Ninth Circuit Affirms That Employees Who Work Outside California Cannot Use The California Unfair Competition Law To Vindicate Their Federal Overtime Rights

On December 13, 2011, the Ninth Circuit issued its most recent decision in the Sullivan v. Oracle saga. See Sullivan, D.C. No. CV-05-00392-AHS (9th Cir. Dec. 13, 2011). The decision followed the June 30, 2011 opinion of the California Supreme Court, in which the Court answered a question that the Ninth Circuit had posed to it: whether employees of a California-based employer who worked entirely outside California could sue the employer under the California Unfair Competition Law ("UCL") for the employer's alleged failure to pay overtime to non-California employees as required under the federal Fair Labor Standards Act ("FLSA"). See Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (2011). Upon remand of the case from the California Supreme Court, the Ninth Circuit held that the state court's opinion was "conclusive" and justified granting summary judgment to Oracle on the UCL claims of these non-California employees. Separately, the Ninth Circuit held that California overtime law applies to non-residents who perform work within the state, another question that it posed to the California Supreme Court to answer. This blog entry, however, focuses solely on the discussion of out-of-state employees' use of the UCL to vindicate FLSA rights.

By way of background, plaintiffs were out-of-state instructors for Oracle, who resided in Colorado and Arizona, and who brought a putative class action for overtime pay on behalf of out-of-state instructors. While Oracle's headquarters are located in California, Oracle employed Instructors in 20 states, including California. The parties disputed whether Instructors who worked entirely outside California and were denied overtime under FLSA standards could recover FLSA overtime under the UCL (because the statute of limitations had run on their actual FLSA claims). The Central District granted Oracle's motion for summary judgment based on stipulated facts. On appeal, the Ninth Circuit initially affirmed that employees who never worked in California were barred from vindicating their FLSA rights through the UCL. The Ninth Circuit withdrew that opinion, however, and instead certified the question for the California Supreme Court to resolve as a matter of state law. The Ninth Circuit asked the California Supreme Court to answer the following specific question: "Does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs if the employer failed to comply with...