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Ken Glueck says he has a vivid memory of Oct. 19, 2015.
Glueck is the top in-house lobbyist for computer giant Oracle America Inc. For nearly two years, his company has been in a bruising, $5.5 billion legal battle with the state of Oregon over who is at fault for Cover Oregon, the failed $300 million health insurance website.
He says he thought that night marked the end of the war.
Glueck says he was at home near Washington, D.C., watching Monday Night Football and talking on the phone to Brian Shipley, then chief of staff to Gov. Kate Brown. Shipley and Brown were in Vietnam on a trade mission.
Glueck claims on that night, after calls the previous two nights, he and Shipley reached an agreement: Oracle would provide the state with $25 million worth of software and services, in exchange for the state dropping all Cover Oregon litigation.
"I said, 'Do we have a deal?'" Glueck recalls. "He said, 'Yes, we have a deal.'"
Shipley, who left Brown's office Nov. 22, acknowledges having the phone conversation but denies reaching any agreement. "Litigation settlement negotiations are in the purview of the attorney general," Shipley said in statement. "A reasonable settlement and end to this case might be in the best interest of Oregonians, but I didn't have the authority to make such a deal."
Brown's spokeswoman, Kristen Grainger, also denies Glueck's account.
"This is another in a long line of desperate Oracle stunts, and it's not true," Grainger says.
The different recollections of the Oct. 19 phone call could seem like just another round of finger-pointing between Oracle and state officials.
But it's more significant for a couple of reasons. First, Oracle is taking the unusual step of going public with this information, and Glueck says the company will file a lawsuit in Multnomah County Circuit Court this week, asking a judge to enforce a $25 million settlement.
"The governor's office approached Oracle to settle this matter," Glueck says. "There is no doubt we reached a firm agreement."
The second reason Glueck's claim is significant is he says Brown and Attorney General Ellen Rosenblum were pursuing separate and uncoordinated paths to settlement.
Neither elected official will discuss whether she communicated with the other about Oracle.
By now, many Oregonians know the outline of the state's dispute with Oracle. After the passage of the Affordable Care Act, the federal government gave Oregon $300 million to build an online health insurance exchange.
The state then hired Oracle, the world's second-largest software company, with profits of nearly $10 billion last year, to build the website.
The website never worked. In May 2014, then-Gov. John Kitzhaber, who was running for re-election and getting a lot of heat for Cover Oregon's failure—asked Rosenblum to sue Oracle. (Disclosure: Rosenblum is married to Richard Meeker, co-owner of WW's parent company.)
The lawsuit she filed in August 2014 seeks $5.5 billion in damages from Oracle and six top company executives.
Kitzhaber won re-election in November 2014, and Glueck says Kitzhaber's chief of staff, Mike Bonetto, soon let Oracle know the state was interested in discussing a settlement. (Bonetto declined to comment.)
Before that could happen, allegations of influence peddling enveloped Kitzhaber's administration, leading to his Feb. 18 resignation and succession by Brown.
The new governor quickly moved to put Kitzhaber's mess behind her. On April 29, 2015, Shipley traveled to Washington, D.C., to meet with Glueck at Oracle's office.
"He strongly signaled they wanted to resolve this," Glueck recalls.
The following month, Glueck and Oracle general counsel Dorian Daley flew to Oregon to meet with Shipley and Brown's deputy general counsel, Misha Issak. Brown briefly popped into the meeting, Glueck says. Shipley confirms both meetings occurred but will not comment.
While Glueck was talking to Shipley, Oracle was also in separate conversations with the Oregon Department of Justice. Rosenblum had retained Eric English, a Portland lawyer specializing in settlements, to represent the DOJ.
"Oracle had been informed that settlement discussions would be handled by Special Assistant Attorney General Eric English," says Michael Kron, a DOJ spokesman.
Glueck says English first approached Oracle in December 2014 and communicated periodically with general counsel Daley, without success.
Glueck thought it was "unusual" for the state to pursue dual tracks. "They were both proposing different numbers and different ideas at different times," he says. "English never actually put a number on the table until after we entered into our agreement with the governor."
The DOJ disagrees with Glueck's characterization that the agency has dragged its feet.
