Judge puts stop to more ‘Vista Capable’ insider e-mails

A federal judge last week granted Microsoft‘s request to suspend the “Vista Capable” lawsuit while an appeals court reviews her decision to give the case class-action status.

The move blocks, for now, any new disclosure of insider e-mails by Microsoft employees, such as the ones made public in February, or the release of internal messages from the nearly 30 companies and people who had been subpoenaed and ordered to deliver documents.

In the year-old lawsuit, consumers have charged Microsoft with misleading PC buyers by sponsoring a marketing program meant to keep computer sales going in the months leading up to Window Vista’s late-2006 release. However, the lawsuit alleged, many machines that boasted the Vista Capable sticker were able to run only Home Basic, a version the plaintiffs said was not the “real” Vista because it omitted some of the most heavily promoted elements of the new operating system.

Last Thursday, U.S. District Court Judge Marsha Pechman granted Microsoft’s motion to stay the lawsuit, putting the case on hold while the Ninth Circuit Court considers Microsoft’s appeal. Four weeks before, Microsoft had appealed Pechman’s ruling that the case be granted class-action status, arguing that the company would rack up expenses and suffer damaged business relationships for no purpose if the case continued but later was denied class-action by the review court.

Lawyers for the plaintiffs, who had petitioned Pechman to keep the case going — and who wanted to continue collecting documents from Microsoft and others as part of the case’s discovery process — took the decision in stride. “We had obviously hoped to proceed to trial in October, notwithstanding Microsoft’s appeal [but] while we wanted to go forward now, given the breadth of the class trial, the Court’s order is certainly a reasonable position to take,” said Jeffrey Tilden, an attorney with the Seattle, Wash. firm Gordon Tilden Thomas & Cordell, in an e-mail Sunday.

The case has become notable because of the 158 pages of Microsoft e-mails that the plaintiffs attorneys had acquired during discovery; Pechman unsealed those documents and released them to the public record on Feb. 27. Among other revelations, the messages showed that top-level Microsoft executives struggled with the new operating system on machines labeled “Vista Capable,” and that partners such as Dell warned Microsoft that the campaign would confuse consumers about which versions of the upcoming OS their new PC would be able to run.

One of the reasons Microsoft gave to Pechman for postponing the case while the Ninth Circuit decides was that it would “would intrude on sensitive pricing decisions and strategies by OEMs, wholesalers and retailers; and would jeopardize Microsoft’s goodwill with class members.” The latter would have been made up of consumers who had purchased PCs labeled with the Vista Capable logo.

Tilden’s firm had followed up its first round of document requests to Microsoft with additional demands in March, and served subpoenas on 29 companies and individuals in search for more information about the decision to market Vista Home Basic, any complaints about Microsoft’s marketing program and the impact sales of Vista Capable PCs had on the sales of Windows XP systems.

The list of 29 individuals and companies that were told to produce documents read like a Who’s Who of the Windows economy, and included retailers such as Amazon.com, Best Buy and Wal-Mart Stores ; computer makers like Acer America, Dell, and Hewlett-Packard; chip-maker Intel; market research firms Gartner and The NDP Group; and Jim Alchin, the former head of Windows development who resigned the day after Vista shipped in January 2007.

Several of these companies filed objections, which Microsoft included in a counter-rebuttal submitted to Pechman two weeks ago, and argued that they should not have to abide by the orders or that the deadlines were too pressing. Some specifically noted that they feared the documents would be released to the public.

Circuit City Stores, for example, called the discovery requests “overbroad, unduly burdensome, oppressive, and harassing,” and would disrupt its business. Office Depot, meanwhile said that the demands sought “information and documents not meant for public disclosure and certainly not meant for disclosure to Office Depot’s direct competitors,” clearly referring to Microsoft being forced to air its laundry in public and to the fact that among the other subpoenaed retailers were Office Max, Fry’s, Best Buy, Circuit City, Costco, and Wal-Mart.

Amazon.com objected on the grounds that the documents could be obtained from others. “They may be available from the Microsoft in the above-entitled action, or from other third parties (such as OEMs and/or retailers) more readily than from Amazon,” its objection read.

It’s not known how long the lawsuit may be delayed if the Ninth Circuit rejects Microsoft’s appeal, though the Redmond, Wash.-based developer said last month it expected the decision to accept or reject the appeal to take 90 days. If the court accepts the appeal, the case could be on hold indefinitely. Earlier, Pechman had set an October trial date, but in her stay of last week, she also ditched the schedule.

Computerworld is an InfoWorld affiliate.