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Microsoft loses 'Vista Capable' appeal; more insider e-mails could emerge

Class-action case over Vista marketing program to resume

April 21, 2008 12:00 PM ET

Computerworld - Microsoft Corp.'s attempt to reverse a lower court's ruling in the ongoing "Vista Capable" lawsuit was denied by an appeals court on Monday. The decision means the case can resume.

It also means that new insider e-mails subpoenaed from Microsoft and nearly 30 other companies could be made public.

In a brief order dated April 21, the Ninth Circuit Court of Appeals rejected Microsoft's request to overturn a decision by U.S. District Court Judge Marsha Pechman in February that granted class-action status to a lawsuit that charges the company deceived consumers in 2006 with its Windows Vista Capable marketing program.

The year-old case alleges that many of the PCs labeled with a "Vista Capable" sticker in the months before Vista was released were able to run only Home Basic, a version the plaintiffs say lacked some of the most heavily promoted elements of the new operating system. Microsoft has disputed the charges.

In papers filed last month, Microsoft petitioned the Ninth Circuit Court to hear its challenge and asked Pechman to suspend the class-action case while the appeal was heard by the higher court. The company argued that continuing the lawsuit might mean new disclosures of insider e-mails, which could "jeopardize Microsoft's goodwill" and "disrupt Microsoft's relationships with its business partners."

Pechman agreed and suspended the lawsuit three weeks ago while the appeals court reviewed her class-action decision.

The case has gained attention because of the 158 pages of Microsoft e-mails the plaintiffs' attorneys acquired during discovery. Among other revelations, the messages showed that top-level Microsoft executives struggled with the new operating system on machines labeled "Vista Capable," and that partners such as Dell Inc. warned Microsoft that the campaign would confuse consumers about which versions of Vista their new PCs would be able to run.

Monday, Microsoft said it was eager to renew the case. "The Ninth Circuit's decision not to accept our request for interim review is not a ruling on the merits of our case," said spokesman Jack Evan. "We look forward to presenting all of the facts on what the district court itself said is a novel claim."

With the lawsuit moving forward again, it's possible more Microsoft documents will see the light of day; last month, lawyers for the plaintiffs served subpoenas on 29 companies and individuals in a hunt for more information about the Vista Capable program.

Among the companies and people told to produce e-mails and other documents were retailers like Best Buy and Wal-Mart, computer makers such as Dell and Hewlett-Packard Co., chip maker Intel Corp., and Jim Allchin, the former head of Windows development who resigned the day after Vista shipped in January 2007. Several of those companies filed objections to the subpoenas, calling the requests "harassing" and disruptive to their business.

"Plaintiffs are pleased that the Ninth Circuit has denied Microsoft's petition for permission to appeal Judge Pechman's class certification order," said Jeff Thomas, an attorney representing one of the original plaintiffs. "We look forward to the setting of a new trial date and proceeding with discovery."

When Pechman suspended the discovery process, she also vacated the case's schedule, which called for a trial date in late October. It's unclear how the two-week delay will affect the schedule.

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