PLAINTIFF ORACLE AMERICA, INC.’S CORRECTED OPPOSITION TO COVER 

OREGON’S MOTION FOR JUDGMENT ON THE PLEADINGS

Brenna K. Legaard, OSB #001658

Email: blegaard@schwabe.com

Jeffrey S. Eden, OSB #851903

Email: jeden@schwabe.com

SCHWABE, WILLIAMSON & WYATT, P.C.

1211 SW 5th Avenue, Suite 1900

Portland, OR 97204

Telephone: 503-222-9981

Facsimile: 503-796-2900

Karen G. Johnson-McKewan, admitted pro hac vice 

Email: kjohnson-mckewan@orrick.com

Robert S. Shwarts, admitted pro hac vice 

Email: rshwarts@orrick.com

Erin M. Connell, admitted pro hac vice 

Email: econnell@orrick.com

ORRICK, HERRINGTON & SUTCLIFFE LLP 

The Orrick Building

405 Howard Street

San Francisco, CA 94105-2625

Telephone: 415-773-5700

Facsimile: 415-773-5759 

Dorian E. Daley, admitted pro hac vice

Email: dorian.daley@oracle.com 

Deborah K. Miller, admitted pro hac vice

Email: deborah.miller@oracle.com 

Peggy E. Bruggman, admitted pro hac vice

Email: Peggy.bruggman@oracle.com 

ORACLE CORPORATION 

LEGAL DEPARTMENT

500 Redwood Shores, CA 94065

Telephone: 650-506-9534

Facsimile: 650-506-7114

Attorneys for Oracle America, Inc.

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 1 of 43
PLAINTIFF ORACLE AMERICA, INC.’S CORRECTED OPPOSITION TO COVER 

OREGON’S MOTION FOR JUDGMENT ON THE PLEADINGS

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

PORTLAND DIVISION

ORACLE AMERICA, INC., a Delaware 

Corporation,

 Plaintiff,

 v.

THE OREGON HEALTH INSURANCE 

EXCHANGE CORPORATION, dba 

COVER OREGON, an Oregon public 

corporation; THE STATE OF OREGON, 

BY AND THROUGH THE OREGON 

HEALTH AUTHORITY AND THE 

OREGON DEPARTMENT OF HUMAN 

SERVICES, AND DOES 1-25, INCLUSIVE

Defendants.

Case No. 3:14-cv-01279-BR

PLAINTIFF ORACLE AMERICA, INC.’S 

CORRECTED OPPOSITION TO COVER 

OREGON’S MOTION FOR JUDGMENT 

ON THE PLEADINGS 

FED. R. CIV. P. 12(c)

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 2 of 43
TABLE OF CONTENTS

Page

Page i PLAINTIFF ORACLE AMERICA, INC.’S CORRECTED OPPOSITION TO COVER 

OREGON’S MOTION FOR JUDGMENT ON THE PLEADINGS

I. INTRODUCTION ................................................................................................................1

II. RELEVANT FACTUAL BACKGROUND.........................................................................3

A. Oracle’s Contracts With The State And Cover Oregon............................................3

B. Oracle And Cover Oregon’s Relationship Turns Litigious ......................................4

C. Senate Bill 1, Whose Primary Object Was To Frustrate Oracle’s Lawsuit, 

Passes With Extreme Speed......................................................................................5

III. LEGAL STANDARD...........................................................................................................6

IV. ARGUMENT........................................................................................................................7

A. In Light Of Senate Bill 1, Substitution, Not Dismissal, Is Appropriate. ..................7

B. Cover Oregon Does Not Have Standing To Invoke Eleventh Amendment 

Immunity On Behalf Of The State............................................................................8

C. The State Has Waived Its Eleventh Amendment Immunity With Respect To 

Oracle’s Copyright Claim Against Cover Oregon..................................................12

1. The State Contractually Waived Its Eleventh Amendment Immunity 

With Respect To Oracle’s Copyright Claim Against Cover Oregon..........12

2. The State Has Waived Any Eleventh Amendment Immunity By Its 

Conduct Related To This Case. ..................................................................17

3. If And When The State Assumes The Cover Oregon OLSA, The 

State Will Contractually Waive Its Eleventh Amendment Immunity 

With Respect To Oracle’s Copyright Claim Against Cover Oregon..........20

D. To The Extent Senate Bill 1 Purports To Transfer Cover Oregon’s 

Liabilities In This Litigation To DCBS While Also Asserting Eleventh 

Amendment Immunity With Respect To Those Liabilities, Senate Bill 1 Is 

Unconstitutional......................................................................................................22

1. Senate Bill 1 Is Unconstitutional Under The Impairment of 

Contracts Clauses Of The United States And Oregon Constitutions..........22

2. Senate Bill 1 Is Unconstitutional Under The Due Process Clause. ............29

3. Senate Bill 1 Is Unconstitutional Under The Takings Clause. ...................31

V. CONCLUSION...................................................................................................................33

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TABLE OF AUTHORITIES

Page(s)

Cases

Alliance of Descendants of Texas Land Grants v. United States,

37 F.3d 1478 (Fed. Cir. 1994)..............................................................................................30, 32

Allied Structural Steel Co. v. Spannaus,

438 U.S. 234 (1978).......................................................................................................23, 24, 27

Amerind Risk Mgmt. Corp. v. Malaterre,

633 F.3d 680 (8th Cir. 2011) .....................................................................................................29

Angle v. Chicago, St. P., M. & O. Ry. Co.,

151 U.S. 1 (1894).......................................................................................................................30

Ashker v. California Dep’t of Corrections

112 F.3d 392 (9th Cir. 1997) ...........................................................................................9, 10, 11

Asociacion de Empleados del Area Canalera (ASEDAC) v. Panama Canal 

Comm’n,

453 F.3d 1309 (11th Cir. 2006) .................................................................................................29

AT&T Communications-East, Inc. v. BNSF Ry. Co.,

Civil No.: 06-866-HA, 2006 U.S. Dist. LEXIS 85781 (D. Or. Nov. 27, 2006) 

(Haggerty, J.) .............................................................................................................................15

Bagdasarian Prods., LLC v. Twentieth Century Fox Film Corporation,

Case No.: 2:10-cv-02991-JHN-JCHx, 2010 U.S. Dist. LEXIS 135857 (C.D. 

Cal. 2010).............................................................................................................................13, 14

Bank of Hemet v. United States,

643 F.2d 661 (9th Cir. 1981) .....................................................................................................20

Bd. of Trs. Sabis Int’l Sch. v. Montgomery,

205 F.Supp.2d 835 (S.D. Ohio 2002) ........................................................................................19

Beers v. State,

61 U.S. 527 (1858)...............................................................................................................27, 28

Board of Regents v. Roth,

408 U.S. 564 (1972).............................................................................................................29, 30

Brewster v. Board of Educ. of Lynwood Unified School Dist.,

149 F.3d 971 (9th Cir. 1998) .....................................................................................................30

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Buffalo Teachers Fed’n v. Tobe,

464 F.3d 364 (2nd Cir. 2006).....................................................................................................24

Coll. Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd.,

527 U.S. 666 (1999)...................................................................................................................28

Colony Cove Props., LLC v. City of Carson,

640 F.3d 948 (9th Cir. 2011) .....................................................................................................31

Demery v. Kupperman,

735 F.2d 1139 (9th Cir. 1984) .............................................................................................10, 11

Duckworth v. Mull,

55 S.E. 850 (N.C. 1906).............................................................................................................30

Durning v. Citibank, N.A.

950 F.2d 1419 (9th Cir. 1991) ...................................................................................................16

Eckles v. State,

306 Or. 380 (1988).....................................................................................................................22

Ellen Rosenblum, the Attorney General for the State of Oregon, et al. v. Oracle 

America, Inc., et al.,

Case No. 14-C-20043 (Aug. 22, 2014)..................................................................................4, 15

Ellen Rosenblum, et al. v. Oracle America, Inc., et al.,

Marion County Circuit Court Case No. 14C20043 ............................................................passim

Embury v. King,

361 F.3d 562 (9th Cir. 2004) .....................................................................................................18

Energy Reserves Group, Inc. v. Kan. Power & Light Co.,

459 U.S. 400 (1983).............................................................................................................22, 24

Fleet Tire Service of North Little Rock v. Oliver Rubber Co.,

118 F.3d 619 (8th Cir. 1997) .....................................................................................................13

Ford Motor Co. v. Dep’t of Treasury,

323 U.S. 459 (1945), overruled on other grounds by Lapides v. Bd. of Regents 

of Univ. of Ga., 535 U.S. 613 (2002)...................................................................................10, 11

Foss v. National Marine Fisheries Serv.,

161 F.3d 584 (9th Cir. 1998) .....................................................................................................29

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc.,

528 U.S. 167 (2000)...................................................................................................................12

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Page iv PLAINTIFF ORACLE AMERICA, INC.’S CORRECTED OPPOSITION TO 

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General Motors Corp. v. Romein,

503 U.S. 181 (1992)...................................................................................................................23

Graham Tech. Solutions, Inc. v. Thinking Pictures, Inc.,

949 F. Supp. 1427 (N.D. Cal 1997)...........................................................................................13

Hal Roach Studios, Inc. v. Richard Feiner & Co.,

896 F.2d 1542 (9th Cir. 1989) .....................................................................................................7

Harris v. County of Orange,

682 F.3d 1126 (9th Cir. 2012) .....................................................................................................7

Johnson v. Rancho Santiago Cmty. College Dist.,

623 F.3d 1011 (9th Cir. 2010) ...................................................................................................18

Kelo v. New London,

545 U.S. 469 (2005)...................................................................................................................31

Kroll v. Bd. of Trustees of Univ. of Ill.,

934 F.2d 904 (7th Cir. 1991) ...............................................................................................12, 29

Ku v. Tennessee,

322 F.3d 431 (6th Cir. 2003) .....................................................................................................18

Lake Country Estates, Inc. v. Tahoe Regional Planning Agency,

440 U.S. 391 (1978)...................................................................................................................16

Lane v. First National Bank of Boston,

871 F.2d 166 (1st Cir. 1989)......................................................................................................32

Lapides v. Bd. of Regents,

535 U.S. 613 (2002)............................................................................................................passim

In re Lazar,

237 F.3d 967 (9th Cir. 2001) .....................................................................................................16

Leer v. Murphy,

844 F.2d 628 (9th Cir. 1988) .....................................................................................................10

Lingle v. Chevron U.S.A., Inc.,

544 U.S. 528 (2005)...................................................................................................................31

Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S. 419 (1982)...................................................................................................................32

Maysonet-Robles v. Cabrero,

323 F.3d 43 (1st Cir. 2003)............................................................................................12, 28, 29

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 6 of 43
Page v PLAINTIFF ORACLE AMERICA, INC.’S CORRECTED OPPOSITION TO 

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Maysonet-Robles v. Cabrero,

Case No. 97-1036 (D. Puerto Rico), Dkt. No. 69 at 4 ...............................................................12

Meyers v. Texas,

410 F.3d 236 (5th Cir. 2005) .....................................................................................................18

Mills v. United States,

742 F.3d 400 (9th Cir. 2014) .......................................................................................................9

Moro v. State of Oregon,

357 Ore. 167, 2015 Ore. LEXIS 277, *40 (2015)..........................................................22, 24, 26

New Hampshire v. Ramsey,

366 F.3d 1 (1st Cir. 2004)..........................................................................................................18

Ossen v. Dep't of Soc. Servs. (In re Charter Oak Assocs.),

361 F.3d 760 (2d Cir. 2004).......................................................................................................18

