Oracle USA, Inc. et al v. Rimini Street, Inc. et al

Filing 1459

ORDERED that the parties' motions to seal (ECF Nos. 1325 , 1334 , 1367 , 1384 , 1388 , 1391 , 1394 , 1404 , 1408 , 1413 , 1417 , 1427 , 1435 , 1439 ) are GRANTED nunc pro tunc. IT IS FURTHER ORDERED that Rimini's m otion to enforce the Court's orders and judgment separating Oracle I from Rimini II (ECF Nos. 1323 ) is DENIED. IT IS FURTHER ORDERED that Rimini's motion to exclude the declarations and opinions of Oracle's expert, Ms. Fre deriksen-Cross, (ECF Nos. 1390 , 1392 -s) is DENIED. IT IS FURTHER ORDERED that Oracle's motion for an order to show cause why Rimini should not be held in contempt (ECF Nos. 1365 , 1368 -s) is GRANTED in part and DENIED in p art. In accordance with this Order, Rimini is ORDERED to SHOW CAUSE why it should not be held in contempt for violating the permanent injunction, no later than Monday, May 10, 2021. Oracle shall file any response within 30 days of Rimini's filing; Rimini shall file any reply within 10 days of Oracle's response. IT IS FURTHER ORDERED that a hearing on the above discussed issues will be held in a courtroom to be designated at the Bruce R. Thompson Courthouse in Ren o, Nevada, commencing on September 20, 2021, at 9:00 a.m. IT IS FURTHER ORDERED that the parties are to submit a proposed joint pre-hearing order no later than Friday, August 20, 2021 as specified herein. IT IS FURTHER ORDERED that Rimini's motion for a jury trial (ECF Nos. 1387 , 1389 -s) is DENIED. IT IS FURTHER ORDERED that Oracles motion for Rule 11 sanctions (ECF No. 1348 ) is DENIED. IT IS FURTHER ORDERED that Judge Ferenbach's Report and Recommendation (ECF No. 1431 ) is ADOPTED and ACCEPTED. Oracle's objections to the Report and Recommendation (ECF Nos. 1434 ; 1436 -s) are OVERRULED. Accordingly, Oracle's motion for Rule 37(e) sanctions (ECF Nos. 1359 ; 1363 -s) is DENIED. Signed by Judge Larry R. Hicks on 3/31/2021. (Copies have been distributed pursuant to the NEF - DRM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ORACLE USA, INC.; a Colorado
corporations; ORACLE AMERICA, INC.; a
Delaware corporation; and ORACLE
INTERNATIONAL CORPORATION, a
California corporation,

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***
Case No. 2:10-cv-00106-LRH-VCF
ORDER

Plaintiffs,

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v.

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RIMINI STREET, INC., a Nevada
corporation; and SETH RAVIN, an
individual,

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Defendants.

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Before the Court are several pending motions. Rimini Street, Inc. and Seth Ravin

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(collectively “Rimini”) move this Court for (1) an order enforcing the Court’s orders and judgment

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separating the instant action 1 from Rimini Street, Inc. v. Oracle International Corp., Case

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No. 2:14-cv-01699-LRH-DJA (ECF Nos. 1323); (2) an order excluding the declaration and

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opinions of Oracle’s expert, Barbara Frederiksen-Cross (ECF Nos. 1390, 1392-s); 2 and (3) a jury

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To be consistent with the Court’s orders in both causes of action, the Court uses “Oracle I” to refer to the
entirety of the above captioned case and “Rimini II” to refer to the entirety of case number 2:14-cv-01699LRH-DJA. Unless otherwise indicated, ECF Numbers articulated throughout this Order refer to the Oracle I
docket.

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The parties filed portions of their briefing and attached exhibits under seal. The Court will refer to the
sealed pleadings with an “-s” designation and, for clarity, will cite to the sealed document for pinpoint
citations unless otherwise noted. While the Court would prefer to keep all the sealed information
confidential, some of it is necessary to resolve the pending motions. The Court will therefore include the
information unredacted in this Order where appropriate. The Court recognizes that the parties have privacy
interests in the confidential information, but the public has an even greater interest in the reasoning behind
the Court’s Order.
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trial (ECF No. 1387, 1389-s). Oracle USA, Inc., Oracle America, Inc., and Oracle International

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Corporation (collectively “Oracle”) moves this Court for an order to show cause why Rimini

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should not be held in contempt for violating the permanent injunction operable in this case (ECF

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Nos. 1365, 1368-s) and for Rule 11 sanctions (ECF No. 1348). Oracle also moves this Court for

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Rule 37(e) sanctions against defendants (ECF Nos. 1359). This issue was referred to Magistrate

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Judge Cam Ferenbach, who issued a Report and Recommendation to deny Oracle’s motion for

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sanctions (ECF No. 1431). Accordingly, Oracle objected (ECF No. 1434). Finally, due to the

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sensitive nature of the information contained within the briefing and exhibits, the parties move to

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seal numerous documents. ECF Nos. 1325, 1334, 1367, 1384, 1388, 1391, 1394, 1404, 1408, 1413,

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1417, 1427, 1435, 1439. The parties have properly responded and replied to all pending motions,

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and each is ripe for review. For the reasons contained within this Order, the Court grants in part

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and denies in part the parties’ substantive motions and grants the parties’ motions to seal nunc pro

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tunc.

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I.

BACKGROUND

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This action has an extensive 11-year history that includes two causes of action. In brief,

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and relevant to the pending motions, Oracle develops, manufactures, and licenses computer

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software, particularly Enterprise Software Programs. Oracle also provides after-license software

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support services to customers who license its copyrighted software. Rimini is a company that

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provides similar after-license software support services to customers licensing Oracle’s

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copyrighted software and competes directly to provide those services. Seth Ravin is the owner and

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CEO of Rimini.

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A. Oracle I Litigation

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Oracle first sued Rimini in 2010, alleging that Rimini infringed several of Oracle’s

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copyrights when it, inter alia, used work that it completed for one client for the benefit of other

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clients, which Oracle claimed was a violation of its software copyrights. Following the filing of

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dispositive motions, the Court granted summary judgment to Oracle on some of its copyright

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infringement claims. Of importance to these proceedings was the Court’s finding that Rimini

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violated the “facilities restriction” within PeopleSoft’s standard licensing agreement when it
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hosted its clients’ development environments on its own computer systems, a process called “local

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hosting.” ECF No. 474; Oracle USA, Inc. v. Rimini Street, Inc., 6 F.Supp.3d 1086, 1096–98 (D.

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Nev. 2014). The Court further held that Rimini was infringing on Oracle’s copyrights for Oracle

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Database when it downloaded many copies of the software off Oracle’s network and failed to

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adhere to the Developer License. ECF No. 476; Oracle USA, Inc. v. Rimini Street, Inc., 6 F.Supp.3d

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1108, 1115–20 (D. Nev. 2014). Later, after a month-long trial, a jury found in favor of Oracle on

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other copyright infringement claims related to Oracle’s J.D. Edwards and Siebel software.

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On appeal, the Ninth Circuit affirmed both this Court’s grant of summary judgment and all

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of the jury’s verdict on infringement violations under the Copyright Act, only reversing regarding

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violations of the California Computer Data Access and Fraud Act (“CDAFA”) and the Nevada

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Computer Crimes Law (“NCCL”). 3 Oracle USA, Inc. v. Rimini Street, Inc., 879 F.3d 948, 962

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(9th Cir. 2018). Given its rulings, the Ninth Circuit vacated this Court’s issuance of a permanent

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injunction and remanded to the Court to determine whether it would again issue a permanent

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injunction based solely on Rimini’s copyright infringement and without reference to the reversed

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state law computer claims. Id. at 964. 4

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On August 14, 2018, this Court granted Oracle’s renewed motion for a permanent

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injunction, which enjoins Rimini from continuing to infringe on Oracle’s copyrighted software.

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ECF No. 1164; Oracle USA, Inc. v. Rimini Street, Inc., 324 F.Supp.3d 1157 (D. Nev. 2018). In

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relevant part, the injunction provides:

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The Ninth Circuit upheld the jury’s $35.6 million judgment against Rimini for its infringement and the
Court’s award of approximately $22.4 million in prejudgment interest against Rimini, while reversing the
jury’s $14.4 million award associated with the state law computer access claims. Oracle USA, Inc. v. Rimini
Street, Inc., 879 F.3d 948, 953, 962–64 (9th Cir. 2018).
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The Ninth Circuit also upheld this Court’s decision to grant Oracle the “full costs” of the litigation, which
included expert witness fees, e-discovery expenses, and jury consultant fees. Id. at 965–66. The Supreme
Court granted certiorari on this issue, reversing the Ninth Circuit and holding that the Copyright Act only
allows a district court to authorize awards for litigation expenses expressly listed in the costs statute. Rimini
Street, Inc. v. Oracle USA, Inc., 139 S. Ct. 873 (2019).
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a. Rimini Street shall not reproduce, prepare derivative works from, or
distribute PeopleSoft, J.D. Edwards, or Siebel software or documentation
unless solely in connection with work for a specific customer that holds a
valid, written license agreement for the particular PeopleSoft, J.D. Edwards,
or Siebel software and documentation authorizing Rimini Street’s specific
conduct;
...

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PeopleSoft

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3. Rimini Street shall not distribute PeopleSoft software or documentation or any
derivative works created from or with PeopleSoft software or documentation;

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4. Rimini Street shall not reproduce, prepare derivative works from, or use a
specific licensee’s PeopleSoft software or documentation other than to support the
specific licensee’s own internal data processing operations;

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5. Rimini Street shall not reproduce, prepare derivative works from, or use
PeopleSoft software or documentation on, with, or to any computer systems other
than a specific licensee’s own computer systems;

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6. Rimini Street shall not reproduce, prepare derivative works from, or use
PeopleSoft software or documentation on one licensee’s computer systems to
support, troubleshoot, or perform development or testing for any other licensee,
including specifically, that Rimini Street shall not use a specific licensee’s
PeopleSoft environment to develop or test software updates or modifications for
the benefit of any other licensee[.]

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J.D. Edwards

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7. Rimini Street shall not distribute J.D. Edwards software or documentation or any
derivative works created from or within J.D. Edwards software or documentation;

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8. Rimini Street shall not copy J.D. Edwards software source code to carry out
development and testing of software updates;

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...

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10. Rimini Street shall not reproduce, prepare derivative works from, or use J.D.
Edwards software or documentation on one licensee’s computer systems to support,
troubleshoot, or perform development or testing for any other licensee, including,
specifically, that Rimini Street shall not use a specific licensee’s J.D. Edwards
environment to develop or test software updates or modifications for the benefit of
any other licensee;

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...

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Oracle Database

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15. Rimini Street shall not reproduce, prepare derivative works from, or distribute
Oracle Database software.

