Daisy Mountain Fire Dist. v. Microsoft Corp.

• Decision Date: 16 April 2008
• Docket Number: Civil No. JFM 07-2851.
• Citation: 547 F.Supp.2d 475
• Parties: DAISY MOUNTAIN FIRE DISTRICT, Plaintiff, v. MICROSOFT CORPORATION, Defendant.
• Court: U.S. District Court — District of Maryland

547 F.Supp.2d 475

DAISY MOUNTAIN FIRE DISTRICT, Plaintiff, v. MICROSOFT CORPORATION, Defendant.

Civil No. JFM 07-2851.

United States District Court, D. Maryland.

April 16, 2008.

COPYRIGHT MATERIAL OMITTED

Gary A. Gotto, Mark D. Samson, Keller Rohrback PLC, Phoenix, AZ, Lynn Lincoln Sarko, Mark A. Griffin, Michael D. Woerner, Raymond J. Farrow, Keller Rohrback LLP, Seattle, WA, for Plaintiff.

Jessica S. Pers, Robert A. Rosenfeld, Heller Ehrman White McAuliffe LLP, San Francisco, CA, John A. Jurata, Jr., Heller Ehrman LLP, Washington, DC, G. Stewart Webb, Jr., Venable LLP, Baltimore, MD, for Defendant.

OPINION

J. FREDERICK MOTZ, District Judge.

Plaintiff Daisy Mountain Fire District ("Daisy"), a political subdivision of the State of Arizona, has brought suit against Microsoft Corporation ("Microsoft") under the Arizona Antitrust Act, Arizona Revised Statutes ("A.R.S.") § 44-1401 et seq. (Am. Compl.¶ 1.) Specifically, Daisy alleges that Microsoft has unlawfully maintained monopoly power in the operating system, word processing applications, and spreadsheet applications markets in violation of A.R.S. § 44-1403,¹ resulting in artificially inflated prices for its products in these three markets (Counts I-III). (Id. ¶¶ 175-83.) In addition, Daisy alleges that Microsoft has unlawfully leveraged that monopoly power and denied access to its operating system software, to foreclose competition in the Windows-compatible word processing applications and spreadsheet applications markets in violation of A.R.S. § 44-1403 (Counts IV-V). (Id. ¶¶ 114-26, 184-91.)

Microsoft has moved to dismiss a substantial portion of plaintiffs claims. Microsoft makes two arguments: (1) that the Arizona Antitrust Act's four-year limitations period bars all damage claims arising prior to July 24, 2003; and (2) that plaintiffs "monopoly leveraging" and "essential facility" claims (Counts IV-V) should be dismissed in their entirety. (Def.'s Mem. at 2.) According to Microsoft, monopoly leveraging is not an independent basis of liability separate from plaintiffs monopolization claims, and the essential facilities doctrine does not require a defendant to share its technological innovations or information. (Id.) For the reasons stated below, I will grant Microsoft's motion.

I.

The facts, as alleged in plaintiffs' amended complaint, are as follows. Since the mid-1980s, Microsoft has dominated the operating system software market, in which its United States market share at times has exceeded 95 percent. (Am. Compl.¶ 12.) Beginning in the late-1980s and continuing through the present, Microsoft engaged in a series of predatory acts designed to, and which did, eliminate competition and prevent entry in the operating system software market. (Id.) Through its exclusionary conduct, Microsoft "fended off three types of challenges to its operating system monopoly. (Id. ¶ 56.) First, between 1988 and 1994, Microsoft eliminated two competing operating systems, DPJ's DR DOS and IBM's OS/2, from the market. (Id. ¶¶ 2, 56, 70-79.) Second, from 1988 to the present, Microsoft directed its exclusionary conduct at "middleware"² software products, including Micrografx's Mirrors, Borland's C + +, Intel's Native Signal Processing, Netscape's Navigator, Sun Microsystem's Java Technologies, and Real Networks's Digital and Streaming Media Technology. (Id. ¶¶ 3, 57, 85-107.) Finally, beginning in 1989, Microsoft directed its exclusionary acts at office productivity applications, particularly word processing and spreadsheets programs (including Lotus 1-2-3), whose cross-platform possibilities threatened Microsoft's operating system monopoly. (Id. ¶¶ 4, 58, 110-13.) As a result of its unlawful conduct, Microsoft has dominated these applications markets since at least the mid-1990s, achieving market shares in each exceeding 90 percent. (Id. ¶ 4.)

Microsoft has allegedly used its monopoly power over operating systems, word processing applications, and spreadsheet applications software to injure consumers of its products, including plaintiff, primarily by charging supra-competitive prices for these three types of software (both as stand-alone products and as part of the Microsoft office suite). (Id. ¶ 5.) Plaintiff seeks to recover damages sustained as a result of this conduct, primarily the overpayments made to Microsoft for these three types of software. (Id. ¶ 6.) Plaintiff also seeks treble damages and costs, including an award of reasonable attorneys' fees. (Id.)

