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Even a billion-dollar settlement can’t keep everyone happy. Plaintiffs in the consumer class action against Microsoft Corp. were in court Monday with some nits to pick. And Microsoft countered with some grousing of its own, saying the $1.1 billion agreement ought to buy it a full release. It wasn’t clear what San Francisco Superior Court Judge Paul Alvarado will do with those arguments. Tuesday, he’ll continue hearing a motion to approve the terms of the settlement — and the accompanying $294 million in requested attorney fees and costs. Employees of the Settlement Recovery Center, a San Francisco outfit set up to help individuals and companies collect their share of the settlement, want Alvarado to extend the deadline for filing claims. And an attorney for URU, an Escondido, Calif.-based clothing manufacturer that has a separate antitrust complaint pending against Microsoft, requested that the agreement not preclude future complaints against Microsoft for overcharges on purchases made after December 2001. Microsoft attorney Robert Rosenfeld, a partner at Heller Ehrman White & McAullife, objected to extending the time period for consumers to file settlement claims. But he spent most of his opening comments on the settlement, arguing that Microsoft should be released from future liability, as the current agreement states. “Microsoft bargained for an end to litigation in California, for peace,” Rosenfeld said. “We didn’t want to be sued again for the same conduct.” Under an agreement reached last year, Microsoft is providing up to $1.1 billion in vouchers to 14 million Californians who indirectly purchased Microsoft software from 1995 to 2001. The vouchers can be used to purchase any computer hardware, software or peripheral products. Two-thirds of unclaimed settlement funds will go to public schools in the form of vouchers, while the remaining one-third will revert to Microsoft. Rosenfeld asked Alvarado to specify in his order that the settlement released Microsoft from future claims based on the same conduct litigated in the consumer class action. Otherwise, he said, “We don’t have a settlement.” But Alvarado said he did not think it was appropriate to do so. “The release appears appropriate,” he said. “I think beyond that, I don’t think I’m prepared to make a finding that bars claims presented in a new lawsuit.” URU attorney Mary Strimel, a partner at Washington, D.C.’s Cohen, Milstein, Hausfeld & Toll, said Microsoft is trying to extinguish any claims beyond December 2001. She asked that the settlement release not cover purchases made after that date. Alvarado asked why that issue shouldn’t be left to another day, addressed in motions for summary judgment in URU’s suit against Microsoft. Strimel said the adequacy of the settlement depends on which claims are being released. Plaintiffs’ attorneys say the face value of the settlement is 22 percent of overcharges on licensing fees paid to Microsoft from 1995 to 2001. But Strimel argued that value is accurate only if you include overcharges through 2012. Alvarado is to decide if the settlement is fair, adequate and reasonable. The judge will also address attorney fees submitted by plaintiffs’ lead counsel, Townsend and Townsend and Crew. Townsend is requesting at least $97 million in fees and costs for itself and another $197 million for 34 other firms that worked on the case. Townsend partner Richard Grossman said 334 class members have expressed concern about the terms of the settlement, representing three one-hundredths of a percent of the class. He said many did not put forth a true legal objection but expressed “social, political or economic viewpoints such as contempt for Microsoft, dislike of attorneys or disappointment in the court system.” Grossman supported the Settlement Recovery Center’s request to extend the deadline for filing claims and suggested that it go into effect after any appeals are considered. Grossman said nearly 600,000 claims had been filed to date. Howard Yellen, the head of the Settlement Recovery Center, floated the idea of changing the settlement terms for companies that have been liquidated. Since these companies cannot use vouchers and can only transfer $650 worth of vouchers to another entity, he suggested that they get cash or that restrictions on voucher transfers be liberalized for them. “There are a lot of dot-coms here in San Francisco that expanded dramatically in the late ’90s and early 2000s and went belly up,” Yellen said. “There’s no way to liquidate vouchers.” Alvarado did not seem inclined to consider this request. “That would be my re-working the settlement,” he told Yellen.

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