www.MSfreePC.com ) web service designed to help Microsoft (Nasdaq: MSFT – News) customers process their claims from the $1.1 billion settlement
Microsoft has agreed to pay.
HellerEhrman
Robert A. Rosenfeld
rrosenfeld@hewm.com
Direct (415) 772-6609
Main (415) 772-6000
Fax (415) 772-6268
September 26, 2003
Via Facsimile
Mr. Michael Robertson
Chief Executive Officer
Lindows Inc.
9333 Genesee Ave. 3rd Floor
San Diego, California 92121
Re: Microsoft Cases, J.C.C.P. No. 4106, San Francisco Superior Court
Dear Mr. Robertson:
This firm represents Microsoft Corporation in a class action pending in
San Francisco Superior Court, in which the Court has recently granted
preliminary approval to a settlement. We just received a copy of a letter
sent to you by counsel for the plaintiffs, raising some concerns about your
www.msfreepc.com website. Our concerns about the website go far beyond those
noted by plaintiffs’ counsel. Your unauthorized website offers class members
the opportunity to submit claims under the Microsoft settlement and obtain an
“Instant Settlement” that they may use to purchase between $50 to $100 worth
of Lindows software. The website also states that it offers a free PC to “the
first 10,000 people who buy $100 worth of products.”
For the reasons set forth below, your website is deceptive, seriously
mischaracterizes the settlement, misleads the public and encourages class
members to submit improper fraudulent claims that will be denied by the
Settlement Claims Administrator. Microsoft strongly supports the right of the
class members to claim benefits under the settlement and use those benefits to
purchase qualifying computer hardware and/or software of any manufacturer,
including Lindows. Microsoft is also committed to protecting the integrity of
the settlement, the authorized website established by Court order and the
claims process preliminarily approved by the Court.
The claims procedures established to implement the settlement reflect the
parties’ concerns about the submission of improper or fraudulent claims. Such
claims, if approved, will take settlement benefits away from legitimate class
members and from California’s public schools, which will receive vouchers
worth two-thirds of any unclaimed settlement funds. The www.msfreepc.com
website recommends procedures that will lead consumers to file improper claims
that will be denied.
The Website Misleads Claimants Into Following Improper Claim Procedures
That May Lead To The Denial Of Their Claims.
The website encourages consumers to submit claims that may be denied
because they do not comply with the claims procedure set out in the Settlement
Agreement presented to the Court.
A. Claims Submitted Through The Website Will BE Invalid Because They Will
Not Be Signed.
The settlement requires that all claimants print out, sign and mail their
claim forms and certify the accuracy of their claims under penalty of perjury.
See Settlement Agreement, section V.A.1.a. For this reason, the electronic
submission of claims are not permitted — claimants must actually sign their
claim forms and mail them to the Settlement Claims Administrator. See
Settlement Agreement, section V. A. Claim forms submitted through the
www.msfreepc.com website will be invalid because they will not be signed.
Instead, these claims will include only the claimant’s typed name (called a
“digital signature” by the website) which is invalid under the Settlement
Agreement.
B. Claims Submitted Through The Website Will Be Invalid Because They Will
Not Include A Certification That The Entire Claim Form Is Accurate.
It appears from the website that Lindows.com is planning to submit claims
through the “combined claims” procedure authorized by the Settlement
Agreement, rather than by obtaining vouchers and subsequently redeeming them.
Under that procedure, each claimant must submit: (1) a completed claim form,
including “Part E” of the form (which relates to the claimant’s use of
settlement benefits to purchase qualifying hardware or software); and (2)
proof of purchase of the qualifying software that the claimant selected from
the www.msfreepc.com website.
The certification under penalty of perjury on the claim form requires
claimants to certify that “all of the information on this form [including Part
E] is true and correct.” However the website does not show a completed Part E
to the claimant, so the claimant’s certification is incomplete. For this
reason, all “combined claims” submitted through the www.msfreepc.com website
will be invalid.
C. Claims Submitted Through The Website Will Be Invalid Because The
Settlement Agreement Requires That Claimants Submit Their Own Claims.
The www.msfreepc.com website requires claimants to “digitally sign” an
Authorization, which purports to authorize Lindows.com to take certain actions
to pursue the claimant’s claim. Among other things, the Authorization
purports to authorize Lindows.com to: (1) submit to the Settlement Claims
Administrator the claimant’s claim form and proof of purchase of Lindows
software; (2) modify the Claim Form to provide that all future correspondence
(including vouchers and checks) will be sent to the claimant at Lindows.com’s
address; (3) open the claimant’s mail and cash the claimant’s check; and (4)
take actions to “enforce payment rights,” which Lindows.com apparently intends
to include the right to appeal to the Court any claims denied by the
Settlement Claims Administrator.
