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Judge gives Microsoft big win in 'Vista Capable' case

Strips class-action status from the case; plaintiffs must sue Microsoft separately

February 18, 2009 12:00 PM ET

Computerworld - A federal judge today stripped class-action status from the "Vista Capable" lawsuit that has plagued Microsoft Corp. for nearly two years, but will allow the plaintiffs to continue to sue the company separately.

The split decision does not put an end to the lawsuit, but it will make it much more difficult for consumers to press their cases.

Not surprisingly, Microsoft applauded the news. "We're pleased that the court granted our motion to decertify the class, leaving only the claims of six individuals," said Microsoft spokesman David Bowermaster in an e-mail late Wednesday. "We look forward to presenting our case to the jury, should the plaintiffs elect to pursue their individual claims."

In a ruling on two motions that Microsoft made in November, U.S. District Court Judge Marsha Pechman granted a motion to decertify the class but denied the company's motion for summary judgment.

The consumers who brought the original lawsuit, and those who followed as members of the class action, will be free to continue their cases, but they will have to do it individually, not as a group, Pechman said. "Approximately one year ago, this Court certified a class in this matter and allowed Plaintiffs 'to further develop their price inflation theory,'" Pechman said. "It is now apparent that class treatment is no longer appropriate."

Later in the ruling, she spelled out what that meant: "Plaintiffs may only pursue their claims individually."

Pechman's ruling comes almost exactly a year after she granted the case class-action status. At that time, she said that the plaintiffs could not collectively claim that Microsoft had deceived them with its Vista Capable marketing program, since that would have required an individual determination for each member of the class. Instead, said Pechman, they could pursue a "price inflation" line of reasoning, which would argue that PC buyers paid more than they would have otherwise, after Microsoft's campaign boosted demand and increased the prices of systems that could run Vista Home Basic.

Today, Pechman shot down the price inflation concept, saying that the plaintiffs had failed to prove any inflation existed. "Plaintiffs evidence fails to establish class-wide causation because it does not attempt [to] identify a specific shift in the demand for Vista Capable PCs," Pechman said.

In several places in her ruling, Pechman said the plaintiffs' expert witness, University of Washington economist Keith Leffler, did not, or was unable to, come up with any data to support the price inflation theory. In earlier testimony, Leffler had pegged the possible damages to Microsoft at $8.5 billion.

"Dr. Leffler did not attempt any regression analysis, much less an econometric analysis of the impact of 'Vista Capable' on demand," Pechman said. "It is ... critical to Plaintiffs' theory of proof to isolate Microsoft's purportedly deceptive efforts to increase demand from promotions OEMs had in the run up to the holiday season."



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