Source: http://www.justice.gov/atr/cases/f10900/10980.htm
Timestamp: 2014-11-24 21:52:31
Document Index: 208118276

Matched Legal Cases: ['§ 4', '§ 4', '§ 15', '§ 5', '§ 16', '§ 15', '§ 25', '§ 16', '§ 26', '§ 1', '§ 4', '§ 26', '§ 1', '§ 4', '§ 4', '§ 25', '§ 26', '§ 26']

Memorandum Amicus Curiae of the United States Regarding Microsoft Corporation`s Motion for Dismissal of the Non-Settling States` Demand for Equitable Relief : State of New York, et al. v. Microsoft Corp.
Next Court Deadline: Remedies Hearing MEMORANDUM AMICUS CURIAE OF THE UNITED STATES
REGARDING MICROSOFT CORPORATION'S MOTION FOR DISMISSAL
OF THE NON-SETTLING STATES' DEMAND FOR EQUITABLE RELIEF
April 15, 2002 CHARLES A. JAMES
Antitrust Division 600 E Street N.W., Suite 9500
INTRODUCTION DISCUSSION THE UNITED STATES IS THE SOLE ENFORCER OF THE FEDERAL ANTITRUST
LAWS ON BEHALF OF THE AMERICAN PUBLIC
Under the Federal Antitrust Laws, Only the United States May Seek Injunctive
Relief in a Sovereign, Law Enforcement Capacity
The States Occupy the Position of Private Parties, Not Sovereigns, When Seeking
MICROSOFT HAS NOT ESTABLISHED THAT PRECEDENT REQUIRES
DISMISSAL OF THE NON-SETTLING STATES' CLAIMS AS A MATTER OF LAW
Dismissal For Want Of A "State-Specific Injury" Is Not Mandated By Existing
Caselaw and Established Practice
The Enforcement Judgment Previously Reached by the United States and the
Pending Tunney Act Proceeding Do Not Foreclose the Non-Settling States'
Claims at this Juncture as a Matter of Law
Microsoft's Constitutional Claims Do Not Require Dismissal as a Matter of Law
THE LIMITATIONS OF CLAYTON ACT SECTION 16 AND THE ENFORCEMENT
JUDGMENT OF THE UNITED STATES ARE IMPORTANT CONSIDERATIONS IN
THE COURT'S EXERCISE OF EQUITABLE DISCRETION
TABLE OF AUTHORITIES Cases Alfred L. Snapp & Sons, Inc. v. Puerto Rico, 458 U.S. 592 (1982) Amoco Production Co. v. Village of Gambell, 480 U.S. 531 (1987) Blue Cross and Blue Shield United of Wisconsin v. Marshfield Clinic, 152 F.3d 588
(7th Cir. 1998) BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996) Brown Shoe Co. v. United States, 370 U.S. 294 (1962) Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573
(1986) Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477 (1977) Buckley v. Valeo, 424 U.S. 1 (1976) California v. American Stores Co., 495 U.S. 271 (1990) Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986) Cavanaugh v. Looney, 248 U.S. 453 (1919) Estados Unidos Mexicanos v. DeCoster, 229 F.3d 332 (1st Cir. 2000) Florida v. Mellon, 273 U.S. 12 (1927) Ford Motor Co. v. United States, 405 U.S. 562 (1972) Georgia v. Evans, 316 U.S. 159 (1942) Georgia v. Pennsylvania Railroad Co., 324 U.S. 439 (1945) Hawaii v. Standard Oil Co. of California, 405 U.S. 251 (1971) Land O'Lakes Creameries, Inc. v. Louisiana State Board Of Health, 160 F. Supp. 387
(E.D. La. 1958) In re Insurance Antitrust Litigation, 938 F.2d 919 (9th Cir. 1991), aff'd in part and
rev'd in part sub nom. Hartford Fire Insurance Co. v. California, 509 U.S. 764
(1993) Louisiana v. Texas, 176 U.S. 1 (1900). Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) Massachusetts v. Mellon, 262 U.S. 447 (1923) Minnesota v. Northern Securities Co., 194 U.S. 48 (1904) Morrison v. Olson, 487 U.S. 654 (1988) Pennsylvania v. Kleppe, 533 F.2d 668 (D.C. Cir. 1976) Pennsylvania v. New Jersey, 426 U.S. 660 (1976)
Pennsylvania v. West Virginia, 262 U.S. 553 (1923) Pennsylvania v. Williams, 294 U.S. 176 (1935) Printz v. United States, 521 U.S. 898 (1997)
South Carolina v. Katzenbach, 383 U.S. 301 (1966) United States v. Bendix Home Appliances, 10 F.R.D. 73 (S.D.N.Y. 1949) United States v. Borden Co., 347 U.S. 514 (1954) United States v. E.I. Du Pont de Nemours & Co., 366 U.S. 316 (1961) United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir.), cert. denied, 122 S. Ct.
