10692 1 IN THE IOWA DISTRICT COURT FOR POLK COUNTY 2 ---------------------------------------------- 3 JOE COMES; RILEY PAINT, ) an Iowa Corporation; ) 4 SKEFFINGTON'S FORMAL ) WEAR OF IOWA, INC., an ) NO. CL82311 5 Iowa Corporation; ) PATRICIA ANNE LARSEN; ) 6 and MIDWEST COMPUTER ) REGISTER CORP., an ) 7 Iowa Corporation, ) ) TRANSCRIPT OF 8 Plaintiffs, ) PROCEEDINGS ) 9 vs. ) ) VOLUME XXXIX 10 MICROSOFT CORPORATION, ) ) 11 Defendant. ) 12 ----------------------------------------------- 13 The above-entitled matter came on for 14 trial before the Honorable Scott D. Rosenberg, 15 commencing at 8:30 a.m., January 29, 2007, in 16 Room 302 of the Polk County Courthouse, 17 Des Moines, Iowa. 18 19 20 21 22 23 JANIS A. LAVORATO 24 Certified Shorthand Reporter Room 405B-Polk County Courthouse 25 Des Moines, Iowa 50309 10693 1 APPEARANCES 2 FOR THE PLAINTIFFS: 3 MICHAEL R. CASHMAN Attorney at Law 4 Zelle, Hofmann, Zoelbel, Mason & 5 Gette, LLP 500 Washington Avenue South 6 Suite 4000 Minneapolis, MN 55415 7 KENT WILLIAMS 8 Attorney at Law Williams Law Firm 9 1632 Homestead Trail Long Lake, MN 55356 10 11 FOR THE DEFENDANT: 12 JOSEPH E. NEUHAUS SHARON L. NELLIS 13 Attorneys at Law Sullivan & Cromwell, LLP 14 New York, NY 10004-2498 15 ROBERT A. ROSENFELD Attorneys at Law 16 Heller Ehrman, LLP 333 Bush Street 17 San Francisco, CA 94104 18 DAVID SMUTNY Attorney at Law 19 Heller Ehrman 1717 Rhode Island Ave. NW 20 Washington, D.C. 21 KIRK BAINBRIDGE Attorney at Law 22 Duncan, Green, Brown & Langeness, PC 23 Suite 380 400 Locust Street 24 Des Moines, IA 50309 25 10694 1 PROCEEDINGS 2 (The following record commenced on 3 January 29, 2007, at 8:30 a.m.) 4 THE COURT: All right. Let's see. 5 Can we start with the October '97, is that 6 right? 7 MR. CASHMAN: Was it the Court's 8 desire that we're going to go line by line? 9 THE COURT: Well, for now I want to go 10 line by line for the old ones and -- 11 MS. BRADLEY: Your Honor, if I may 12 make a suggestion? Microsoft would be glad to 13 walk through all of these line by line now if 14 you would prefer it. But if you would rather, 15 we could, perhaps, argue just the one we took 16 up on Friday -- or Thursday, rather. And after 17 the Court issues its rulings on one transcript, 18 the parties could meet and confer with hopes of 19 dramatically narrowing the issues, the 20 remaining collateral estoppel issues that we 21 would have to bring before you, if that seems 22 like a manageable way to take this up? 23 MR. CASHMAN: Well, Your Honor, again, 24 the plaintiffs' view is that there is not a 25 single collateral estoppel objection that has 10695 1 any merit for the reasons we explained before, 2 and so plaintiffs feel that all of these should 3 be overruled. 4 We're prepared to go through them if 5 that's the Court's wish. But all of these 6 designations go to other issues, and none of 7 them are for solely bolstering a claim which 8 plaintiffs are not going to be pursuing anyway. 9 THE COURT: Okay. 10 MR. CASHMAN: If Microsoft's desire is 11 that they're concerned about making a record, I 12 think the fact that they make the objections 13 that they have on the chart is sufficient for 14 them to have made their record. 15 I think the Court can overrule all of 16 those objections for the reasons we stated 17 during our argument, and Microsoft has its 18 record with the findings that they cite in the 19 chart. 20 THE COURT: It's up to you how you 21 want to do it. 22 MS. BRADLEY: Well, Your Honor, we 23 would ask we be given the opportunity to go at 24 least one transcript line by line. And if the 25 Court is inclined to sustain any collateral- 10696 1 estoppel objections, we should move forward 2 accordingly. 3 THE COURT: Okay. Try to be quick. 4 MR. CASHMAN: To the plaintiffs, at 5 least, if we are going to go through this on a 6 line by line and try to break this down into 7 some more manageable chunks. And what we've 8 done, Your Honor, is we've broken these into 9 groups based on collateral estoppel objections 10 that Microsoft has asserted. And I have here 11 for the Court a book that I think will make 12 this -- I hope makes it easier. And let me 13 explain what we've done, Your Honor. 14 The findings of fact that Microsoft 15 asserts for collateral estoppel objections as 16 it relates to their -- the testimony to which 17 they're objecting falls into 14 groups. And I 18 put in a book there tabs 1 through 14 where 19 I've recited the specific findings of fact for 20 Your Honor that have been alleged. 21 And also, Your Honor, summarized -- 22 boiled those findings of fact down to their 23 essence for you at the top so that we can 24 easily see what each finding is really about. 25 And then I've attached the specific 10697 1 lines of testimony to each of these groups to 2 which Microsoft is objecting. And on the first 3 page under each tab where I say "group," for 4 example, "Kempin group" once your rulings start 5 lines 1, 2 and 16, I've numbered the rulings 6 chart line so that you can reference those 7 easily to see where those are. 8 And again, the way that these are 9 grouped, generally speaking, is by the findings 10 of fact that Microsoft has asserted for the 11 collateral estoppel objection. 12 As it relates to group 1, Your Honor, 13 we touched on this before. I think it's 14 telling in the first instance that Microsoft 15 cites so many findings, which tells you that 16 really this is not underlying evidence for any 17 of those specific findings. 18 I reminded or advised the Court on 19 Friday that the DOJ CID deposition was not even 20 the underlying evidence for the testimony. 21 And, in fact, in the DOJ case, Mr. Kempin 22 provided written direct testimony. I have that 23 here. I'm not going to burden the Court with 24 reading through it. But it goes to show that 25 the testimony, this deposition testimony, is 10698 1 not the underlying evidence that Judge Jackson 2 used to issue these findings of fact. He had 3 different testimony before him when he issued 4 these findings of fact. 5 The group 1 testimony, Your Honor, 6 basically, here Mr. Kempin is telling the 7 Department of Justice that Internet Explorer 8 is part of Windows and OEMs are contractually 9 obligated to preinstall it. And he goes on to 10 provide other testimony about that. For 11 example, he says at 25, line 1 to 12, that if 12 the OEM Micron had asked to remove it, 13 Mr. Kempin would have referred Micron to the 14 contract and refused. 15 And he goes on to state in the last 16 designation here that restrictions on the boot 17 sequence are in the Windows 95 contracts and 18 are strict rules. 19 As I explained on Friday, this 20 testimony is not subject to any collateral 21 estoppel objections. And I'm going to start 22 factually and then go back to a couple of legal 23 principles. 24 But, first of all, factually, Count II 25 of plaintiffs' petition alleges that Microsoft 10699 1 entered into contracts, combinations or 2 conspiracies in restraint of trade. And these 3 designations, Your Honor, all three of these 4 designations, are relevant to whether 5 Microsoft's contracts unreasonably restrained 6 trade. They go to that issue. And these 7 designations are highly probative because 8 Mr. Kempin concedes that the way Microsoft 9 writes the license agreements for Windows 95 10 gives OEMs no choice and that the contracts are 11 subject to both strict rules. So all of that 12 testimony then goes to the unreasonable 13 restraint-of-trade claim. 14 Furthermore, I didn't -- at the very 15 beginning of the deposition, if the Court were 16 to refer back to the very beginning of the 17 deposition, Mr. Kempin and the examining lawyer 18 discussed the civil investigator demand. 19 You'll see that the Department of Justice is 20 investigating certain alleged conduct. 21 And what you have here, basically, 22 throughout this deposition then, is testimony 23 by Mr. Kempin which is later determined by the 24 Department of Justice to be incorrect or 25 misleading or untrue. And, in fact, by virtue 10700 1 of the findings of fact you have, the Court, 2 Judge Jackson, the findings themselves show 3 that the testimony of Mr. Kempin was deemed 4 not correct or not true because, obviously, 5 Mr. Kempin is defending what Microsoft did with 6 these contracts. 7 And so this testimony all goes to the 8 willful or flagrant issue because here you have 9 Microsoft engaged in prelitigation efforts to 10 mislead the Department of Justice. 11 And then, lastly -- and this is not an 12 exhaustive list -- but, again, this is relevant 13 to the credibility of the witness when you have 14 here a senior vice president who is defending 15 actions, which, as I've mentioned, are found to 16 be anticompetitive. 17 Now, I just want to go back to the law 18 for just a minute. Plaintiffs cannot be 19 collaterally estopped from presenting this 20 evidence when they're not presenting it to redo 21 the issue litigated in the government case. 22 And as we've discussed before, the plaintiffs 23 were not parties to the Department of Justice 24 action, which would be a fundamental 25 prerequisite for application of any collateral 10701 1 estoppel against plaintiffs. And since we were 2 not parties to that action, we cannot be 3 estopped. So factually and legally, this is 4 just a microcosm on group one here, but neither 5 one, facts or law, allow the collateral 6 estoppel objections that Microsoft has alleged. 7 So they should be overruled. 8 And that would take care of group 1. 9 All of the objections which Microsoft has 10 asserted, 158 through 161, 164 and 175 and 176, 11 those collateral estoppel objections have no 12 merit and should be overruled. 13 THE COURT: Thank you, sir. It's a 14 very good notebook. Thank you. Ms. Bradley. 15 MS. BRADLEY: Your Honor, we've 16 addressed the first citation that plaintiffs 17 discussed yesterday, but I would like to go 18 back and speak about a few of the points 19 plaintiffs raised today with respect to that 20 designation, the other two described. 21 Plaintiffs -- first, I know of no 22 ruling by this Court that in order for evidence 23 to be collaterally estopped, it had to be the 24 exact evidence that was considered by Judge 25 Jackson in creating the findings of fact. Once 10702 1 the fact was established, then, as Microsoft 2 reads all of this Court's orders on collateral 3 estoppel, that fact is established and neither 4 plaintiffs nor Microsoft may put into evidence 5 other evidence either supporting or refuting 6 that finding. 7 Plaintiffs first justification for 8 attempting to enter this duplicative evidence 9 is Count II of plaintiffs' complaint that 10 Microsoft entered contracts, combination or 11 conspiracies. And plaintiffs argue that 12 Mr. Kempin's testimony in these three citations 13 show that Microsoft entered into unreasonable 14 restraint of trade because OEMs had no choice 15 as plaintiffs' claim to enter into such 16 contracts if they wanted Windows. 