Oracle fails in bid to dismiss DOJ fraud suit

Some claims are dismissed but the government may refile its complaint, according to a judge's ruling

Oracle has managed to get some but not all aspects of the U.S. government's fraud case against it dismissed, according to documents filed last week in U.S. District Court for the Eastern District of Virginia.

The U.S. Department of Justice sued Oracle earlier this year, alleging the software vendor significantly overcharged taxpayers for its software over a number of years.

In a strongly worded motion filed in late September, Oracle argued the government's allegations should be dismissed partly on grounds they are too old and exceed the statute of limitations.

The government's case is "a hodgepodge of inadequately pled, inconsistent, and, in many cases, untimely theories of liability that no set of facts can rescue," Oracle's filing reads in part.

Its "most obvious problem is timeliness," the motion adds. "One of its primary allegations is that Oracle made false disclosures relating to discounting practices to the General Services Administration ... during 1997 contract negotiations. But this allegation ignores a 1998 pre-award audit of Oracle's discounting practices, which was distributed to a host of responsible Government officials."

"Rather than taking action then, the Government sat on its hands, and in the subsequent thirteen years, witnesses have died, memories have faded and documents have disappeared -- the very reasons that statutes of limitations exist," the motion states.

A Nov. 2 ruling by Judge Leonie M. Brinkema partly granted Oracle's motion, dismissing "any claims based upon the 1997 disclosures; (2) any claims alleging common law fraud occurring before May 29, 2004; and (3) any claims alleging False Claims Act violations, breach of contract, or quasi-contract violations occurring before May 29, 2001."

However, many of the government's allegations don't specify certain dates, instead merely "alleging a general pattern of fraud," the judge wrote.

Therefore, by Nov. 16 the government must file an amended complaint "stating only common law fraud claims based upon conduct occurring on or after May 29, 2004, along with any False Claims Act and breach of contract or quasi-contract claims based upon conduct occurring on or after May 29, 2001."

The government's suit joined a previous complaint filed by former Oracle employee Paul Frascella under the False Claims Act. The act enables whistleblowers to sue parties they believe have committed fraud against the government. Typically, whistleblowers are entitled to some of any damages awarded.

The suit centers on "multiple award schedule" contracts the U.S. General Services Administration makes with vendors such as Oracle. The contracts allow vendors to include their products and prices in a catalog government agencies can use to make purchases with less red tape.

But the contracts, known as "GSA Schedules," are supposed to provide discounts that are as good as or superior to those given to the vendor's most favored customers.

Oracle allegedly found ways around the restrictions in order to give some commercial clients better discounts.

Oracle is embroiled in another high-profile piece of litigation this week, as its intellectual-property lawsuit against SAP continues in an Oakland, California, court. CEO Larry Ellison took the stand Monday.

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Tags governmentregulationOraclelegalsoftwareapplicationsCivil lawsuits

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Chris Kanaracus

IDG News Service
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