New York v. Microsoft

• Decision Date: 01 November 2002
• Docket Number: No. 98CV1233.,98CV1233.
• Citation: 231 F.Supp.2d 203
• Parties: State of NEW YORK, et al., Plaintiffs v. MICROSOFT CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

231 F.Supp.2d 203

State of NEW YORK, et al., Plaintiffs v. MICROSOFT CORPORATION, Defendant.

No. 98CV1233.

United States District Court, District of Columbia.

November 1, 2002.

Philip Beck, Mary Jean Moltenbrey, Jacqueline S. Kelley, U.S. Dept. of Justice, Washington, DC, Renata B. Hesse, Phillip R. Malone, U.S. Dept. of Justice, Antitrust Div. Washington, DC, for U.S.

Steven F. Benz, Kellogg, Huber, Hansen Todd & Evans, PLLC, Washington, DC, for California plaintiffs.

Jeffrey Blumenfeld, Gray Cary Ware & Freidenrich, Washington, DC, for NetAction and Computer Professionals for Social Responsibility.

Jay Ward Brown, Levine, Sullivan & Koch, LLP, Washington, DC, for Cable News Network, LP, LLP, Dow Jones & Co., Inc., Los Angeles Times, Associated Press, Washington Post, USA Today.

Donald L. Flexner, Boies, Schiller & Flexner, LLP, Washington, DC, for SBC Communications, Inc.

Judith L. Harris, Reed Smith, LLP, Washington, DC, for Novell, Inc.

Jay L. Himes, N.Y. Dept. of Law, New York City, for Commonwealth of Kentucky, State of Ill., State of Louisiana, State of Maryland, State of Mich., State of N.Y., State of N.C., State of Ohio.

Steven L. Holley, Richard J. Iroksky, John L. Warden, Sullivan & Cromwell, New York City, William H. Neukom. Microsoft Corp., Redmond, WA, Bradley Paul Smith, Sullivan & Cromwell, Washington, DC, for Microsoft.

Michael Lenett, Cuneo Law Group, Washington, DC, for American Antitrust Institute, Inc.

Bradley S. Lui, Morrison & Foerster, LLP, Washington, DC, Jason M. Mahler, Computer & Communications Industry Ass'n, Washington, DC, for Computer & Communications Industry Ass'n.

Glenn B. Manishin, Kelley Drye & Warren, LLP, Washington, DC, for Software & Information Industry Ass'n.

Aileen Meyer, Washington, DC, for San Jose Mercury News, Inc.

Peter Peckarsky, Washington, DC, for Relpromax Antitrust, Inc.

Gene C. Schaerr, Sidley Austin Brown & Wood, LLP, for Association for Competitive Technology.

Brendan V. Sullivan, Jr., Williams & Connolly, LLP, Washington, DC, for District of Columbia, State of Cal., State of Conn., State of Fla., State of Iowa, State of Kan., State of Mass., State of Minn., State of Utah.

Kenneth W. Starr, Kirkland & Ellis, Washington, DC, for ProComp.

James S. Turner, Swankin & Turner, Washington, DC, for Consumers for Computing Choice and Open Platform Working Group, Free Software Foundation, Andreas Pour, Dan Kegel, John Carroll, Mason Thomas.

MEMORANDUM OPINION

KOLLAR-KOTELLY, District Judge.

Presently pending before the Court is a joint stipulation entered by Defendant Microsoft Corporation and the Plaintiff States of New York, Ohio, Illinois, Kentucky, Louisiana, Maryland, Michigan, North Carolina, and Wisconsin ("Plaintiff Settling States"). The stipulation indicates that these States have joined the settlement between the United States and Microsoft in United States v. Microsoft Corp., No. 98-1232 (D.D.C.). In United States v. Microsoft Corp., the United States and Microsoft have proposed entry of a consent decree-the Second Revised Proposed Final Judgment ("SRPFJ")-as the final judgment in that case. Pursuant to Federal Rule of Civil Procedure 54(b), the Plaintiff Settling States¹ ask the Court to enter the SRPFJ as a final judgment as to their claims. For the reasons set forth in the Memorandum Opinion issued in United States v. Microsoft, No. 98-1232, 2002 WL 31439450 (D.D.C. Nov. 1, 2002), appended hereto as Appendix A, the Court conditionally approves the SRPFJ as a final judgment as to the claims of the Plaintiff Settling States.

