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25 states unite to fight Microsoft motion

In a tussle over jurisdiction, 25 states rally behind the nine states still in litigation with the software giant, filing briefs opposing the company's motion for dismissal of its federal case.

WASHINGTON--In three separate legal briefs filed Friday, a total of 34 states opposed a Microsoft motion that a federal judge should dismiss the remaining portion of its antitrust case.

Nine states and the District of Columbia return to court Monday to determine a remedy for the company's antitrust violations. But Microsoft had asked U.S. District Judge Colleen Kollar-Kotelly to dismiss the states' litigation, arguing that the states should not be allowed to set antitrust policy over the Justice Department. The Justice Department and nine other states settled the case in November.

Twenty-five additional states rallied Friday behind the nine litigating states--California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah and West Virginia, along with the District of Columbia--in an attempt to protect states' jurisdiction over antitrust matters.

Twenty-four of those additional states--Arizona, Arkansas, Colorado, Idaho, Illinois, Indiana, Louisiana, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, North Dakota, Ohio, Oregon, South Dakota, Tennessee, Vermont, Washington, Wisconsin and the Commonwealth of Kentucky--filed a joint brief, saying they "take no position in this Memorandum on the merits of the underlying" antitrust case. New York filed a separate brief. The nine litigating states filed a brief of their own.

In their brief, the 24 states argued that the Clayton Act grants them the authority to continue a case "even when the federal government has proposed to settle a case. Congress has granted the states clear authority to proceed independently under Section 16, despite the fact that the federal government has chosen not to act, has proposed to settle a case, has in fact settled a case, or has taken the matter to trial." New York raised similar concerns.

"We have strong relationships with many of the state attorneys general," said Microsoft spokesman Jim Desler. "We work with them on various activities and initiatives. On this issue, we agree to disagree. While the states do have a role in antitrust enforcement, the non-settling states stepped outside the boundaries of that role when they chose to pursue a different course from the Justice Department, resulting in conflicting national competition policy."

In making the filing, the states are trying to protect their sovereignty over antitrust matters, something a dismissal could potentially undermine, said legal experts.

"There are a lot of us who, having done antitrust defense, would like to see this whole dual-sovereignty issue resolved," said Emmett Stanton, an antitrust lawyer with Fenwick & West in Palo Alto, Calif. "If there was a case to challenge this, this would be the one."

The "friends of court" briefs filed by the 25 states were not expected, but a third brief from the litigating states came as no surprise. The states rebutted Microsoft's request more in the context of the overall antitrust case than in regard to the sovereignty issue.

They argued that Microsoft's request is "effectively, a motion to set aside the Court of Appeals' mandate."

In June 2000, seven judges unanimously upheld eight separate antitrust violations against Microsoft.

The filings could give the litigating states important air cover as they return to court next week for what could be as much as eight weeks of testimony. They are looking for stiffer sanctions than those proposed by the Justice Department and the settling states. The settlement largely puts restrictions on Microsoft's business practices. The litigating states also want restrictions on how Microsoft develops and deploys software.

While overseeing the settlement proceeding, Kollar-Kotelly must weigh whether the settlement meets the standard demanded by the Nixon-era Tunney Act. That law requires that a settlement be in the public interest and that no backroom dealmaking influence the process. Kollar-Kotelly could reject or approve the proposed deal at any time.