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Ruling Denying Microsoft's Motions to Dismiss and for Summary Judgment.
Re: Bristol Technology v. Microsoft, Case No. 398 CV 1657 (JCH).

Date: December 30, 1998.
Source: Bristol Technology, Copyright 1998.  Reprinted with permission.  This document has been edited for HTML, but not for content.





)   Civil Action No.:
)   3-98-CV-1657 (JCH)
)   December 30, 1998



1 Familiarity with the Ruling on the Motion for Preliminary Injunction is assumed in connection with the reading of this decision.

On October 8, 1998, the defendant Microsoft Corporation moved to dismiss this action in its entirety, or in the alternative, for summary judgement on all counts. [Dkt. #46]. Since its filing, there has been a hearing on the plaintiff’s Motion for a Preliminary Injunction and a Memorandum of Decision thereon which issued this same date (hereinafter referred to as "PI Decision") [Dkt. #94].1  For reasons set forth below, the court DENIES the defendant’s Motion in its entirety.


In deciding Microsoft’s Rule 12(b)(6) motion to dismiss, the court accepts as true the material facts alleged in the complaint and draws all reasonable inferences in plaintiff’s favor. See Kaluczky v. City of White Plains, 57 F.3d 202, 206 (2d Cir. 1995) (citing Hill v. City of New York, 45 F.3d 653, 657 (2d Cir. 1995)). Dismissal of a complaint under the Rule is inappropriate unless "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." I. Meyer Pincus & Associates v. Oppenheimer & Co., 936 F.2d 759, 762 (2d Cir. 1991). The issue on a motion to dismiss "is not whether the plaintiff will prevail, but whether he is entitled to offer evidence to support his claims." United States v. Yale New Haven Hosp., 727 F. Supp. 784, 786 (D. Conn. 1990) (citing Scheuer v. Rhodes, 416 U.S. 235, 236(1974). In deciding such a motion, consideration is limited to the facts stated in the complaint or in documents attached thereto as exhibits or incorporated therein by reference.

Under Rule 56 of the Federal Rules of Civil Procedure, a summary judgement motion may be granted where there is no genuine issue as to any materail fact. Fed.R.Civ.P. 56(c). No genuine issue exists if, on the basis of all the pleadings, affidavits and other papers on file, and after drawing all inferences and resolving all ambiguities in favor of the non-movant, it appears that the evidence supporting the non-movant’s case is so scant that a rational jury could not find in his favor. See Gallo v. Prudential Residential Servs., Ltd. Partnership, 22 F.3d 1219, 1224 (2d Cir. 1994).


In its Motion, Microsoft has asserted several grounds for dismissal of this action. With respect to both the state and federal antitrust claims (Second through Twelfth Claims), Microsoft argues that Bristol has failed to plead both antitrust standing and antitrust injury. Further, with respect to the monopolization claims of the Complaint (Second through Fourth Claims and Eighth through Tenth Claims), Microsoft argues that a dismissal is appropriate because Bristol’s expert has conceded that Microsoft does not possess monopoly power in either of the markets for technical workstation operating systems or departmental server operating systems. Finally, Microsoft argues that both Bristol’s promissory estoppel and Connecticut Unfair Trade Practices Act ("CUPTA") claims should be dismissed because the Complaint fails to allege a cause of action under either.

A.  Antitrust Injury and Standing

Turning first to Microsoft’s arguments concerning Bristol’s antitrust claims, Microsoft claims that Bristol’s Complaint fails to allege antitrust standing. The court does not agree. In Conley v. Gibson, 355 U.S. 41 (1957), the Supreme Court explained the liberal system of "notice pleading" set up by the Rule 8 of the Federal Rules of Civil Procedure:

[A]ll the Rules require is "a short and plain statement of the claim" that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.... The Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits.

Id. At 47-48 (citations omitted).

The Supreme Court has identified five factors, analysis of which should determine the standing issue:

  1. the causal connection between the antitrust violation and the harm to the plaintiff, and whether the harm was intended;
  2. the nature of the injury, including whether the plaintiff is a consumer or competitor in the relevant market;
  3. the directness of the injury, and whether the damages are too speculative;
  4. the potential for duplicative recovery, and whether the apportionment of damages would be too complex; and
  5. the existence of more direct victims.

