[About as surprising as Handgun Control calling for more laws restricting
firearms purchases, but there you are. --Declan]
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From: [EMAIL PROTECTED]
Date: Mon, 26 Nov 2001 16:57:55 -0500
Subject: aai- Microsoft Class Action Settlement Unfair, AAI Tells Court
To: [EMAIL PROTECTED]
On Tuesday, Nov. 27, the Multidistrict Litigation Court in Baltimore will
hd a hearing on a proposed national settlement of private class actions
against Microsoft. AAI today sent the following letter to Judge Motz urging
rejection of the settlement.
Bert Foer
American Antitrust Institute
November 26, 2001
Judge J. Frederick Motz
U.S. District Court
101 W. Lombard Street
Baltimore, MD 21201
By FAX: 410-962-2698
Re: Proposed MDL Microsoft Settlement
Dear Judge Motz:
We write on extremely short notice over the holiday weekend to express
distress at the proposed settlement that comes before your Court on
November 27. Were there more time, we would apply to speak as amicus
curiae, but we hope you will take notice of our concerns, which are based
on public reports. The American Antitrust Institute is an independent
non-profit education, research, and advocacy organization dedicated to a
vigorous role for antitrust in the national economy. We have commented
frequently, as have many of our individual Advisory Board members, on
matters relating to Microsoft's anticompetitive activities. It is with this
perspective that we make the following points.
� First, the proposed settlement does not appear to represent a fair and
reasonable termination of the over one hundred private class action suits
against Microsoft.
� Second, even if the settlement is deemed fair with respect to consumers
in non-repealer states, a national settlement would be grossly unfair to
consumers in states where a right of recovery has clearly been brought into
being and where the plaintiffs stand ready to go to trial and, indeed, are
opposed to a national settlement that would preclude their right of trial.
�Consumers in repealer states ought to have a right to their class actions
being tried or settled on their own merits. As the Court of Appeals for the
District of Columbia Circuit said, talking about how the judiciary should
consider antitrust issues in the fast paced software market, even though
the remedy in the federal litigation against Microsoft may be too late to
do any good, "� the threat of private damage actions will remain to deter
those firms inclined to test the limits of the law." 253 F3d 34, 49.
�Given the large monetary damages to consumers that have been alleged in
the various repealer states�in the billions of dollars, the proposed
settlement is grossly out of proportion to what is at stake. Not only does
it fail to provide any benefit directly to the consumer class, it also
fails to achieve any of the benefits that the antitrust laws anticipate
through their unique "private attorney general" function. Microsoft's
illegal uses of its market power, which are alleged in these cases and
which have credibility as a result of findings by the U.S. District Court,
upheld by a unanimous Court of Appeals, will not be touched by this
settlement. The money that Microsoft will pay under the settlement is a
pittance for that company, having no deterrent value.
�An order for Microsoft to place low-cost computers and free Microsoft
software into the public schools, where future Microsoft customers can be
trained, is the type of punishment that Brier Rabbit sought in the brier
patch. To the extent that this influx of Microsoft products undermines
Apple, one of Microsoft's few remaining competitors, whose base of strength
happens to be in the public schools, the proposed settlement of these
antitrust suits may actually be anticompetitive.
� The proposed settlement must be viewed in the context of Microsoft taking
advantage of a division between those states that have chosen to overturn
the Illinois Brick rule and those that have not. Microsoft has cleverly
engineered the fracture to the point where one group of lawyers
(representing consumers in non-repealer states) who had lost their case and
now have only the bargaining leverage of relinquishing their right of
appeal, willingly enters a nationwide settlement that gives them (but not
the class they represent) a little something including attorneys' fees,
while appearing to sell out consumers in the repealer states, whose
indirect purchaser claims have not yet been heard. As advocates of the
antitrust mission, we worry that the public will view this settlement as an
example of lawyers winning their fees while consumers get nothing of value,
an outcome that can only diminish popular support for the antitrust laws
themselves.
We urge the Court to reject the proposed settlement as unfair or, at the
very least, to carve out from the settlement those states that provide for
a right of recovery by indirect purchasers.
Sincerely,
Albert A. Foer, President
Cc: The Honorable Stuart R. Pollak
San Francisco County Superior Court
400 McAllister Street, Dept. 304
San Francisco, CA 94111
[EMAIL PROTECTED]
fn.The AAI is described at www.antitrustinstitute.org. Our Advisory Board
consists of 54 eminent law professors, lawyers, economists, and
businesspersons, many of whom have carefully followed developments relating
to Microsoft Corporation and the antitrust laws. By way of full disclosure,
we are aware that three of our Advisory Board members have an interest as
attorneys representing clients in private actions against Microsoft.
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