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ECF No. 1166 (modified per the Ninth Circuit’s order).

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In granting the permanent injunction, the Court noted that the balance of the hardships

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weighed in favor of its issuance because Oracle was only seeking to enjoin acts that had already

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been determined to be unlawful and that had been affirmed on appeal. ECF No. 1164 at 9. The

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Ninth Circuit affirmed this permanent injunction, except instructing the Court to strike paragraphs

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nine and thirteen, and the words “or access” in paragraphs eight and twelve. ECF No. 1236; Oracle

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USA, Inc. v. Rimini Street, Inc., 783 Fed.Appx.707, 710–11 (9th Cir. 2019) (unpublished) (“The

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injunction enjoins ‘local hosting’ as to PeopleSoft, J.D. Edwards, and Siebel. But only the

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PeopleSoft license limits the licensee to using the licensed Software ‘at its facilities . . . .’

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(emphasis added), which is the basis for the local hosting requirement. . . . ‘Accessing’ a

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copyrighted work is not an infringing activity under the Copyright Act.”). 5

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On April 4, 2019, the Court granted Oracle’s motion to reopen discovery to determine if

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Rimini has been complying with the permanent injunction. ECF Nos. 1199; 1215; 1218. The

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parties engaged in discovery for approximately a year and a half. ECF No. 1354. Following close

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of discovery, the parties filed the six now pending substantive motions.
B. Rimini II Litigation

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In October 2014, Rimini filed a separate complaint against Oracle for declaratory

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judgment. Rimini II, ECF No. 1. This complaint stemmed from the Court’s granting of summary

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judgment to Oracle in Oracle I on the issue of whether Rimini infringed six of Oracle’s PeopleSoft

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and Database copyrights. At the time of filing the second action, Rimini maintained that by July

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31, 2014, it had changed its company policies to comply with the Court’s February 13, 2014

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summary judgment Order, by transitioning to something it dubbed “Process 2.0” support services.

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Id. at 3. Despite Rimini’s assertions that it had ceased infringing on Oracle’s copyrights, Oracle

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was skeptical and counterclaimed, alleging eight causes of action, including copyright

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infringement, regarding Rimini’s new Process 2.0. Rimini II, ECF Nos. 21, 22-s.

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After extensive, lengthy, and contentious discovery and motion practice, including the

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filing of amended complaints by both Oracle and Rimini, the parties filed seven motions for

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summary judgment, consisting of more than 2,800 pages of briefing and 43,000 pages of

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Denying cert., 140 S.Ct. 850 (Jan. 13, 2020) (Mem).
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supporting exhibits, declarations, and appendices. On September 14, 2020, the Court issued its 94-

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page order granting in part and denying in part these motions. Rimini II, ECF No. 1253; Rimini

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Street, Inc. v. Oracle International Corp., 473 F.Supp.3d 1158 (D. Nev. 2020). In relevant part,

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the Court held that Rimini had infringed four of Oracle’s copyrights—PeopleSoft HRMS 8.9 (TX

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7-065-381); PeopleTools 8.46.17 (TX 7-092-772); PeopleSoft HRMS 8.3 (TX 5-469-032); and

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PeopleTools 8.48.10 (TX 7-092-819)—while following its new Process 2.0 support services for

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its clients Campbell Soup and City of Eugene. Rimini II, ECF No. 1253 at 65–66. First, the Court

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held that when Rimini “prototyped” a PeopleSoft update in Campbell Soup’s development

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environment that the client did not want, and then provided that update to another of Rimini’s

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clients, Toll Brothers, without separately developing the update in Toll Brothers development

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environment, Rimini had violated the “internal data processing operations” provision of the

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PeopleSoft license. Second, the Court held that Rimini created a derivative work when it created

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an update using Oracle’s PeopleTools Application Designer utility in the City of Eugene’s system.

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While creation of that derivative work was licensed for City of Eugene, the Court found that

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because Rimini was using City of Eugene’s development environment to “prototype” the update,

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and then distributed that update to multiple other clients without separate development, Rimini

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was violating the “internal data processing operations” provision of the license.
The parties filed their 935-page proposed joint pretrial order on December 19, 2020, but

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due to the parties’ inability to agree on a proposed trial date, trial has not yet been set.

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II.

THE PARTIES’ MOTIONS TO SEAL

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There is a general presumption that court records should be open and accessible to the

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public. Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9th Cir. 1995). With non-dispositive motions,

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this presumption is automatically overcome by a showing that the material to be filed under seal

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is being done so pursuant to a valid protective order. Foltz v. State Farm Mut. Auto. Ins. Co., 331

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F.3d 1122, 1135 (9th Cir. 2003) (citing Phillips ex rel. Estates of Byrd v. General Motors Corp.,

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307 F.3d 1206, 1213 (9th Cir. 2002)). The parties seek to seal the following non-dispositive filings,

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pursuant to the operative protective order in this case (ECF No. 55), and the protective order in

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place in Rimini II (Rimini II, ECF No. 58):
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Exhibit A and portions of Exhibit B to the Declaration of Eric D. Vandevelde, filed in
support of Rimini’s motion to enforce the Court’s orders and judgment separating Oracle
I from Rimini II (ECF No. 1325)

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Portions of Oracle’s opposition to Rimini’s motion to enforce the Court’s orders and
judgment separating Oracle I from Rimini II and accompanying exhibits (ECF No. 1334)

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Portions of Rimini’s motion to exclude the declaration and opinions of Oracle’s expert,
Barbara Frederiksen-Cross, and accompanying exhibits (ECF No. 1391); portions of
Oracle’s opposition to the motion and accompanying exhibits (ECF No. 1408); and
portions of Rimini’s reply to the motion (ECF No. 1417)

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Portions of Rimini’s motion for a jury trial and accompanying exhibits (ECF No. 1388)
and its reply to the motion (ECF No. 1413)

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Portions of Oracle’s motion for an order to show cause why Rimini should not be held in
contempt and accompanying exhibits (ECF No. 1367); portions of Rimini’s opposition to
Oracle’s motion and accompanying exhibits (ECF No. 1384); and portions of Oracle’s
reply to its motion and accompanying exhibits (ECF No. 1404).

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Video presentation titled “BengeDeclarationProcess2.0.pm4” and contained on the DVD
and USB drive manually filed (ECF No. 1393) in connection with its opposition to Oracle’s
motion for an order to show cause (ECF No. 1394)

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Oracle’s objections to Magistrate Judge Ferenbach’s Report and Recommendation on
Oracle’s motion for Rule 37 sanctions (ECF No. 1435); Rimini’s opposition to Oracle’s
objections to the Report and Recommendation (ECF No. 1439) 6

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Oracle’s response and objections to Rimini’s Notice of Demonstratives (ECF No. 1427)

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The Court has reviewed these motions to seal and the underlying documents and finds that

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the filings should be sealed as requested. The information the parties seek to seal consists of “non-

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public, technologically and commercially sensitive information,” and proprietary business and

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technical information, that has been designated “Confidential” or “Highly Confidential

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Information – Attorneys’ Eyes Only” under the protective orders. The Court recognizes the

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significant risk of competitive injury and potential prejudice to the parties if their proprietary

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information is released to the public. See Center for Auto Safety v. Chrysler Group, LLC, 809 F.3d

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1092, 1097 (9th Cir. 2016) (quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978))

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(articulating that compelling reasons may exist to seal a record if it may be used “as sources of

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business information that might harm a litigant’s competitive standing.”); Hologram USA, Inc. v.

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Pulse Evolution Corp., Case No. 2:14-cv-00772-GMN-NJK, 2015 WL 105793, at * 1-2 (D. Nev.

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The Court notes that Oracle’s objection and Rimini’s corresponding opposition contain similar
information as that already sealed in relation to Oracle’s motion for Rule 37(e) sanctions. See ECF
No. 1425.
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Jan. 7, 2015) (granting the plaintiff’s motion to seal when the underlying filing contained

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“sensitive, proprietary, and technical information,” disclosure of which was likely to injure the

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plaintiff’s competitive posture). The Court further notes that the parties have filed redacted

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versions of the sealed filings (where appropriate) in the public record, narrowly tailoring their

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requests to seal and limiting any harm to the public. Accordingly, the Court grants the parties’

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motions to seal nunc pro tunc.

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III.

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THE PARTIES’ SUBSTANTIVE MOTIONS
A. Rimini’s motion to enforce the Court’s orders and judgment separating Oracle I
from Rimini II is denied.

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Before the Court is Rimini’s motion to enforce the Court’s orders and judgment separating

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Oracle I from Rimini II. ECF No. 1323. Oracle opposed (ECF Nos. 1333, 1335-s) and Rimini

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replied (ECF No. 1347). For the reasons below, the Court denies Rimini’s motion.

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In April 2019, the Court reopened discovery in this case so that Oracle could determine

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whether Rimini was/is complying with the permanent injunction. Following the close of fact

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discovery, Oracle served Rimini with Barbara Frederiksen-Cross’s Post-Injunction Expert Report

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on January 31, 2020. ECF No. 1324 ¶ 2. This report provides, in relevant part, that three processes

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at issue in Rimini II violate the permanent injunction: cloud hosting (“Rimini consistently violates

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the Injunction by reproducing and creating derivative works based upon PeopleSoft software on

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servers and virtual machines hosted by Windstream.”); cross-use by prototyping updates in one

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customer’s environment for the use and benefit of other Rimini customers; and Rimini’s use of its

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AFW Tools software to send the prototyped updates to its clients. ECF Nos. 1324-1; 1326-s at

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6–8. Believing that these issues are not covered by the injunction, Rimini motions the Court to

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prohibit Oracle from arguing that Rimini should be held in contempt for violating the injunction

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as it relates to any Process 2.0 support services. In support, Rimini argues that the Court has

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previously drawn a stark divide between this case, Oracle I, which can only deal with Process 1.0

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claims and issues, and Rimini II, which can only deal with Process 2.0 claims and issues.

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Rimini points to four of the Court’s orders to support its contention:

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This case has been pending for nearly five years and, under the Court’s
supervision, fact and expert discovery has been completed. The parties require
leave of Court to engage in any further discovery other than the supplementation
required by Rule 26(e). Moreover, Oracle has offered to stipulate not to seek
damages in this case for the period on or after the District Court’s February 13,
2014 order, and the Court will hold Oracle to that offer. Accordingly, the February
13, 2014 order is not a basis to reopen discovery, and the Court declines to do so.
While the District Court will decide the admissibility of Rimini’s expert’s opinion
on the proposed method of calculating damages, the full discovery on that theory
has been conducted. Discovery will remain closed, and the case will remain as it
was put in at the close of discovery, not thereafter.

