Although U.S. District Judge Thomas Penfield Jackson made public his decision on Friday to appoint conservative appeals court judge Richard Posner as a mediator in the case, his reasons for doing so only became known today through a court transcript obtained by CNET News.com.
"I think this is probably as propitious a time for any possible negotiated outcome as you have," Jackson told lawyers from Microsoft, the Justice Department and 19 states during a meeting in his chambers last week.
Division between the Justice Department and the states over what to do about Microsoft apparently led to Jackson's decision. Jackson on Nov. 5 released findings of fact supporting many of the government's allegations against Microsoft and setting the stage for a government victory.
Jackson told the lawyers that his appointment of Posner was "partly motivated by what I think are somewhat disturbing reports in the press [that] the plaintiffs are proceeding on, quote, parallel tracks, or something like that."
The judge expressed concern about "divergent views. The harmony between the states and the [Justice Department] so far has been, I think enormously helpful. And I would like to see it continue. I would not like to have to deal with divergent points of view."
As reported last week, the government camp is divided on several important issues, such as giving away the source code to Windows and limiting Microsoft's ability to tie Web browsing technology to its products. There is near consensus on some kind of breakup, but how that should be done is not clear.
Jackson wasted no time, opening the meeting with talks of settlement.
"There are several things I want to take up this afternoon, one of which I think will come as something of a surprise to you. And I may as well mention that at the outset here," Jackson said, according to the transcript.
"I have prevailed on [judge] Richard Posner...to function as a mediator to see whether or not he can get you all playing the same tune, if you are willing to take a shot at it," Jackson continued.
Antitrust experts had expected Jackson to broach the settlement issue, but opening with it showed clearly that he was taking charge. Jackson throughout the trial strongly encouraged settlement, and at certain breaks in the testimony gave both sides time to negotiate, although sources close to the proceedings said that never seriously happened.
"Is there any one among you who thinks that you would not be willing to let Judge Posner take a shot at it?" Jackson asked both sides.
Microsoft attorney John Warden said he would not object, and in fact "would recommend it to Microsoft. Yes, I have the highest regard for him. He is one of the smartest guys alive."
Government attorneys showed similar respect for Posner but proceeded cautiously on settlement issues.
"I think there are some issues about the use of mediation in a government case raising certain public policy issues that I would need to go back and talk to the people at the Justice Department about," said government lead attorney David Boies, according to the transcript.
Boies explained that he had experience in private mediation matters, but that he had "never thought through the issue of how you mediate some issues that raise sort of law enforcement and the kind of public policy issues that are here."
Richard Blumenthal, Connecticut attorney general, told Jackson he felt "those reports of divergent views were somewhat exaggerated."
"There has been a lot exaggerated about this case," Jackson quipped.
Despite promises of a united front, Kevin O'Connor, Wisconsin assistant attorney general, had a surprise for the judge later in the hearing.
"Your honor, with respect to the states' position on briefing, we would like the opportunity to submit a separate brief on the state law question," O'Connor told Jackson.
"I'm sorry? You would like what?" Jackson asked.
"To submit a separate brief on the state law issues," O`Connor said.
"Oh, you would have to," responded Jackson.
Earlier in the hearing, the parties agreed to one brief each on conclusions of law, meaning the government and states would file one brief together.
Conclusions of law are the next stage of the trial, with the government set to deliver its brief to the court on Dec. 6 and Microsoft on Jan. 17.
Jackson is expected to deliver his conclusions of law, essentially a verdict, as late as March.
The regular court schedule is expected to continue while the parties pursue mediation. Posner will act in a private capacity with Jackson having final authority.
Antitrust experts generally applauded the choice of Posner as mediator.
Posner's appointment is a mixed bag for both parties, and he could undermine the government's pursuit of a breakup of Microsoft, said antitrust experts.
Microsoft will face a tough and conservative mediator, who will leave little wiggle room, said Dana Hayter, an intellectual property and antitrust attorney with Fenwick & West in San Francisco. Some of his conservative views on the economics of antitrust law favor Microsoft.
Posner's stature and conservatism will likely appeal to the mostly conservative D.C. Circuit Court of Appeals, which would hear any appeal in the case.
This could have a great impact on any appeal, if the case continues but either side, particularly Microsoft, rejects any reasonable settlement proposal from Posner, Hayter said.