In considering proposed settlements, the Court is generally required to assess whether the settlement fairly and reasonably resolves the controversy in a manner consistent with the public interest. See Citizens for a Better Env't v. Gorsuch, 718 F.2d 1117, 1126 (D.C.Cir.1983). "Naturally, the agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation." Id. at 1124 (quoting United States v. Armour & Co., 402 U.S. 673, 681, 91 S.Ct. 1752, 29 L.Ed.2d 256 (1971)); see also United States v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C.Cir.1995). "[T]he reviewing court is not to substitute its judgment for that of the parties to the decree but to assure itself that the terms of the decree are fair and adequate and are not unlawful, unreasonable, or against public policy." United States v. Hooker Chemicals and Plastics Corp., 540 F.Supp. 1067, 1072 (W.D.N.Y.1982). In addition, because approval of a settlement is a judicial act that is committed to the informed discretion of the trial court, the Court must satisfy itself that the decree is equitable in any effect it may have upon third parties. Donovan v. Robbins, 752 F.2d 1170, 1176-77 (7th Cir.1985); see also Hooker Chemicals and Plastics Corp., 540 F.Supp. at 1072 ("[T]he court must eschew any rubber stamp approval in favor of an independent evaluation, yet, at the same time, it must stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case.") (quoting City of Detroit v. Grinnell Corp. 495 F.2d 448, 462 (2d Cir.1974)).

The standard described above cannot be said to exceed that imposed by the Tunney Act, 15 U.S.C. § 16(b)-(h). The Tunney Act requires the Court to subject any consent decree proposed in any civil proceeding brought by the United States under the antitrust laws to a determination of whether entry of such decree is in the "public interest." 15 U.S.C. § 16(b),(e); See generally Microsoft, 56 F.3d 1448. The Court recited the legal history of this case and its former companion case-United States v. Microsoft Corp.-in Memorandum Opinions issued in United States v. Microsoft Corp. on July 1, 2002, and November 1, 2002. In its November 1, 2002, Opinion in United States v. Microsoft, the Court determined that, save for the provision specifying the Court's reservation of jurisdiction, entry of the SRPFJ as the final judgment in that case is in the public interest. See Appendix A; Microsoft, No. 98-1232(CKK), 2002 WL 31439450 (D.D.C. Nov. 1, 2002). As the claims of the Plaintiff Settling States are indistinguishable from the claims of the United States, except that the Plaintiff Settling States advanced claims under state law as well as federal law, based upon the detailed analysis set forth in the record of United States v. Microsoft Corp., No. 98-1232, the Court finds that, with the exception of the reservation of jurisdiction, the SRPFJ is fair, reasonable, and in the public interest.

Because the Court has concerns that the reservation of jurisdiction in the proposed decree is insufficient to ensure clear enforcement of its terms by the Court, the Court shall condition its entry of the SRPFJ as the final judgment for the claims of the Plaintiff Settling States pending receipt by the Court of an amendment to that provision. See Appendix A; Microsoft, 98-1232, 2002 WL 31439450 (D.D.C. Nov. 1, 2002). The Court suggests that the public interest would be served if Microsoft and the parties to the settlement would agree to amend the proposed final judgment to reserve for the Court, in addition to the powers presently specified in the proposed final judgment, the power sua sponte to issue orders or directions for the construction or carrying out of the final judgment, for the enforcement of compliance therewith, and for the punishment of any violation thereof. Such an amendment would not appear to work a fundamental change to the parties' agreement and would ensure that the Court retains the power intended by Plaintiffs and which the Court considers necessary to ensure effective implementation of the final judgment in this case.

Based on the foregoing, the Court conditionally approves the SRPFJ as the final judgment as to the claims of the Plaintiff Settling States in the above-captioned case. The Court will enter final judgment upon receipt of a proposed decree which reflects the amendment described above. Such amendment shall be filed in writing with the Court not later than November 8, 2002. An appropriate Order accompanies this Memorandum Opinion.

APPENDIX A

MEMORANDUM OPINION

Remaining in this case for the Court's determination is the resolution of a single issue: whether entry of the final judgment proposed by the parties is in the public interest. The Court makes this determination pursuant to the Antitrust Procedures and Penalties Act ("Tunney Act"), 15 U.S.C. § 16(b)-(h). In a previous Memorandum Opinion, the Court reviewed the pertinent procedural history and determined that the parties had satisfied the other requirements of the Tunney Act. See generally United States v. Microsoft Corp., 215 F.Supp.2d 1 (D.D.C. July 1, 2002). Having reviewed the voluminous record in this case and considered the factors enumerated in 15 U.S.C. § 16(e), the Court finds that, with the exception of the provisions relating to the retention of the Court's jurisdiction, the proposed consent decree is in the public interest. Accordingly, the Court conditionally approves the proposed consent decree as the final judgment in this case, pending the prompt agreement by the parties to a modification of the Court's retention of its jurisdiction.

I. PROCEDURAL HISTORY

On May 18, 1998, the United States filed a civil complaint alleging that Microsoft had engaged in anticompetitive conduct in violation of §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. On that same date, a group of state plaintiffs filed a separate civil complaint alleging similar violations of federal law, as well as violations of the corresponding provisions of their various state laws. Not long after filing, the two cases were consolidated and thereafter, proceeded jointly through discovery and a trial on the merits. On November 5, 1999, Judge Thomas Penfield Jackson entered 412 findings of fact, United States v....