Microsoft in uphill battle on appeal
By David Lawsky, Reuters, 5/25/2000
WASHINGTON - Microsoft says the judge in its
antitrust case is rushing to judgement on whether
to divide the firm, but experts said on Thursday
although its argument may be a good one it faces
an uphill battle in appeals court.
District Judge Thomas Penfield Jackson abruptly
ended the trial Wednesday two years after it was
filed, asking the government to tinker with a
proposal to break the company into two entities
before resubmitting it Friday. Microsoft Corp.
(MSFT.O) can comment on the form of that final
draft, but not do much more.
The judge's decision caught Microsoft by surprise.
Jackson has already found Microsoft violated
antitrust law by abusing monopoly power and his
next task is to decide what remedy to impose.
Microsoft lawyer John Warden had opened the
hearing by proposing it focus on the company's
motion to dump consideration of a break-up, and
then turn to a schedule for witnesses and hearings
on other remedies in the coming months.
The judge brushed that aside and said the
discussion would be about remedies. After the
hearing, Microsoft general counsel Bill Neukom
said challenges to the judge's remedy procedures
will be one of many issues the company raises on
appeal.
Most experts contacted said it would have been a
good idea for the judge to conduct further hearings.
One sympathetic to the government case, who
asked not to be identified, said further hearings
would have been a good insurance policy.
"There's probably enough to survive due process
but the judge has raised a question he didn't need
to raise" about his procedures, said the legal
expert.
A Washington lawyer who for the most part
represents defendants thought Microsoft's
concerns about further hearings would be looked on
favorably by a higher court.
"You're not going to find any controlling legal
authority that says you have to do it but put
yourself in the shoes of an appellate court," said
John Stuart Smith of Nixon Peabody, noting that
Jackson "did not permit (Microsoft) to either
present evidence, conduct discovery or have a factual hearing on the impact" of
a remedy such as a break-up.
But Duke Law School professor Tom Rowe, who teaches remedies, said
appeals courts give judges wide latitude to conduct their courtrooms as they
see fit.
"I think it is highly likely the decision about whether to hear more evidence,
witnesses and argument would be subject to deferential appellate review,
reversible only for abuse of discretion," he said.
But some other parts of Microsoft's appeal -- for example, whether the judge's
conclusions of law were correct -- will be scrutinized by a much tougher
standard and there the judge's views will be given no deference, Rowe said.
Indeed, Jackson has had experience in getting reversed on Microsoft cases.
Bill Kolasky, who wrote a friend-of-the-court brief sympathetic to Microsoft,
compared Jackson's failure to hold more hearings to his 1997 action in an
earlier Microsoft case.
The government had asked Jackson hold Microsoft in contempt for violating a
1995 agreement with the government. Instead, Jackson issued a preliminary
injunction without conducting hearings or letting Microsoft comment. His
procedure was overturned unanimously by the court of appeals in May, 1998.
"What Jackson is doing here is what he did in the contempt proceedings in
1997," said Kolasky, adding there was "more process than in 1997, but not
much more."
But another law professor, Herbert Hovenkamp of the University of Iowa College
of Law, who has on occasion done work for some of the states that sued
Microsoft, said the situations in 1997 and now were very different.
"I think (Jackson) is in the clear," said Hovenkamp, because he had already
heard the views of both sides on paper and in person. Whether or not it was a
good idea for the judge to hold more hearings, it was not required by law,
Hovenkamp said.
"If he decides it's not worthwhile to have another hearing, he's free to call it
quits," Hovenkamp said.
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