Judge in ‘Vista Capable’ Suit Says ‘Stay’

Microsoft has taken a beating in the courts lately. The European Commission continues to investigate what it views as anti-competitive behaviors in the European Union. The federal judge overseeing the company’s antitrust settlement with the U.S. Department of Justice in January extended Microsoft’s consent decree for another two years.

Finally, in late February, the judge in Seattle handling a lawsuit claiming that Microsoft (NASDAQ: MSFT) purposely mislead consumers with its Windows “Vista Capable” sticker campaign during the 2006 holiday buying season, certified the case as a “class action.”

That was complicated by the embarrassing disclosure of a raft of executive e-mails in the case when Judge Marsha Pechman unsealed them in February.

However, Friday, Judge Pechman handed Microsoft a win – if only a small one – when she agreed to a stay of all activities in the lawsuit while Microsoft appeals her class action ruling.

“All further proceedings, including discovery, in this case are stayed until the later of 1) denial of Microsoft’s petition for permission to appeal or 2) the Ninth Circuit [Court of Appeals]’ entry of its mandate following disposition of Microsoft’s appeal, if accepted,” Pechman’s order read. The ruling also suspends the case’s timetable until the appeals process is completed – meaning the suit will not, as originally scheduled, go to trial in October.

The upshot: Even if Microsoft cannot block the suit’s class action status, it can at least delay further discovery in the case until its appeals have gone through the appeals court process, which can be quite lengthy. With more than 100 million units of Vista already sold, a loss in this case could become a financial nightmare for Microsoft and its shareholders.

Judge Pechman’s latest ruling comes after Microsoft filed the request for a stay, as well as a request to the appeals court asking for permission to appeal, and the plaintiffs’ attorneys responded with two filings of their own. In her ruling, Judge Pechman did not explain her reasoning.

However, in its petition for a stay, Microsoft’s legal team argued that it is likely to be harmed by further disclosure of proprietary information should the case continue during the appeals process.

“[C]ontinued proceedings … would cost Microsoft a substantial sum of money for discovery and divert key personnel from full-time tasks; would intrude on sensitive pricing decisions and strategies by OEMs, wholesalers, and retailers; and would jeopardize Microsoft s goodwill with class members all with respect to claims that might not proceed on a class basis at all,” Microsoft’s request for a stay said.

Following the unsealing of 158 pages of e-mails and other correspondence, many of which were less than flattering to their authors, the plaintiffs sought to subpoena a list of Microsoft executives and partners. The stay also suspends that part of the discovery process.

The suit was initially filed a year ago by a Washington state woman who purchased a new PC bearing the “Vista Capable” sticker during the 2006 holiday season. However, the only version of Vista that the PC could run was Home Basic, which does not have the Aero Glass user interface that Microsoft advertised as the most visual aspect of higher end editions of Vista. No editions of Vista were available for consumers until January 30, 2007.

Microsoft declined to comment on Judge Pechman’s stay order.

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