FALL 2007

Computer Law

Course No.  9200 711 001
Th 6:30 - 9:30 p.m.
Room W-214
Professor Jay Dratler, Jr.
Room 231D (IP Alcove)
(330) 972-7972
dratler@uakron.edu, dratler@neo.rr.com
Copyright © 2000, 2001, 2002, 2004, 2007   Jay Dratler, Jr.   For permission, see CMI.

Note: Complex Antitrust Adjudication

and the Limits of Human Patience and Understanding

One of the unfortunate facts of life about antitrust law is that trials are almost invariably long, complex, exceedingly expensive, and tiresome.  This is particularly so in cases like Microsoft III involving complex new or emerging technology.  The federal government's similar case against IBM Corp. began in the late 1960s, in that firm's heyday as a monopolist, and lasted fifteen years.  Despite all that effort, the case ended in a settlement in 1984 that most observers saw as an almost complete capitulation by the government.  In Microsoft III, the D.C. Circuit called a three-year delay from the filing of the complaint to appellate review "noteworthy" for its brevity, and indeed it was.   Despite the case's "fast track," the trial lasted 76 days.  Excluding weekends, that equates to fifteen weeks, or the equivalent of a full semester of law study, full time, eight hours per day.

It takes some imagination to understand what trial judges, let alone juries, endure in these cases.  Think of yourself sitting in a courtroom for fifteen weeks straight, listening—for the entirety of each day—to self-interested witnesses drone on about such minutiae as icons on the computer desktop and how computer-program files and libraries interact.  Then add the intellectually taxing complexity of expert testimony on such dry matters as market definition, market power, and the putative economic efficiencies of "network effects" related to computer software integration.  As you think of the limits of human patience, consider also that most judges are hardly experts in antitrust law, let alone economics or the complex technologies involved in these cases.   Can judges—let alone juries—fully master the complexities of both the law and underlying technology, or do fact finders necessarily rely on credibility, personality, and gut instinct?

Unlike judges in civil-law systems, our common-law judges seldom question witnesses directly.  So they cannot act like reporters and "follow up" questions on points of interest.  That is the advocates' job.  All a judge can do is sit quietly and listen, perhaps taking notes.  Under these circumstances, how would you react as a judge if you began to feel that one side or the other was prolonging the proceedings for purposes delay or obfuscation, or out of sheer intransigence?

The reasons why the D.C. Circuit disqualified Judge Thomas Penfield Jackson in Microsoft III are fascinating.  It did so because of his inappropriate public comments and his appearance of bias, mostly toward the end of the trial.  Following is a representative sampling (with attribution omitted) of what the appellate court quotes various media as saying Judge Jackson said (words in quotation marks are reportedly the judge's own words; other words are reported paraphrases):
    The D.C. Circuit's ruling in the earlier consent decree "was wrongheaded on several counts" and would exempt the software industry from the antitrust laws.
    "It was quite clear to me that the motive of Microsoft in bundling the Internet browser was not one of consumer convenience.  The evidence that this was done for the consumer was not credible. . . .  The evidence was so compelling that there was an ulterior motive."
    Bill Gates' "testimony is inherently without credibility" and "if you can't believe this guy, who else can you believe?"  There "were times when I became impatient with Microsoft witnesses who were giving speeches. . . .  They were telling me things I just flatly could not credit."
    "Falsus in uno, falsus in omnibus." (Latin: "Untrue in one thing, untrue in all.")  "I don't subscribe to that as absolutely true.  But it does lead one to suspicion.  It's a universal human experience.  If someone lies to you once, how much else can you credit as the truth?"
    "[I]f I were able to propose a remedy of my devising, I'd require Mr. Gates to write a book report" on Napoleon Bonaparte, "because I think [Gates] has a Napoleonic concept of himself and his company, an arrogance that derives from power and unalloyed success, with no leavening hard experience, no reverses."
    [On seeing a group picture of Bill Gates and Paul Allen and their shaggy-haired first employees at Microsoft]  I saw "a smart-mouthed young kid who has extraordinary ability and needs a little discipline.  I've often said to colleagues that Gates would be better off if he had finished Harvard."
    [On Microsoft's employees' self-incriminating documents and e-mails:]  They were like drug traffickers who "never figure out that they shouldn't be saying certain things on the phone."
    [On the need for an evidentiary hearing on the remedy:]  I am "not aware of any case authority that says I have to give them any due process at all.  The case is over.  They lost."  "[W]ere the Japanese allowed to propose terms of their surrender?"
    [On the remedy earlier:]  I was "not at all comfortable with restructuring the company," because I was unsure I was "competent to do that."  [Later:]  "[W]ith what looks like Microsoft intransigence, a breakup is inevitable."
    [A month before issuing the divestiture order.]  I'm "assuming, as I think they are, [that ] the Justice Department and the states are genuinely concerned about the public interest. . . .  I know they have carefully studied all the possible options.  This isn't a bunch of amateurs.  They have consulted with some of the best minds in America over a long period of time."
    [Explaining his change of heart on divestiture by way of a folksy "North Carolina mule trainer" story:]  "He had a trained mule who could do all kinds of wonderful tricks.  One day somebody asked him: ‘How do you do it?  How do you train the mule to do all these amazing things?'  ‘Well,' he answered, ‘I'll show you.'  He took a 2-by-4 and whopped him upside the head.  The mule was reeling and fell to his knees, and the trainer said: ‘You just have to get his attention.'  I hope I've got Microsoft's attention."