Owens v. Kaiser Found. Health Plan, Inc.,

244 F.3d 708 (9th Cir. 2001) .......................................................................................................7

Penn Central Transp. Co. v. New York City,

438 U.S. 104 (1978)...................................................................................................................32

Pennhurst State Sch. & Hop. v. Halderman,

465 U.S. 89 (1984).................................................................................................................9, 10

Practice Mgmt. Info. v. Am. Medical Ass’n,

121 F.3d 516 (9th Cir. 1997) .....................................................................................................32

Rhyne v. K-Mart Corp.,

594 S.E.2d 1 (N.C. 2004)...........................................................................................................30

Roth v. Pritikin,

710 F.2d 934 (2d Cir. 1983).................................................................................................30, 32

Ruckelshaus v. Monsanto,

467 U.S. 986 (1984).......................................................................................................31, 32, 33

RUI One Corp. v. City of Berkeley,

371 F.3d 1137 (9th Cir. 2004) ...................................................................................................23

Sanitation & Recycling Indus., Inc. v. City of New York,

107 F.3d 985 (2nd Cir. 1997).........................................................................................23, 24, 26

Seagal v. Vorderwuhlbecke,

162 Fed. App’x 746 (9th Cir. 2006) ..........................................................................................13

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 7 of 43
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Singleton v. Wulff,

428 U.S. 106 (1976).....................................................................................................................9

Skelton v. Henry,

390 F.3d 614 (8th Cir. 2004) .....................................................................................................18

Surprenant v. Mass. Turnpike Auth.,

768 F.Supp.2d 312 (D. Mass. 2011)....................................................................................12, 29

Swierkiewicz v. Sorema N.A.,

534 U.S. 506 (2002).....................................................................................................................7

Thompson v. Univ. of S.C.,

Civil Action No.: 3:04-219-CMC-BM, 2006 U.S. Dist. LEXIS 67652 (D.S.C. 

Sept. 5, 2006).............................................................................................................................19

Tutor-Saliba Corp. v. City of Hailey,

452 F.3d 1055 (9th Cir. 2006) ...................................................................................................29

Union Elec. Co. v. Missouri Dep’t. of Conservation,

366 F.3d 655 (8th Cir. 2004) .....................................................................................................18

United States Trust Co. v. New Jersey,

431 U.S. 1 (1977).................................................................................................................24, 26

United States v. Stonehill,

83 F.3d 1156 (9th Cir. 1996) .....................................................................................................30

United States v. Windsor,

133 S. Ct. 2675 (2013).................................................................................................................9

Univ. of Haw. Prof’l Assembly v. Cayetano,

183 F.3d 1096 ............................................................................................................................23

Warth v. Seldin,

422 U.S. 490 (1975).....................................................................................................................9

Statutes

17 U.S.C. § 101, et seq.....................................................................................................................30

28 U.S.C. § 1338(a) .......................................................................................................................3, 4

Other Authorities

Cover Oregon, ASSOCIATED PRESS (Sept. 5, 2014), 

http://www.washingtontimes.com/news/2014/sep/5/oregon-governorrecommends-dissolving-cover-oregon/?page=all......................................................................25

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Rule 201 of the Federal Rules of Evidence .......................................................................................7

Rule 12(c) of the Federal Rules of Civil Procedure.......................................................................6, 7

Rule 12(d) of the Federal Rules of Civil Procedure ..........................................................................7

Rule 25(c) of the Federal Rules of Civil Procedure.......................................................................2, 8

Rule 56 of the Federal Rules of Civil Procedure ...............................................................................7

Oregon Senate Bill 99 (2011) ............................................................................................................3

Oregon Senate Bill 1 (2015) .....................................................................................................passim

OREGON LEGISLATIVE ASSEMBLY, FISCAL IMPACT REPORT OF SENATE BILL 1, 78th .....................25

Article 1, Section 21 of the Oregon Constitution ............................................................................22

Fifth Amendment to the United States Constitution........................................................2, 30, 31, 32

Eleventh Amendment to the United States Constitution ..........................................................passim

Fourteenth Amendment to the United States Constitution ....................................................2, 29, 31

Article 1, Section 10 of the United States Constitution...................................................................22

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 9 of 43
Page 1 PLAINTIFF ORACLE AMERICA, INC.’S CORRECTED OPPOSITION TO 

COVER OREGON’S MOTION FOR JUDGMENT ON THE PLEADINGS

Plaintiff Oracle America, Inc. (“Oracle”) hereby submits its corrected opposition to Cover 

Oregon’s Motion for Judgment on the Pleadings. This corrected opposition replaces and 

supersedes ECF No. 125 filed in this matter.

I. INTRODUCTION

The State’s plan to deprive Oracle of its intellectual property has now come to a head. Last 

fall, Oracle sued the State of Oregon and Cover Oregon, an Oregon public corporation, for 

copyright infringement, among other claims. The State immediately responded that it is immune 

under the Eleventh Amendment from suit in federal court and, because federal court is the 

exclusive forum for copyright claims, the State cannot be held to account for its infringement of 

Oracle’s copyrights. The State currently has a motion for summary judgment to that effect 

pending.

If the State’s argument succeeds, that means only Cover Oregon—a public corporation and 

not an arm of the state for immunity purposes—would be exposed to Oracle’s copyright claims. 

But the State, acting through its Legislature, has also attempted to eliminate Cover Oregon’s 

liability. On March 6, 2015, the State passed Senate Bill 1, which purports to: (1) dissolve Cover 

Oregon; (2) transfer Cover Oregon’s rights, obligations, and liabilities to a state agency, the 

Department of Consumer and Business Services (“DCBS”); and (3) substitute DCBS in for Cover 

Oregon in pending litigation. For good measure, Senate Bill 1 explicitly purports to preserve 

DCBS’s immunity from suit in federal court, despite clear language in the contract between Cover 

Oregon and Oracle providing for jurisdiction in federal courts for any disputes arising from or 

relating to that contract. By passing Senate Bill 1, the Legislature sought to nullify Cover 

Oregon’s agreement to federal court jurisdiction in order to insulate Cover Oregon and DCBS 

from Oracle’s copyright claim. 

Now that the Legislature has passed Senate Bill 1, Cover Oregon brings its motion for 

judgment on the pleadings. In it, Cover Oregon argues that DCBS, not Cover Oregon, is now the 

real party in interest with respect to Oracle’s claims against Cover Oregon. And, because DCBS 

is entitled to Eleventh Amendment immunity, Cover Oregon asks this Court to dismiss all claims 

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 10 of 43
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pending against Cover Oregon. If both the State’s and Cover Oregon’s arguments about Eleventh 

Amendment immunity succeed, Oracle will have no forum in which to pursue its copyright claim. 

Cover Oregon’s (and the State’s) litigation position is indefensible. First, it is procedurally 

improper. To the extent Senate Bill 1 operates to transfer Cover Oregon’s liabilities to DCBS, the 

proper procedure would be to substitute DCBS into this case, not to dismiss Oracle’s claims 

outright.1

 Indeed that is precisely the procedure the State is attempting to follow in the Ellen 

Rosenblum, et al. v. Oracle America, Inc., et al., Marion County Circuit Court Case No. 

14C20043 (“State Action”). As it stands now, however, Cover Oregon is raising an Eleventh 

Amendment immunity defense for an entity that is not a party to this lawsuit, an argument Cover 

Oregon has no standing to make. Should the Court wish to consider arguments about DCBS’s 

Eleventh Amendment immunity, the Court should grant a motion to substitute DCBS on or after 

June 30, 2015, and allow DCBS to raise those arguments itself. 

Second, even assuming that Cover Oregon has standing to bring this motion for the State, 

the State has already waived its Eleventh Amendment immunity for this litigation, both by signing 

contracts consenting to federal jurisdiction, and by its conduct during its relationship with Oracle 

and this litigation. Third, the portion of Senate Bill 1 that purports to reclaim Eleventh 

Amendment immunity while unilaterally transferring contracts that contain express waivers of that 

immunity is unconstitutional under at least the Impairment of Contracts Clauses of the United 

States and Oregon Constitutions, the Due Process Clause of the Fourteenth Amendment of the 

United States Constitution, and the Takings Clause of the Fifth Amendment of the United States 

Constitution. 

For each of these reasons, the Court should deny Cover Oregon’s motion in its entirety.

 1 Concurrent with this motion, Oracle has filed a Motion to Substitute the State of Oregon, by and 

through the Department of Consumer and Business Services for Cover Oregon, pursuant to Rule 

25(c) of the Federal Rules of Civil Procedure. 

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 11 of 43
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II. RELEVANT FACTUAL BACKGROUND 

A. ORACLE’S CONTRACTS WITH THE STATE AND COVER OREGON

Beginning in 2011, the State of Oregon contracted with Oracle and several others to build 

and develop the technology infrastructure for two projects: (1) modernization of Oregon’s delivery 

of health and human services to low-income Oregonians (the “Modernization” project); and (2) 

creation of an online health insurance exchange (“HIX”) for Oregon. Dkt. No. 77 (2nd Am. 

Complt.) ¶¶ 14-18, 36-55. As this Court is aware, the State signed two primary contracts related 

to Oracle’s provision of services to the State—a License and Services Agreement with Oracle 

reseller Mythics, Inc. (the “Mythics Agreement”) and a License and Services Agreement with 

Oracle (the “State OLSA”). Id. ¶¶ 36-45. In both the Mythics Agreement and the State OLSA, 

the State contractually agreed to “submit to the . . . jurisdiction” of the United States District Court 

for the District of Oregon “in any dispute arising out of or relating to [the] agreement.” Id. ¶¶ 10-

13. 

In June 2011, Oregon Senate Bill 99 created a separate entity—the Oregon Health 

Insurance Exchange Corporation (“Cover Oregon”)—which eventually assumed full ownership of 

the HIX project. Id. ¶ 18. Cover Oregon and Oracle entered into a separate Oracle License and 

Services Agreement governing their relationship (the “Cover Oregon OLSA”). Id. ¶¶ 46-55. Like 

the Mythics Agreement and the State OLSA, the Cover Oregon OLSA provides that the parties

will submit to the jurisdiction of federal courts for disputes arising out of or relating to the Cover 

Oregon OLSA:

This agreement is governed by the substantive and procedural laws 

of Oregon and you and Oracle agree to submit to the exclusive 

jurisdiction of, and venue in, if in state Courts, in the Circuit Court 

of the State of Oregon for Marion County or, if in federal courts, the 

United States District Court for the District of Oregon, in any 

dispute arising out of or relating to this agreement. 

Dkt. No. 77, Ex. B at § O.1. Even though Cover Oregon is not entitled to Eleventh Amendment 

immunity, out of an abundance of caution, Oracle specifically included this provision in the Cover 

Oregon OLSA to ensure that Oracle could protect its intellectual property rights in the federal 

courts. Under 28 U.S.C. § 1338(a), the United States District Courts have exclusive jurisdiction 

Case 3:14-cv-01279-BR Document 127 Filed 05/06/15 Page 12 of 43
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over all claims for patent and copyright infringement. Because Oracle can only assert these 

intellectual property claims in the federal courts, Oracle ensured that its contractual relationship 

with Cover Oregon allowed Oracle access to those courts, regardless of any arguments Cover 

Oregon may have raised later about sovereign immunity. Dkt. No. 77 ¶ 12-13. Oracle would not 

have entered into its agreements with Cover Oregon without the express understanding that it 

could pursue any claims arising from or relating to the Cover Oregon OLSA in federal court. Id.