When read in context of the rest of this well-pleaded complaint, certainly, paragraph 25 (where Bristol describes how its product makes non-Windows operating systems more effective competitors), and paragraphs 60 and 70, for example (in which Bristol alleges Microsoft acted with intent to harm Bristol), sufficiently allege an antitrust injury to sustain a claim under the antitrust laws.

2  It appears to be Microsoft's legal theory, see Microsoft's Memorandum in Support of Motion to Dismiss at 12-14, that merely because there are many cross-platform tools that allow application programs to be translated between UNIX and Windows NT, any injury to Bristol cannot be deemed and antitrust injury. Such is not the law. See Klor's, Inc. v. Broadway-Hale Stores, Inc. 359 U.S. 207, 211 (1959) ("[A] 'monopolistic tendency' not to be tolerated merely because the victim is just one merchant whose business is so small that his destruction makes little difference to the economy.").

Also, as set forth in greater detail in this court’s PI Decision at pages 18 to 26, Bristol has satisfied not only the antitrust standing requirement, but also has pled an antitrust injury. Again, the court must take on its face as pled the allegations in a light most favorable to the plaintiff. With respect to the issue of antitrust injury, Bristol must have alleged in its Complaint that it has suffered an "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendant’s acts unlawful."2  Brunswick Corp. v. Pueblo Bowlamatic, Inc., 429 U.S. 477, 489 (1977). Allegations that Bristol is a competitor in the relevant markets, paragraph 25, that it has been harmed by Microsoft’s intentionally anticompetitive behavior, see, e.g., 70 and 72, and that the harm is of the type the antitrust laws were designed to prevent, see, e.g., paragraphs 75 and 76, are sufficient to satisfy the requirement of antitrust injury.

With respect to Microsoft’s alternative Motion for Summary Judgement on those grounds, the record before the court clearly shows that there are, at least, material issues of fact on antitrust standing and injury. See PI Decision at 18-36. Thus, both aspects of Microsoft’s Motion based on lack of antitrust injury and standing are denied.

B.  Section 2 Claims

Microsoft further argues that, because Bristol’s economic expert has acknowledged that Microsoft currently has no monopoly power in the technical workstations and departmental sever operating systems markets, the monopolization claims involving those markets must be dismissed, alternatively, summary judgement should enter on them.

However, an excerpt of Dr. Langlois’ deposition testimony does not counter the clear allegations in Bristol’s Complaint regarding Microsoft’s monopolization of the server and workstation operating systems markets. See Complaint at 23-24. Because this court must accept as true all material facts alleged in the Complaint, the argument urged by Microsoft is inappropriate in the Rule 12(b)6 context.

Microsoft also presses for summary judgement on this issue. This court will not enter judgemnt at this stage on Microsoft’s adverse admission theory. First, the Fifth Circuit cases that Microsoft at 7, do not compel this conclusion. In Fox v. Taylor Diving & Salvage Co., 694 F.2d 1349, 1355-56 (5th Cir. 1983), the court determined that the plaintiff adopted the expert’s trial testimony based on the totality of the circumstances surrounding that testimony including, for instance, the plaintiff's attorney's failure to question the witness on the adverse assumptions proffered. Further, the Fox court instructed that the circumstances in which the testimony of an expert witness can serve as an adverse admission against the presenting party should be narrowly construed. Id. at 1354. In H. E. Collins v. Wayne Corp., 621 F.2d 777 (5th Cir. 1980), although the court held that the expert's deposition testimony was an admission, it stated:

[the testimony was not, of course, a binding judicial admission, and had the district court admitted [it, the defendant] would have had an opportunity to explain why some of [the expert's] conclusions were not consistent with [the defendant's] position at trial.

Id. at 782.

