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Philip T. Prince, Etc v. Jeffrey S. Berg

January 3, 2011

PHILIP T. PRINCE, ETC., PLAINTIFF,
v.
JEFFREY S. BERG, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Richard Seeborg United States District Judge

**E-filed 1/3/2010**

court 11

C

For the Northern District of California

ct

i str

ORDER DENYING MOTION TO

tates D

REMAND

S ted

I. INTODUCTION

i Un

This shareholders derivative action was filed in San Mateo Superior Court and was removed here by defendants, based on their contention that the claims arise under federal law. The complaint alleges that nominal defendant Oracle Corporation engaged in a scheme over a number of years to overcharge for products purchased by the federal government. The individual defendants are all directors, and in some cases officers, of Oracle who allegedly authorized, participated in, and/or failed to prevent the alleged overbilling. Plaintiff Philip Prince moves to remand the action to state court, contending that the claims for relief sound in state law only. Prince acknowledges, however, that his state law claims for breach of fiduciary duty and abuse of control depend on whether or not there were underlying violations of the False Claims Act, 31 U.S.C §§ 3729-3733. Prince argues that because Oracle's potential liability under the False Claims Act is presently being litigated in a 2 qui tam action pending against it in another district, the issues of federal law need not be adjudicated 3 in this action. As the existence of False Claim Act violations are nonetheless an element of the 4 wrongdoing that Prince hopes to prove here, and present a substantial, disputed federal issue, the 5 removal based on federal question jurisdiction was proper, and the motion to remand will be denied.

Prince's complaint alleges that between 1998 and 2006, Oracle made sales of software and 9 licenses to the United States government totaling some $1.08 billion, but that through a variety of 10 fraudulent and improper practices, it failed to apply certain discounts to which the government was ...


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