17 This is a fact that is already 18 established in the findings of fact. If we 19 turn again to Finding 158, sort of in the 20 middle of that finding, Judge Jackson finds: 21 After all Microsoft made the 22 restriction a nonnegotiable term in its Windows 23 95 license, and OEMs felt they had no 24 commercially viable alternative to 25 preinstalling Windows 95 on their PCs. 10703 1 The testimony doesn't need to and 2 cannot come in for that same purpose. If 3 plaintiffs claim that the findings show an 4 unreasonable restrain of trade, then that is 5 already established for this period of time and 6 for this market. 7 Mr. Kempin's testimony doesn't touch 8 on anything outside of the period of time and 9 the market which is collaterally estopped by 10 these findings. And there's just no 11 justification for this duplicative evidence to 12 come in on that fact that has been established. 13 Plaintiffs also argue that the DOJ 14 determined that Kempin's testimony was untrue. 15 And it's unclear to me what they mean by that 16 because reading -- particularly if the Court 17 turns to the first designation on the list -- 18 Kempin's testimony about the contracts at 19 issue, he prescribes precisely the terms of the 20 contracts that are described in Finding 158. 21 And it's not clear to me what about 22 Mr. Kempin's testimony plaintiffs would claim 23 to be untrue. 24 Whether Mr. Kempin thought the 25 contracts were appropriate or inappropriate is 10704 1 really irrelevant to the matter at hand, which 2 is whether Microsoft engaged in this conduct 3 and that was later determined by a court down 4 the road that certain actions were determined 5 to be lawful and certain to be unlawful. 6 That's really beside the point and, honestly, I 7 can't make heads or tails of plaintiffs' 8 argument that Kempin's testimony was untrue. 9 In fact, the plaintiffs wish to offer 10 this testimony for its truth. The plaintiffs 11 wish to enter into evidence Microsoft's 12 activities and the contracts that Microsoft 13 entered into that Kempin testified about here. 14 And for plaintiffs to claim that is somehow 15 untrue seems to defeat the purpose on that 16 designation as far as I can tell. 17 Plaintiffs also talk about designation 18 3, I think. 19 THE COURT: 2 and 16. 20 MS. BRADLEY: Designation 16 actually 21 goes to a different subject. It isn't so 22 closely tied to Finding of Fact 158. But if I 23 may just familiarize myself with plaintiffs' 24 binder for a moment so I can locate this 25 designation. 10705 1 This testimony touches more on the 2 Windows boot sequence, which upon further 3 reflection really goes to Finding of Fact 203, 4 if we could turn to that. 5 MR. CASHMAN: I'm going to object, 6 Your Honor. Microsoft hasn't asserted 203 as a 7 collateral estoppel objection to this 8 testimony. 9 MS. BRADLEY: I would just say that as 10 Your Honor can tell, this is a laborious 11 process and one that is, we will agree, not a 12 precise one. And Microsoft has attempted to 13 cite a range of findings to which various 14 testimony goes. But when push comes to shove 15 on some of these, it becomes clear. And 16 Microsoft did this, simply made its assertions 17 of certain findings of fact of which testimony 18 related, really as a service to plaintiffs. 19 Microsoft is attempting to meet its 20 burden to show a linkage to certain findings of 21 fact. And, in fact, many of these citations 22 go to many, many findings. And so we would 23 request, Your Honor, that the Court consider 24 Finding 203 in examining the testimony at 25 plaintiffs' designation 16, that is page 113, 10706 1 lines 5 through 15. 2 And if we turn to that designation, it 3 speaks about the Windows experience and whether 4 Microsoft prohibited OEMs with Windows 95 from 5 altering the sequence in which Windows boots up 6 and the initial Window screen that the end user 7 sees. 8 This is precisely the activity that is 9 described in Finding 203 towards the bottom 10 third of that finding, Judge Jackson writes: 11 Microsoft threatened to terminate the 12 Windows license of any OEM that removed 13 Microsoft's chosen icons and program entries 14 from the Windows desktop or the start menu. It 15 threatened similar punishment for OEMs who 16 added programs that promoted third party 17 software to the Windows boot sequences. 18 Finding 203 talks about Microsoft's 19 restriction on the Windows boot sequence as 20 does the designation at page 113 of the Kempin 21 DOJ CID testimony. It goes to nothing else, 22 and it's collaterally estopped. 23 MR. CASHMAN: Your Honor, this 24 argument just highlights how absurd Microsoft's 25 position is because as I explained on Friday, 10707 1 at a bare minimum, at a bare minimum, this 2 testimony would be admissible in relation to 3 showing -- to proving plaintiffs' claim on the 4 operating systems market for the periods that 5 are not covered by the government case. So at 6 a bare minimum, this testimony, even if it was 7 verbatim from what Judge Jackson saw and relied 8 on, even if it was the exact same issue, 9 plaintiffs would be entitled to rely on it for 10 the purpose of establishing liability in the 11 operating systems markets for periods of time 12 not covered by the government case. Everything 13 Ms. Bradley just said underscores that bare 14 minimum conclusion. 15 All that this -- all that the 16 government findings preclude under the Court's 17 order is bolstering, solely to bolster the 18 findings of fact as it relates to the 19 government claim. And that's not what is going 20 on here. 21 Plaintiffs have multiple other issues. 22 I've explained a few. And the most simple and 23 obvious one which precludes the collateral 24 estoppel objection is operating system market 25 outside of the period of time at issue in the 10708 1 government case. And it's for that very reason 2 that the cases which Microsoft, as the court 3 may recall, cited in support of collateral 4 estoppel, the Setter case and the In Re Air 5 Crash Disaster case, why those cases support 6 plaintiffs. The Court may recall that in those 7 two cases the Court declined to apply 8 collateral estoppel on those two cases. And 9 they said it was because plaintiffs would be 10 entitled to put on that evidence anyhow in the 11 subsequent case. 12 And so in the particular facts of 13 those two cases, there wasn't going to be any 14 judicial efficiency. But you take that a step 15 further in the 3M case that we previously cited 16 to the Court. That case shows that in a 17 complex antitrust case like this, there are 18 judicial efficiencies to be gained by having 19 collateral estoppel, which is what we've got, 20 and that the plaintiffs are entitled to use 21 that evidence to prove other issues in the 22 case. 23 So Microsoft is -- this is a deceptive 24 effort by Microsoft to preclude plaintiffs from 25 putting on evidence which goes to many other 10709 1 issues in the case and has nothing to do with 2 the issues in the government case. So these 3 objections should be rejected, Your Honor. 4 THE COURT: Anything else on this set? 5 MS. BRADLEY: Your Honor, I'll just 6 alert us all to the fact that the testimony at 7 page 113 which plaintiffs claim somehow goes to 8 Microsoft's activities in the operating systems 9 market outside of the time period covered by 10 the DOJ case is false. Mr. Kempin testifies in 11 1997 smack in the middle of the time period 12 covered by the DOJ case. He testifies in the 13 present tense, and plaintiffs can point to 14 nothing that would indicate he testifies about 15 Internet Explorer 4 centrally at issue in the 16 DOJ case. And it's that fact that is estopped 17 by Finding 203 and nothing else. 18 THE COURT: Okay. Can we move to the 19 next set? 20 MR. CASHMAN: The next group 2, Your 21 Honor, is the collateral estoppel objections 22 found at lines 3, 4 and 5 on the rulings page. 23 Again, all the arguments that I've 24 made before would apply with equal force to 25 this group, Your Honor. 10710 1 Here in these designations Kempin is 2 saying that IE is distributed through a variety 3 of means, including one that can be downloaded 4 from the Internet. And the functionality of 5 the version downloaded from the Internet is the 6 same as that of versions preinstalled by an 7 OEM. And Mr. Kempin also testifies in these 8 designations that the price of Windows 95 is 9 attributable to IE, so you pay -- this is a 10 quote from the last group of designations: So 11 you pay for Internet Explorer as well. And 12 Kempin goes on to discuss the increase of price 13 when Microsoft went from Windows 3 to Windows 14 95 with IE included. 15 Now, first of all, there is discussion 16 in this testimony about big price increases. 17 And any evidence regarding prices is highly 18 relevant in a case in this one which is an 19 overcharge when there are overcharge issues. 20 So that's one reason. 21 Another reason, again, is the willful 22 and flagrant conduct because this evidence 23 demonstrates that Mr. Kempin is aware of the 24 lack of a technical justification for tying 25 those two together. 10711 1 So we've got willful and flagrant 2 conduct. And, again, we've got the basic issue 3 that this would apply to operating system 4 liability outside of the period of time at 5 issue in the government case. This testimony 6 simply is not offered to bolster and could not 7 be offered to bolster findings of fact as they 8 relate to operating systems during the period 9 of time at issue in the DOJ matter. 10 These objections should be overruled, 11 Your Honor, for all the reasons we've 12 previously stated. 13 MS. BRADLEY: And for all the reasons 14 we've previously stated, Microsoft submits that 15 they should be sustained. Mr. Kempin's 16 testimony about price increases during the 17 time -- for the operating systems during the 18 time period estopped by the findings of fact is 19 collaterally estopped. 20 Plaintiffs can make no argument that 21 that testimony goes to anything else besides 22 the facts already stated in the findings. 23 The same for the lack of technical 24 justification for tying. The findings of fact 25 found that. Whether Mr. Kempin agrees or not 10712 1 is beside the point. 2 And, frankly, Your Honor, I don't see 3 anything in here about Mr. Kempin testifying 4 either way about the technical justification 5 for tying Internet Explorer to Windows 95. I'm 6 willing to stand corrected on that if there is 7 something in here. 8 And again, for plaintiffs to 9 continually come back to the statement that 10 this somehow goes to activities that are -- 11 activities in the operating system market 12 outside of the time collaterally estopped by 13 the government case is simply wrong. 14 Mr. Kempin testified in 1997 in the 15 present tense, and for a period shortly before 16 that about Microsoft's activities with respect 17 to Windows 95. That's smack in the center of 18 the government case, and it's collaterally 19 estopped. 