MS Judge Sets Schedule for Punishment Phase

WASHINGTON (04/05/2000) - U.S. District Judge Thomas Penfield Jackson has published an aggressive schedule for the "remedy phase" of the historic antitrust battle between the U.S. government and Microsoft Corp., which calls for a rapid series of filings before a courtroom hearing on May 24.

Jackson issued his scheduling order after his second meeting with attorneys in the case in as many days. It requires the Department of Justice (DOJ) to file its proposal for how to punish Microsoft, which Jackson earlier this week found guilty of numerous violations of antitrust law, by April 28. The order allows the federal government's partners in the case, 19 U.S. state attorneys general and the District of Columbia corporation counsel, to file a single proposal if a majority of that group favors a remedy at odds with the federal government's position.

Jackson has repeatedly told government attorneys that he strongly prefers a single proposal from that side. Yesterday, Jackson bluntly told Wisconsin Assistant Attorney General Kevin O'Connor that he will decide "one omnibus remedy" in the case.

The order requires Microsoft to file its response by May 10 and the government to file a response to Microsoft's brief by May 17. It does not mention any further witness testimony in the case.

During yesterday's chambers conference, Jackson made it clear that he wants someone -- preferably the U.S. Supreme Court -- to grade his homework as soon as possible.

The judge told attorneys for both sides in the case that he is "very much desirous of having an appellate panel take a look at my work product so far and would prefer if we were able to conclude the remedy phase on a fast track," according to the transcript of a scheduling conference.

Jackson had told the attorneys for Microsoft, the Justice Department, 19 states and the District of Columbia that he wanted to wrap up the "remedy phase within 60 days. If that wasn't possible, Jackson said yesterday, he would seek to split the case in half, immediately allowing Microsoft to appeal his April 3 "conclusions of law" in the case directly to the Supreme Court, even before Jackson finishes deciding a remedy.

"I would be remiss if I didn't tell you that I will be inviting from the government a motion to provide for direct review in the Supreme Court," Jackson said yesterday.

Observers interpret Jackson's Supreme Court strategy as a weapon to spur Microsoft to move quickly during the remedy phase. Today's scheduling order indicates that Jackson has been successful in that regard. But neither Jackson, attorneys in the case, nor several legal experts are certain that the Supreme Court will agree to take an appeal in pieces, if indeed it takes an appeal at all. In any event, legal experts say, the seven-week schedule Jackson established today is unusually fast for an antitrust remedy phase, even for this fast-moving case.

Stephen Houck, the former head of the New York state attorney general's antitrust division who led the case for the 19 states and the District until recently, said he believes the federal government would take Jackson up on his suggestion that they request an expedited appeal to the Supreme Court. "They would have considered it before, but they are almost certain to take this up now with the judge's invitation," Houck says.

Houck, now with the New York firm Reboul, MacMurray, Hewitt, Maynard & Kristol, said the somewhat archaic provision is seldom invoked. "The standard is that it was of great public importance to the administration of justice. It's an option only to the U.S. government. That's the only party that can avail itself of this provision."

The law was invoked twice in 1983, in conjunction with the government's antitrust battle with AT&T -- but only after U.S. District Judge Harold Greene ordered the company to break itself up.

Houck said he doubts that Jackson would be able to split the case in two and appeal directly to the Supreme Court before the remedy phase. "I think that's highly unlikely (that the case will be split). Technically, the judge cannot do that because the government is a plaintiff. He had in mind (a Supreme Court) appeal before his remedies are linked (to his April 3 ruling). None of the parties favor that."

Yesterday, the government's lead trial counsel, David Boies, also disputed Jackson's reading of the relevant federal law, known as the Expediting Act.

Boies said there is a "severe question" as to whether Jackson could split the case in half under that law. John Warden, the Sullivan and Cromwell attorney serving as Microsoft's lead trial counsel, agreed with Boies.

Jackson then pitched an alternate plan: immediately sending his April 3 ruling directly to the U.S. Court of Appeals for the D.C. Circuit, instead of waiting until he decides on a remedy.

"My transcendent objective is to get this thing before an appellate tribunal, one or another, as quickly as possible because I don't want to disrupt the economy or waste any more of your or my time on a remedy if it's going to come back here," Jackson says.

Jackson's comment could be interpreted to mean that he doesn't want to undertake the Herculean task of deciding a remedy in the case if his guilty verdict will be overturned.

Warden and Boies, apparently misunderstanding Jackson's description of an immediate appeal to the U.S. Court of Appeals as an "alternate" plan to an immediate Supreme Court appeal, said the Expediting Act's provision against splitting the case would preclude Jackson's alternate strategy.

Although Jackson has often conducted such private meetings in the case off the record, the fount of leaks from parties in the case during supposedly confidential settlement talks persuaded him to abandon secrecy. The judge said yesterday that both he and Chicago appellate Judge Richard Posner, who mediated talks for more than four months at Jackson's behest, are "distressed at the misinformation and the leakage that has occurred despite everybody's expressed intention to maintain strict confidentiality, and so I believe the best prophylaxis is to have it all transcribed and release it on the public record."

As a first step, Jackson asked both sides yesterday to submit publicly the final offers made before settlement talks collapsed last Saturday. Boies and Warden were reluctant to submit the offers, however, saying that those offers went far beyond whatever remedy either side might propose in court. Jackson promptly offered to let Boies and Warden file the offers secretly. No mention of the offers was made in today's scheduling order. A transcript of this morning's meeting in Jackson's chambers, in which those offers presumably were discussed further, isn't yet available.

The parties in the case met today to continue hashing out the rules for the remedy phase, even as Microsoft Chairman Bill Gates met secretly with federal lawmakers in the U.S. Capitol, just up the street from the federal courthouse.

Gates appeared this afternoon at the White House alongside President Bill Clinton and Federal Reserve Chairman Alan Greenspan to talk about technology issues, including the digital divide. A Microsoft spokesperson said Gates received the White House invitation weeks ago but decided only last weekend to attend, even as settlement talks in the case were collapsing.

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