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Jury Awards $1.675 Million in an EEOC ADA Discrimination Case

A seven-person jury in Syracuse, New York returned a verdict to resolve a disability discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC). The jury awarded $1.675 million to Shelley Valentino, a deaf individual, who unsuccessfully applied for two positions in McLane’s warehouse located in Lysander, N.Y., for which she was fully qualified. The facility employs approximately 650 people and distributes products to retail businesses throughout the Northeast.

On March 12, 2018, Valentino applied online for two open positions with Defendant: Warehouse Selector II and Warehouse Selector IV. Her application indicated two prior work experiences: working as a hostess and busser at Plainville Restaurant between August 2007 and July 2008, and as a filing and data entry clerk between January and October 2003. Her resume indicated that she received her GED in 2005, a certification in medical billing and coding in 2011, and an associate degree in health information technology in 2016. Valentino’s application nowhere indicates that she has any disability or requires any accommodation.

McLane contacted her the same day she applied for the two jobs, and left a message. She then returned McLane’s call using a Telecommunications Relay Service, which uses an operator to facilitate calls for people with hearing and speech disabilities. After being contacted via the Relay Service, McLane did not return her call and rejected her application the next day. McLane filled the positions with individuals who are not hearing impaired. The reason given in the applicant tracking system was that Valentino did not meet the company’s preferred qualifications.

McLane received a total of 208 applications for the Warehouse Selector II position and hired 15 individuals. Similarly, they received 209 applications for the Warehouse Selector IV position and hired eight individuals.

The EEOC filed suit in the U.S. District Court for the Northern District of New York (EEOC v. McLane/Eastern, Inc. d/b/a McLane Northeast, Civil Action No. 5:20-cv-01628-BKS-ML) after first attempting to reach a pre-litigation settlement through its conciliation process. The EEOC sought back pay, front pay, compensatory damages, and punitive damages for the applicant, as well as injunctive relief designed to remedy and prevent future disability discrimination in the hiring process.

In January 2023, the court heard a motion for summary judgment filed by McLane, who pointed out that courts regularly dismiss ADA disability discrimination claims where the plaintiff cannot establish that the employer had knowledge of the plaintiff’s disability, on the ground that such a plaintiff cannot establish the causation element of a prima facie case. An employer “cannot be liable under the ADA for firing an employee when it indisputably had no knowledge of the disability,” because an employer cannot take an adverse action with respect to an employee or applicant “because of a disability unless it knows of the disability.”

“[A] plaintiff alleging discrimination on account of his protected status must offer evidence that a decision-maker was personally aware of his protected status to establish a prima facie case of discrimination.” Murray v. Cerebral Palsy Ass’ns of N.Y., Inc., No. 16-cv-662, 2018 WL 264112, at *7, 2017 U.S. Dist. LEXIS 213553, at *19-20 (S.D.N.Y. Jan. 2, 2018) ( other citations omitted).

McLane argued that the evidence “plainly demonstrates” that it had no knowledge of Valentino’s deafness when her applications were rejected, because (1) Defendant’s Human Resources Manager, Anne Orr – the decisionmaker -testified that she did not know Valentino is deaf until Valentino filed a charge of discrimination with the EEOC in August 2018; (2) the other three members of the Human Resources Department testified that they were not aware of Valentino’s disability at the relevant time, did not speak to Valentino on the phone or recall a TRS call, and played no role in the hiring process; and (3) Valentino herself never expressly informed Defendant of her disability and does not know for sure whether the TRS operator did so.

The Court denied the motion for summary judgment, concluding that there is evidence from which a reasonable factfinder could conclude that Defendant had knowledge of Valentino’s disability at the time it decided not to interview or hire her in March 2018, based on the transcript of the March 12 Telecommunications Relay Service, that someone in McLane’s HR department received.

After a 3 ½-day trial, the jury found, following just two hours of deliberation, that McLane Northeast violated the Americans with Disabilities Act (ADA) by first refusing to interview Valentino, once the company learned that the candidate was disabled. Then the company further violated the ADA by refusing to hire the candidate for the two entry-level warehouse jobs that she applied for, the EEOC.

