Del. judge allows shareholder suit against Oracle to continue
Shareholders Suit against Oracle andEllison Can Proceed
WILMINGTON, Del. (Legal Newsline) - A Delaware Chancery Court judge ruled Wednesday that the shareholder lawsuit filed last year against Oracle and the CEO Larry Ellison can move forward.
A motion to dismiss had been filed in April. The suit claims Oracle bought Pillar Data Systems in breach of its fiduciary duties.
According to the complaint, the plaintiffs are the City of Roseville (Michigan) Employees Retirement System and the Southeastern Pennsylvania Transportation Authority of Philadelphia. They allege that the purchase was made at the behest of Ellison so he could recoup his losses from his more than "half billion" dollar investment in Pillar Data, which is a data storage company.
The complaint says that Ellison wanted "to dump his losing investment on Oracle's public stockholders."
The plaintiffs' complaint also states that the transaction "made no economic sense for Oracle. But it made a lot of sense for Ellison." According to the complaint, because of the way the purchase was arranged, Oracle would lose money no matter how well Pillar performed as part of the Oracle Corp.
The plaintiffs responded to the dismissal motion in July. Judge Leo E. Strine denied, in part, the motion to dismiss. He also asked for an implementing order within a week and a scheduling order within a month.
"Oracle has paid nothing," Michael Carroll, a New York-based lawyer for the software maker, told the judge, according to Bloomberg News. "Investors shouldn't be able to challenge the deal until it's clear the earn-out payment will be made."