20 The final citation that plaintiffs 21 include in this group, and that's the citation 22 at page 30. Microsoft submits that the 23 testimony goes not only to the findings of fact 24 listed but also to Finding 62. And if we could 25 just turn to that. 10713 1 MR. CASHMAN: Again, Your Honor, 2 plaintiffs object because the only objection 3 Microsoft asserted here were 242 and 243 to 4 this group. 5 THE COURT: Noted. 6 MS. BRADLEY: And here is questioning 7 about whether the price of Windows 95 changed 8 and how Microsoft made a determination about 9 pricing, that is, what was Microsoft's pricing 10 behavior? At Finding 62 Judge Jackson makes a 11 finding about Microsoft's pricing behavior and 12 what it considered in doing so and the fact 13 that, as was found in the government case, 14 Microsoft raised the price that it charged OEMs 15 for Windows 95. And that fact is estopped, and 16 plaintiffs haven't suggested a single, viable 17 alternative purpose for this testimony. 18 MR. CASHMAN: Your Honor, during 19 opening statement the Court may recall that 20 Mr. Tulchin repeatedly told the jury that this 21 case was about an overcharge involving whether 22 Microsoft's prices were fair and whether 23 Microsoft products were a good value. He said 24 that over and over if the Court will recall. 25 Plaintiffs don't agree with that 10714 1 characterization of what an overcharge case is. 2 But in the discussion Mr. Tulchin repeatedly 3 said there was no separate charge for Internet 4 Explorer and that was important in an 5 overcharge case. 6 Here Mr. Kempin is saying in this 7 testimony, this group of testimony, that, in 8 fact, the price of Internet Explorer was 9 reflected in the price of Windows. 10 Plaintiffs think that is an accurate 11 fact, and that Microsoft, obviously, has to 12 recoup that cost somewhere. So again, that's 13 pricing testimony, and plaintiffs are entitled 14 to introduce that evidence. And they're also 15 entitled to introduce that evidence to rebut 16 the -- and show the falsity of the claims made 17 by Microsoft through Mr. Tulchin in his 18 opening. 19 So, again, we have myriad reasons why 20 this is not subject to collateral -- these 21 collateral estoppel objections. And a couple 22 of really interesting points, because 23 Ms. Bradley is trying to overly narrow what is 24 at issue here. Now she keeps saying that this 25 testimony is present tense testimony in order 10715 1 to try to get around the fact that this 2 evidence at a bare minimum would go to 3 operating system liability outside the period 4 of time at issue in the government case. 5 So her response is to try to say the 6 testimony is being provided right smack in 1997 7 in the middle of the government case. If that 8 is Microsoft's position, that's an admission, 9 Your Honor, of what we talked about on Friday, 10 that any evidence from Caldera could not be 11 collaterally estopped, that any evidence from 12 the JCCP cases could not be collaterally 13 estopped, that any evidence outside that period 14 of time simply could not be collaterally 15 estopped. 16 In any case, that characterization is 17 just plain wrong because, obviously, somebody's 18 testimony can apply to a broad period of time 19 that is not just about when they're testifying. 20 And, in fact, again, if the Court refers to the 21 first couple of pages of the CID testimony 22 where the subject matter of the investigative 23 demand is described, it's clear that the 24 evidence goes back quite aways. 25 So Ms. Bradley's efforts to get around 10716 1 the fact that this is -- just goes to a myriad 2 of other purposes just doesn't hold water. 3 Again, Your Honor, what you really 4 have here is that Microsoft is making 5 cumulative objections. That is all this is. 6 They're trying to disguise a cumulative 7 objection under the rubric of collateral 8 estoppel, and it's not cumulative. 9 Plaintiffs are just beginning to put 10 on their case. And all of this evidence is 11 relevant to go through some of the highlights 12 again. The unreasonable restraint of trade, 13 consumer harm, causation, willful or flagrant 14 conduct, just a variety of issues, and in no 15 sense is this being offered solely to bolster 16 findings on the claim that was at issue in the 17 government case. 18 So these objections have no merit. 19 They should be overruled. 20 THE COURT: Ms. Bradley. 21 MS. BRADLEY: Plaintiffs continue to 22 real off this list of their proposed universe 23 of alternate purposes for what they claim is 24 every single designation to which Microsoft has 25 objected to on collateral estoppel grounds. 10717 1 With all due respect, that just 2 doesn't get them to where they need to be. At 3 minimum, plaintiffs' burden should be to tie an 4 actual alternate purpose to some actual 5 testimony. 6 And it seems to me that throughout 7 this whole argument this morning, plaintiffs 8 have ignored the testimony on the page and have 9 spoken in broad platitude about the conceivable 10 alternate purposes for Mr. Kempin's and 11 presumably any testimony generally what 12 plaintiffs talked about with respect to 13 testimony outside of the estopped period. 14 If we look at the testimony, we find 15 that Mr. Kempin is testifying specifically 16 about that within the time periods that have 17 been collaterally estopped. 18 Plaintiffs claim that this somehow 19 cuts against Microsoft's assertion of 20 collateral estoppel arguments when the 21 testimony was made outside of the time period. 22 Microsoft would just ask: Would plaintiffs 23 claim that if a witness were asked -- and this 24 is actually the case in some other testimony 25 not at issue in this case today -- if a witness 10718 1 were asked whether Finding of Fact 62 was 2 correct but that were asked in 2005 and not 3 during the class period, would that not be 4 collaterally estopped because not considered by 5 Judge Jackson in making his finding or not 6 contemporaneous with the collateral estopped 7 time period? 8 It's difficult to imagine where such 9 an argument would end. When we look to the 10 Caldera testimony and a small amount of JCCP 11 testimony to which Microsoft objected on 12 collateral estoppel grounds, what we will see 13 is that in those cases the questioning attorney 14 was harkening back to the time period and the 15 market that is collaterally estopped and asking 16 about activities that are confined within that 17 time period and that market. And though 18 whether testimony is given contemporaneously or 19 thereafter is really not relevant to that 20 issue. 21 MR. CASHMAN: Your Honor, I think the 22 fact that Microsoft's desperate grasp at straws 23 is demonstrated by the fact that they don't 24 cite to either one of the findings that they 25 allege these objections to the group testimony, 10719 1 group 2 testimony, which were Findings 242 and 2 243. 3 Now they've manufactured a new 4 objection to Finding of Fact 62, and they don't 5 even rely at all on the two findings that they 6 objected to this testimony before it. 7 But, even importantly and more 8 fundamentally, Ms. Bradley conceded during her 9 argument that the alternative uses that I 10 described were conceivable. And that right 11 there, Your Honor, is enough to establish that 12 this testimony is admissible. 13 Microsoft cannot preclude the 14 admission of testimony when it goes to any 15 other issue, and that's what this testimony 16 does. It goes not only to another issue, 17 another conceivable issue, as Ms. Bradley has 18 conceded, but it goes to multiple other issues. 19 And it has nothing to do with the conclusions 20 in the government case, operating system 21 liability for the period at issue there. 22 So the objections, again, are wholly 23 without merit and should be rejected. 24 THE COURT: Anything else? 25 MS. BRADLEY: No, Your Honor. 10720 1 THE COURT: Move to 3 then. 2 MR. CASHMAN: Group 3 is lines 6, 7, 3 and 8 on the rulings chart, and those are 4 findings of fact that Microsoft cites 216, 217 5 and 218. These objections should be overruled. 6 Here Mr. Kempin testifies about OEMs 7 having presupport costs associated with loading 8 more than one browser. He talks about the fact 9 that Microsoft actively attempts to dissuade 10 OEMs from loading another browser. And he also 11 testifies that if IE was the only browser 12 preinstalled, it gets the consumer first and 13 increases the chance that a consumer will stay 14 with Internet Explorer. That's the substance 15 of his testimony. 16 Now, immediately after discussing how 17 Internet Explorer and Windows have been 18 contractually and technically bound together, 19 Mr. Kempin concedes that OEMs are unlikely to 20 preinstall another browser due to the increased 21 support costs. 22 So what you have is a concession by 23 Mr. Kempin that Microsoft's conduct had an 24 impact on consumers and it would have an impact 25 on competitors and that Mr. Kempin, i.e. 10721 1 Microsoft, was aware of that. 2 This evidence is admissible not only 3 for all the other reasons that I've discussed, 4 but here this one goes clearly to causation and 5 consumer harm, that the conduct had an impact. 6 And it also clearly goes to willful and 7 flagrant conduct because as in much of this 8 testimony Mr. Kempin is aware of the impact 9 that its conduct is having. 10 So you've got multiple issues again, 11 which clearly require that the collateral 12 estoppel objections be overruled. It shows 13 they have no merit because the testimony is not 14 being provided solely to bolster any government 15 action claim, the operating system liability 16 for the period at issue in the government 17 actions. They should be overruled, Your Honor. 18 THE COURT: Ms. Bradley. 19 MS. BRADLEY: Mr. Kempin is asked 20 about whether he had ever heard that OEMs were 21 concerned about end users confusion or 22 increased technical support calls if they 23 installed two separate browser. 24 Findings of Fact 214 to 218 go to that 25 exact issue. And Mr. Kempin's concession of 10722 1 the unlikeliness of installing two browsers 2 because of the threat of these problems 3 arising, that's a fact that is already 4 established. The fact that Mr. Kempin 5 testified to it gets the plaintiffs no closer 6 to any of their proposed alternate purposes. 7 And, in fact, I haven't heard any alternate 8 purpose except that plaintiffs claim that this 9 somehow goes to the impact of Microsoft's 10 conduct. 11 The impact of the conduct itself is a 12 collaterally estopped fact, and that is that 13 OEMs were less likely to preinstall two 14 browsers because of their concern that end 15 users would be confused and that they would 16 result in increased technical support calls and 17 increased costs to the OEMs. 18 Mr. Kempin goes to precisely those 19 facts, and there's no alternate purpose. We 20 ask that the objection be sustained. 