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Oracle tries to kill website suit


California software giant Oracle is pulling out the stops to settle or kill the state’s lawsuit over its $300 million health insurance enrollment website meltdown. This comes even as Oregon’s lawyers claim they’ve hit pay dirt in internal corporate documents that allegedly show the company has been lying about who is at fault.

Since December, Oracle asked a top federal official to block Oregon’s suit and, according to a recent court filing, asked state Senate leaders to pull funding for the litigation led by Oregon Attorney General Ellen Rosenblum.

Most recently, Oracle filed a Jan. 20 lawsuit attempting to enforce what it claimed was a $25 million oral agreement with Gov. Kate Brown’s aides to settle the state’s lawsuit accusing the company of fraud and racketeering while failing to deliver a working Cover Oregon website.

Two law professors say Oracle’s latest legal plays don’t seem that impressive. “Those don’t look like very strong arguments,” said Tung Yin, a Lewis & Clark law professor. “If this is what the case is down to, that would seem to suggest a palpable weakness on Oracle’s side.”

While Oracle’s new lawsuit could conceivably prevail, “it would be a stretch,” said David Friedman, a professor at the Willamette University College of Law. “I think what Oracle is trying to do through this lawsuit is to tell the story of what happened, that they attempted to make a deal to resolve this.”

Oracle executive Ken Glueck defended the strength of his company’s case in an email, saying “We are more confident in our case than ever. We filed the lawsuit because we settled this matter with Governor Brown after negotiating in good faith, which brought an end to this litigation and substantial benefits to the State.”

A $25 million settlement by Oregon would amount to about a tenth of the $240 million the state paid Oracle on the exchange and a related project. It would amount to a notable reversal considering the state’s 2014 lawsuit demanded billions of dollars. In comparison, the state of Maryland last year reached a settlement over its own enrollment website debacle in which its main contractor agreed to reimburse $45 million of the $73 million it was paid.

Oracle has tried going to the federal government. On Jan. 13, Oracle sent a letter to Sylvia Matthews Burwell, U.S. Secretary of Health and Human Services, asking her to step in and kill the suit, claiming it conflicted with federal law.

Then, in its Jan. 20 lawsuit filed in Marion County Circuit Court claiming a $25 million settlement was reached, Oracle says it held a series of discussions with Brian Shipley, then chief of staff to Gov. Kate Brown, starting in May 2015 before reaching an oral agreement in October.

Attorney General Ellen Rosenblum’s office has long maintained that only she can settle the case. In an interview with Willamette Week, which broke the news of the alleged deal last week, Oracle executive Ken Glueck appeared to suggest Brown’s office warned Oracle that Rosenblum would have to agree to the deal. “Shipley assured him the governor’s office could get Rosenblum to agree and if not, the governor’s office would announce the agreement, effectively forcing the AG to agree,” according to the article, which also quoted Brown’s office denying a deal.

Oracle made no mention of the alleged agreement in a lengthy Nov. 20 hearing on the case in Marion County Circuit Court, which may not help the odds of their latest lawsuit. “That’s probably not a good fact for them,” said Yin, the Lewis & Clark professor.

The latest efforts by Oracle come as the company has started turning over documents in the pre-trial discovery phase of the state’s case. Though it’s early, the state says it has already found internal corporate documents that “belie Oracle’s public relations story, undermine its litigation defenses, and strongly support plaintiffs’ claims,” according to a Jan. 13 filing.

Oracle’s Glueck emailed a statement attributed to a lawyer for the company, Karen Johnson-McKewan, saying the state’s motion made “false and misleading statements.”

Some of the documents cited by the state allegedly go to a key point of contention. Oracle has blamed the website’s problems on the state’s decision to cancel plans to hire an expert contractor called a “systems integrator” to oversee the project. Oregon, meanwhile, has claimed Oracle engaged in a covert campaign to persuade officials an integrator wasn’t necessary—which essentially made Oracle the main contractor on the project, in line for more money.

According to a Jan. 13 state filing, “Oracle’s documents demonstrate its own culpability, the shoddiness of its programming, its active opposition to Oregon’s hiring a systems integrator, and its misappropriation of Oregon and federal grant funding to develop code to sell to other customers.”