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IN THE United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT Nos. 98-5399, 98-5400 MICROSOFT CORPORATION, Defendant-Appellant, v. UNITED STATES OF AMERICA, Plaintiff, MICROSOFT CORPORATION, Defendant-Counterclaim Plaintiff-Appellant, v. STATE OF NEW YORK, ex rel. Attorney General DENNIS C. VACCO, et al., Plaintiffs-Counterclaim Defendants. THE NEW YORK TIMES COMPANY, et al., Intervenors-Appellees.
REPLY OF MICROSOFT CORPORATION IN FURTHER Twenty depositions have already been taken in this case, and more than 25 remain to be taken. The district court has scheduled trial to begin in September, just four months after the complaints were filed. Microsoft seeks a stay that will permit the parties [begin page 2] promptly to resume taking depositions in the normal accepted manner under the Federal Rules of Civil Procedure while this Court considers the question of first impression raised by this appeal. Microsoft does not seek delay. On the contrary, if the Court grants Microsoft’s
motion for a stay, the parties can resume taking depositions without further ado. Absent a
stay, however, the more than 25 remaining depositions in this case will become a media
circus, with scores of members of the public and press potentially in attendance at each
one. In addition to the carnival atmosphere that such media attendance will create, the
parties may be required to make frequent trips to the district court to resolve subtle and
difficult issues of confidentiality--in many instances pertaining to matters that neither
side ultimately will choose to make subjects of proof at trial. These disruptions, which
are inevitable notwithstanding the parties’ good-faith efforts to develop the
"protocol" required by the Order, will seriously interfere with Microsoft’s
ability to prepare for trial in the short time remaining. The injury that Microsoft will
suffer as a result of these disruptions will be irreparable-that is, it will be incapable
of being undone even if Microsoft prevails on its appeal. ARGUMENT 1. No one disputes that the Court has jurisdiction over Microsoft’s appeal. In fact, the DOJ expressly concedes that "the collateral order doctrine applies in the circumstances presented by this case." (DOJ Opp’n at 4 n.4.) Similarly, the district court concluded that the Order "involves a collateral . . . question of law," and cited Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), as authority for an immediate appeal of the Order. (See August 11, 1998 Order at 2.) [begin page 3] 2. Microsoft is likely to prevail on its appeal because the history of the Publicity in Taking Evidence Act confirms that Microsoft’s reading of the term "deposition" is correct. The DOJ and intervenors argue to the contrary based largely on cases that never considered the history of 15 U.S.C. § 30. (See DOJ Opp’n at 5-6; Intervenors Opp’n at 6-8.) Those cases instead simply assumed that 15 U.S.C. § 30 applies to discovery depositions in view of the statute’s language without ever considering the origin of the statute or the nature of the proceedings referred to by the term "deposition." Indeed, many of the cases cited by the DOJ and intervenors assumed that 15 U.S.C. § 30 applies to discovery depositions in the context of deciding completely different issues. See, e.g., United States v. Procter & Gamble Co., 356 U.S. 677, 683 (1958); United States v. United Fruit Co., 410 F.2d 553, 555-56 (5th Cir. 1969); Times News Ltd. of Great Britain v. McDonnell Douglas Corp., 387 F. Supp. 189, 196 (C.D. Cal. 1974). Simply stated, the question of statutory interpretation raised by this appeal is one of first impression, and the references on which the DOJ and intervenors rely as purported authority for their interpretation do not address (much less decide) the question presented. The DOJ and intervenors also rely heavily on Judge Edelstein’s handling of the IBM litigation as a precedent for the Order. (See DOJ Opp’n at 5; Intervenors Opp’n at 7.) In fact, the DOJ goes so far as to say that "the experience of the IBM litigation" establishes that 15 U.S.C. § 30 can be applied to discovery depositions with "no appreciable disruption" (DOJ Opp’n at 9), an assertion with which the district court took issue (see 8/11/98 Tr. at 13). Suffice it to say that others have a different view of the manner in which that litigation was conducted, including the district court in this case. (See id. at 20 ("I am not sure that Judge Edelstein’s precedent is a precedent that I would like to necessarily follow insofar as the [begin page 4] management of the case is concerned.").) As one legal publication noted when Judge Edelstein was recused from the IBM case in 1995: One bizarre incident that stands out in the minds of lawyers is Edelstein’s ruling that under the Publicity in Taking Evidence Act, all depositions in the case had to be read into the trial record. For several months, attorneys droned on, while the judge occasionally fell asleep or left the courtroom.