21 MR. CASHMAN: Group 4, Your Honor. 22 THE COURT: You have nothing else on 23 3? No. That's fine. 24 MR. CASHMAN: I'm trying to expedite 25 this, Your Honor, because these objections are 10723 1 all without merit. And it would be error, 2 plaintiffs believe, to grant any of them 3 because the evidence is not being presented to 4 prove liability in the operating systems market 5 for the period of time at issue. 6 And again, I think it bears emphasis 7 that even if this was identical evidence, even 8 if Microsoft would prove that this evidence was 9 exactly the evidence that Judge Jackson relied 10 on to issue a finding of fact, which Microsoft 11 has not done, that it would still be admissible 12 for operating system market liability in other 13 time periods. So we've got that as the bare 14 minimum. 15 And we also have other purposes, which 16 I have identified, all of which make it clear 17 both factually and under the law that 18 plaintiffs are entitled to present this 19 evidence, that these collateral estoppel 20 objections are made up out of whole cloth 21 wherein Microsoft is just attempting to confuse 22 the issues and essentially prevent the 23 plaintiffs from using any evidence from the 24 Department of Justice case other than the 25 findings themselves. That's what Microsoft is 10724 1 essentially asking the Court to do, is to 2 prevent plaintiffs from using any evidence from 3 the government case. And that's absurd, Your 4 Honor. 5 And it's also not only contrary to the 6 law and contrary to the specific facts as we go 7 through each designation, but it's also 8 contrary to prior orders of this Court wherein 9 the Court ordered and allowed discovery for the 10 plaintiffs to obtain that evidence from the 11 Department of Justice case. 12 So the position that Microsoft is 13 taking globally and line by line is nonsensical 14 and should be rejected. 15 We're ready to turn to group 4, Your 16 Honor. 17 THE COURT: Who wants to talk about 4 18 first? 19 MR. CASHMAN: Group 4, Your Honor, 20 this group of designations is largely about 21 preinstallation of Internet Explorer 4.0 and 22 whether OEMs had any choice. So, again, this 23 goes to willful or flagrant conduct. I'm not 24 going to repeat all those arguments. Either 25 Microsoft was misleading government 10725 1 investigators or Microsoft decided to 2 subsequently deny OEM options of which it was 3 aware and knew were problematic. But in either 4 case it goes to willful or flagrant conduct. 5 This testimony also goes to contracts, 6 combinations or conspiracies and restrain of 7 trade. And we also have the basics, which I've 8 discussed before. I'm not going to reargue 9 those here. 10 THE COURT: Ms. Bradley. 11 MS. BRADLEY: If we could turn to the 12 testimony at issue beginning at page 74 and the 13 related finding of fact, Finding of Fact 158, 14 we will see that Mr. Kempin is asked here about 15 an interrogatory answer in which Microsoft 16 describes the distribution of Internet Explorer 17 4, which for this short period of time was 18 optional for all OEMs. And at 76, 19 to 21, 19 and will remain optional in most cases even 20 after that date until OEMs begin shipping 21 Windows 98. Finding of Fact 158 describes just 22 that. A sentence near the end of that finding, 23 Judge Jackson finds that apart from a few 24 months in the fall of 1997 -- note that the 25 exact date in which Mr. Kempin is giving his 10726 1 testimony -- when Microsoft provided OEMs with 2 Internet Explorer 4.0 on a separate disk from 3 Windows 95 and permitted them to ship the 4 latter without the former. Microsoft never 5 allowed OEMs to ship Windows 95 without 6 Internet Explorer. 7 It's difficult to imagine what else 8 the testimony would go to except to that exact 9 finding and, indeed, not even the whole 10 finding, that specific portion of the finding 11 in which Jackson found exactly what Mr. Kempin 12 testifies about precisely during the time 13 period that Judge Jackson describes, and that 14 is, that Internet Explorer 4.0 was optional for 15 OEMs to load during the time period. For 16 plaintiffs to argue that this somehow goes to 17 Microsoft's activity in the OEM market outside 18 of the collaterally estopped period is wrong. 19 Willfulness and flagrance, plaintiffs 20 continue to attempt to use those as the magic 21 words to get in facts that are already 22 estopped, and it doesn't get them there. And 23 if that activity, which is collaterally 24 estopped, is found to be an unreasonable 25 restraint of trade, then it's an unreasonable 10727 1 restraint of trade. Mr. Kempin's testimony 2 about it does nothing more to get us there. 3 For all those reasons, Microsoft asks 4 that these lines of testimony be excluded on 5 collateral estoppel grounds. 6 MR. CASHMAN: Your Honor, I'm going to 7 just focus on one contention that Ms. Bradley 8 made because, again, it emphasizes just how 9 wrong Microsoft is, and that is willful or 10 flagrant. She says that just doesn't get 11 plaintiffs there. 12 And that highlights how absurd the 13 position that Microsoft is taking is because if 14 willful and flagrant were the only issue, this 15 evidence would still be admissible. That's 16 what the law says. That's what the Court's 17 December 7, 2007 -- or 2006 order said because 18 it goes to another issue. And we are entitled 19 to put on evidence to prove willful or flagrant 20 conduct, and Microsoft cannot through these 21 phantom collateral estoppel objections prevent 22 plaintiffs from putting on any evidence that 23 goes to willful or flagrant conduct. 24 Microsoft, if they had their way, 25 would limit plaintiffs to just the findings. 10728 1 That is the only thing we could get from the 2 government case. And then they would turn 3 around and say "ha-ha-ha, try to prove willful 4 and flagrant conduct based on the findings 5 alone." And that's clearly erroneous. 6 So the concession that any evidence 7 that might go to willful or flagrant conduct is 8 a concession that the evidence has to be 9 permitted. And, quite frankly, Your Honor, all 10 of the testimony by Mr. Kempin goes to willful 11 or flagrant because the testimony, which he 12 provided, was obviously rejected or frowned 13 upon by Judge Jackson in reaching the findings 14 that he did. 15 So right there, aside from all the 16 other issues we've been talking about, again, 17 just highlights why Microsoft is wrong. The 18 whole testimony from Mr. Kempin goes to willful 19 or flagrant conduct, his attitude about these 20 contracts goes to willful or flagrant conduct. 21 And that's particularly true since you're 22 talking about a senior vice president of the 23 company. So his testimony is highly probative 24 on that issue, in addition to the other issues 25 which we discussed. So the objections should 10729 1 be overruled. 2 THE COURT: Anything else on group 4? 3 MS. BRADLEY: No, Your Honor. 4 THE COURT: Good fight. 5 MR. CASHMAN: Your Honor, I'm not 6 going to reargue group 5. That's line 14 on 7 the rulings chart, and the arguments I made in 8 relation to group 4 would apply with equal 9 force on group 5. 10 THE COURT: Ms. Bradley. 11 MS. BRADLEY: Again, I would take us 12 to the testimony where the question the 13 attorney asks: 14 If the IE 4 was on the table, if an 15 OEM like Dell had come to you and said -- we 16 talked about one situation already -- but if 17 they had come to you and said, look, for some 18 of our customers we would like to be able to 19 ship the machine without IE 3 on it. We would 20 like to take it off. What would your response 21 have been? 22 And Mr. Kempin testifies that IE 3, 23 that Windows 95 could not be installed without 24 Internet Explorer 3. Findings of Fact 158 says 25 that exact same thing, and that is that 10730 1 Microsoft licenses were nonnegotiable with 2 respect to this issue and that OEMs felt that 3 they had no choice but to preinstall IE 4 with 4 Windows 95. That's collaterally estopped. It 5 goes to nothing else. Plaintiffs haven't given 6 any plausible suggestion as to some other 7 fact -- that it's plaintiffs' burden to 8 establish -- that the testimony goes to. And 9 it should be excluded as collaterally estopped. 10 MR. CASHMAN: The only problem with 11 Ms. Bradley's argument is they didn't insert 12 158 as an objection for line 14. They asserted 13 157 and 241 and those don't apply. All they 14 say is -- 157 -- that Microsoft bundled IE with 15 Windows by July to protect its applications 16 barrier to entry to maximize the usage of IE at 17 the expense of Netscape. And 241 concerns the 18 success that Microsoft had in foreclosing 19 Netscape from the OEM channel. 20 Now, again, testimony -- the testimony 21 that Mr. Kempin provides here is probative and 22 admissible on a number of issues. Number one, 23 as we've talked about before, willful and 24 flagrant. We've also got -- this goes to 25 unreasonable restraint of trade. It goes to 10731 1 causation and consumer harm. It goes to 2 credibility. It goes to multiple issues. And 3 Microsoft's objections have no merit on the law 4 or on the facts. 5 Ms. Bradley continues trying to take 6 refuge in the specific -- in the specific 7 snippet of testimony compared to a line that 8 she lifts out of a finding. And that, Your 9 Honor, is of no help to Microsoft because the 10 testimony still goes to other issues in the 11 case. And for that reason would be admissible, 12 even if it was the exact same evidence that 13 Judge Jackson relied on, which as we know 14 Microsoft has failed to establish. So, again, 15 the objection should be overruled. 16 THE COURT: Ms. Bradley, anything else 17 on this one? 18 MS. BRADLEY: Nothing further, Your 19 Honor. 20 THE COURT: Group 6. 21 MR. CASHMAN: Group 6, Your Honor, is 22 lines 18 through 32 on the rulings chart. And 23 here we're shifting gears a little bit because 24 this is no longer the CID deposition. These 25 are from the Caldera deposition, and it's 10732 1 impossible, as I pointed out earlier, that the 2 Caldera designations were the underlying 3 evidence for Judge Jackson's findings. And 4 here, as we know, Caldera was about the DRI 5 situation, and none of the findings of fact are 6 about the DRI. 7 So as we know in Caldera, they are 8 focused on Microsoft's conduct towards DRI and 9 DR-DOS, and that was conduct that occurred 10 prior to the government action because as we 11 know DR-DOS ceased to exist when Windows 95 12 came out. And the government case, of course, 13 was for an entirely different time period, from 14 July 15, 1995 to June 24, 1999. 15 So we've got that. And also the fact 16 that Microsoft has argued, Your Honor, I think 17 Mr. Holley and Mr. Tulchin have made this 18 argument repeatedly that the DRI issues, none 19 of the DRI issues are subject to collateral 20 estoppel. 