MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

The Honorable Richard A. Jones

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

BRIAN JOHNSON, et al.,

Plaintiffs,

vs.

MICROSOFT CORPORATION, a

Washington corporation,

Defendant.

No. CV06-0900 RAJ

DEFENDANT MICROSOFT

CORPORATION’S OPPOSITION

TO PLAINTIFFS’ MOTION FOR

LEAVE TO FILE THEIR THIRD

AMENDED CONSOLIDATED

COMPLAINT

NOTED ON MOTION CALENDAR:

January 8, 2010

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 1 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 1

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

I. SUMMARY

Three and a half years into this putative class action, Plaintiffs seek leave to file a fifth

version of their complaint that would eliminate the class allegations and add claims for

misrepresentation and injunctive relief. Plaintiffs’ proposal is shocking not only for its timing,

but also because it appears to be part of a cynical attempt to game the system that continued

when they withdrew their second class certification motion on the day their reply brief was due.

Indeed, Plaintiffs now claim to want to pursue the case on an individual basis only, even though

they previously filed a Second Amended Consolidated Complaint (“Second Amended

Complaint”) that expanded their proposed class to hundreds of millions of Windows XP users.

Although Plaintiffs’ scheme to withdraw their class allegations constitutes a major

reversal in strategy, they offer no explanation for it. Even stranger, they propose to add

injunctive relief claims after Microsoft’s class certification opposition demonstrated that such

claims could not be certified because, among other reasons, they were not pled. Plaintiffs’

actions suggest they seek to dodge an unfavorable certification decision now with the intent of

attempting to re-inject their class allegations when they think their odds for success improve.

This Court should allow Plaintiffs to amend their complaint to withdraw their class

allegations only if the withdrawal is final. Faced with a proposed class action that seeks

hundreds of million in damages, Microsoft invested a huge amount of time and money to oppose

class certification on two separate occasions, with its most recent opposition consisting of a

forty-page brief, five declarations, and hundreds of exhibits. Now that class discovery has

ended, the certification question is ripe for adjudication. If Plaintiffs have any intent of ever

seeking certification in this case, the time is now.

Microsoft also opposes Plaintiffs’ motion to the extent that it seeks to add proposed

claims for misrepresentation and injunctive relief. The record shows that Plaintiffs’ proposed

claims are futile and would not survive a summary judgment motion. Plaintiffs’ request to add

these claims should also be denied because of their undue delay and the substantial prejudice that

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 2 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 2

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

would be inflicted upon Microsoft. Plaintiffs have known about the factual predicate for their

proposed claims for more than fifteen months and their untimely addition would unfairly force

Microsoft to re-do much of its costly discovery. If leave to amend is granted, Microsoft should

be awarded an amount necessary to reimburse these expenses.

Plaintiffs provide no explanation why their decision to withdraw their class allegations

was delayed until the eve of the class certification hearing and after Microsoft filed its

opposition. Plainly the timing of this decision was tactical, and Microsoft should be awarded its

attorneys’ fees and costs incurred in preparing its second class certification opposition.

II. FACTS

A. Plaintiffs’ Prior Four Complaints and First Class Certification Motion.

Plaintiff Johnson commenced this action on June 26, 2006. Within days, five other

plaintiffs filed a similar suit against Microsoft in the same Court. See Engineered Process

Controls, LLC (“EPC”) v. Microsoft Corp., No. 06-0927 (W.D. Wash.). The complaints

proposed nationwide classes of Windows XP users who installed Microsoft’s Windows Genuine

Advantage (“WGA”) Validation software. See Johnson Compl., Dkt. No. 1 ¶ 34; EPC Compl.,

Case No. 06-0927, Dkt. No. 1 ¶ 35. In their two complaints, Plaintiffs asserted eight causes of

action, including one for misrepresentation. See Johnson Compl., Dkt. No. 1 ¶¶ 41-78; EPC

Compl., Case No. 06-0927, Dkt. No. 1 ¶¶ 44-86.

