Major v. Microsoft Corp.

• Decision Date: 06 September 2002
• Docket Number: No. 97,888.,97,888.
• Citation: 60 P.3d 511,2002 OK CIV APP 120
• Parties: Jonathan C. MAJOR, on his own behalf and on behalf of those similarly situated, Plaintiff/Appellant, v. MICROSOFT CORPORATION, a Washington Corporation, Defendant/Appellee.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

60 P.3d 511

2002 OK CIV APP 120

Jonathan C. MAJOR, on his own behalf and on behalf of those similarly situated, Plaintiff/Appellant, v. MICROSOFT CORPORATION, a Washington Corporation, Defendant/Appellee.

No. 97,888.

Court of Civil Appeals of Oklahoma, Division No. 3.

September 6, 2002.

Certiorari Denied November 19, 2002.

Donald L. Kahl, T. Lane Wilson, Anthony J. Jorgenson, Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., Tulsa, OK, and Michael E. Smith, Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., Oklahoma City, OK, for Plaintiff/Appellant.

Kenneth N. McKinney, Keith D. Tracy, Ronald L. Walker, McKinney & Stringer, P.C., Oklahoma City, OK, and David B. Tulchin, Joseph E. Neuhas, Sullivan and Cromwell, New York, NY, for Defendant/Appellee.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3. Opinion by CAROL M. HANSEN, Presiding Judge.

¶ 1 Plaintiff, Jonathan C. Major, purchased a Windows 98 operating system from Office Depot in Tulsa County. Upon installing this system on his computer, Major was required to register his ownership as an end user licensee of the system. He later purchased a new computer from Gateway in January of 2000. Windows 98 was pre-installed on that computer. Before using the system, he was again required to register with Microsoft.

¶ 2 Major originally filed this action against Defendant Microsoft in Tulsa County, Oklahoma, district court seeking damages for its violation of the Oklahoma Antitrust Reform Act. 79 O.S. Supp.2000 §§ 201 et seq. The trial court granted Microsoft's motion to dismiss, but allowed Major to replead. Major filed an amended petition seeking similar damages but including violations of the Oklahoma Uniform Commercial Code, 12A O.S. Supp.2000 § 2-302, and the Oklahoma Consumer Protection Act, 15 O.S. Supp.2000 §§ 751 et seq.

¶ 3 After removal to federal court and return to Oklahoma, the trial court dismissed the action pursuant to Microsoft's renewed motion to dismiss. Major now appeals the dismissal.

¶ 4 Microsoft is a for-profit corporation, organized and existing under the laws of the State of Washington. It focuses primarily on developing and licensing computer software. It markets and licenses its Windows 98 operating system for Intel-based personal computers throughout the United States, including the State of Oklahoma. Major complained Microsoft possessed monopoly power, including the power to control price and to exclude competition. He alleged Microsoft had unlawfully sought to acquire, maintain and expand its monopoly power by anti-competitive and unreasonable exclusionary conduct. As a result, Microsoft knowingly and intentionally licensed its Windows 98 operating system for Intel-based personal computers, without regard to competition, at a monopoly price in excess of that which Microsoft would have been able to charge in a competitive market. Therefore, Major claims all members of the class similarly situated are entitled to damages according to proof as to the difference between a competitive price and the unlawful monopoly price that they incurred as end user licensees.

¶ 5 In 1977, the United States Supreme Court decided the case of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707. That decision studied the issue of standing to sue for treble damages under the Clayton Act, 15 U.S.C.A. § 15 (1976). In Illinois Brick, the State of Illinois brought suit against concrete block manufacturers alleging price fixing in violation of § 4 of the Clayton Act. That section provides "(a)ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may bring suit to recover damages sustained by him." The Court held the state, as an indirect purchaser, did not have standing to pursue the action because it did not buy concrete blocks directly from the manufacturers, and thus was not the party "injured in his business or property within the meaning of section 4 of the Clayton Act." The Court drew a line at which the law will not permit remote antitrust claims to be asserted. This bright line has become known as the "indirect-purchaser rule."¹

¶ 6 Ten years later the United States Supreme Court clarified its ruling in Illinois Brick in California v. ARC Am. Corp., 490 U.S. 93, 109 S.Ct. 1661, 104 L.Ed.2d 86. It held that nothing in federal antitrust legislation prevented the states from allowing indirect purchasers to bring antitrust actions under state statutes. The Court stated the statutes of Alabama, California and Minnesota (the plaintiffs) expressly allowed indirect purchasers to sue. That decision, however, did not create a cause of action for indirect purchasers, but rather merely authorized the states to provide a cause of action for indirect purchasers based on their states' antitrust laws. It concluded Congress had not preempted the field of antitrust law, but rather intended the federal antitrust laws to supplement, not displace, state antitrust remedies. See, Comes v. Microsoft Corporation, 646 N.W.2d 440 (Iowa.2002) and cases cited therein.² Since that time other jurisdictions have interpreted their state antitrust laws to give standing to indirect purchasers. Bunker's Glass Company v. Pilkington, 202 Ariz. 481, 47 P.3d 1119 (Ariz.App.2002).

