Case 3:14-cv BR Document 82 Filed 02/09/15 Page 1 of 6

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1 Case 3:14-cv BR Document 82 Filed 02/09/15 Page 1 of 6 Brenna K. Legaard, OSB # blegaard@schwabe.com Jeffrey S. Eden, OSB # jeden@schwabe.com SCHWABE, WILLIAMSON & WYATT, P.C SW 5th Avenue, Suite 1900 Portland, OR Telephone: Facsimile: Karen G. Johnson-McKewan, admitted pro hac vice kjohnson-mckewan@orrick.com Robert S. Shwarts, admitted pro hac vice rshwarts@orrick.com Erin M. Connell, admitted pro hac vice econnell@orrick.com ORRICK, HERRINGTON & SUTCLIFFE LLP The Orrick Building 405 Howard Street San Francisco, CA Telephone: Facsimile: Dorian E. Daley, admitted pro hac vice dorian.daley@oracle.com Deborah K. Miller, admitted pro hac vice deborah.miller@oracle.com Peggy E. Bruggman, admitted pro hac vice peggy.bruggmam@oracle.com ORACLE CORPORATION LEGAL DEPARTMENT 500 Redwood Shores, CA Telephone: Facsimile: Attorneys for Oracle America, Inc. ORACLE S RESPONSE IN OPPOSITION TO DEFENDANTS MOTION FOR AN

2 Case 3:14-cv BR Document 82 Filed 02/09/15 Page 2 of 6 UNITED STATES DISTRICT COURT DISTRICT OF OREGON PORTLAND DIVISION ORACLE AMERICA, INC., a Delaware Corporation, v. Plaintiff, THE OREGON HEALTH INSURANCE EXCHANGE CORPORATION, dba COVER OREGON, an Oregon Limited Liability Corporation; THE STATE OF OREGON, BY AND THROUGH THE OREGON HEALTH AUTHORITY AND THE OREGON DEPARTMENT OF HUMAN SERVICES, AND DOES 1-25, INCLUSIVE Case No. 3:14-cv BR Related Case No. 3:14-cv BR ORACLE S RESPONSE IN OPPOSITION TO DEFENDANTS MOTION FOR AN EXTENSION OF TIME IN WHICH TO ANSWER OR OTHERWISE RESPOND TO ORACLE S SECOND AMENDED COMPLAINT Oral Argument Requested Defendants. ARGUMENT During the hearing on Defendants motions to dismiss Plaintiffs First Amended Complaint, this Court stated that it would grant Cover Oregon s motion without prejudice, permit plaintiff Oracle America, Inc. ( Oracle ) to file a Second Amended Complaint, and direct Cover Oregon to file an answer to [Oracle s] second amended complaint, and reserve its defenses for later. Dec. 19, 2014 Hrg. Tr. (Dkt. 74) Cover Oregon, however, is now seeking to do just the opposite. It asks this Court to permit Cover Oregon to postpone a response to the Second Amended Complaint until after what it characterizes as the likely passage of an Oregon state bill that would dissolve Cover Oregon and substitute in its place the state Department of Consumer and Business Services ( DCBS ). DCBS would then assert an Eleventh Amendment immunity defense. This transparent attempt to end-run this Court s clear Page 1 ORACLE S RESPONSE IN OPPOSITION TO DEFENDANTS MOTION FOR AN

