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Tech Law Journal |
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Editor's Notes: UNITED STATES DISTRICT COURT
Plaintiff, by his attorneys, complains of the defendant upon information and belief except for paragraphs that allege his personal transactions and adequacy to represent the class under Rule 23 of the Federal Rules of Civil Procedure. SUMMARY OF ALLEGATIONS 1. Reference is made to the Court's Findings of Fact dated November 5, 1999 in United States of America v. Microsoft Corp., Civil Action No. 98-1232 (TPJ), State of New York, et al. v. Microsoft Corp., Civil Action No. 98-1233, (TPJ) by the Honorable Thomas Penfield Jackson ("the Findings"). 2. Based in whole or in part on the Findings, plaintiff has good grounds to believe and does allege that defendant took steps and made agreements which were intended to have and did [begin page 2] have anticompetitive effects in violation of the Sherman Act ("unlawful steps"), and charged supracompetitive prices for its Intel-compatible personal computer ("PC") operating systems (including Windows program products) as further alleged in par. 12-19. 3. Based upon economic opinion, the Findings and other information, plaintiff has good grounds to believe and does allege that a portion of the supracompetitive price that plaintiff and others similarly situated paid for defendant's monopolistic products resulted directly and proximately from defendant's unlawful steps ("unlawful price inflation and overcharges"). 4. Plaintiff and others similarly situated have suffered damages in their property consisting of the unlawful price inflation and overcharges which they have paid and are entitled to recover damages from defendant therefor. JURISDICTION AND VENUE 5. Jurisdiction is premised on the Sherman Act, federal question jurisdiction and supplemental jurisdiction. 6. Venue is proper because, among other things, (a) an injunction was entered here against Microsoft on July 15, 1994 and the Findings were made here; (b) parts of the unlawful steps and acts and transactions complained of occurred in this District, and (c) defendant's ill-gotten gains from the unlawful price inflation were paid (in part) in this District. [begin page 3] PARTIES 7. Plaintiff Frank L. DeJulius ("plaintiff") is a natural person who resides in Ohio and purchased indirectly from Microsoft a Windows 95 program during the first half of 1997 and purchased directly from Microsoft during the latter half of 1999 an upgrade to the Windows 98 program. 8. A portion of the supracompetitive prices paid by plaintiff on each of his purchases was caused directly by defendant's violations of the Sherman Act and the laws of various state jurisdictions including those of Ohio. 9. At all relevant times, Microsoft Corporation, was a corporation organized under the laws of the State of Washington, engaged in developing computer software and licensing it to various purchasers. Its business activities include licensing Intel-compatible PC operating systems to purchasers. [begin page 4] CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action individually and as a class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, on behalf of all persons who purchased, directly from defendant or (as to the Second Claim under the laws of various state jurisdictions, including Ohio) indirectly, products which consisted of or included the Intel-compatible PC operating systems sold by Microsoft (the "Class") between November 8, 1989 and November 26, 1999 (the "Class Period").1 Excluded from the Class are the defendant, its affiliates and subsidiaries, and all of its officers, directors and employees. 11. This action is properly maintainable as a class action because, pursuant to Rule 23 of the Federal Rules of Civil Procedure: (a) The class is so numerous that joinder of all Class members is impractical. On information and belief, there are in excess of 10,000 members of the Class. (b) There are predominating questions of law or fact common to the Class, including: * whether defendant is liable to plaintiff and [begin page 5] the Class under the Sherman Act; * whether defendant is liable to plaintiff and the Class under the laws of various state jurisdictions, including those of Ohio (see fn. 1 and Second Claim); * whether defendant maintained a monopoly in the market for Intel-compatible PC operating systems during the Class Period; * whether defendant took anticompetitive steps, including making anticompetitive agreements or arrangements in violation of the Sherman Act; * whether (and, if so, to what extent) defendant maintained and perpetrated its monopoly at times during the Class Period (including from summer 1995 until the present) by virtue of anticompetitive, unlawful or otherwise abusive acts in violation of the Sherman Act; * whether defendant was able to charge supracompetitive prices as a result of its alleged unlawful steps or the anticompetitive effects of its unlawfully maintained monopoly or otherwise; * whether plaintiff and the Class sustained damages as a result of defendant's alleged unfair and unlawful conduct; whether econometric or other formulae exist by [begin page 6] which the amount of plaintiff's and other Class members' damages may be determined. (c) Plaintiff's claims are typical of the claims of all Class members because plaintiff transacted in similar products subject to the same course of conduct, by the same defendant with the same alleged effects. (d) Plaintiff will adequately represent the interests of the Class. Plaintiff has retained competent counsel who are experienced in complex antitrust and other class actions and they are committed to prosecute this action vigorously. (e) Prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for defendants. (f) Defendant has acted on grounds generally applicable to the Class. (g) A class action is superior to any other method for the fair and efficient adjudication of this controversy. (h) The identity of class members may be easily ascertained from the records of defendant or others. UNDERLYING ALLEGATIONS 12. During the Class Period, Microsoft (a) manufactured and licensed to various purchasers Intel-compatible PC operating [begin page 7] systems, and (b) maintained a monopoly in the market for licensing of Intel-compatible PC operating systems worldwide. Among other things, Microsoft enjoyed a ninety-plus percent share of the sales made each year during the Class Period in the relevant market. 