B. ORACLE AND COVER OREGON’S RELATIONSHIP TURNS LITIGIOUS

According to the Patient Protection and Affordable Care Act (“ACA”), Oregon’s HIX was 

supposed to launch by October 1, 2013. Dkt. No. 77 ¶¶ 27-31. Under Cover Oregon’s 

supervision, it did not. Id. However, with substantial support from Oracle, Cover Oregon was 

able to launch critical parts of the technology supporting the HIX in late 2013. Id. In the first year 

of enrollment, Cover Oregon enrolled more than 430,000 Oregonians in health insurance or 

Medicaid thanks to Oracle’s work. Id. ¶ 28. By late February 2014, Oracle had created a 

functional health insurance exchange web portal which would permit consumers to shop for and 

purchase insurance online. Id. ¶ 29. The State and Cover Oregon, however, refused to launch that 

web portal. Id.

Cover Oregon also refused to pay for services Oracle had provided, thus failing to satisfy a 

condition precedent to receiving a license to Oracle’s copyrighted software code. Id. ¶¶ 77-98. It 

infringed Oracle’s copyrights by using Oracle’s software without a license, transferring Oracle’s 

source code to others, and authorizing others to prepare derivative works based on Oracle’s 

software. Id. ¶¶ 69-76. Accordingly, on August 8, 2014, Oracle filed this lawsuit, and amended 

its Complaint in September and January. See Dkt. Nos. 1, 18, 33, 77. Oracle’s Complaint now 

asserts, among other claims, claims for breach of contract and copyright infringement against 

Cover Oregon, as well as a claim for copyright infringement against the State. See Dkt. No. 77. 

Shortly after Oracle brought its suit, the State and Cover Oregon filed a related lawsuit in state 

court against Oracle and several of its executives. Request for Judicial Notice, Ex A, Ellen 

Rosenblum, the Attorney General for the State of Oregon, et al. v. Oracle America, Inc., et al., 

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Case No. 14-C-20043 (Aug. 22, 2014). In that lawsuit, the State and Cover Oregon allege, among 

other things, breach of the Mythics Agreement, the State OLSA, and the Cover Oregon OLSA. Id.

¶¶ 293-339. 

C. SENATE BILL 1, WHOSE PRIMARY OBJECT WAS TO FRUSTRATE ORACLE’S 

LAWSUIT, PASSES WITH EXTREME SPEED

On March 6, 2015, the State passed Senate Bill 1, which—among other things—dissolves 

Cover Oregon. Request for Judicial Notice, Ex. F, Abolishment of Oregon Health Insurance 

Exchange Corporation, S. BILL 1, ch. 003, 78th Sess. (2015) (“Senate Bill 1”). According to that 

legislation, the “rights, obligations and liabilities” of Cover Oregon are transferred to the 

Department of Consumer and Business Services (“DCBS”). Id. § 6(2). Also according to that 

legislation, “the State of Oregon, by and through [DCBS], is substituted for [Cover Oregon]” in 

“any action, proceeding or prosecution involving or with respect to” certain transferred powers, 

rights, obligations, and liabilities. Id. § 5. 

Senate Bill 1 also includes provisions aimed at destroying Oracle’s right to protect its 

intellectual property rights against Cover Oregon’s infringement. Indeed, on January 9, 2015, 

Patrick Allen, the Director of DCBS, testified before the Joint Committee that he and Oregon’s 

Office of Legislative Counsel were receiving advice from the Oregon Department of Justice about 

how to implement the proposed Legislation to make it more advantageous for ongoing litigation. 

Request for Judicial Notice, Ex. G, [Timestamp: 1:18:54; pg. 65; transcript of Joint Committee 

Meeting on Jan. 9, 2015]. This admission is particularly telling because on January 2, 2015 

(shortly after a hearing in this case at which Oracle and the State presented oral argument on the 

issue of whether the State could assert Eleventh Amendment immunity as a defense to Oracle’s 

copyright infringement claim), a new draft of Senate Bill 1 emerged. This draft includes a 

provision that purports to allow for the transfer of rights, obligations, and liabilities to DCBS 

“subject to the limitations, defenses and immunities of the department that arise under ORS 

30.260 to 30.300, the Eleventh Amendment to the United States Constitution and other state and 

federal laws.” Request for Judicial Notice, Ex. F, Senate Bill 1 § 6(3). Accordingly, the State 

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now argues that while Cover Oregon and Oracle contractually agreed in the Cover Oregon OLSA 

to submit to the jurisdiction of federal courts, Senate Bill 1 eliminates that provision of the 

agreement. The effect of this argument, if successful, would be that Oracle will be stripped of any 

means of protecting its copyrights from infringement, even though it expressly bargained for a 

federal forum with both the State and Cover Oregon.

Confirming that the goal of Senate Bill 1 was to quickly gain an unfair litigation 

advantage, the Oregon legislature processed and passed Senate Bill 1 with unprecedented speed. 

As drafted, the Bill declares an “emergency” and states that it “takes effect on its passage.” 

Request for Judicial Notice, Ex. F, Senate Bill 1, § 61. As Senator Brian Boquist (Co-Vice 

Chairman of the Joint Committee) stated at a January 9, 2015, public hearing, “I think we’ve all 

seen that this is frankly a revolutionary process in the legislature. We’re moving faster than I’ve 

ever seen this happen before.” Request for Judicial Notice, Ex. G, [Timestamp: 1:18:54; pg. 65; 

transcript of Joint Committee Meeting on Jan. 9, 2015]. Senator Boquist further remarked that it 

was unconventional that the Legislature had not asked anyone from Oracle to testify regarding 

Senate Bill 1: “If I had my druthers, someone from Oracle would be here testifying under oath.” 

Id. [Timestamp: 15:20]. Allen confirmed in his testimony that the litigation impacted the timing 

of the Bill, stating that “an early implementation date is more advantageous from a litigation 

stand point.” Id. [Timestamp: 24:55-25:36] (emphasis added). Indeed, once Senate Bill 1 passed, 

the State acted quickly in both the state and federal litigations to take advantage of its terms by 

filing the present motion on April 14, 2015, and in the State Action, a Motion to Substitute DCBS 

for Cover Oregon on April 1, 2015. Request for Judicial Notice, Ex. B. The timing of these 

events, the speed at which Senate Bill 1 passed, and the admissions by Allen and the members of 

the Oregon legislature quoted above confirm that the driving force of Senate Bill 1 was not to 

serve a public purpose, but instead to gain an unfair litigation advantage against Oracle.

III. LEGAL STANDARD

According to Rule 12(c) of the Federal Rules of Civil Procedure, “[a]fter the pleadings are 

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closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” 

“A judgment on the pleadings is properly granted when, taking all the allegations in the pleadings 

as true, the moving party is entitled to judgment as a matter of law.” Owens v. Kaiser Found. 

Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001) (internal quotation marks and citation 

omitted). A court should grant a motion for judgment on the pleadings “only if it is clear that no 

relief could be granted under any set of facts that could be proved consistent with the allegations.” 

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002). A motion for judgment on the pleadings 

may not be based on evidence or allegations outside of the pleadings, Hal Roach Studios, Inc. v. 

Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989), unless that evidence is susceptible to 

judicial notice under Federal Rule of Evidence 201. See Harris v. County of Orange, 682 F.3d 

1126, 1131-32 (9th Cir. 2012). If, on a motion under 12(c), “matters outside the pleadings [and 

not judicially noticeable] are presented to and not excluded by the court, the motion must be 

treated as one for summary judgment under Rule 56,” not Rule 12(c). Fed. R. Civ. P. 12(d).2

IV. ARGUMENT

A. IN LIGHT OF SENATE BILL 1, SUBSTITUTION, NOT DISMISSAL, IS APPROPRIATE.

Cover Oregon’s Motion for Judgment on the Pleadings requests that the Court dismiss 

Oracle’s claims against Cover Oregon because “Senate Bill 1 transferred all of Cover Oregon’s 

liabilities” to DCBS. Mot. at 1. According to Cover Oregon:

[T]he transfer on March 6 of Cover Oregon’s liabilities to DCBS 

means the State of Oregon, and not Cover Oregon, is responsible 

for any judgment entered in this case on the claims currently 

asserted against Cover Oregon. This transfer of liability makes the 

State the real, substantial party in interest to Oracle’s claims against 

Cover Oregon.

Mot. at 1. In light of this argument, Cover Oregon’s request for judgment on the pleadings is 

improper. If Cover Oregon is correct that Senate Bill 1 transferred Cover Oregon’s liabilities to 

 2 Cover Oregon specifically observes in its moving papers that it “does not intend to convert this 

Rule 12(c) motion into a Rule 56 Motion.” Mot. at n.1. For this reason, Oracle’s argument relies 

on the facts alleged in the pleadings in this matter and on judicially noticeable facts. However, 

even should this Court convert Cover Oregon’s motion to a Rule 56 Motion, that motion should be 

denied for the reasons set forth herein.

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DCBS, then the proper procedure at this time would be a motion for substitution under Rule 25(c) 

of the Federal Rules of Civil Procedure, which provides:

If an interest is transferred, the action may be continued by or 

against the original party unless the court, on motion, orders the 

transferee to be substituted in the action or joined with the original 

party.

Fed. R. Civ. P. 25(c). 

Indeed, substitution is the procedure that the State is attempting to follow in the State 

Action, where Cover Oregon has filed claims against Oracle arising out of or relating to the Cover 

Oregon OLSA. Request for Judicial Notice, Ex. B. On April 1, 2015, the State filed a motion in 

the State Action to substitute DCBS for Cover Oregon. Id. In that motion, the State argued that 

“Senate Bill 1 substituted DCBS for Cover Oregon in all pending litigation, effective March 6,” 

and that “[b]y operation of this law, DCBS is substituted in place of Cover Oregon in this action.” 

Id. at 2. The State emphasized that “[t]his provision was effective immediately on passage.” Id.

at 6 (referring to Senate Bill 1, § 5). 

Cover Oregon takes an inconsistent position in its Motion for Judgment on the Pleadings in 

this Court. Here, Cover Oregon argues only that Senate Bill 1 “allows . . . for the substitution of 

DCBS for Cover Oregon in all pending litigation.” Mot. at 3 (citing Senate Bill 1, § 5). Cover 

Oregon then seeks to avoid such a substitution by asking this Court simply to dismiss all claims 

pending against it. The State and Cover Oregon should not be permitted to take these inconsistent 

positions; if Cover Oregon’s liabilities have been transferred to DCBS, then this Court should 

substitute DCBS into this case, and then let DCBS pursue its interests as it chooses. 

B. COVER OREGON DOES NOT HAVE STANDING TO INVOKE ELEVENTH 

AMENDMENT IMMUNITY ON BEHALF OF THE STATE.

Cover Oregon has attempted to skip the step of substituting DCBS into this case, and 

instead argues that, because DCBS is entitled to invoke sovereign immunity, the claims against 

Cover Oregon should be dismissed. Mot. at 1, 10-11. Cover Oregon does not have standing to 

raise this argument. There is no dispute that Cover Oregon is not entitled to invoke Eleventh 

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Amendment immunity on its own behalf. See Request for Judicial Notice, Ex. B. State’s Mot. for 

Substitution at 11 (admitting that Cover Oregon “is not entitled to Eleventh Amendment 

immunity.”). And there is no legal support for Cover Oregon’s argument that it may do so on 

behalf of the State.