3 Case 3:14-cv BR Document 82 Filed 02/09/15 Page 3 of 6 directive should be rejected. Defendants motion is governed by Federal Rule of Civil Procedure 6(b): [w]hen an act may or must be done within a specified time, the court may, for good cause, extend the time. Fed. R. Civ. P. 6(b)(1). In assessing whether good cause exists, [t]he factors to consider include the danger of prejudice to the [non-moving party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith. Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. P Ship, 507 U.S. 380, 395 (1993); see, e.g., Tsao v. Cnty. of L.A., Case No. CV DDP (CWx), 2009 U.S. Dist. LEXIS , at *26 (C.D. Cal. Dec. 3, 2009) (applying these factors to the good cause determination). By Defendants own admission, the very purpose of the extension is to inflict prejudice on Oracle. Oracle has sued the State and Cover Oregon for copyright infringement. See Second Am. Compl. (Dkt. 77) The State has consistently asserted Eleventh Amendment immunity as a defense to this claim, but Cover Oregon has not (and cannot). But, as Defendants assert, [o]nce substituted, DCBS likely will assert its Eleventh Amendment immunity and move to dismiss all claims against it filed in federal court. Mot. 2; id. at 5 ( [R]egardless of whether Cover Oregon could assert an Eleventh Amendment immunity defense, DCBS will. ). Oracle of course will vigorously oppose such a motion. But the point remains: Defendants seek to delay expressly for the purpose of allowing the case to develop in a manner they find more favorable. Such a request is nothing short of extraordinary. 1 1 Defendants raise the issue that further proceedings at this point risk wasting party and judicial resources. Mot. at 2-3. Those complaints should be read against the backdrop of public admissions that the Department of Justice a litigant and counsel for Defendants in this case is also engaged in drafting the very legislation that has created that purported risk. See Testimony of Patrick Allen, available at at 24:25 ( The June 30th effective date, I need to talk a little bit about, I mentioned that s an operational date. We have been receiving advice from DOJ about, aside from operational constraints, what are the constraints or requirements or directions we may need the bill to take pending legislation about Cover Oregon and there may be some tension between those that we have not yet resolved. We re working very quickly to get an answer on. But there may be some direction from DOJ that actually an early implementation date is more advantageous from a litigation stand point. ) (last checked on Feb. 9, 2015). It is, at the very least, unseemly for Defendants to ask the Court for relief from a risk they have been engineering. Page 2 ORACLE S RESPONSE IN OPPOSITION TO DEFENDANTS MOTION FOR AN

4 Case 3:14-cv BR Document 82 Filed 02/09/15 Page 4 of 6 So is the length of the delay (Pioneer Inv. Servs., 507 U.S. at 395) that Defendants request. The Federal Rules of Civil Procedure require that Cover Oregon answer by February 17, Fed. R. Civ. P. 12(a)(1)(A)(i). Defendants are not looking to extend that period by a mere week or so. 2 Apparently even doubling or tripling the allotted response time would not be enough. Rather, they ask the Court for an extension of time that could last until July 11, 2015, i.e., 144 days. Mot. at 6. Suspending the case for that long, especially relative to the 21-day default response period provided by the Rules, is more akin to an indefinite stay a procedural device of last resort that is heavily disfavored than a reasonable extension of time. Cf. Dependable Highway Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) ( Generally, stays should not be indefinite in nature. ); Yong v. INS, 208 F.3d 1116, 1119 (9th Cir. 2000) ( If a stay is especially long or its term is indefinite, we require a greater showing to justify it. ). And the reason for the delay (Pioneer Inv. Servs., 507 U.S. at 395) is pure speculation. Defendants declare that the bill that would substitute DCBS for Cover Oregon, which is in draft form, likely will pass in this legislative session. Mot. at 4. Their evidence consists of news media accounts of public statements from both parties and the Governor voicing support for such a bill. Id. But, as the State rightfully acknowledges, the road to actual passage into law is paved with many detours. Oregon State Legislature, How Ideas Become Law, available at (last visited Feb. 9, 2015). Legislative efforts often fail despite publicly announced strong bipartisan support, even in the relatively recent past. See, e.g., Sean Vitka, This Meaningful Surveillance Reform Had Bipartisan Support. It Failed Anyway. (Slate, Dec. 10, 2014), available at dment_fails_despite_bipartisan_support.html (last visited Feb. 9, 2015). To use this Court s 2 To be clear, Oracle believes that parties and their counsel should grant reasonable extensions of time to each other where appropriate, and Oracle has done so in this matter. That is not the case with this request. Page 3 ORACLE S RESPONSE IN OPPOSITION TO DEFENDANTS MOTION FOR AN

