- The Washington Times - Wednesday, October 10, 2001

The Supreme Court yesterday refused a second time to interrupt lower-court actions in the Microsoft antitrust case, but left the door open for a full appeal should the new judge fail to persuade both sides to settle.

In another important case, the justices let stand a Louisiana law nullifying New Orleans' 1998 lawsuit seeking to hold the handgun industry financially liable for injuries caused by criminals. That ruling indirectly could buttress similar laws passed by 26 other states that restrict their cities from filing lawsuits.

The Microsoft decision strengthens the Justice Department's hand in round-the-clock settlement talks ordered by U.S. District Judge Colleen Kollar-Kotelly, who said she will appoint a mediator Friday if no progress is made.

"There's no reason this case can't be settled," the judge said, citing economic fallout from the Sept. 11 terrorism attacks as a reason for speed.

The stock market seemed to see it another way. Microsoft shares declined markedly immediately after the order was issued, and analysts blamed the prospect of setbacks for the software maker.

Penalty proceedings are set for March 11 if the "intensive" talks fail to find a remedy agreeable to all sides to overcome Microsoft's dominance in the industry, which has produced a virtual monopoly of the Windows operating system on personal computers.

Antitrust law specialist Robert H. Lande, a professor at the University of Baltimore, said yesterday's refusal to halt the penalty phase midstream "might give the government a tiny psychological edge in negotiations" because it ends the potential that the federal government and 18 states joining the lawsuit would have to retry their entire case.

Justice Department spokesman Gina Talamona said the government was "pleased with the court's decision," which followed Solicitor General Theodore B. Olson's recommendation to avoid what he called multiple, piecemeal requests for review.

"We'll continue our progress in the district court," Miss Talamona said.

Microsoft spokesman Jim Desler said the company was disappointed that the Supreme Court didn't include Microsoft in its somewhat light docket this term.

"We'll continue to move forward with the case on the district court level, and we'll comply with the court order to work with the government to settle this case," he said.

Judge Kollar-Kotelly took over the case after the U.S. Circuit Court of Appeals for D.C. removed U.S. District Judge Thomas Penfield Jackson on June 28.

The appeals court left in place Judge Jackson's conclusions that Microsoft broke antitrust laws and should be punished.

The appeals court roundly criticized Judge Jackson for offensive comments about Microsoft in secret press interviews, which the court said gave rise to "an appearance of partiality" and tainted the proceedings.

Microsoft said the ethical breaches justified rehearing the full case with a new judge.

Yesterday's decision rejected that option while leaving open the prospect for a review after the penalty phase.

In September 2000, the justices refused for the first time to short-circuit the appeals process, rejecting a motion to invoke a special fast-track process used for major antitrust cases.

The Bush administration abandoned efforts to break up Microsoft into smaller companies, in the mode of the 1981 breakup of American Telephone & Telegraph Co. into regional "Baby Bell" companies.

Although the court did not say why it refused to hear the appeal before the case was decided, it normally had shunned such "interlocutory" appeals.

"Microsoft has been found to have committed serious violations through conduct that began in 1995, yet those violations remain unremedied," Mr. Olson said.

"The sooner remedial proceedings begin, the sooner a resolution can be crafted to assure competitive conditions and give industry participants the certainty they need to plan or commit resources efficiently," Mr. Olson said.

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