The jury awarded Valentino $25,000 in back pay, $150,000 in emotional distress damages, and $1.5 million in punitive damages.

Caitlin Brown, one of the EEOC trial attorneys who litigated the case, said, “The jury clearly understood that what McLane did here was wrong ” Deaf applicants, and all applicants with disabilities, deserve a fair chance to get jobs to enable them to support themselves and their families.”

$1 Million Settlement for Warehouse Workers in Inland Empire

The Labor Commissioner’s Office (LCO) has reached a $1 million settlement against La Mina De Oro Inc. and related businesses for wage theft violations.

The settlement will compensate 107 warehouse and retail workers who were not paid for all hours worked, which resulted in making less than minimum wage. Workers were also not paid for daily overtime and did not receive required rest and meal breaks.

LCO is distributing checks to workers who worked at La Mina de Oro, Inc. or related entities KD Distributors, Inc. and Desire Fragrances Inc. between August 1, 2014 and September 30, 2016. These workers should contact the LCO at 833-LCO-INFO (833-526-4636), as they may be entitled to owed wages and damages under this settlement agreement.

LCO’s Bureau of Field Enforcement (BOFE) began an investigation of La Mina de Oro around June 2016 after receiving a referral from the Warehouse Workers Resource Center (WWRC), a non-profit community-based-organization that advocates for workplace compliance in the warehouse industry.

Workers reported they were not paid for all the hours that they worked and their wage statements did not reflect the required information such as all required overtime pay or late meal-periods. They were not paid overtime after eight hours in a day, but only after 40 hours in a week. Workers also reported that they were not allowed to leave and had to be ready to serve customers during their rest breaks and meal breaks.

Citations were issued to La Mina de Oro and related entities on February 24, 2021 and a second citation was issued on May 18, 2021.

“My office is committed to stopping wage theft and collecting owed wages for workers,” said Labor Commissioner Lilia García-Brower. “Employees who were affected by this case should contact my office, as they may be entitled to owed wages and damages under the settlement agreement.”

February 5, 2024 – News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: WCAB Panel Reviews Criteria to Set Aside C&R for Incompetence. Opinion Defines When Ending Forced Arbitration Act “Dispute” Arise. Insureds May Video Record Participants During Examination Under Oath. SoCal Man Sentenced for $6M Used and Counterfeit Medical Device Fraud. Ethics Ratings of Nearly All Professions Down in U.S. NCCI Releases Q4 2023 “Upbeat” Quarterly Economics Briefing. CWCI Reports Workers’ Comp Inpatient Care Declined by 51.1%. DWC Annual Report of Inventory for Claims Due by April 1. Researchers Discover Potential Non-Opioid Treatment for Chronic Pain. Pomona Valley Hospital Overbilled $1.4M For Prescription Meds.

Lien Claimant’s Market Rate Analysis Inadequate to Justify Additional Fees

Lien claimant San Diego Imaging, Inc., dba California Imaging Solutions filed a lien for services rendered to Applicant Jose Abrego who claimed injuries while he was employed by Tri-State Employment who was insured by Lumbermen’s Underwriting.

It was undisputed that all dates of service of the lien were initially paid, in part, by Lumbermen’s Underwriting. When Lumbermen’s went into liquidation and CIGA took over the case, California Imaging re-submitted its bill of its alleged balance to CIGA.

A lien trial was set on August 14, 2023, and September 20, 2023 regarding the sole issue of the alleged balance of California Imaging’s lien.

California Imaging attempted to prove its claim for the balance of it’s lien with an unauthenticated, partial market survey. The Market Survey Analysis was identified as Lien Claimant Exhibit 10 at trial and objected to by Defendant for lack of foundation and as non-substantial evidence. It was however admitted into evidence over the Defendant’s objection.

