Oracle off the hook for fraud but judge allows breach of contract claim to continue

Building material supplier left without functional ERP can amend claim

Oracle has won a temporary reprieve in its defense of a lawsuit alleging the company conducted a "widespread fraudulent scheme and unfair business practice" in sales of NetSuite software, with all claims dismissed against Big Red except for one.

The judge did not, however, dismiss the plaintiff's claim that Oracle breached its contract with the user by failing to deliver workable software on time. River Supply, Inc (RSI), a Pennsylvania-based architectural construction material supplier, was told it could amend its claim, which originally alleged Oracle committed fraud in the way it sold the software.

In June, the company alleged in a filing that "Oracle lures their customers into signing complex and confusing agreements, several of which agreements are not adequately disclosed, and which the customer does not even know exist and therefore cannot be binding," according to the earlier amended complaint [PDF].

However, in a ruling [PDF] earlier this week, United States Magistrate Judge Laurel Beeler allowed only the allegations of breach of contract to progress.

RSI originally alleged that Oracle breached the contract by failing to implement "workable ERP [software], which is what businesses use to manage day-to-day business activities, such as accounting, finance, procurement, project management, supply chain, and manufacturing."

It also claimed Oracle missed "go-live" dates from the middle of 2021 until January 2023 and that it did not manage the work of its partners. The Register has given Oracle the opportunity to respond to these claims.

In the court papers, Oracle moved to dismiss the claim of fraud on the ground that most of its "alleged statements were general statements – such as that the products and services are a complete solution – that courts have dismissed as puffery."

The fraud claim was dismissed, although as previously mentioned, the judge did allow the RSI's legal team to amend its claim without having to appeal. She said that if the claims were "rendered more concrete, they might be actionable."

In its fraud claim, RSI alleged Oracle and NetSuite sold the SuiteSuccess ERP product by "making sweeping claims that have no basis in reality." For example, it stated, according to Oracle's website, "NetSuite SuiteSuccess is a total solution designed to manage all aspects of a business in a single system," which "gets you up and running quickly."

Based on these claims and other representations from Oracle, RSI entered into the contract for the ERP rollout.

"These representations turned out to be false," the earlier complaint alleged. "Now after signing the contract over 26 months ago, Oracle has Plaintiff's money but has failed to deliver a functional ERP Product."

RSI accused Oracle, which bought Netsuite for $9.3 billion in 2016, of attempting to obscure contractual arrangements in its use of the Subscription Services Agreement, which the plaintiff alleged was difficult to find in "a complex set of contract documents" presented to customers via DocuSign.

RSI has until December 4 to amend its claim. ®

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