* * *

A quite similar thing had happened to another respected district-court judge in the IBM antitrust trial years before.  After the government settled the IBM case with nearly complete capitulation, the district judge "sharply criticized" the dismissal by the government and called a hearing to question the dismissal under the Tunney Act, which requires judicial review of consent decrees in certain cases.  See In re IBM Corp., 45 F.3d 641, 642 (2d Cir. 1995).  The judge went so far as to criticize the dismissal in the press; he refused to approve orders, stipulated by both sides, allowing the parties to "dispose of billions of pages of documents accumulated over the course of the litigation."  Id.  The Court of Appeals held that the Tunney Act does not apply to voluntary dismissals and that the judge had abused his power in failing to resolve the issue and expeditiously terminate the litigation.  It therefore granted IBM a mandamus ordering him to do so.  See id., citing In re IBM Corp., 687 F.2d 591, 603-04 (2d Cir. 1982).

Another third similar incident occurred in Microsoft I, the government's first antitrust action against Microsoft.  The trial judge had read an unauthorized biography of Bill Gates, Microsoft's Chairman, containing numerous allegations of anticompetitive behavior.  See United States v. Microsoft Corp., 56 F.3d 1448, 1463 (D.C. Cir. 1995) ("[A] review of the transcripts in this case makes it patently obvious that the reason for the judge's broad-ranging inquiries was his acceptance of the accusations in the book Hard Drive"), referring to James Wallace & Jim Erickson, Hard Drive: Bill Gates and the Making of the Microsoft Empire (1992).  The trial judge refused to enter the proposed Final Judgment agreed to by both parties, based in part on these ex parte allegations and in part upon representations of three software application developers, which the judge had allowed to appear anonymously as amici curiae.   See id. at 1453; United States v. Microsoft Corp., 159 F.R.D. 318, 332, 334 (D.D.C.), rev'd, 56 F.3d 1448 (D.C. Cir. 1995).  Moreover, in his hearing on the matter, the judge repeatedly questioned the Assistant Attorney General heading the Antitrust Division of the Department of Justice about matters not raised in the complaint.  See Microsoft Corp., 56 F.3d at 1455 (the trial judge had asked the government to reveal subjects of its investigation not appearing in the complaint, its conclusions, the subjects of its bargaining with defendant, and areas discussed but not included in decree).  The D.C. Circuit not only reversed the judge's decision and mandated that he enter the proposed Final Judgment.  See id. at 1462.  It also ordered him removed from the case, reasoning that his consideration of ex parte submissions, approval of anonymous appearances by the "amici," and attempts to second-guess the Attorney General gave the appearance of bias.  See id. at 1463-65.  See also id. at 1459 (the district judged tried to "reach beyond the complaint to evaluate claims that the government did not make and to inquire as to why they were not made" but Tunney Act's "reference to the alleged violations suggests that Congress did not mean for a district judge to construct his own hypothetical case and then evaluate the decree against that case"); id. at 1462 ("Tunney Act cannot be interpreted as an authorization for a district judge to assume the role of Attorney General").

