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STATE OF NEW YORK v. MICROSOFT CORPORATION

United States District Court, District of Columbia


May 12, 2003

STATE OF NEW YORK, ET AL., PLAINTIFFS
v.
MICROSOFT CORPORATION, DEFENDANT.

The opinion of the court was delivered by: Colleen Kollar-kotelly, United States District Judge

MEMORANDUM OPINION

This case comes before the Court on Defendant Microsoft's Motion for Protective Order Denying States' Request for Production of Documents ("Microsoft Mot."), which is opposed by Plaintiffs. Microsoft's Motion objects to the following requests for information:

1. Attorney time records, including contemporaneous time records, concerning all legal services provided to Microsoft, whether by outside or in-house counsel, in connection with the Litigation, from January 1, 1997 through the present.
2. Documents sufficient to identify, with respect to each attorney who provided legal services to Microsoft in connection with the Litigation: a) the name of the attorney; b) the work or tasks performed by each attorney and the date the work was performed; and c) the amount of time spent on each such task.
3. All documents: a) concerning Microsoft's agreement to pay any State money for attorneys fees or costs incurred in the Litigation, including any written agreement(s), and any communications between Microsoft and any State concerning Microsoft's payment of fees or costs incurred by any State; b) concerning any review, analysis, or investigation of attorneys fees or costs incurred by any other State(s), conducted by or on behalf of Microsoft prior to paying any other State(s) money for attorneys fees or costs incurred in the Litigation; and c) sufficient to identify the total amount paid to other States for attorneys fees or costs.
Microsoft Mot. at 1-2; Microsoft Mot. Ex. A at 1-2.*fn1 Microsoft claims that these requests seek production of massive amounts of irrelevant information. Microsoft Mot. at 1. Microsoft claims that its attorneys' time records "do not impact whether the states prevailed upon certain legal claims or whether the states kept contemporaneous and proper time records," the bases on which it challenges Plaintiffs Commonwealth of Massachusetts and State of West Virginia's request for attorneys fees. Id. at 2. Furthermore, Microsoft maintains that documents related to its settlement with the other States which settled their antitrust actions against Microsoft are irrelevant because those fees were agreed to as part of a settlement agreement and here the fees are in dispute. Id.

Plaintiffs Commonwealth of Massachusetts and the State of West Virginia ("Plaintiff States") assert that their requests are targeted at arguments made by Microsoft in its opposition to their fee request. Plaintiffs', Commonwealth of Massachusetts and State of West Virginia, Opposition to Microsoft's Motion for Protective Order to Quash States' Limited Request for Documents (Pl. States' Opp'n) at 2. They claim that since Microsoft contends that zero dollars would reasonably compensate the States for more than five years of litigation[,] Microsoft . . . has challenged the reasonableness of the States' entire request, regardless of Microsoft's strained characterization that it has "not challeng[ed] the reasonableness of the States' fees." Id. at 2-3 (emphasis in original).

Upon review of Microsoft's Motion for a Protective Order, Plaintiff States' Opposition thereto, Microsoft's Reply, the relevant law and Microsoft's Opposition to Plaintiff States' Motion for Attorneys Fees and Expenses ("Microsoft Opp'n"), the Court shall grant Microsoft's Motion for a Protective Order. Plaintiff States shall have ten (10) calendar days, until May 22, 2003, to file a Reply to Microsoft's Opposition to their Motion for Attorneys Fees and Expenses.

I: DISCUSSION

The point of contention is whether or not Plaintiff States' discovery requests are aimed at relevant information. Rule 26 of the Federal Rules of Civil Procedure provides that "[p]arties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party. . . ." Fed.R.Civ.P. 26(b)(1). Upon review of the briefings in this case, it is clear that the discovery requests, contrary to Plaintiff States' assertions, are not aimed at evidence relevant to Microsoft's opposition to Plaintiff States' request for attorney's fees and costs.