On January 11, 2007, Johnson and the EPC plaintiffs consolidated their lawsuits by filing

a First Amended Consolidated Complaint (“First Amended Complaint”) that asserted a brief

class period beginning April 25, 2006 and ending June 26, 2006. See Dkt. No. 22 ¶ 19, 51, 112,

122, 133. Rather than proceeding on all eight claims, Plaintiffs trimmed their case to three –

breach of contract, violation of the consumer protection act, and trespass. Id. ¶¶ 67-133.

Notably, Plaintiffs dropped their misrepresentation claim. Id.

On August 31, 2007, Plaintiffs filed their first class certification motion. See Dkt. No.

72. Twelve days before the December 30, 2007 deadline for Microsoft’s opposition, however,

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 3 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 3

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

Plaintiffs unexpectedly withdrew it. See Dkt. No. 126. Plaintiffs’ last-minute maneuver forced

Microsoft to scrap its nearly completed class certification opposition.

On January 12, 2008, Plaintiffs moved for leave to amend their First Amended

Complaint. See Dkt. No. 130. They sought to expand their proposed two-month class period

(April 25, 2006 to June 26, 2006) more than fourteen times (July 25, 2005 to the present), insert

an unjust enrichment claim, and add five plaintiffs. Id. at 2-4. Plaintiffs argued that documents

purportedly showing that Microsoft “misrepresented the true nature of the WGA program”

justified these amendments. Id. at 4. On March 21, 2008, the Court granted Plaintiffs’ motion,

permitting the filing of their Second Amended Complaint. See Dkt. No. 137.

B. Plaintiffs’ Last-Minute Withdrawal of Their Second Class Certification

Motion and Untimely Request to File a Fifth Version of Their Complaint.

On September 15, 2008, Plaintiffs filed their second class certification motion. See Dkt.

No. 164. Plaintiffs argued that the case is a “paradigmatic example” of a class action and that

prosecuting their claims in a single proceeding would be “superior to separate litigation of

individual actions.” Id. at 1, 38. On September 22, 2009, Microsoft filed its class certification

opposition and supporting declarations. See Dkt. Nos. 211-16. When the deadline for Plaintiffs’

reply brief arrived, they once again withdrew their class certification motion, see Dkt. No. 221,

and said that they “intend to file a motion to amend the complaint withdrawing their class claims

on the remaining causes of action.” See Ex. A.

1

Plaintiffs provided no explanation for their

unusual eleventh-hour decision.

On December 14, 2009, Plaintiffs filed their motion for leave to amend yet again. See

Dkt. No. 223.

2 However, in addition to proposing to withdraw their class allegations, Plaintiffs

seek to add claims that: (1) Microsoft made fraudulent and/or negligent misrepresentations

1 All of the exhibits cited herein are attached to the Declaration of Karl J. Quackenbush in Support of

Microsoft’s Opposition.

2 A copy of Plaintiffs’ proposed Third Amended Complaint is attached as Exhibit A to their motion for

leave to amend.

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 4 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 4

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

during the installation of WGA Validation through Microsoft Update, see proposed Third Am.

Compl. ¶¶ 48-60, 232-58; (2) Microsoft made fraudulent and/or negligent misrepresentation

during the installation of WGA Validation through Automatic Updates, see id. ¶¶ 60-83; and (3)

they are entitled to more than a dozen forms of injunctive relief, see id. ¶¶ 218-19.

3

III. ARGUMENT

A. Plaintiffs’ Request to Withdraw Their Class Allegations Should Be

Granted Only If the Withdrawal Is Final.

This Court should grant Plaintiffs leave to amend to withdraw their class allegations only

if the withdrawal is final. Rule 16(b)(3)(A) of the Federal Rules of Civil Procedure “requires the

district court to include in its scheduling order a deadline or other time limitation on amending

the pleadings.” See AZ Holding, L.L.C. v. Frederick, 2009 WL 3063314, at *2 (D. Ariz. Sept.

22, 2009). Without a court-imposed deadline now, Plaintiffs may continue to seek amendments

– including an amendment to re-introduce the class allegations they now purport to want to

withdraw. Indeed, Plaintiffs’ proposed Third Amended Consolidated Complaint (“Third

Amended Complaint”) asserts class allegations in the dismissed breach of contract claim even

though they told the Court they would remove all class allegations. See proposed Third Am.

