The Nebraska Supreme Court decided on Friday to revive an antitrust-related class-action lawsuit against Microsoft that asserts that the software giant overcharged consumers in that state for Windows 98. The suit's renewal is taking place in a dramatically different legal landscape than existed when a lower court dismissed the case in mid-2003. Today, Microsoft faces an imminent legal defeat at the hands of the European Union (EU), and the company is involved in its first state-based antitrust trial in Minnesota, a trial that features charges similar to the Nebraska charges.
"It's kind of exciting when the little guy takes on the big guy," Lead Attorney Robert Hillis said of the decision. Hillis represents two women from Fremont, Nebraska, but believes the class-action suit could eventually represent at least 4000 consumers. Hillis says he'll have to collect data from Microsoft to determine exactly how many consumers the suit might affect.
In its ruling, the Nebraska Supreme Court noted that its earlier decision to uphold a lower court dismissal of the case was in error because the lower court misinterpreted the language of that state's Consumer Protection Act. According to the Nebraska Supreme Court, even companies that don't sell products directly to consumers, as was the case with Win98, can be sued for overcharging consumers. The Nebraska case is just one of more than 30 similar suits Microsoft faced in the wake of its federal antitrust trial, in which a US District Court found that the company's overcharging of customers for its Windows and Microsoft Office products was part of its monopoly abuses.
Interestingly, the Nebraska decision was divided, with three of the seven members of the Nebraska Supreme Court dissenting. To reach its decision, the Supreme Court ultimately adopted the rationale behind the Iowa Competition Law, which stipulates that consumers be protected from price gouging, even in the event of indirect sales. This reasoning is sharply different from how the US Supreme Court interprets federal antitrust law, in which consumers aren't protected in the event of indirect sales. "To deny the indirect purchaser, who in this case is the ultimate purchaser, the right to seek relief from unlawful conduct would essentially remove the word 'consumer' from the Consumer Protection Act," Judge John Wright wrote in the court's decision.
The Nebraska case is now headed back to a lower court, which will hold further hearings to determine whether the case should go to trial. The lower court will make a revised decision based on the notion that Microsoft is indeed liable for overcharging even those consumers who purchased Win98 indirectly from Microsoft, such as purchasing from hardware makers new PCs that included preinstalled copies of Win98.
A Microsoft representative expressed disappointment in the decision. "Microsoft has been a market leader in delivering great software at very competitive prices and has even reduced prices while adding features and functionality to its products," the spokesperson said. "Our high-volume, low-cost business model empowers consumers and is the opposite of overcharging."