Judge Orders Microsoft to Produce Documents

(September 4, 1998)  U.S. District Court Judge Thomas Jackson ordered Microsoft to produce certain documents requested by the Department of Justice which pertain to its newly raised allegations.  Judge Jackson put off deciding whether this evidence will be admissible at trial.  He also put off the question of whether the trial will be delayed by the addition of these allegations.

The Department of Justice (DOJ) largely prevailed on its September 2 Motion to Compel Microsoft to produce records pertaining to its new factual allegations.  After the hearing, Judge Jackson issued a written Order.

The DOJ filed a brief Monday night which for the first time alleged that Microsoft's illegal conduct includes its dealings with Intel, Apple, and Real Networks regarding streaming software.

Microsoft almost at the same time filed a motion seeking to limit the issues at trial.   It asked that the new allegations be excluded.  Prevailing on this motion would have rendered the DOJ's discovery requests moot.  Microsoft asked in the alternative to have the trial delayed in order to prepare defenses to these new charges.

The dispute goes to what are the issues in the case.  Microsoft took the position in its Motion to Limit Issues for Trial that none of the newly raised allegations "is directly related to the claims that plaintiffs asserted back in May , i.e., (1) alleged tying of standalone web browsing software to Microsoft’s Windows 98 operating system, (2) allegedly unlawful provisions in Microsoft’s contracts with Internet Service Providers, Internet Content Providers, Online Services and Independent Software Vendors regarding the promotion and distribution of web browsing software, and (3) allegedly unlawful provisions in Microsoft’s license agreements with computer manufacturers prohibiting the removal of features or functionality from Windows 98."

In contrast, the DOJ argued in its Opposition to Microsoft's Motion to Limit Trial that it is not bringing any new claims.   Rather, the new allegations "are evidence of (a) Microsoft's monopoly power; and/or (b) A pattern of anticompetitive conduct and agreements that is relevant to assess the purpose and effect of Microsoft's conduct concerning competing browsers and Java."

Judge Jackson held a hearing in his Washington DC courtroom at 2 p.m. yesterday (Thursday, September 3).  David Boies represented the Department of Justice.   John Warden of the law firm of Sullivan & Cromwel represented Microsoft.   Other attorneys were present, but did not participate in the oral argument.   These included Douglas Melamed and Jeffrey Blattner for the DOJ, and Charles Rule for Microsoft.  Microsoft General Counsel William Neukom was not present for this hearing.

Judge Jackson opened the hearing by saying that "the only matter that I understand to be before me ... is the Motion to Compel Discovery."  He continued that the time and place to decide Microsoft's Motion to Limit Issues for Trial, and any motion to delay the trial, is the September 17 pretrial conference.

Microsoft's John Warden argued first.  He stated that "the real issue here is ... the scope of the trial."  He explained that "they brought a targeted case, not a general monopolization case."   He reminded Judge Jackson that the Court responded to that by setting an expedited trial date, and by limiting the parties to twelve (plus two rebuttal) depositions each.

He conceded the documents sought by the DOJ "may be evidence in some monopolization case, but not this monopolization case."

"There has to be an end to what we have to prepare to defend ourselves against .. and then some time to prepare," he said.

Microsoft's position is that the documents which it must produce "have to be based on the accusations made in the Complaint," and the issues raised by the Complaint are "integration of Windows 98," "certain distribution agreements," and "license agreements with OEMs."

Judge Jackson was not impressed.  He told Warden that Jackson's view of the case "is not so narrow as yours".  In Jackson's view, there are "three major thrusts of the case."  These are the legal claims of  monopolization, attempts to monopolize, and unreasonable restraints on competition, which includes tying and exclusionary agreements.  (David Boies later concurred with this interpretation of the case.)

Warden persisted: "This isn't really a discovery dispute."  He emphatically stated that the issues as defined by the government and the Court give Microsoft "no notice at all!"

David Boies then argued on behalf of the DOJ.  He stated that "we are not claiming attempted monopolization of the video streaming market."  He insisted that the DOJ is not raising new claims.  Rather, it is asking for evidence on new topics, which support the original claims of monopolization, attempted monopolization, and restraining competition.

For example, he stated that "what Microsoft was doing in the QuickTime area was the same as what it was trying to do in the Netscape area ... leveraging."

