Clerk of the Court . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . San Francisco County Superior Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P.O. Box 2821 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . San Francisco, CA 94126-2821 . . . . . . . . . . . . . . . . . . . . . . . . 4 November, 2003

Objection to Settlement Case J.C.C.P. 4106

I am a Class Member. I object to the Settlement in Microsoft I-V Cases ("Settlement")

Reasons

The Settlement is not fair

The Class was overcharged in Cash for the purchase of Microsoft's products and is entitled to a Settlement in Cash not worthless Vouchers. Not all members of the Class, including me, can use Vouchers and, for many other Class Members, the amount of a Voucher is insignificant and will discourage the filing of claims by Class Members, but all members of the Class can use Cash. The Court should take notice that the Settlement does not guarantee that Vouchers are true cash equivalents of $1.1 billion. Only a small fraction of Vouchers will be redeemed and only a small fraction of $1.1 billion will be paid out by Microsoft. Clearly, the Settlement is made solely for the benefit of Class Counsel, who receive their fees in Cash, and Microsoft, who relies on a Voucher design and redemption process which guarantees that very few Vouchers will ever be redeemed.

The Settlement true value is not real

An offer of cash would allow the Court and the Class to more accurately evaluate the Settlement's true value. The Settlement (1) requires the purchase of products which a Class Member may not want or not warrant a claim. Clearly, cash convertibility is preferable to noncash Vouchers which, unless a buyer can be found who intends to use them, cannot be converted to cash; (2) does not guarantee that all the issued Vouchers will be redeemed. In evaluating the Settlement, the only proper means of measuring true value is by finding the actual redemption rate of Vouchers which is impossible unless Voucher redemptions are tracked; (3) does not require post settlement tracking of how many Class Members actually redeem their Vouchers. In Perish v. Intel Corp., No. CV-75-51-01 (Cal. Super. Ct. Santa Clara Co. June 22, 1998) 500,000 coupons offering $50 rebate off of the purchase price of a new microprocessor only generated 150 requests from class members for the coupons; (4) does not offer a 100% redemption of the issued Vouchers. In other words, issued Vouchers not only must be convertible to cash by Microsoft, but Microsoft must continue to track Vouchers and issue Vouchers until the agreed upon cash value of $1.1 billion plus interest of the Settlement is reached. This was not done.

Non-Members Lack Standing

The Settlement provides that, if less than $1.1 billion is claimed by Class Members, Microsoft will provide 2/3 of any unclaimed Vouchers to California's public Schools and the remaining 1/3 to Microsoft. However, Schools and Microsoft are not Members of the Class and, therefore, lack standing to receive benefits from distribution of Vouchers. Clearly, the Settlement is designed, first, to effectuate a low redemption rate of Vouchers, second, to divert unclaimed Vouchers to schools and to Microsoft and, third, to advertize Microsoft's generosity to schools at the expense of the Class. Such switching of benefits from the Class to non-Class schools and Microsoft should not be allowed by this Court.

Class Counsel does not represent the best interests of the Class.

Cash rather than Vouchers are in the best interests of Class Members. In my typical case of a small claimant, I have no use for Vouchers because I do not intend to purchase computer products for which these can be redeemed. I will, therefore, lose the amount of cash overcharged me by Microsoft. I do not think Class Counsel is much interested in fairness and justice, i.e., whether Class Members get paid in Cash for what they were overcharged in Cash. Indeed, the Settlement provides Class Counsel and Microsoft an opportunity for an alliance of their economic pocketbooks against the best interests of the Class. Considering the expected low redemption rate of Vouchers, Microsoft is willing to pay inordinately high cash fees to Class Counsel in return for supporting the Settlement in which the Class receives worthless Vouchers. To prevent this abuse (1) the Court may wish to consider requiring that Class Counsel accept payment of their fees in Vouchers. Clearly, Class Counsel will accept such payment unless it believes Vouchers are worthless. (2) Counsel fees should be based upon the actual recovery to the Class which requires cash convertibility, extended redemption periods, post settlement tracking and continued Voucher issuance until the amount redeemed equals the promised cash value $1.1 billion plus interest of the Settlement.

