Public Agencies Take Turn Suing Microsoft
Monday August 30, 2:58 am ET
Brenda Sandburg, The Recorder

When Microsoft Corp. agreed to fork over $1.1 billion in vouchers to settle a California consumer class action, public entities thought they were entitled to a piece of the pie.

But they soon found out they were excluded from the January 2003 settlement.

Now the public entities -- led by the city and county of San Francisco and the county of Santa Clara, Calif., -- have filed their own antitrust suit against Microsoft. And they say they won't be satisfied with vouchers to buy computer products.

"We've asked for damages," said Martin Dodd, Santa Clara's special assistant county counsel. "We're looking for money."

The suit, filed Friday in San Francisco Superior Court, does not specify damages but Dodd said he expects the amount to be "quite substantial."

Like the California consumer class action, the public entity suit charges that Microsoft's allegedly unlawful conduct denied plaintiffs competitive prices and a free choice of software products.

San Mateo County, Contra Costa County and the city and county of Los Angeles are also named plaintiffs.

Eugene Crew, a partner at Townsend and Townsend and Crew who is representing the plaintiffs, said the potential class includes every city, county and village in California, as well as the school, water and irrigation districts, the courts and state offices.

"It seems to me the governmental agencies deserve the same" compensation that consumers received, Crew said. "Particularly given the financial constraints the government agencies are in, we should do all we can to get them just compensation."

Crew said he was not aware of any other suit brought by public entities against Microsoft.

Microsoft spokeswoman Stacy Drake said the suit was the first of its kind.

"We value our relationship with these cities and have been grateful to provide them great software at reasonable prices," Drake said. "We firmly believe we've provided very competitive prices."

Drake said Microsoft has settled 15 consumer class actions and has four others pending.

The California action settled last year was a consolidation of 27 consumer suits, the first of which was filed by Townsend.

The firm also was brought in to try a consumer class action in Minnesota. That case settled during trial in April, when Microsoft agreed to provide vouchers for computer products.

The new class action is City and County of San Francisco v. Microsoft, 04434228.