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Microsoft suit not a windfall for consumers

Star Tribune (Minneapolis, MN)

Squadrons of high-priced lawyers, countless reams of paper, nearly five years of litigation, and the settlement of a class-action suit against computer giant Microsoft Corp. comes down to this: Nine bucks for a Minnesota consumer who bought a copy of Microsoft Word – and who is willing to take the time and effort to file a claim.

That doesn’t sound like much from the ballyhooed $241 million settlement, announced this week in Hennepin County District Court.

But consumer advocates say that giving money back to customers, no matter how small the amount, is better than leaving it in the hands of giant corporations that came by it unfairly.

“Is it better for the defendants to reap the benefits of their unlawful conduct and keep the money?” asked Minneapolis attorney Richard Hagstrom, one of the lead plaintiffs’ lawyers in the Microsoft case. “Or is it better to bring a class-action suit, and the consumers and businesses that have been overcharged can make a decision on whether they want to get their money back?”

The suit against Microsoft was brought by a group of private attorneys on behalf of a million or more Minnesota consumers and businesses that allegedly were overcharged for computer hardware and software containing Microsoft products.

A seven-week trial ended in April with a settlement, which wasn’t disclosed until Thursday. Microsoft admitted no wrongdoing but agreed to pay up to $241.4 million in damages, including donations of $5 million to the University of Minnesota, $2.5 million to private legal-aid programs, and potentially as much as $70 million to the state Department of Education for the purchase of computer gear.

In addition, beginning later this year, consumers and businesses that bought a Microsoft product between May 1994 and March 2003 can file for vouchers of between $9 and $100, based on which Microsoft items – and how many – they bought.

Some of the biggest money stands to go to the 20 lawyers on the case, who have submitted a bill for $59.4 million, an amount that must be approved by a judge.

St. Paul consumer attorney Peter F. Barry, who was not involved in the Microsoft case, said it’s unfair to focus on attorney fees in class-action cases.

“The class-action mechanism is a response to the same sort of salami-slicing fraud that corporations have been subjecting consumers to for as long as there have been corporations,” Barry said.

“And no one would suggest getting rid of corporations because some corporations steal from consumers, any more than we should get rid of class-action suits because some attorneys benefit disproportionately.”

Class-action suits are an important means of allowing a group of consumers to stop unfair corporate practices that no individual could fight alone, Barry added.

“Realistically, people are simply not going to be able to bring a claim in state or federal court for the $100 they were overcharged, or the $50 a corporation took from them.”

Another function of class-action law is to deter future wrongdoing, said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif.

“By holding a company accountable, you not only make them give back what they wrongly took, you leave with them an indelible reminder that they should not behave this way again,” Heller said. “The punishment should be sufficient to teach those at the executive level not to act this way.”
Contact John Reinan at: [email protected]

Settlement details:

Although admitting no wrongdoing, Microsoft Corp. has agreed to pay up to $241.4 million to Minnesota consumers, businesses and institutions that allegedly were overcharged for computer hardware and software. The breakdown:

– $2.5 million to private groups that provide legal aid to the poor

– $5 million to the University of Minnesota

– Up to $70 million to the state Department of Education

– Varying amounts to individual consumers and businesses, based on:
$15 for an operating system
$23 for Microsoft Office
$23 for Excel
$9 for Word, Works Suite and Home Essentials

– 20 plaintiffs’ attorneys are seeking approval of $59.4 million in
legal fees.
by Star Tribune research

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