Microsoft Settles Minnesota Lawsuit
Microsoft Corp. on Monday continued the drive to leave its legal woes behind by agreeing to settle a class-action lawsuit filed by Minnesota customers who claimed they paid too much for the software titan’s products.
The suit was the only antitrust case against Microsoft by consumers to reach trial. The settlement cuts to seven the number of antitrust suits filed on behalf of groups of consumers pending against the company.
Terms of the final deal won’t be made public until June because some issues remain unresolved. But outside experts speculated that the arrangement was similar to those reached in 10 other states, including California, which offered millions of consumers discounts on future purchases and aided schools in poor neighborhoods.
Such deals -- cheaper for Microsoft than cash settlements -- require consumers to report their past purchases in return for vouchers good for discounts on additional hardware and software. The vast majority of customers don’t fill out the vouchers, and the unclaimed amounts are split between Microsoft and the schools.
Even when the vouchers are collected, some go toward purchasing Microsoft products, which cost much less for the company to make than for consumers to buy.
But Minnesotans may make out somewhat better than other states’ residents, analysts said, because the plaintiffs’ lawyers had made it two-thirds of the way through their case and put on effective testimony. Some of those lawyers worked on California’s case, which settled with Microsoft pledging $1.5 billion in vouchers.
“One suspects that the plaintiffs got a pretty good settlement, but we don’t know,” said University of Baltimore law professor Robert H. Lande. “We do know that the plaintiffs are aggressive, and they got a great settlement in California.”
The Minneapolis case went to trial in March in Hennepin County District Court and featured evidence and testimony that went beyond what had been presented in the U.S. government’s antitrust case against the company, which was settled in 2001.
A Stanford economist testified that Microsoft could be held responsible for high prices charged to consumers, even though they didn’t make their software purchases directly from Microsoft. And a former executive at a small computer manufacturer testified that Microsoft charged his firm based on the number of machines he shipped, even if they didn’t include Microsoft’s Windows operating system. So it made no financial sense to install rival software, the former executive told the jury.
Said attorney Richard Hagstrom, a lawyer for the plaintiffs, who had been seeking $425 million: “We thought it was going very well.”
Earlier this month, Microsoft reached a $2-billion settlement with Sun Microsystems Inc. Microsoft still faces antitrust suits by competitors Burst.com Inc. and RealNetworks Inc.
In addition, suits by consumers in Iowa, New Mexico, Vermont, Arizona, Nebraska, Massachusetts and Mississippi are pending. And Microsoft intends to appeal a recent antitrust judgment by the European Commission.
Analysts said they expected the wave of settlements to continue.
“They are doing it deliberately to clear the decks,” said Prudential Securities legal analyst James Lucier. “They feel that now is the time to try to bring some finality and closure to this.”
Microsoft shares rose 37 cents to $25.53 on Nasdaq.
