River Supply v. Oracle: Court Delivers Unappetizing Ruling Affirming Oracle’s Unsavory Clickwrap Agreements

If the range of potential complaints that can kick off a litigation were akin to a restaurant menu, then River Supply’s currently pending lawsuit against Oracle for a failed ERP installation, as initially filed, was the fat, juicy cheeseburger on the bill of fare. River Supply’s hamburger promised to be a pound of sizzling ground beef grilled over the scorching flame of “massive systemic fraud,” dressed with red onion slices of breached implied covenants, real mayo suffused with warranty claims, dill pickles brined in criminal theft allegations, and the tangy cheese of an unconscionable contract – all wrapped within the toasted kaiser roll of a nearly 200-page complaint.

But the meal promised on the menu isn’t always the fare that finds its way to the expectant diner. By granting Oracle’s motion to dismiss River Supply’s complaint earlier this month, U.S. Magistrate Judge Laurel Beeler, the most important patron at the table set by River Supply, found on her plate an ordinary peanut butter and jelly sandwich constituting a run-of-the-mill breach-of-contract claim. Reeling from the disparity, Judge Beeler dismissed all claims save for breach of contract and sent her plate back to the kitchen, directing the chefs of River Supply to try and cook the cheeseburger again.

Culinary metaphor notwithstanding, Judge Beeler’s order dismissing River Supply’s complaint offers some important takeaways for Oracle and NetSuite licensees. First and most significantly, the Court judicially blessed Oracle’s clickwrap agreement, declining to find the hyperlinked Subscription Services Agreement to be unconscionable and, instead, applying its integration clause and limitation of liability provisions. Tellingly, Judge Beeler observed:

The pages are not confusing, they are not hidden, and the Agreement is easily available. River Supply’s agent may not have read the contract terms, but River Supply is bound by them.

[Dkt. 61, 17:9-10.] The Court went on to describe River Supply’s agreement with Oracle as “not a consumer contract involving buried terms … (but) a business contract for services.” (Emphasis supplied)  [Dkt. 61, 18:3-4.]

River Supply may yet figure out how to properly allege its individual fraud claims against Oracle and deliver some approximation of the deluxe cheeseburger promised on the menu. But for now, the original allegations of “massive systemic fraud” appear to have been lost in the sauce. Looking forward, regardless of whether River Supply files a revised complaint that passes muster(d), there is little doubt that Oracle emerged from Judge Beeler’s Order in a better position than before the litigation was launched – Oracle now has a published District Court opinion sanctioning the enforceability of certain of its clickwrap agreements.

To make something delectable out of the culinary let down of River Supply, following are our recommended best practices for Oracle licensees:

• Have a lawyer review the terms of the clickwrap agreement – including all hyperlinks – before manifesting assent. Counsel will be in the best position to advise you on the legal ramifications of certain terms and conditions (e.g., a limitation of liability provision).
• Make sure the appropriate business people within your company have taken the time to navigate forwards and backwards through the terms of the clickwrap agreement by scrolling in a deliberate fashion on the computer screen. As Judge Beeler made clear in her decision in the River Supply matter, if you click your assent to the agreement, you will be bound by its terms whether you’ve read them or not.
• Conduct the appropriate due diligence to assure that the terms of the clickwrap agreement are not contradicted or rendered ambiguous by information or communications otherwise provided to you by Oracle. Your expectations as to what constitutes the agreement will be governed by the agreement itself, so it’s best to assure that there’s no divergence between what you expect and what you’re going to get.
• Maintain accurate records of the content and format of the electronic agreement process, documenting what steps you had to take to gain access to particular items and what version of the clickwrap agreement was in effect at the time the parties entered into the contract. Oracle has a propensity to rewrite agreements to their advantage at a later time, so it is vital that you maintain an accurate record as to what constituted the terms and conditions of your clickwrap agreement.

While it’s easy to view Judge Beeler’s decision as mostly directed to River Supply and how it should set the table to save its lawsuit, licensees of Oracle products should be mindful of how Oracle’s winning judicial affirmation of its clickwrap agreements will reverberate in the market for a long time. Rather than stirring the pot in contentious fashion with Oracle after you’ve carelessly clicked through an agreement, it’s better to know the recipe and its ingredients before assenting and fully appreciating what you’ve put in the oven.

Published on November 20, 2023