¶ 7 Section 205 of the Oklahoma Antitrust Reform Act, provides that any person who is injured in his or her business or property by a violation of the act may obtain appropriate injunctive or other equitable relief and monetary damages and shall recover threefold the damages sustained, and the cost of suit, including a reasonable attorney fee. This is almost identical to the language of the federal act quoted above.

¶ 8 The Oklahoma Legislature has spoken. The controlling section of the Oklahoma Act is the final section, § 212. That section states:

The provisions of this act shall be interpreted in a manner consistent with Federal Antitrust Law 15 U.S.C., Section 1 et seq. and the case law applicable thereto.

¶ 9 Accordingly, under § 212, we are required to apply the holdings of Illinois Brick to the present appeal.

¶ 10 Major does not actively argue this Court should not follow Illinois Brick. In his briefs at trial Major makes two arguments in defense to Microsoft's motion to dismiss. He claims because he was required to register as an end user licensee, he is a direct purchaser, not an indirect one. He argues he suffered a unique injury as a direct result of Microsoft's practices. He further points out Illinois Brick provides for three exceptions to the indirect purchaser rule: (a) Vertical Price-Fixing Conspiracy, (Microsoft in conjunction with Compac, Dell and NEC); (b) an Ownership or Control exception; and, (c) the cost-plus contract exception. He also argues the trial court erroneously dismissed his claims under the Uniform Commercial Code, 12A O.S. Supp.2000 § 2-302, and the Oklahoma Consumer Protection Act.

¶ 11 The trial court in its journal entry dismissing Major's case, attached and incorporated herein, made a detailed legal analysis of these claims. We see no reason to repeat that analysis here. Rule 1.202, Oklahoma Supreme Court Rules, 12 O.S. Supp. 2000, Ch. 15 App. provides that in any case in which the court determines after argument or submission on the briefs that no reversible error of law appears, and (d) the opinion or findings of fact and conclusions of law of the trial court adequately explains the decision, the court may affirm by an opinion citing this rule. We have examined the record, more particularly the briefs of the parties in the trial court, and hold the trial court should be affirmed under this rule.

¶ 12 AFFIRMED.

ADAMS and MITCHELL, JJ. CONCUR.

EXHIBIT "A"

ORDER

This matter comes before the Court on the Renewed Motion to Dismiss of defendant Microsoft Corporation ("Microsoft").

On November 17, 2000, this Court entered an order dismissing the original Petition: The Court concluded that the claims as originally pled were barred by the rule of Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), barring antitrust damage claims by indirect purchasers. However, the Court granted plaintiff Jonathan C. Major ("Major") the opportunity to replead and, on December 14, 2000, Major filed his First Amended Petition. On January 12, 2001, Microsoft removed the case to the United States District Court for the Northern District of Oklahoma. The Judicial Panel on Multidistrict Litigation then issued a Conditional Transfer Order, transferring the case to the United States District Court for the District of Maryland, for consolidation with all other federal court putative class action antitrust actions pending against Microsoft. The U.S. District Court for the Northern District of Oklahoma subsequently remanded the case to this Court, and Microsoft filed its Renewed Motion to Dismiss.

In his First Claim for Relief in the First Amended Petition, Major claims Microsoft has violated Oklahoma's Antitrust Reform Act, 79 O.S. §§ 201, et seq. by monopolizing trade and commerce relating to operating systems for Intel-based personal computers within the State of Oklahoma. Major further alleges Microsoft has conspired with distributors to fix prices for its Windows 98 operating system at an unlawful monopoly price. In his Second Claim for Relief, Major and the putative class claim entitlement to a modification of the price provisions of their contracts for the purchase and use of Windows 98 under the "unconscionability" section of the Oklahoma Uniform Commercial Code ("UCC"), 12A O.S. § 2-302. In his Third Claim for Relief, Major contends that Microsoft's conduct and business practices constitute unfair and deceptive business practices as those terms are defined in the Oklahoma Consumer Protection Act ("CPA"), 15 O.S. §§ 751, et seq. and that he and each member of the putative class is entitled to recover damages...