It is hard to exaggerate how extraordinary are these histories.  You can read hundreds, if not thousands, of judicial opinions without coming across a single instance of a federal judge being rebuked, let alone disqualified, for bias or the appearance of bias.  Yet here we have three instances—all in virtually the same kind of case—of highly respected trial judges appearing to have "rebelled" against the legal system.  These fascinating histories raise some interesting questions that address the practical limits of antitrust litigation.

1.   Despite their awesome responsibilities, federal judges are human.  What do you think motivated each of these three judges to overstep the limits of his office and/or judicial ethics?  Obviously it was frustration with something, but what?  Was it the slow pace of the judicial process?  the complexity of the facts or the law?  a feeling that antitrust law is incapable of recognizing injustice and/or providing an appropriate remedy?  a feeling that appellate judges, not having had exhaustive (and exhausting!) contact with facts and witnesses, have insufficient insight to second-guess trial judges' decisions in matters of such complexity?  all of the above?

2.  Broadly speaking, the possible causes of trial-judge frustration resolve into two broad categories.  First, the trial judges may have felt that, having spent months or years on a case, having reviewed all the innumerable documents and having heard and seen all the witnesses at length and at close hand, they deserved more deference from the appellate courts.  Second, the judges might have been frustrated by a feeling that, despite all their diligent effort, justice was not done.  Which of these two broad theories applied in Microsoft III?

3.  A trial judge may spend months or years on a single case like these.  During the trial itself, the judge may think about little else for days or weeks on end.  In contrast, members of an appellate panel may spend a week or less assimilating a case, hearing the arguments, and writing an opinion.  Appellate judges may be better or more experienced jurists than trial judges; presumably that's why they sit on a higher bench.  But is it really possible for human beings who are, after all, generalists, to assimilate all the incredibly complex facts and the highly abstract law and economic theory in cases like this one in a few days?

4.  If the answer to the last question is "no" or "maybe not," what changes in adjudication of complex antitrust cases might you recommend?  Should there be a special appellate court to handle complex antitrust cases, like the Federal Circuit, which has exclusive jurisdiction over patent appeals?  Should the law be revised to give the trial judge's findings and conclusions more weight and require more deference from appellate courts?  Should cases like these be decided by adjudicatory tribunals within expert administrative agencies like the Federal Trade Commission, with weak or attenuated judicial review for obvious error or injustice only?  (In Europe, union-wide antitrust cases are brought and decided by the European Commission, an executive agency, with review by the European Court of Justice.)  Can you think of any other way to improve the system, or are we Americans stuck with one that causes trial judges to rebel?

5.   In each of these three cases (twice against Microsoft and once against IBM), the ultimate remedy was little more than a slap on the wrist.  "Sin no more" injunctions were issued by mutual consent, but little changed in the marketplace.  There was little, if anything, that one could describe as punishment or deterrence (other than the not inconsiderable cost, trouble and expense of litigation).  Contrast those outcomes in the United States with the European Commission's decision (now under appeal) fining Microsoft $ 612 million and ordering it to provide a version of Windows without Windows Media Player and to disclose certain unspecified software design materials to rivals.

Which approach to complex antitrust matters involving complex technology is better, the American or European approach?  Is a "slap on the wrist" remedy useless, or does the very threat of future or continuing litigation restrain the behavior of monopolists like Microsoft?  Can a weak remedy and the threat of future litigation affect the behavior of a firm with $38 billion in the bank, when private "follow on" antitrust lawsuits settle for less than $1 billion?

6.  As a matter of practical litigation tactics, which side do these histories favor, government or antitrust defendant?  If you represented the defendant, would you advise it to dig its heel in, contest every little issue of fact and law, and obfuscate and confuse the fact finder as much as possible, on the theory that if you didn't win at trial you could frustrate the trial judge sufficiently to have him or her disqualified and perhaps get a second bite at the apple?  Might you reason that, after all the delay that these tactics would cause, the marketplace would have changed irrevocably in your client's favor?  Would those trial tactics be ethical?  Does the complexity of fact and law in these cases encourage abusive trial tactics and delay?

7.   How should a judge approach these cases?  An "iron hand" in the courtroom can avoid prolixity, cumulative evidence, obfuscation, and shilly-shallying.  But in cases this complex, doesn't an iron hand risk reversal on appeal, whether on a point of law or for failure to admit relevant evidence?  Don't cases this complex motivate judges to let everything in, both to assist their own understanding of complex facts and law and to avoid reversal?  Is there any solution to this dilemma short of expert decision makers?

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