5 Case 3:14-cv BR Document 82 Filed 02/09/15 Page 5 of 6 words, [a]ny prediction of whether the state legislature will pass the bill[], and whether the governor will sign it, is speculative at best. Oregon-Columbia Brick Masons Joint Apprenticeship Training Comm. v. Oregon Bureau of Labor & Indus., Civil No KI, 2003 U.S. Dist. LEXIS 28067, at *6 (D. Or. May 9, 2003). Moreover, even if the bill does pass, the legislation is subject to constitutional challenge. The U.S. Constitution provides that [n]o State shall pass any Law impairing the Obligation of Contracts. U.S. Const. at. I, 10, cl. 1. The relevant inquiry includes (1) whether a contract exists as to the specific terms allegedly at issue, (2) whether the law in question impairs an obligation under that contract and (3) whether the discerned impairment can fairly be characterized as substantial. San Diego Police Officers Ass n v. San Diego City Employees Ret. Sys., 568 F.3d 725, (9th Cir. 2009). The final version of the bill is not yet available, but as currently drafted it is likely that the legislation will run afoul of this constitutional prohibition. For example, the Oracle License and Services Agreement with Cover Oregon (the Cover Oregon OLSA ) grants Cover Oregon a limited right to use Oracle s code that, by its specific terms, is nonassignable. Second Am. Compl. 49. The Oregon bill at issue here would obliterate that specific term, directing assignment of the Cover Oregon OLSA to DCBS and divesting Oracle of its bargained-for right to determine with whom it will and will not do business. And Defendants acknowledge that the resulting effect on the contracting parties relative rights would be substantial, namely, the potential addition of a new ground for dismissal (Eleventh Amendment immunity). 3 See Mot. 2, 6. Accordingly, a Contracts Clause challenge would, at the minimum, have a colorable chance of success. Defendants argue that granting this extension will conserve judicial resources. But that argument is incorrect. The case will still proceed against OHA, at least through the summary judgment motion OHA has been directed to file in support of its claim to sovereign immunity. If the Court ultimately rules that 3 That it is Defendants themselves who are engaged in an effort to change the law midstream in this litigation to assure a more favorable outcome raises considerable doubt about the legitimacy of the legislation they are pursuing. In any event, the Court ought to view with skepticism Cover Oregon s request for indefinite relief from the current deadline, as it is a plain attempt to enlist judicial assistance in their effort to change the rules of the game. Page 4 ORACLE S RESPONSE IN OPPOSITION TO DEFENDANTS MOTION FOR AN

6 Case 3:14-cv BR Document 82 Filed 02/09/15 Page 6 of 6 OHA waived its sovereign immunity in the OHA OLSA, that case will be litigated in this Court. Extending Cover Oregon s time to respond will thus result in no savings of judicial resources. Given the uncertainty of when, if ever the bill will be passed, the likelihood of challenge if it does, and the extraordinary request for a five-month extension, the relevant factors point decisively against the lengthy extension that Defendants seek. This Court should apply those factors and confirm that it meant what it said when it direct[ed] Cover Oregon to file an answer to [Oracle s] second amended complaint and reserve its defenses for later. Dec. 19, 2014 Hrg. Tr CONCLUSION For the foregoing reasons, Cover Oregon should answer the Second Amended Complaint and put the case at issue. Defendants motion for an extension of time should be denied. Respectfully submitted, Dated: February 9, 2015 By: /s/ Brenna K Legaard Brenna K. Legaard, OSB # blegaard@schwabe.com Jeffrey S. Eden, OSB # jeden@schwabe.com SCHWABE, WILLIAMSON & WYATT, P.C SW 5th Avenue, Suite 1900 Portland, OR Telephone: Facsimile: Attorneys for Plaintiff Oracle America, Inc. Page 5 ORACLE S RESPONSE IN OPPOSITION TO DEFENDANTS MOTION FOR AN