the Court will accept and decide all three of the cer-

tified questions. However, if the Court in its discretion

chooses to accept and decide only one or two of the questions,

we will be grateful for its assistance as to that question or

those questions.

All further proceedings in this case in this court are stayed

pending final action by the California Supreme Court. This

case is withdrawn from submission until further order of this

court. This panel retains jurisdiction over further proceedings

upon receiving a decision from the California Supreme Court

or upon that court’s decision to decline to answer the certified

question or questions. The parties shall notify the Clerk of this

court within one week after the California Supreme Court

accepts or rejects certification. If the California Supreme

Court accepts the certified question or questions, the parties

shall file a joint status report to our court every six months

after the date of acceptance, or more frequently if circum-

stances warrant, and again within one week if the California

Supreme Court renders an opinion.

In accordance with California Rule of Court 8.548, the

Clerk of Court is hereby directed to transmit forthwith to the

California Supreme Court, under official seal of the Ninth

Circuit, the original and ten copies of this order, along with

all relevant briefs and excerpts of record. The Clerk shall also

file certificates of service with the parties to this appeal. Cal.

R. Ct. 8.548(c)-(d).

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