On Wednesday, February 18, Judge Marsha Pechman issued an order reversing her earlier decision to grant the collection of various lawsuits against Microsoft and the company's "Vista Capable" campaign class action status. Her decertification effectively ends the Vista Capable lawsuit when discussed as a monolithic endeavor—Microsoft is understandably pleased—but stops short of granting Microsoft the summary judgment it requested.In her 17-page decision (PDF), Pechman describes the history of the case to date, the relevant statutes and court decisions, and the two motions Microsoft presented for consideration. While the plaintiffs in the case allege that Microsoft's Vista Capable campaign constituted deceptive marketing, the actual (and novel) legal argument was that Microsoft's vigorous advertising campaign around Vista Capable had led OEMs to charge a premium for systems labeled as such. Had these systems simply carried a standard Windows XP logo, the suit contended, they would have sold for lower prices. Although it wasn't part of the legal argument, the class action centered around the idea that Windows Vista Basic wasn't the "real" Windows Vista, and that customers who bought Vista Capable machines found themselves stuck with hardware that did not perform as advertised.
The original request for class certification was based on two points: first, that Microsoft had violated the Washington Consumer Protection Act (CPA) or the equivalent in other states, and second, that the company had benefited from unjust enrichment.
In order to qualify as a class action under the CPA, a plaintiff must show that the defendant engaged in an unfair or deceptive act that occurred in the conduct of its main trade, affected the public interest, and injured the plaintiff. The act in question must also be the proximate cause of the plaintiff's injury, an act which "in direct sequence...produce[d] the injury complained of and without which such injury would not have occurred." That's a high bar, but Pechman originally granted class action status in her decision last year in order to give the plaintiffs time "to further develop their 'price inflation' theory."
Arrested development
Given the novelty of their argument and the court's stated willingness to allow them time for development, you'd think the plaintiff's would have attacked Microsoft with a full battalion of economic analysis—and you'd be wrong. Pechman notes that cases that alleged economic harm ultimately failed due to their inability to demonstrate how and where that harm occurred, despite having gathered extensive economic data and performed multiple statistical analyses. "Plaintiffs' evidence fails to establish class-wide causation because it does not attempt [to] identify a specific shift in the demand for Vista Capable PCs," wrote Judge Pechman. "Dr. Leffler did not attempt any regression analysis, much less an econometric analysis of the impact of 'Vista Capable' on demand." (Dr. Leffler served as an expert witness on behalf of the plaintiffs.)
Instead of attempting to demonstrate class-wide causation, the plaintiffs based their arguments on anecdotes, gathered testimony, and the batch of e-mails Microsoft was forced to release back in early 2008. Leffler attempted to argue that the Vista Capable campaign succeeded based on internal Microsoft documents, but Pechman notes that said documents do not give any hard data on whether Microsoft actually hit any specific targets. Even if it did, there's no accompanying evidence to illustrate that the growth in question was driven solely by the Vista Capable program rather than by holiday discounts, OEM promotions, or a general uptick in laptop sales. It certainly doesn't help that the laptop market has been growing steadily for years, that fact alone could easily have obscured the theoretical impact of the Vista Capable campaign.
Leffler falls equally short when tasked with demonstrating that the Vista Campaign actually had a demonstrable and particular impact on system price. Rather than offering economic analysis, Dr. Leffler relied again upon precampaign discussions within Microsoft itself and sworn testimony from certain plaintiffs. The good doctor ultimately concluded that "fundamental and non-controversial economic principles" imply that the Vista Capable campaign increased the price of applicable systems. Judge Pechman evidently didn't attend the prestigious economic school that discovered these principles, and notes: "It does not appear as if Dr. Leffler tested this assumption against any real pricing data."
Not entirely off the hook
Given that the plaintiffs presented no real evidence to support the continuation of the Vista Capable class action, Judge Pechman opted to decertify the case. She did, however, note that her decision should not be taken as a ruling on the validity of specific individual claims. "While the Court decertifies the class today, it is careful to note that this ruling makes no comment on the merits or veracity of Plaintiffs' individual CPA and unjust enrichment claims. Defendant is mistaken to equate Plaintiffs' failure to provide class-wide proof of causation with a failure to present an issue for trial."
Pechman also dings Microsoft for missing the plaintiffs' point when it defends Vista Home Basic as a valid Vista distribution. "The question is not whether Basic can be called 'Vista' based on computer code similarity or whether Microsoft as a software developer has the right to offer multiple permutations of its product; it is whether Microsoft's use of the 'Vista Capable' designation had the capacity to deceive...In this sense, Microsoft's internal communications raise a serious question about whether customers were likely to be deceived by the WVC campaign." For this reason, the judge opted to deny Microsoft's motion for summary judgment, and will allow individual complaints to to press onward.
The Vista class action lawsuit may be effectively dead, but the suit has been a fantastic success in terms of the information about the run up to Vista's release turned up through discovery. The documents (PDF) Microsoft was forced to disclose were a fascinating goldmine of information, even if they represent just the merest fraction of the thousands of e-mails Microsoft employees and representatives exchanged throughout the development of the Vista Capable marketing program. Thanks to those documents, we discovered how Microsoft first stuck to and then flip-flopped on its decision to require Windows Vista Device Driver Model (WVDDM)-compatible video hardware, why the company made that decision, and how the fallout caused waves within the seemingly monolithic corporation. Of equal interest was the fact that early NVIDIA drivers were substantially to blame for Vista's instability and undoubtedly contributed to the general perception that Windows Vista was buggy, undesirable, and a step backwards from stable, yummy, Windows XP.
By Joel Hruska
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