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Rimini Street, Inc. v. Oracle International Corporation

United States District Court, D. Nevada

November 7, 2017

RIMINI STREET, INC. a Nevada Corporation; Plaintiff,
v.
ORACLE INTERNATIONAL CORPORATION, a California Corporation, Defendant. ORACLE AMERICA, INC., a Delaware Corporation; and ORACLE INTERNATIONAL CORPORATION, Plaintiff,
v.
RIMINI STREET, INC.; and SETH RAVIN, an individual, Counter-defendants.

          ORDER

          LARRY R. HICKS UNITED STATES DISTRICT JUDGE

         Before the court is defendant and counter-claimants Oracle International Corporation and Oracle America, Inc.'s (collectively “Oracle”) motion to dismiss claims two through eight of plaintiff Rimini Street, Inc.'s (“Rimini Street”) third amended complaint (ECF No. 487). ECF No. 505. Plaintiff Rimini Street filed an opposition (ECF No. 537) to which Oracle replied (ECF No. 543).

         I. Facts and Procedural Background

         Defendant Oracle develops, manufacturers, and licenses computer software, particularly Enterprise Software Programs.[1] Rather than sell its software to consumers outright, Oracle licenses its software to customers through software licensing agreements which govern the customers' rights to use the software. Along with its software licensing business, Oracle also provides software maintenance and support services to its software licensees through separate software support service contracts. Oracle holds a number of federal copyrights for its various software applications, including the particular Enterprise Software Programs at issue in this action.

         Plaintiff Rimini Street provides third-party maintenance and support services to consumers who license software applications from other software companies and competes directly with Oracle to provide these after-license services. Rimini Street does not develop or manufacture its own competing software applications and holds no federal copyrights. Rather, Rimini Street contracts with software licensees to provide software maintenance and support services for certain software applications including the particular Oracle copyrighted Enterprise Software Programs at issue in this action. Counter-defendant Seth Ravin (“Ravin”) is the owner and CEO of Rimini Street.

         This is the second action between the parties. In the first action, Oracle USA., Inc. v. Rimini Street, Inc., case no. 2:10-cv-0106-LRH-(VCF) (“Oracle I”), Oracle brought several claims against Rimini Street and Ravin for copyright infringement and other business-related torts based on (1) the process Rimini Street used to provide software maintenance and support services to customers who had licensed Oracle software, and (2) the manner in which Rimini Street accessed and preserved copies of Oracle's copyrighted software source code. See Oracle I, case no. 2:10-cv-0106-LRH-(VCF), ECF No. 1. While litigation in Oracle I was proceeding, Rimini Street allegedly changed the manner by which it accessed and preserved its customer's licensed software and the process by which it provided software maintenance and support services to its clients in response to the court's summary judgment orders (Oracle I, case no. 2:10-cv-0106-LRH-VCF, ECF Nos. 474, 476). Subsequently, on October 15, 2014, Rimini Street initiated the present action against Oracle seeking a declaration from the court that its new software maintenance and support processes do not infringe Oracle's software copyrights. See ECF No. 1.

         After Rimini Street changed its maintenance and support model for servicing Oracle's copyrighted software, Oracle allegedly made several false statements about Rimini Street's business services to Oracle licensees who had or were thinking about contracts with Rimini Street for after-license support services. In particular, Oracle allegedly told its licensees that Rimini Street was still engaging in copyright infringement of Oracle's software copyrights and that Rimini Street's new software support model for Oracle copyrighted software does not comply with the court's orders in Oracle I. Further, Oracle allegedly misrepresented the type and quality of software maintenance and support services that Rimini Street is capable of providing. Rimini then twice amended its complaint to add new allegations and claims against Oracle based on these alleged misrepresentations. See ECF Nos. 63, 367.