"We have always been more than willing to engage in constructive discussion involving designated individuals from each side," says Kron. "That could lead to a realistic and fair outcome. But we also have a trial date in 2017, and are actively preparing."
How a settlement might occur is complicated.
"There's not much case law on this issue," says Paul Diller, who teaches at the Willamette University College of Law.
The case was originally brought at a governor's request, and the state is the AG's client. Yet Rosenblum filed the lawsuit, and she controls racketeering claims against Oracle executives.
Glueck says Shipley assured him the governor's office could get Rosenblum to agree and if not, the governor's office would announce the agreement, effectively forcing the AG to agree.
Shipley declined to comment.
Shipley and Glueck met or talked six times.
Glueck says he and Shipley agreed Oct. 19 to a non-cash arrangement. Oracle would compensate the state by providing $10 million in software licenses and $5 million worth of computer hosting services, and by funding a $10 million educational program called the Oregon Technology Partnership. Oracle would also drop all claims against Oregon.
Josh Kardon, a contract lobbyist for Oracle, says Shipley confirmed to him in a conversation Oct. 23 that he'd reached a verbal agreement with the company. Shipley confirmed speaking to Kardon but declined to elaborate.
Told of the terms of the alleged agreement, David Friedman, a professor at the Willamette University College of Law, says he's impressed.
"I think it would be a good deal for the state of Oregon because I just don't think Oregon is ever going to see a dime otherwise," Friedman says.
Moreover, he adds, the feds would probably reclaim any cash Oregon recovered from Oracle.
"Settlement would be also good for Oracle," Friedman says. "The only loser would be the private law firms that have been retained to litigate this."
But the settlement didn't happen.
Ten days later, Glueck says, Shipley told him he couldn't get the AG on board.
"I said: 'Well, Brian, we specifically asked this six months ago, and you assured us the governor was going to bring the AG along. This is bad faith,'" Glueck recalls. "He said: 'I know what we said. We can't bring the AG along.'"
Shipley declined to comment, except to say there was no deal.
Brown's and Rosenblum's offices both deny Oracle ever had any agreement with the state to settle or that the AG quashed a deal with Oracle.
Rosenblum declined to be interviewed, and Kron, her spokesman, declined to address whether or what Shipley told the Department of Justice, saying only there was no deal.
"The state and Cover Oregon paid more than $240 million for Oracle products and services that never worked as promised, and spent more than $100 million more remediating Oracle's mistakes," Kron says. "In that context, a hypothetical settlement for $25 million in Oracle goods and services would be completely unacceptable."
Glueck says Rosenblum has another reason to dislike the deal: politics. Keeping the litigation alive gives her ammunition in her current re-election campaign, he says, and suits the financial interests of the Markowitz Herbold law firm, which the state has already paid nearly $4 million in the Oracle case.
"The AG is using this litigation as a re-election tool," Glueck says, "and the Markowitz firm has every incentive to continue to bill hourly."
Glueck points to fundraising emails Rosenblum has sent identifying the Oracle case as a reason voters might want to support her.
"It's been just over three years since I was sworn in as Oregon's first female Attorney General," Rosenblum writes in a fundraising email. "Could you have imagined some of the opportunities and challenges we've faced? How about taking on a multibillion-dollar corporation that blew what was to have been a model state health exchange website?"
Dan Kully, who's running Rosenblum's re-election campaign, says Glueck is wrong.
"Every single day, she's fighting to hold Oracle accountable and get the best outcome possible for Oregon taxpayers," Kully says.
Oracle has every motivation to portray the state as unreasonable. It's in Oracle's financial and reputational interests to end the fight with Oregon, especially if it can escape with a relatively modest payment.
But Oracle is confident enough in its story to file a new lawsuit memorializing the alleged verbal settlement and asking a judge to enforce it.
Grainger, Brown's spokeswoman, questions Oracle's intentions.
"Oracle is telling the media that they want to enforce a nonexistent settlement agreement and that they want to settle, yet they haven't responded to settlement counsel and they haven't gone through proper channels to do that," she says. "Their intentions are a little bit murky at best."
Friedman, the Willamette University professor, says settlement is the appropriate outcome.
"Litigation will take forever," he adds. "And everything Oregon recovers—even punitive damages—will end up going back to the federal government."
Willamette Week