Posts Tagged ‘ibm’

Dismissed without Merit

Lead litigator Tom Barr seen here with the NYT from January 9, 1982 announcing the IBM case was being dismissed without merit

In 1982, the U.S Government announced two landmark anti-trust decisions that dominated The New York Times front page thirty years ago today. The headline was, “U.S. Settles Phone Suit, Drops I.B.M. Case; A.T.&T to Split Up, Transforming Industry”.

In one day, the U.S. Department of Justice announced the resolution to two antitrust lawsuits against corporate giants. In the first case, AT&T settled with the government by consenting to break up Ma Bell and divest itself of 22 Bell phone companies, transforming the telecommunication industry. That landmark decision blunted the news that the Justice Department was dropping its thirteen year antitrust lawsuit against IBM. The case was dismissed “without merit” by Assistant Attorney General of the Antitrust Division, William Baxter.

The lawsuit was filed in 1969 on Nicholas Katzenbach’s 47th birthday in the waning days of the Johnson Administration. Weeks earlier Katzenbach announced that he would be joining IBM as its General Counsel. Little did he or his successor, Attorney General Ramsey Clark, who filed the case, realize that this case would span five presidential administrations from Johnson to Reagan. Nor did Katzenbach realize that he would spend much of his time at IBM fighting the very institution he used to lead.

From the onset Katzenbach and Tom Barr, the lead litigator of IBM’s defense were adamant that IBM had not violated Section 2 of the Sherman Antitrust Act, the heart of which focused on preventing corporate monopolies. Barr worked for what many considered the premier corporate law firm in the country – Cravath, Swaine & Moore – which IBM already had on retainer prior to the suit. By the end of the lawsuit the Cravath approach to the IBM case served as the gold standard in complex corporate litigation and it gave rise to some legal giants including David Boies who most recently represented the NFL owners and the NBA players in their respective lockouts. In the meantime, computer giants such as Apple and Microsoft (the latter of whom faced its own government antitrust lawsuit led by Boies), have risen as IBM’s foothold on the computer industry has waned. The marketplace (a point of contention during the lawsuit) changed dramatically during the thirteen years the case dragged on, and has changed even more in the thirty years since it ended.