California Imaging argued that it should be paid its lien balance, based solely on an in-house created Market Rate Analysis. In this case, Lumbermen’s paid the lien claimant’s bills in excess of the current fee schedule, which fee schedule was operative shortly thereafter on July 1, 2015. Lien claimant acknowledges receiving the EOB/EOR(s) statements for its invoices, within its objections to Lumbermen’s thereto.

California Imaging attached an Affidavit of Yvette Padilla to its Market Rate Analysis. Ms. Padilla is identified in California Imaging’s Petition for Reconsideration as its Collection Supervisor. The Affidavit of Ms. Padilla states that, “On January 30, 2020, I compiled the following report by retrieving data from California Imaging Solutions internal database. For convenience only the first 5 pages of the report are included, and the rest of the report is available upon request.” Thus, the Market Rate Analysis was an unauthenticated, incomplete document.

Also, California Imaging submitted its invoices, which did not include dates of service and detail multiple charges, fees and costs which were unexplained and incomprehensible. “Further, without a witness to authenticate its documentary evidence, Defendant is denied its due process right of cross-examination.”

On November 2, 2023 the WCJ found that lien claimant failed to meet its burden of proving that (1) it is entitled to an additional monetary payment from CIGA; and (2) its lien was reasonable and necessary. and ordered that lien claimant take nothing.

Reconsideration was denied, for the reasons stated in the WCJ Report, in the panel decision of Jose Abrego v Tri-State Employment -ADJ8995855-ADJ10748640-ADJ10749649 (January, 2024).

The court in Ashely Colamonico v. Secure Transportation (2019 Cal.Wrk.Comp.LEXIS 111; 84 Cal.Comp.Cases 1059)(en banc)) states that, “a lien claimant is required to establish that: 1) a contested claim existed at the time the expenses were incurred; 2) the expenses were incurred for the purpose of proving or disproving the contested claim; and 3) the expenses were reasonable and necessary at the time they were incurred.”

Pursuant to Labor Code §4620(a); §4621(a), the lien claimant must prove the medical-legal expense was reasonably, actually, and necessarily incurred [See §§3205.5, 5705; Colamonico, supra; Torres v. AJC Sandblasting (2012) 77 Cal.Comp.Cases 1113, 1115 [2012 Cal.Wrk.Comp. LEXIS 160] (Appeals Board en banc).

Any award, order or decision of the Appeals Board must be supported by substantial evidence in light of the entire record (Labor Code §5952(d); Lamb v. Workers’ Comp. Appeals Bd. (1974) 11 Cal.3d 274,280 [39 Cal.Comp.Cases 310]. It is more than a mere scintilla, and means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion – It must be reasonable in nature, credible, and of solid value (Braewood Convalescent Hospital v. Workers’ Comp. Appeals Bd. (Bolton) (1983) 34 Cal.3d 159,164 [48 Cal.Comp.Cases 566].

California Imaging’s Market Analysis was not substantial evidence, in light of the entire record. This is the only document that lien claimant relied upon to substantiate its alleged balance of $3,840.29. The lien claimant did not prove that its balance was reasonable or necessary.

Report Shows Record Healthcare Sector Bankruptcies in 2023

Gibbins Advisors, a lhealthcare restructuring advisory firm, has issued its latest report analyzing healthcare sector Chapter 11 bankruptcy cases filed from 2019 to 2023 for companies with more than $10 million in liabilities.

According to the report, there were 79 Healthcare Bankruptcy Filings in 2023 which made it the highest of the last five years, with the next closest being 2019 which saw 51 cases. Case volumes in 2023 were over 3 times the level seen in 2021 and over 1.7 times the level in 2022.

Large Healthcare Bankruptcy Filings with liabilities over $100 million surged in 2023, reaching 28 filings compared to only 7 in 2022 and 8 in 2021.

While the number of Healthcare Bankruptcy Filings increased across six consecutive quarters through Q3 2023, there was a decline from Q3 to Q4 2023. While the number of cases in the second half of 2023 approximate those in the first half of 2023, it is yet unclear if lower volumes in Q4 2023 indicate an emerging trend.

Senior care and pharmaceutical subsectors comprised almost half the total healthcare bankruptcy filings in 2023, consistent with previous trends.

