Nebraska High Court Revives Lawsuit Against Microsoft

LINCOLN, Neb. (AP) -- A divided Nebraska Supreme Court revived a class-action lawsuit Friday alleging that Microsoft Corp. violated the state's consumer-protection laws by engaging in monopolistic behavior.

The high court ruled 4-3 in favor of two Nebraskans who sued the software giant in 2001. They allege that Microsoft used its monopoly in computer operating systems to overcharge people for its widely used Windows 98 software.

The lawsuit is one of scores nationwide stemming from the U.S. Justice Department's antitrust action against Microsoft, which the company has settled.

Meanwhile, European regulators are expected to hit Microsoft next week with an order to change some business practices and pay a fine worth up to hundreds of millions of dollars.

The Nebraska lawsuit does not estimate the financial damage to Windows users in the state. Nor does it specify the number of members in the class of both individual and corporate users of Windows, although it said there are at least 4,000 in Nebraska.

Originally, Dodge County District Judge F.A. Gossett III ruled that a 1977 U.S. Supreme Court decision barred the lawsuit.

That decision--in a case pitting the Illinois Brick Co. against the state of Illinois--said only consumers who bought directly from price-fixing manufacturers can sue for antitrust damages. The decision prevented consumers from seeking compensation if the manufacturer sold to a middleman, as is the case of most people who bought Windows 98 pre-loaded on computers.

However, writing for the majority in Friday's opinion, Judge John Wright said Nebraska's consumer protection act, passed after the 1977 decision, "provides that any person injured by a violation may sue for damages"--whether a good or service was sold directly or indirectly.

Last year, Microsoft agreed to settle class-action antitrust lawsuits brought by customers in five states and the District of Columbia by issuing vouchers worth $200 million.

In all, Microsoft has settled similar lawsuits in at least nine states and Washington, D.C., for a total of $1.55 billion.

Nebraska did not sue Microsoft.