21 So given those claims, how can 22 Microsoft credibly claim that any of the 23 evidence from the Caldera action is cumulative 24 or bolsters the established facts from the 25 government action. 10733 1 So here to show how ridiculous some of 2 these objections are, Your Honor, Microsoft has 3 objections to a large part of Mr. Kempin's 4 Caldera testimony where he explained his job 5 responsibilities and he testified about per 6 processor licenses. Of course, there's nothing 7 in the findings about per processor licenses, 8 long-term licenses, Microsoft's marketing 9 strategy versus DR-DOS, how the Windows GUI 10 related to DOS and whether DR-DOS put any price 11 pressure on Microsoft's operating system 12 offerings. 13 So, obviously, this testimony from 14 Mr. Kempin has nothing to do with the 15 bolstering of the findings of fact. There's no 16 testimony -- or, I should say, nothing in any 17 of the findings about the per processor 18 licenses. There's nothing in the findings 19 about whether DR-DOS put price pressure on 20 Microsoft's products. That issue, of course, 21 is relevant to causation and consumer harm. 22 And then we've got the issues about 23 whether those actions by Microsoft as testified 24 to by Mr. Kempin relating to per processor 25 licenses, long-term contracts and the bolting 10734 1 of Windows -- the Windows GUI to MS-DOS -- are 2 relevant to whether those actions were 3 anticompetitive violations of the Iowa 4 Competition Law. 5 So, Your Honor, none of the Caldera 6 testimony in group 6 can even under any view of 7 the facts or the law be viewed as subject to a 8 cumulative objection, which is what these 9 collateral estoppel objections really are. 10 They should all be denied. 11 Thank you. 12 THE COURT: Ms. Bradley. 13 MS. BRADLEY: Your Honor, Microsoft 14 would repeat its offer to plaintiffs and the 15 Court to leave off with having just argued all 16 of Microsoft's objections, collateral estoppel 17 objections and the DOJ CID testimony we just 18 discussed until the Court has had an 19 opportunity to make rulings on those 20 designations at which point Microsoft could 21 meet with plaintiffs and attempt to narrow the 22 universe of collateral estoppel objections in 23 hopes that plaintiffs would withdraw testimony 24 for which they have no alternative purpose and 25 Microsoft could narrow its collateral estoppel 10735 1 objections based upon the Court's rulings on 2 the admissibility of testimony in the DOJ CID 3 deposition. We're also happy to move forward 4 with the line-by-line argument if the Court 5 wishes. 6 MR. CASHMAN: Well, Your Honor, unless 7 Microsoft is willing to withdraw these 8 objections that they've made. They have no 9 merit and they've chosen to focus on a few 10 inapposite lines from the DOJ testimony and 11 don't even want to address the examples which 12 underscore over and over again how ridiculous 13 their objections are, which Caldera is a 14 perfect example. There is no basis for those 15 objections in the first instance, and the 16 examples become even more extreme, even in the 17 DOJ case, Your Honor, which if Microsoft 18 doesn't want to discuss any of these on a line 19 by line or group by group, I'm going -- I will 20 point out then some further examples for the 21 Court to underscore while all of these 22 objections should be overruled. 23 So if Microsoft doesn't want to make 24 any further argument, that's fine. But then I 25 would like to just point out a few additional 10736 1 examples why all these objections should be 2 overruled. 3 MS. BRADLEY: Your Honor, as I stated 4 already, Microsoft is happy to argue these line 5 by line and would be happy to go to them for 6 the Court today. But because plaintiffs have 7 right out refused to meet and confer with 8 Microsoft on these objections, we've had to 9 bring a huge volume of objections to the 10 Court's attention for argument today. We would 11 like to not waste your time with this if the 12 Court should rule one way or another in a way 13 that makes it clear to the parties the standard 14 the Court is drawing on these line-by-line 15 objections and the parties could -- I have 16 great hope -- could take those and reduce the 17 number of objections that we bring to you 18 today. Again, we're happy to go through them 19 line by line today if that's what the Court 20 wishes. 21 MR. CASHMAN: Well, Your Honor, I 22 guess in that case I'm going to direct the 23 Court's attention to some obvious examples, and 24 I'm going to direct your attention first to 25 group No. 8, Your Honor. 10737 1 THE COURT: Well, that doesn't answer 2 the question. Do you want to go line by line 3 or not? 4 MR. CASHMAN: I want to underscore why 5 these objections have no merit under any 6 circumstance. And I've said before if 7 Microsoft doesn't wish to respond to what I've 8 said about group 6 and keep going that way, 9 that's fine. But I want to underscore for the 10 Court why some of the objections to some of 11 these other groups of testimony have no merit. 12 So I think that the right thing to do, 13 Your Honor, is I'm going to say just on group 14 7, again, those go to the issues that we 15 discussed before, credibility, willful or 16 flagrant conduct and causation, consumer harm. 17 And then I wish to direct the Court's attention 18 to group 8. 19 In group 8 designations Mr. Kempin 20 discusses how Microsoft sets prices for Windows 21 98 and Windows 95 OEM licenses. In the context 22 of discussing what factors to consider in 23 setting price, Mr. Kempin says that the price 24 of Windows 95 included an extra charge for 25 Internet Explorer and in some testimony that is 10738 1 actually in group 11. 2 Mr. Kempin discusses the increased 3 royalty price that Microsoft charged for IBM 4 for Windows 95. So, again, plaintiffs' 5 position on the testimony that this would 6 relate to virtually all the objections that 7 Microsoft has asserted for the DOJ deposition, 8 these go to pricing. And plaintiffs are 9 entitled to introduce any price evidence where 10 Microsoft has alleged, as it has in this case, 11 that it has not overcharged any consumers. 12 So that's one reason for this 13 testimony and why it's admissible. 14 Furthermore, under a preliminary Instruction 15 No. 13 that the Court gave, plaintiffs have to 16 prove that Microsoft continued to possess 17 monopoly power after June of 1999. 18 This deposition was taken in October 19 of 1998, Your Honor, and the factors that 20 Microsoft considered in this time period in 21 setting prices are relevant to whether 22 Microsoft continued to possess monopoly power 23 some months later starting in June 1999. 24 Again, we've got the issue of what 25 Mr. Tulchin claims and what one of Microsoft's 10739 1 primary contentions is here. He told the jury 2 that because Internet Explorer was included for 3 free, there could be no consumer harm caused by 4 the conduct at issue in the government action. 5 Therefore, plaintiffs are entitled to present 6 evidence to the jury that clarifies the fact 7 that the price of windows was higher due to the 8 fact that Internet Explorer was included. So 9 this evidence is relevant again on causation 10 and harm to Iowa consumers. 11 So those reasons, actually, Your 12 Honor, cover the designations at issue in 13 group 8 and group 9. 14 MS. BRADLEY: Since plaintiffs have, 15 apparently, rejected our suggestion to meet and 16 confer on these, then I'm happy to argue them 17 line by line. 18 At tab 6 we have Microsoft's 19 objections, collateral estoppel objections to 20 certain testimony from Mr. Kempin in his 21 Caldera deposition. 22 Microsoft has limited its collateral 23 estoppel objections to only testimony that 24 refers to the operating systems market during 25 the collaterally estopped time period, that is 10740 1 the time period in the government case, and has 2 tied those designations, a long discussion in 3 the Caldera deposition, to Findings of Fact 54 4 through 58. 5 In Findings 54 through 58, generally, 6 Judge Jackson describes Microsoft's 7 relationships with OEMs and the importance to 8 Microsoft that OEMs preinstall Windows on their 9 systems and the feeling by OEMs that they had 10 no alternative but to preinstall Microsoft 11 operating systems on their systems. 12 The findings of fact at issue, and to 13 which we tied the testimony, also go to 14 Microsoft's pricing behavior and, in fact, do 15 touch on per processor licenses at Findings of 16 Fact 58 in which the finding describes 17 Microsoft's concerns about piracy and the 18 importance to Microsoft in its attempts to 19 drastically limit the number of PCs that sold 20 without an operating system preinstalled. 21 That's exactly the justification that Microsoft 22 gave and that Mr. Kempin gives for Microsoft's 23 offer of per processor licenses. 24 And as such, we believe that the 25 designations that -- to which Microsoft has 10741 1 objected on collateral estoppel grounds in that 2 Mr. Kempin's Caldera testimony should be 3 excluded because that testimony goes to 4 Microsoft's activities during the collaterally 5 estopped time period about the collaterally 6 estopped products, that is, Microsoft's 7 operating system products. And, in fact, the 8 testimony was taken in the middle of the time 9 period which is collaterally estopped. And the 10 fact that other issues in Caldera take place 11 outside the collaterally estopped time period 12 is really irrelevant to that fact. 13 Moving onto Tab 7 and because 14 plaintiffs have already given their argument on 15 Tab 7 to 9, I will walk us through those pretty 16 quickly. 17 I'm still figuring out the binder 18 so -- 19 THE COURT: Take your time. 20 MS. BRADLEY: If I may go back a bit 21 because we're turning to the DOJ CID testimony 22 again and this testimony taken in 1998. 23 Plaintiffs made an argument earlier 24 this morning about the fact that if Microsoft 25 had its way, it would exclude all testimony 10742 1 taken during the DOJ proceedings. And that I 2 would like to point out is not the case. In 3 fact, Microsoft has narrowly tailored its 4 objections, even to the testimony taken in the 5 DOJ. This Court, I believe, has already seen 6 and will continue to see quite a large volume 7 of testimony taken during DOJ depositions, 8 civil investigative demands and, indeed, during 9 the DOJ trial, liability and remedies trials. 10 And Microsoft doesn't object to that where that 11 testimony goes to a fact that hasn't been 12 collaterally estopped. But there are facts in 13 the testimony that do go only to collaterally 14 estopped facts, and that's when Microsoft must 15 object. 16 Starting at 82. Microsoft asserts 17 collateral estoppel objections to this range of 18 testimony because it relates to Findings 203 19 through 221 and that general range of findings. 20 And this, again, is testimony about 21 Microsoft's conditions that it placed on OEMs 22 when they preloaded Windows 98, which was a 23 product at issue in the DOJ trial and is the 24 subject of many collaterally estopped findings. 