Of particular note, hospital bankruptcy filings spiked in 2023 with 12 filings compared to a total of 11 filings from the prior 3 years combined.

We saw a dramatic increase in healthcare bankruptcy filings in 2023, continuing the trend which began in mid-2022″ said Clare Moylan, Principal at Gibbins Advisors. “Key observations from 2023 are the return of large bankruptcy cases with over $100 million in liabilities, and a spike in hospital filings, both of which appear to primarily be a result COVID-19 pandemic-related protections ending.”

Some of the recent data was surprising” said Tyler Brasher, Director at Gibbins Advisors. “Total healthcare filings spiked in Q3 and then receded in Q4 2023, and there were no senior care bankruptcies filed in Q4 2023 when we expect to see about 5 per quarter. We will closely monitor in 2024 to see if the market is changing”.

“Despite the absence of senior care bankruptcy filings in Q4 2023, based on our knowledge of the market we expect to see senior care bankruptcies return in 2024” said Brasher. “As for total case volume, we are seeing a lot of distress in healthcare as the market remains very challenging for providers, so we expect to see continued levels of healthcare bankruptcies in 2024 that we saw last year.”

“As we anticipated, restructuring activity in the hospital sector increased markedly in 2023 and we expect to see a continuation of that level of distress this year as hospitals, particularly rural and standalone hospitals, work through challenging profitability, liquidity and leverage dynamics,” said Moylan.

UCSF Health To Buy Two Bay Area Struggling Hospitals:

UCSF Health has signed a definitive agreement with Dignity Health to acquire Saint Francis Memorial Hospital and St. Mary’s Medical Center, along with associated outpatient clinics in San Francisco. The organization hopes to close the transaction in spring 2024.

Building on decades of collaboration between the organizations, the acquisition ensures that two of San Francisco’s longest-serving community hospitals – and the unique services they provide – remain accessible to San Franciscans.

“St. Mary’s and Saint Francis have a proud history of providing comprehensive health care in San Francisco,” said Suresh Gunasekaran, president and chief executive officer of UCSF Health. “This is an opportunity to honor that legacy, expanding access and enhancing care for our neighbors while reinforcing UCSF Health’s deep commitment to our hometown.”

UCSF Health has committed to maintaining Saint Francis and St. Mary’s existing services, ensuring patients have convenient local access for their primary and specialty care needs. UCSF Health has also committed to retention of the employees of both hospitals. Preserving these historic hospitals will keep patients connected with their care providers and maintain vital services like the Bothin Burn Center, the Gender Institute, the McAuley Adolescent Psychiatric Unit, and the Sister Mary Philippa Health Center at a time when communities are losing health care options.

“Saint Francis Memorial Hospital and St. Mary’s Medical Center have cared for the most vulnerable among us and offered specialized services not available at any other local care sites,” said Dr. Richard Podolin, cardiologist and chair, Dignity Health St. Mary’s Medical Center Community Board. “The transition of ownership and investment by UCSF Health will ensure these hospitals carry this legacy forward, providing access to high-quality, patient-centered care and services to all San Franciscans.”

Saint Francis and St. Mary’s will retain their open medical staffs, a departure from the faculty-based structure at UCSF Health’s other hospitals. Ensuring local doctors can continue to practice at each location preserves critical, longstanding patient-provider relationships and supports San Francisco’s diverse medical community.

In recognition of their long history of caring for San Franciscans and deep roots in the community, and as the newest addition to the UCSF Health system, the two hospitals’ new names will be UCSF Health Saint Francis Hospital and UCSF Health St. Mary’s Hospital.

UCSF Health plans to build on the strengths of the hospitals, including their dedicated community physicians and employed staff, by expanding key services such as cardiology and surgery in the first year. Initial plans also include bolstering hospital medicine programs and both emergency departments to better support care providers and improve patients’ experience.

Shelby Decosta, president of the UCSF Health Affiliates Network, a longtime UCSF Health leader and Dignity Health alum, will have executive oversight over the two hospitals.

