Microsoft Cleans Up Another Suit

Microsoft on Monday announced that it has settled the class action suit brought against it by consumers and businesses in Minnesota.

The suit claimed the software vendor used its monopoly power to inflate the prices of its products. According to a Microsoft spokesperson, executives will not comment on the settlement before the terms are presented to the judge.

Rick Hagstrom, a partner in the law firm Zelle Hoffman Voelbel Mason & Gette, and one of the lead plaintiffs’ attorneys, told that some pieces of the settlement will be hammered out in binding arbitration, with a July 1 deadline to take the settlement back to the judge for approval. The firm is seeking somewhere between $283 and $425 million as part of the settlement.

Hagstrom wouldn’t say which Microsoft executives were involved in the negotiations, or which parties made offers, but he pointed out that before the case went to trial, Microsoft and the plaintiff class engaged in court-ordered mediation. Those discussions, while they didn’t result in settlement, started the process. He said it would be unusual not to have some inquiries back and forth during the course of a case.

Craig Corbitt, a partner in Zelle Hoffman Voelbel Mason & Gette who worked on the California case, told that Minnesota’s class action suit was broader than the Federal antitrust complaint against Microsoft, involving word processing and spreadsheet applications as well as the operating system. He said the case was groundbreaking because of its scale and because it actually went to trial. Both Chairman and Chief Software Architect and President Steve Ballmer had been subpoenaed.

Corbitt said that while he didn’t have knowledge of how other states’ cases against Microsoft were settled, the inference that the Minnesota plaintiffs’ lawyers were tougher negotiators was not unreasonable.

Microsoft won dismissals or denials of class certification in 18 states, and has settled with nine states and the District of Columbia. Hagstrom said his firm drew on the proceedings of the previous settlements with states and the District of Columbia. The firm was part of the legal team that handled California’s class action suit, and it is participating in the Iowa action.

Over the seven weeks of this trial, the first of the cases against Microsoft that actually went to trial, he said, “We learned a lot, and I think Microsoft learned a lot… It was eye-opening for the public and for the jury.”

In the course of the trial, personal e-mails among Microsoft executives were made public, offering a peek into Redmond’s battle against Novell’s DR-DOS, its wrangles with Lotus over Java and its evaluations of the competitive position for Windows.

Hagstrom said that a resolution could have come at any time before or during the trial.

“As a defendant, maybe Microsoft was looking for us to blink before trial,” he said. “We didn’t blink. We’re a tenacious group of trial attorneys, and we made it clear to Microsoft that we intended to take this all the way.”

Minnesota is the latest domino to fall in Microsoft’s row of outstanding litigation. On April 2, the company settled all outstanding litigation with archrival Sun Microsystems and on April 12 it paid $440 million to license InterTrust’s digital rights management technologies. Still on the docket is Real Networks’ own anti-trust suit that accuses Microsoft of unfair competition against its media player.

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