PeopleSoft Inc. has sued Oracle Corp. seeking an order barring Oracle from proceeding with its hostile takeover bid for PeopleSoft.

PeopleSoft accuses Oracle of unfair business practices, trade libel, and tortious interference with PeopleSoft’s customer relationships. Oracle launched its bid only to undercut PeopleSoft’s business operations, undermine its viability and interfere with the proposed takeover of J.D. Edwards & Co., PeopleSoft said in a statement Friday.

The announcement of the suit, filed in Alameda County Superior Court in California, comes a day after J.D. Edwards filed two lawsuits against Oracle. J.D. Edwards is seeking damages and an order that will block Oracle’s bid for PeopleSoft. [Please see J.D. Edwards sues Oracle over PeopleSoft bid.]

PeopleSoft on June 2 announced it had agreed to buy J.D. Edwards. Oracle launched a hostile US$5.1 billion takeover bid for PeopleSoft on June 6. PeopleSoft and J.D. Edwards both compete with Oracle in the enterprise applications market. Combining the two companies would create a bigger competitor for Oracle, analysts have said.

PeopleSoft on Thursday said its board of directors voted unanimously to recommend shareholders reject Oracle’s bid. J.D. Edwards strongly backed PeopleSoft’s rejection of Oracle’s bid.

The PeopleSoft lawsuit expands the high-stakes battle over Oracle’s attempted takeover of PeopleSoft. The companies involved and their chief executives have all taken nasty jabs at each other. Oracle on Tuesday said PeopleSoft had decided not to go to court.

“PeopleSoft seems to have revived its on-again, off-again litigation strategy,” Oracle said in a statement. “This matter must be decided by PeopleSoft shareholders and not by frivolous litigation.”