Oracle is a leading computer technology company that is known for producing outstanding software products. Its innovative and progressive technologies present consumers and enterprises with could, licenses, hardware, software, and other services. It’s a leader in database management systems for the business world, but it’s had numerous legal problems throughout its existence. Here are the 10 biggest Oracle lawsuits in company history to show you a few examples of the less attractive aspects of the mega-giant.
10. Oracle the defendant in the 401K case Settlement: $12 million
401K specialist Magazine reports that Oracle became the defendant in litigation over retirement plan funding. Jerry Schlichter filed a class action lawsuit against Oracle Corp on behalf of its 401k plan participants. The action was filed in January of 2016, claiming that Oracle’s recordkeeper, Fidelity was allowed by Oracle to charge excessive fees, and that unwise investment options occurred, causing financial harm to plan participants. Fidelity made investments that paid revenue sharing to itself while underperforming for the more than 70,000 401k plan participants. The discrepancies went far above reasonable rates for services provided.
Fidelity invested options in the Artisan Small Cap Value Fund, Pimco Inflation Response Multi-Asset Fund, and TCM Small-Mid Cap Growth Fund, which came into question because of their lackluster performance and obvious benefits to Fidelity, yet Oracle did nothing to protect its 401k plan holders. The case was set to go to trial when Oracle negotiated a settlement on behalf of the members of the class-action, which was accepted pre-trial in December of sds2019, moments before the trial was scheduled to begin. Approval was granted by a Colorado court to compensate over half of the 70k plan participants damaged. $12 million is the maximum payout with $4.5 million paid to attorneys in the case and the remainder distributed to plan participants. Oracle was required to “instruct Fidelity not to cross-sell any products or services to its plan participants for three years.”
9. Oracle named in a shareholder lawsuit Settlement amount: $17.5 million
Reuters explains that the Oracle Corporation was accused of making false statements about its cloud computing business to mislead investors. Plaintiffs claimed that the company used “aggressive cloud sales tactics to artificially inflate its share price,” and misrepresented the actual demand for services by creating an artificial demand when a disinterest in the products permeated the period. Oracle and its executives did not acknowledge any wrongdoing in the case but agreed to a settlement of $17.5 million to satisfy shareholder dissatisfaction and prevent further expensive legal action.
8. Oracle named in lawsuit for misclassifying workers Settlement amount: $27.5 million
Plaintiffs filed a civil lawsuit in the Superior Court of the State of California, County of San Mateo in 2006, alleging Oracle misclassified the job descriptions for many of its workers. The action resulted in workers performing at job levels that were beyond the scope of the classification, which caused them financial harm. Investigations for Lin, et al v. Siebel Systems, Inc, a subsidiary of Oracle, revealed that the company committed employment-related offenses that violated wage and hour regulation of labor laws in the state of California. Oracle agreed to a settlement penalty of $27.5 million to resolve the case. Funds were distributed to the members of the class-action suit to compensate them for their losses as determined by calculating the fair wage each should have received from Oracle, including benefits, on November 6, 2006.
7. Oracle sued for overtime violations Settlement amount: $35 million
Garcia v. Oracle Corp is a lawsuit filed in a Superior Court of the State of California in Alameda County, alleging that Oracle committed employment-related offenses of the nature of wage and hour violations. Allegations that workers were not compensated for overtime were investigated by the California Labor Board. Some workers were forced to work hours for which they were not compensated per the labor laws of California, resulting in violations of numerous regulations on the part of Oracle.
The class-action lawsuit further alleged that more than fifty members of the action were customer support engineers, quality assurance engineers, and project managers who worked at the PeopleSoft facility of Oracle in Califonia. The company did not pay them for overtime and denied them the right to take off-duty meal periods. The class of these workers was protected under California labor laws to receive fair treatment by their employer including meal periods and overtime pay, according to GBDH Legal. Oracle agreed to pay a penalty of $35 million to resolve the private civil litigation with plaintiffs agreeing to the settlement amount. The case was resolved on November 14, 2011.
6. Oracle accused of committing government contracting offenses Penalty amount: $46 million
The Justice Department reports that Oracle’s subsidiary company Sun Microsystems Inc. was accused of submitting false claims that resulted in false claims made by others to the General Services Administration and other agencies of the federal government. The US Justice Department Civil Division investigated the claims and discovered evidence that OracleAmerica Inc and its subsidiaries requested recommendations for the federal government to purchase Sun’s products from integrator companies by paying them kickbacks for their help in securing government contracts. Sun worked with consulting companies to pay the fees to companies each time they influenced a federal agency to make sun product purchases.