Discovery Requests #1 and #2

Plaintiff States assert that Microsoft is challenging the reasonableness of their attorneys fees request, and that the firm majority of courts considering the issue . . . have ruled that the hours spent by counsel for opposing parties are relevant to determining a reasonable fee award. Pl. States' Opp'n at 2-3. For this reason Plaintiff States maintain that their first two discovery requests are aimed at relevant information.

Microsoft concedes that the cases cited by Plaintiff States "support the undisputed contention that when a party challenges the reasonableness of the hourly rate or the number of hours expended, discovery into opposing counsel's fees may be appropriate." Microsoft Reply at 2 n. 1 (emphasis in original). However, Microsoft asserts that it is not challenging the reasonableness of the hours expended nor the hourly rate Plaintiff States present to the Court in support of their fee petition. Rather, Microsoft states it makes "only legal challenges" to the request for court-ordered fees. Microsoft Reply at 2; Microsoft Mot. at 2, 4; see also Microsoft Opp'n at 2-3. Microsoft in its Reply brief makes this clear, stating: "Microsoft objected to the states' fee requests because the states failed to substantially prevail on many of their legal claims, failed to keep contemporaneous time records required of fee petitioners, failed to exercise the billing judgment demanded of fee petitioners, and engaged in block billing forbidden to fee petitioners." Microsoft Reply at 3.

Given Microsoft's representations, and Plaintiff States' failure to point to any part of Microsoft's Opposition to their fees request where it challenges the reasonableness of hours and/or rates used to calculate the fees they requested,*fn2 the Court determines that Microsoft's challenge to Plaintiff States' attorneys fee request is based on the legal sufficiency of the request and does not dispute the reasonableness of the Plaintiff States' calculations. None of the cases cited by Plaintiff States stand for the proposition that discovery of a defendant's attorney's billing records is appropriate when the defendant does not challenge the reasonableness of the plaintiffs representations of the hours expended or hourly rate charged.*fn3 In fact, some of the cases explicitly note that "[w]hether discovery is appropriate depends, in part, on the objections raised by the opponent to the fee petition going to the reasonableness of the fee petition." Murray v. Stucky's Inc., 153 F.R.D. 151, 152-53 (N.D. Iowa 1993); see also Coalition to Save our Children v. State Bd. of Educ. of the State of Delaware, 143 F.R.D. 61, 64-66 (D. Del. 1992). Given that Microsoft does not challenge the reasonableness of Plaintiff States' representations of hours expended or the appropriate hourly rate, the Court fails to see how the request for an accounting of Microsoft's attorneys' hours spent and tasks performed during the litigation "is relevant to the claim or defense of any party." Fed.R.Civ.P. 26(b)(1). As such, the Court shall grant Microsoft's Motion for Protective Order with regard to the first two discovery requests made by Plaintiff States.*fn4

Discovery Request #13

Plaintiff States also request "agreements and correspondence concerning Microsoft's payment of full fees and costs to all prevailing states, provided they did not appeal." Pl. States' Opp'n at 2. Plaintiff States maintain that since they

prevailed to the same degree as other litigating states[, t]here is no reasonable basis to distinguish between Massachusetts and West Virginia's entitlement to fees and that of other States. It appears, however, that Microsoft paid every other state their full fees and costs, including all fees for the remedy proceedings, fees attributable to all causes of action, and apparently without regard to the level of documentation supporting the claimed fees. The States should be allowed to learn the basis for, and the circumstances surrounding Microsoft's decision, in this very litigation, to pay full fees and costs to those identically situated States.
Pl. States' Opp'n at 6 (citations omitted) (emphasis in original). In support of this position, Plaintiff States point to Kyles v. Sec'y of Agric., 604 F. Supp. 426, 436 (D.D.C. 1985) which they claim stands for the proposition that "a fee opponent's settlement practices in connection with other fee petitions should be considered in evaluating its opposition to a fee award." Pl. States' Opp'n at 6. The Court disagrees with Plaintiff States' characterization of Kyles. In Kyles, Judge Oberdorfer was concerned with what appeared to be a practice within the Executive Branch of forcing parties or lawyers who seek attorneys fees at a rate greater than $75 per hour

to fight for it — through formal discovery and dilatory motions for extensions of time and for reconsideration, capped by automatic appeals, many of them abandoned when briefing time approaches. By this form of "jaw-boning," these officers may well be attempting to enact a de facto ceiling of $75, contrary to statutes enacted by Congress and authoritatively interpreted by the Courts.
Kyles, 604 F. Supp. at 436. It was in relation to this concern that Judge Oberdorfer noted that

