Oracle dismissal motion overruled in PeopleSoft suit

A California judge rejected large portions of Oracle Corp.’s motion to dismiss PeopleSoft Inc.’s lawsuit against it for libel and unfair competition, leaving the suit free to proceed.

Judge Ronald Sabraw filed what court documents called a “tentative” ruling Monday, in advance of a Tuesday motion hearing in Alameda County Superior Court.

Executives from Oracle and PeopleSoft did not immediately respond to calls seeking comment on the judge’s ruling.

Sabraw upheld one of Oracle’s objections, ruling that PeopleSoft could not charge Oracle with “negligent interference with prospective economic advantage” because that claim requires proof that the offending party owed the other a “duty of care,” something a competitor doesn’t owe a rival it seeks to acquire, the judge wrote.

He also sustained another Oracle’s objections after determining that PeopleSoft’s complaint doesn’t adequately identify certain statutes PeopleSoft claims Oracle violated. Sabraw left PeopleSoft the option of amending its complaint to clarify the issue.

Oracle, in Redwood Shores, Calif., filed a demurrer seeking dismissal of the case on the grounds that PeopleSoft hadn’t alleged any actions by Oracle falling outside the bounds of accepted competitive practices for two companies engaged in a takeover fight. Sabraw’s ruling rejected that argument, finding 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.

Pleasanton, Calif.-based PeopleSoft sued Oracle after its competitor in the enterprise software market launched an unsolicited tender offer in June seeking to acquire PeopleSoft. That bid, valued at US$7.3 billion, has been extended several times and is now set to last through Dec. 31. Both companies are awaiting a decision from the U.S. Department of Justice on whether it will block the proposed hostile takeover.

PeopleSoft has until Nov. 21 to file an amended complaint, which Oracle will have until Dec. 12 to answer. The next scheduled action in the lawsuit is a Dec. 5 case management conference.

The two companies also remain locked in legal battle in a Delaware courtroom, where Oracle is seeking to strike down PeopleSoft’s “poison pill,” a provision in its bylaws that would help it prevent an unwanted takeover.