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ECF No. 515 at 3.
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ECF No. 669 at 5.
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Order granting of Oracle’s motion in limine to exclude evidence and argument related to
Rimini’s Process 2.0 support service, in relevant part:
The court has reviewed Oracle’s motion and finds that Rimini’s new service
support model is not relevant to any claim or issue in this action. In their opposition,
defendants argue that Rimini’s new support model constitutes a non-infringing
alternative to its old process and that evidence of this process is relevant to show
that non-infringing alternatives were available to Rimini at the time of the alleged
infringement. However, the court finds that defendants’ claim that the new support
model is non-infringing is speculative. . . . Further, all claims, issues, and evidence
related to the new support model are being addressed solely in [Rimini II].
Therefore, the court finds that evidence of Rimini’s new service model is not
relevant to this action and the court shall grant Oracle’s motion accordingly.

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Order denying consolidation of Oracle I and Rimini II, in relevant part:
Here, though commonality exists between the two actions, the court,
nevertheless, finds consolidation inappropriate because of the distinct litigation
postures the cases are currently in. (citation omitted). In the present action,
consolidation would lead to an unreasonable delay of trial, as this case is currently
set for trial in September and has been pending on the court’s docket since 2010.
In contrast, the Rimini action was just initiated in the fall of 2014 and has yet to
begin discovery, let alone pre-discovery motions. Such an unreasonable delay in a
trial is sufficient cause to deny consolidation.

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Order regarding case management conference, in relevant part:

ECF No. 723 at 3.
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Order granting the permanent injunction, in relevant part:
Finally, because Oracle seeks to enjoin only acts that have already been determined
to be unlawful, and which have been affirmed on appeal, the balance of hardships
weighs in favor of issuing a permanent injunction.
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Further, an injunction against future copyright infringement would not harm the
public’s access to competitive after-license software support services because
Rimini Street has repeatedly represented to the court that its current business model
is not based on its prior infringing conduct.

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ECF No. 1164 at 9.

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The Court has reviewed its prior orders, the permanent injunction, and the lengthy record

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before it. The Court agrees with Rimini that certain issues related to Process 2.0 are currently being

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litigated in Rimini II: whether cloud hosting or Rimini’s AFW Tools software constitute copyright

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infringement are open questions for the jury to decide in that case. As the Court made clear in its

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Order granting the permanent injunction, the injunction does not enjoin conduct that has yet to be

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adjudicated unlawful. See id.

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However, the Court does not agree that the stark divide between the two cases—that

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Oracle I only concerns Process 1.0 while Rimini II only concerns Process 2.0—exists. The Court

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issued the above relevant orders, in part, because this case has such a lengthy history. The Court

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found it necessary, in its inherit discretion to manage its caseload, to place some stopping point on

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discovery and the pre-trial process in Oracle I. Had it not, this case would not yet have gone to

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trial and would still be languishing in pre-trial motion practice more than eleven years since its

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filing. Additionally, issues related to Process 1.0 are being litigated in Rimini II: the Court’s

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September 14, 2020 summary judgment order specifically permits Oracle to argue for either lost

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profits or fair market value license damages for Oracle’s so-called “gap customers.” 7 See Rimini

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II, ECF No. 1253 at 75-81. As Rimini did not change its support services to Process 2.0 until the

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end of July 2014, necessarily, these gap customers were serviced following Process 1.0, and the

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stark line Rimini argues exists between the two cases clearly does not.

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Moreover, the permanent injunction does not just enjoin Process 1.0. Rather, the injunction

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enjoins Process 1.0 conduct that has been adjudicated (and upheld on appeal) is infringing Oracle’s

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copyrights. The conduct enjoined includes violating Oracle’s software licenses by reproducing or

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preparing derivative works not solely for the support of a client’s internal data processing

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“Gap customers” is defined as clients Rimini gained from December 5, 2011 (the close of fact discovery
in Oracle I) to February 13, 2014 (the end of the Oracle I damages period). Rimini II, ECF No. 1253 at 75.
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operations, local hosting, and cross using one client’s Oracle software environment to develop and

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test updates and modifications for the benefit of another licensee. Process 2.0 could include such

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conduct, just as Process 1.0 did.

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If the Court has been unclear in its prior rulings, it will not be so here. In no uncertain

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terms, there is no separate and delineated line between Oracle I and Rimini II based solely on

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Process 1.0 and 2.0. Accordingly, the Court cannot grant Rimini’s motion to enforce an order that

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does not exist. However, the permanent injunction only enjoins conduct that has been adjudicated

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unlawful. The Court made this clear in its Order granting the permanent injunction, and on Oracle’s

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assurance that it would not seek to hold Rimini in contempt for conduct not yet adjudicated in

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Rimini II. See ECF No. 1117 at 18, 25 n.3, 28 (“Because Oracle seeks only to enjoin illegal actions

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or copying that this Court has found to be outside the scope of any license, and because Rimini

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claims that it no longer infringes, the balance of hardships tips entirely in favor of Oracle. . . . To

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be clear, Oracle is not asking now for a ruling on the merits of the issues in dispute in Rimini II.

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Instead, Oracle asks the Court for a permanent injunction restraining Rimini from continuing to

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commit the infringement that this Court and the jury have already determined to constitute

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copyright infringement. . . . Oracle’s requested relief is appropriately tailored to prevent future

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occurrences of the conduct adjudged to constitute copyright infringement in this case.”); ECF No.

18

1174 at 23-24 (articulating that it would be “bad faith” for Oracle to go beyond the clear terms of

19

the injunction). Both parties are bound by their respective representations to this Court. While it

20

should not need to rule on such an obvious fact, the Court expects all parties in this litigation to

21

follow its orders and judgments and comport themselves with the professionalism their positions

22

require. The Court will tolerate no less. Accordingly, if Rimini II results in findings that Rimini’s

23

Process 2.0 conduct is still infringing Oracle’s copyrights, Oracle could then move for contempt

24

and argue that Rimini’s later conduct is “the same type or class as the unlawful acts which the

25

court has found to have been committed” in Oracle I. See Orantes-Hernandez v. Thornburgh, 919

26

F.2d 549, 564 (9th Cir. 1990) (quoting N.L.R.B. v. Express Publ’g Co., 312 U.S. 426, 435 (1941))

27

(articulating that the “district court has ‘broad powers to restrain acts which are of the same

28

type or class as unlawful acts which the court has found to have been committed or whose
11

1

commission in the future, unless enjoined, may be fairly anticipated from the defendant’s conduct

2

in the past.”).

3
4

B. Rimini’s motion to exclude the declaration and opinions of Oracle’s expert, Barbara
Frederiksen-Cross, is denied.

5

Before the Court is Rimini’s motion to exclude the declaration and opinions of Oracle’s

6

expert Barbara Frederiksen-Cross because (1) her opinions are unreliable because she did not apply

7

“analytic dissection”; and (2) her opinions are irrelevant because they pertain to unadjudicated

8

conduct. ECF Nos. 1390, 1392-s. Oracle opposed (ECF Nos. 1407, 1409-s), and Rimini replied

9

(ECF Nos. 1416, 1418-s). For the reasons below, the Court denies Rimini’s motion.

10

Federal Rule of Evidence 702 governs the admissibility of expert testimony, providing:

11

14

A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if: (a) the expert’s
scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b) the testimony is based
on sufficient facts or data; (c) the testimony is the product of reliable principles and
methods; and (d) the expert has reliably applied the principles and methods to the
facts of the case.

15

FED R. EVID. 702. Expert testimony must rest on a reliable foundation and be relevant to the task

16

at hand. Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 597 (1993).

12
13

17

To determine the reliability of the principles and methods used, the court looks to: (1)

18

whether a theory or technique can be or has been tested; (2) whether it has been subjected to peer

19

review and publication; (3) the known or potential rate of error; (4) whether there are standards

20

controlling the technique’s operation; and (5) whether the theory or technique has general

21

acceptance within the relevant scientific community. Id. at 592–94. “These factors are ‘meant to

22

be helpful, not definitive, and the trial court has discretion to decide how to test an expert’s

23

reliability as well as whether the testimony is reliable, based on the particular circumstances of the

24

particular case.’” Pyramid Techs., Inc. v. Hartford Cas. Ins. Co., 752 F.3d 807, 814 (9th Cir. 2014)

25

(quoting Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010)). However, the Court notes that

26

“Daubert is meant to protect juries from being swayed by dubious scientific testimony. When the

27

district court sits as the finder of fact, there is less need for the gatekeeper to keep the gate when

28

the gatekeeper is keeping the gate only for himself.” United States v. Flores, 901 F.3d 1150, 1165
12

1

(9th Cir. 2018) (quoting David E. Watson, P.C. v. United States, 668 F.3d 1008, 1015 (8th Cir.

2

2012)) (emphasis in original). Thus, when the Court is the trier of fact, and not just the gatekeeper,

3

it may admit evidence, even if it may later exclude it or disregard it if it fails to meet the Rule 702

4

standard. Id. (quoting In re Salem, 465 F.3d 767, 777 (7th Cir. 2006)).

5

There can be no dispute that Ms. Frederiksen-Cross is an expert in forensic software

6

analysis—she has 45 plus years of experience as a software developer and consultant and is trained

7

in forensic analysis of computer software in the context of copyright infringement. ECF

8

No. 1368-1-s ¶¶ 3–4. Her expert opinions have been considered in Rimini II, among other cases in

9

this Circuit,8 and the Court sees no reason, based on her qualifications or experience, that her

10

opinions should be excluded here. 9 Rather, Rimini argues that her opinions are unreliable because

11

she used “unsound methodologies” and “applied the wrong legal standard.”

12

The Court sits as the trier of fact in this contempt proceeding and as such may admit

13

evidence that it may later disregard if it finds that it does not meet the Rule 702 standard.

14

Additionally, the Court need not find that an expert articulated the correct legal standard in her

15

opinion because it is the Court’s purview to decide the law. See Plexxikon Inc. v. Novartis Pharms.

16

Corp., 2020 WL 2301213, at * 2 (N.D. Cal. May 8, 2020) (slip copy). The Court has reviewed

17

Frederiksen-Cross’s declaration and expert report and finds that it will likely help the Court decide

18

the issues of fact in these contempt proceedings. The Court is in the unique position to consider

19

her opinions in relation to the law and will not exclude her opinions outright even if it may

20

disregard them when reaching its final decision.

21

Rimini further argues that Frederiksen-Cross’s entire declaration and opinion is irrelevant

22

and therefore should be excluded because she failed to analyze how Rimini’s support Process 1.0,

23

enjoined in Oracle I, is “more than colorably different” than its new support Process 2.0, currently

24

See DropzoneMS, LLC v. Cockayne, Case No. 3:16-cv-02348-YY, 2019 WL 7630788, at *6 (D. Or. Sept.
12, 2019) (“Frederiksen-Cross is undoubtedly an expert in forensic software analysis. . . . (detailing 44
years of experience designing, developing, and analyzing computer software; listing extensive publication
and presentation history; and analyzing computer software as an expert witness in arbitrations and federal
district courts across the country).”).

