Posted March 21st, 2019.
By Mike LaSusa
Law360 (March 21, 2019, 7:54 PM EDT) — A former worker who hit Oracle Inc. with a putative class action over sales commission pay can send the dispute to arbitration, a Ninth Circuit panel said Thursday, noting that the case put the tech titan in the atypical position of fighting against arbitrating employment matters.
The three-judge panel ruled that a California federal court had been right to order Oracle to arbitrate the dispute with plaintiff Marcella Johnson, who accused Oracle of holding back $150 million in commission wages owed to sales employees by changing commission formulas that applied to past sales, sometimes even after the commissions had been paid.
The Redwood Shores, California-based company had argued that the lower court erred by failing to determine if there was a valid arbitration agreement, but in Thursday’s unpublished opinion, the Ninth Circuit judges said there were two agreements in the case that both clearly provided for arbitration.
“The district court therefore correctly ruled it was for the arbitrator to determine which contract defined the scope of the arbitration,” the judges said.
Johnson originally filed her claims in California federal court, claiming employees’ commissions were reduced to align their pay with the company’s “financial forecasts and bottom-line goals.”
Johnson voluntarily dismissed the suit after Oracle produced a mandatory arbitration agreement and then she filed an arbitration demand with JAMS, as the agreement required. But she claims Oracle has “flatly refused” to participate in the process and asked the court to compel Oracle to arbitrate her dispute, pay its designated share of the fees, and award attorneys’ fees and costs.
After a hearing on the motion to compel in November 2017, U.S. Magistrate Judge Elizabeth D. Laporte sided with Johnson, but Oracle appealed the ruling to the Ninth Circuit.
At oral arguments in February, the appeals panel seemed skeptical of Oracle’s arguments.
During the hearing in San Francisco, U.S. District Judge Robert Lasnik, who sat on the three-judge panel by designation, said big companies are typically the ones insisting on arbitration and “making class actions disappear.” But in this case, Oracle was fighting the district judge’s decision to send Johnson’s case to arbitration.
“There’s a man bites dog aspect to this case. Usually the big corporations are the ones who are imposing arbitration on people,” the judge said. “Don’t you see the irony here?”
Plaintiff attorney Michael Palmer of Sanford Heisler Sharp LLP celebrated the Ninth Circuit’s decision on Thursday.
“This marks the third time in this case that Oracle has tried unsuccessfully to avoid complying with its own arbitration agreement,” Palmer told Law360. “We look forward to proceeding swiftly in arbitration.”
Oracle didn’t respond to a request for comment Thursday.
Oracle is currently trying to fend off another pay-related dispute in California. Earlier this month, the company asked a Golden State court not to certify a class alleging that it pays thousands of female workers less than men in the same job groups, saying workers’ actual duties and skills vary widely.
U.S. Circuit Judges Mary M. Schroeder and Johnnie B. Rawlinson and U.S. District Judge Robert Lasnik, sitting by designation, sat on the panel for the Ninth District.
Johnson is represented by Michael Douglas Palmer of Sanford Heisler Sharp LLP.
Oracle is represented by Brendan Dolan of Vedder Price LLP.
The case is Johnson v. Oracle America Inc., case number 17-17489, in the U.S. Court of Appeals for the Ninth Circuit.
–Additional reporting by Dorothy Atkins and Braden Campbell. Editing by Janice Carter Brown.