Their actions resulted in violations of the False Claims Act, and additionally, violations of the Anti-Kickback Act. Allegations of defective pricing in GSA Schedule contracts between 1997 and 1999 due to incomplete and inaccurate information provided to the contracting officers during negotiations resulted in the company charging inflated prices. Oracle’s Sun committed numerous violations in its dealings with the federal government including misrepresentations during negotiations of contracts and illegal inducements and kickbacks, causing a waste of taxpayer money. The Justice Department is committed to fair and equal treatment for all and to prosecuting those who abuse the laws for monetary gain. Oracle agreed to a settlement of $46 million on January 31, 2011, to end the legal action.
5. Oracle sued for violations of the False Claims Act Settlement amount: $98.5 million
The Department of Justice confirms that Oracle misrepresents its discounting practices to gain awards of government contracts to sell its products. Investigations into PeopelSoft Inc’s disclosures made during contract negotiations for the GSA were not accurate, current, and misleading regarding the sale of software licenses and maintenance services for the federal government between March 1997 and September 2005. Oracle takes over PeopleSoft and serves as a subsidiary of the parent company. Its actions inflate the prices for software and services during the period. This results in numerous violations of the law. The civil case ends before it goes to trial. The Oracle Corporation agrees to penalties of $98.5 million. This is for providing federal government contract negotiation officers with false pricing information. This is admitting to violations of the False Claims Act. The case ends on October 10, 2006, in one of the largest settlements for FCA violations.
4. Oregon sues Oracle for racketeering, fraud, and false claims Settlement amount: $100 million
The State of Oregon filed claims against Oracle for racketeering, filing false claims, and fraud. Oregon asserts that the health exchange program’s technology and IT program experiences multiple issues. This includes the Oregon government seeking damages for the IT issues that Oracle didn’t fix. Governor Kate Brown led the fight. It was messy at times with Oracle executives and state officials at odds. They each claim the other was part of the problems.
This messy litigation was a multifaceted case that involved numerous state officials and Oracle executives battling it out in their attempts to find common ground. The State of Oregon claims it paid Oracle $240 million for the “failed Cover Oregon project,” and years of expert IT work did not result in a functional exchange. To end the situation and ongoing battle, Oracle and the State of Oregon agreed on a $100 million settlement, comprised mainly of Oracle software and associated services, to bring the issues to a close.
3. Oracle called on claims of insider trading Penalty: $122 million
Oracle’s CEO, Lawrence J. Ellison is allegedly part of insider trading while under the employment of the corporations. The shareholders pushed forward in the case that resulted from his insider knowledge to gain financial advantage, which is illegal in the United States. Ellison allegedly sold $894 million in Oracle shares before the news emerged about the company failing to meet quarterly earnings targets. He sold his shares for double the value they would have been the following day after the news broke. It’s unfair to other shareholders, but Ellison made good by donating $100 million to charities in the name of Oracle as a part of the settlement approval. Ellison did not admit wrongdoing but paid shareholders an additional $22 million in compensation.
2. Oracle sued for violations of the False Claims Act Settlement amount: $199.5 million
The Department of Justice reports that Oracle America and Oracle Corp allegedly sold software licenses and technical support services to several federal agencies under contracts with the General Service Administration. They failed to meet the obligations under those contracts. Claims that Oracle did not disclose accurate and complete information about its discounts. The results of Oracle’s actions were the US government paying higher prices for Oracle products. This is because it received lower discounts than were fair as other customers received deeper discounts. Oracle’s actions violated the definitions of “fair” business practices established throughout the industry. Oracle violates the terms of the contract with deceptive and misleading statements. It also engages in unlawful and fraudulent practices to secure government business.
The Attorney General of the Eastern District of Virginia announced the settlement agreement for $199.5 million. It’s the largest False Claims Act resolutions. $40 million of the settlement is awarded to Paul Frascella, a whistleblower and former employee of Oracle. He qualifies under provisions of the False Claims Act for compensation for this input that helps uncover the injustices.
1. Oracle lawsuit in HP settlement violation Settlement amount: $3 billion
Oracle breaches a pact with Hewlett Packard for product sales for its platform. A lawsuit filed in a California Appeals Court examined the facts presented. It discovers that Oracle violates a settlement agreement it previously has with Hewlett-Packard Company. This is from when it ends software development for an HP server platform prematurely. However, under the terms of the settlement, Oracle agrees to continue offering software for HP platforms. This is in a partnership that exists before the new CEO Mark Hurd.
After assuming the post, Oracle ceases sales for the platform. This violates the terms of the previous agreement, placing them “on the hook” for the $3 billion verdict. This comes after the agreement for settlement in 2010. Oracle is liable for the entire $3 billion settlement amount. This is because it fails to adhere to the settlement stipulations in 2015. The case ends 2015, with Hewlett Packard expressing pleasure with the ruling. The $3 billion settlement is the most expensive penalty in Oracle’s company history. The outcomes show the world that failure to comply with previous settlement agreements is bad. These supersede any potential gains of dodging a deal. However, Oracle learns a valuable lesson about honoring its commitments in 2015.