Class Action

New Ninth Circuit decision on the UCL's extraterritorial operation: Sullivan v. Oracle Corp.

By Kimberly A. Kralowec

In Sullivan v. Oracle Corp., ___ F.3d ___ (9th Cir. Nov. 6, 2008), the Ninth Circuit addressed whether non-residents of California may invoke the UCL's "unlawful" prong against a defendant with its principal place of business in California. According to the Ninth Circuit (opinion by Judge Fletcher), the answer depends on the underlying, "borrowed" law.

After a lengthy analysis, the court held that non-Californians may invoke the Labor Code directly for work performed in California (slip op. at 15266-75), and therefore may also state a UCL "unlawful" prong claim for Labor Code violations (id. at 15276). However, they could not invoke the UCL's "unlawful" prong to obtain redress for violation of the federal Fair Labor Standards Act for work performed outside California. Id. at 15276-77 (citing Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214 (1999)). The opinion concludes:

We reverse the district court?s grant of summary judgment on Plaintiffs? first two claims. We hold that California?s Labor Code applies to work performed in California by nonresidents of California. We affirm the district court?s grant of summary judgment on Plaintiffs? third claim. We hold that § 17200 does not apply to allegedly unlawful behavior occurring outside California causing injury to nonresidents of California.

Id. at 15277 (emphasis added). 

The opinion spends little time discussing the fact that the defendant's principal place of business is in California or the possibility that its FLSA violations may have emanated from California.  That factor could have impacted the analysis of the UCL's extraterritorial application under Norwest.  The opinion seems to assume that for non-Californians performing work outside California, any FSLA violations also necessarily emanated from outside California.  I do not think that is necessarily true in every case against a California-based defendant who employs workers out of state.  For more discussion of the Norwest decision, see this blog post. 

Full post as published by The UCL Practitioner on November 06, 2008 (boomark / Sullivan v. Oracle Corp.&linkurl=http://www.uslaw.com/library/Class_Action/New_Ninth_Circuit_decision_UCLs_extraterritorial_operation_Sullivan_v_.php?item=289243' rel=nofollow title='The UCL Practitioner'>email).