Claims submitted through the www.msfreepc.com website will be invalid
because the Settlement Agreement does not permit retailers or other vendors of
qualifying hardware and software to submit claims on behalf of claimants. In
addition, to prevent the development of a “gray market” for settlement
vouchers, the Agreement contains clear restrictions on the transferability of
claims and vouchers. Claims cannot be transferred at all and a transferee of
vouchers may not redeem more than $10,000 in transferred vouchers. See
Settlement Agreement, sections IV.F and V.B.2.(1)
I.The Website Encourages People To Submit Fraudulent Claims.
In addition to mischaracterizing the settlement and encouraging consumers
to submit defective claims that will denied, the website also encourages
people to submit fraudulent claims. The Settlement Agreement authorizes the
Settlement Claims Administrator and the parties to reject these claims or to
request additional supporting documentation, on the ground that “there is
reasonable cause to suspect that the [claims are] fraudulent or otherwise
improper.” See Settlement Agreement, section V.A.2 see also section V.D.2
(Settlement Claims Administrator “shall reject any invalid claims unless Lead
Counsel for the California Class and Microsoft otherwise direct…. If Lead
Counsel for the California Class or Microsoft disputes any claim, the
Settlement Claims Administrator may request additional documentation from the
claimant.”).
The www.msfreepc.com website clearly encourages people to submit
fraudulent claims. The website’s clear objective is to encourage claimants to
maximize the amount of their claims rather than submit claims that accurately
reflect purchases made or benefits to which they are entitled. For example,
the website encourages claimants to submit claims for combinations of products
that total exactly $100, and offers a “free PC” only to claimants who submit
claims for only one purchased product, only allows claimants to submit claims
for certain combinations of purchased products (with high total values), and
does not allow claims that total less than $50. The website also offers a
prepared list of “sellers” of software which encourages claimants to make a
hasty, careless or false designation of the seller of their products instead
of accurately identify their software purchases before submitting their claim.
All of these problems are compounded by the fact that the settlement
notice provided to class members does not accompany the “claim form” that
claimants are asked to “digitally sign.” The settlement notice is supposed to
accompany the claim form, so that potential claimants can make an informed
decision about whether to file a claim, object or do nothing. However, the
www.msfreepc.com website does not provide a copy of the notice, so most people
who submit claims through the website will not have read the notice and will
not be making an informed decision.
For the foregoing reasons, Lindows.com must correct or take down the
www.msfreepc.com website to rectify the many serious defects we have
identified above. Please let us know by noon on Monday, September 29, 2003 of
the corrective actions you intend to take. If we do not hear from you by
then, Microsoft will take all appropriate action to protect the integrity of
the settlement claims process and the settlement benefits to which the class
members and California’s public schools are entitled as well as its own
interests.
Very truly yours,
Robert A. Rosenfeld
(1) The www.msfreepc.com website mischaracterizes a number of other
aspects of the settlement: for example, the website does not clearly
inform consumers at the outset that they are only eligible to obtain
vouchers if they purchased software for use in California; the
website does not mention the benefits provided by the settlement to
California's public schools, which class members might wish to
consider in determining whether to submit a claim; the website does
not explain that direct purchases of Microsoft software cannot make
claims under the settlement. In addition, the website's reference to
the Department of Justice action against Microsoft suggests
incorrectly that the settlement in this case is somehow based on
the findings of liability in the Department of Justice action against
Microsoft. There has been no determination of wrongful conduct,
guilt or liability in the Settlement. Moreover, the website's
description of the Department of Justice action itself is inaccurate.
The website incorrectly states that Microsoft was "found guilty of
antitrust violations" in the Department of Justice case. The
Department of Justice action was a civil proceeding, and the findings
of liability in that action do not constitute criminal convictions or
findings of "guilt."
About Lindows.com
Lindows.com gives consumers the world’s most affordable choice in
software, focusing on complete ease-of-use and reliability. LindowsOS is an
intuitive operating system that allows the installation of hundreds of
applications from the Click-N-Run(TM) Warehouse ( www.lindows.com/cnr ) with
just one click. LindowsOS can be experienced on LindowsOS Certified Computers
( www.lindows.com/pc ), on Seagate hard drives or ordered directly from
www.lindows.com/buy . Lindows retail products are also available at
Walmart.com ( www.lindows.com/walmart ), at Fry’s Electronics stores, and
through TigerDirect.com ( www.lindows.com/tigerdirect ), as well as from
additional resellers listed at www.lindows.com/featured . LindowsOS 4.0 now
offers a complete suite of office software, as well as protection from spam,
viruses, and objectionable-content websites through add-on paks
( www.lindows.com/addons ).
For further information, please contact: Cheryl Schwarzman, Director, PR
of Lindows.com, Inc., +1-858-587-6700 ext. 241, or fax, +1-858-587-8095,
pr@lindows.com
