State v. Microsoft Corporation, Civil Action No. 98-1233 (CKK) (D. D.C. 9/22/2003)

• Decision Date: 22 September 2003
• Docket Number: Civil Action No. 98-1233 (CKK).
• Parties: STATE OF NEW YORK, <I>et al.</I>, Plaintiffs, v. MICROSOFT CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

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STATE OF NEW YORK, et al., Plaintiffs, v. MICROSOFT CORPORATION, Defendant.

Civil Action No. 98-1233 (CKK).

United States District Court, District of Columbia.

September 22, 2003.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, District Judge.

Currently pending before the Court is the Commonwealth of Massachusetts's ("Massachusetts" or "Plaintiff") Motion for Attorneys' Fees and Expenses. Microsoft Corporation ("Microsoft" or "Defendant") opposes Plaintiff's motion, arguing that Massachusetts's request should be substantially reduced or denied entirely. After reviewing Plaintiff's Statement of Points and Authorities in Support of Motion for Attorneys Fees ("Pl.'s Mem."), Defendant's Opposition, and Plaintiff's Reply, the Court provided Microsoft the opportunity to supplement its briefing to address Plaintiff's Massachusetts-state-law arguments, which were essentially briefed only in Plaintiff's Reply. New York v. Microsoft Corp., Civ. No. 98-1233 (D.D.C. July 3, 2003) (order permitting Defendant to file a supplemental brief). Microsoft filed an additional brief addressing the issue, and Massachusetts filed a motion for leave to file a response brief which the Court shall grant. Massachusetts also filed a supplemental brief, seeking additional attorneys' fees for work done on its Massachusetts law response brief, and reducing its request for costs. In all, Plaintiff seeks $20,302.72 in what it alternatively refers to as expenses and costs, and $1,992,075.00¹ in attorneys' fees. After reviewing all the briefing, the submitted exhibits and the relevant law, the Court shall grant Plaintiff $967,014.52 in attorneys' fees, and $0.00 in costs.²

I: INTRODUCTION

On May 18, 1998, simultaneous with the filing of a complaint by the United States in a related case, a group of state plaintiffs filed a civil complaint alleging antitrust violations by Microsoft and seeking preliminary and permanent injunctions barring the company's allegedly unlawful conduct. See United States v. Microsoft Corp., 253 F.3d 34, 47 (D.C. Cir. 2001). In United States v. Microsoft Corp., No. 98-1232 (D.D.C.), the federal government brought claims pursuant to federal law, while in State of New York, et al. v. Microsoft Corp., No. 98-1233 (D.D.C.), the Plaintiff States brought claims pursuant to both federal and state law. These two cases were consolidated, and following a bench trial in the consolidated cases, Judge Thomas Penfield Jackson concluded that Microsoft had violated Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, imposing liability for illegal monopoly maintenance, attempted monopolization, and unlawful tying. United States v. Microsoft Corp., 87 F. Supp. 2d 30, 35 (D.D.C. 2000). Correspondingly, Judge Jackson held that Microsoft had violated the state antitrust laws analogous to Sections 1 and 2 of the Sherman Act in each of the nineteen plaintiff states and the District of Columbia. Id. at 54. To remedy these findings of liability, Judge Jackson ordered the division of Microsoft into two separate corporations. United States v. Microsoft Corp., 97 F. Supp. 2d 59, 64 (D.D.C. 2000). Microsoft filed an appeal in both cases. On appeal, the D.C. Circuit deferred to Judge Jackson's factual findings, Microsoft, 253 F.3d at 118, altered his findings of liability — affirming in part and reversing in part — and vacated the remedy decree, id. at 46.

The appellate court remanded the cases to this Court with instructions to hold a "remedies-specific evidentiary hearing," id. at 103, and to "fashion an appropriate remedy" in light of the revised liability findings, id. at 105. Following remand, pursuant to Court Order, the parties in the two consolidated cases entered into intensive settlement negotiations. See United States v. Microsoft Corp., Nos. 98-1232 and 98-1233 (D.D.C. Sept. 28, 2001) (order requiring the parties to enter into settlement negotiations). The settlement negotiations did not resolve both cases in their entirety. However, the United States and Microsoft were able to reach a resolution in United States v. Microsoft Corp. in the form of a proposed consent decree. The settlement negotiations were partially successful with regard to the states' case, State of New York, et al. v. Microsoft Corp.; a portion of the plaintiffs in that case joined the settlement between the United States and Microsoft. The states which opted not to join the settlement between the United States and Microsoft, including Massachusetts, proposed a remedy distinct from that presented in the proposed consent decree.