Moving beyond the complex specialty care it is known for, UCSF Health is making a meaningful shift toward incorporating convenient and comprehensive community-based care into its health system. These investments will also open unused bed space in both hospitals for patients who need primary and specialty care in San Francisco.

In the near term, increasing staffing and resources at Saint Francis and St. Mary’s will allow more patients across San Francisco to be seen at the currently under-utilized hospitals and will help UCSF Health see more patients with complex health conditions at its other sites, including the new hospital at Parnassus Heights opening in 2030.

Bringing Saint Francis and St. Mary’s into the health system also expands access to UCSF Health’s internationally renowned experts and highly specialized, innovative care. Connecting both hospitals’ community-based care with the clinical excellence of UCSF Health’s academic medical center will help enhance already strong patient outcomes, quality and safety.

Consistently ranked as one of the top hospitals in the United States, UCSF Medical Center was named to the Honor Roll of the nation’s best hospitals by U.S. News & World Report for 2023-2024. The medical center was also listed among the country’s top 10 hospitals in seven specialties: neurology/neurosurgery, geriatric care, psychiatry, cancer, autoimmune disorders, pulmonology/lung surgery, and ophthalmology.

Census Bureau Drops Controversial Disability Statistics Proposal

The U.S. Census Bureau is no longer moving forward with a controversial proposal that could have shrunk a key estimated rate of disability in the United States by about 40%, the bureau’s director said Tuesday in a blog post.

According to the report by NPR, the announcement comes just over two weeks after the bureau said the majority of the more than 12,000 public comments it received about proposed changes to its annual American Community Survey cited concerns over changing the survey’s disability questions.

“Based on that feedback, we plan to retain the current ACS disability questions for collection year 2025,” Census Bureau Director Robert Santos said in Tuesday’s blog post, adding that the country’s largest federal statistical agency will keep working with the public “to better understand data needs on disability and assess which, if any, revisions are needed across the federal statistical system to better address those needs.” A controversial Census Bureau proposal could shrink the U.S. disability rate by 40%

The American Community Survey currently asks participants yes-or-no questions about whether they have “serious difficulty” with hearing, seeing, concentrating, walking and other functional abilities.

To align with international standards and produce more detailed data about people’s disabilities, the bureau had proposed a new set of questions that would have asked people to rate their level of difficulty with certain activities.

Based on those responses, the bureau was proposing that its main estimates of disability would count only the people who report “A lot of difficulty” or “Cannot do at all,” leaving out those who respond with “Some difficulty.” That change, the bureau’s testing found, could have lowered the estimated share of the U.S. population with any disability by around 40% – from 13.9% of the country to 8.1%.

That finding, along with the proposal’s overall approach, sparked pushback from many disability advocates. Some have flagged that measuring disability based on levels of difficulty with activities is out of date with how many disabled people view their disabilities. Another major concern has been how changing this disability data could make it harder to advocate for more resources for disabled people.

Santos said the bureau plans to hold a meeting this spring with disability community representatives, advocates and researchers to discuss “data needs,” noting that the bureau embraces “continuous improvement.”

In a statement, Bonnielin Swenor, Scott Landes and Jean Hall – three of the leading researchers against the proposed question changes – said they hope the bureau will “fully engage the disability community” after dropping a proposal that many advocates felt was missing input from disabled people in the United States.

“While this is a win for our community, we must stay committed to the long-term goal of developing better disability questions that are more equitable and inclusive of our community,” Swenor, Landes and Hall said.

January 29, 2024 – News Podcast

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: WCAB Rejects Psychologist’s Psyche Claim Against Dept. of Corrections. S.F. City Attorney Battles U.S. News & World Report Over Hospital Ranking. CEO of Whittier Health Clinic Sentenced to 10 Years for Billing Fraud. Cheesecake Factory Settles SoCal Wage Violations for $1M. Study Shows VA Healthcare More Efficient, Less Costly & Better Results. Technology Industries Dominate 2024 J.P. Morgan Healthcare Conference. Sedgwick Introduces it’s Connect 2024 Industry Trends Agenda. NSC Expands Workplace Safety Grant Programs by $260K.