The fundamental prerequisite for standing is that the claimant must have “a personal stake 

in the outcome of the controversy . . . .” Warth v. Seldin, 422 U.S. 490, 498-99 (1975). A party 

“generally must assert his own legal rights and interests, and cannot rest his claim to relief on the 

legal rights or interests of third parties.” Id. at 499. There are at least two reasons for the principle 

that federal courts “must hesitate before resolving a controversy, even one within their 

constitutional power to resolve, on the basis of the rights of third persons not parties to the 

litigation.” Singleton v. Wulff, 428 U.S. 106, 113 (1976) (plurality). “First... it may be that in fact 

the holders of those rights either do not wish to assert them, or will be able to enjoy them 

regardless of whether the in-court litigant is successful or not. Second, third parties themselves 

usually will be the best proponents of their own rights.” Id. at 113-114 (citation omitted). 

Standing rules ensure the “concrete adverseness which sharpens the presentation of issues upon 

which . . . court[s] so largely depend[] for illumination of difficult constitutional questions.” 

United States v. Windsor, 133 S. Ct. 2675, 2686-87 (2013) (internal quotation marks and citations 

omitted); see also Mills v. United States, 742 F.3d 400, 406-407 (9th Cir. 2014). 

Based on these principles, a defendant asserting Eleventh Amendment immunity must 

have standing to do so. See Ashker v. California Dep’t of Corrections 112 F.3d 392, 394 (9th Cir. 

1997) (addressing whether defendants had standing to raise Eleventh Amendment immunity). 

According to the case law, there are two general situations in which a defendant has standing to 

assert Eleventh Amendment immunity. First, of course, a State or one of its agencies or 

departments may raise the State’s Eleventh Amendment immunity when “the State or one of its 

agencies or departments is named as the defendant.” Pennhurst State Sch. & Hop. v. Halderman, 

465 U.S. 89, 100 (1984). Second, when state officials are the named defendants in a lawsuit, a 

state “is entitled to invoke its sovereign immunity from suit even though individual officials are 

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nominal defendants” if “the action is in essence one for the recovery from the state, [and] the state 

is the real, substantial party in interest.” Ford Motor Co. v. Dep’t of Treasury, 323 U.S. 459, 464 

(1945), overruled on other grounds by Lapides v. Bd. of Regents of Univ. of Ga., 535 U.S. 613, 

623 (2002). Cover Oregon is neither an agency of the state nor a state official. These cases, 

therefore, do not stand for the principle that Cover Oregon may assert the State’s Eleventh 

Amendment immunity.

Cover Oregon argues that it may raise the State’s Eleventh Amendment immunity at this 

time because the State has become the “real, substantial party in interest” by operation of Senate 

Bill 1. Mot. at 4. This argument would expand the language in Ford Motor Co. far beyond any 

fair reading of that case. As Ford Motor Co. holds, and as several subsequent cases have 

confirmed, a state may invoke its sovereign immunity when state officials are nominal defendants, 

if the “action is in essence one for the recovery of money from the state,” and the state is thus the 

“real, substantial party in interest.” Ford Motor Co., 323 U.S. at 464; see also Pennhurst State 

School & Hosp, 465 U.S. at 101; Ashker, 112 F.3d at 394; Leer v. Murphy, 844 F.2d 628, 631 (9th 

Cir. 1988); Demery v. Kupperman, 735 F.2d 1139, 1145-46 (9th Cir. 1984). The current case is 

distinguishable from the reasoning in Ford Motor Co. for two reasons. First, though the State is a 

defendant in its own right in this case, it has not (and does not now) purport to appear for Cover 

Oregon to invoke its sovereign immunity. Second, Oracle has not asserted any claims against 

Cover Oregon that treat Cover Oregon as a proxy for the State. 

With respect to the second distinction, the “real, substantial party in interest” test attempts 

to evaluate the true nature of the relief the plaintiff seeks. See Demery, 735 F.2d at 1148 (“[T]he 

eleventh amendment bars suits that seek to impose a liability that, because of the nature of the 

claim asserted, ‘must be paid from public funds in the state treasury.’”) (emphasis in original, 

internal citations omitted). For example, where a plaintiff sues a state official as a nominal 

defendant, while truly seeking payment from a state treasury, the plaintiff’s claim is “in essence 

one for recovery from the state.” See Ford Motor Co., 323 U.S. at 464. Put another way, the state 

is the “real, substantial party in interest” in a suit against a state official because the suit is, for all 

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intents and purposes, a suit against the state. When a plaintiff sues a nominal state official, in fact 

seeking money from a state, it is both fair and expected that a state can then appear to assert its 

Eleventh Amendment immunity. That is not the case here. Oracle did not sue a “nominal” 

defendant in order to seek money from the State coffers. To the contrary, Oracle sued Cover 

Oregon, an independent public corporation with its own funds. And Cover Oregon remains the 

defendant in this case. While the State has attempted, by legislation, to change the nature of 

Oracle’s claims,3 the State has not appeared in this litigation to defend against Oracle’s claims 

against Cover Oregon, and none of the State’s officials have been named as nominal defendants to 

those claims. Thus, the State’s argument is, at best, that if substitution were to occur per Senate 

Bill 1, the case would become one against the State. This is not the analysis described in Ford 

Motor Co., and it is not the analysis required by general standing principles. For these reasons, 

Cover Oregon does not have standing to raise the State’s Eleventh Amendment immunity. 

Notably, courts regularly reject other attempts to expand the “real, substantial party in 

interest” test beyond its ordinary limits. For example, in Asker, 112 F.3d at 395, a plaintiff sued 

two state officials in their personal capacities. The state officials argued that, even though they 

had been sued in their personal capacities, California was the “real party in interest” because 

California had passed a statute requiring it to indemnify state officials sued in their personal 

capacities. Id. The Ninth Circuit rejected this argument, reasoning that “a state should not be able 

to extend ‘sovereign immunity to state officials merely by enacting a law assuming those officials’ 

debts.’” Id. (quoting Demery v. Kupperman, 735 F.2d 1139 (9th Cir. 1984)). Similar reasoning 

applies here. The State cannot legislatively expand who has standing to raise an Eleventh 

Amendment immunity defense. If the State seeks to raise that defense, the State must do so itself. 

 3 Senate Bill 1 purports to appropriate the money in Cover Oregon’s accounts and “the 

unexpended balances of amounts authorized to be expended by” Cover Oregon. Request for 

Judicial Notice, Ex. F, Senate Bill 1 § 4. Senate Bill 1 also purports to transfer to DCBS Cover 

Oregon’s liabilities. Id. § 6. This is, of course, a circumstance of the State’s own making. The 

State’s attempt to shift non-sovereign funds into its own coffers for the purpose of insulating that 

money from existing claims should not impact whether the non-sovereign entity can raise a 

defense of Eleventh Amendment immunity on the State’s behalf.

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Until DCBS substitutes into this litigation in Cover Oregon’s place, no party has standing to raise 

an Eleventh Amendment defense to Oracle’s claims against Cover Oregon.

Cover Oregon cites three cases in which courts have validated an Eleventh Amendment 

immunity defense where a state entity succeeded to litigation initially filed against a non-state 

entity. See Mot. at 6-10 (citing Maysonet-Robles v. Cabrero, 323 F.3d 43 (1st Cir. 2003); 

Surprenant v. Mass. Turnpike Auth., 768 F.Supp.2d 312 (D. Mass. 2011); Kroll v. Bd. of Trustees 

of Univ. of Ill., 934 F.2d 904 (7th Cir. 1991). Not one of those cases followed the procedure 

Cover Oregon requests here. To the contrary, in each of those cases, the state entity appeared in 

the case to assert Eleventh Amendment immunity on its own behalf. See Surprenant, 768 

F.Supp.2d at 314; Kroll, 934 F.2d at 906; Request for Judicial Notice, Ex. E (Maysonet-Robles v. 

Cabrero, Case No. 97-1036 (D. Puerto Rico), Dkt. No. 69 at 4). As in those cases, if the State 

wants to assert its Eleventh Amendment immunity with respect to Oracle’s claims against Cover 

Oregon, it should do so for itself.

The Court’s analysis should end here. Because Cover Oregon lacks standing to raise 

DCBS’s claimed Eleventh Amendment immunity, this Court lacks jurisdiction to consider that 

argument, and thus cannot grant Cover Oregon’s motion for judgment on the pleadings based 

thereon. See, e.g., Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 185 

(2000) (treating the Constitution’s Article III standing requirements as mandatory jurisdictional 

hurdles). However, should the Court decide to address Cover Oregon’s arguments regarding 

DCBS’s Eleventh Amendment immunity, those arguments also fail.

C. THE STATE HAS WAIVED ITS ELEVENTH AMENDMENT IMMUNITY WITH RESPECT 

TO ORACLE’S COPYRIGHT CLAIM AGAINST COVER OREGON.

1. The State Contractually Waived Its Eleventh Amendment Immunity 

With Respect To Oracle’s Copyright Claim Against Cover Oregon.

Even were it appropriate for the Court to consider the merits of Cover Oregon’s arguments 

about the State’s Eleventh Amendment immunity, they lack merit. First, even if Senate Bill 1 did 

validly transfer Cover Oregon’s liabilities to DCBS without waiving the State’s Eleventh 

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Amendment immunity (which Oracle disputes), the State already waived its Eleventh Amendment 

immunity with respect to Oracle’s copyright claim against Cover Oregon when it entered into the 

Mythics Agreement and the State OLSA. As explained in Oracle’s Second Amended Complaint 

(as well as in Oracle’s Opposition to the State’s Motion for Summary Judgment re Sovereign 

Immunity, Dkt. No. 101, and Oracle’s Cross-Motion for Summary Judgment re Sovereign 

Immunity, Dkt. No. 104), the State contractually agreed to waive its Eleventh Amendment 

immunity “in any dispute arising out of or relating to” either the Mythics Agreement or the State 

OLSA. Dkt. No. 77 ¶¶ 10-13. Because Oracle’s copyright claim against Cover Oregon “relates 

to” both the Mythics Agreement and the State OLSA, the State has waived its Eleventh 

Amendment immunity as to that claim. For this reason, Oracle’s copyright claim against Cover 

Oregon (or DCBS) should not be dismissed. 

a. Oracle’s Copyright Claim Against Cover Oregon “Relate[s] To” 

The Mythics Agreement And The OHA OLSA.

There can be no question, for the purposes of this motion for judgment on the pleadings, 

that Oracle’s copyright claim against Cover Oregon “relates to” the Mythics Agreement and the 

State OLSA. Courts give broad scope to contractual language regarding disputes that “relate to” a 

contract. See, e.g., Seagal v. Vorderwuhlbecke, 162 Fed. App’x 746, 748 (9th Cir. 2006) (forum 

selection clause applicable to disputes “arising out of or in connection with” contract embraces 

disputes that “directly depend on adjudication of the underlying contract claims” or “bear a 

significant relationship to the contractual dispute”); Fleet Tire Service of North Little Rock v. 

Oliver Rubber Co., 118 F.3d 619, 620-21 (8th Cir. 1997) (the language “arising out of or relating 

to” “constitutes the broadest language the parties could reasonably use”). Moreover, courts in the 

Ninth Circuit have found copyright claims to be within the scope of contractual forum selection 

clauses that were narrower than the one at issue here. See, e.g., Graham Tech. Solutions, Inc. v. 

Thinking Pictures, Inc., 949 F. Supp. 1427, 1433-34 (N.D. Cal 1997); Bagdasarian Prods., LLC v. 

Twentieth Century Fox Film Corporation, Case No.: 2:10-cv-02991-JHN-JCHx, 2010 U.S. Dist. 

LEXIS 135857 (C.D. Cal. 2010).

