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Oracle Refuses To Arbitrate Wage Fight, Ex-Worker Says


By Melissa Daniels

Law360, Los Angeles (September 6, 2017, 6:32 PM EDT) -- A former Oracle sales representative is asking a California federal judge to force the computer technology giant into arbitration, saying the company has refused to cooperate with the JAMS process after the representative dropped a $150 million putative class action bringing wage claims over allegedly unpaid commissions.

Marcella Johnson voluntarily dismissed her lawsuit alleging unpaid commission and wage law violations after Oracle America Inc. produced a mandatory arbitration agreement. Though Johnson filed an arbitration demand with JAMS, as the agreement required, she now claims Oracle has “flatly refused” to participate in the process, according to a petition to compel arbitration filed Wednesday.

“Among other things, Oracle has refused to pay its share of the arbitration fee or to participate in the selection of the arbitrator,” the petition says. “Based on Oracle’s recalcitrance, the arbitration cannot proceed.”

Johnson claims Oracle is insisting that the parties’ relationship is governed by a second arbitration agreement, one with a provision that prohibits class arbitration.

Michael Palmer of Sanford Heisler Sharp LLP, one of Johnson’s attorneys, told Law360 that they don’t believe the second document is a valid arbitration agreement that could supersede the first — but such disagreements over which arbitration agreement applies and whether class arbitration is allowed should be left up to the arbitrator.

“It’s absolutely stunning that the company here is mandating that employees go to arbitration, but then itself is preventing an arbitrator from deciding on a very central issue,” he said. “They’ve essentially just gone into a kind of default mode where they are just refusing to engage at all.”

Johnson’s petition also argues that even if Oracle’s purported second arbitration agreement is found to be valid, it is unenforceable under the Ninth Circuit’s 2016 decision in Morris v. Ernst & Young LLP, which found class waivers violate the National Labor Relations Act and is currently under review at the U.S. Supreme Court.

“Oracle seeks to do nothing more than stonewall and delay this case in hopes that Morris may be overturned during the next Supreme Court term,” the petition says. “Oracle’s conduct has had the effect of bogging down both the court system and the arbitral forum with needless protracted litigation.”

The petition seeks an order compelling Oracle to arbitrate the action before JAMS-San Francisco, pay its designated share of the fees and participate in the selection of the arbitrator — as well as an award of attorneys’ fees and costs.

Johnson’s initial suit accused Oracle of holding back millions of dollars in commission wages owed to sales employees by changing commission formulas that applied to past sales, even sometimes after the commission had been paid. The commissions were reduced to align the employee pay with the company’s “financial forecasts and bottom-line goals,” according to her complaint.

Johnson claimed Oracle told her she had a negative commission balance of approximately $20,000 after it “re-planned” how much she would be paid for sales she made in 2013. She quit after she made enough commission earnings to pay off the company-stated debt, according to her suit.

The action brought claims for failure to pay commission wages in breach of California labor code and contract, failure to pay wages upon separation, and unfair competition, and sought an award of damages in excess of $150 million. Johnson filed a notice of voluntary dismissal in May of this year, followed up by an operative arbitration demand filed in September.

The demand brings the same claims that the complaint did on behalf of Johnson and the putative class, as well as peonage and forced labor claims on behalf of Johnson.  

Palmer told Law360 that while exact figures from Oracle about its sales representatives affected by the commission changes aren’t yet available, Johnson’s legal team believes the class could easily have more than 1,000 individuals.

Representatives for Oracle didn’t immediately respond to requests for comment on Wednesday.

Johnson is represented by David Sanford, Michael Palmer, Andrew Melzer and Danielle Fuschetti of Sanford Heisler Sharp LLP and Xinying Valerian of Valerian Law.

Counsel information for Oracle wasn’t immediately available.

The case Johnson v. Oracle America Inc., case number 3:17-cv-05157 in the U.S. District Court for the Northern District of California.

--Additional reporting by Bonnie Eslinger. Editing by Alanna Weissman.