Ninth Circuit Affirms Dismissal of Oracle Whistleblower Suit Finding That Federal Whistleblower Law Cannot be Applied to NetSuite Employee Working in Canada

By Pam Fulmer

We have previously blogged on the Daramola v. Oracle case brought by a former Oracle employee who blew the whistle on Oracle and NetSuite's fraudulent sales practices involving their ERP line of software solutions.  Mr. Daramola's Complaint was dismissed not because a court found that his allegations about Oracle's alleged unlawful conduct was without merit, but instead on the grounds that the whistleblower anti-retaliation laws he was proceeding under could not be invoked by an Oracle employee who was a Canadian citizen, employed by an Oracle Canadian subsidiary, and who worked from Canada and not the U.S.  The Ninth Circuit affirmed the lower court's ruling reasoning that "the employment relationship in this case is between a Canadian employer and Canadian employee, to be governed by Canadian law, with the employee residing in Canada.  Any domestic duties he performed were incidental to his foreign employment" and that merely accessing Oracle servers in California was not enough to establish the needed domestic conduct such as to make the protections of U.S. whistleblower laws applicable to Mr. Daramola.

The Ninth Circuit described the facts of the case as follows:

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 ecommerce 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. "​

For those who are interested, the entire Daramola Complaint can be found as Exhibit 1 to the Second Amended Complaint that we filed on behalf of our client River Supply Inc.

If you are a company that has contracted with Oracle or NetSuite and had a similar experience to the experience of RSI set forth in the Second Amended Complaint, we would be interested in talking to you.