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Oracle’s Second Amended Complaint makes clear that its copyright claim against Cover 

Oregon relates to the Mythics Agreement and the State OLSA. The Second Amended Complaint 

plainly alleges that Cover Oregon has infringed Oracle’s rights in the “Copyright Assets,” which, 

by definition, include software code that Oracle developed under the Mythics Agreement, the 

State OLSA, and the Cover Oregon OLSA. Dkt. No. 77 ¶¶ 56, 69-76. Oracle alleges that Cover 

Oregon has done so by: (1) “infringing Oracle’s exclusive rights to reproduce and publicly display 

the work,” Dkt. No. 77 ¶ 72; (2) “transferring Oracle’s Copyright Assets to the control of the State 

of Oregon for further development,” id. ¶ 73; and (3) “unlawfully authoriz[ing] others to prepare 

derivative works based on the Copyright Assets.”

Oracle’s Second Amended Complaint further explains that, under the Mythics Agreement, 

Oracle did “initial work developing software code to support Medicaid benefit eligibility 

determinations.” Id. ¶ 39. Then, “during Oracle’s work for Cover Oregon, it continued to write 

code that included functionality supporting Medicaid benefit eligibility determinations.” Id. ¶ 54. 

“Oracle’s work on Medicaid benefit eligibility determinations (among other things) built upon 

work that Oracle began under the Mythics Agreement, and continued under the [State] OLSA.” 

Id. Indeed, the Second Amended Complaint alleges that “[t]he Copyright Assets, including code 

supporting Medicaid eligibility determinations, were developed as a result of services rendered 

under each of the Mythics Agreement, the [State] OLSA, and the Cover Oregon OLSA, and all 

claims asserted herein arise out of or relate to these agreements.” Id. ¶ 58. At the very least, 

analysis of the scope of the Mythics Agreement and the State OLSA and the software code that 

Oracle delivered under those agreements will be important to evaluate the scope of Oracle’s 

copyright claim here, which alleges that Cover Oregon is using copyrighted code for which neither 

Cover Oregon nor the State has paid. See Id. ¶¶ 71, 74. Thus, Oracle’s copyright claim against 

Cover Oregon (or DCBS) “relates to” the Mythics Agreement and the State OLSA, by which the 

State explicitly agreed to submit to federal court jurisdiction for related disputes.

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b. The State’s Waiver Applies To DCBS.

The State’s waiver “by and through” OHA and DHS is sufficient to bind the State 

generally to the consent to federal jurisdiction, even if a different state agency (DCBS) is now 

involved. Indeed, Cover Oregon repeatedly admits that in light of Senate Bill 1, “the State, by and 

through DCBS, is the real, substantial party in interest” with respect to Oracle’s claims against 

Cover Oregon. Mot. at 4, 10 (emphasis added). Accordingly, if DCBS were to assume Cover 

Oregon’s liabilities pursuant to Senate Bill 1, the State’s waiver would apply to Oracle’s claims 

against DCBS. 

As pled in the Second Amended Complaint, it was the State, not merely the State’s 

agencies, that waived Eleventh Amendment immunity with respect to disputes arising out of or 

relating to the Mythics Agreement and the State OLSA. Dkt. No. 77 ¶¶ 10-13. Indeed, the State 

OLSA, attached as Exhibit A to the Second Amended Complaint, confirms that “the State of 

Oregon acting by and through [DHS] on behalf of itself and [OHA]” is the contracting party—not 

merely the state agencies. Dkt. No. 77-1 at 1 (emphasis added). There is no question that when a 

state acts “by and through” a state agency, it is the state that acts, not merely the state agency. 

See, e.g., AT&T Communications-East, Inc. v. BNSF Ry. Co., Civil No.: 06-866-HA, 2006 U.S. 

Dist. LEXIS 85781 at *11 (D. Or. Nov. 27, 2006) (Haggerty, J.) (holding that a suit against the 

“State of Oregon, by and through the Oregon Department of Transportation” was a suit against the 

State itself); see generally Dkt. No. 92 (State’s Motion for Summary Judgment) at 15 (conceding 

that the State was a party to the State OLSA). Thus, the State has waived its Eleventh 

Amendment immunity for disputes related to the Mythics Agreement and the State OLSA.

Even if the Court concludes that the parties to the Mythics Agreement and the State OLSA 

are OHA and DHS (as opposed to the State itself), both Supreme Court and Ninth Circuit case law 

confirm that a waiver of an agency’s Eleventh Amendment immunity is only effective if the 

agency itself is an “arm of the State,” and therefore the waiver applies to the state itself, and not 

simply to the agency. Eleventh Amendment immunity belongs to the states, not to their agencies, 

and only extends to agencies if the agency is deemed to be an “arm of the state.” See, e.g., 

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Durning v. Citibank, N.A. 950 F.2d 1419, 1427 (9th Cir. 1991). As explained in Lake Country 

Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391, 400-401 (1978):

By its terms, the protection afforded by [the Eleventh] Amendment 

is only available to ‘one of the United States.’ It is true, of course, 

that some agencies exercising state power have been permitted to 

invoke the Amendment in order to protect the state treasury from 

liability that would have had essentially the same practical 

consequences as a judgment against the State itself. But the Court 

has consistently refused to construe the Amendment to afford 

protection to political subdivisions such as counties and 

municipalities, even though such entities exercise a ‘slice of state 

power.’

Furthermore, a waiver of a state’s sovereign immunity with regard to one state agency acts 

as a waiver for all state agencies, within the scope of the waiver. For example, in In re Lazar, 237 

F.3d 967, 976-79 (9th Cir. 2001), the Ninth Circuit found that the California State Water 

Resources Control Board, an agency of the State of California, had waived sovereign immunity 

because of the actions of the California State Board of Equalization, another California State 

agency. The Court reasoned simply that “when a state or an ‘arm of the state’ files a proof of 

claim in a bankruptcy proceeding, the state waives its Eleventh Amendment immunity with regard 

to the bankruptcy estate’s claims that arise from the same transaction or occurrence as the state’s 

claim.” Id. at 978. Thus, an “arm of the state” may waive Eleventh Amendment immunity on 

behalf of the state, and that waiver may be applied to another “arm of the state.”

Here, because the State itself waived its Eleventh Amendment immunity in the Mythics 

Agreement and the State OLSA, that waiver extends to DCBS as an “arm of the State” for 

purposes of defending against Oracle’s claims. But even if the waiver contained in the Mythics 

Agreement and the State OLSA was on behalf of OHA and DHS only, it nevertheless extends to 

DCBS because in order for these agencies to be entitled to Eleventh Amendment immunity in the 

first place, they must be “arms of the state,” and therefore act on behalf of the State itself. The 

Court should therefore deny Cover Oregon’s motion for judgment on the pleadings. 

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2. The State Has Waived Any Eleventh Amendment Immunity By Its 

Conduct Related To This Case.

The State has also waived its Eleventh Amendment immunity with respect to Oracle’s 

copyright claim against Cover Oregon (or DCBS) by virtue of its conduct related to this litigation. 

Related to this case, the State has: (1) signed two contracts related to Oracle’s provision of 

services to the State agreeing to federal court jurisdiction for disputes relating to those contracts; 

(2) created a public corporation, Cover Oregon, that also contractually agreed to federal court 

jurisdiction for disputes relating to that contract; (3) sued, along with Cover Oregon, for breach of 

all three of those contracts; (4) passed legislation purporting to dissolve Cover Oregon and assume 

its contracts; and (5) acted with the express purpose of influencing this litigation. Given these 

facts, principles of fairness and consistency mandate a finding of waiver.

In Lapides v. Bd. of Regents, 535 U.S. 613, 620 (2002), the Supreme Court held that a state 

waived its Eleventh Amendment immunity when, as a defendant in state-court proceedings, it 

voluntarily agreed to remove the case to federal court. In so holding, the Supreme Court 

emphasized the importance of fairness and consistency to its evaluation of whether a state has 

waived Eleventh Amendment immunity by its conduct. The Supreme Court explained:

It would seem anomalous or inconsistent for a State both (1) to 

invoke federal jurisdiction, thereby contending that the ‘Judicial 

power of the United States’ extends to the case at hand, and (2) to 

claim Eleventh Amendment immunity, thereby denying that the 

“Judicial power of the United States” extends to the case at hand. 

And a Constitution that permitted States to follow their litigation 

interests by freely asserting both claims in the same case could 

generate seriously unfair results. 

Lapides, 535 U.S. at 619 (emphasis added). The Supreme Court explained further that the 

doctrine of waiver by conduct depends more on fairness than on a state’s actual intention:

[A]n interpretation of the Eleventh Amendment that finds waiver in 

the litigation context rests upon the Amendment’s presumed 

recognition of the judicial need to avoid inconsistency, anomaly, 

and unfairness, and not upon a State’s actual preference or desire, 

which might, after all, favor selective use of ‘immunity’ to achieve 

litigation advantages. 

Id. at 620 (internal citations omitted); see also id. at 623 (“In large part the rule governing 

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voluntary invocations of federal jurisdiction has rested upon the problems of inconsistency and 

unfairness that a contrary rule of law would create. And that determination reflects a belief that 

neither those who wrote the Eleventh Amendment nor the States themselves . . . would intend to 

create that unfairness.”) (internal citations omitted). The Supreme Court emphasized that a state 

may not selectively apply its Eleventh Amendment immunity “to achieve litigation advantages.” 

Id. at 620.

Since the Supreme Court decided Lapides, other courts have extended its principles of 

fairness and consistency beyond the removal context. See Johnson v. Rancho Santiago Cmty. 

College Dist., 623 F.3d 1011, 1022 (9th Cir. 2010) (finding that state waived immunity defense 

where it “engaged in extensive proceedings in the district court without seeking dismissal on 

sovereign immunity grounds” and appeared to have “made a tactical decision to delay asserting 

the sovereign immunity defense”); Embury v. King, 361 F.3d 562, 563 (9th Cir. 2004) (applying 

the Lapides reasoning beyond the facts of Lapides); Meyers v. Texas, 410 F.3d 236, 248 (5th Cir. 

2005) (same); Skelton v. Henry, 390 F.3d 614, 618 (8th Cir. 2004) (explaining that “[w]aiver in 

litigation prevents states from selectively invoking immunity to achieve litigation advantages” and 

the court therefore should focus on the state’s “action in litigation ... [rather than] on the intention 

of the state to waive immunity”); Union Elec. Co. v. Missouri Dep’t. of Conservation, 366 F.3d 

655, 659 (8th Cir. 2004) (explaining that the “general rule regarding waiver” is that “when a State 

voluntarily invokes federal jurisdiction...[it] cannot escape the result of its own voluntary act by 

invoking the prohibitions of the Eleventh Amendment”); New Hampshire v. Ramsey, 366 F.3d 1, 

16-17 (1st Cir. 2004) (describing the Supreme Court's “core concern” in Lapides as being that “a 

state cannot selectively invoke its Eleventh Amendment immunity to gain litigation advantage”); 

Ossen v. Dep't of Soc. Servs. (In re Charter Oak Assocs.), 361 F.3d 760, 769 (2d Cir. 2004) 

(explaining, in a bankruptcy case, that the “waiver-by-litigation doctrine” is driven by “fairness 

and consistency concerns” that override a “State’s actual preference or desire”); Ku v. Tennessee, 

322 F.3d 431, 435 (6th Cir. 2003) (applying “inconsistency and unfairness” rationale to find that 

“appearing without objection and defending on the merits in a case over which the district court 

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otherwise has original jurisdiction is a form of voluntary invocation of the federal court’s 

jurisdiction that is sufficient to waive a State’s defense of Eleventh Amendment immunity”); 

Thompson v. Univ. of S.C., Civil Action No.: 3:04-219-CMC-BM, 2006 U.S. Dist. LEXIS 67652, 

*8-9 (D.S.C. Sept. 5, 2006) (“[I]t appears that Lapides might be extended to other circumstances 

involving strategic invocation of Eleventh Amendment immunity. . . .”). 

