2763 1 IN THE IOWA DISTRICT COURT FOR POLK COUNTY ----------------------------------------------- 2 JOE COMES; RILEY PAINT, ) 3 INC., an Iowa Corporation;) SKEFFINGTON'S FORMAL ) 4 WEAR OF IOWA, INC., an ) NO. CL82311 Iowa Corporation; and ) 5 PATRICIA ANNE LARSEN; ) ) TRANSCRIPT OF 6 Plaintiffs, ) PROCEEDINGS ) VOLUME XI 7 vs. ) ) 8 MICROSOFT CORPORATION, ) a Washington Corporation ,) 9 ) Defendant. ) 10 ----------------------------------------------- 11 The above-entitled matter came on for 12 trial before the Honorable Scott D. Rosenberg 13 and a jury commencing at 8 a.m., December 4, 14 2006, in Room 302 of the Polk County 15 Courthouse, Des Moines, Iowa. 16 17 18 19 20 HUNEY-VAUGHN COURT REPORTERS, LTD. 21 Suite 307, 604 Locust Street 22 Des Moines, Iowa 50309 23 (515)288-4910 24 25 2764 1 A P P E A R A N C E S 2 Plaintiffs by: ROXANNE BARTON CONLIN 3 Attorney at Law Roxanne Conlin & Associates, PC 4 Suite 600 319 Seventh Street 5 Des Moines, Iowa 50309 (515)283-1111 6 RICHARD M. HAGSTROM 7 Attorney at Law Zelle, Hofmann, Voelbel, 8 Mason & Gette, LLP 500 Washington Avenue South 9 Suite 4000 Minneapolis, Minnesota 55415 10 (612)339-2020 11 ROBERT J. GRALEWSKI, JR. Attorney at Law 12 Gergosian & Gralewski 550 West C Street 13 Suite 1600 San Diego, CA 92101 14 (619) 230-0104 15 16 17 18 19 20 21 22 23 24 25 2765 1 Defendant by: DAVID B. TULCHIN 2 STEVEN L. HOLLEY SHARON L. NELLES 3 Attorneys at Law Sullivan & Cromwell, LLP 4 125 Broad Street New York, New York 10004-2498 5 (212)558-3749 6 ROBERT A. ROSENFELD Attorney at Law 7 Heller Ehrman, LLP 333 Bush Street 8 San Francisco, California 94104 (415)772-6000 9 STEPHEN A. TUGGY 10 HEIDI B. BRADLEY Attorneys at Law 11 Heller Ehrman, LLP 333 South Hope Street 12 Suite 3900 Los Angeles, CA 90071-3043 13 (213) 689-0200 14 DANIEL S. SILVERMAN Attorney at Law 15 Heller Ehrman, LLP 4350 La Jolla Village Drive 16 Seventh Floor San Diego, CA 92122-1246 17 (858)450-8400 18 BRENT B. GREEN Attorney at Law 19 Duncan, Green, Brown & Langeness, PC 20 Suite 380 400 Locust Street 21 Des Moines, Iowa 50309 (515)288-6440 22 23 24 25 2766 1 RICHARD J. WALLIS STEVEN J. AESCHBACHER 2 Attorneys at Law Microsoft Corporation 3 One Microsoft Way Redmond, California 98052 4 (425)882-8080 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2767 1 THE COURT: Go ahead, Chris. 2 MR. GREEN: Yeah. There are several 3 things pending, but I think the only thing that 4 we need to take up this morning is we'd like to 5 be heard on a curative instruction regarding 6 what we believe are improper statements made by 7 Ms. Conlin in her opening statement. 8 And I believe Ms. Nelles is going to 9 do that. And we haven't got a brief, but we're 10 prepared to argue that unless the Court wants a 11 full briefing now. 12 MS. NELLES: Your Honor, I think I can 13 be very quick and perhaps we can get this done 14 while Mr. Tuggy is on his way over and they are 15 negotiating this evidence. 16 But something that occurred on Friday 17 we wanted to raise. We think it requires a 18 correction. Your Honor, during her opening 19 statement on Friday, Ms. Conlin made several 20 statements to the Jury that are contrary to the 21 Court's instructions. 22 Specifically, during her opening 23 statement, Ms. Conlin told the Jury that the 24 Iowa Competition Law requires companies to, 25 quote, compete fairly. 2768 1 This is not the law as accepted by the 2 United States Supreme Court. It's not the law 3 as set forth by the Supreme Court of Iowa, and 4 it is not the law as the Court instructed the 5 Jury. 6 Unfair conduct, of course, is not the 7 same as anticompetitive conduct. And that is 8 what Plaintiffs must prove here. 9 And Microsoft would ask that the Court 10 provide a corrective instruction to remedy the 11 incorrect statements that were made. 12 Now, let me just tell you exactly what 13 Ms. Conlin said to the Jury. What she said 14 was, and I'm quoting, the rules say that 15 companies should compete as vigorously as they 16 can, do everything they can to win, make the 17 best, the most innovative, the most creative 18 products, get the best sales force, and try to 19 win on the merits. 20 But the rules also say you have to 21 compete fairly. If you don't, you have to be 22 held accountable for the damage that you do to 23 the competitive process and to the free market 24 and to consumers. 