Demartini v. Microsoft Corporation

Background

The plaintiffs brought the action under Sections 7 and 16 of the Clayton Act and sought to stop a proposed merger between Microsoft Corporation and Activision Blizzard, Inc. The court previously denied the plaintiffs’ motion for a preliminary injunction, finding, among other things, that they had not shown a likelihood of irreparable injury. The merger closed on October 13, 2023.

Four days before the merger closed, the plaintiffs filed a motion to hold separate. They asked the court to require Microsoft to maintain Activision Blizzard as a separate subsidiary, prevent Microsoft from combining Activision business units with Microsoft, and prevent actions that could irreparably harm Activision’s ability to compete independently until the plaintiffs could be heard on the merits.

Court’s analysis

The court first concluded that the plaintiffs had provided no legal basis for the motion. The authority they cited concerning a court’s equitable power to issue a “hold separate” order arose in the context of a motion for preliminary injunctive relief. Because the court had already denied the plaintiffs’ preliminary-injunction motion, the court stated that any request to reconsider that ruling lacked a sufficient basis. The opinion explains that reconsideration generally requires newly discovered evidence, clear error, or an intervening change in controlling law, and the plaintiffs had not shown one of those grounds.

The court also stated that the plaintiffs’ appeal from the preliminary-injunction denial was pending. As a result, the district court was deprived of jurisdiction over the matters on appeal, except that it retained authority to act to preserve the status quo. The court noted that it had mentioned Microsoft’s representation that it intended to maintain Activision as a subsidiary, but had not ordered Microsoft to do so. The plaintiffs had not requested such an order at that earlier time.

The court further criticized the timing of the motion. The plaintiffs waited five months, until the eve of the merger’s closing, to seek relief that was scheduled to be heard after the merger was expected to close—and in fact did close. The court rejected the plaintiffs’ argument that the order was necessary to preserve divestiture as a possible remedy, stating that they could and should have raised that argument earlier.

Rulings

Judge Jacquelyn Corley vacated the scheduled oral argument and denied the plaintiffs’ motion to hold separate. The court also denied the plaintiffs’ administrative motion to seal because Microsoft, which had designated the material as confidential, did not submit the required supporting declaration before the deadline. The November 16, 2023 case management conference was continued to December 21, 2023, and the order disposed of Docket Nos. 275 and 276.