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Plaintiffs’ attorneys in California’s Microsoft Corp. antitrust case have escalated their challenge to San Francisco Judge Richard Kramer. In reply papers filed Tuesday, San Francisco attorney Craig Corbitt said he isn’t satisfied that simply selling his Microsoft stock removed the judge’s bias. Corbitt said Kramer’s “integrity” and “reputation as a lawyer and judge” were not being questioned. But his embrace of Microsoft shares was. “Substantial, prolonged ownership of stock in a corporation charged with reaping illegal monopoly profits over several years for the benefit of its shareholders could easily cause a shareholder to be favorably disposed toward the corporation that has yielded a profitable return on the shareholder’s investment,” wrote Corbitt, chairman of the plaintiffs’ executive committee. “Such a bias seems natural, if not inevitable,” he added. But Kramer said in an answer filed Wednesday that he didn’t make a profit when he sold the stock — he lost money. “The shares referred to in this motion were all sold at prices below what I paid for them,” the judge wrote. “Thus, my investment in them yielded no profitable return.” The exchange between Corbitt and the judge was the latest skirmish since Kramer took over the case with the elevation of Judge Stuart Pollak to California’s 1st District Court of Appeal. Last week Corbitt filed a challenge for cause based on Kramer’s latest financial disclosure statement. The judge responded by saying he sold off all his Microsoft shares when he liquidated the bulk of a portfolio valued at less than $4.6 million. Kramer said he’s unsure exactly when he told his stockbroker to execute sell orders but estimated that it was before September 2001. He said it occurred long before he was appointed to take over the complex litigation court from Pollak. Corbitt and the rest of the plaintiffs’ attorneys are skeptical of Kramer’s contention that he lost money. “While Judge Kramer has sold his holdings in Microsoft, Intel and AOL, that would not automatically erase any potential for bias given that he was able to sell his substantial holdings at a price that was enhanced by the illegal monopoly profits Microsoft reaped for its shareholders,” their reply to the judge said. They added that “we nonetheless believe that he should be recused from this case so as to remove the clear potential and appearance of bias stemming from his recent ownership of stock in Microsoft, Intel and AOL.” Intel Corp. and AOL Time Warner Inc. executives may be called as witnesses in the case, according to the plaintiffs. Kramer, in response, explained at length how he hired a financial manager in early 2000 to make his investments for him. “The shares in this portfolio were bought and sold for me by the manager, who did not consult with me regarding specific transactions,” he said. The judge claimed he was unaware that his financial manager had intended to buy the Microsoft, Intel, AOL and other shares. “Thus, I made no analysis of any of the subject companies in connection with this investment, nor was the investment a reflection of any attitude or decision on my part regarding these companies,” he wrote. Kramer, who has said he wants to preside over the Microsoft antitrust trial scheduled to begin in August, remains disinclined to recuse himself. “I hold no bias regarding any matter which will interfere with my being fair and impartial in this case,” he said. Microsoft attorney Robert Rosenfeld said in a statement filed with the court that it’s “silly” to suggest a judge with investments can’t be fair. “In such a world, for-cause challenges would be the norm, judge shopping would be rampant and only those judges who put their savings ‘under the mattress’ would be immune to charges of bias,” the Heller Erhman White & McAuliffe partner wrote. Although the Microsoft investment is the ostensible reason plaintiffs’ attorneys are trying to bump Kramer from the case, some among them have expressed concern with his business-oriented past law practice as a partner with San Francisco-based Steefel, Levitt & Weiss. The lawyers have said privately that they thought they had a more sympathetic ear with Pollak on the bench.

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