FC: American Antitrust Institute: Reject MS class action settlement

From: Declan McCullagh (declanat_private)
Date: Tue Nov 27 2001 - 08:48:03 PST

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    [About as surprising as Handgun Control calling for more laws restricting 
    firearms purchases, but there you are. --Declan]
    From: BFoerat_private
    Date: Mon, 26 Nov 2001 16:57:55 -0500
    Subject: aai- Microsoft Class Action Settlement Unfair, AAI Tells Court
    To: declanat_private
    On Tuesday, Nov. 27, the Multidistrict Litigation Court in Baltimore will 
    hd a hearing on a proposed national settlement of private class actions 
    against Microsoft. AAI today sent the following letter to Judge Motz urging 
    rejection of the settlement.
    Bert Foer
    American Antitrust Institute
    November 26, 2001
    Judge J. Frederick Motz
    U.S. District Court
    101 W. Lombard Street
    Baltimore, MD 21201
    By FAX: 410-962-2698
    Re: Proposed MDL Microsoft Settlement
    Dear Judge Motz:
    	We write on extremely short notice over the holiday weekend to express 
    distress at the proposed settlement that comes before your Court on 
    November 27. Were there more time, we would apply to speak as amicus 
    curiae, but we hope you will take notice of our concerns, which are based 
    on public reports. The American Antitrust Institute is an independent 
    non-profit education, research, and advocacy organization dedicated to a 
    vigorous role for antitrust in the national economy.  We have commented 
    frequently, as have many of our individual Advisory Board members, on 
    matters relating to Microsoft's anticompetitive activities. It is with this 
    perspective that we make the following points.
    	· First, the proposed settlement does not appear to represent a fair and 
    reasonable termination of the over one hundred private class action suits 
    against Microsoft.
    	· Second, even if the settlement is deemed fair with respect to consumers 
    in non-repealer states, a national settlement would be grossly unfair to 
    consumers in states where a right of recovery has clearly been brought into 
    being and where the plaintiffs stand ready to go to trial and, indeed, are 
    opposed to a national settlement that would preclude their right of trial.
    	·Consumers in repealer states ought to have a right to their class actions 
    being tried or settled on their own merits. As the Court of Appeals for the 
    District of Columbia Circuit said, talking about how the judiciary should 
    consider antitrust issues in the fast paced software market, even though 
    the remedy in the federal litigation against Microsoft may be too late to 
    do any good, "… the threat of private damage actions will remain to deter 
    those firms inclined to test the limits of the law." 253 F3d 34, 49.
    	·Given the large monetary damages to consumers that have been alleged in 
    the various repealer states—in the billions of dollars, the proposed 
    settlement is grossly out of proportion to what is at stake. Not only does 
    it fail to provide any benefit directly to the consumer class, it also 
    fails to achieve any of the benefits that the antitrust laws anticipate 
    through their unique "private attorney general" function. Microsoft's 
    illegal uses of its market power, which are alleged in these cases and 
    which have credibility as a result of findings by the U.S. District Court, 
    upheld by a unanimous Court of Appeals, will not be touched by this 
    settlement. The money that Microsoft will pay under the settlement is a 
    pittance for that company, having no deterrent value.
    ·An order for Microsoft to place low-cost computers and free Microsoft 
    software into the public schools, where future Microsoft customers can be 
    trained, is the type of punishment that Brier Rabbit sought in the brier 
    patch. To the extent that this influx of Microsoft products undermines 
    Apple, one of Microsoft's few remaining competitors, whose base of strength 
    happens to be in the public schools, the proposed settlement of these 
    antitrust suits may actually be anticompetitive.
    · The proposed settlement must be viewed in the context of Microsoft taking 
    advantage of a division between those states that have chosen to overturn 
    the Illinois Brick rule and those that have not. Microsoft has cleverly 
    engineered the fracture to the point where one group of lawyers 
    (representing consumers in non-repealer states) who had lost their case and 
    now have only the bargaining leverage of relinquishing their right of 
    appeal, willingly enters a nationwide settlement that gives them (but not 
    the class they represent) a little something including attorneys' fees, 
    while appearing to sell out consumers in the repealer states, whose 
    indirect purchaser claims have not yet been heard. As advocates of the 
    antitrust mission, we worry that the public will view this settlement as an 
    example of lawyers winning their fees while consumers get nothing of value, 
    an outcome that can only diminish popular support for the antitrust laws 
    We urge the Court to reject the proposed settlement as unfair or, at the 
    very least, to carve out from the settlement those states that provide for 
    a right of recovery by indirect purchasers.
    Albert A. Foer, President
    Cc: The Honorable Stuart R. Pollak
    San Francisco County Superior Court
    400 McAllister Street, Dept. 304
    San Francisco, CA 94111
    fn.The AAI is described at www.antitrustinstitute.org. Our Advisory Board 
    consists of 54 eminent law professors, lawyers, economists, and 
    businesspersons, many of whom have carefully followed developments relating 
    to Microsoft Corporation and the antitrust laws. By way of full disclosure, 
    we are aware that three of our Advisory Board members have an interest as 
    attorneys representing clients in private actions against Microsoft.
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