350 (2001) United States v. Microsoft Corp., 87 F. Supp. 2d 30 (D.D.C. 2001) United States v. San Francisco, 310 U.S. 16 (1940) Vermont Agency of Natural Resources v. United States, 529 U.S. 765 (2000) Virginian Railway Co. v. System Federation No. 40, Railway Employees Department
of the American Federation of Labor, 300 U.S. 515 (1937) Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982) Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 (1969) Statutes and Constitutional Provisions
§ 4, 15 U.S.C. § § 4C, 15 U.S.C. § 15c § 5(e), 15 U.S.C. § 16(e) (Tunney Act) § 15, 15 U.S.C. § 25 § 16, 15 U.S.C. § 26 Sherman Act, ch. 647, 26 Stat. 209 (1890)
§§ 1, 2, 7
§ 4 U.S. Constitution
Article II Article III Legislative Materials
51 Cong. Rec. S14,476 (daily ed. Aug. 31, 1914) 51 Cong. Rec. S14,477 (daily ed. Aug. 31, 1914)
51 Cong. Rec. S14,518-9 (daily ed. Sept. 1, 1914) 51 Cong. Rec. S14,526 (daily ed. Sept. 1, 1914) NOTE: Cited material from the Congressional Record is reprinted in 3 Earl W. Kintner,
The Legislative History of the Federal Antitrust Law and Related Statutes (1978).
Next Court Deadline: MEMORANDUM AMICUS CURIAE OF THE UNITED STATES
The United States submits this Memorandum in response to the Court's invitation to present
its views as amicus curiae with regard to Microsoft's motion to dismiss the non-settling States'
demand for equitable relief. Microsoft's motion raises a number of important questions concerning
the limits of the non-settling States' legal standing as parens patriae. The movement of some
States into the field of antitrust enforcement with respect to national or international markets, and
their demands for relief that will affect competition and consumers outside of their borders, raise
issues that have not been fully developed in the jurisprudence. As Microsoft points out, the decided
cases tend to address state efforts to vindicate more clearly defined local interests, not the kind of
interests at stake here. Nevertheless, the United States finds no definitive case law that would
require granting the relief Microsoft seeks as a matter of law. Rather, as discussed more fully
below, we believe that the law requires the Court to take cognizance of many of the issues
Microsoft raises in the exercise of the Court's equitable discretion.
The current proceeding is unique. Following separate but concurrent and largely
coordinated investigations, the United States and several States commenced separate suits in the
same court against Microsoft challenging substantially the same conduct. In pursuing the
monopoly maintenance claim in court, the States did not assert any particular state interests in the
matter, or indicate any actual or potential divergence from the approach taken by the United
States with respect to liability or remedy. Microsoft moved the court to consolidate the two
cases. The two cases were consolidated for all purposes on May 22, 1998, were tried together to
final judgment, appealed together, and remanded together for further proceedings consistent with
the Court of Appeals' decision, which treated the U.S. and state cases as being indistinguishable.
Seven months after the appellate decision, this Court deconsolidated the two cases because
they had "taken divergent paths." Order at 2 (February 1, 2002). The cases diverged because the
United States and nine plaintiff States in this case reached a settlement with Microsoft, while the
remaining States did not. The United States agreed to the settlement because it is a complete and
fully appropriate remedy for the violations found by the District Court and affirmed by the Court
of Appeals and provides immediate and certain relief without further litigation.
The non-settling States  which can take for granted the protection afforded by the
settlement now before this Court in the Tunney Act proceeding  came to advance their own far-reaching remedial proposals, many of which appear unrelated to the theories of illegality advanced
by the United States and the plaintiff States at trial and the findings of liability sustained by the
Courts. This action by the non-settling States raises for the very first time the prospect that a
small group of States, with no particularized interests to vindicate, might somehow obtain
divergent relief with wide-ranging, national economic implications.
Microsoft asks the Court to rule now as a matter of law that the non-settling States' claims
should be dismissed, chiefly for want of standing. The non-settling States appear to agree with
Microsoft that, unlike the United States, they are entitled to equitable relief under the federal
antitrust laws only if they have met the requisite elements of standing under Section 16 of the
Clayton Act, 15 U.S.C. § 26. See, e.g., Memorandum of Defendant Microsoft Corporation in
Support of Its Motion for Dismissal of the Non-Settling States' Demand for Equitable Relief at
16 ("MS Mem."); Plaintiff Litigating States' Response to Microsoft's "Motion for Dismissal of
the Non-Settling States' Demand for Equitable Relief" at 10 ("Response"). Microsoft and the
States disagree on the requisite elements. Microsoft contends that the States are required to
demonstrate a "state-specific" injury that can be distinguished from the generalized law
enforcement interest in stopping Microsoft's established antitrust violations. The States disagree
that they are required to demonstrate a state-specific injury and contend that they have adequately
demonstrated their standing as it is defined in existing case law. Microsoft's arguments raise
important issues of federal antitrust enforcement policy that -- as more fully developed below --
are significant to the Court's ultimate decision in this case. But on this motion to dismiss, the
United States cannot as amicus advise this Court that the precedents cited by Microsoft require
dismissal prior to any further evidentiary proceedings.