         On January 17, 2017, Oracle sent Rimini Street a letter providing 60 days' notice of Oracle's intent to revoke Rimini Street's access to Oracle's various support websites.[2] After the sixty-day period ran, Oracle allegedly revoked and terminated all of Rimini Street's access to Oracle's support websites, thereby allegedly preventing Rimini Street from carrying out certain support services for Rimini Street's clients. In response, Rimini Street filed a motion for leave to file a third amended complaint to add new allegations and claims arising from Oracle's revocation of access to the support websites (ECF No. 465) which was granted by the court (ECF No. 486). Subsequently, on May 2, 2017, Rimini Street filed its third and final complaint against Oracle alleging eight (8) causes of action: (1) declaratory judgment that Rimini Street's new software maintenance and support processes do not infringe Oracle's software copyrights; (2) declaratory judgment that Rimini Street has not engaged in any violation of the Federal, California, and Nevada anti-hacking statutes; (3) declaratory judgment that Oracle has engaged in copyright misuse; (4) intentional interference with contractual relations; (5) intentional interference with prospective economic advantage; (6) violation of Nevada's Deceptive Trade Practices Act, Nevada Revised Statutes (“NRS”) § 598 et seq.; (7) violation of the Lanham Act; and (8) unfair competition in violation of California Business & Professions Code § 17200 et seq. ECF No. 487. Thereafter, Oracle filed the present motion to dismiss certain claims from Rimini Street's third amended complaint. ECF No. 505.

         II. Legal Standard

         A. Rule 12(b)(6)

         Defendant Oracle seeks dismissal pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a legally cognizable cause of action. See Fed. R. Civ. P. 12(b)(6) (stating that a party may file a motion to dismiss for “failure to state a claim upon which relief can be granted[.]”). To survive a motion to dismiss for failure to state a claim, a complaint must satisfy the notice pleading standard of Rule 8(a)(2) of the Federal Rules of Civil Procedure. See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). Under Rule 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8(a)(2) does not require detailed factual allegations; however, a pleading that offers only “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action'” is insufficient and fails to meet this broad pleading standard. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         To sufficiently allege a claim under Rule 8(a)(2), viewed within the context of a Rule 12(b)(6) motion to dismiss, a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference, based on the court's judicial experience and common sense, that the defendant is liable for the alleged misconduct. See Id. at 678-679 (stating that “[t]he plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.”) (internal quotation marks and citations omitted). Further, in reviewing a motion to dismiss, the court accepts the factual allegations in the complaint as true. Id. However, bare assertions in a complaint amounting “to nothing more than a formulaic recitation of the elements of a . . . claim . . . are not entitled to an assumption of truth.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 556 U.S. at 698) (internal quotation marks omitted). The court discounts these allegations because “they do nothing more than state a legal conclusion-even if that conclusion is cast in the form of a factual allegation.” Id. “In sum, for a complaint to survive a motion to dismiss, the non-conclusory ‘factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Id.

         B. Rule 9(b)

         Pursuant to the Federal Rules of Civil Procedure, a complaint triggers the heightened pleading standard of Rule 9(b), rather than the broad notice pleading standard of Rule 8(a)(2), when the complaint alleges facts that “sound in fraud.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003). To determine whether a complaint sounds in fraud, a court looks to the substance of the party's allegations. Id. There are no “magic words” or formal requirements for a complaint to sound in fraud (Id. at 1108), and fraud need not be an element of a claim for Rule 9(b)'s heightened pleading standard to apply to the allegations in a complaint (See Grand Canal Shops II, LLC v. Iavarone, 2012 WL 6041643, at *2 (D. Nev. Dec. 4, 2012)). Generally, a complaint that alleges a party made “misrepresentations” in order to induce a breach of contract or otherwise interfere with current or prospective contractual relations is sufficient to trigger Rule 9(b)'s heightened pleading standard. See e.g., BioResource, Inc. v. U.S. PharmaCo Distribution, Ltd., No. C10-1053, 2010 WL 3853025, at *3 (N.D. Cal. Sept. 29, 2010); Hologram USA, Inc. v. Pulse Evolution Corp., 2015 WL 316900, at *4 (D. Nev. Jan. 23, 2015). Similarly, a complaint that alleges a party violated the Lanham Act by making misrepresentations in its advertising and marketing materials likewise triggers Rule 9(b)'s pleading standard. LT Int'l Ltd. v. Shuffle Master, Inc., 8 F.Supp.3d 1238, 1244-45 (D. Nev. 2014).

         To sufficiently allege a claim under Rule 9(b) of the Federal Rules of Civil Procedure, a complaint must make specific allegations of the alleged fraud sufficient “to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). To provide a defendant with appropriate notice, a complaint must allege the “time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007); see also, Saldate v. Wilshire Credit Corp., 268 F.R.D. 87, 102 (E.D. Cal. 2010) (quoting Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 157 (Cal. 1991)) (“[I]n a fraud action against a corporation, a plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.'”). However, there is a recognized exception to Rule 9(b)'s heightened pleading standard when “the facts constituting the circumstances of the alleged fraud are peculiarly within the defendant's knowledge or are readily obtainable by him.” Nuebronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993). “In such situations, plaintiffs cannot be expected to have personal knowledge of the relevant facts” and the court may review the sufficiency of the complaint under Rule 8(a)(2)'s pleading standard. Id.