Compl ¶ 85.

An immediate deadline for seeking further amendments is warranted because Plaintiffs’

conduct shows that they are likely trying to game the system by withdrawing their class

allegations now only to re-inject them later. Microsoft’s recently-filed class certification

opposition demonstrated that Plaintiffs’ request for Rule 23(b)(2) certification should be denied

because, among other reasons, they sought predominantly monetary, rather than injunctive,

relief. See Dkt. No. 211, at 11-14. With their proposal for new injunctive relief claims,

3 Windows Update and Microsoft Update (collectively “Microsoft Updates”) are Web sites that users can

visit to choose software they want to download. See Dkt. No. 212 ¶ 16. By contrast, Automatic Updates

is a feature that allows updates to be delivered to users’ computers. Id. ¶ 17. Many users know about

Automatic Updates because they have seen the familiar bubble that appears in the lower right corner of

computer screens when updates are ready to install. Id.

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 5 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 5

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

Plaintiffs seek to add the types of claims that one would expect from a plaintiff who attempts to

bolster his chances for class certification – not one who purports to withdraw class claims.

The deadline for seeking further amendments should be now. During the more than three

and a half years that this case has been pending, Microsoft has prepared two class certification

oppositions, and responded to 166 document requests, 92 requests for admission, 43

interrogatories, 21 written deposition questions and two Rule 30(b)(6) deposition notices. See

Dkt. No. 107 ¶¶ 2-15; Dkt. No. 160 ¶¶ 2-4. Plaintiffs have had more than ample time – and have

obtained more than sufficient discovery – to determine what substantive claims they want to

pursue and whether those claims are suitable for class-wide treatment. As a result, Plaintiffs will

suffer no prejudice by the entry of an immediate deadline for seeking further amendments.

If the Court does not bar further amendments now, it should at least deny Plaintiffs’

request to withdraw their class allegations and set a briefing schedule that allows Microsoft to

file a motion to deny certification of the class proposed in Plaintiffs’ Second Amended

Complaint. Vinole v. Countrywide Home Loans, Inc., 571 F.3d 935, 939 (9th Cir. 2009) (“[W]e

conclude that Rule 23 does not preclude a defendant from bringing a ‘preemptive’ motion to

deny certification.”). Under this Court’s orders, Plaintiffs’ second class certification motion was

due on September 15, 2008, and scheduled for oral argument on December 2, 2009. See Dkt.

Nos. 143, 220-21. Plaintiffs should not be given another opportunity to manipulate the class

certification process by seeking to re-assert class allegations later. Allowing them to do so

would violate the civil rules. See Fed. R. Civ. P. 23(c)(1)(A) (requiring court to determine

whether to certify an action “[a]t an early practical time after a person sues”).

B. Plaintiffs’ Request to Add New Claims Should Be Denied for Three Reasons.

This Court should deny Plaintiffs’ request to introduce claims for misrepresentation and

injunctive relief. A district court should deny leave to amend a complaint where the proposed

amendment: (1) is futile; (2) produces an undue delay in litigation; or (3) prejudices the

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 6 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 6

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

opposing party. AmerisourceBergen Corp. v. Dialysist West Inc., 465 F.3d 956, 951 (9th Cir.

2006). Here, this Court should deny leave to amend for all three reasons.

1. Plaintiffs’ Motion Should Be Denied Because Plaintiffs’ Proposed

New Claims Are Futile.

Plaintiffs’ motion should be denied on grounds of futility because the factual record

contradicts the additional allegations they propose to make. A proposed amendment is futile if it

would not survive a summary judgment motion. Gabrielson v. Montgomery Ward & Co., 785

F.2d 762, 766 (9th Cir. 1986); Aughe v. Shalala, 885 F. Supp. 1428, 1433-34 (W.D. Wash.

1995). Here, the evidence of record shows that Plaintiffs’ proposed claims for misrepresentation

and injunctive relief would be dismissed on summary judgment.

