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Microsoft faces class-action lawsuits

Logo - InfoWorldNovember 23, 1999 | InfoWorld

By Nancy Weil and James Niccolai

Three lawyers filed a class-action lawsuit against Microsoft Monday on behalf of millions of the software vendor’s customers in California. The suit is the latest to emerge since a U.S. federal court judge determined earlier this month that Microsoft is a monopoly.

Monday’s lawsuit, filed in California Superior Court in San Francisco, accuses Microsoft of using its monopoly in the desktop PC software market to charge users an unfairly high price for its Windows operating system. The suit was filed on behalf of all users in California who bought a version of Windows 95 or Windows 98.

The lawsuit seeks treble financial damages for the plaintiffs. The suit doesn’t put a dollar figure on those damages, but notes that the suit was filed on behalf of “millions of consumers or end-users.”

After Judge Thomas Penfield Jackson issued his findings of fact in the government’s antitrust case against Microsoft earlier this month, some legal experts predicted his ruling that the software maker is a monopoly would lead to a barrage of additional lawsuits.

A Microsoft spokesman on Monday said a class-action lawsuit similar to the California suit was filed last week in Louisiana, although he couldn’t provide any specifics about the suit. Other private lawsuits seeking class-action status have already been filed in Orange County, Calif., New York, and Birmingham, Alabama, according to an Associated Press report Monday.

“We think it’s very unfortunate for consumers and the economy that these kinds of groundless lawsuits are being threatened against a company that has driven prices down and given great value and innovation to consumers,” said Microsoft spokesman Tom Pilla.

The lawsuits are “particularly ironic” considering that Windows 95 and Windows 98 cost less than, for example, IBM’s OS/2 and Apple Computer’s Macintosh operating system, according to Pilla.

Until a verdict is reached in the government’s antitrust case against Microsoft, Judge Jackson’s findings of fact can’t be brought to bear in any of the private antitrust actions, according to Pilla. What’s more, Microsoft has indicated that it will appeal any unfavorable ruling in that case, a process that could take years, Pilla noted.

The California suit filed Monday attaches Jackson’s findings of fact as “Exhibit A,” and refers to the judge’s determination that Microsoft abused its monopoly power to the detriment of consumers.

A rash of private lawsuits would likely increase the incentive for Microsoft to settle its case with the U.S. government, observers noted. The prospect of a settlement increased last week after Jackson appointed a moderator to the case in Washington.

The three lawyers who filed the California lawsuit — Terry Gross and Francis Acarpulla of San Francisco, and Daniel Mogin of San Diego — aren’t newcomers to high-tech litigation. In 1997 the trio helped force a settlement in a case against Intel that accused the chip maker of spreading misleading data about the performance of its microprocessors, according to information on Gross’ Web site.

The private lawsuits apparently haven’t dampened Wall Street’s enthusiasm for Microsoft’s stock. The software vendor’s shares on the Nasdaq stock exchange closed Monday at $89.81, up $3.81.

Microsoft Corp., in Redmond, Wash., is at www.microsoft.com.

Nancy Weil is a correspondent in the Boston bureau of the IDG News Service, an InfoWorld affiliate. James Niccolai is senior U.S. correspondent for the News Service.