Attorney's fees are unauthorized

Attorney's fees cannot be set by any third party but, rather, are determined by agreement between client and attorney not between Class Counsel and Microsoft. Since no Agreement exists between Class Representatives and Class Counsel which specifies the hourly or contingency basis for fees, authorization and terms for a Settlement, the attempt to negotiate fees between Class Counsel and Microsoft, and the segregation of payment of fees in Cash to the Class Counsel and the payment of Vouchers to the Class, is unauthorized by the Class and with intent of defrauding the Class.

Hourly fees are not applicable or are not reasonable.

Since the Class does not pay fees, these must necessarily be based on a contingency agreement, i.e., a reasonable percentage of the amount recovered by the Class. This is the strongest possible incentive for Class Counsel to work for the best interests of the Class. Accordingly, attorney's hourly fees are inapplicable. Or, if applicable, hourly fees are not reasonable. For example, if the average hourly rate in the Court's jurisdiction is $X/hr and the proven time spent by attorneys is 54,000Y hours (Y man year/case x 27 cases), a reasonable fee would be $54,000XY not $275,000,000=1,000,000 hrs x $275/hr or 500,000 hrs x $550/hr requested by Class Counsel. It is beyond belief that Class Counsel, a 145 member firm with 10 antitrust attorneys and 135 attorneys in unrelated practice, has spent 1/2-1 million pretrial hours in reaching the Settlement. How many astronomical hours would it take Class Counsel's 10 antitrust attorneys to do trial?

Contingency fees are indeterminate

The Settlement contemplates recovery by Vouchers allegedly worth $1.1 billion. Assuming arguendo that Vouchers have a real cash value, any reasonable contingency fees due to Class Counsel must be paid as a percentage of Vouchers issued by Microsoft to the Class. Since there is no evidence that any Voucher issued by Microsoft will ever be redeemed by a significant number of claimants, and since no evidence exists that Microsoft will incur actual $1.1 billion cash payments in connection with its Voucher offer, there exists no basis to establish that attorney's fees paid in Vouchers are worth $275,000,000. Accordingly, contingency fees paid in Vouchers are indeterminate in Cash. I think Class Counsel would be greatly interested in fairness and justice if they too were paid in Vouchers.

The California system of justice has been turned on its head by the alliance of economic interests of Class Counsel and Microsoft against the best interests of the Class. I request that the Court: DISAPPROVE the Settlement; ORDER that all claims be paid in Cash or true Cash equivalent; SANCTION Class Counsel for filing a frivolous claim for $275,000,000; ORDER the removal of Class Counsel from the case; and SANCTION Microsoft for filing a frivolous offer for worthless Voucher payments to Class Members.

References

SETTLEMENT AGREEMENT at http://www.microsoftcalsettlement.com

CONSUMER CLASS ACTIONS AND COUPON SETTLEMENTS: ARE CONSUMERS BEING SHORTCHANGED? Published In Advancing The Consumer Interest, Vol. 12, No. 2, Fall/Winter 2000 And May Not Be Reproduced Without The Permission Of Thomas A. Dickerson. By Judge Thomas A. Dickerson and Brenda V. Mechmann. See at http://www.classactionlitigation.com/CouponArticleACIWebPage.htm

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Respectfully Submitted

 

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . James Constant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1603 Danbury Dr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Claremont, CA 91711 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (909) 624-1801

cc.

Eugene Crew, Richard L. Grossman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Townsend and Townsend and Crew LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P.O. Box 2837 . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . San Francisco, CA 94126-2837

Robert A. Rosenfeld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Heller, Ehrman, White & Mcauliffe LLP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P.O. Box 150 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . San Francisco, CA 94104-0150

 


e-mail 10/2/03 Dear Mr. Gates: I thought I should give you advance information about a matter that should be brought to your attention. In Settlement Case J.C.C.P. 4106, I am a small claimant who was overcharged $16 and am entitled to receive a Voucher which is worthless. Most honest merchants would reimburse the overcharge immediately. However, Microsoft has hired clever lawyers who have made a Settlement solely for their own benefit of pocketing huge fees. Apparently, Microsoft relies on a Voucher design and redemption process which guarantees that very few vouchers will ever be redeemed. Your good name will suffer more than Microsoft expects to gain in this conspiracy to defraud customers. Either fight the case in trial and prove no liability or make an honest settlement, i.e., pay back what you overcharged the buyers of your products in cash or true cash equivalent Vouchers.. Honest dealing is worth more than clever lawyers will buy you. Jim Constant