Plaintiffs first seek to add a claim that Microsoft made misrepresentations during the

installation of WGA Validation through Microsoft Update. See proposed Third Am. Compl. ¶¶

48-60, 232-58. But none of the remaining Plaintiffs claim to have obtained WGA Validation

through that Update Service:

• Plaintiff Johnson testified that he installed WGA Validation through Automatic

Updates, but not Microsoft Update. See Ex. B at 10; Ex. D at 31-33.

• Plaintiff Sifuentes admitted that he never installed any software from Microsoft

Update, and instead claimed to have obtained WGA Validation from Automatic

Updates. See Ex. B at 10; Ex. E at 37-38.

• The corporate designee of Plaintiff EPC has no recollection of ever visiting

Microsoft Update to install updates, and said that the company installed WGA

Validation through Automatic Updates. See Ex. B at 10; Ex. F at 41.

• Plaintiff Grennan stated that he was uncertain as to how he obtained WGA

Validation and has no idea whether he ever visited the Microsoft Update Web site.

See Ex. C at 21; Ex. G at 44-45.

• Plaintiff Verrilli confirmed in both his discovery responses and at his deposition that

he installed WGA Validation through Automatic Updates. See Ex. C at 21; Ex. H at

48-49.

• Plaintiff Weatherill testified that he installed WGA Validation through Automatic

Updates and that it was highly unlikely that he obtained WGA Validation through

Microsoft Update. See Ex. C at 21; Ex. I at 54-55.

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 7 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 7

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

Next, Plaintiffs seek to add a claim that Microsoft made misrepresentations during the

installation of WGA Validation through Automatic Updates (as opposed to Microsoft Update).

See proposed Third Am. Compl. ¶¶ 60-83. Although Plaintiffs theorize that Microsoft failed to

disclose that WGA Validation was installed before they provided consent, see id. ¶¶ 64-66, 76,

their fantasy cannot be squared with the undisputed facts. Every individual who installed WGA

Validation through Automatic Updates was required to accept a WGA End User License

Agreement (“WGA EULA”) by clicking “I Accept” or “I Agree” before installing the software.

See Dkt. No. 212 ¶ 20. The WGA EULA disclosed in plain language that the software would

determine whether the user’s computer contained a properly licensed copy of Windows XP. Id.

¶ 28(a). If the user did not accept the WGA EULA, the software was not installed. Id. ¶ 20.

Plaintiffs have no evidence to the contrary. Plaintiff Johnson remembered accepting the

WGA EULA, but did not know, one way or another, whether the software was installed

beforehand. See Ex. D at 34. Similarly, Plaintiff Verrilli explained that he would have agreed to

the installation of WGA Validation because he “cannot imagine the software would install

without so selecting.” See Ex. H at 50. In the face of this fatal evidence, Plaintiffs should not be

permitted to inject a baseless claim.

In their final proposed additional claim, Plaintiffs seek to recover various forms of

injunctive relief. Under Washington law, however, a plaintiff cannot obtain injunctive relief

unless he shows that he has a well-grounded fear of an immediate invasion of a right. Tyler Pipe

Indus., Inc. v. State, Dep’t of Revenue, 96 Wn.2d 785, 792 (1982); Rubin v. Juanita Shores

Condominium Owner’s Ass’n, 2005 WL 3105610, at *4 (Wn. App. Nov. 21, 2005).

4 Here, many

of Plaintiffs’ proposed claims for injunctive relief are futile because Plaintiffs have no well4 Although the claims of Plaintiffs Johnson, Verrilli, and Weatherill are governed by California law, and

the claims of Plaintiff Grennan are governed by Oklahoma law, those states impose a similar requirement

for obtaining injunctive relief. Intel Corp. v. Hamidi, 71 P.3d 296, 303 (Cal. 2003) (holding that an

injunction is an “extraordinary remedy” that requires “a showing of likely irreparable injury”); House of

Realty, Inc. v. City of Midwest City, 109 P.3d 314, 318 (Okla. 2004) (holding that an injunction requires a

showing that threatened acts “will, in probability, be committed”).

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 8 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 8

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

grounded fear that WGA Validation will be forcibly installed on their computers.