25 And this has to do -- this testimony has to do 10743 1 with the OEMs configuration of the channel bar 2 and other items that were permitted to appear 3 or not permitted to appear on the desktops of 4 computers manufactured by the OEMs and 5 Microsoft's limitations on the OEMs' ability to 6 change the way the desktop appeared and that 7 has to do -- it bears directly on Findings of 8 Fact 202, 213. 9 And as Your Honor will see and we've 10 already discussed, Finding 203 describes the 11 start menu and the desktop requirements for 12 OEMs and Microsoft's threats to terminate 13 licenses for OEMs that violated those 14 requirements. 15 213 again describes Microsoft's 16 attempts to, quote, force OEMs to accept a 17 series of restrictions on their ability to 18 reconfigure the Windows 95 desktop and boot 19 sequence. It goes on to describe the OEMs' 20 unhappiness in Finding 214 with this state of 21 affairs and so on and so forth. 22 The questioner in this DOJ CID 23 testimony asks about those restrictions and 24 Mr. Kempin describes them, describes them in a 25 way that is remarkably similar to the way that 10744 1 they're described in the findings of fact. It 2 goes to nothing else. It's simply bolstering. 3 It's the same fact that has already been found, 4 and it's already before the jury. Plaintiffs 5 cannot suggest an alternate purpose for this, 6 and they haven't. 7 For those reasons we ask that 8 Microsoft's objections to the Kempin DOJ CID 9 testimony between pages 82 and 97 be sustained. 10 And that, I believe, takes care of the 11 1998 Kempin DOJ CID testimony and permits us to 12 move on to the Kempin DOJ testimony. And I 13 believe that plaintiffs have already addressed 14 portions of this testimony as well. If I may 15 just confirm that. Yes. And this begins at 16 plaintiffs' Tab 8 in the binder they handed up, 17 line 37, and I'll turn to that now. 18 Microsoft has objected to this first 19 line of testimony as relating to Finding of 20 Fact 55, which, again, goes to the fact that 21 OEMs felt they had no choice but to load 22 Windows and speak some about Microsoft's 23 pricing behavior with respect to its operating 24 system software that it offered to OEMs. 25 Here, beginning at page 9, Mr. Kempin 10745 1 testifies about that pricing behavior and 2 specifically about how Microsoft needed the 3 termination of the pricing structure for 4 Windows 95. 5 Finding of Fact 55 describes the fact 6 that Microsoft did not consider the prices of 7 other Intel-compatible PC operating systems 8 when it set its pricing. And the following 9 findings go on to describe more about 10 Microsoft's pricing behavior. 11 THE COURT: You're starting at line 11 12 on page 9? 13 MS. BRADLEY: Line 9 -- or, I'm sorry. 14 Page 9, line 11 -- through page 11. And again, 15 Microsoft would invite the Court to read the 16 testimony, read the findings of fact and make 17 its own determination about whether Microsoft's 18 linkages that it's proposed for these findings 19 are plausible and in the face of plaintiffs' 20 utter lack to suggest any viable alternative 21 purpose for this testimony to sustain 22 Microsoft's objections accordingly. 23 The testimony at lines -- or pages 21 24 through 26 and again 33 through 39 also go to 25 Microsoft's pricing behavior in a way that is 10746 1 already described in the findings of fact, and, 2 specifically, Finding 55. 3 And reading further in the findings of 4 fact, there are also mentions of Microsoft's 5 pricing behaviors on through Finding 58. 6 And I won't read those all to you here 7 again, but we would ask and suggest that upon 8 reading the testimony, there's no question that 9 Mr. Kempin is testifying about exactly those 10 facts that are estopped. And we would ask that 11 our objections be sustained on that ground. 12 MR. CASHMAN: Your Honor, I'll go back 13 to group 8 here since that's where Ms. Bradley 14 left off and it's incredibly misleading because 15 while Ms. Bradley goes on to talk about -- 16 admitted that Mr. Kempin's testimony is about 17 pricing issues, there's no collateral estoppel 18 on pricing issues. You read Finding 55 that 19 they cite for group 8, and it doesn't have 20 anything to do with the kind of pricing issues 21 that are at issue in an overcharge case. 22 So Mr. Kempin's testimony regarding 23 how Microsoft set prices and what it considers 24 in setting prices is relevant to whether those 25 prices were set by competitive forces or by the 10747 1 unilateral exercise of Microsoft's power. How 2 Microsoft set those prices and what prices it 3 set are incredibly relevant in an overcharge 4 case. 5 So plaintiffs are entitled to 6 introduce that pricing evidence. And don't 7 forget, Your Honor, that here Microsoft alleges 8 and has alleged throughout the case that it has 9 not overcharged any consumers. So any evidence 10 that comes through Mr. Kempin or anyone else 11 about prices is extremely relevant, extremely 12 relevant. 13 So we're entitled to present that 14 evidence. As I think I said in opening 15 statement, Mr. Tulchin told the jury that 16 Internet Explorer was included for free and 17 there could be no consumer harm. And he also 18 said that wasn't established in the government 19 action. 20 So not only are plaintiffs required 21 but they're entitled to present evidence to the 22 jury showing that the price of Windows was 23 higher due to the fact that Internet Explorer 24 was included. So that goes right to rebut some 25 basic claims that Microsoft has made in the 10748 1 case. But they go to the bigger issue of 2 causation and consumer harm. 3 When Ms. Bradley -- I guess she just 4 isn't listening when she keeps saying 5 plaintiffs haven't identified any issues, but 6 we've identified multiple issues. And, again, 7 to go back to the very basic, even if 8 Ms. Bradley could show that there was a piece 9 of evidence that Judge Jackson had and that he 10 relied on and, let's say, even quoted it in a 11 finding, would mean that it could be presented 12 by plaintiffs because plaintiffs are entitled 13 to present that evidence if it goes to any one 14 of these other issues in the case. 15 That's the law. And Microsoft has 16 zero cases. They've never shown the Court a 17 case in which a party who is not a participant 18 in the earlier litigation could be collaterally 19 estopped on any fact. All the cases that 20 Microsoft cited to the Court are misleading, 21 have been misleadingly cited because in all of 22 those cases there was mutuality. In the first 23 case the parties were the same as they were in 24 the second case when they tried to raise a new 25 issue. 10749 1 It's fundamental as a matter of due 2 process, and all the cases make this clear, 3 that a party who is not a participant in the 4 earlier litigation cannot be collaterally 5 estopped from presenting evidence. 6 So not only does Microsoft have it 7 wrong on the law, they've got it wrong on the 8 facts. And all of these objections are just 9 inappropriate and should be overruled. 10 I think we can turn to group 10, Your 11 Honor. 12 MS. BRADLEY: If I may. 13 THE COURT: What about group 8 and 9. 14 MR. CASHMAN: Group 8 and 9, I think 15 we can treat those together because they fall 16 into the same category. 17 THE COURT: I'll let Ms. Bradley 18 respond. 19 MS. BRADLEY: If I may respond to 20 plaintiffs' general argument that they should 21 not be bound by collateral estoppel. I will 22 submit that plaintiffs have never cited a case 23 because there is none in which plaintiffs or a 24 party in a following case is granted collateral 25 estoppel on issues and then is permitted to 10750 1 relitigate those same issues, while the party 2 against whom collateral estoppel has been 3 entered has its hands tied in defending itself 4 on those issues. 5 Iowa law is clear and law generally is 6 clear that once a fact is established under 7 collateral estoppel, that fact cannot be 8 relitigated. Plaintiffs' absurd interpretation 9 of offensive nonmutual collateral estoppel has 10 never been adopted by the Court and should not 11 be done here. 12 What plaintiffs attempt to suggest 13 here, and in fact said as much, is that even 14 facts that were considered by Judge Jackson in 15 the DOJ case, even if those facts are quoted in 16 a finding, plaintiffs should still be entitled 17 to march those out again here, the underlying 18 facts, because plaintiffs were not present 19 during the DOJ case. That is wrong on the law, 20 and the Court has already found as much. 21 To turn back to the citations about 22 which we spoke earlier in Mr. Kempin's DOJ 23 testimony, I would just like to point the Court 24 to one illustrative example and that's at page 25 21 of that testimony in which the questioning 10751 1 attorney asks what factors Microsoft considered 2 when attempting to determine what Microsoft 3 would charge for its operating systems. 4 And Mr. Kempin says that, "Oh, we look 5 at some of them, that is, other vendors once in 6 awhile. But in this particular case we really 7 compared it with Windows 95." And this is 8 asking about Microsoft's consideration for the 9 pricing of Windows 98. That is exactly what is 10 stated in Finding 55, which states that 11 Microsoft did not consider the prices of other 12 Intel-compatible PC operating systems when it 13 set its prices for Windows 98. It goes to 14 nothing else. It should be collaterally 15 estopped as are the other facts that Microsoft 16 has cited in the DOJ testimony and should be 17 excluded. 18 THE COURT: We're going to take a 19 break for myself and my court reporter. 20 (A short recess was taken.) 21 THE COURT: Okay. What's next? Are 22 we still on 8 or go to 9? 23 MS. BRADLEY: I think we're done with 24 8 and 9. I think we've agreed we raise the 25 same issues, so we can move on to 10 or we will 10752 1 be happy to. 2 MR. CASHMAN: I'll say this, Your 3 Honor, and this is for 8 and 9 and really for 4 all of these is what you see here is Microsoft 5 basically -- they acknowledge that all this 6 evidence is relevant, but what they are saying 7 is that this evidence could not help prove any 8 other fact in the case and that's how absurd 9 their position is. They're saying it couldn't 10 help prove any other fact in the case, and that 11 even though plaintiffs have identified multiple 12 other facts, the Court should disregard 13 plaintiffs' other bases for this evidence. 14 So what they're asking the Court to 15 do, not only is their position wrong as a 16 matter of law, but they're basically asking the 17 Court to usurp the role of the jury, which will 18 decide what evidence helps prove -- helps prove 19 what claims, all these other issues that the 20 plaintiffs have been discussing. 