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PeopleSoft loses round in Oracle suit

PeopleSoft fails to persuade a judge to fully open up e-mail and documents relating to Oracle's hostile takeover bid.

PeopleSoft has failed to persuade a court to fully open up Oracle e-mail and documents relating to Oracle's hostile takeover bid for its business software rival.

Judge Ronald Sabraw of Alameda County Superior Court on Thursday declined to address PeopleSoft's informal request that the e-mails and documents be unsealed in their entirety. At the moment, excerpts from the internal Oracle communications form part of the evidence in a lawsuit, in which PeopleSoft alleges the database maker launched its takeover bid to disrupt PeopleSoft's business.

The lawsuit was initially filed in Alameda County in June, but was amended by PeopleSoft in August to bring in additional information, from the e-mails and documents, regarding discussions between Oracle executives about the proposed acquisition.

During the Superior Court hearing Thursday, Oracle contended that the sections of the e-mails and documents cited in PeopleSoft's lawsuit were taken out of context. Those versions included passages that had been redacted, or blacked-out, for reasons of confidentiality by agreement of Oracle and PeopleSoft both.

For its part, PeopleSoft alleged that Oracle had responded to its presentation of e-mail sections by releasing selected e-mails in their entirety to the press--but not all of the documents.

"We told the judge if Oracle is providing one, or a couple, memorandums to the press, then they should release all of them. But the judge said we have to ask Oracle to release them first (before asking the court)," said Steve Swasey, a PeopleSoft spokesman.

PeopleSoft plans to formally ask Oracle to remove the documents' confidential designation soon, said Jonathan Dickey, a Gibson, Dunn & Crutcher attorney who is representing PeopleSoft. If they refuse, PeopleSoft will file a motion with the court in a week or two to press the issue, he said.

"They say we didn't ask the right question of them--a delaying tactic at best. They were perfectly capable of saying, 'We withdraw the (confidentiality designations) in court today,'" Dickey said. "In our view, it's a question of when, not if, the underlying documents are going to be released."

Stephen Hibbard, an attorney representing Oracle, characterized PeopleSoft's arguments to Judge Sabraw as a public relations move.

"PeopleSoft is playing a 'gotcha game,'" said Hibbard, a lawyer at law firm Bingham McCutchen.

The companies had agreed to make the documents confidential, with the understanding that if either party had a problem with portions of the documents being sealed, they would approach the other with the request to remove the seal, Hibbard said. They had also agreed that if one party disagreed with such a request, that party could then file a motion with the court.

"PeopleSoft has not come to us to say: 'We disagree, and can you take a look at this?'" Hibbard said. "And the judge said we don't have to turn over the rest of the documents, because we were never properly asked."

He noted, however, Oracle can release its e-mails and documents any time it chooses, because they are the property of the company.

Case in point
The question of whether Oracle plans to support and upgrade PeopleSoft software, should a merger occur, is a great issue for PeopleSoft's current customers.

In its amended lawsuit, PeopleSoft presented an excerpt from a June 6 internal e-mail sent by high-level Oracle executive Safra Catz. The excerpt went: "We really won't be continuing (PeopleSoft's) product line."

But the full version of the e-mail suggests that Oracle did not intend to "harm" PeopleSoft with its bid, contended Jim Finn, an Oracle spokesman. In the e-mail, released Thursday to the public by Oracle, Catz writes:

"We are really excited about this deal, because it will increase our earnings per share immediately, and since we will not be integrating the product lines, we expect there to be minimal business integration risk. This makes us an even greater threat to SAP. All of you need to know that there will be no reorganization of Oracle. Some employees from PeopleSoft will be invited to join us where it makes sense. We don't expect their senior management team to join us. We have not spoken to them directly and this deal is considered hostile.

"As many of you have heard, PeopleSoft recently signed a merger agreement with J.D. Edwards. Our offer is in no way contingent on that deal going through. We will review that transaction once our transaction is effective.

"This is a really exciting opportunity for Oracle. Though we really won't be continuing their product line or combining operations, there will no doubt be challenges."

PeopleSoft and Oracle are scheduled to attend the next hearing over the lawsuit on Dec. 5.