Microsoft Plays the Squeaky Wheel

Microsoft (MSFT) urged the U.S. Supreme Court on Tuesday - for the second time - to send the court-ordered breakup of the software giant back down to an appeals court for initial review.

In a 10-page filing, Microsoft's lawyers disputed earlier arguments by government lawyers that the case required urgent consideration by the high court. Furthermore, Microsoft disagreed that the historic antitrust case could be boiled down to a handful of legal points, saying that the Supreme Court "should leave to the court of appeals the onerous task of reviewing the 'entire evidence' to identify the many factual errors made by the district court." Last week, the Justice Department asked the high court to honor U.S. District Judge Thomas Penfield Jackson's certification of the case for direct Supreme Court review. Jackson ruled on June 7 that Microsoft should be broken into two companies, one for its Windows operating systems and one for the rest of its products, to "remedy" a host of federal and state antitrust violations alleged by the Justice Department, 19 states and the District of Columbia. Jackson also ordered a list of temporary conduct restrictions on the proposed new Windows company. Jackson set a 10-year limit on his ruling after the date that it takes effect.

He eventually stayed his entire judgment pending appeals and sent the case over the heads of the U.S. Court of Appeals for the District of Columbia Circuit by invoking the federal Expediting Act of 1903. The law, which provided for direct Supreme Court review of federal antitrust cases, was amended in 1974 to give the high court the option of refusing to hear such direct appeals unless they were deemed to be of sufficient importance. Since 1974, the Expediting Act has been invoked twice, both times during the break up of AT&T Corp. (T) , which was done with a consent decree.

But Microsoft wants the case to go before the appeals court first. The company's lawyers have long been confident of their chances before the judicially conservative appeals court, which in June 1998 overturned a prior Jackson decision against Microsoft. The 10-judge appeals court panel has signaled its eagerness to take the case by declaring that all seven of its eligible judges would hear Microsoft's initial appeal, rather than consigning it to the customary three-judge panel.

In Tuesday's brief, which reprised many of the points made in a July 26 filing, Microsoft again argued that the case was too complex - and Jackson's judicial and procedural errors too numerous - for the Supreme Court not to let the appeals court sift through the case first. The company's lawyers declared that Jackson's "improper decisions regarding the conduct of the trial" and "imposition of draconian relief without holding a hearing cast serious doubt on [Jackson's] reliability as finder of fact." Microsoft also argued that contrary to the government's claim, its case is unlike AT&T's in that the "nature of the issues presented and the state of the record" are more unsettled.

Among other matters, Microsoft told the Supreme Court that it should let the appeals court decide whether to disqualify Jackson from any further proceedings because of numerous media interviews he has granted in recent months.

Later Tuesday, the federal government filed a supplementary brief arguing that the states and the District should be included in the high court's review of the case under the Expediting Act. Microsoft has argued that the law applies only to federal cases, even though the company successfully argued at the beginning of its case that Jackson should combine the federal and state complaints. As a precaution, the states and the District also have filed a separate petition outside the Expediting Act asking the Supreme Court to hear them right away.

A Justice Department spokeswoman declined to comment on Microsoft's filing. The Supreme Court, which is in its summer recess, is expected to decide by October whether to hold on to the case or kick it back to the appeals court.

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