Mediator named in lawsuit

Appointment bodes well for settlement of case, experts say

November 20, 1999|By Lyle Denniston | Lyle Denniston,SUN NATIONAL STAFF

WASHINGTON -- In a significant peacemaking overture in the court battle over Microsoft Corp., a federal judge named a mediator yesterday to help the two sides work toward a settlement.

U.S. District Judge Thomas Penfield Jackson ordered the government's antitrust case into "voluntary mediation" -- that is, with consent of both sides -- and chose Richard A. Posner of Chicago to supervise the talks as mediator. Posner, a federal appeals court judge, is a leading authority on that branch of the law.

The action was widely interpreted as a sign that settlement discussions have a greater chance of succeeding than at any point in the 18 months since the case was filed by the Justice Department and 19 states.

"The prospects of achieving a settlement went up substantially," said William A. Kovacic, a professor of antitrust law at George Washington University who has been a neutral observer of the case.

Kovacic said Posner could work toward a settlement "with more credibility than any other individual in the United States. He has the ability to move each party away from their more extreme views of the case."

Posner's approach, the professor speculated, will be to tell both sides that neither is guaranteed victory. Kovacic views the court move as a change in substance in the case, not as a cosmetic gesture, he said.

Robert Levy, a senior fellow at the Cato Institute, a research and policy group, who has followed the case closely, said, "Both parties have shown a willingness to talk, but the judge seems to suggest that something more than willingness exists, that something more serious is cooking here."

The idea of sending the case to mediation was Jackson's, according to sources close to the case. He suggested it at a closed-door session with lawyers for both sides Thursday. The session had been called to update the judge on developments in the case in recent weeks.

Both sides agreed with the mediation plan, and the judge announced it late yesterday afternoon, after the close of stock market trading.

In a separate order yesterday dealing with procedures in the lawsuit against Microsoft, Jackson made it clear that the mediation would not interfere with the progress of the case.

The battle over Microsoft will proceed in court over legal issues and in private sessions with Posner over how a settlement might be fashioned.

Jackson, in findings of fact early this month, ruled that Microsoft holds a monopoly in creating and selling the software systems that run computers and has used that monopoly power to stifle competition and harm consumers.

The judge has not decided whether Microsoft has violated antitrust law. That is to be determined in the next phase of the case, which will begin Dec. 6 when the Justice Department details how, in its view, the Sherman Antitrust Act has been violated. Microsoft is to reply Jan. 17.

The judge is expected to rule early next year on his conclusions of law. Only if he finds a violation will the judge move toward a remedy, which could include a breakup of the company.

Microsoft, in a statement by a spokesman, Jim Cullinan, said the company looks forward "to working with Judge Posner to try and reach a fair and reasonable solution. We think this is potentially a very positive step toward resolving the case."

Gina Talamona, a spokeswoman for the Justice Department, said officials there "look forward to meeting with Judge Posner to discuss ways to address the serious competitive problems identified" in Jackson's findings of fact on Nov. 5.

"The department has always been willing to seek a settlement that would promote competition, innovation and consumer choice," she said.

Although there had been off-and-on discussions involving a settlement in the case, with Jackson encouraging those efforts in private, the attempts reportedly have not progressed far.

A mediator could at least narrow the gaps between the two sides' positions and possibly produce a full settlement. Posner, as a neutral mediator, could move forcefully to press the two sides toward common ground.

Posner, Kovacic said, has wide experience in the antitrust field and "is one of the five most important antitrust scholars of the past 50 years."

Jackson set no time limit on the mediation efforts of Posner, who will carry them out "in a private capacity," according to yesterday's order. Posner was given wide discretion to decide "the manner and duration" of the mediation effort.

Posner, who will be 61 in January, was named in 1981 to the 7th U.S. Circuit Court of Appeals, which sits in Chicago, by President Ronald Reagan. Previously, he had been a University of Chicago law professor and was among a group of conservative academics named by Reagan to federal judgeships.

During his years on the bench, Posner has developed a reputation as more of a moderate than some of his conservative 7th Circuit Court colleagues. He is that court's chief judge.

Posner has published many books and articles, most of which deal with the relationship between law and economics. He has also written on the law concerning obscenity, and he recently published a book sharply critical of President Clinton's behavior that led to the president's impeachment.

In one of his most recent significant opinions, Posner wrote a sharply worded dissent when the appeals court upheld laws in Illinois and Wisconsin that ban a form of late-term abortion.

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