For example, in Bd. of Trs. Sabis Int’l Sch. v. Montgomery, 205 F.Supp.2d 835, 846 (S.D. 

Ohio 2002), the court found that a state waived its Eleventh Amendment immunity by conduct 

when it inserted a binding arbitration clause into a contract. The Court reasoned:

Similar to the act of removal, which is litigation conduct, the 

insertion of the binding arbitration clause into the contract 

constitutes pre-litigation conduct, or action undertaken in 

anticipation of future disputes that might result in litigation. As the 

Supreme Court stated with respect to certain litigation conduct, an 

interpretation of the Eleventh Amendment that would allow the 

State to engage in the pre-litigation act of drafting a binding 

arbitration clause into a contract without waiving sovereign 

immunity would rest upon the State’s mere ‘preference or desire.’ 

Such an interpretation of the Eleventh Amendment would allow the 

State selectively to hide behind the cloak of sovereign immunity 

when doing so would serve its litigation objectives. In other words, 

an interpretation of the Eleventh Amendment that allows the State 

selectively to waive sovereign immunity encourages forum 

shopping by the State, and fails to produce consistent and fair 

results, which is precisely the opposite of what the Supreme Court 

mandated in Lapides.

Id. at 846. 

These principles drive a similar conclusion here. In this case, the State entered into two 

contracts consenting to federal court jurisdiction, and enacted legislation purporting to assume a

third such contract. In so doing, the State voluntarily invoked federal jurisdiction with respect to 

this case. Lapides, 535 U.S. at 623. That the legislation by which the State will assume the Cover 

Oregon OLSA also purports to reassert Eleventh Amendment immunity is irrelevant; that 

language is a strategic invocation of Eleventh Amendment immunity, made purely for litigation 

purposes, and, as such, should be ignored. Id. at 620. In a case such as this, the State’s “actual 

preference or desire” is unimportant, because, as a result of the State’s actions, application of 

Eleventh Amendment immunity in this case would create an unfair result. Id at 623.; see also 

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Bank of Hemet v. United States, 643 F.2d 661, 665 (9th Cir. 1981) (finding waiver of sovereign 

immunity to “permit the [plaintiff] to have its day in court” and to “restrain[] any tendency on the 

part of the government to manipulate its position subsequent to the filing of the complaint so as to 

present a situation that falls between the cracks of applicable waiver statutes”). 

Here, as explained above, the State did not need to dissolve Cover Oregon and abandon its 

functioning online health insurance exchange. Once the State had made the decision to abandon 

Cover Oregon and the technology Oracle developed, the State did not need to dissolve Cover 

Oregon at a time when the State was still relying heavily on Oracle’s technology. The State did 

not need to assume Cover Oregon’s contracts with Oracle at all. The State chose to assume those 

contracts at this time in consultation with its attorneys and as a pure litigation tactic—it wanted to 

deprive Oracle of its claims against Cover Oregon while securing for itself the ability to press 

Cover Oregon’s case against Oracle. In the interest of fairness, and according to Lapides, the 

Court should not permit the State to take for itself the benefits of the Cover Oregon OLSA (as well 

as all of the money in Cover Oregon’s accounts, see Senate Bill 1, § 4), while at the same time 

rejecting responsibility for Cover Oregon’s liability under Oracle’s copyright claim. 

3. If And When The State Assumes The Cover Oregon OLSA, The State 

Will Contractually Waive Its Eleventh Amendment Immunity With 

Respect To Oracle’s Copyright Claim Against Cover Oregon. 

The State and Cover Oregon, on the one hand, and Oracle, on the other, disagree as to if 

and when the State will assume Cover Oregon’s contracts. According to the State and Cover 

Oregon, those contracts have already transferred to the State by operation of Senate Bill 1. See, 

e.g., Request for Judicial Notice, Ex. D, State Reply Mot. for Substitution at 7-9. According to 

Oracle, those contracts will not transfer until June 30, 2015, the second effective date set forth in 

Senate Bill 1, and they will only transfer if the State and Cover Oregon comply with the 

conditions for assignment set forth in those contracts. See Request for Judicial Notice, Ex. C, 

State Conditional Opp. to Mot. for Substitution at 11-17. Notwithstanding the parties’ 

disagreement as to the timing and conditions of any transfer, if and when the State does assume 

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the Cover Oregon OLSA, it will have contractually waived its Eleventh Amendment immunity 

with respect to Oracle’s copyright claim against Cover Oregon by assuming the provision of that 

contract that explicitly agrees to submit to federal jurisdiction (Section O.1). See Dkt. No. 77, Ex. 

B at § O.1. 

The State has argued that the State’s assumption of Section O.1 does not constitute a 

waiver of Eleventh Amendment immunity with respect to the State, because it did not constitute a 

waiver of Eleventh Amendment immunity with respect to Cover Oregon, which has no Eleventh 

Amendment immunity to waive. See Request for Judicial Notice, Ex. B, State Mot. for 

Substitution at 11. This argument fails. In Section O.1, the parties agree to “submit to the 

exclusive jurisdiction of, and venue in . . . the United States District Court for the District of 

Oregon, in any dispute arising out of or relating to this agreement.” Dkt. No. 77, Ex. B. Whether 

or not this language constituted a waiver of Eleventh Amendment immunity with respect to Cover 

Oregon, it surely constitutes a waiver of Eleventh Amendment immunity once the State becomes a 

party to the contract. See generally Dkt. No. 101 (Oracle’s Opp. to the State’s MSJ). 

Cover Oregon and the State will also likely argue that the State can assume the Cover 

Oregon OLSA without regard for Section O.1, because Section 6(3) of Senate Bill 1 purports to 

subject the rights, obligations, and liabilities transferred to DCBS “to the limitations, defenses and 

immunities of the department that arise under . . . the Eleventh Amendment to the United States 

Constitution . . . .” Request for Judicial Notice, Ex. F, Senate Bill 1. Cover Oregon cites to no 

authority supporting the notion that the Oregon Legislature has authority to materially re-write the 

parties’ contract in this manner. Cover Oregon also cites no authority for the proposition that 

DCBS may assume the benefits of the contract, but otherwise selectively choose which provisions 

are binding upon it. Moreover, as explained in detail in the next section, Cover Oregon’s 

interpretation of Senate Bill 1 must be rejected because to the extent Senate Bill 1 operates to 

transfer Cover Oregon’s contracts with Oracle to DCBS, while at the same time purporting to 

nullify a material term of those contracts, Senate Bill 1 violates Oracle’s constitutionally protected 

rights. 

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D. TO THE EXTENT SENATE BILL 1 PURPORTS TO TRANSFER COVER OREGON’S 

LIABILITIES IN THIS LITIGATION TO DCBS WHILE ALSO ASSERTING ELEVENTH 

AMENDMENT IMMUNITY WITH RESPECT TO THOSE LIABILITIES, SENATE BILL 1

IS UNCONSTITUTIONAL.

Senate Bill 1, as Cover Oregon seeks to apply it here, is unconstitutional. According to 

Cover Oregon, Senate Bill 1 transferred all of Cover Oregon’s liabilities to DCBS, but also 

provides that those liabilities, unlike before, must now be subject to the Eleventh Amendment. 

Mot. at 3-4. In essence, Cover Oregon is arguing that Senate Bill 1 operates to deprive Oracle of 

its copyright claim against Cover Oregon. If Cover Oregon’s reading of Senate Bill 1 is correct, 

that legislation, as applied to Oracle, is unconstitutional under: (1) the Impairment of Contracts 

Clause of Article 1, Section 10 of the United States Constitution and Article 1, Section 21 of the 

Oregon Constitution; (2) the Fourteenth Amendment’s Due Process Clause; and (3) the Fifth 

Amendment’s Takings Clause. 

1. Senate Bill 1 Is Unconstitutional Under The Impairment of Contracts 

Clauses Of The United States And Oregon Constitutions. 

Article 1, Section 10 of the United States Constitution provides that “[n]o State shall . . . 

pass any . . . Law impairing the Obligations of Contracts . . . .” Similarly, Article 1, Section 21 of 

the Oregon Constitution provides that “[n]o . . . law impairing the obligation of contracts shall ever 

be passed.” Article I, Section 21 of the Oregon Constitution is based on Article I, Section 10 of 

the United States Constitution. Eckles v. State, 306 Or. 380, 389 (1988). To determine whether a 

law impairs a party’s contractual rights under the federal Contract Clause, courts analyze: (1) 

whether the contractual impairment is substantial and, if so, (2) whether the law serves a legitimate 

public purpose and, if such purpose is demonstrated, (3) whether the means chosen to accomplish 

this purpose are reasonable and necessary. Energy Reserves Group, Inc. v. Kan. Power & Light 

Co., 459 U.S. 400, 411–13 (1983). Oregon courts interpret “the state Contract Clause as being 

consistent with the Unites States Supreme Court’s interpretation of the federal Contract Clause in 

1857.” Moro v. State of Oregon, 357 Ore. 167, 2015 Ore. LEXIS 277, *40 (2015). Whether the 

state Contract Clause protects parties from only “substantial” impairments, as opposed to 

protecting parties from all impairments, remains an open question. Id. at *105. It also remains an 

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open question whether Oregon courts recognize a “public purpose defense” to an impairment of a 

contract under whether the state Contract Clause. Id. at 110. 

a. Senate Bill 1 Substantially Impairs Oracle’s Contract Rights.

In determining whether a contractual impairment is substantial under the federal Contract 

Clause, courts examine “the extent to which reasonable expectations under the contract have been 

disrupted.” Sanitation & Recycling Indus., Inc. v. City of New York, 107 F.3d 985, 993 (2nd Cir. 

1997); see also Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 245 (1978) (“Contracts 

enable individuals to order their personal and business affairs according to their particular needs. . 

. . Once arranged, those rights and obligations are binding under the law, and the parties are 

entitled to rely on them.”) (emphasis added). The “substantial impairment” inquiry under the 

federal Contract Clause “itself has three components: ‘whether there is a contractual relationship, 

whether a change in law impairs that contractual relationship, and whether the impairment is 

substantial.’” RUI One Corp. v. City of Berkeley, 371 F.3d 1137, 1147 (9th Cir. 2004) (emphasis 

added) (quoting General Motors Corp. v. Romein, 503 U.S. 181, 186 (1992)). All three factors are 

present here.

First, the State has conceded that Cover Oregon and Oracle had a contractual relationship 

in the Cover Oregon OLSA. Request for Judicial Notice, Ex. B, State Motion for Substitution at 

8. As part of that contractual relationship, Cover Oregon and Oracle consented to suit in federal 

court for claims related to the Cover Oregon OLSA. That agreement was exceedingly important 

to Oracle, which can only protect its intellectual property rights in federal court. See supra at 

Section II.A. 

