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Robert M. Langer, of Wiggin & Dana’s Hartford, Conn., office, characterized the 103-page Microsoft decision by federal Judge Janet C. Hall of the U.S. District Court for the District of Connecticut — vacated by the 2nd Circuit — as the most detailed examination of punitive damages under CUTPA in its 28-year history. Invoking “exceptional circumstances,” the 2nd U.S. Circuit Court of Appeals drained the legal life out of Connecticut’s landmark Microsoft case, in which a federal judge made a record-setting $1 million unfair-trade punitive-damage award. The circuit panel vacated the ruling Janet C. Hall imposed against Microsoft Inc. in Bridgeport, Conn., federal court. Her ruling, a 103-page analysis of the reach of the state’s unfair trade practices act, was the most detailed examination of that law in its 28-year history, says CUTPA maven Robert M. Langer, of Wiggin & Dana’s Hartford office. “That’s lost now,” said Langer, after the May 17 ruling. Langer, who teaches and writes on CUTPA matters, was not involved in the case. Hall had ruled that Microsoft engaged in “reckless and wanton” deception when it told Bristol Technologies and other software makers that it would share the Windows source code but subsequently stopped doing so. Microsoft’s goal initially was to make Windows and Unix interoperable on high-powered computers. In June 1999, a Bridgeport jury awarded Danbury, Conn.-based Bristol Technologies just $1 in actual damages for deception and found no unfair trade practices. Last September, Hall awarded Bristol $1 million in punitive damages for deception. By the terms of the state unfair trade law, punitive damages are awarded by the judge. This year, while the case was on appeal to the 2nd Circuit, Microsoft and Bristol settled for an undisclosed sum. Under the deal, Microsoft got to argue unopposed to vacate Hall’s decision. Strategically, the company wanted some assurance that Hall’s findings would not haunt Microsoft in the U.S. Justice Department’s antitrust case against it or in private litigation. The standard set by the U.S. Supreme Court in 1994 in U.S. Bancorp v. Bonner only excuses the nullification of existing opinions in exceptional circumstances, but the 2nd Circuit vacated Hall’s opinion by finding Bristol’s case an exception. Three basic reasons are given in U.S. Bancorp to not vacate a written decision even when the parties settle during appeal. First, judicial precedent enjoys a presumption of correctness. Second, society benefits from the orderly resolution of legal questions. And third, a losing party forfeits its appeal rights by settling and also surrenders the right to cover its tracks with “the equitable remedy of vacatur.” POWER FAILURE? The 2nd Circuit questioned whether Hall could impose punitive damages. The 2nd Circuit’s own rulings conflict on whether post-trial punitives are allowable, thus Hall’s power to issue her ruling “is subject to doubt,” the panel wrote. Judges Dennis G. Jacobs, Fred I. Parker and Robert A. Katzman didn’t flinch as they shredded Hall’s work. “[S]ince CUTPA is a state statute, and since one can expect that its import will be developed by Connecticut state courts, a federal court interpretive opinion is perhaps dispensable.” The judges implied Hall violated caselaw and Microsoft’s Seventh Amendment jury-trial rights when, following CUTPA’s terms, she awarded punitive damages herself instead of letting the jury handle the issue of punitives. Triggering conjecture, the judges wrote “we decline to speculate as to whether the district court’s factual findings in this case are consistent with the Seventh Amendment.” Finally, the panel comforted the world’s richest man, Microsoft founder Bill Gates. With punitives comes blame. Even unnamed parties become “the subject of moral appraisals.” In light of the shaky Seventh Amendment ground under Hall’s decision, and the fact the parties have settled, it’s only fair to do away with Hall’s findings, the panel concluded. “I am very surprised that the Court of Appeals took this step of vacating Judge Hall’s very careful and correct opinion,” said Bristol Tech’s attorney John Altieri Jr., of New York’s O’Melveny & Myers. “It’s also surprising that the court did not require Microsoft to ask Judge Hall for this relief first,” he added. With Bristol gagged and no input from Hall, the 2nd Circuit heard Microsoft, he said, “but not anyone who took an opposing view.” EVERYTHING’S EXCEPTIONAL Wiggin & Dana appellate lawyer Mark R. Kravitz has written about the phenomenon of defendants making vacatur a condition of settlement. While Bristol v. Microsoft will remain in the lawbooks, he said in an interview, “its value will come from the force of the logic, not any imprimatur that the court system puts on it. It surely will have no precedential value against Microsoft itself in any case.” Strong U.S. Supreme Court policy only allows vacatur in exceptional cases. “But the bottom line is that circuits have a formal program to settle cases on appeal, but many institutional litigants just cannot settle and leave that judgment out there.” In order to break the logjam, cases are increasingly ruled exceptional to make settlement possible, Kravitz said.

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