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State Class Action Crisis Continues With Microsoft

The nation is currently engulfed in a huge state class action crisis, which continues to get worse. Following in the wake of the millions of dollars "earned" by lawyers in the tobacco cases, lawyers are lining up in front of courthouses to file consumer class action cases against Microsoft. Surely it is no coincidence that before the U.S. Justice Department’s lawsuit against Microsoft was filed, few private class action suits against Microsoft existed, but following Judge Thomas Penfield Jackson’s decision ordering the break-up of Microsoft and restrictions on certain of its business practices, over 100 consumer state class actions have been filed.

Earlier this month, a Minnesota state judge granted class action status in a consumer antitrust suit accusing Microsoft of overcharging customers who bought the Windows operating systems through middlemen and violating Minnesota’s antitrust laws by illegally creating and maintaining a monopoly in the computer operating system market. This case mirrors similar class-action suits pending in California, Maine, Wisconsin, South Dakota and Michigan (all states that have recently passed tailor-made legislation to allow indirect purchasers to recover damages in antitrust suits).

The explosion in state class action filings as a means of effectuating social reform is increasingly becoming a means to "blackmail" corporate defendants as private class action suits piggyback on government litigation. The single most important event of class certification becomes the fulcrum to shakedown a corporation to settle the case. Although the federal courts have indicated an increased tendency to refuse class certification in mass tort and product liability cases, state judges seem lax in applying class certification standards. The irresponsible manner in which state courts are adjudicating these suits perhaps prompted Judge Richard Posner in 1995 to deny class certification, to encourage the courts to think long and hard before assuming the "undue and unnecessary risk of a monumental industry-busting error in entrusting the determination of potential multibillion dollar liabilities to a single jury . . .." (In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1304 (7th Cir. 1995).

The class action suit, designed to improve access to courts and facilitate efficiency of resolution of claims, has become unwieldy and ineffective with an increase in lawsuits actually causing a decrease in judicial efficiency. The cost of this lawsuit abuse undoubtedly will higher prices for consumer products, lost business expansion and product development. The larger issue, however, is whether private state class action lawsuits that piggyback on government litigation really serve the public good or merely enrich lawyers.


Judge to Rule on Microsoft Antitrust Settlement

U.S. District Judge J. Frederick Motz, who is overseeing the class-action lawsuit brought by consumers against Microsoft, indicated he will rule by the middle of December on the embattled software maker’s proposed antitrust settlement

Microsoft’s controversial proposal to end the consumer driven class-action lawsuit calls for the company to provide software, computers and other resources valued at more than $1 billion to thousands of needy school systems throughout the country. According to Microsoft attorney David Tulchin, "The settlement is a great settlement for the kids and the county. It helps 7 or 8 million kids in the poorest schools get the benefits they wouldn’t otherwise have." Attorneys for Microsoft will continue to make their case for the settlement at a hearing on December 10, 2001.

Critics of the deal argue that it would only strengthen the very monopoly and abuses that the lawsuit is attempting to remedy. Apple Computer’s Steve Job released a statement harshly criticizing the proposal: "We’re baffled that a settlement imposed against Microsoft for breaking the law should allow, even encourage, them to unfairly make inroads into education — one of the few markets left where they don’t have monopoly power."

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