Second and third, Senate Bill 1 substantially impairs the contractual relationship between 

Oracle and Cover Oregon by purporting to assert Eleventh Amendment immunity with regard to 

the Cover Oregon OLSA, thus eliminating Oracle’s ability to enforce its intellectual property 

rights under that contract. The government impairs a contractual obligation when it attempts “to 

use the law, federal or state, to repudiate a contractual obligation.” Univ. of Haw. Prof’l Assembly 

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v. Cayetano, 183 F.3d 1096, 1104; see also Moro, 2015 Ore. LEXIS 277, *102-110. That is what 

happened here. Despite Oracle’s and Cover Oregon’s contract to resolve disputes related to that 

contract in federal court, the State, by legislation, is attempting to eliminate that contract 

provision, and thus to defeat Oracle’s copyright claim against Cover Oregon altogether. That 

claim, according to Oracle’s Second Amended Complaint, is worth at least $23 million dollars. 

See Dkt. No. 77 ¶ 98. By depriving Oracle of its ability to pursue its copyright claim in any court, 

the State has substantially impaired Oracle’s contractual rights.

b. The Legislature Cannot Show A Legitimate Public Purpose 

Behind Senate Bill 1, And Senate Bill 1 Is Not A Reasonable or 

Necessary Way To Accomplish The State’s Claimed Objectives. 

When a state law constitutes a substantial impairment of a contract, the federal Contract 

Clause allows the state to defend the impairment by showing a significant and legitimate public 

purpose behind the law. Energy Reserves Group, 459 U.S. at 411–12. A legitimate public 

purpose is one “aimed at remedying an important ‘general social or economic problem’ rather than 

‘providing a benefit to special interests.’” Sanitation & Recycling Indus., 107 F.3d at 993 (internal 

citations omitted); see also Spannaus, 438 U.S. at 247-49 (finding a statute unconstitutional 

because it was not “necessary to meet an important general social problem” and because it 

impacted the contracts of “an extremely narrow” group of entities). The purpose may not be 

simply the financial benefit of the sovereign. Buffalo Teachers Fed’n v. Tobe, 464 F.3d 364, 368 

(2nd Cir. 2006). Additionally, 

[C]omplete deference to a legislative assessment of reasonableness 

and necessity is not appropriate [where] the State’s self-interest is at 

stake. A governmental entity can always find a use for extra 

money, especially when taxes do not have to be raised. If a State 

could reduce its financial obligations whenever it wanted to spend 

the money for what it regarded as an important public purpose, the 

Contract Clause would provide no protection at all.

United States Trust Co. v. New Jersey, 431 U.S. 1, 26 (1977).

Here, the State cannot show a legitimate public purpose behind Senate Bill 1 because the 

dissolution of Cover Oregon is completely unnecessary. The Oregon HIX system works, and the 

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State has used and can continue to use it to enroll Oregonians in health insurance. Dkt. No. 77 ¶ 2. 

Indeed, fiscal impact statements demonstrate that the transfer of Cover Oregon’s functions to 

DCBS will not result in financial savings to Oregonians:

The operation of the exchange will result in a fiscal impact to the 

Department of Consumer and Business Services; however the 

revenues and expenditures included in the fiscal impact 

substantively mirror the revenues and expenditures of Cover 

Oregon.

Request for Judicial Notice, Ex. I (OREGON LEGISLATIVE ASSEMBLY, FISCAL IMPACT REPORT OF 

SENATE BILL 1, 78th Sess., at 1 (Feb. 12, 2015)).

Senate Bill 1 passed, not to improve the Oregon HIX, but to: (1) eliminate Oracle’s 

copyright claim against Cover Oregon; (2) save Governor Kitzhaber’s (pre-resignation) political 

reputation; and (3) minimize further public discussion about Cover Oregon, which had become a 

political embarrassment to State officials. As described above, the legislators drafting Senate Bill 

1 were in contact with, and taking advice from, the State’s litigation team. Likely because of 

advice from that team, those legislators specifically included provisions: (1) assigning Cover 

Oregon’s contracts despite non-assignment provisions; and (2) expressly re-asserting the State’s 

sovereign immunity.

In addition, as more and more news reports have shed light on former Governor 

Kitzhaber’s strategy regarding Cover Oregon, it has become increasingly clear that Cover Oregon 

was abolished, not to improve Oregon’s HIX in any way, but instead to preserve Kitzhaber’s 

political reputation. Dkt. No. 77 ¶¶ 31-33. The initial “failure” of the Oregon HIX was a major 

embarrassment for Kitzhaber and his campaign advisers, who were in the middle of a reelection 

campaign. See id. Faced with the prospect of losing an election over the Cover Oregon debacle, 

Kitzhaber and his campaign advisers decided on a political strategy of: (1) blaming Oracle for 

Cover Oregon’s failures; and (2) eliminating Cover Oregon to end public discussion regarding 

Cover Oregon’s failures. Indeed, it was Kitzhaber who initially called for the dissolution of Cover 

Oregon. Request for Judicial Notice, Ex. J, (Gosia Wozniacka, Governor, senator want to 

dissolve Cover Oregon, ASSOCIATED PRESS (Sept. 5, 2014), 

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http://www.washingtontimes.com/news/2014/sep/5/oregon-governor-recommends-dissolvingcover-oregon/?page=all).

Cover Oregon claims that the legitimate purpose behind Senate Bill 1 was to “allow the 

state to maintain and guarantee the continuation of Cover Oregon’s core functions by bringing 

these functions into DCBS and OHA.” Mot. at 2 (citing a statement from the floor debate 

regarding Senate Bill 1). This argument is baseless. First, the State’s claims about the legitimate 

purpose behind Senate Bill 1 are subject to scrutiny because of the State’s direct involvement in 

the Cover Oregon Agreements, both before and after the transfer purportedly effected by Senate 

Bill 1, and because the State is apparently paying for Cover Oregon’s legal defense. See United 

States Trust Co., 431 U.S. at 26. Second, Cover Oregon does not explain why the public purpose 

enumerated above could not be accomplished without dissolving Cover Oregon and destroying

Oracle’s ability to defend its intellectual property rights. See U.S. Trust Co., 431 U.S. at 22–23 (A 

law that impairs contracts may only do so by means that are reasonable and necessary to meet the 

stated legitimate public purpose.); Sanitation & Recycling Indus., 107 F.3d at 993 (“A law that 

works substantial impairment of contractual relations must be specifically tailored to meet the 

societal ill it is supposedly designed to ameliorate.”); see also Moro, 2015 Ore. LEXIS 277, *109-

110 (“[E]ven if respondents had identified specific public service deficiencies resulting from the 

current level of funding, they have not demonstrated that those deficiencies could not be remedied 

through funding from other sources.”).

To the contrary, even Oregon Senators questioned the means by which Senate Bill 1 

purported to carry out the State’s stated goals. See Request for Judicial Notice, Ex. G 

[Timestamp: 38:35; pg. 33; transcript of Joint Committee Meeting on Jan. 9, 2015] (“DCBS 

would probably be the next to last place I’d put [Cover Oregon].”); Request for Judicial Notice, 

Ex. H [Timestamp: 29:07-29:36; transcript of Oregon House Hearing on Senate Bill 1 on Feb. 27, 

2015] (urging members of the House of Representatives to “vote no until DCBS tells us exactly 

how they plan on executing this transfer”); Id. [Timestamp: 25:13-27:07] (“. . . I know there is a 

desire to put Cover Oregon behind us, especially in wake of everything that has . . . come out in 

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the media about Cover Oregon and the emails and etc. But I am still not convinced the state has 

the capability to manage this project. I am not convinced that DCBS has the capability to manage 

this project. . . . does the state have the capacity and ability to maintain and work through large 

scale, particularly tech projects, of this scale and nature. I do not think we do. . . . I do not think 

this bill solves it, I do not think we spent enough time with it.”). 

Finally, even if the Court finds that some portions of Senate Bill 1 had a legitimate public 

purpose, there is simply no legitimate public purpose behind Senate Bill 1, Section 6(3), which 

purports to assert Eleventh Amendment immunity over contracts that DCBS assumes from Cover 

Oregon, whether or not those contracts include agreements to suit in federal court. This portion of 

Senate Bill 1 does not accomplish any legitimate public purpose in a reasonable or necessary 

manner. Section 6(3) does not address “an important general social problem.” See Spannaus, 438 

U.S. at 247. To the contrary, it impacts only a very narrow scope of entities—businesses who 

entered into contracts with Cover Oregon. Id. Finally, the State could easily, and reasonably, 

have assumed the benefits of Cover Oregon’s contracts without also seeking to avoid the liabilities 

by asserting Eleventh Amendment immunity. Senate Bill 1, as the State seeks to apply it here, is 

not constitutional.

c. Beers And Its Progeny Do Not Render Senate Bill 1 

Constitutional.

Cover Oregon cites several cases for the proposition that the State, as Cover Oregon’s 

successor in this lawsuit, can invoke an Eleventh Amendment immunity defense that was not 

available to Cover Oregon. Mot. at 6-10. Cover Oregon is wrong in this case. None of the cases 

that Cover Oregon cites involved a state assuming (and purporting to negate) a contractual 

commitment to submit to federal jurisdiction. Beers v. State, 61 U.S. 527 (1858), is the case upon 

which all of the State’s other cases depend. In that case, the Supreme Court found that a state was 

entitled to enact a statute limiting the scope of a waiver of sovereign immunity contained in a prior 

statute, even while a claim against the state was pending. Id. It was important to the Supreme 

Court’s holding, however, that the second statute “violated no contract with the parties,” id. at 

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530, and that “the prior law was not a contract.” Id. at 529. Here, there obviously was a contract. 

Moreover, that contract: (1) contains a clear and unambiguous consent to federal court 

jurisdiction; (2) states it can only be modified in writing by both parties; and (3) involves two 

private parties (Oracle and Cover Oregon), not the State. Dkt. No. 77, Ex. B at § L . These 

distinctions are important because the reasoning in Beers is based on the idea that a state can 

decide how and when it can be sued, but only absent an express agreement to the contrary. Beers, 

61 U.S. at 529; see Coll. Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 527 

U.S. 666, 676 (1999) (“We have even held that a State may, absent any contractual commitment 

to the contrary, alter the conditions of its waiver and apply those changes to a pending suit.”). 

Accordingly, Beers does not support the State’s position in this case. 

Similarly, Maysonet-Robles v. Cabrero, 323 F.3d 43, 50 (1st Cir. 2003), which relied on 

Beers, did not involve: (1) a contractual consent to federal jurisdiction; or (2) the state’s

assumption of a private contract and purported legislative negation of elements of that contract. 

Furthermore, Maysonet-Robles itself recognized that its holding conflicts with the Lapides line of 

cases: “It is surely troubling that Puerto Rico’s actions here implicate the concerns of 

inconsistency and unfairness that are at the heart of the waiver-by-litigation-conduct doctrine.” Id.

at 53. The Maysonet-Robles court further bemoaned the result:

In reviewing what has occurred in this case and the conclusion we 

have perforce reached, we are constrained to say that the actions of 

the Puerto Rico executive agencies and legislature here have 

continued a distressing pattern of activity in seeking to avoid 

millions of dollars of established or potential liability—a pattern 

that this Court has twice labeled as ‘despicable’ in earlier cases.

Id. at 54 (internal citations omitted). The court concluded, however, that it would “leave it to the 

courts of the Commonwealth to correct any injustice.” Id. at 55. Here, of course, the state courts 

cannot correct the injustice, because the claimed effect of Senate Bill 1 is to eliminate Oracle’s 

claim for copyright infringement, which cannot be litigated in the state courts. Thus, this case is 

more similar to Lapides than to Maysonet-Robles, and warrants a similar outcome. 

The other cases Cover Oregon relies upon for its argument are similarly distinguishable. 