5 Although

Plaintiffs seek injunctions that would prevent future installations of WGA Validation, see

proposed Third Am. Compl. ¶¶ 218-19, Windows XP users have always been able to decline the

installation of WGA Validation if they do not want it. See Dkt. No. 212 ¶¶ 4-5. Plaintiffs

Verrilli and Weatherill admitted as much when they testified that they clicked an “I Agree”

button before installing WGA Validation. See Ex. H at 50-51; Ex. I at 57-58.

Almost all of Plaintiffs’ other requested injunctions are futile in light of this Court’s

summary judgment ruling that an Internet Protocol address (“IP Address”) is not personally

identifiable information. See Dkt. No. 206, at 7. In seeking injunctions that would require

Microsoft to delete the data WGA Validation collected, impose a constructive trust on that data,

and/or conduct an independent audit of it, see proposed Third Am. Compl. ¶¶ 218-19, Plaintiffs

continue to rely on their rejected assertion that an IP address constitutes personally identifiable

information. Id. ¶¶ 47, 183, 210. Without a viable theory that Microsoft collected information

that infringed upon Plaintiffs’ rights, they are not entitled to these forms of injunctive relief.

Plaintiffs’ remaining requested injunctions seek a tool for removing WGA Validation and

disgorgement of revenues. See proposed Third Am. Compl. ¶¶ 218-19. But these forms of relief

are already part of Plaintiffs’ unjust enrichment and trespass claims. See Second Am. Compl. ¶¶

85, 195. If Plaintiffs wanted to add these requests for relief to their CPA claim, they should have

done so when they added them to their other claims in April 2008. Id.

2. Plaintiffs’ Motion Should Be Denied Because of Their Undue

Delay in Seeking Leave to Amend.

This Court should also deny Plaintiffs’ motion based on undue delay. Courts refuse leave

to amend when there is an unreasonable delay between learning a relevant fact and seeking

leave. AmerisourceBergen, 465 F.3d at 953. In assessing whether delay is unreasonable, courts

5

For example, Plaintiffs seek to add injunction claims for: (a) the provision of a tool that would allow

users to decline WGA Validation; (b) the reconfiguration of WGA Validation as an opt-in program; and

(c) the uncoupling of WGA from security updates. See proposed Third Am. Compl. ¶¶ 218-19.

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 9 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 9

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

inquire into when the moving party knew or should have known the facts and theories raised in

the amendment. Id.

The record here shows that Plaintiffs were aware, or should have been aware, of the facts

underlying their proposed misrepresentation claims no later than September 2008 – fifteen

months before they sought leave to amend. For example, Plaintiffs’ proposed misrepresentation

claims are premised upon the allegedly deceptive screenshots that were presented during the

installation of WGA Validation. When Microsoft served its supplemental interrogatory answers

in September 2008, Plaintiffs possessed the screenshots that depicted the users’ experience

through both Microsoft Update and Automatic Updates, descriptions of the disclosures that were

presented to users, and explanations of the timing of the installation of WGA Validation in

relation to users’ acceptance of the WGA EULA. See Exs. J and K.

Plaintiffs should have known about their proposed injunctive relief claims even earlier.

Their proposed Third Amended Complaint proposes to tack on injunctive remedies that are

based on the same CPA violations they alleged in their April 7, 2008 Second Amended

Complaint. Even if they could establish that they should not have known about the proposed

injunctive relief claims in April 2008, they most certainly knew about them on September 15,

2008, when they sought class certification for many of the same requests for injunctive relief that

they now seek to add to their complaint. See Dkt. No. 164, at 34.

Courts have denied leave to amend based on delays as short as six months. See

McGlinchy v. Shell Chem. Co., 845 F.2d 802, 809 (9th Cir. 1988) (denying motion where

plaintiffs “did not give notice of their intention to amend their complaint until ... at least six

months after they had become aware of the new claims”). Although Plaintiffs should have

known about facts underlying their proposed claims at least fifteen months ago, they remained

idle and allowed the case to proceed solely upon the claims set forth in the Second Amended

Complaint. Plaintiffs’ dilatory conduct warrants denial of leave to amend.