25
26
27
28

8

Rimini argues for the first time in its reply that Frederiksen-Cross is unqualified. This argument was never
made in its original motion and Rimini only points to her not having a bachelor’s degree in support. The
Court sees no reason to address this argument further.
13
9

1

being adjudicated in Rimini II. This standard is based on the Federal Circuit’s opinion in the patent

2

case, TiVo Inc. v. EchoStar Corp., 646 F.3d 869 (Fed. Cir. 2011). However, the Court agrees with

3

its sister court in the Central District of California and finds that the “more than colorably different”

4

standard articulated in TiVo is only used to determine “whether an injunction against patent

5

infringement has been violated.” TiVo, 646 F.3d at 881 (emphasis added); Disney Enters., Inc. v.

6

VidAngel Inc., Case No. CV 16-04109-AB(PLAx), 2017 WL 6820015, at *2 (C.D. Cal. Sept. 13,

7

2017). 10 Accordingly, the Court does not need to determine whether Rimini’s new support Process

8

2.0 is more than colorably different than its prior Process 1.0 to proceed with these contempt

9

proceedings. And whether Frederiksen-Cross conducted such an analysis is not relevant to the

10

Court’s ruling. The Court is well equipped to determine what in Frederiksen-Cross’s declaration

11

and opinion is relevant to its rulings, and as the fact finder, the Court may later exclude the opinion

12

or disregard it if it fails to meet federal evidentiary standards. Rimini’s motion is therefore denied.

13

C. Oracle’s motion for an order to show cause why Rimini should not be held in
contempt is granted in part and denied in part.

14
15

Before the Court is Oracle’s motion for an order to show cause why Rimini should not be

16

held in contempt for violating the Court’s permanent injunction. ECF Nos. 1365, 1368-s. Rimini

17

opposed (ECF Nos. 1382, 1385-s), and Oracle replied (ECF Nos. 1401, 1405-s). For the reasons

18

below, the Court grants in part and denies in part Oracle’s motion.
1. Legal Standard

19
20

Pursuant to Title 18, United States Code, Section 401, a court may hold any party in civil

21

contempt who fails to comply with or violates a court order. 18 U.S.C. § 401(3). A party “fails to

22

act as ordered by the court when [it] fails to take ‘all the reasonable steps within [its] power to

23
24
25
26
27
28

10

The VidAngel Court found:
[T]he act sought to be restrained in the instant case was not VidAngel’s use of a technology
that infringed upon a patent. The Order sought to restrain VidAngel from using Plaintiffs’
copyrighted works without a license or otherwise engaging in activities that violated
Plaintiffs’ exclusive rights under the Copyright Act and the Digital Millennium Copyright
Act. Thus, the injunction is proper in scope as it only restrains “acts which are the same
type or class as [the likely] unlawful acts which the court has found to have been committed
or whose commission in the future, unless enjoined, may be fairly anticipated from the
defendant’s conduct in the past.” Orantes-Hernandez, 919 F.2d at 564.

VidAngel Inc., 2017 WL 6820015, at *2.

14

1

[e]nsure compliance with the court’s order.’” In re Crystal Palace Gambling Hall, Inc., 817 F.2d

2

1361, 1365 (9th Cir. 1987) (quoting Shuffler v. Heritage Bank, 720 F.2d 1141, 1146–47 (9th Cir.

3

1983)). “The party alleging civil contempt must demonstrate that the alleged contemnor violated

4

the court’s order by ‘clear and convincing evidence,’ not merely a preponderance of the evidence.”

5

In re Dual-Deck Video Cassette Recorder Antitrust Litigation, 10 F.3d 693, 695 (9th Cir. 1993)

6

(quoting Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885, 889 (9th Cir. 1982)). In

7

doing so, the moving party must cite to specific provisions of the injunction the enjoined party has

8

allegedly violated and allegations of noncompliance. Reynolds v. Roberts, 207 F.3d 1288, 1298

9

(11th Cir. 2000). If the moving party has stated a case of noncompliance, the Court shall issue an

10

order to show cause why the enjoined party should not be held in contempt for violating its order,

11

and schedule a hearing on the issue. Id.
2. Discussion

12
13

Oracle asserts that Rimini is violating the permanent injunction as to three of its software

14

systems: PeopleSoft, J.D. Edwards, and Oracle Database. As the provisions of the permanent

15

injunction vary based on software, the Court will address each in turn.
i. PeopleSoft

16
17

First, Oracle alleges that Rimini is violating paragraphs 4 and 6 of the permanent injunction

18

by continuing to impermissibly and unlawfully cross-use its PeopleSoft software through (1)

19

Rimini’s prototype/retrofit support service model; (2) Rimini’s creation and use of “Dev

20

Instructions”; (3) Rimini’s use of its AFW Tools software (TransferFiles); and (4) by continuing

21

to test updates in one client’s environment that are then reused for other clients. As a preliminary

22

matter, neither Rimini’s Dev Instructions nor its AFW Tools software were before the Court or

23

held to be unlawful in Oracle I. Moreover, whether these support services constitute copyright

24

infringement is squarely before the Court in Rimini II and the Court has not yet ruled on the

25

lawfulness of these support processes. It is inappropriate to make a determination as to the validity

26

of these services for the first time in contempt proceedings, and therefore, the Court denies

27

Oracle’s motion as it relates to the Dev Instructions and AFW Tools software outright.

28

///
15

1

Whether Rimini’s prototype/retrofit support service model constitutes copyright

2

infringement is also squarely before the Court in Rimini II—specifically, whether this support

3

process uses one client’s environment under color of license for another client. Oracle alleges that

4

two updates constitute unlawful cross-use under this support model: HCM200443 and

5

HCM200440. Oracle argues that Rimini prototyped the development of HCM200443 in 10 client

6

environments, which took approximately 9 days of developer time (averaging 1 day per client),

7

and then retrofitted that update in 72 client environments between February 27 and April 1, 2019

8

(averaging .44 days per client). Update HCM200440 was prototyped in 11 client environments

9

over approximately a month and half (averaging 4.2 days per client) and then retrofitted in 74

10

client environments between June 4 and 17, 2019 (averaging .2 days per client). Because

11

retrofitting the update was more streamlined and took a fraction of the time as prototyping the

12

update, including not requiring QA analysis, Oracle argues that Rimini’s conduct constitutes

13

unlawful cross-use.

14

The Court has made no ruling at this time that the prototype/retrofit support process always

15

constitutes unlawful cross-use. And the Court will not make a blanket finding that whenever an

16

update is built quicker for one client than another, that means that Rimini uses one client’s

17

environment under color of license for another client, and violates the permanent injunction. It is

18

common sense that Rimini’s engineers would get better and faster at conducting a task with more

19

experience. Indeed, both parties in this case likely picked their respective counsel for the exact

20

reason that each had experience in copyright litigation. It would be inapposite to find that simply

21

because Rimini’s developers are able to develop updates faster, with less testing, after they have

22

built the update for another client, Rimini is violating the permanent injunction against cross-use.

23

See In re Dual-Deck Video Cassette Recorder Antitrust Litigation, 10 F.3d at 695 (“Indeed,

24

lawyers who learn from and use their experience obtained in discovery under such an order would

25

have to change fields, and never do antitrust work again, lest they ‘use’ what they learned in a

26

prior case ‘in any way whatsoever’ in any ‘other action.’”). Such a finding is outside the scope of

27

the permanent injunction and outside the scope of any factual or legal findings from Oracle I which

28

form the basis and reasoning for the permanent injunction.
16

1

However, in Rimini II, the Court did find that this prototype/retrofit support service

2

constituted copyright infringement as it related to Rimini’s work with two specific clients:

3

Campbell Soup and City of Eugene. Rimini II, ECF No. 1253 at 39-55; Rimini Street, Inc. v. Oracle

4

International Corp., 473 F.Supp.3d 1158 (D. Nev. 2020). First, when Rimini created and tested its

5

PPACA Phase 1 update HCM104286 in Campbell Soup’s environment, even knowing that

6

Campbell Soup did not want the update, such copying was not for Campbell Soup’s sole “internal

7

data processing operations.” Id. at 43–44. And, when this update was then sent to Rimini’s client

8

Toll Brothers (without any separate development or testing in a Toll Brothers environment), the

9

Court held that Rimini used Campbell Soup’s development environment, under color of Campbell

10

Soup’s license, to develop the update for the benefit of Toll Brothers in violation of the “internal

11

data processing operations” provision of the license. Id. at 45–46. It is clear to the Court that such

12

conduct violates the permanent injunction; specifically, paragraph 4 (“reproduce, prepare

13

derivative works from, or use a specific licensee’s PeopleSoft software or documentation other

14

than to support the specific licensee’s own internal data processing operations.”); and paragraph

15

6 (“use [of] a specific licensee’s PeopleSoft environment to develop or test software updates or

16

modifications for the benefit of any other licensee.”). ECF No. 1166 ¶¶ 4, 6 (emphasis added).

17

Because the Court finds, by clear and convincing evidence, that Rimini is violating the permanent

18

injunction, the Court issues an order to show cause why Rimini should not be held in contempt.

19

Consequently, at the hereafter hearing, the parties will not be permitted to re-argue the at-issue

20

conduct; rather, the parties are only permitted to argue whether Rimini should be held in contempt

21

for such a violation, and what sanctions are appropriate, taking into account that damages will be

22

assessed by the jury in Rimini II for this conduct.

23

The next was in relation to Rimini’s development and testing of its PPACA Phase 3 update

24

HCM104288 in City of Eugene’s development environment. The Court first held that the update

25

incorporated into the development environment was a derivative work, the creation and testing of

26

which was licensed. Rimini II, ECF No. 1253 at 51–52; Rimini Street, Inc. v. Oracle International

27

Corp., 473 F.Supp.3d 1158 (D. Nev. 2020). Next, the Court looked at the individual update and

28

held that it too was a derivative work: it substantially incorporated protected material from the
17

1

preexisting work because Rimini used the PeopleTools Application Designer utility (which is part

2

of Oracle’s PeopleTools software) to create the update, and the update could not be used with any

3

software programs other than PeopleSoft. Id. at 52–53. This update was also expressly licensed

4

for use by City of Eugene. Id. at 53. However, what was not expressly licensed was when Rimini

5

“prototyped” the update in City of Eugene’s environment, and then sent it to three other clients

6

without any testing or development in their respective environments—such development could not

7

be solely for City of Eugene’s “internal data processing operations.” Id. Of particular note to the

8

Court’s analysis was that City of Eugene’s license also included provision 4.1, which prohibits the

9

marketing or distribution of any updates developed under City of Eugene’s license. Id. at 54.

