|
Microsoft suit has little impact
|
 |
November 22, 1999: 8:25 p.m. ET
Class-action in California leaves company, investors unphased
By Staff Writer Richard Richtmyer
|
NEW YORK (CNNfn) - The lawyers who filed a class-action lawsuit Monday claiming Microsoft violated California state law by overcharging for its Windows operating system admittedly have a tough case to prove.
The suit, filed in San Francisco Superior Court, claims that California consumers "paid more for Windows than they would have paid in the absence of the illegal trust" and seeks unspecified monetary damages.
While the class-action is case is built on the findings of fact handed down by U.S. District Judge Thomas Penfield Jackson, who has been presiding over the U.S. Justice Department's antitrust case against Microsoft, the lawyers pursuing the California class-action will need to go a few steps beyond that, according to Daniel Mogin, who, along with fellow class-action lawyers Francis O. Scarpulla and Terry Gross, filed the suit.
In his findings of fact, Jackson determined that Microsoft indeed had monopoly power over the operating systems that run on the vast majority of the world's personal computers. The governments aim in that case is to strip Microsoft of its monopoly power and level the competitive landscape.
"The government cases that have been brought are about achieving structural remedies," Mogin said in an interview with CNNfn.com. "This case is about monetary damages for consumers, for the people who purchased or licensed Windows."
Although he described Jackson's findings as the foundation of the class-action suit, they will not be enough to prove their case, according to Mogin.
"They get us about 85 percent of the way there, as far as liability goes," he said. "But they only give us a start on what's going to be a long road as far as proving other damages goes."
Mogin said the class-action will focus on one of Jackson's findings in particular. Citing an internal Microsoft study from November 1997, Jackson said that the company "could have charged $49 for an upgrade to Windows 98" but instead chose to charge the "revenue-maximizing price" of $89, even though the $49 price would have been profitable.
The class-action suit will be tied very closely to that $40 differential, according to Mogin. "We're going to build off of that," he said.
Investors seemed unimpressed by the lawsuit. Shares of Microsoft (MSFT) gained 4.43 percent in Nasdaq trading Monday, closing 3-3/16 higher at 89-13/16.
Enthusiasm about a possible settlement in the government's case against Microsoft was the driving force behind the day's gains. After the closing bell Friday, Jackson appointed a mediator in that case, leading most observers to believe that an out-of-court settlement is imminent.
Microsoft itself also shrugged off the lawsuit.
Claiming that Microsoft's prices are lower than its competitors', Microsoft spokesman Mark Murray said that the class-action suit is baseless.
"We just think it's very unfortunate that anyone would be threatening these kinds of groundless lawsuits against a company that has consistently driven prices downward and delivered great innovative products to consumers," he told CNNfn.
"I think the factual record is going to show very clearly that Microsoft's prices are actually lower than most of our major competitors," Murray added. "Lower than IBM , lower than the Macintosh operating system. In fact, the judge's own findings of fact said that IBM charges 2 1/2 times as much as Microsoft charges for Windows `98. So it's very hard to see how this case has any merit whatsoever."
The California class-action is just the latest in a string of lawsuits filed against Microsoft since Jackson's ruling earlier this month. The company is facing at least seven other suits filed in Alabama, Louisiana and New York.
But a flood of follow-on lawsuits is common after a case such as the one Microsoft has been fighting against the government, according to Michael Malina a partner in the law firm of Kaye, Scholer and former chairman of the New York State Bar's antitrust section.
"It is virtually certain whenever there is a rather significant government prosecution … and there's a record map as to how to prove it," Malina told CNNfn. "Private actions will be brought because there's a lot of money in that pot of goal at end of the rainbow, at least that's the way it seems."
And because Jackson separated the "findings of fact" from the "conclusions of law" in the government's antitrust case, he may have done much of the legal legwork for the attorney's who want to go after Microsoft in civil proceedings, Malina said.
"The judge has given these plaintiffs a clear road map, street by street almost house by house, if you will, as to what they have to prove and they can just go out and prove it themselves."
Even so, Mogin and his colleagues in California admit that even with a map, the journey will be nonetheless a long one.
"It would be very difficult to estimate, but I'm sure it will be a very long process," he said. 
|
|
|
|
|
|
Microsoft
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
