Muy RICO! Is Microsoft the Mob?

The judges on the Ninth Circuit U.S. Court of Appeals aren’t saying Microsoft is a criminal organization … they’re just keeping their minds open.

An en banc panel issued a decision (.pdf) on Friday that reversed a lower court’s dismissal of RICO accusations against the software juggernaut and retail partner Best Buy. Apart from the vision of Bill Gates as Corleone, the decision is interesting because of its concise assessment of the interpretations of the Racketeer Influenced and Corrupt Organization statute, passed by Congress in 1970 and then immediately misinterpreted by courts nationwide. (Check out the Wikipedia summary at your own risk.)

In his opinion, Judge William Fletcher lays out the U.S. Supreme Court’s repeated slapdowns to courts trying to read the statute as narrowly as possible, which is also what the Ninth found the Western District of Washington federal court did here.

The story starts with James Odom buying a computer from Best Buy. As his suit tells it, the retailer had a deal with Microsoft in which computer buyers would be given a CD enabling a free six-month trial of Microsoft’s MSN portal/Internet access service. Even though Odom specifically said he didn’t even want the disc, a sales clerk scanned in Odom’s credit card number, secretly creating an MSN account for Odom that the customer didn’t even know existed — until bills for the service started hitting his card after the “trial period” expired.

This, Odom’s attorneys argue, would constitute wire fraud, and would make Best Buy and Microsoft a “criminal enterprise” as described by the statute. The lower court, like many federal courts nationwide, felt that RICO was meant to apply only to legitimate businesses being infiltrated by mobsters. Picture your sweet, innocent Las Vegas casino circa 1950, as shady East Coast hoodlums move in. The U.S. Supremes keep saying, no, it’s not that narrow, and if Congress wanted it to be that narrow, Congress would have to take care of that itself. (That’s what we in the journalism business call a paraphrase.)

So we get reversal, remanding, and the possibility that Odom can turn this thing into a class action.

The panel was officially unanimous in this result, though that’s only a technicality. In addition to a concurrence by Judge Silverman (joined by four others) that agrees with the result without agreeing that Microsoft-Best Buy cabal is exactly a criminal enterprise, Judge Jay Bybee tacks on a pithy one paragraph “concurrence” that is a fun little read.  Stripped of legal citation, Bybee (joined by Reinhardt) harrumphs:

“It strikes me as outlandish that what Judge Silverman correctly describes as a ‘marketing contract’ between Microsoft and Best Buy could subject them to a private RICO action. … But my concerns were voiced and dismissed more than 20 years ago. … I therefore join judge Fletcher’s opinion for the court.”

If that’s a concurrence, you’d expect the dissent to be ticking …

— Brian McDonough