PORTLAND — A federal judge said a case Oregon filed in state court against technology giant Oracle over Cover Oregon should stay in state court, at least for the time being.

U.S. District Court Judge Anna Brown said during oral arguments Friday the attorneys for both sides have played “procedural chess” in dueling suits the two filed in August.

The state’s health insurance website never worked.

Oregon filed suit in Marion County Circuit Court on Aug. 22, two weeks after Oracle sued the state in federal court alleging the state owed $23 million in unpaid bills. Oracle then tried to pull the state’s case into federal court, where Brown said Friday it didn’t belong.

The decision is considered a victory for the state in what will likely be a long and costly court battle.

The two will meet Dec. 19, again in federal court, when both sides will argue Oracle’s initial claim.

Brown’s decision leaves open the possibility that both cases could continue in separate courts, an option that would drive up an already costly court battle.

Oregon Attorney General Ellen Rosenblum has said Oracle was fraudulent while acting as engineer for Cover Oregon. In response, Oracle countersued and added a claim that Oregon infringed federal copyright laws by using the company’s technology.

Brown said that move came too late because the copyright claim was added after both sides had already made their initial claims.

She said there is a “fundamental premise that this court cannot act unless the matter is properly here.”

Brown added she has questions “as to whether this court has jurisdiction over the heart of this claim.”

Oracle attorney Karen Johnson-McKewan argued that Brown has proper authority even if Oracle’s copyright claim came too late.

But Brown called the copyright claim “the tail-wagging of the dog,” saying she couldn’t ignore court procedures.

“Rules exist for a reason,” Brown said before announcing her decision.

Oregon is suing the company and six of its executives. The suit alleges the executives were involved in fraud and racketeering and is seeking the $240 million the state paid for the failed exchange plus damages for lost revenue, up to a total of $480 million.

The state hired a private Portland law firm to handle the case.

“Through this legal action, we intend to make our state whole,” Rosenblum said when announcing the case in August.

Oracle alleges the state owes $23 million for work Oracle continued to do to salvage Cover Oregon after an initial failed launch last fall. It said in its Aug. 8 filing that Cover Oregon executives knew the website would fail, and that they are using Oracle as a scapegoat for the failure.

Johnson-McKewan, a partner with the San Francisco-based law firm Orrick, Herrington & Sutcliffe, told the judge she planned to argue in Marion County that both cases actually belong in federal court.

— Reporter: 406-589-4347,

tanderson@bendbulletin.com