25 That's from Friday's transcript, the 2769 1 December 1 transcript at page 2602, lines 14 2 through 24. I have copies I can show you. 3 Now, shortly after making this 4 statement, Ms. Conlin went on to add what the 5 law requires of Microsoft is exactly what the 6 law requires of all companies. Compete fair 7 and square. Microsoft did not. That's, again, 8 the December 1 transcript, page 2604, lines 1 9 through 4. 10 And then, again, Ms. Conlin later 11 equated unfair and illegal tactics. She said 12 to the Jury, when they cannot win on fair 13 competition on features, on price, they resort 14 to unfair and illegal tactics like these 15 exclusionary contract terms, December 1 16 transcript at page 2715, lines 16 through 19. 17 These statements are just wrong. I 18 believe Mr. Holley went through this many times 19 in going through the Jury instructions. 20 The antitrust laws are not a 21 codisability. It is well settled that unfair 22 conduct does not itself constitute a violation 23 of the antitrust laws. 24 The Supreme Court of the United States 25 said this itself in Brook Limited versus Brown 2770 1 and Williamson Tobacco Corp. 2 The Supreme Court said even an act of 3 pure malice by one business competitor against 4 another does not, without more, state a claim 5 under the federal antitrust laws. 6 Those laws do not create a federal law 7 of unfair competition. That's on the 509 U.S. 8 209. The jump site is 229, a 1993 case. 9 The Iowa Supreme Court has made a very 10 similar observation. Next Generation Realty 11 versus Iowa Realty, Inc. 12 The Iowa Supreme Court said the 13 marketplace is often unfair, sometimes brutal, 14 sometimes tortious acts take place there, but 15 until an act impacts on the public's access to 16 a competitive market, the injured are left to 17 proceed with traditional tort or contract 18 remedies. 19 In other words, Your Honor, brutal and 20 tortious behavior alone and certainly unfair -- 21 and arguably unfair behavior alone is not in 22 and of itself a violation of the Iowa 23 Competition Law. 24 Your Honor, the antitrust laws 25 encourage all products, even monopolists, to 2771 1 compete aggressively and to win for themselves 2 all the business they can. 3 In order to actually prove 4 anticompetitive conduct, it is Plaintiffs' 5 burden here to demonstrate that the conduct 6 they allege was conduct without a legitimate 7 business purpose that makes sense only because 8 of eliminating competition, not simply that the 9 conduct was not fair. 10 Now, the Court and Your Honor 11 instructing the Jury, Preliminary Instruction 12 Number 8, appropriately told the Jury that not 13 all behavior that enters competitors as 14 anticompetitive and that the difference between 15 anticompetitive conduct and conduct that has a 16 legitimate business purpose can be difficult to 17 determine. 18 By implying that unfair is enough, 19 that unfair conduct is illegal, Plaintiffs' 20 counsel has contradicted this Court's 21 instruction in a fundamental way. And we would 22 ask that the Court cure the harm from counsel's 23 assertion about unfairness and provide a 24 corrective instruction to the Jury before 25 opening statements continue. 2772 1 I have a proposal I'd like to bring up 2 to Your Honor. 3 MS. CONLIN: Maybe I could see it too. 4 MS. NELLES: I'll give it to you too. 5 I'm sorry. 6 Here's the proposed instruction. 7 Here's the transcript cites, and here is the 8 Next Generation Realty case. 9 Let me get a copy for Ms. Conlin. 10 THE COURT: Anything else, Ms. Nelles? 11 MS. NELLES: No. That's it, Your 12 Honor. Thank you. 13 THE COURT: Very well. 14 Any response, Ms. Conlin? 15 MS. CONLIN: Yes, Your Honor, if I 16 may. 17 First of all, of course, we had no 18 notice whatsoever that this was going to come 19 up this morning. No objection was made at the 20 time, which is what I understand the rules 21 require. 22 This is a typical tactic on 23 Microsoft's behalf which we saw in Minnesota. 24 They take the transcript and have minions run 25 through it, parsing every word, making every 2773 1 attempt that they can think of in law or in 2 fact to criticize. And we really did have this 3 very same thing come up in Minnesota. 4 Every single morning we would come to 5 court and there would be some new thing that 6 some member of the Defendant's trial team had 7 done that overnight they had decided was 8 somehow wr