13. At least as early as 1995, various potential competitive products arose which, but for Microsoft's unlawful conduct alleged herein, would have reduced Microsoft's monopoly in Intel-compatible PC operating systems. These products included the following: (a) the Native Signal Processing software produced by Intel which was designed to enhance video and graphics performance of Intel microprocessors; (b) the Media Player produced by RealNetworks which provided multimedia playback technology for audio and video content from the Internet; (c) the Java programming language and technologies produced by Sun Microsystems which were intended to provide an operating system independent programming language; (d) the Navigator, produced by Netscape, which was intended to permit PC users to receive audio, video, text, and graphic content from the Internet. Each of these products offered features that allowed software developers to create applications programs that did not rely exclusively on Microsoft's monopoly products (including Microsoft's Windows operating system). 14. In violation of the Sherman Act, Microsoft took [begin page 8] unilateral steps and also entered myriad agreements with parties from all sectors of the personal computer industry which were designed to and did have anticompetitive effects and to exercise Microsoft's prodigious market power and ability to harm other firms or products that posed any competitive threat to its monopoly. 15. Among such agreements which were designed to have and did have such anticompetitive effects, were the following: (a) an agreement with Intel entered at the end of July 1995 for Intel to stop promoting its Native Signal Processing software; (b) an agreement entered on July 18, 1997 between Microsoft and RealNetworks which effectively halted the threat of MediaPlayer by superimposing a strict channel on its use; (c) dozens of agreements which Microsoft entered with Independent Software Vendors ("ISVs"), between the fall of 1997 and continuing at least through November 1998, to make their Java applications reliant on Windows specific technologies and to restrain the ISVs from distributing to Windows users the non-Microsoft Java virtual machines; (d) agreements with original equipment manufacturers ("OEMs") of personal computers (including Apple Computer, International Business Machines, Hewlett Packard, Compaq, Dell and Gateway) entered between Summer 1995 and continuing until at least 1998 [begin page 9] which, among other things, (1) prevented any significant distribution by these OEMs of the Navigator program, and (2) made it far more costly for these OEMs to distribute, and for consumers to use, the Navigator program; and (e) agreements which were entered between 1996 and 1998 with Internet access providers ("IAPs") and Internet content providers ("ICPs") to restrict distribution and promotion of the Navigator program including, among others, agreements with America Online ("AOL") (including agreements entered on or about March 12 and October 28, 1996) which, among other things, placed quotas on how many Navigator programs AOL could distribute and provided AOL with a bounty for every AOL subscriber that it converted to Microsoft Internet Explorer. 16. Other unlawful steps which Microsoft took to maintain its monopoly and supracompetitive prices include, but are not limited to, Microsoft's attempt in May 1995 to induce Netscape not to compete with Microsoft. EFFECTS 17. As a direct and proximate result of Microsoft's anticompetitive steps and agreements entered in violation of the Sherman Act the development of competitive threats to Microsoft's monopoly (including those alleged in par. 13) have been eliminated or greatly limited, consumer choice of substitutes for Microsoft's [begin page 10] monopoly products (including Microsoft's Windows operating system) has or have been reduced, and Microsoft was able unlawfully to maintain its monopoly from the time of the first of its anticompetitive agreements or steps through the present. 18. During the Class Period, Microsoft was able to charge and did charge supracompetitive prices for its monopoly products (including its operating systems known as Windows 95, Windows 98, and the upgrade from Windows 95 to Windows 98). 19. As a direct result of defendant's unlawful steps, the price paid by plaintiff and members of the Class for Microsoft's monopoly products (including its windows 95 and 98 operating systems) has included unlawful price inflation and overcharges.
20. Plaintiff repeats and incorporates herein all previous allegations. 21. As a direct, foreseeable and proximate cause of Microsoft's conduct in violation of the Sherman Act, plaintiff and members of the Class have been damaged in their property in that the price or a portion of the price which they have paid for or in respect of Microsoft's Intel-compatible operating systems has been unlawfully inflated to a supracompetitive level.
[begin page 11] 22. Plaintiff repeats and incorporates herein all previous allegations. 23. Defendant's foregoing conduct also constitutes anticompetitive agreements and acts and unfair and deceptive business practices to consumers in a violation of the laws of numerous states including but not limited to Ohio (Ohio Rev. Code Ann. §§ 1345.01 et seq.), California, District of Columbia, Maine, Michigan, Minnesota, New Mexico, New York, South Dakota, Tennessee, Wisconsin and other states. 24. As a direct result of defendant's violations of these state laws, plaintiff suffered damages in Ohio on plaintiff's indirect and direct purchase in Ohio from Microsoft at the supracompetitive prices which resulted, in whole or in part, from such violations. WHEREFORE, plaintiff respectfully requests this Court to enter judgment as follows: A. Declaring that this action may proceed as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure and that the plaintiff be certified as Class representative and its attorneys as Class counsel; B. Awarding plaintiff and the Class compensatory damages (trebled) on their First Claim for violation of the Sherman Act in amounts to be established at trial (as well as attorneys fees); [begin page 12] C. Awarding plaintiff and the Class compensatory and other available damages on their Second Claim for violation of state laws in amounts to be established at trial (as well as attorneys fees); D. Ordering that Microsoft disgorge its ill-gotten and unlawful gains obtained as a result of its unlawful conduct and that a constructive trust or lien be imposed over all funds or assets traceable to those ill-gotten gains; and E. Awarding prejudgment interest and such other different or further relief as the Court may deem fit, just and proper. Coyright Tech Law Journal.
Respectfully submitted, Christopher Lovell, Esq. (CL 2595)
/s/ COCHRAN & COCHRAN Attorneys for Plaintiff and the Class [begin page 13] JURY DEMAND Plaintiff demands trial by jury.
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