Oracle argues for dismissal of PeopleSoft suit

OAKLAND, CALIFORNIA – Lawyers for Oracle Corp. on Tuesday tried to persuade a California judge to change his mind about rejecting Oracle’s motion to dismiss a PeopleSoft Inc. lawsuit against it.

California Superior Court Judge Ronald Sabraw late Monday in a “tentative ruling” ruled mostly against Oracle, clearing the way for the suit for libel and unfair competition to proceed.

During a hearing Tuesday morning, counsel for Oracle argued that PeopleSoft’s suit has no legal ground because Oracle’s comments about PeopleSoft and its products are simply competitive comments.

Furthermore, PeopleSoft has not proven the part of its suit that alleges that Oracle knowingly interfered with contracts between PeopleSoft and its customers, David Balabanian, counsel for Oracle told the judge in the Superior Court for California in Alameda County.

PeopleSoft claims one French customer, identified during the hearing only as customer “F,” suspended its contract after Oracle launched its takeover offer for PeopleSoft, but PeopleSoft has not proven that Oracle knew about this contract, Balabanian said.

Judge Sabraw showed interest in Balabanian’s comments. He asked whether Oracle’s statements about PeopleSoft are actionable and noted that competition is tough in the enterprise software space. He also agreed that specific proof that Oracle knew about customer “F” is required. PeopleSoft’s counsel promised evidence at a later stage.

Sabraw’s tentative ruling rejected Oracle’s argument that PeopleSoft hadn’t alleged any actions by Oracle falling outside the bounds of accepted competitive practices. He found that PeopleSoft’s complaint offered sufficient allegations of false statements by Oracle, interference with PeopleSoft’s current customers, trade libel and deceptive advertising for the case to proceed.

PeopleSoft of Pleasanton, California, sued Oracle in June after the Redwood Shores, California, competitor made a hostile bid to acquire it.

PeopleSoft believes Oracle launched its offer only to undercut PeopleSoft’s business by disparaging its products, services and potential customers and to undermine PeopleSoft’s viability by creating fear, uncertainty and doubt (“FUD”) around the company and its products, PeopleSoft’s counsel said during the hearing.

To spread FUD, Oracle and its executives made false and misleading statements, according to PeopleSoft. For example, the promise that a migration from PeopleSoft’s software to Oracle’s software would be “graceful” is misleading, according to PeopleSoft.

Oracle’s counsel was upbeat after the hearing. “We saw some questions and will be interested to see how the judge addresses them,” Balabanian said. He expects Judge Sabraw to have a final ruling on Oracle’s motion soon.

Still, Balabanian dismisses PeopleSoft’s lawsuit as “distracting litigation.” The main show, he said, is in Delaware, where Oracle is suing PeopleSoft to remove that company’s “poison pill,” a provision in its bylaws that can prevent an unwanted takeover.

Oracle’s bid for PeopleSoft, valued at $7.3 billion, has been extended several times and is now set to last through Dec. 31. Both companies are awaiting a decision from antitrust regulators on whether the proposed hostile takeover can proceed.