Jeff Barge, Judge’s Rulings, Words Lead to Recusal, 81-APR A.B.A.J. 32, 32-33 (1995).1 The history of 15 U.S.C. § 30 confirms that Congress never intended the statute to apply to modern discovery depositions now being taken at a breakneck pace in this case. It is undisputed that "in 1913 depositions were taken principally to preserve testimony" for trial. (DOJ Opp’n at 6.) It is also undisputed that Congress enacted 15 U.S.C. § 30 in reaction to the decision in United States v. United Shoe Machinery Co., 198 F. 870 (D. Mass. 1912). (See DOJ Opp’n at 7-8; Intervenors Opp’n at 8-9.) The DOJ and intervenors contend, however, that the facts of United Shoe "tend to support the conclusion that the statute applies to pretrial depositions irrespective of the use to which such testimony is put." (DOJ Opp’n at 7; accord Intervenors Opp’n at 8.) That contention cannot be reconciled with a careful reading of United Shoe or the legislative history of 15 U.S.C. § 30. In United Shoe, the testimony of all witnesses was taken before an examiner appointed by the court. See 198 F. at 871. That testimony was reduced to writing, signed by the witness and submitted to a court of equity, which then decided the case on the papers without ever holding an evidentiary hearing in open court. Id. The "depositions" taken by the [begin page 5] examiner were the only trial record. As the DOJ and intervenors point out (see DOJ Opp’n at 7-8; Intervenors Opp’n at 8-9), the court in United Shoe sought to defend its exclusion of the public from the proceedings before the examiner based on the general distinction between the pretrial taking of evidence and the trial itself, noting that the testimony taken by the examiner does not become "legal evidence" until it is accepted by the court. 198 F. at 871. In enacting 15 U.S.C. § 30, Congress did not reject the general distinction between pretrial proceedings and trials. Congress instead concluded that the proceedings before the examiner in United Shoe were, in effect, the trial of the action because there was no subsequent evidentiary hearing. Congress therefore determined that such "hearings" before examiners or masters should be open to the public (as they had always been in the past) as the only "trial" of the action: It is the universal practice in all equity suits brought by the United States Government under [the Sherman Act] for the court to appoint a master to take testimony. As a general rule this master is, in effect, a traveling court and he has to go to various parts of the country to take evidence . . . . Until a short time ago it was always supposed that the taking of testimony by such master was a public function and that the rules regarding the publicity of courts generally applied to such masters. In all cases that have ever been commenced by the Government under this act, until very recently, there never was any attempt made to have such hearings held in secret. H.R. Rep. No. 62-1356, at 1 (1913), reprinted in 8 The Legislative History of the Federal Antitrust Laws and Related Statutes 6395 (Earl W. Kintner ed., 1984). Although Congress analogized the examiner in United Shoe to a "traveling court," the intervenors insist that "the ‘examiner’ was no more than a glorified court reporter," and argue that the "depositions" in United Shoe "were remarkably similar to discovery depositions taken today pursuant to the Federal Rules." (Intervenors Opp’n at 9 (emphasis in original).) The intervenors are simply wrong. Indeed, Representative Norris, one of the [begin page 6] sponsors of the bill that became 15 U.S.C. § 30, stated that the practice at issue in United Shoe--the taking of evidence by a traveling examiner or special master rather than in open court-was unique even in 1913: There is not any other class of cases that I know of where it is the almost universal rule that all evidence is taken by a master or traveling court. Most of this evidence in the ordinary case is taken in open court. 62d Cong. Rec. 2511 (daily ed. Feb. 3, 1913) (statement of Rep. Norris), reprinted in 8 The Legislative History of the Federal Antitrust Laws and Related Statutes 6397 (Earl W. Kintner ed., 1984). In short, the "depositions" in United Shoe were akin to trial testimony because there was no subsequent trial, and thus they were not, as the intervenors contend, "remarkably similar to discovery depositions taken today pursuant to the Federal Rules." (Intervenors Opp’n at 9 (emphasis in original).) The DOJ and intervenors further contend that the depositions in this case are not true "discovery" depositions, but rather "are being taken for the purpose of creating substantive evidence to be used in lieu of live trial testimony." (DOJ Opp’n at 5; Intervenors Opp’n at 9 n.4.) As an initial matter, in Pretrial Order No. 2, the district court imposed strict limits on the use of deposition testimony in this case. (A copy of Pretrial Order No. 2 is annexed hereto as Exhibit A.) Pretrial Order No. 2 expressly provides that (i) "deposition excerpts should be offered to prove only subordinate or predicate issues, such as authenticity of exhibits (where contested) or foundation evidence for direct testimony or expert opinion to be presented at trial" and (ii) "[n]o party should expect to prove a genuinely contested issue of material fact solely by means of deposition excerpts."
