ERP Customer Sues Oracle for Fraud and Other Torts Arising Out of Failed NetSuite SuiteSuccess Cloud Implementation
June 19, 2023. Tactical Law Group LLP filed a lawsuit Friday on behalf of our client River Supply, Inc. ("RSI") against Oracle America, Inc. and NetSuite, Inc. (collectively "Oracle") and certain of Oracle's third-party business partners arising out of a failed SuiteSuccess ERP implementation and Oracle cloud subscription. The lawsuit filed in federal court in the Northern District of California asserts claims for fraud in the inducement and other related torts and unfair business practices.
The Complaint alleges that Oracle targets small and medium size businesses such as RSI using predatory, unfair, and unlawful business practices. These allegations relate to Oracle's Suite Success cloud offering where Oracle allegedly misrepresents the capabilities of its existing software solution and the amount of time required to go live in order to lure potential customers into contracting with Oracle. RSI also claims that Oracle competes unfairly by offering steep discounts so as beat its competition, all the while intending to inflate the contract price through expensive change orders.
RSI claims that Oracle deployed an aggressive sales team pre-contract who made misrepresentations to RSI by promising that Oracle had an existing software solution, which would meet all of RSI’s requirements with only minor customizations and that could go live quickly, when in fact they did not. RSI also alleges that Oracle promised that the contract price was fixed priced and “all in” and there would be no price increases. These representations too turned out to be false. RSI alleges that the Oracle team knew these representations were false when they made them, but made them anyway in order to induce RSI to enter into the contract. RSI seeks to rescind the contracts for fraud in the inducement and to get its money back, as well as other damages caused by Oracle’s improper conduct.
The Complaint further details that Oracle provides contract documents for execution that are presented in a deceptive and confusing way so that the customer is unaware of entire contracts as well as key contract terms that are one sided and benefit Oracle to the detriment of the Oracle customer. These terms (contained in a Subscription Services Agreement) are presented in a disguised hyperlink on the Estimate Form. That link, which is not highlighted or underlined does not link directly to the Subscription Services Agreement, but instead the Oracle customer is forced to search the Oracle website through several different and confusing webpages to locate the applicable contract. As a result, the Complaint alleges that RSI did not assent to the Subscription Services Agreement, as it did not even know of its existence. RSI further alleges that the manner in which Oracle presents the contract documents to its SuiteSuccess customers is deceptive and unfair and constitutes an unfair trade practice in violation of California Business & Professions Code Section 17200. RSI alleges that Oracle has deployed this unfair trade practice widely against many American small and medium size businesses, which have been damaged by Oracle’s deceptive presentation of the agreements and other improper conduct.
At the end of the day and after paying Oracle and its partners a great deal of money and investing significant internal resources in the project, RSI has no working ERP solution. As a result of Oracle’s conduct, RSI alleges that it has suffered damages and seeks to hold Oracle to account for its failures, misrepresentations and other misconduct.
RSI also alleges that the same wrongful acts and unfair trade practices that were deployed against RSI have been deployed against many American small and medium businesses who have entered into almost identical agreements with Oracle for its ERP related products. In fact, these very practices have been detailed and exposed in a separate whistle-blower lawsuit filed by a former Oracle employee, Mr. Tayo Daramola, which we have previously blogged about. A copy of Mr. Daramola's Complaint is attached as Exhibit 1 to RSI's Complaint. RSI seeks restitution of the monies paid, damages (including treble and punitive damages) and other relief.
The lawsuit is River Supply, Inc. v. Oracle America, Inc., NetSuite Inc. et. al., Case No. 3:23-civ-02981(LB). A copy of RSI’s Complaint can be found here.
By Tactical Law Attorneys and From Time to Time Their Guests