Judge Jackson ordered Microsoft to produce most of the records sought by the government, including Microsoft's databases relating to OEM license agreements for Microsoft operating system products.  However, he set no specific deadline.

Judge Jackson did not address whether the evidence acquired from this new discovery would be admissible at trial.  Nor did he rule on Microsoft's alternative request for a continuance.  Jackson told Warden that if Microsoft wants to delay the trial, it should file a motion for a continuance, and he would take it up at the pretrial conference on September 17.  Warden assured him that "if these matters remain in the case, we are going to have to see a material continuance."

Warden did not mention for how long the trial should be delayed.  However, he did say that "we are not asking for years; we need months."

In contrast, Boies stated after the hearing, "I think this trial is going to start on September 23."  It would be in the government's interest to be able to present evidence at trial on the new allegations, yet not allow Microsoft much time to develop rebuttal evidence.

Microsoft asserts that the discovery and trial issues should all be rendered moot by the summary judgment which it expects to win shortly.  Charles Rule stated after the hearing that "there ought to be a summary judgment granted in Microsoft's favor, so this will all be a moot issue, if there is no trial, obviously."  John Warden similarly stated after the hearing that "a week from tomorrow the Court will hear our Motion for Summary Judgment, and in our view, that should be the end of the case."

DOJ Attorney David Boies engaged in the following dialogue with the press on the front steps of the courthouse after the hearing.

Question:  Tell us what you think.  Are you pleased, or are you happy?
Boies:  I am not going to comment on that.
Question:  Do you think that this trial is going to start on September 23rd?
Boies:  I think it is going to start on September 23rd or ...
Question: How do you respond to the suggestion that in adding all of these new matters Microsoft needs more time to prepare?
Boies:  I think we covered that before.  We don't think that there is substantial expansion of the case.  What is at issue here is additional evidence of the claims that are already in ...
Question:  Some people have suggested that you are trying to shift away from the browser claims because of the appellate court ruling.  Is that true?"
Boies:  I think that we made very clear in there that we have two complaints.   One is the monopolization of the operating system market, the maintenance of that monopoly power by trying to undermine both Java and browsers that were viewed as a threat to that power, and second, attempting to monopolize the browser market.  Those were are claims in May.  Those are our claims now.  And those will be our claims at trial.  What is at issue is what is the evidence that supports those claims.   And it is true that we have gotten some additional evidence -- some additional good evidence -- in discovery that we intend to use.  That is what discovery is for.

Microsoft Attorney John Warden made the following statement to the press on the front steps of the courthouse after the hearing.

"Ladies and Gentlemen, as most of you know, I am John Warden of Sullivan & Cromwell, representing Microsoft.

What happened today was that the Court made it quite clear that it was only ruling on discovery issues.  Our position, as you heard me say in court, is that the government is trying to expand its case at the eleventh hour by adding a multitude of new allegations and topics to the case that were not part of the case brought in May.  The Court today allowed discovery on those topics.  It reserved decision on whether they are properly part of the trial. It said it would take those issues up at the pretrial conference.  If these claims, these allegations, these topics, remain in the case, and if there is a trial, we will present a powerful rebuttal of the allegations the government now seeks to make.  We don't think that the trial should be expanded to include these allegations.  We have not had notice of them, as I said in court.  But they are groundless, and we will rebut them if necessary.

Now you heard me say, "if there is a trial."  I think most of you are also aware that a week from tomorrow the Court will hear our Motion for Summary Judgment, and in our view, that should be the end of the case.  Thankyou."

Excerpt from statement made by Microsoft legal advisor Charles Rule on the front steps of the courthouse after the hearing.

"The judge said that discovery is going to proceed; but what the Judge left open was the question of whether or not the government in fact could pursue those avenues at trial -- could introduce that evidence at trial.  And, what a pretrial conference does is to some extent map out what is going to happen at trial.  The judge at that point, if there is a trial, if he does not dismiss it on summary judgment, will say, you know, what is going to be in, what is going to be out.  And at that point, the Judge has said, he is leaving himself the flexibility, obviously, to rule on any need for a continuance or anything at that time.  But until you know what is happening at trial, who knows, the judge has certainly left that issue open, and simply going to provide those documents, and I think that if you read the papers, and now we have the benefit of being able to read the government's papers, there ought to be a summary judgment granted in Microsoft's favor so this will all be a moot issue, if there is no trial, obviously.