The intervenors also note (Intervenors Opp’n at 9 n.4) that the DOJ represented to the district court at the August 12, 1998 hearing that "the lion’s share" of the depositions at [begin page 7] issue are depositions de bene esse. (A copy of the transcript of the August 12, 1998 hearing is annexed hereto as Exhibit B.) A deposition de bene esse is "[t]estimony to be read at trial, so far as relevant and competent, as though the witness were present in court." Black’s Law Dictionary 44 (6th ed. 1990). Because such deposition testimony will be read at trial as though the witness were present in court, members of the press and public will hear that testimony in open court when evidence is taken, at the same time and in the same manner as the district court. This situation is therefore very different from the one at issue in United Shoe, where there was no subsequent trial in open court.2 Finally, the DOJ and intervenors contend that Congress’s 1976 amendments to the Antitrust Civil Process Act "left no doubt that section 30 means exactly what it says and that it applies with full force to modern discovery depositions." (Intervenors Opp’n at 10; accord DOJ Opp’n at 8.) The DOJ and intervenors fail to acknowledge, however, that such ex parte investigative depositions are not subject to the Federal Rules of Civil Procedure and that the House Judiciary Report concerning the amendments stresses that "nothing" in the amendments was meant "in any way" to "alter[] the postcomplaint procedures established by the Federal Rules." H.R. Rep. No. 94-1343, at 15 n.40, reprinted in 1976 U.S.C.C.A.N. 2596, 2610 n.40. In view of these facts, the significance of Congress’s 1976 amendments to the proper interpretation of 15 U.S.C. § 30 is ambiguous at best. Indeed, the DOJ and intervenors point to absolutely no evidence that Congress even considered the question sub judice in amending the Antitrust Civil Process Act. As a result, and the intervenors’ assertion that those amendments "left no doubt" that the statute "applies with full force to modern discovery depositions" (Intervenors Opp’n at 10) should be recognized for what it is-empty hyperbole. 3. Microsoft will be irreparably injured absent a stay because broad public and press attendance will convert the remaining depositions into a media circus, causing both delay and disruption. It is hard enough to prepare for trial in less than four months in a major antitrust case brought by the DOJ and 20 different Attorneys General under Sections 1 and 2 of the Sherman Act and a myriad of different state laws without also having to accommodate scores of members of the public and press at each deposition. Although the DOJ and the States attempt to make light of the disruption that the presence of the press and members of the general public at the remaining depositions will cause (see DOJ Opp’n at 9; States Opp’n at 2-3), the district court saw things very differently, remarking to the intervenors: "I hope that you realize what effect you may have on these proceedings." (8/11/98 Tr. at 3.) Leaving aside the substantial logistical difficulty of accommodating so many people, concerns about confidentiality will invariably necessitate frequent off-the-record consultations between witnesses and their counsel, thus interrupting the examinations and inevitably prolonging the depositions. The parties also may have to resort frequently to the district court to resolve disputed questions of confidentiality, which will inevitably arise given the nature of the claims asserted in the case. In fact, Assistant Attorney General Joel I. Klein informed the House Judiciary Committee in his March 1998 letter recommending that 15 [begin page 9] U.S.C. § 30 be repealed that making depositions open to the public "could raise unnecessary complications," especially in "high profile civil litigation." (An excerpt of the relevant portion of Assistant Attorney General Klein’s March 1998 letter to the House Judiciary Committee is annexed hereto as Exhibit C.) There has not been a civil antitrust case with as high a profile as this one in decades. Plaintiffs and the intervenors suggest that the "protocol" the parties are currently negotiating in accordance with the Order will obviate all concerns about confidentiality and about disruption and delay inherent in opening discovery depositions to the public in a celebrated case. (See DOJ Opp’n at 8-9; States Opp’n at 2-4; Intervenors Opp’n at 13.) In fact, the States and intervenors go so far as to suggest that "Microsoft’s participation in the [protocol] negotiations " shows that Microsoft is not "likely to suffer irreparable injury." (States Opp’n at 3-4; accord Intervenors