10

Accordingly, the Court held that in that instance, Rimini’s prototyping of the update and later

11

distribution of the update to other clients, also violated section 4.1 of the license (a provision not

12

included in all PeopleSoft licenses). Id. Again, it is clear to the Court that this conduct also violates

13

the permanent injunction; specifically, paragraph 4 (“reproduce, prepare derivative works from, or

14

use a specific licensee’s PeopleSoft software or documentation other than to support the specific

15

licensee’s own internal data processing operations.”); and paragraph 6 (“use [of] a specific

16

licensee’s PeopleSoft environment to develop or test software updates or modifications for the

17

benefit of any other licensee.”). ECF No. 1166 ¶¶ 4, 6 (emphasis added). Because the Court finds,

18

by clear and convincing evidence, that Rimini is violating the permanent injunction, the Court

19

issues an order to show cause why Rimini should not be held in contempt. Consequently, at the

20

hereafter hearing, the parties will not be permitted to re-argue the at-issue conduct; rather, the

21

parties are only permitted to argue whether Rimini should be held in contempt for such a violation,

22

and what sanctions are appropriate, taking into account that damages will be assessed by the jury

23

in Rimini II for this conduct.

24

Finally, Oracle argues that Rimini is violating paragraph 6 of the permanent injunction

25

when it creates a single “test plan,” that it uses with multiple clients, and consists of Rimini running

26

an update in a client’s PeopleSoft environment, taking screenshots of that customer’s environment

27

to show what a successful update looks like, and saving the screenshots to Rimini’s SpiraTeam

28

system. ECF No. 1368-1-s ¶ 49. Rimini’s expert, Owen Astrachan provides:
18

1

7

A “test case” is “a Rimini-created document (typically in the Spira database)
that is essentially a plan for testing a client’s PeopleSoft (or JD Edwards) software
to make sure than [sic] an update was implemented correctly. For example, if a tax
regulation change required a reporting form to have an additional box containing
an employee’s health insurance election, the update would change the code so that
when the report is generated, the new box is included. A test plan would likely
include having a tester generate the report and then checking to see if the report has
the box. The plan could also include generating other reports to make sure they do
not have the extra box—i.e., to make sure that the update did not cause problems
with other functions. There could be many tests that a tester should perform to
ensure that the required update functionality exists and that no other functionality
“broke” in the process, and the “test case” sets forth those tests so that a Quality
Assurance employee can run through them.

8

ECF No. 1386-1-s ¶ 264 (emphasis in original). If a subsequent Rimini client needs the same or a

9

similar update, Rimini may use the same test plan, i.e., the same list of tests to run to ensure the

10

functionality of the update, for the subsequent client. Id. ¶ 265. The parties agree that these test

11

cases may contain screenshots of the Oracle software successfully running the update, but neither

12

believes these screenshots constitute infringing conduct. Id. ¶ 266; ECF No. 1368-1-s ¶ 52.

2
3
4
5
6

13

Oracle argues that because Rimini may use the test case for multiple customers, Rimini is

14

violating paragraph 6 of the permanent injunction because the testing “benefits” multiple Rimini

15

clients. The Court disagrees. The Court finds that the test case is not “testing” as provided for in

16

paragraph 6 of the permanent injunction; rather, the test case is simply the plan for how Rimini

17

will test a specific update. To be unlawful cross-use under this permanent injunction and the law

18

of Oracle I, Rimini must use one client’s environment under color of license for another client.

19

Nothing in the record would support a finding that Rimini is prohibited from using the same tests

20

to ensure functionality of an update. Like above, it is common sense that Rimini’s engineers would

21

use the same tests to ensure functionality of an update. Therefore, so long as Rimini is testing the

22

update in its client’s individual environments, the testing itself (and necessarily, the copies made

23

in the process of testing the update) is for the benefit of each individual client.

24

However, that was not always the case—in at least two instances, Rimini used City of

25

Eugene’s Windstream environment (“COEX” or “COE”) for the general purpose of testing updates

26

for other customers. Frederiksen-Cross provides that a W-2 update was tested in COEX for Rimini

27

client JHN and that it was not tested in JHN’s environment. ECF No. 1368-1-s ¶ 70. Frederiksen-

28

Cross further provides that Rimini update “rsi940.sqr” was tested in COE and then sent to all
19

1

clients in scope. Id. ¶ 71. This appears to be a classic example of unlawful cross-use and Rimini

2

using one client’s environment under color of license for another client. Further, while Rimini does

3

not dispute this cross-use testing in its opposition, its expert Owen Astrachan disagrees with both

4

points in his Rebuttal Expert Report, dated March 13, 2020. ECF No. 1386-1-s ¶¶ 278-279. Given

5

the conflicting accounts from the parties’ experts, the Court finds that an evidentiary hearing on

6

this issue is required. The Court, as fact finder, must hear from both parties competing experts to

7

determine if Rimini’s testing in this context constitutes unlawful cross-use in violation of the

8

permanent injunction. Accordingly, the Court issues an order to show cause as to this conduct.

9

Second, Oracle argues that Rimini is violating paragraph 5 of the permanent injunction

10

through its use of Windstream cloud-hosting to facilitate its support services. This is an issue

11

squarely before the Court in Rimini II and the Court has made no ruling on the lawfulness of such

12

conduct. Indeed, in the Court’s September 2020 order on summary judgment in Rimini II, the Court

13

specifically held that it is a disputed question of material fact as to whether the license agreements

14

expressly allow for cloud hosting, and if they do, whether the client exercised control such that the

15

cloud constituted the client’s “facility.” Rimini II, ECF No. 1253 at 90–91; Rimini Street, Inc. v.

16

Oracle International Corp., 473 F.Supp.3d 1158 (D. Nev. 2020). Paragraph 5 of the permanent

17

injunction provides that Rimini will not provide support services other than on the “licensee’s own

18

computer systems.” ECF No. 1166 ¶ 5. This provision was included specifically because Rimini

19

was unlawfully hosting its client’s software on its own servers and the client had no control over

20

what Rimini was doing. It was this conduct that was held unlawful and in violation of the facilities

21

provision of the client’s license. It has never been adjudicated whether cloud hosting is permitted

22

under either a specific client’s license or under the general facilities provision of the PeopleSoft

23

license. Nor has it been adjudicated whether a client’s own computer systems would include its

24

cloud-based servers. Accordingly, Oracle’s motion for an order to show cause as it relates to

25

Windstream, and/or cloud hosting in general, will not be considered in these contempt

26

proceedings.

27

Oracle also argues that Rimini is violating paragraph 5 of the permanent injunction because

28

it maintains Oracle software and support materials on its systems: (1) one third of the lines of code
20

1

in Rimini’s “RSPCMPAY.cbl” file was copied from Oracle’s PeopleSoft PSPTARRY.cbl source

2

code file; (2) Rimini saved this “RSPCMPAY.cbl” file to its system and distributed it 14 times to

3

7 customers; (3) Oracle’s “psptaxdt.dms” source code (including the Oracle copyright notice)

4

modified only slightly with Rimini added code; (4) internal emails containing PeopleSoft

5

copyrighted documentation; and (5) two PeopleSoft Payroll update documents bearing copyright

6

notices.

7

As to the RSPCMPAY.cbl file, Rimini argues that Oracle’s expert, Barbara Frederiksen-

8

Cross, did not properly conduct an analytical dissection, as required by the Ninth Circuit, citing

9

Rentmeester v. Nike, Inc., 883 F.3d 1111, 1118 (9th Cir. 2018); Apple Comput., Inc. v. Microsoft

10

Corp., 35 F.3d 1435, 1443 (9th Cir. 1994), and in a separate motion, requests the Court exclude

11

her declaration and opinions for this reason. As addressed above, the Court declines to exclude her

12

declaration and opinions and considers this issue on its merits.

13

It is well settled that not all copying violates the Copyright Act; but rather, a plaintiff must

14

prove “copying of protectable expression beyond the scope of the license.” MAI Systems Corp. v.

15

Peak Computer, Inc., 991 F.2d 511, 517 (9th Cir. 1993) (quoting S.O.S., Inc. v. Payday, Inc., 886

16

F.2d 1081, 1085 (9th Cir. 1989)). “Copying may be shown by circumstantial evidence of access

17

and substantial similarity of both the general ideas and expression between the copyrighted work

18

and the allegedly infringing work.” Apple Comput., 35 F.3d at 1442. Analytic dissection refers to

19

the process of determining whether the allegedly similar features are “elements of a work that are

20

protectable and used without the author’s permission.” Id. at 1442-43.

21

In pertinent part, the permanent injunction prohibits Rimini from distributing PeopleSoft

22

software or documentation, and from reproducing and preparing derivative works outside the

23

scope of the license. Frederiksen-Cross analyzed the discovery and provided that:

24
25
26
27
28

Rimini also copied substantial portions of the PeopleSoft file PSPTARRY.cbl into
its ‘RSPCMPAY.cbl’ file, which was saved to Rimini’s internal system and
distributed at least 14 times to 7 different clients between December 19, 2018 and
July 2, 2019. Comparing these two files shows that 32.74% of lines from the Rimini
file match lines from the GA version of the Oracle file. . . . I provided a “complete
side-by-side comparison of these files, with Rimini’s RSPCMPAY.cbl on the
[right] and Oracle’s PSPTARRY.cbl on the [left] and highlighting content in the
Rimini file matching the Oracle file, which shows substantial similarities between
21

1
2

these files and protected expression copied from the Oracle file to the RS-prefixed
file.

3

ECF No. 1368-1-s ¶ 77 (cleaned up). She goes on to provide that she reviewed the matching lines

4

of code and determined that there was no programing rational or standard that would require using

5

the same code and they are “idiosyncrasies” from the Oracle code. Id. ¶ 78.

6

Rimini does not dispute that the RSPCMPAY.cbl file is on its computer systems, but just

7

disputes that it copied substantial portions from Oracle’s PSPTARRY.cbl file. Rimini’s expert,

8

Owen Astrachan, opines:

9
10
11
12
13
14
15
16
17
18

I note that the two files look very different and are designed to accomplish different
tasks. The Oracle file is almost four times as long as the Rimini file. Moreover, the
Oracle file is designed to “load the tax array with the YTD balances” while the
Rimini file performs different functions[.] . . . In other words, the Rimini file is
designed to augment the functionality of an Oracle file by loading additional, more
detailed data. Given the differences between these two files, in my opinion the
overall concept and feel of the Rimini file is different from the Oracle file.
...
In my opinion, the similar code in both columns is dictated by external
constraints and therefore is not indicative of copying. The procedures in both blocks
of code are designed to pull data from a database using the PTPSQLRT API. To
use the API, the code must refer to its name—“PTPSQLRT”—which is why
“PTPSQLRT” appears multiple times in both columns. Moreover, both programs
must use standard programing language constructs (e.g., CALL, USING, FETCH,
SET) to instruct the program how to use the API to find the data (e.g., “SET
FETCH-YTD-END of S-YTD TO TRUE”).
ECF No. 1386-1-s ¶¶ 197–199.