Following expedited discovery, on March 18, 2002, an evidentiary hearing on the issue of the remedy commenced. The parties submitted the direct testimony in written format, while cross-examination and re-direct testimony were offered in open court. Over thirty-two trial days, the Court reviewed the written direct testimony and heard the live testimony of fifteen witnesses proffered by Plaintiff States and nineteen witnesses proffered by Microsoft. On November 1, 2002, the Court issued its Final Judgment in State of New York, et al. v. Microsoft, adopting some, but rejecting many of the litigating states' proposed remedies. State of New York v. Microsoft Corp., 2002 WL 31439740 (D.D.C. Nov. 01, 2002). On November 12, 2002, the Court entered its Final Judgment in United States v. Microsoft, approving the consent decree. United States v. Microsoft Corp., 2002 WL 31654530 (D.D.C. Nov. 12, 2002); see also United States v. Microsoft Corp., 231 F. Supp. 2d 144 (D.D.C. 2001) (memorandum opinion analyzing and conditionally approving the proposed consent decree).

Of the litigating states, only Massachusetts and West Virginia appealed this Court's Final Judgment in State of New York, et. al. v. Microsoft. On December 16, 2002, Massachusetts and the State of West Virginia filed a motion for attorneys fees and a motion to stay proceedings pending their appeal. The Court denied the motion to stay proceedings. State of New York, et. al. v. Microsoft Corp., 2003 WL 299440 (D.D.C. Jan. 15, 2003). On June 20, 2003, West Virginia voluntarily withdrew its motion for attorneys' fees and expenses with prejudice as well as its appeal of this Court's November 1, 2002, Order. Therefore, the only matter before this Court is Massachusetts's motion for attorneys' fees and expenses.

Massachusetts asks the Court to award it $20,302.72 in what it alternatively refers to as expenses and costs, and $1,992,075.00³ in attorneys' fees. Microsoft does not dispute Plaintiff's right to fees under these statutes, nor does it contest the reasonableness of the hours or rates proposed by Plaintiff. Microsoft's challenge to Plaintiff's request can be divided into two main arguments. The first is that Plaintiff did not prevail on a large number of its claims, and therefore cannot collect attorneys' fees and costs for time spent on those efforts. Def.'s Opp'n at 5-24, 41. The second argument centers around the sufficiency of Massachusetts's documentary support for its request for fees and costs; specifically, Microsoft complains that Plaintiff did not keep contemporaneous records, its records contain inconsistencies and implausible consistencies, Plaintiff used objectionable multi-day block billing, and its entries lack the requisite particularity. Id. at 25-41.

II. DISCUSSION

Before commencing its analysis of the substance of Plaintiff's fee petition, the Court addresses two preliminary matters. The first is Plaintiff's repeated reference to settlement offers allegedly proffered by Microsoft, and the settlement agreements reached by Microsoft and the other state parties to this suit. Pl.'s Reply at 1-2, 22; Pl.'s Mass. Law Reply at 2; Pl.'s Opp'n to Def.'s Mot. for Protective Order at 6. Plaintiff contends that Microsoft's position on its fees request is motivated by a desire to punish Plaintiff for appealing this Court's November 1, 2002, Final Judgment in this case. Pl.'s Reply at 1. The Court finds this argument to be irrelevant to its consideration of the fee petition. What Microsoft may have been willing to offer Plaintiff likely reflects considerations other than the merits of Plaintiff's fee petition. Moreover, neither Microsoft's nor Plaintiff's willingness or unwillingness to settle the attorneys' fee matter has any bearing on the merits of Plaintiff's fee petition. The Court therefore draws no inferences regarding the reasonableness of Plaintiff's fee petition from its descriptions of settlement discussions, nor its decision not to settle but to appeal judgment.

The second preliminary matter the Court addresses is the basis of Plaintiff's fee petition. As the following pages show, Plaintiff's failure to provide a coherent legal and factual basis for its request has made what should have been a fairly straightforward exercise for the Court, one that has required much time and effort. The Court has endeavored to decipher the legal and factual bases for Plaintiff's request, understanding that the underlying lawsuit was one of great complexity that required much time and effort to litigate. In many instances, however, the deficiencies in Plaintiff's request left the Court with no choice but to reduce its recovery. Plaintiff's haphazard and incomplete invocation of Massachusetts law required a greater expenditure of judicial resources than one would have expected given the fact Plaintiff is the Commonwealth of Massachusetts and represented by its Attorney General's Office. Furthermore, had Plaintiff elected to keep contemporaneous records of its attorneys' hours, or provided the Court with more detail regarding the activities that underlie its request, the Court's consideration of this petition would have been much less taxing and Plaintiff likely would be more satisfied with the outcome.

In this regard, the Court notes that Plaintiff provides no excuse for its failure to maintain such records. This may be because it has no excuse. The record reflects that Plain...