Defendant fails to explain satisfactorily why it opposed an interim distribution at the $75 rate that it had advised the Court of Appeals was the basis for settlements generally and at which defendant had already agreed to settle the attorney's fee for services provided by plaintiffs former partner during the administrative stage of this very case. Our Court of Appeals has admonished that "the interests of justice will be served by awarding the prevailing party his fees as promptly as possible."
Id. (citation omitted) (emphasis added). Judge Oberdorfer did not order discovery of the Government's settlement practices, or of its settlement with another attorney in the case, in order to determine the reasonableness of the attorney's fee award under consideration. Nor did he propose as a general rule that "a fee opponent's settlement practices in connection with other fee petitions should be considered in evaluating its opposition to a fee award." Pl. States' Opp'n at 6. Rather, he pointed out that the Government had failed to adequately explain its delay in the attorney's fee phase of the case.*fn5

In addition to the lack of support in the caselaw for Plaintiff States' discovery request, the Court agrees with Microsoft that their claim

for fees has nothing to do with the other states' claims. Microsoft settled with the other states, and, in return for their cases coming to an end, Microsoft agreed to pay the settling states' fees, giving up any challenge to the amount of or the legal propriety of these fees. . . . Whether Microsoft was willing to pay the full fee request of the settling states is simply irrelevant to whether Massachusetts and West Virginia complied with the legal requirements for petitioning this Court for fees when such a petition is contested.
Microsoft Reply at 4. The Court notes that many variables and considerations that may or may not have to do with the merits of the claims often play a role in decisions to enter into settlements. Therefore, the Court shall grant Microsoft's Motion for Protective Order with regard to this third discovery request as well.

In reaching its decision, the Court notes that granting Microsoft's motion also comports with the Supreme Court's instruction that "[a] request for attorney's fees should not result in a second major litigation." Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). The Court is also cognizant of the rationale behind its decision to deny Plaintiff States' Motion to hold in Abeyance Proceedings on the Fee Petitions. State of New York v. Microsoft Corp., 98-1233, WL 299440 (D.D.C. Jan. 15, 2003). In reaching its decision to deny Plaintiff States motion, the Court followed the direction provided by this District Court's Local Rules, the Federal Rules of Civil Procedure, and the D.C. Circuit Court of Appeals, which noted that "from the appellate court's perspective, it would be desirable if the merits appeal and the appeal from the final order on fees could be decided together. Indeed, this appears to be the import of the 1993 amendments to the civil and appellate rules." Id. at *1-2 (quoting Gilda Marx, Inc. v. Wildwood Exercise, Inc., 85 F.3d 675, 680 n. 5 (D.C. Cir. 1996) (referring to Fed.R.Civ.Pro. 54(d)(2)(B)) (citations omitted)). This Court concluded that "the circumstances of this case counsel proceeding immediately with the attorneys fees phase so that the Court of Appeals might deal with any attorneys fees issue that is appealed along with the merits appeal in this case." Id. at *2.

Given the basis for this decision on the Plaintiff States' Motion to Stay Proceedings, and the fact that the Court shall grant Microsoft's Motion for Protective Order, the Court declines to grant Plaintiff States' request for 30 days to file their Reply in support of their fee petition. See Pl. States' Opp'n at 7. Since no additional discovery is required as a result of today's decision, Plaintiff States shall file their reply by May 22, 2003.

II: CONCLUSION

After considering Microsoft's Motion for Protective Order, Plaintiff States' Opposition thereto, Microsoft's Reply, the relevant law and Microsoft's Opposition to Plaintiff States' Motion for Attorneys Fees and Expenses, this Court shall grant Microsoft's Motion for Protective Order. An Order accompanies this Memorandum Opinion.


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