Opp’n at 13.) Microsoft is participating in good faith in the protocol negotiations because it is required to do so by the Order. That does not mean, however, that Microsoft will not suffer irreparable injury absent a stay. In any event, the protocol that the parties are negotiating is complicated and will not insure against disruption or delay. If the parties are to complete the remaining depositions in the short time before trial, the depositions will have to be double- and triple-tracked. Finding adequate facilities capable of accommodating members of the press and public for multiple simultaneous depositions of both Microsoft officers and employees and nonparty deponents will be difficult to say the least. In short, the situation created by the Order is simply unworkable and is bound to result in significant delay. The prompt resumption of depositions in this case is not only in Microsoft’s interest, but in the public interest as well. As the States frankly state, the "prompt resolution of [begin page 10] the scheduled depositions is a matter of some urgency," and "the public interest" in a "prompt resolution" of this case "is extraordinarily great." (States Opp’n at 2-3.) Contrary to the claims of the States and intervenors (see States Opp’n at 2 n.3, 3; Intervenors Opp’n at 13), however, the stay that Microsoft seeks will facilitate, not delay, the resumption of depositions. If Microsoft’s motion for a stay is granted, depositions in the action-which, according to the States, "have been stayed for several days, at the cost of great disruption to the trial preparations of the parties"-can be resumed promptly in circumstances calculated to facilitate their timely completion. (States Opp’n at 2.) 4. The stay that Microsoft seeks will preserve the status quo that existed before the intervenors filed their motion while the Court considers the important question raised by this appeal. Twenty depositions have already been taken in this case, mostly of nonparty deponents. Large portions of those depositions have been designated by the nonparties as Confidential or Highly Confidential under the Protective Order and thus remain unavailable to the public and press. Microsoft simply seeks to have the remaining depositions in this case go forward pending the resolution of this appeal according to the same procedure that has applied to all previous depositions-a procedure to which all parties to this action agreed in submitting the Protective Order to the district court and on which numerous nonparties have relied. Indeed, if the Court were to deny Microsoft’s stay motion, then Microsoft would bear the brunt of what would be a profound change in the status quo-the Protective Order would still preclude Microsoft’s in-house lawyers litigating the case from having access to the previous deposition testimony that nonparties have designated Highly Confidential, while the contents of the deposition testimony of Microsoft witnesses would be broadly disseminated in The New York Times and on the nightly news. [begin page 11] Even though they waited until deposition discovery in this case was nearly half over to raise the issue of public attendance, the intervenors nevertheless claim that this Court should disregard their delay in ruling on Microsoft’s stay motion because they filed a motion to intervene on May 21, 1998. (See Intervenors Opp’n at 4 n.2.) As the DOJ notes, however, the intervenors’s original motion to intervene "neither invoked the Publicity in Taking Evidence Act . . . nor sought [the right] to attend any depositions in this matter." Instead, the intervenors waited until August 10, 1998-two days before the deposition of William Gates was scheduled to begin-to raise the issue. (See DOJ Opp’n at 2-3.) Moreover, although the intervenors’ claim that they did not realize that "deposition discovery had commenced" in this case until August 6, 1998-more than two months after this lawsuit was filed and a month before trial was scheduled to begin-that claim is simply not credible. What did the intervenors think was happening after the district court’s entry of Pretrial Order No. 1 on June 12, 1998 providing for depositions on 10 days’ notice? The intervenors’ claim of ignorance is belied by the fact that Reuters, one of the intervenors, reported on July 16, 1998-three weeks before the intervenors claim they first learned that depositions had begun-that "[l]awyers have begun taking depositions in preparation for a trial in the Microsoft antitrust case scheduled to begin in eight weeks, officials said yesterday." (A copy of the July 16, 1998 Reuters article entitled Microsoft Case Depositions Begin is annexed hereto as Exhibit D.)