21 Microsoft's position, Your Honor, is 22 absurd in the extreme because clearly this 23 evidence goes or would be helpful for the jury 24 in considering all these other issues. And 25 Microsoft simply cannot establish that the only 10753 1 purpose, the only purpose of this evidence 2 would be to prove operating system liability in 3 the time period that was at issue in the 4 government case. 5 So again, it just highlights why all 6 their objections should be overruled. 7 Turning to group 10, Your Honor, I 8 think, again, just highlights how wrong 9 Microsoft is. 10 Group 10, which is from the 1998 11 Department of Justice deposition, Microsoft has 12 asserted collateral estoppel objections for 13 Findings 203, 208, 213, 214 and 215, and these 14 designations have nothing to do with those -- 15 with what Microsoft claims. 16 What we've got here is a lot of 17 testimony by Mr. Kempin about Microsoft's per 18 system licenses and marketing development 19 agreements which have the acronym MDAs with 20 OEMs such as Compaq, Gateway, IBM, Packard 21 Bell, Dell, and Hewlett Packard. 22 Microsoft's per system licenses and 23 MDAs, Your Honor, were not specifically found 24 to be anticompetitive in any of the findings of 25 fact and certainly not the findings of fact 10754 1 which Microsoft cites. 2 So plaintiffs are entitled to present 3 this evidence in support of the allegations 4 that such licensing terms are anticompetitive. 5 And Mr. Kempin's testimony regarding prices for 6 Windows 95 and discriminatory discounts given 7 by OEMs is a pricing issue. And that is 8 relevant, again, to causation and consumer harm 9 at a bare minimum. 10 In a case involving overcharge and 11 pass-through such as this case, the plaintiffs 12 are entitled to present testimony on the 13 subject of price, and that's what this 14 testimony by Mr. Kempin is about. And, again, 15 it goes back to what Mr. Tulchin has been 16 asserting, and Microsoft has been asserting it 17 throughout the case, that no consumers were 18 overcharged. Well, this testimony goes 19 directly to that claim, and it goes directly to 20 the causation and harm to Iowa consumers on 21 overcharging pass-through. 22 The bottom line here, Your Honor, is 23 if the testimony relates to price, it's 24 admissible because there's no findings saying 25 that there was an overcharge. 10755 1 And Microsoft can -- they can cite to 2 every finding on which collateral estoppel 3 effect was given, and it simply does not 4 prevent the presentation of this evidence. 5 So again, plaintiffs submit that all 6 of these objections to group 10 and everything 7 prior should be overruled. 8 Thank you. 9 MS. BRADLEY: Your Honor, this is a 10 pretty large volume of testimony. And I think, 11 to take it pretty much collectively, that goes 12 to Microsoft's relationships and licensing 13 agreements with OEMs, the exact same behavior 14 that is covered by the findings of fact that 15 Microsoft has cited, that is, basically 16 Findings 203 through 215 or thereabouts, and 17 that is that essentially Microsoft requires 18 that OEMs accept a series of restrictions when 19 entering into licenses for Windows 95 and 20 Windows 98. Again, those are the products and 21 the time period which is collaterally estopped. 22 And Microsoft submits that Microsoft's 23 activities with respect to the OEMs and the 24 requirements that it placed on OEMs before they 25 were permitted to preload Windows 95 and 10756 1 Windows 98 are facts that have been 2 collaterally estoppel and that plaintiffs have 3 again failed to cite any viable alternative 4 purpose for those facts and as such the 5 testimony should be excluded. 6 MR. CASHMAN: Your Honor, according to 7 Microsoft's interpretation of that case -- 8 again their main defense is based on pricing, 9 that their prices are fair and that consumers 10 are not overcharged. And yet Microsoft is 11 seeking to preclude the plaintiffs from putting 12 in evidence on that very point. And that's 13 what all of this testimony in group 10 is 14 about, that the prices that Microsoft charged 15 for these marketing development agreements. 16 As the Court may recall, a marketing 17 developing agreement is what Microsoft started 18 to use after the per processor licenses. The 19 plaintiffs contend in this case that the MDAs 20 are anticompetitive just like the per processor 21 licenses are. 22 So any testimony concerning the market 23 development agreements and the anticompetitive 24 effect, the cause that it had in harming Iowa 25 consumers, is admissible. And again, Microsoft 10757 1 cannot establish that the sole purpose, that 2 the sole purpose of this testimony -- that the 3 only thing it could do is to prove the 4 government case. I mean, that is just not 5 true. 6 And plaintiffs believe that the jury 7 should be and is entitled to hear this evidence 8 because it is probative on multiple issues in 9 the case and that Microsoft was incorrect in 10 asking the Court to usurp the jury's role. 11 So we ask that these objections be 12 overruled, Your Honor. 13 MS. BRADLEY: Your Honor, it's 14 Microsoft's position that these findings, to 15 which Microsoft has linked the testimony, show 16 harm to consumers or had some impact on prices, 17 then that fact is established and plaintiffs 18 may not put in the same evidence yet again 19 because they claim that somehow those facts, 20 the facts that are already collaterally 21 estopped go to the plaintiffs' pricing story. 22 And I do want to address one other 23 point that plaintiffs continue -- an argument 24 that plaintiffs continue to make, which is the 25 suggestion that it's somehow Microsoft's burden 10758 1 to show that the sole purpose of this testimony 2 is collaterally estopped. 3 Microsoft has already linked the 4 testimony to the collaterally estopped 5 findings, which it claims go -- which it claims 6 the testimony is offered solely to bolster. 7 It's then plaintiffs' burden to show that the 8 testimony somehow goes to another relevant 9 issue in the case, and it's not solely to 10 bolster. 11 That's been this Court's clear order. 12 And plaintiffs continue to ignore that and 13 request that somehow it's Microsoft's burden to 14 attempt to conceive of any alternative purpose 15 that the plaintiffs may argue or offer for such 16 testimony and then that Microsoft should not be 17 asserting collateral estoppel objections 18 otherwise. 19 We've given plaintiffs every 20 opportunity to offer viable alternative 21 purposes for this testimony and they have, as 22 of yet, refused to do so. And they're coming 23 in here today and last week and parading out 24 their universe of what they claim are their 25 potential alternative purposes for the 10759 1 testimony. 2 It's simply insufficient to meet their 3 burden to tie specific testimony to a viable 4 and alternative purpose. And they haven't done 5 so again here with respect to this testimony by 6 Mr. Kempin in which he describes Microsoft's 7 licensing practices with respect to certain 8 OEMs and those are OEMs that are described -- 9 and those relationship are described in the 10 findings of fact that Microsoft has cited. 11 MR. CASHMAN: Your Honor, I guess it's 12 pretty amazing that Ms. Bradley keeps saying 13 that plaintiffs haven't shown alternative uses. 14 And aside from whose burden it is, it's clear 15 that there are so many alternative uses for 16 this testimony. 17 And, incredibly, I have to write this 18 down because Ms. Bradley said it's Microsoft's 19 position that if there is a finding that says 20 there is some impact on prices, then the 21 evidence should be excluded. 22 And that's just -- that's just plain 23 wrong. I mean, Microsoft says over and over 24 again that there's no findings on overcharge 25 and that there's no overcharge and that's a key 10760 1 issue in the case, pricing. And so if we have 2 any evidence that goes to pricing, again, like 3 willful and flagrant causation, consumer harm, 4 the other issues we've discussed earlier today 5 and last Friday, any evidence that goes to 6 pricing is clearly admissible because there's 7 no finding in the government case of overcharge 8 as Microsoft continually claims. And so that's 9 a key issue in the case and that is just 10 crystal-clear. And Ms. Bradley also has the 11 standard backwards. If there is some impact on 12 prices, that means it's admissible. What 13 Microsoft has to prove is that the evidence 14 could only prove operating system liability in 15 the government case. And none of the evidence 16 at issue here fits into that category. I mean, 17 it's really pretty astounding that Microsoft 18 keeps saying -- believing that they can 19 characterize what purpose plaintiffs are going 20 to use the evidence for. That's just wrong. 21 If the plaintiffs can believe that 22 this evidence goes to show causation and 23 consumer harm, they're entitled to put it on so 24 that we can prove our case. Microsoft is not 25 entitled to present -- or, pardon me, prevent 10761 1 plaintiffs from putting on evidence that is 2 relevant to prove their claims. 3 Their objections should be overruled, 4 Your Honor, in global and on a line-by-line 5 basis just like they were handled with respect 6 to Mr. Gates. These objections have no more 7 merit than they did when they were asserted 8 against Mr. Gates. 9 THE COURT: Anything else on group 10? 10 MS. BRADLEY: No, Your Honor. 11 THE COURT: Group 11. 12 MR. CASHMAN: Group 11, again, 13 Microsoft asserts a single finding as an 14 objection. That's Finding No. 57. And again, 15 the testimony at issue here in this single line 16 of designation is testimony concerning pricing, 17 Microsoft's per system licenses and the MDAs. 18 And as we just discussed, those were 19 not specifically found to be anticompetitive in 20 any finding of fact and certainly not in No. 21 57. So this testimony regarding prices for 22 Windows 95 and the discriminatory discounts 23 that were given to OEMs is a price issue which 24 is relevant to causation and consumer harm and 25 therefore it's relevant in this case on the 10762 1 issues of overcharge and pass-through. 2 MS. BRADLEY: The testimony at 103 to 3 104 is Mr. Kempin's testimony about what 4 factors Microsoft considered when setting its 5 prices for Windows 95 to IBM and Microsoft's 6 attempts to add value by adding features to 7 Windows 95. In Finding of Fact 57, Judge 8 Jackson describes this pressure that Microsoft 9 attempted to put on OEMs in which Microsoft 10 continued to update its operating system 11 software and release new versions of that 12 software so that there would continue to be a 13 market for its products and then as it did so 14 increase the prices of the older version of its 15 products to OEMs. 16 That's exactly the activities that are 17 described in Mr. Kempin's testimony. And 18 again, I would ask the plaintiffs to 19 specifically describe the alternative purpose 20 for which they would offer such testimony. 