         III. Discussion

         In its motion, Oracle seeks to dismiss six (6) claims from Rimini Street's third amended complaint (ECF No. 487): claim two for a declaratory judgment that Rimini Street has not engaged in any violation of the Federal, California, and Nevada anti-hacking statutes; claim three for a declaratory judgment that Oracle has engaged in copyright misuse; claim four for intentional interference with contractual relations; claim five for intentional interference with prospective economic advantage; claim six for violation of Nevada's Deceptive Trade Practices Act, NRS § 598 et seq.; claim seven for violation of the Lanham Act; and claim eight for unfair competition in violation of California Business & Professions Code § 17200 et seq. See ECF No. 505. The court shall address each claim below.

         A. Declaratory Judgment re: Anti-Hacking Statutes

         Rimini Street's second cause of action is for a declaratory judgment that it did not, has not, and would not violate either the Federal Computer Fraud and Abuse Act (“CFAA”), the California Computer Data Access and Fraud Act (“CDAFA”), or the Nevada Computer Crimes Law (“NCCL”) by continuing to access Oracle's support websites after Oracle's purported revocation of Rimini Street's authorization to access those support websites.[3] ECF No. 487. Rimini Street's claim for declaratory relief is based upon Oracle's January 17, 2017 cease-and-desist letter which informed Rimini Street that its authorization to access Oracle's various support websites would be revoked as of March 18, 2017. In its third amended complaint, Rimini Street alleges that it acts as an authorized agent for its clients who license Oracle's copyrighted software and, as part of those software licenses, are specifically authorized to access Oracle's support websites. ECF No. 487, ¶ 117. Based on the alleged express authorization to access Oracle's support websites on the licensees' behalf, Rimini Street seeks a declaration from the court that continued access of Oracle's support websites after March 18, 2017, is not a violation of the CFAA, CDAFA, and the NCCL.

         In its motion to dismiss, Oracle contends that Rimini Street's declaratory relief claim fails to state a claim for relief as a matter of law in light of recent Ninth Circuit precedent established in Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058 (9th Cir. 2016). See ECF No. 505. Specifically, Oracle argues that in light of Facebook, Rimini Street's continued access of Oracle's support websites after Oracle's explicit revocation of authorization constitutes a violation of the CFAA, CDAFA, and the NCCL regardless of any prior or subsequent authorization from Oracle's software licensees.

         The court has reviewed the allegations in Rimini Street's third amended complaint, along with the documents and pleadings on file in this matter, and finds that the court cannot, on the limited record and argument before the court, conclude that Rimini Street's continued access of Oracle's support websites after March 18, 2017, is or is not a violation of the Federal, California, and Nevada anti-hacking statutes. The court recognizes Oracle's argument that the Ninth Circuit's recent decision in Facebook confirms that continuing to access a website after receiving an express revocation of authorization to access that website by the website's owner is an actionable violation of both the CAFA and the CDAFA.[4]See Facebook, Inc., 944 F.3d 1058, 1067-1069 (reaffirming the rule that a defendant violates the CFAA and CDAFA when the defendant accesses a website after permission to access the website has been specifically revoked by the owner of the website and the defendant was aware of such express revocation). However, although Facebook dealt, in a limited manner, with subsequent third party authorization to access a website after the website's owner revoked such authorization, [5] the parties have not addressed the issue of Facebook's precedential effect in this action where the third party authorization comes from a licensee with a direct contractually vested property interest in accessing the website which arises from the underlying license. And here Rimini Street has specifically pled that Oracle's software licenses specifically grant the licensee “the right to access, download, and use the bug fixes, patches, and updates that Oracle makes available” on its support websites. ECF No. 487, ¶ 62. Rimini Street has further alleged that the software licenses specifically allow the licensee to appoint an agent to access the support websites and execute downloads on the licensees' behalf. Id. ΒΆ 63-64. In this vein, Rimini Street has alleged that its clients - the licensees of Oracle's software - have granted Rimini Street the authority to access ...


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