Nor will the public suffer irreparable injury if a stay is granted. In an effort to create the impression that Microsoft is doing something nefarious, the intervenors repeatedly assert that Microsoft wishes to proceed with "secret" depositions. (See, e.g., Intervenors Opp’n at 4, 6, 13, 15.) That assertion is ridiculous. Microsoft seeks simply to proceed [begin page 12] with depositions in the manner in which they are typically conducted in civil litigation in this country, even in antitrust actions brought by the United States. As the DOJ acknowledges, "[t]he Publicity in Taking Evidence Act has seldom been invoked over the years." (DOJ Opp’n at 2-3.)3 If this Court ultimately determines that the intervenors’ interpretation of 15 U.S.C. § 30 is correct, the intervenors can be afforded access to appropriately edited videotapes and transcripts of all the depositions in this case-which would still represent unprecedented public access to pretrial discovery materials. Indeed, if this appeal is resolved before the start of trial, then the intervenors can have access to such materials before the district court does. Any delay in resolving this issue is attributable to the intervenors having waited as long as they did to raise it. In claiming that access to edited videotapes is inadequate, the intervenors attempt to rely on the public’s First Amendment right to attend open trials. (See Intervenors Opp’n at 13-15.) That reliance is misplaced. The public will have access to the trial of this case to the normal extent, consistent with the First Amendment. Indeed, in recommending that the Publicity in Taking Evidence Act be repealed, the DOJ conceded that there is no longer any "need for this type of provision" because antitrust cases are now resolved by a public trial. As Assistant Attorney General Klein explained to the House Judiciary Committee in his March 1998 letter, "[i]f the matter goes to trial, the trial will be public." In contrast, the issue presented by this appeal-the public’s right of access to pretrial discovery materials-does not implicate the First Amendment. See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 33 (1984). The intervenors’ argument to the contrary-that "the First Amendment provides the [begin page 13] yardstick by which these statutory rights are to be measured" (Intervenors Opp’n at 14 n.8)-is completely circular and should be rejected. Lastly, the determination of whether the public will suffer irreparable harm should be informed by the underlying purpose of statute. The intervenors misunderstand the rationale for 15 U.S.C. § 30. The Attorney General asked Congress to enact 15 U.S.C. § 30 in order to create publicity for government antitrust actions so that witnesses with helpful evidence would come forward. Representative Clayton explained: Sometimes the bystanders have heard things and the Attorney General has derived information from them which, if they had been excluded from the hearings, he perhaps would not have gotten. Sometimes the matter has gone to the press and has been discussed there, and from that source he has derived further information beneficial to him in the successful prosecution of suits against trusts. 62d Cong. Rec. 2511 (daily ed. Feb. 3, 1913) (statement of Rep. Clayton), reprinted in 8 The Legislative History of the Federal Antitrust Laws and Related Statutes 6399 (Earl W. Kintner ed., 1984). Circumstances could hardly be more different today, as the DOJ conceded in recommending to Congress that the statute be repealed. No one contends in this case that public attendance at depositions is needed to generate publicity so that witnesses with evidence will come forward. Nor could anyone plausibly do so given the unprecedented publicity that this action has already received. [begin page 14] CONCLUSION For the foregoing reasons, as well as those set out in Microsoft’s original motion, Microsoft respectfully requests that this Court stay the Order pending Microsoft’s appeal. Dated: New York, New York
[begin page 15] Certificate of Service and Exhibits omitted.
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