19

Given these conflicting accounts of the two files, the Court finds that an evidentiary hearing

20

on this issue is required. The Court, as fact finder, must hear from both parties competing experts

21

to determine if Rimini’s file contains protected Oracle expression that Rimini is prohibited from

22

having on its systems. Accordingly, the Court issues an order to show cause as to this file.

23

As to the “psptaxdt.dms” source code file and emails containing PeopleSoft copyrighted

24

documentation and PeopleSoft Payroll update documents, Rimini does not dispute that such

25

content is on its systems. Rather, it contends that the content was sent to it by a client, contrary to

26

express instructions. However, “[t]he absence of willfulness does not relieve from civil contempt.”

27

McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949). While Rimini may not have

28

willfully intended to violate the permanent injunction by having such content on its computer
22

1

systems, it is uncontradicted that such content is on its systems and that it is a violation of the

2

permanent injunction. Rimini’s intent may affect what sanction the Court finds is appropriate for

3

the violation, but the Court still finds it necessary to issue an order to show cause why Rimini

4

should not be held in contempt for these violations of paragraph 5 of the permanent injunction.

5

See TiVo, 646 F.3d at 880 (“Although a defendant’s diligence and good faith efforts are not a

6

defense to contempt, these factors may be considered in assessing penalties, a matter as to which

7

the district court has considerable discretion.”). Because the Court finds, by clear and convincing

8

evidence, that Rimini is violating the permanent injunction, the Court issues an order to show cause

9

why Rimini should not be held in contempt. Consequently, at the hereafter hearing, the parties will

10

not be permitted to re-argue the at-issue conduct; rather, the parties are only permitted to argue

11

whether Rimini should be held in contempt for such a violation, and what sanctions are

12

appropriate.

13

Third, Oracle argues that Rimini’s updates and modifications are derivative works, the

14

creation of which violates paragraphs 4, 5 and 6 of the permanent injunction. Oracle argues that

15

every single update and modification of Oracle’s software constitutes a derivative work and is

16

therefore a violation of the permanent injunction. The Court disagrees. Preliminarily, whether a

17

particular stand-alone update or modification is a derivative work is a fact specific inquiry, and the

18

Court will not make a blanket ruling that every modification and every update that Rimini has

19

created for PeopleSoft is a derivative work. The Court and the parties agree that when that update

20

or modification is applied to the PeopleSoft environment, the entire environment is a derivative

21

work—Rimini conceded this point and the Court specifically held so in its September 2020

22

summary judgment order in Rimini II. Rimini II, ECF No. 1253 at 51–52; Rimini Street, Inc. v.

23

Oracle International Corp., 473 F.Supp.3d 1158 (D. Nev. 2020). But the Court further held that

24

such creation of derivative works may be expressly authorized by a client’s license. Id.

25

The Court has made clear that the permanent injunction enjoins unlawful, infringing

26

conduct. And Rimini is not enjoined from creating derivative works—paragraph 4 of the

27

permanent injunction specifically provides that derivative works may be made so long as they are

28

for the licensee’s own internal data processing operations. What is unlawful, and thus prohibited
23

1

by this permanent injunction, is the creation of derivative works that are outside the scope of, or

2

in violation of the client’s license.

3

Here, Oracle points to only one example of a derivative work that violates the permanent

4

injunction: Rimini’s 1099 update that was emailed to Easter Seals in 2018. It is not clear from the

5

record before the Court where this update came from, where it was developed, and for what client.

6

If the update was developed for Easter Seals, in Easter Seals environment, and Easter Seals is

7

permitted under its license to create derivative works and have a third-party servicer create those

8

derivative works for it, then the Court could not find Rimini’s conduct was a violation of the

9

permanent injunction. However, because the Court lacks necessary information to make this

10

finding, an evidentiary hearing is needed to determine if the creation and distribution of the update

11

violated the permanent injunction. Accordingly, the Court issues an order to show cause on this

12

issue.

13

ii. J.D. Edwards

14

First, Oracle argues that Rimini is violating paragraph 8 of the permanent injunction by

15

copying J.D. Edwards source code when it develops and tests updates. Oracle articulates that J.D.

16

Edwards “source code” includes software files “.h” and “.c” files (written in the C programing

17

language), Business Functions, Interactive Applications, Batch Applications, and Event Rules

18

code. ECF No. 1368-s at 29. There are two types of J.D. Edwards software at-issue here—J.D.

19

Edwards EnterpriseOne and J.D. Edwards World. As to J.D. Edwards EnterpriseOne, Rimini

20

allegedly copies source code (1) whenever it uses Oracle’s Object Management Workbench, i.e.,

21

whenever Rimini opens the program (“checked out”), closes the program (“checked in”), or the

22

contents of the program are displayed; (2) when it “promotes” source code files between

23

environments (i.e., from a development to a testing environment); and (3) when Rimini copied

24

source code file, prvtsidx.plb onto its own systems where it was then modified. As to J.D. Edwards

25

World, Rimini is allegedly copying source code when (1) Rimini developers display the source

26

code in source editors; and (2) when they promote source code from one environment to another.

27

Finally, Oracle alleges that Rimini violates the injunction as to both J.D. Edwards programs when

28

it creates technical specification documents (like the “Dev Instructions” discussed above): the
24

1

technical specification document for Rimini’s JDE105328 update copied source code from Oracle

2

file R89078652 and from J.D. Edwards World A9.3 source code file P06767.

3

The parties dispute the meaning of the term “source code” within the injunction: Oracle

4

maintains that “source code” refers to both “open code” (code that the licensee may modify to

5

create tax, legal, and regulatory updates to its software) and “closed code” (code that the licensee

6

does not have access to and would need to reverse engineered or “decompile”), while Rimini

7

maintains that the term only refers to closed code. Rimini further argues that reading the injunction

8

to mean both open and closed code would make paragraph 10 of the injunction superfluous and

9

would operate as a total ban on Rimini support services for J.D. Edwards software because every

10

time Rimini accesses the software, copies of source code are made.

11

The Court finds that the parties dispute over the definition of source code is material to the

12

Court’s ruling, and therefore, an evidentiary hearing on the issue is necessary before the Court can

13

determine whether Rimini’s conduct violates the injunction. As to the technical specification

14

documents, this was not previously before the Court or held to be unlawful in Oracle I, and like

15

with the Dev Instructions, the Court has not yet ruled on the lawfulness of this support process.

16

However, Rimini fails to address this content in its opposition, though its expert, Owen Astrachan,

17

addressed it in his Supplemental Expert Report, dated June 26, 2020, opining that the at-issue code

18

was not copied. ECF No. 1368-2-s ¶ 22. Given the conflicting expert opinions, the Court finds that

19

evidentiary hearing is needed to determine if this technical instruction did in fact copy Oracle

20

source code in violation of the permanent injunction.

21

Second, Oracle alleges that Rimini is violating paragraph 10 of the permanent injunction

22

by unlawfully cross using Oracle’s software and creating derivative works. Oracle argues that

23

Rimini is committing unlawful cross-use by copying source code into technical specification

24

documents and copying testing procedures. Like above with PeopleSoft, the Court has made no

25

ruling at this time that the prototype/retrofit support process always constitutes unlawful cross-use.

26

And the Court will not make a blanket finding that whenever an update is built quicker for one

27

client than another, that means that Rimini uses one client’s environment under color of license

28
25

1

for another client and violates the permanent injunction. It is common sense that Rimini’s

2

engineers would get better and faster at conducting a task with more experience.

3

As to creating derivative works, the Court has made clear that the permanent injunction

4

enjoins unlawful, infringing conduct. And Rimini is not enjoined from creating derivative works—

5

paragraph 10 of the permanent injunction specifically provides that derivative works may be made

6

so long as it is not for the benefit of another licensee. What is unlawful, and thus prohibited by this

7

permanent injunction, is the creation of derivative works that are outside the scope of, or in

8

violation of the client’s license. Accordingly, Oracle has failed to show by clear and convincing

9

evidence that Rimini is violating the paragraph 10 of the permanent injunction.

10

Finally, Oracle argues that Rimini is violating paragraphs 3 and 17 of the permanent

11

injunction, pertaining to both PeopleSoft and J.D. Edwards, by distributing updates to its clients.

12

As discussed above, the Court has not ruled on whether Rimini’s distribution software programs,

13

particularly TransferFiles, are unlawful or violate the Copyright Act. But the Court need not rule

14

on that specific issue to deny Oracle’s motion—to read the injunction to prohibit all distribution

15

of Rimini updates to its client’s would be a complete ban on Rimini support services. That was

16

neither the intention nor the purpose of the permanent injunction and such a reading would be

17

outside its scope. Further, such a reading would render other provisions of the injunction

18

superfluous—to say that Rimini is permitted to create derivative works within the scope of the

19

license but that it can’t distribute the derivative work to its client would be an absurd result.

20

As to the specific examples Oracle provides, the Court finds that an order to show cause

21

may issue in part. As to one client, Petco, Rimini was unable to conduct QA testing due to an issue

22

with the client’s environment; Rimini chose to not test the update because it had previously been

23

tested and worked for other clients before distribution. ECF No. 1368-1-s ¶ 114. Rimini is not

24

required to test updates and if Rimini chooses to send a client an untested update, developed in

25

that client’s environment, the Court cannot find that conduct violates the injunction. However, as

26

to update HCM200049, delivered to Rimini’s client Matheson Trucking, without any indication it

27

was developed or tested in that client’s environments, is a clear violation of the permanent

28

injunction. See id. ¶ 115. Because the Court finds, by clear and convincing evidence, that Rimini
26

1

is violating the permanent injunction, the Court issues an order to show cause why Rimini should

2

not be held in contempt. Consequently, at the hereafter hearing, the parties will not be permitted

3

to re-argue the at-issue conduct; rather, the parties are only permitted to argue whether Rimini

4

should be held in contempt for such a violation, and what sanctions are appropriate. As to update

5

HCM2000105, delivered to clients Rockefeller Group International and Home Shopping Network,

6

is not clear whether the update was sent directly to these clients or developed and tested in their

7

own environments. Therefore, the Court finds an evidentiary hearing is required to determine

8

whether Rimini’s conduct violates the permanent injunction.
iii. Oracle Database

9
10

Finally, Oracle argues that Rimini is violating paragraph 15 of the permanent injunction

11

when it develops and tests updates in J.D. Edwards and PeopleSoft environments that contain

12

Oracle Database because that results in copying Oracle Database. ECF No. 1368-1-s ¶ 120.

