Judge allows class-action case to proceed against Microsoft

Posted: Thursday, August 31, 2000

SAN FRANCISCO -- A judge has allowed the first class-action suit to proceed against Microsoft Corp. on allegations that the software giant's monopoly harmed California consumers. Dozens of similar suits linger nationwide.

In a 21-page opinion released late Tuesday, San Francisco Superior Court Judge Stuart R. Pollak said an untold number of California consumers could be represented in one trial to determine whether they were forced to pay unreasonably high costs for Microsoft products. He said denying the suit ''could result in repetitious litigation.''

''This case involves a very large number of claimants with relatively small amounts at stake,'' Pollak said. ''Most consumers have little incentive to litigate independently since the costs of litigation undoubtedly would overwhelm their potential recovery.''

Microsoft spokesman James W. Cullinan said the Redmond, Wash., company is reviewing the ruling.

''This is just one step in a long process in this case,'' Cullinan said. He declined further comment.

Attorneys in the case are scheduled to meet with Pollak on Oct. 4 to prepare for a trial. No trial date has been set yet.

The products at issue are Microsoft's Windows operating system, its MS-DOS operating system, Word programs and Excel software purchased on or after May 18, 1994.

Microsoft urged Pollak on Aug. 4 not to allow the case to proceed because it would be nearly impossible to determine damages. Microsoft attorney Charles B. Casper argued that the company markets its products to thousands of companies who resell them at different prices, adding that the judge would have to weigh each consumer's claim on a case-by-case basis.

Lawyers seeking class-action status said that Microsoft was trying to shield itself behind its size.

''Just make your business large enough that you can overcharge and get away with it,'' San Francisco attorney Daniel J. Furniss argued.

Pollak's decision came three weeks after Microsoft asked a federal judge in Baltimore to dismiss or at least consolidate 62 pending federal and state class-action suits. That action is pending and, so far, none have been able to proceed.

Courts in Hawaii, Iowa, Kentucky, Nevada, Oregon, Rhode Island and Texas have dismissed similar class-action lawsuits on grounds that laws in those states don't allow them.

The majority of the cases nationwide were filed after U.S. District Court Judge Thomas Penfield Jackson in Washington, D.C., ruled that the company violated federal antitrust laws. Microsoft is appealing Jackson's ruling and his order to split the software giant into two companies.

Three weeks ago, Pollak suggested that it would be a Herculean task for attorneys to demonstrate how consumers were wronged.

''If they can't do it, they'll lose the case,'' Pollak said.

Microsoft has argued that, even if it was a monopoly, consumers in many instances benefited and were not harmed. For instance, Microsoft says Netscape, now a division of America Online Inc., dropped its roughly $50 charge for a Web browser after Microsoft began giving its browser away for free.



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