Further, Bristol has properly responded with a Rule 56(f) affidavit, identifying discovery that is needed on the pricing practices and profit margins of the defendant. Given that the essence of monopoly power is the ability to control price, Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 596 n.20 (1985), Bristol should be allowed the opportunity to adduce direct evidence of monopoly power, as opposed to merly proving a percentage market share that lies

Within the "ambiguous zone." See 2 Julian O. von Kalinowski, Antitrust Laws and Trade Regulation, 25-30 to 25-32 (2nd ed. 1998) (explaining that courts are split over whether market share of 40-70% alone establish market power).

C.  Promissory Estoppel Claim

Microsoft next argues that the Fourteenth Claim, alleging promissory estoppel, should be dismissed. "Under our well-established law, any claim of estoppel is predicated on proof of two essential elements: the party against who estoppel is claimed must do or say something calculated or intended to induce another party to believe that certain facts exist and to act on that belief; and the other party must change its position in reliance on those facts, thereby incurring some injury." Connecticut Nat'l Bank v. Voog, 233 Conn. 352, 366 (1995) (citations omitted). The plaintiff has sufficiently alleged a cause of action for promissory estoppel in its Complaint. See 122 ("Microsoft by its acts and words represented to Bristol that Microsoft would continue to make available to Bristol the source code and other materials contemplated by the WISE agreement"); |123 ("Bristol reasonably relied and acted on the truth and accuracy of the representation."); 124 ("In reasonable reliance on the representations of Microsoft, Bristol changed its position."); 126 ("As a direct and proximate result of Microsoft's failure to make good on the representation . . . Bristol has been damaged in its business and property."). Certainly under the federal rules of pleading and the standard to be applied at the Rule 12(b)(6) stage, it cannot be said that a motion to dismiss is appropriate with respect to this claim at this time.

With respect to Microsoft's alternative Motion for Summary Judgment on this claim, the court finds that, on the present record, there are genuine issues of material fact. Further, the plaintiff is entitled to proceed to discovery before the court rules either on a motion for summary judgment or on the merits of this claim.

D.  CUTPA Claim

3  What is curious about this argument is that Microsoft rests its defense to other of Bristol's claims on the fact that it is under no contractual obligation with respect to the provision of source code to Bristol for product versions NT 4 and NT 5.

Finally, Microsoft moves to dismiss Bristol's CUTPA claim. Microsoft's theory is that Connecticut does not recognize a CUTPA cause of action when a written contract exists, unless the plaintiff alleges that the defendant acted in contravention of the plaintiff's contractual rights. See, e.g., McKeown Distributors, Inc. v. GYP-Crete Corp,, 618 F. Supp. 632, 643-44 (D. Conn. 1985). In making this argument, Microsoft misconstrues Bristol's claim.3 Bristol makes no claim that Microsoft breached the contract entered into by the parties in 1994. Its claim concerns Microsoft's conduct subsequent to the making of that contract, and in connection with matters that are clearly not covered by that contract. Thus, Microsoft's motion to dismiss pursuant to Rule 12(b)(6) must be denied as Bristol as alleged a well-pleaded claim for unfair trade practices under CUTPAT. See Complaint at 115-117, 120; see also Fink v. Golenbock, 283 Conn. 183, 215 (1996).

Further, Microsoft is also not entitled to summary judgement on this claim. There are genuine issues of material fact, for example, whether the conduct Bristol complains of is "unfair" under CUTPA. See PI Decision at 44-50.


Bristol has met the pleading requirements of Rule 8 with respect to its monopolization, CUTPA and estoppel claims. It has also satisfied the pleading requirements concerning antitrust standing and injury. Accordingly, Microsoft's Motion to Dismiss is DENIED.

Microsoft as alternatively requested this court to grant summary judgement on the entire complaint. As suggested above, the plaintiff's Rule 56(f) motion appropriately suggests areas of discovery that is plaintiff is entitled to pursue before its claims are tested by a summary judgement motion. The court notes, thought, with the benefit of more that three days of hearing evidence, and the review of hundreds of exhibits running into thousands of pages, that there are serious issues of material fact in this case that prevent the entry of a summary judgment at this time. Accordingly, the court DENIES the alternative motion of the defendant for summary judgment without prejudice to renewal at the completion of discovery if, at that time, there are no material issues of fact.


Dated at Bridgeport, Connecticut this 30th day of December, 1998


Janet C. Hall
United States District Judge


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