21 THE COURT: Anything else on 11, sir? 22 MR. CASHMAN: Your Honor, nothing 23 further on No. 11. 24 THE COURT: 12. 25 MR. CASHMAN: Group 12 are lines 67 10763 1 through 68. I believe that we've already 2 covered the arguments that would be applicable 3 to those designation. Again, none of the 4 testimony of Mr. Kempin pertains solely to 5 bolster the government case. And that would 6 also apply, Your Honor, to group 13. 7 I think we could move forward to group 8 14, which is the JCCP case from California. 9 THE COURT: Do you wish to respond to 10 12? 11 MS. BRADLEY: Microsoft would like to 12 respond on groups 12 and 13. 13 THE COURT: Proceed. 14 MS. BRADLEY: Group 12, which I 15 understand to be line 67, and that is 16 Mr. Kimpen's testimony at pages 219 through 17 225. 18 Mr. Kempin discusses services calls 19 that -- Microsoft Internet referral server 20 describes Microsoft's attempts to distribute 21 Internet Explorer through that channel brand. 22 And if we turn to Finding 25, we will 23 see that finding and the findings thereafter 24 refer to and describe this Windows or Internet 25 referral server, precisely the activity before 10764 1 which Mr. Kempin speaks in his testimony. 2 And again, we would ask that 3 plaintiffs -- and as we read through the 4 findings, we see that, in fact, the findings go 5 on at some length about the Internet referral 6 server, as does Mr. Kempin's testimony, and 7 they essentially mirror each other. 8 Mr. Kempin's testimony bolsters the findings of 9 fact and does nothing else. 10 MR. CASHMAN: Well, Ms. Bradley, I 11 don't think has read the testimony closely 12 enough of Mr. Kempin. His testimony in group 13 12, Your Honor, is about whether Microsoft had 14 any deals with an OEM named Compaq. 15 The Court probably recalls Compaq 16 related to Microsoft's Internet referral 17 service. 18 The deal in question involved Compaq 19 agreeing not to promote Netscape in exchange 20 for revenue from the Internet referral service. 21 The findings of fact that Microsoft cites 22 relate to Microsoft's coercion of ISPs. And 23 Compaq is an OEM, not an ISP. So right there 24 it's about apples and oranges. 25 But it also goes to the other issues 10765 1 that we've talked about before, contracts or 2 combinations and then also causation and 3 consumer harm. 4 So again, there isn't a situation that 5 Microsoft has identified, nor is there a 6 situation that they could identify where the 7 evidence would go to another purpose. 8 The jury is entitled to hear this 9 testimony. It would be error to exclude any of 10 it. 11 Thank you. 12 THE COURT: Anything else on this? 13 MS. BRADLEY: I will just note for the 14 record that Finding of Fact 253 is exactly on 15 point with what Mr. Kempin has testified to 16 which is Microsoft's inclusion of the Internet 17 connection Wizard, and as a result, the Windows 18 referral server in its Windows 95 software. 19 And the deal it did with Compaq was 20 specifically addressing the inclusion of this 21 Internet referral server in Microsoft's version 22 of Windows 95. They exactly track one another, 23 and plaintiffs have not presented a viable 24 alternative purpose for the testimony. 25 MR. CASHMAN: Again, it's just evident 10766 1 that Ms. Bradley does not want to accept the 2 alternative purposes that have been identified 3 repeatedly. 4 Group number 13, Your Honor, I intend 5 to expedite this. These designations -- 6 Mr. Kempin testifies about how he participated 7 in discussions with IBM's PC company once a 8 court order two years prior when he gave this 9 testimony. And he states that Ballmer and 10 Gates were not interested in working closely 11 with IBM, and he identities the reason is that 12 IBM supported Sun and Oracle. 13 The findings of fact that Microsoft 14 cites here, which there's a multitude of them, 15 but they relate to Microsoft pressuring IBM to 16 end its support for SmartSuite and OS/2 work. 17 There's nothing about the support for Java, 18 which is what Mr. Kempin was testifying about. 19 So the issues are not even the same. 20 Here again, the additional purpose -- or an 21 obvious purpose for this testimony is the 22 willful and flagrant conduct for the two 23 highest executives at Microsoft. The way that 24 they were conducting themselves for IBM support 25 for competitors is evidence of willful and 10767 1 flagrant conduct. 2 It shows that Microsoft desired to 3 punish the OEMs, which supported middleware. 4 This was a strategy directed at the very top of 5 Microsoft by Mr. Gates and Mr. Ballmer. 6 So again, we've got the clear purpose 7 of willful and flagrant conduct. And I won't 8 go through all the other reasons again, but it 9 supports causation and consumer harm and 10 combinations in restraint of trade. 11 Thank you. 12 THE COURT: Ms. Bradley, anything 13 else? 14 MS. BRADLEY: I will just say that 15 Microsoft believes, and believes that the Court 16 will find upon reading the testimony and the 17 findings of fact which Microsoft has linked the 18 testimony, that both the testimony and the 19 findings of fact go to Microsoft's complex 20 relationship with IBM, specifically, and that 21 plaintiffs have been unable to cite an 22 alternative purpose for that testimony. The 23 testimony and the findings go to the same facts 24 and the same issues and should not be admitted. 25 THE COURT: Shall we move to the last 10768 1 set then? 2 MR. CASHMAN: Group 14, Your Honor, is 3 from the JCP case. It's just one designation 4 that's line 83 on the rulings chart. 5 Here Mr. Kempin discusses per system 6 licensing of MS-DOS and how it allegedly 7 reduced piracies and supports OEMs to 8 preinstall Microsoft's operating system. 9 Plaintiffs allege that Microsoft's per 10 system licensing of MS-DOS was anticompetitive, 11 as the Court knows, and that it harmed DR-DOS 12 and OS/2. So per system licensing and DR-DOS, 13 as we've discussed before, aren't addressed 14 anywhere in the findings of fact. 15 Where the findings of fact do address 16 piracy, it's in reference to whether it creates 17 price pressure on Microsoft, thereby reducing 18 Microsoft's monopoly power. And Finding 58 19 concluded that it did not. 20 So this designation has nothing to do 21 with Finding 58 and does not bolster Finding 58 22 in any way. And that's just addressing it on a 23 micro level, but, obviously, all the arguments 24 I've made in connection with the global issues 25 apply with equal force. I won't repeat them at 10769 1 this time. 2 Thank you. 3 THE COURT: Ms. Bradley. 4 MS. BRADLEY: Mr. Kempin's testimony 5 at page 499 of this JCCP deposition is about 6 Microsoft's piracy rationale for the licensing 7 practices it undertook with respect to Windows 8 95. That's exactly the activities that are 9 addressed in Finding of Fact 55 in which Judge 10 Jackson writes that -- I'm sorry, it's 58, in 11 which Judge Jackson writes that although there 12 is no legal secondary market for Microsoft PC 13 operating systems, there's a thriving illegal 14 one. Software pirates illegally copy software 15 products such as Windows, selling each copy for 16 a fraction of the vendor's usual price. 17 One of the ways Microsoft combats 18 piracy is by advising OEMs that they will be 19 charged a higher price for Windows unless they 20 drastically limit the number of PCs that they 21 sell without an operating system preinstalled. 22 That's exactly the activity about which 23 Mr. Kempin has advised here in which he states 24 Microsoft put pressure on OEMs to adopt per 25 system -- or per processor licenses because of 10770 1 Microsoft's concern about piracy. 2 Microsoft requests that, as with the 3 other collaterally estopped material, that this 4 designation be excluded. 5 MR. CASHMAN: Your Honor, again, 6 Ms. Bradley -- Microsoft unwittingly makes 7 statements that shows why their objections have 8 no merit. Here in this instance she said when 9 she's talking about this designation for 10 Mr. Kempin, she said it relates to Judge 11 Jackson finding. "Relates" being the key 12 concession here, the key omission because 13 that's not the point. 14 If it relates to Judge Jackson's 15 finding, it doesn't result in -- it doesn't 16 provide merit to their cumulative objections. 17 If it relates to Judge Jackson's findings is 18 not the question. It's whether it helps prove 19 any other issue, and it does. 20 As we've gone through all the various 21 issues that this testimony and all the 22 testimony shows that it goes to other issues. 23 It strains credibility for Microsoft to contend 24 with a straight face that evidence testimony 25 taken in 2002 in the California action could 10771 1 somehow have been considered by Judge Jackson 2 is an impossibility. So not only is it 3 factually inapposite, but there's just no way 4 that evidence could constitute underlying 5 evidence for anything Judge Jackson did. 6 So again, like the Caldera case 7 testimony and like the testimony in the DOJ 8 case and in the CID, which plaintiffs have 9 established was not considered by Judge 10 Jackson, Microsoft's objections have to be 11 overruled for that reason alone. 12 I have nothing further to say on group 13 14, Your Honor. 14 THE COURT: Any other arguments on any 15 of these designations regarding collateral 16 estoppel? 17 MS. BRADLEY: Nothing further from 18 Microsoft. 19 MR. CASHMAN: Plaintiffs respectfully 20 submit that Microsoft's objection have no basis 21 in law or in fact, Your Honor, and that they 22 should be overruled in global. 23 Thank you. 24 THE COURT: Thank you. They're 25 submitted. 10772 1 MR. TUGGY: Your Honor, I think today 2 for the evidence team the only other motion we 3 had on the calendar was at the end of the day 4 the Phase VII Appeals. And late last night or 5 perhaps very early this morning we received an 6 e-mail from Mr. Garwleski. He has some traffic 7 problems and based on that we've agreed with 8 him that we can take these up early next week 9 as time permits. I don't know if we would 10 reach them today in any event, but we've agreed 11 with Mr. Garwleski that his unavailability 12 based on his travel problems means that we need 13 not hear that today. 14 THE COURT: Next on my list is the 15 Charles Laurence matter. 16 MR. CASHMAN: That's -- Mr. Williams 17 will handle that for plaintiffs. 18 THE COURT: Mr. Williams. 19 MR. WILLIAMS: Good morning, Your 20 Honor. I'll give defense counsel a chance to 21 get situated here. 22 THE COURT: Okay. Ms. Bradley is 23 taking a back seat now. 24 MS. BRADLEY: I'm glad too. 25 THE COURT: Okay. 10773 1 MR. WILLIAMS: Thank you, Your Honor. 2 This argument can be long or short, depending 3 on which way we go here. I'll give you some 4 brief background. 5 Last September plaintiffs moved in 6 limine to preclude testimony from several of 7 Microsoft's retained experts, one of which was 8 Mr. Charles Laurence. And all those motions 9 were based on foundational grounds. 10