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 10 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 10

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

3. Plaintiffs’ Motion Should Be Denied Because the Proposed

Amendments Would Cause Microsoft Substantial Prejudice.

This Court should also deny Plaintiffs’ motion because the proposed amendments would

cause Microsoft to suffer substantial prejudice by having to re-do its discovery and internal

investigations. See Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir. 1994) (affirming denial of

leave to amend in light of the “voluminous and protracted discovery ... expense, delay, and wear

and tear on individuals and companies”). Microsoft tailored its discovery requests, deposition

questions, and internal fact-gathering to the allegations in both the First and Second Amended

Complaints. If Plaintiffs are once again granted leave to amend, Microsoft will be forced to redo its internal inquiries and the discovery that it took from each of the Plaintiffs scattered around

the country. By way of example, this would require Microsoft to determine how each Plaintiff

purportedly saw statements on Microsoft Update even though they admitted to not using that

Update Service.

The prejudice that would result from additional discovery is exacerbated by the time

spent and costs incurred during the first go-around. Microsoft spent more than four and a half

months trying to get complete answers to the single set of March 9, 2007 discovery requests

served on the original plaintiffs. Microsoft sent eight deficiency letters and participated in two

meet and confer sessions, all to no avail. See Dkt. No. 32 ¶¶ 3-11. Ultimately, an order

compelling discovery proved necessary. See Dkt. Nos. 44 & 46.

Now that Microsoft has completed the exhausting process of collecting the evidence for

its defense, Plaintiffs seek to inject a new set of claims. Microsoft should not be required to retake discovery, especially when Plaintiffs have exhibited a pattern of delay. This Court should

refuse to allow Plaintiffs to cause further prejudice and deny their motion.

C. If the Court Grants Leave to Amend, It Should Require Plaintiffs to Compensate

Microsoft for Its Class Certification Opposition and any Additional Discovery.

If this Court grants Plaintiffs’ motion and allows the filing of their proposed Third

Amended Complaint, it should require Plaintiffs to reimburse Microsoft for its attorneys’ fees,

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 11 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 11

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

costs, and other expenses for the discovery relating to their new claims. Courts routinely impose

such a condition where, as here, a plaintiff seeks to add claims after a defendant has taken its

discovery. General Signal Corp. v. MCI Telecomm. Corp., 66 F.3d 1500, 1514 (9th Cir. 1995)

(affirming grant of leave to amend conditioned upon “compensate[ing] the opposing party for

additional costs incurred”); Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990)

(affirming denial of leave to amend even though plaintiffs “offered to reimburse [defendants] for

any additional discovery expenses” because “their offer does not take into account the

opportunity costs to the Bank when its officers spend time in the discovery process”); G & C

Auto Body Inc. v. GEICO Gen. Ins. Co., 2008 WL 687371, at *4 (C.D. Cal. Mar. 11, 2008)

(granting leave to amend because the court “can cure any prejudice by reopening discovery and

shifting any additional discovery costs to GEICO.”).

If Plaintiffs are granted leave to introduce their proposed claims, Microsoft will need to

re-serve written discovery and re-take depositions to ask about each Plaintiff’s experience in

installing WGA Validation, their use of the Update Service, and the forms of relief they seek.

Because the expenses for this additional discovery would have been significantly lessened if

Plaintiff had acted in a timely manner, they should be responsible for paying them.

If leave to amend is granted, the Court should also order Plaintiffs to reimburse Microsoft

for the expenses incurred in defending against their second class certification motion and set a

date for submission of a fee petition. By the time Plaintiffs made their last-minute decision to

withdraw their class certification motion for the second time, Microsoft had already incurred

substantial expense in drafting its September 22, 2009 class certification opposition and

preparing for the December 2, 2009 oral argument. Plaintiffs offer no explanation for the timing

of this maneuver other than to say that is when they made the decision to withdraw their class

certification motion for the second time. See Dkt. No. 223, at 1. There is no reason why

Plaintiffs could not have made this decision much sooner, sparing Microsoft the enormous

amount of time and money it spent. See Collaboration Properties, Inc. v. Tandberg ASA, 2006

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 12 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 12

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

WL 2398763, at *3 (N.D. Cal. Jun. 27, 2006) (“[C]ourts have broad power to impose reasonable

conditions on amendment”).