13

Oracle’s expert, Barbara Frederiksen-Cross, estimated that this occurred in 305 of Rimini’s

14

customers’ environments. Id. ¶ 121. In opposition, Rimini argues that paragraph 15 does not

15

prohibit it from copying Oracle Database if it is doing so pursuant to a valid Oracle License and

16

Service Agreement or a Developer License; to do otherwise would be a ban on all copying of

17

Oracle Database. 11

18

On summary judgment, the Court held that Rimini was infringing on Oracle’s copyrights

19

for Oracle Database. See ECF No. 476. Specifically, the Court held that the Developer License,

20

under which authorization Rimini downloaded Oracle Database, did not permit Rimini to make

21

unlimited copies of the software on Rimini’s systems, use that software to create updates and bug

22

fixes for Oracle’s Enterprise Software programs, or use those copies to create commercial support

23

services for its clients. Id. at 9–12. The Court also found that, although many of Rimini’s clients

24

are authorized to use Oracle Database under their Oracle License and Service Agreement

25

(“OLSA”), because Rimini downloaded Oracle Database directly from Oracle, rather than receive

26

access through its clients, Rimini’s use of the software was restricted to the provisions of the

27
28

The Court notes that this is the same argument Rimini made when it initially objected to the permanent
injunction. See ECF No. 1130 at 28.
27

11

1

Developer License. Id. at 12–13. The Ninth Circuit upheld the Court’s summary judgment ruling.

2

Oracle USA, Inc. v. Rimini Street, Inc., 879 F.3d 948, 960 (9th Cir. 2018).

3
4
5
6

The Court entered the at-issue permanent injunction, with the following provision
pertaining to Oracle Database:
15. Rimini Street shall not reproduce, prepare derivative works from, or distribute
Oracle Database software.

7

ECF No. 1166 ¶ 15. When the Court implemented this provision, the Court reasoned that the

8

balance of the hardships weighed in favor of the permanent injunction, in part, because Oracle was

9

only seeking to enjoin acts that had been determined to be unlawful and upheld on appeal. ECF

10

No. 1164 at 9. The Ninth Circuit upheld the permanent injunction, specifically holding that it was

11

not overly broad, but did not address the Oracle Database provision specifically. Oracle USA, Inc.

12

v. Rimini Street, Inc., 783 Fed.Appx.707, 710–11 (9th Cir. 2019).

13

Given the extensive record in this case and the Court’s previous orders, it is clear that this

14

provision does not prohibit all copying of Oracle Database. To read paragraph 15 to prohibit all

15

copying, would make previous paragraphs of the permanent injunction related to PeopleSoft and

16

J.D. Edwards superfluous—Rimini is permitted to make copies of these software programs when

17

doing so is within the scope of the software license. If copies of Oracle Database are necessarily

18

made when Rimini is providing support services for these other Enterprise Software programs,

19

and those copies are expressly permitted under their respective licenses, the Oracle Database

20

copies cannot be prohibited by the permanent injunction. Here, Oracle has not provided clear and

21

convincing evidence that the copies of Oracle Database, made in the approximately 305 client

22

systems, were not expressly authorized by the clients’ licenses, or that Rimini violated the

23

permanent injunction. Therefore, the Court shall not issue an order to show cause as to Oracle

24

Database.

25

D. Rimini’s motion for a jury trial is denied.

26

Before the Court is Rimini’s motion for a jury trial. ECF Nos. 1387, 1389-s. Oracle

27

opposed (ECF No. 1403, errata ECF No. 1411) and Rimini replied (ECF Nos. 1412, 1414-s). For

28

the reasons below, the Court denies Rimini’s motion.
28

1

Generally, civil contempt proceedings only require notice and an opportunity to be heard.

2

International Union, United Mine Workers of America v. Bagwell, 512 U.S. 821, 826–27, 831

3

(1994). It is only when contempt proceedings are criminal that heighted due process protections

4

are required. Id. at 831. “[W]hether a contempt is civil or criminal turns on the ‘character and

5

purpose’ of the sanction involved.” Id. at 827. A sanction is “civil if it coerces compliance with a

6

court order or is a remedial sanction meant to compensate the complainant for actual losses. A

7

criminal sanction, in contrast, generally seeks to punish a completed act of disobedience.” Parsons

8

v. Ryan, 949 F.3d 443, 455 (9th Cir. 2020) (cleaned up).

9

Oracle requests the following sanctions under the Court’s inherent authority for Rimini’s

10

alleged violations of the permanent injunction: (1) an order barring Rimini from providing support

11

services for Oracle’s PeopleSoft or J.D. Edwards product lines; (2) impoundment of the infringing

12

copies and Rimini’s computer systems, or alternatively, require that they be placed in escrow so

13

that Oracle can monitor Rimini’s compliance and until Rimini demonstrates compliance with the

14

permanent injunction; (3) attorneys’ fees and costs for successfully mounting these contempt

15

proceedings; and (4) compensatory damages. Oracle further requests that it be permitted to reopen

16

discovery for the narrow purpose of determining the amount of compensatory damages Oracle

17

should be awarded. ECF No. 1368 at 34-35. Rimini argues that a complete ban on Rimini providing

18

support services and the impoundment of its computers are punitive sanctions and thus, a jury trial

19

and heighted due process protections are required in these contempt proceedings. ECF No. 1387

20

at 15–19. Oracle, in its response to this motion, withdrew its request for a complete ban on Rimini

21

support services, but argues that impoundment is a coercive sanction, routinely permitted in civil

22

contempt proceedings. ECF No. 1411-2 at 22-24

23

As Oracle has withdrawn its first requested sanction, the Court sees no reason to address

24

whether a complete ban on Rimini support services would be a punitive or compensatory sanction.

25

Second, impoundment is a statutory remedy permitted under the Copyright Act for copyright

26

infringement. 17 U.S.C. § 503. In a civil contempt proceeding, the Court may find impoundment

27

appropriate if Rimini willfully violated the Court’s orders, but heightened due process protections

28

are not required to reach such a finding. See National Research Bureau, Inc. v. Kucker, 481 F.Supp.
29

1

612, 615–16 (S.D.N.Y. 1979). Third, it is well established that the prevailing party may be awarded

2

attorneys’ fees and costs in civil contempt proceedings and the Court has discretion to determine

3

if a fee award is an appropriate remedial measure. See Perry v. O’Donnell, 759 F.2d 702, 705-06

4

(9th Cir. 1985). Finally, compensatory damages may be awarded for Oracle’s actual damages and

5

any additional profits of the infringer. 17 U.S.C. § 504. Oracle’s motion for an order to show cause

6

does not address a specific amount in damages it has suffered due to Rimini’s alleged

7

contumacious conduct but asks the Court to reopen discovery if Rimini is held in contempt. If the

8

Court finds Rimini in contempt, the Court will determine at that time how to fashion equitable and

9

appropriate sanctions and reopen discovery if it sees fit to do so. At this time, the Court does not

10

find that these requested sanctions are punitive; therefore, heighted due process protections and/or

11

a jury trial are not required.

12

Rimini’s further arguments as to why it is entitled to a jury trial pertain to Rimini’s position

13

that the complained of conduct is currently being adjudicated in Rimini II. As the Court found

14

above, there are material issues of fact and a jury trial will be held in Rimini II on a number of

15

issues Oracle has raised in its motion for an order to show cause. Because the Court declines to

16

entertain those issues in this contempt proceeding, the Court need not address Rimini’s additional

17

arguments for a jury trial. Accordingly, Rimini’s motion for a jury trial is denied.

18

E. Oracle’s motion for Rule 11 sanctions is denied.

19

Oracle moves this Court, under its inherent authority, Federal Rule of Civil Procedure 11,

20

and 28 U.S.C. § 1927, to impose sanctions on Rimini and its outside counsel, Gibson, Dunn &

21

Crutcher, LLP (“Gibson Dunn”) because Rimini filed its motion to enforce (discussed above in

22

Part III.A) in an attempt to re-litigate (for the seventh time) the scope of the permanent injunction.

23

ECF No. 1348. Rimini opposed (ECF No. 1350) and Oracle responded (ECF No. 1353). For the

24

reasons below, the Court denies Oracle’s motion.

25

1. Legal Standard

26

There are three sources of sanctioning power: Rule 11 of the Federal Rules of Civil

27

Procedure, 28 U.S.C. § 1927, and the Court’s inherent power to regulate itself. See United States

28

v. Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO, 948
30

1

F.2d 1338, 1342–43 (2d Cir. 1991) (“Brotherhood”). Oracle seeks sanctions against Rimini

2

pursuant to all three.

3

Under Rule 11, the Court may, on a party’s motion, after notice and a reasonable

4

opportunity to respond, impose appropriate sanctions against another party for any violation of

5

Rule 11(b) of the Federal Rules of Civil Procedure. See FED. R. CIV. P. 11(c)(1). Here, Oracle

6

represents that on April 20, 2020, it served Rimini with notice it intended to file a motion for

7

sanctions unless Rimini withdrew its above discussed motion to enforce (ECF No. 1323). ECF No.

8

1348 at 6. When Rimini had not withdrawn its motion within 21-days, Oracle filed this motion for

9

sanctions on May 12, 2020. Id. Accordingly, Oracle has satisfied the procedural requirements of

10

Rule 11(c)(2).

11

“One of the fundamental purposes of Rule 11 is to ‘reduce frivolous claims, defenses or

12

motions and to deter costly meritless maneuvers, . . . thereby avoiding delay and unnecessary

13

expense in litigation.’” Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002) (quoting

14

Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1536 (9th Cir 1986)). Rule 11

15

provides, in pertinent part,

16

23

(b) Representations to the Court. By presenting to the court a pleading, written
motion, or other paper--whether by signing, filing, submitting, or later advocating
it--an attorney or unrepresented party certifies that to the best of the person’s
knowledge, information, and belief, formed after an inquiry reasonable under the
circumstances:
(1) it is not being presented for any improper purpose, such as to harass,
cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by
existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law or for establishing new law; . . .
...
(c)(4) . . . The sanction may include nonmonetary directives; an order to pay a
penalty into court; or, if imposed on motion and warranted for effective deterrence,
an order directing payment to the movant of part or all of the reasonable attorney’s
fees and other expenses directly resulting from the violation.

24

FED. R. CIV. P. 11. By its terms, Rule 11 sanctions apply only to documents parties submit to the

25

court, not to the conduct of those parties. Christian, 286 F.3d at 1130. Prior to filing a document,

26

each party has a duty to “conduct a reasonable factual investigation” and to “perform adequate

27

legal research” confirming that the positions taken in the document are “warranted by existing law

28

or a good faith alteration of existing law.” Id. at 1127 (quoting Golden Eagle, 801 F.2d at 1537).

