After the judge overseeing the Microsoft Corp. antitrust trial suggested the appointment of federal judge Richard A. Posner as a mediator in the case last Thursday, Justice Department officials endorsed the choice later that day. The timing of the Justice endorsement was reported incorrectly in an article yesterday. (Published 11/24/99)

A federal judge who brought an outside mediator into the Microsoft Corp. antitrust trial was "partly motivated" by what he called "disturbing reports" of a potential split between the federal and state lawyers prosecuting the case, according to a court transcript released yesterday.

In a private conference in his chambers Thursday afternoon, U.S. District Judge Thomas Penfield Jackson told government lawyers that he "would not like to have to deal with divergent points of view" on the topic of what sanctions should be imposed on the company.

Although the Justice Department and 19 state attorneys general filed a joint antitrust lawsuit against the company and worked together closely in presenting evidence at the trial, the two camps have been separately studying the thorny issue of what "remedy" to ask Jackson to impose if he rules that Microsoft has broken the law. Separate committees in each camp, for instance, have sought advice from various economists, policymakers and industry leaders.

The federal and state lawyers working on the case have expressed a desire to reach consensus on a remedy, but if they cannot, some state officials have suggested that they would seriously consider making a separate request for sanctions.

The states are believed to favor more aggressive remedies than the Justice Department, though neither group has come to any formal conclusions. Many state attorneys on the case already have decided to push for sanctions that would strip Microsoft of its dominance in the market for personal computer operating systems, either through a corporate breakup or by forcing the firm to share the secret code that makes up its Windows software, according to sources familiar with the states' legal strategy.

Jackson, who ruled earlier this month that Microsoft has used its monopoly power to stifle competition and harm consumers, has urged the company and the government to settle the dispute before he decides whether the company's actions were illegal.

In his meeting with the lawyers, Jackson said he noted a recent article in the New York Times about the divergent views between Justice and the states. The article quoted a senior aide to one of the state attorneys general as saying: "There's more tension between the states and Justice on remedies than there was during the trial. During the trial, we were mostly just passengers, but now there are two different trains running on parallel tracks."

Jackson told the lawyers that his decision to appoint a mediator was "partly motivated by what I think are somewhat disturbing reports in the press that the plaintiffs are proceedings on 'parallel tracks' or something like that."

"The harmony between the states and the [Justice Department] so far has been, I think, enormously helpful," Jackson said. "And I would like to see it continue."

Two of the state attorneys general present at the meeting, Tom Miller of Iowa and Richard Blumenthal of Connecticut, as well as the Justice Department's lead trial attorney, David Boies, told the judge that all the government lawyers were working well together.

"The states have cooperated completely with us, and we have tried to cooperate completely with them," Boies told the judge. "I do not anticipate any significant differences here."

Blumenthal said he thought the "reports of divergent views were somewhat exaggerated."

Miller, in an interview yesterday, said that "at the end of the process, I hope we will be at the same place as the Justice Department" on remedies. Even though Justice and the states have separate remedies committees, Miller said the two groups communicate frequently.

Legal specialists said Jackson's comments reflect a fear that the trial--and any possible settlement--could become more complicated if the government camps split. "It will be impossible to get the plaintiffs and the defendants to agree if the plaintiffs themselves cannot agree," said William E. Kovacic, a law professor at George Washington University.

At the gathering, Jackson informed government and Microsoft lawyers of his interest in having Richard A. Posner, the chief judge of the U.S. Court of Appeals for the 7th Circuit, serve as a voluntary mediator. Although the parties have had three meetings aimed at reaching an agreement over the past year and a half, they remain far apart on fundamental issues.

"I think this is probably as propitious a time for any possible negotiated outcome as you could have," Jackson said.

Posner, a noted antitrust expert, is regarded as a conservative judge who has been skeptical of government regulation of business. Asked by Jackson what he thought of Posner, Microsoft's lead attorney, John L. Warden, called the proposed mediator "one of the smartest guys alive."

Boies, who told the judge he has a "very high regard" for Posner, said he needed to discuss the use of a mediator in a government antitrust case with other Justice Department officials before endorsing Jackson's suggestion. Justice told Jackson's office the following day that it would welcome Posner's involvement.

CAPTION: Judge Thomas Penfield Jackson cited "disturbing reports" of a rift.