D. Plaintiff Ellis Cannot Obtain Leave to Amend Because He Voluntarily

Dismissed His Claims With Prejudice.

Plaintiffs’ motion should be denied to the extent that it seeks amendments concerning

Plaintiff Ellis because he voluntarily dismissed his claims with prejudice. See Dkt. No. 210. A

trial court is precluded from granting leave to amend a complaint after a judgment has been

entered unless the judgment is first re-opened. Slezak v. TCIF, 324 Fed. App’x 652, 653 (9th

Cir. 2009); Lindauer v. Rogers, 91 F.3d 1355, 1357 (9th Cir. 1996). A voluntary dismissal with

prejudice is the equivalent of a judgment because both operate as adjudications on the merits.

Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1160 (9th Cir. 2002). A court may not

grant leave to amend following a dismissal with prejudice because it loses jurisdiction over the

dismissed claims and cannot issue further orders pertaining to them. Duke Energy Trading &

Mktg., L.L.C. v. Davis, 267 F.3d 1042, 1049 (9th Cir. 2001); see also Lindauer, 91 F.3d at 1357

(“[B]ecause judgment had been entered and not reopened ... the district court was without power

to hear the motion.”).

Because Plaintiff Ellis voluntarily dismissed his claims with prejudice and never moved

to re-open his case, see Dkt. No. 210, he cannot obtain leave to amend.

IV. CONCLUSION

For the reasons stated above, Microsoft respectfully requests that the Court: (1) allow

Plaintiffs to withdraw the class allegations relating to their remaining claims by striking them

from the Second Amended Complaint; (2) impose an immediate deadline for seeking leave for

any further amendments as required by Fed. R. Civ. P. 16(b)(3)(A); and (3) deny Plaintiffs’

request to file their proposed Third Amended Complaint.

//

//

//

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 13 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 13

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

DATED this 4th day of January, 2010.

s/Karl J. Quackenbush

Karl J. Quackenbush, WSBA # 9602

Gavin W. Skok, WSBA # 29766

RIDDELL WILLIAMS P.S.

1001 Fourth Avenue, Suite 4500

Seattle, WA 98154

Tel: (206) 624-3600

Fax: (206) 389-1708

kquackenbush@riddellwilliams.com

gskok@riddellwilliams.com

Charles B. Casper, admitted pro hac vice

Gregory J. Hauck, admitted pro hac vice

MONTGOMERY, MCCRACKEN,

WALKER & RHOADS, LLP

123 South Broad Street

Philadelphia, PA 19109-1029

Tel: (215) 772-1500

Fax: (215) 772-7620

ccasper@mmwr.com

ghauck@mmwr.com

Attorneys for Defendant

MICROSOFT CORPORATION

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 14 of 15
MICROSOFT’S OPPOSITION TO PLAINTIFFS’

MOTION FOR LEAVE TO AMEND - 14

Case No. CV06-0900 RAJ

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

RIDDELL WILLIAMS P.S.

1001 FOURTH AVENUE

SUITE 4500

SEATTLE, WASHINGTON 98154-1192

TELEPHONE: (206) 389-1583

FACSIMILE: (206) 389-1708

CERTIFICATE OF SERVICE

I hereby certify that on January 4, 2010, I caused to be electronically filed the foregoing

with the Clerk of the Court using the CM/ECF system which will send notification of such filing

to the following:

David Breskin

Alan Himmelfarb

William Houck

Daniel Johnson

Scott Kamber

Todd Nunn

Roger Townsend

Jess Webster

/s/Karl J. Quackenbush

Karl J. Quackenbush, WSBA # 9602

RIDDELL WILLIAMS P.S.

1001 Fourth Avenue, Suite 4500

Seattle, WA 98154

Tel: (206) 624-3600

Fax: (206) 389-1708

kquackenbush@riddellwilliams.com

Case 2:06-cv-00900-RAJ Document 225 Filed 01/04/2010 Page 15 of 15