Microsoft-Calif. Talks Appear to Have Failed

Renewed settlement talks between Microsoft Corp. and California class-action lawyers for buyers of Windows software appear to have failed, reducing the chances that a federal judge will approve an earlier $1-billion deal to resolve more than 100 private lawsuits.

Both sides in the talks said Thursday that they expect mediator Ken Feinberg to tell U.S. District Judge Frederick Motz as soon as today that a more generous deal is not in the offing.

They believe Motz will then rule quickly on whether to give preliminary approval to the earlier plan.

Last month, the Baltimore judge asked Microsoft to negotiate with San Francisco attorney Eugene Crew, who had been appointed by a California state court to lead class-action suits on behalf of consumers who say Microsoft overcharged them in its monopoly over software.

Crew had been left out of the initial round of talks between Microsoft and class-action lawyers from other states.

Those talks produced a controversial plan for Microsoft to help public schools get $1 billion worth of software and machines.

Crew complained that the proposed settlement did nothing for the victims of Microsoft’s misconduct, which had been established by a federal appeals court considering a separate lawsuit by antitrust authorities.

Crew said U.S. consumers could recover as much as $46 billion at trial, while the other class-action lawyers estimated they could win $5 billion to $13 billion.

It is unusual for judges to reject proposed settlements as unfair. But Motz said at an earlier hearing he was reluctant to impose the terms on citizens of states such as California, which provide more recourse for consumers who buy goods through third parties, in this case computer firms. He then asked Microsoft to bring Crew into the new talks.

That second round of discussions, which broke off Tuesday, barely got off the ground.

“I have nothing to report, except to say that no progress was made and it wasn’t for a lack of attempt on our part,” Crew said.

Microsoft spokesman Jim Desler agreed that the two sides remained far apart.

Motz “just wanted, as a matter of process, to have California be part of it,” Desler said. “I think this satisfied the judge’s request.”

Feinberg couldn’t be reached for comment.

A resolution of the case would lift one of the two major legal clouds over Microsoft as it continues to fight nine states in federal court in Washington.