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Taking stock of the Oracle-Oregon blame game

At its core, the battle between Oracle and Oregon over who is to blame for the failure of the $300 million Cover Oregon website is simpler than it appears.

The California software giant, which over three years collected $240 million from the state for work that was scrapped, has launched a public relations onslaught in recent weeks, battering Oregon with new accusations and lawsuits even as the state continues to notch small but significant pre-trial victories in court.

However, newly released documents may have changed the legal analysis. So as you try to keep score, here are four things you need to understand.

1) The Oregon case is very dangerous to Oracle

The state of Oregon could make Oracle suffer dearly if the case goes to trial.

Oregon's lawsuit asks for more than $6 billion, plus punitive damages on top of that.

Willamette University professor David Friedman says that a simple question will be in play in trial. “It’s going to be ‘Oracle, what did you promise, and what did you deliver?’”

If that’s true, then newly revealed documents suggest the state’s odds of victory are increasing.

Internal company documents that were recently unearthed by the state go to the heart of why insiders and documents primarily say the project failed. First, Oracle’s design of the project was highly flawed, and second, the software provided by Oracle didn’t perform as promised.

Oracle software engineer Chris Osterdock, who was brought in to troubleshoot, listed several examples of why the Oregon project “is so screwed up” in a November 2013 email. “Now I cannot help with the above,” he added. “That is a fundamental architectural design issue. I’m really at a loss as to how they could design such a system.”

The other big problem cited in documents and interviews was that Oracle’s software didn’t work as promised.

Specifically, two of its software products, Siebel and Webcenter, did not work well together as the company had promised in its bidding literature. In fact, they apparently worked so poorly together that two years into the project, Oracle executive Holger Herbert in November 2013 wrote in an email to a colleague that Oregon needed to “get off Webcenter” and shift to a different product. Without an upgrade to Siebel, he wrote, the company’s “army” of about 200 programmers working on the Oregon project were “rapoing the state” — an apparent reference to “raping” — “on something that will never work well.”

Emails indicate concerns over the Oracle's performance made it all the way to top executives, including cofounder Larry Ellison. They now could be forced to testify by the state.

Ken Glueck, a company vice president and spokesman, argues that whatever the documents say about the state of the project in late 2013, they don’t show intentional fraud or false claims — the major allegations of the state’s case. The documents “don’t do anything to establish their lawsuit,” he argues.

2. Oracle is winning the PR war

Oracle has taken full advantage of numerous missteps by the state, and political observers tend to agree the company is winning the public relations war.

The company has even set up a new web page on its battle with Oregon, while meeting with newspapers to make its case that politics and state mismanagement, not Oracle, are why the website didn't launch.

One recent lawsuit suggests that aides to Gov. Kate Brown at least entertained a possible settlement of the case for $25 million — a bargain considering what the state’s lawsuit claimed. Oracle contends an agreement was reached orally and has sued to enforce it.

Oracle also recently unveiled a document suggesting Oregon officials misled the federal government about the state of the project in an August 2013 report, claiming the project had been functional for months in order to win more federal funds. Oracle has broadcast its finding in a federal lawsuit calling on the federal government to investigate.

The recent suits by Oracle appear unlikely to notch any legal victories, according to legal experts. But they help generate media coverage and create a narrative that pressures the state to settle, they say. And, of course, talking tough is a standard negotiating tactic, according to Lewis & Clark Law School professor Tung Yin.

The company also may be trying to subtly influence whatever jury is selected to hear the case, Yin says. He doesn’t think the company has violated ethical restrictions, but “there are subtle ways you can try to get more information out to the general public.”

3. Winning could cost Oregon a lot

While a jury could conceivably award Oregon a lot of money, can the state afford to try the case?

Since November, the state has paid its outside law firm on the case about $1 million a month, bringing the cost of suing Oracle so far to $7.4 million.

Kristina Edmunson, spokeswoman for the Oregon Department of Justice, argues those costs were inflated by the cost of going through millions of documents obtained from Oracle. She said the state expects the monthly cost to go down.

But with trial set to begin in January 2017, simple math shows the state’s outside legal costs could easily approach or exceed $15 million before the trial even begins.

Yin, the professor, says those escalating costs will increasingly raise questions for the public, such as “Wait a minute, why are we spending so much?” — especially in light of Oracle’s portrayal of the case as a loser.

4) Oracle may be fibbing

In its recent federal lawsuit, Oracle claims that former Cover Oregon director Bruce Goldberg even admitted in a state email that the website prepared by Oracle was working by February 2014 — a central part of Oracle’s case.

The suit argues that “Bruce Goldberg, Cover Oregon’s then-acting Executive Director, told Governor Kitzhaber on February 27, 2014, that Cover Oregon believed the self-service web portal could ‘function with a 90+ percent of accuracy for 90-95 percent of the population.’”

But Goldberg, through Edmunson, said that Oracle’s claim is a misquote: His email was describing a minimum standard of system readiness. And a reading of the full email appears to clearly support his view, the two law professors, Friedman and Yin, agreed.

In its suit, Oracle does not quote how Goldberg’s email proceeds to describe a massive failure rate for those using the Oracle-built system, that it was “only processing eligibility and enrollment at about 50 percent on the first try.”

Goldberg’s email indicates that Oracle wanted the state to launch the website at a lower level of service, and use public relations messaging to mute any backlash by the public.

However, Glueck, the Oracle executive, disagreed with the interpretation of Goldberg’s email offered by Goldberg and the two law professors.

“If Bruce would like to provide an alternative explanation to a jury he may do so,” he says. “That’s ultimately what a jury decides.”