Employer Costs and Attorney Fees Awarded Only in Frivolous FEHA Cases

Neeble-Diamond’s lawsuit against Hotel California stated both statutory and nonstatutory causes of action arising out of her alleged status as an employee of Hotel California. The trial court entered judgment in favor of Hotel California after a jury concluded Neeble-Diamond was an independent contractor, rather than an employee. The judgment provided “[c]osts to be determined pursuant to any timely-filed memorandum and/or motions.”

Hotel California then filed a cost memorandum as well as a separate motion seeking an award of attorney fees. Neeble-Diamond opposed the motion for attorney fees, but filed no motion to tax costs until after she was served with a proposed amended judgment which included the costs.

The trial court denied the motion for attorney fees, explaining that as a prevailing defendant in a case seeking recovery under FEHA, Hotel California was entitled to attorney fees only if Neeble-Diamond’s FEHA claims were objectively frivolous, and it had made no such showing in its moving papers. In its ruling, the court noted the same rule applied to both attorney fee and cost awards in a FEHA case, citing Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th, 97, 115 (Williams) [“[a] prevailing defendant . . . should not be awarded fees and costs unless the court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so”].

Neeble-Diamond attempted to file an untimely motion to tax costs, claiming her failure to have done so earlier was the result of excusable attorney error. The trial court denied relief from the late filing, concluding the attorney neglect was not excusable, and denied the motion to tax costs as untimely. The court then signed an “amended judgment” that included an award of $180,369.41 in costs to Hotel California.

Neeble-Diamond appealed from an order awarding costs in excess of $180,000 to prevailing defendant Hotel California By the Sea (Hotel California). She argues the award must be reversed because her complaint alleged causes of action based on the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et. seq.), and the court cannot award costs to a defendant unless it makes a finding that the FEHA claims were objectively frivolous.

The Court of Appeals agreed, and reversed in the published case of Neeble-Diamond v Hotel California By the Sea – G061425 (February 2024).

As a general rule, the prevailing party in a lawsuit is entitled to recover allowable costs. (Code Civ. Proc., § 1032, subd. (b) [“[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding”].) Section 1033.5 specifies the items that are “allowable as costs under Section 1032.” (§ 1033.5, subd. (a).)

A different rule, however, applies in FEHA cases. In Williams v. Chino Valley Independent Fire Dist., 347 P. 3d 976, 61 Cal.4th 97, our Supreme Court held that Government Code section 12965, subdivision (b), “governs cost awards in FEHA actions, allowing trial courts discretion in awards of both attorney fees and costs to prevailing FEHA parties.” (Williams, supra, 61 Cal.4th at p. 99.)

Government Code section 12965, subdivision (c)(6), codifies the Williams rule: “In civil actions brought under this section, the court, in its discretion, may award to the prevailing party, including the department, reasonable attorney’s fees and costs, including expert witness fees, except that, notwithstanding Section 998 of the Code of Civil Procedure, a prevailing defendant shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.”

Thus, when the defense prevails in a FEHA action, it has no automatic right to recover costs under section 1032; instead, it must move the court to make a discretionary award of such costs, based in part on a specific finding that the action was frivolous.

Hotel California made no motion for an award of discretionary costs. Instead, it filed a cost memorandum that amounts to a request for the clerk to award the costs a prevailing party would be entitled to as a matter of right under section 1032. Because Hotel California failed to file the necessary motion for costs, as it had for attorney fees, it forfeited any such claim and Neeble-Diamond had no obligation to respond to its ineffective cost memorandum.

We consequently conclude the court erred by signing an “amended judgment” that included an award of $180,369.41 in costs to Hotel California.

No Extraterritorial Application of California & Federal Whistleblower Law

Plaintiff Tayo Daramola, a Canadian citizen, is a former employee of Oracle Canada, resided in Montreal at all relevant times. Daramola’s offer letter from Oracle stated that Daramola would be assigned to an office in Canada, but Daramola worked remotely. His employment agreement with Oracle stated that it was governed by Canadian law.