17
18
19
20
21
22

31

1

In determining whether the factual and legal inquiry was reasonable, the court applies an objective

2

standard of reasonableness. Brotherhood, 948 F.2d at 1344 (citing Business Guides, Inc. v.

3

Chromatic Commc’ns Enter.s., Inc., 498 U.S. 533, 549–50 (1991)).

4

Alternatively, sanctions are available under 28 U.S.C. § 1927, which provides:

5

7

Any attorney or other person admitted to conduct cases in any court of the United
States or any Territory thereof who so multiples the proceedings in any case
unreasonably and vexatiously may be required by the court to satisfy personally the
excess costs, expenses, and attorney’s fees reasonably incurred because of such
conduct.

8

A section 1927 sanction differs from a Rule 11 sanction by requiring the heightened showing of

9

bad faith, by allowing the court to impose an award of fees sua sponte, and by bringing conduct

10

outside of the pleadings within the ambit of sanctionable activities. See GEORGENE M. VAIRO,

11

RULE 11 SANCTIONS: CASE LAW, PERSPECTIVES, AND PREVENTATIVE MEASURES 760–62 (Richard

12

G. Johnson ed., 3d ed. 2003). As a penal statute, section 1927 discourages unnecessary delays in

13

litigation by requiring the offending party to compensate other litigants for costs due to the dilatory

14

conduct. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 759–60 (1980). To award sanctions,

15

the movant must show that the offending party (1) multiplied the proceedings (2) in a vexatious

16

and unreasonable manner, causing (3) an increase in the cost of the proceedings. Shields v. Shetler,

17

120 F.R.D. 123, 127 (D. Colo. 1988). A “vexatious” multiplication of the proceedings occurs when

18

the party acts recklessly, plus “something more,” such as frivolousness, harassment, or an improper

19

purpose. Fink v. Gomez, 239 F.3d 989, 993–94 (9th Cir. 2001) ([R]ecklessness suffices for § 1927,

20

but bad faith is required for sanctions under the court’s inherent power.”); see B.K.B. v. Maui

21

Police Dep’t, 276 F.3d 1091, 1107 (9th Cir. 2002) (finding recklessness plus knowledge sufficient

22

for section 1927 sanctions). Before a court imposes section 1927 sanctions, the offending party

23

must be given notice and an opportunity to be heard. T.W. Elec. Serv., Inc v. Pacific Elec.

24

Contractors Ass’n, 809 F.2d 626, 638 (9th Cir. 1987).

6

25

Finally, the court may sanction an offending party pursuant to its inherent power “to

26

manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases.”

27

Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (quoting Link v. Wabash R. Co., 370 U.S. 626,

28

630–31 (1962)). In this circuit, a showing of bad faith is required to support sanctions under the
32

1

Court’s inherent authority. Fink, 239 F.3d at 993. Due to the “very potency’ of the Court’s inherent

2

power—encompassing, for example, the imposition of attorneys’ fees if a court finds that “the

3

very temple of justice has been defiled,” Chambers, 501 U.S. at 44–46 (quoting Universal Oil

4

Products Co. v. Root Refining Co., 328 U.S. 575, 580 (1946))—courts favor restraint and

5

discretion in its exercise and require a particularized showing of bad faith, Brotherhood, 948 F.2d

6

at 1345.

7

2. Discussion

8

Oracle motions this Court for sanctions against Rimini for vexatious litigation because

9

Rimini filed its motion to enforce the court’s orders and judgment separating Oracle I from Rimini

10

II. Oracle argues that this motion is improperly duplicative and an attempt to relitigate (for the

11

seventh time) the scope of the permanent injunction, which this Court (and the Ninth Circuit on

12

appeal) held was not overly broad. In opposition, Rimini argues that it was compelled to file the

13

at issue motion because it appeared that Oracle would violate the Court’s orders and attempt to

14

litigate issues currently being adjudicated in Rimini II in these contempt proceedings.

15

The Court is concerned with both parties’ conduct. It agrees with Oracle that Rimini’s

16

motion is procedurally improper—if Oracle decided to raise issues in contempt proceedings

17

outside the scope of the permanent injunction, that should be discussed in relation to Oracle’s

18

motion for an order to show cause, not some preemptive strike styled motion. However, it does

19

not agree with Oracle that Rimini’s conduct is completely baseless. At the time Rimini filed its

20

motion to enforce, it appeared, based on Oracle’s expert’s post-injunction report, that Oracle

21

intended to bring contempt proceedings relating to issues currently being adjudicated in Rimini

22

II—specifically related to cloud hosting and Rimini’s AFW Tools software. Given that Oracle has

23

made multiple representations to the Court that it would not attempt to expand the scope of the

24

injunction to issues not yet adjudicated unlawful, and this Court’s specific ruling that the injunction

25

was narrowly tailored to only enjoin acts that have already been adjudicated unlawful, Rimini’s

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concern was, to some extent, founded.

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Both sides appear to have behaved improperly, but the Court finds that sanctions are not

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appropriate under Rule 11, section 1927, or the Court’s inherent authority. The Court does not find
33

1

that anything in the record supports a finding that Rimini acted in bad faith by filing its motion.

2

Nor does the Court find that Rimini’s motion was vexatious or unreasonable given Oracle’s

3

conduct, or that it was for an improper purpose, such as to harass, cause unnecessary delay, or

4

needlessly increase the cost of litigation. The Court has been previously impressed with the way

5

the parties have been able to work together professionally throughout this case’s eleven-year

6

history, even with highly contentious matters. The Court is greatly concerned that these two

7

motions indicate a breakdown in amicable proceedings and strongly cautions the parties against

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reaching a point that zealous advocacy overshadows professional conduct.

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F. The Court adopts and accepts Magistrate Judge Ferenbach’s Report and
Recommendation and overrules Oracle’s objections. Accordingly, Oracle’s motion
for Rule 37(e) sanctions is denied.

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Before the Court is Oracle’s motion for Rule 37(e) sanctions. ECF Nos. 1359; 1363-s.

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Rimini opposed (ECF Nos. 1372; 1374-s), and Oracle replied (ECF Nos. 1376; 1379-s). This

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pending motion was referred to Magistrate Judge Cam Ferenbach under 28 U.S.C. § 636(b)(1)(B)

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and Local Rule IB 1-4, who issued a Report and Recommendation that this Court deny Oracle’s

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motion. ECF No. 1431. Accordingly, Oracle objected (ECF Nos. 1434; 1436-s), and Rimini replied

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(ECF Nos. 1438; 1440-s).

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The Court conducted a de novo review of the matter and has fully considered the pleadings

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and memoranda of the parties, including Oracle’s objection to the Report and Recommendation

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and Rimini’s response, and other relevant matters of record under 28 U.S.C. § 636(b)(1)(B) and

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Local Rule IB 3-2. Accordingly, the Court accepts and adopts Judge Ferenbach’s Report and

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Recommendation, overrules Oracle’s objections, and accordingly, denies Oracle’s motion for Rule

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37(e) sanctions.

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IV.

CONCLUSIONS

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IT IS THEREFORE ORDERED that the parties’ motions to seal (ECF Nos. 1325, 1334,

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1367, 1384, 1388, 1391, 1394, 1404, 1408, 1413, 1417, 1427, 1435, 1439) are GRANTED nunc

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pro tunc.

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IT IS FURTHER ORDERED that Rimini’s motion to enforce the Court’s orders and
judgment separating Oracle I from Rimini II (ECF Nos. 1323) is DENIED.
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1
2

IT IS FURTHER ORDERED that Rimini’s motion to exclude the declarations and
opinions of Oracle’s expert, Ms. Frederiksen-Cross, (ECF Nos. 1390, 1392-s) is DENIED.

3

IT IS FURTHER ORDERED that Oracle’s motion for an order to show cause why Rimini

4

should not be held in contempt (ECF Nos. 1365, 1368-s) is GRANTED in part and DENIED in

5

part. In accordance with this Order, Rimini is ORDERED to SHOW CAUSE why it should not

6

be held in contempt for violating the permanent injunction, no later than Monday, May 10, 2021.

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Oracle shall file any response within 30 days of Rimini’s filing; Rimini shall file any reply within

8

10 days of Oracle’s response. Rimini’s show cause brief and Oracle’s response shall not exceed

9

30 pages and Rimini’s reply shall not exceed 15 pages, excluding non-substantive portions of the

10

filing, including tables of contents, tables of authorities, and signature pages. Exhibits are not to

11

exceed 100 pages. No extensions will be granted for either party unless extenuating circumstances

12

are shown.

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IT IS FURTHER ORDERED that a hearing on the above discussed issues will be held in

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a courtroom to be designated at the Bruce R. Thompson Courthouse in Reno, Nevada, commencing

15

on September 20, 2021, at 9:00 a.m. Each side will have 1 hour for opening and closing statements,

16

and presentation of evidence/witness testimony shall not exceed 3 days per side. Participating

17

counsel must appear in-person, but it is left to the parties’ discretion to have any of its witnesses

18

appear by ZOOM video conferencing. The parties are directed to contact Courtroom Deputy Katie

19

Sutherland, at [e-mail], for ZOOM connectivity instructions. In

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accordance with this Order, the parties should not re-argue conduct the Court has found, by clear

21

and convincing evidence, violates the permanent injunction, and the Court cautions the parties to

22

strictly stay within the bounds articulated above for its argument and evidence presentation;

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violations will not be tolerated.

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IT IS FURTHER ORDERED that the parties are to submit a proposed joint pre-hearing

25

order no later than Friday, August 20, 2021, which should include: a brief statement of the issues

26

to be tried; a list of admitted facts and contested facts to be tried; stipulated exhibits; any exhibits

27

objected to and why; depositions to be offered and/or objections; and witnesses to be called. No

28

motions in limine will be heard without leave of the Court.
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1
2
3
4

IT IS FURTHER ORDERED that Rimini’s motion for a jury trial (ECF Nos. 1387, 1389-s)
is DENIED.
IT IS FURTHER ORDERED that Oracle’s motion for Rule 11 sanctions (ECF No. 1348)
is DENIED.

5

IT IS FURTHER ORDERED that Judge Ferenbach’s Report and Recommendation (ECF

6

No. 1431) is ADOPTED and ACCEPTED. Oracle’s objections to the Report and

7

Recommendation (ECF Nos. 1434; 1436-s) are OVERRULED. Accordingly, Oracle’s motion for

8

Rule 37(e) sanctions (ECF Nos. 1359; 1363-s) is DENIED.

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10

IT IS SO ORDERED.
DATED this 31st day of March, 2021.

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12

LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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