THE UNITED STATES IS THE SOLE ENFORCER OF THE FEDERAL
ANTITRUST LAWS ON BEHALF OF THE AMERICAN PUBLIC
Although the States have traditionally played a significant role in American antitrust activity,
they do not stand on equal footing with the United States as enforcers of the federal antitrust
laws. The States possess important authority to seek both monetary and injunctive relief. In
pursuing injunctive relief, however, the States appear before the Court as private parties, not as
sovereign law enforcers. They do so in the pursuit of quasi-sovereign parens patriae interests on
behalf of the economic well-being of their citizens, and the relief they may seek is subject to the
limits Congress and the courts have imposed.
Maintaining recognition of the proper distinction between the state and federal roles in
antitrust enforcement is exceptionally important in light of the global nature of competition and
the wide array of matters that need the attention of state and federal enforcers. Under our
Constitution, for example, the States cannot appropriately conduct international relations with
foreign nations pertaining to competition policy. Likewise, full effectuation of the antitrust laws
benefits from persistent attention by state authorities to local issues that might escape federal
attention. The public interest is best served when federal and state antitrust activity is
complementary, not duplicative or conflicting.
The Sherman Act, as enacted in 1890, ch. 647, 26 Stat. 209, 210 (codified as amended at 15
U.S.C. §§ 1-7), gave the federal courts jurisdiction "to prevent and restrain violations" of the Act,
and gave the "several district attorneys of the United States, in their respective districts, under the
direction of the Attorney-General," the "duty . . . to institute proceedings in equity to prevent and
restrain such violations." Id. § 4 (codified as amended at 15 U.S.C. § 4). The Act did not
provide for equitable relief at the behest of anyone else.(1) Thus, the Supreme Court held that a suit
for equitable relief by the State of Minnesota, alleging violations of the Sherman Act and injury to
property values in the State, did not present a case arising under the Constitution or laws of the
United States. Minnesota v. N. Sec. Co., 194 U.S. 48 (1904). As the Court explained:
We cannot suppose it was intended that the enforcement of the [Sherman
A]ct should depend in any degree upon original suits in equity instituted by
the states or by individuals to prevent violations of its provisions. On the
contrary, taking all the sections of that act together, we think that its
intention was to limit direct proceedings in equity to prevent and restrain
such violations of the anti-trust act as cause injury to the general public, or
to all alike, merely from the suppression of competition in trade and
commerce . . . to those instituted in the name of the United States . . . by
district attorneys of the United States, acting under the direction of the
Attorney General; thus securing the enforcement of the act, so far as direct
proceedings in equity are concerned, according to some uniform plan,
operative throughout the entire country.
In 1914, Congress modified this remedial scheme by enacting the Clayton Act. While it
included in Section 15, 15 U.S.C. § 25, a provision virtually identical to the Section 4 of the
Sherman Act, the Clayton Act also included a separate provision, Section 16, 15 U.S.C. § 26,
allowing private parties to seek injunctive relief when faced with prospective injury resulting from
Any person, firm, corporation, or association shall be entitled to sue for
violation of the antitrust laws . . . when and under the same conditions and
principles as injunctive relief against threatened conduct that will cause loss
or damage is granted by courts of equity, under the rules governing such
Section 16, however, is narrower in scope than the Clayton Act and Sherman Act provisions
for equitable relief in actions brought by the United States. While the United States may sue to
restrain violations of either Act without any showing of injury, and courts may grant injunctions
restraining such violations, others may sue only under Section 16, and only to protect against
"threatened loss or damage by a violation." They have no authority to seek an injunction merely
on account of a violation of the antitrust laws. See, e.g., Louisiana v. Texas, 176 U.S. 1, 19
(1900) ("the vindication of the freedom of interstate commerce is not committed to the State of
Louisiana") (quoted in Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 602-03
(1982)). Moreover, not all threatened loss or damage suffices; rather, "antitrust injury" must be
threatened -- "threatened loss or damage 'of the type the antitrust laws were designed to prevent
and that flows from that which makes defendants' acts unlawful.'" Cargill, Inc. v. Monfort of
Colo., Inc., 479 U.S. 104, 113 (1986) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,
429 U.S. 477, 489 (1977)). Finally, unlike Section 15, Section 16 explicitly emphasizes that such
relief can only be granted under the same conditions and principles considered by courts of equity. 15 U.S.C. § 26. The States Occupy the Position of Private Parties, Not Sovereigns, When
Seeking Injunctive Relief Under Section 16 of the Clayton Act
It was not through oversight that the Clayton Act relegates States seeking injunctive relief
to the status of "[a]ny person" pursuant to Section 16. Georgia v. Pa. R.R. Co., 324 U.S. 439,
447 (1945). During floor consideration of the Clayton Act, Senator Reed offered an amendment
that would have added a new section to the bill: "Tha