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Surprenant v. Mass Tpk. Auth., 768 F.Supp.2d 312 (D. Mass. 2011), a district court case in the 

First Circuit with facts “for all practical purposes identical” to those in Maysonet-Robles, id. at 

n.9, is non-binding and distinguishable for the same reasons that Maysonet-Robles is 

distinguishable. Kroll v. Board of Trustees of University of Illinois, 934 F.2d 904 (7th Cir. 1991), 

which briefly addresses this topic, also did not involve a prior contractual commitment to submit 

to federal court jurisdiction. Nor did Asociacion de Empleados del Area Canalera (ASEDAC) v. 

Panama Canal Comm’n, 453 F.3d 1309, 1313 (11th Cir. 2006), or Amerind Risk Mgmt. Corp. v. 

Malaterre, 633 F.3d 680, 686-87 (8th Cir. 2011), which are further distinguishable because they 

address federal governmental immunity and tribal immunity, not Eleventh Amendment immunity. 

Thus, the cases upon which Cover Oregon relies do not weigh against a finding that Senate Bill 1, 

as applied to Oracle in this case, violates the Impairment of Contracts Clauses of the United States 

and Oregon Constitutions. 

2. Senate Bill 1 Is Unconstitutional Under The Due Process Clause.

Senate Bill 1, as applied to Oracle in this case, also violates the Due Process Clause of the 

Fourteenth Amendment. That clause provides that no State shall “deprive any person of . . . 

property, without due process of law.” To establish a violation of substantive due process, a 

plaintiff must show only: (1) a constitutionally protectable property interest, and (2) the 

deprivation of that interest without due process of law. Board of Regents v. Roth, 408 U.S. 564 

(1972); see also Tutor-Saliba Corp. v. City of Hailey, 452 F.3d 1055, 1061 (9th Cir. 2006) 

(internal citations omitted). The facts of this case meet these requirements. Oracle’s pending 

claim for copyright infringement against Cover Oregon constitutes a constitutionally protectable 

property interest. And Senate Bill 1, as interpreted by Cover Oregon, retroactively, arbitrarily, and 

capriciously deprives Oracle of that property interest without due process of law. 

a. Oracle’s Copyright Claim Against Cover Oregon Is A 

Constitutionally Protectable Property Interest.

“The threshold question is whether [Oracle has] a constitutionally protectable property 

interest[.]” Foss v. National Marine Fisheries Serv., 161 F.3d 584, 588 (9th Cir. 1998). “In order 

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to possess a property interest in a benefit, an individual must have more than an abstract need or 

desire for it or a unilateral expectation of it. Rather, he must possess a legitimate claim of 

entitlement to it.” Brewster v. Board of Educ. of Lynwood Unified School Dist., 149 F.3d 971, 982 

(9th Cir. 1998) (internal quotations omitted). “Property interests . . . are not created by the 

Constitution. . . . [T]hey are created and their dimensions are defined by existing rules or 

understandings that stem from an independent source such as state law—rules or understandings 

that secure certain benefits and that support claims of entitlement to those benefits.” Bd. of 

Regents v. Roth, 408 U.S. 564, 577 (1972). 

Oracle’s pending claim for copyright infringement is one such property interest, created by 

federal law. See 17 U.S.C. § 101, et seq.; see also Roth v. Pritikin, 710 F.2d 934, 939 (2d Cir. 

1983) (“[A]n interest in a copyright is a property right protected by the due process and just 

compensation clauses of the Constitution). Oracle has the exclusive right to reproduce, distribute, 

and prepare derivative works of its copyrighted software, and Cover Oregon has infringed upon 

that right. See 17 U.S.C. § 106. Further, “lawsuits, as choses in action, are personal property . . . 

.” United States v. Stonehill, 83 F.3d 1156, 1159–60 (9th Cir. 1996); see also Rhyne v. K-Mart 

Corp., 594 S.E.2d 1, 12 (N.C. 2004) (“Without question, vested rights of action are property, just 

as tangible things are property.”); Duckworth v. Mull, 55 S.E. 850, 852 (N.C. 1906) (“A right to 

sue for an injury is a right of action; it is a thing in action, and is property.”); Angle v. Chicago, St. 

P., M. & O. Ry. Co., 151 U.S. 1, 19 (1894) (stating that a right of action to recover damages for an 

injury is property); Alliance of Descendants of Texas Land Grants v. United States, 37 F.3d 1478, 

1481 (Fed. Cir. 1994) (finding that “a legal cause of action is property within the meaning of the 

Fifth Amendment”) (internal citations omitted). Because Senate Bill 1 deprives Oracle of its right 

to sue Cover Oregon or a successor for Cover Oregon’s copyright infringement, Senate Bill 1 has 

deprived Oracle of a constitutionally protectable property interest.

b. The Passage of Senate Bill 1 Was Arbitrary And Unreasonable 

And Served No Substantial Public Purpose.

“[T]o establish a substantive due process violation,” a party must show that the challenged 

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action was “clearly arbitrary and unreasonable.” See Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 

542 (2005); Colony Cove Props., LLC v. City of Carson, 640 F.3d 948, 960 (9th Cir. 2011). 

Oracle has shown that here. See supra at Section IV.D.1.b. Oracle has shown that the Oregon 

Legislature passed Senate Bill 1 (and, in particular, the portion of that bill that purports to insert 

Eleventh Amendment immunity into the Cover Oregon OLSA,) not to benefit the public, but to 

deprive Oracle of its rights and to gain a litigation advantage. Oracle has shown that the transfer 

of Cover Oregon’s rights and liabilities will confer no benefit to the public in the form of 

improved financial conditions or functionality of the HIX. And Oracle has shown that even some 

Oregon legislators questioned the speed with which the Legislature passed Senate Bill 1, as well 

as whether the transfer of Cover Oregon’s rights and liabilities to DCBS was a good idea. Oracle 

has shown that at least one legislator thought that the Legislature should have asked an Oracle 

representative to testify about the impact of Senate Bill 1—the Legislature did not. Thus, the 

Passage of Senate Bill 1 was arbitrary, unreasonable, and unconstitutional as applied to Oracle in 

this case.

3. Senate Bill 1 Is Unconstitutional Under The Takings Clause.

Finally, Senate Bill 1, as applied here, is unconstitutional under the Takings Clause of the 

Fifth Amendment to the United States Constitution. That clause provides that no “private property 

shall be taken for public use, without just compensation.” The Fourteenth Amendment 

incorporates the Takings Clause and applies it to the States. Kelo v. New London, 545 U.S. 469 

(2005). To state a claim for a taking of property by the state, a party must show: (1) a government 

taking, (2) of an interest that qualifies as property under the Fifth Amendment, (3) for a public 

purpose or use, and (4) without adequate compensation. Ruckelshaus v. Monsanto, 467 U.S. 986, 

1000-01 (1984). The State’s actions in this case satisfy all four elements. 

a. Senate Bill 1, As Applied By Cover Oregon, Affected A 

Government Taking.

To the extent Senate Bill 1 acts to deprive Oracle of its copyright claim against Cover 

Oregon, it constitutes a government taking. Takings claims are divided into two classes: physical 

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occupation and regulatory takings. Compare, e.g., Loretto v. Teleprompter Manhattan CATV 

Corp., 458 U.S. 419, 426 (1982) (physical occupation) with Penn Central Transp. Co. v. New York 

City, 438 U.S. 104, 123-25 (1978) (regulatory taking). A physical occupation occurs when the 

government physically intrudes upon private property. Loretto, 458 U.S. at 426. A regulatory 

taking, on the other hand, occurs when the value or usefulness of private property is diminished by 

regulatory action. See generally Penn Central Transp. Co., 438 U.S. 104. Senate Bill 1, as 

applied to Oracle in this case, constitutes a regulatory taking because it diminishes the value of 

Oracle’s copyrights, as well as its pending copyright claim against Cover Oregon, by making it 

impossible for Oracle to enforce its copyrights against a known infringer. 

b. Oracle’s Interest In Its Copyrights And Its Pending Copyright 

Claim Against Cover Oregon Is An Interest That Qualifies As 

Property Under The Fifth Amendment.

Oracle’s interests in its copyrights and its copyright claim against Cover Oregon are 

interests that qualify as property under the Fifth Amendment. “[A] legal cause of action is 

property within the meaning of the Fifth Amendment.” Alliance of Descendants of Texas Land 

Grants v. United States, 37 F.3d at 1481 (Fed. Cir. 1994) (internal citations omitted). So is a more 

generalized interest in copyright. See Ruckelshaus v. Monsanto, 467 U.S. 986, 1002-03 (1984) 

(intangible interests like trade secrets can constitute private property protected by the takings 

clause); Practice Mgmt. Info. v. Am. Medical Ass’n, 121 F.3d 516, 520 (9th Cir. 1997) 

(recognizing that certain action by a “state legislature or administrative body [that would deprive 

a] copyright owner of its property would raise very substantial problems under the Takings Clause 

of the Constitution”); Roth v. Pritikin, 710 F.2d 934, 939 (2d Cir. 1983) (“[A]n interest in a 

copyright is a property right protected by the due process and just compensation clauses of the 

Constitution); Lane v. First National Bank of Boston, 871 F.2d 166, 174 (1st Cir. 1989) (copyright 

“taken for public use” may give rise to “a constitutional right to just compensation”). Therefore, 

Oracle’s interests in its copyrights and its pending copyright claim against Cover Oregon are 

protectable property interests under the Fifth Amendment.

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c. Senate Bill 1, As Cover Oregon Interprets It, Takes Oracle’s 

Property Interest In Its Copyrights For A Public Purpose Or 

Use. 

The portion of Senate Bill 1 that purports to insert an Eleventh Amendment immunity 

defense into the Cover Oregon OLSA has a public purpose: to allow the State to make use of the 

benefits of the Cover Oregon OLSA in the form of copyrighted software code without burdening it 

with the obligation to respect Oracle’s copyrights. Senate Bill 1 accomplishes this by legislatively 

re-writing Oracle’s contract with Cover Oregon in order to provide the State’s Attorney General 

with a previously-unavailable legal argument aimed at destroying Oracle’s ability to enforce its 

copyrights. Among the benefits the State would enjoy is a financial windfall from being relieved 

of the obligation to defend against Oracle’s copyright claims, or pay damages for infringing those 

copyrights. These are not legitimate public purposes, see Section IV.D.1.b., supra, but they are 

enough to satisfy this prong. See Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1014-15 (1984) 

(the challenged state action must simply have a “conceivable public character”).

d. Senate Bill 1 Does Not Provide For Compensation To Oracle.

Finally, the taking effected by Senate Bill 1, as interpreted by Cover Oregon, does not 

provide for adequate compensation to Oracle—Senate Bill 1 does not provide for any 

compensation to Oracle at all for the diminution of the value of its copyrights or the loss of its 

right to enforce its copyright claim against Cover Oregon. For these reasons, Senate Bill 1, as 

interpreted by Cover Oregon, is unconstitutional under the Takings Clause as well.

V. CONCLUSION

For these reasons, Oracle respectfully asks the Court to deny Cover Oregon’s Motion for 

Judgment on the Pleadings. 

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Dated: May 6, 2015

Respectfully submitted,

By: /s/ Brenna K. Legaard

Brenna K. Legaard, OSB #001658 

Email: blegaard@schwabe.com

Jeffrey S. Eden, OSB #851903

Email: jeden@schwabe.com 

SCHWABE, WILLIAMSON & WYATT, P.C.

1211 SW 5th Avenue, Suite 1900 

Portland, OR 97204 

Telephone: 503-222-9981 

Facsimile: 503-796-2900

Attorneys for Plaintiff

Oracle America, Inc.

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