Oracle 2015 Annual Report Download - page 136

Table of Contents
ORACLE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
May 31, 2016
what was required under the contracts and failing to perform the services in a professional manner consistent with industry standards. The complaint alleges that
Oracle violated Oregon’s False Claims Act by making false statements in order to obtain payment of invoices and by presenting invoices for payment that were
false. The claims for violation of Oregon’s Civil Racketeer Influenced and Corrupt Organizations Act allege that Oracle violated the statute by making false
statements in writing about the capabilities of Oracle’s products and the functionality and readiness of the healthcare exchange website, by using those false
statements to obtain the signatures necessary to secure the contracts, execute documents, and enable payment, and by using the wires to transmit documents
containing the allegedly false statements. On May 16, 2016, the State of Oregon filed a motion seeking to amend its complaint to add a demand for punitive
damages against Oracle for the claims alleging fraud and violations of the Oregon Civil Racketeer Influenced and Corrupt Organizations Act.
The claims against the individuals allege that one former employee violated Oregon’s False Claims Act by making false statements that fraudulently induced the
State of Oregon to enter into its contracts with Oracle, and that the other four employees violated the statute by making false statements in order to get invoices
paid.
Oracle responded to the original complaint on December 2, 2014, and filed a response to the First Amended Complaint on August 20, 2015. Oracle denied all
claims and allegations and filed counterclaims against the DCBS for breach of contract, quantummeruit(a claim requesting payment for the value of services
provided), and breach of the implied covenant of good faith and fair dealing. The court granted the State of Oregon’s motion to dismiss Oracle’s claims for breach
of contract and the breach of the implied covenant of good faith and fair dealing. On October 26, 2015, Oracle filed its amended response to Plaintiffs’ First
Amended Complaint and alleged counterclaims against the DCBS for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of
implied-in-fact contract, quantummeruit, and promissory estoppel (a claim seeking to enforce promises that Oracle relied upon in providing services). The State of
Oregon filed a motion to dismiss all counterclaims except the causes of action for quantummeruitand promissory estoppel, and on February 5, 2016 the court
granted that motion and dismissed with prejudice Oracle’s claims for breach of contract, breach of the implied covenant of good faith and fair dealing and breach of
implied-in-fact contract. Oracle seeks monetary damages to compensate it for the value of unpaid services and its attorneys’ fees and costs. Trial is set to begin on
January 10, 2017. We cannot currently estimate a reasonably possible range of loss for this action. We believe that we have meritorious defenses against this action,
and we will continue to vigorously defend it.
On August 8, 2014, Oracle filed a lawsuit in the U.S. District Court, for the District of Oregon in Portland against Cover Oregon. The complaint alleged claims for
breach of contract and quantummeruitand sought monetary damages to compensate Oracle for the value of unpaid services. On September 8, 2014, Oracle filed a
First Amended Complaint adding two State of Oregon agencies as defendants and adding causes of action for copyright infringement and breach of the implied
covenant of good faith and fair dealing. On January 27, 2015, Oracle filed a Second Amended Complaint. Cover Oregon, now the DCBS, is a defendant as to all
causes of action; the other state agencies are defendants to the cause of action for copyright infringement. In addition to monetary damages, Oracle seeks an
injunction prohibiting infringement of its copyrights. All defendants moved for judgment in their favor, claiming that the state entities have sovereign immunity
(that is, they cannot be sued in federal court). On November 18, 2015, the court ruled on the motions, holding that two state agencies (Oregon Health Authority and
Oregon Department of Human Services) do not have sovereign immunity, but that the DCBS does have sovereign immunity. On December 9 and 17, 2015, Oracle
and the Oregon parties each filed notices of appeal from that decision. The Ninth Circuit Court of Appeals has coordinated the two matters, and briefing will begin
in late April 2016.
On November 12, 2015, Oracle filed a lawsuit in the Circuit Court of the State of Oregon for the County of Marion against Oregon’s Governor, Kate Brown, in her
official capacity. Oracle filed a First Amended Complaint on January 15, 2016. In this lawsuit, Oracle alleges violations of Oregon’s Public Records Law and seeks
a court order declaring that Governor Brown has violated Oregon’s Public Records Law and compelling compliance with that law. The Governor has moved to
dismiss the complaint.
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