II.

In Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007), the Supreme Court held that, in order to survive a motion to dismiss, a plaintiff must plead plausible, not merely conceivable, facts in support of her claim.³ The complaint must state "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.... Factual allegations must be enough to raise a right to relief above the speculative level...." Id. at 1965. "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Id. at 1960. In considering a motion to dismiss, a court must "accept the factual allegations of the complaint as true and must view the complaint in the light most favorable to the plaintiff." GE Inv. Private Placement Partners II v. Parker, 247 F.3d 543, 548 (4th Cir.2001).

III.

Microsoft argues that plaintiffs claims for damages for purchases made more than four years before plaintiffs original complaint was filed should be dismissed. (Def.'s Mem. at 5.) As Daisy conceded during the motions hearing held on March 7, 2008, the Arizona Antitrust Act's four year statute of limitations applies in the instant case. Daisy had argued in its Opposition that the four year limitations period did not apply because Arizona courts have "broad[ly]" exempted Arizona state entities from statutes of limitations under the common law doctrine of nullum tempus occurrit regi⁴ (PL's Opp'n at 2-3.) Under A.R.S. § 44-1408's plain language, however, this doctrine clearly does not apply. A.R.S. § 44-1408(A) expressly creates a cause of action limited to governmental entities ("[t]he state, a political subdivision or any public agency"),⁵ while A.R.S. § 44-14KKB) provides that "[a]n action under A.R.S. § 44-1408 to recover damages is barred if it is not commenced within four years after the cause of action accrues. . . ."⁶ Plaintiff filed its original complaint on July 24, 2007 in the Superior Court of the State of Arizona. Accordingly, unless the statute of limitations was tolled, A.R.S. § 44-1410 would bar all overcharge claims for the period before July 24, 2003 because those purchases occurred, and the claims based on them accrued, more than four years before plaintiff filed its original complaint.

Microsoft argues that plaintiff cannot rely on class action tolling to extend the damages period beyond July 24, 2003.⁷ The class action tolling doctrine provides that the "commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action." Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554. 94 S.Ct. 756, 38 L.Ed.2d 713 (1974); sec vim Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983) ("The filing of a class action tolls the statute of limitations as to all asserted members of the class ....") (internal citations omitted). The class action that potentially suspended the statute of limitations as to plaintiff in the instant case is Friedman v. Microsoft Corp., No. CV 2000-000722 (Ariz. Sup.Ct., Maricopa County Jan. 12, 2000), which was filed on January 12, 2000. (Rosenfeld Decl. ¶ 2.) Both Microsoft and Daisy agree that the filing of the Friedman class action tolled the limitations period.⁸ (Def.'s Mem. at 9-10; PL's Opp'n at 4-5.) Their disagreement centers on when, if ever, the tolling period ended.

A.

Microsoft contends that, at the earliest, tolling ended when the Friedman plaintiffs filed their Amended/Consolidated Class Action Complaint on January 2, 2003, thereby "expressly excluding `governmental entities' from that case" more than four years prior to the filing of Daisy's original complaint.⁹ (Def.'s Mem. at 9.) In support of this argument, Microsoft cites several federal district court cases concluding that class action tolling ends when a purported class member ceases to be a member of a putative class. (Id.) For example, in In re Microsoft Corp. Antitrust Litigation II, I held that tolling ceased when class counsel filed a motion for class certification excluding governmental entities from the class. 2005 WL 906364, at *4 (D.Md.2005) (citing Smith v. Pennington, 352 F.3d 884, 894 (4th Cir. 2003) ("When a plaintiff moves for class certification by asserting an unambiguous definition of his desired class that is more narrow than is arguably dictated by his complaint, his asserted class for tolling purposes may be limited to that more narrow definition.")).¹⁰

Similarly, Ganousis v. E.I. du Pont de Nemours & Co. held that a purported class member ceases to be a member of the putative class as soon as class counsel files a motion excluding that class member. 803 F.Supp. 149, 156 (N.D.IU.1992). Accordingly, the court determined that when class counsel "unequivocally focused their sights [in their motion for class certification] as including within the proposed class only Minnesota residents — and thus as excluding [Ganousis]" — the tolling of the statute of limitations ended. Id. at 155-56 (emphasis in original). Ganousis rejected plaintiffs argument that only a court's determination of class certification, not a class counsel's motion, could end the tolling. Id. at 156; see also Del Sontro v. Cendant Corp., 223 F.Supp.2d 563, 581 (D.N.J.2002) ("When class certification is denied, or a purported class...