Microsoft’s private-suit deal scuttled
Posted by configure on 12 January 2002 - 06:11 · no comments & 118 views
About the Author
Full name: Unknown
Forum name:
configure
Contact: via forum PM
Submissions: Normal · Headline
Full name: Unknown
Forum name:
configureContact: via forum PM
Submissions: Normal · Headline
Slashdot It!
Submit to reddit
Submit to blinklist
Bookmark on del.icio.us
Add to furl
Share on Facebook
Add to Windows Live
Add to Google
In a withering deconstruction of the settlement terms, U.S. District Judge J. Frederick Motz, in essence saying the pact was like a wolf in sheep’s clothing, noting the proposed settlement’s “potential adverse impact upon competition.” (MSNBC is a Microsoft-NBC joint venture.)
“On its face the agreement is entirely ‘platform neutral,’” writes the Motz, because it allows schools to apply for donations of either Apple’s Macintosh computers or Windows-based PCs. In addition, the settlement terms also allow schools to purchase non-Microsoft software.
But the darker angels of Microsoft’s deal are in the details, as the judge dug deeper.
The settlement “raises legitimate questions since it appears to provide a means for flooding a part of the kindergarten through high school market, in which Microsoft has not traditionally been the strongest player (particularly in relation to Apple), with Microsoft software and refurbished software,” the judge said.
The settlement provides for up to 200,000 refurbished computers to be made available; however, 95 percent of computers donated for refurbishing run Microsoft software, the judge notes, and thus, schools looking for the biggest bang for their buck would most likely choose the Windows-based machines.
“A reasonably foreseeable effect… would be to increase the number of PCs, both absolutely and in comparison to Macs, being used in the eligible schools,” Motz wrote in his decision.
Further, the promise of Microsoft to give away its software also raised the judge’s eyebrows, who said, in siding with opponents of the settlement terms, that such an action “to put it bluntly… could be viewed as constituting ‘court approved predatory pricing.’”
Microsoft said it was “confident” that it “ultimately will prevail in these lawsuits” and that it was disappointed to have missed an opportunity to settle the case and help the nation’s neediest schools.
Sharper Pencil
Like the settlement terms he torpedoed, Motz’s ruling also requires more than a quick glance, Microsoft attorney Tom Burt said.
Although Motz said the terms of the settlement were “thinly funded” there isn’t any language that “suggests that the total amount of money in the settlement is insufficient to be a reasonable settlement,” Burt said. The judge said “he thought there wasn’t enough money for certain purposes and that there are a number of different ways to approach modifying the settlement that might solve some of those problems,” Burt said. “We’re considering all of those.”
Motz suggested that Microsoft might pony up an all cash settlement that went into a special fund. “Having donated the monies to create the fund, Microsoft could then compete” to sell its software to eligible schools using money from the fund.
Motz’s ruling today means “either Microsoft can make a serious offer [to settle] or they can proceed with the damages trial,” said Robert Lande, law professor at the University of Baltimore School of Law.
“The judge is doing exactly the right thing,” Lande said, “protecting consumers from Microsoft and a bunch of plaintiff lawyers that didn’t care that much about the people who were ripped off.”
Earlier, Motz had expressed reservations about the private-suit settlement during three days of hearings on the matter last month. On Dec. 10 he ordered the two sides into mediation in a last-ditch effort to try to find a compromise.
The settling attorneys told Motz the deal is better for consumers than trying to divvy up money among individuals. Consumers would get as little at $10 apiece if Microsoft had agreed to reimburse them directly, they said.
But the California attorneys criticized it as a legal ruse that will further the company’s dominant position in the computer business and give it a leg up over Apple Computer Inc. in the school market.
The California class-action lawyers had complained that the nationwide settlement was negotiated without their input, even though state has a strong case against the company.
Long March to Settlement
Many of the initial civil lawsuits were tossed out because of a Supreme Court ruling that says only the initial buyer of a product can sue under antitrust laws. The majority of consumers, however, are “indirect buyers,” Lande said, because Windows is already loaded on their machines when they buy them.
Some states, however, have passed laws allowing indirect buyers to sue and California is one of the biggest. Lawyers for California class actions vigorously opposed the settlement.
“You’ve got these particular plaintiff lawyers, they’ve been tossed out on their ears because (they are from states where the consumers don’t have a claim),” Lande said, “and they’re scrambling around worrying that they won’t get their legal fees paid so it’s their incentive just to agree to anything that Microsoft throws up.”
Motz’s decision comes on the heels of a failed mediation attempt by Microsoft and dissenting class-action attorneys to reach a compromise.
Now the class-action suits resume with the pre-trial work of preparing for a court room hearing — those cases are scattered throughout the U.S., said Microsoft’s Burt.
These civil class-action suits are separate from the landmark federal antitrust case that is playing out in Washington, D.C. However, without the guilty verdict in the federal case that tagged Microsoft forever as a predatory monopolist, the civil cases would never have come to be, legal experts say. In the civil cases, all the plaintiffs have to prove is damages, in this case, that they’ve been overcharged for the software. The claim that Microsoft is a monopoly is now a fact of law and need not be proved again in court.
In the federal case, the Justice Department and nine of the original 18 states that also sued Microsoft for violation of the antitrust act, have reached a settlement. The other nine states rejected those settlement terms and are pushing forward in court, looking for what they see as more suitable punishment of Microsoft.