By logging into Oracle’s computer systems, Daramola could conduct business and collaborate with colleagues in the United States, including employees of Oracle America. Both Oracle America and Oracle Canada are wholly owned subsidiaries of Oracle Corporation, a California-based company that develops and hosts software applications for institutional customers.

One such Oracle product was the “Campus Store Solution,” a subscription software service for college bookstores. In July 2017, Daramola was assigned as lead project manager for the implementation of Campus Store Solution at institutions of higher education in Texas, Utah, and Washington.

Daramola came to believe that Campus Store Solution was defrauding customers. The product was billed as an e-commerce platform with specific functionalities, but Daramola thought Oracle had no way of delivering the promised features, at least at the agreed-upon price. Daramola reported the suspected fraud to Oracle America and the SEC.

After doing so, Daramola was removed as a project manager. Daramola’s supervisor at Oracle America, Douglas Riseberg, offered Daramola an opportunity to work on another Campus Store Solution project, but Riseberg revoked the offer when Daramola again expressed his unwillingness to take part in fraud. Riseberg also downgraded Daramola’s job performance rating. Believing he had no other option, Daramola resigned from the company. He sent his resignation letter to an HR representative of Oracle Canada in Montreal and copied his “U.S. manager,” Matthew Posey.

Daramola then filed a lawsuit in federal court in California against Oracle America, Riseberg, and other Oracle America employees. Daramola claimed that the defendants violated the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, 15 U.S.C. § 78u-6(h)(1), and California law, Cal. Lab. Code § 1102.5, by retaliating against him for protected whistleblower activity.

After allowing jurisdictional discovery, the district court dismissed the claims underFederal Rule of Civil Procedure 12(b)(6). The court concluded that the anti-retaliation provisions in the two Acts do not apply extraterritorially, and that here, applying those provisions would be extraterritorial because Daramola’s principal worksite was in Canada. The California law claims “founder[ed] on the same extraterritoriality barrier.” Because Daramola had already amended his complaint twice before, the district court dismissed the case with prejudice.

Darmola appealed. The 9th Circuit Court of Appeals was asked to decide whether the whistleblower anti-retaliation provisions in the Sarbanes-Oxley and Dodd-Frank Acts apply outside the United States, and, if not, whether this case involves a permissible domestic application of the statutes. Its answer to both questions was no and it affirmed the dismissal in the published case of Daramola v Oracle America -22-15959 (February 2024).

The question in this case is whether either of these anti-retaliation provisions apply to Daramola, a Canadian working out of Canada for a Canadian subsidiary of a U.S. parent company.

To answer that question, the Court of Appeals applied a well-known principle of statutory interpretation known as the “presumption against extraterritoriality.” See, e.g., Abitron Austria GmbH v. Hetronic Int’l, Inc., 600 U.S. 412, 417 (2023); RJR Nabisco, Inc. v. European Cmty., 579 U.S. 325, 335 (2016); United States v. Alahmedalabdaloklah, 76 F.4th 1183, 1202-03 (9th Cir. 2023). That presumption is this: “It is a longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” Abitron, 600 U.S. at 417 (quoting Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 255 (2010)). Presumptively, “foreign conduct is generally the domain of foreign law.” Id. (alteration omitted) (quoting Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 455 (2007)).

This same reasoning disposes of Daramola’s state law claims. Daramola alleged that Oracle’s retaliation violated California’s labor laws and its public policy, as reflected in Cal. Bus. & Prof. Code § 17200.

Analogous to the federal presumption against extraterritoriality, California presumes that its legislature does “not intend a statute to be ‘operative, with respect to occurrences outside the state, . . . unless such intention is clearly expressed or reasonably to be inferred from the language of the act or from its purpose, subject matter or history.’” Sullivan v. Oracle Corp., 254 P.3d 237, 248 (Cal. 2011) (quoting Diamond Multimedia Sys., Inc. v. Superior Court, 968 P.2d 539, 553 (Cal. 1999)).