Judge v. I.B.M.: Long, Bitter Clash

By Mary B. W. Tabor
The New York Times

June 14, 1994

In 1953, a young Federal judge named David N. Edelstein had his first brush with I.B.M. and its lawyers in his Manhattan courtroom. A year earlier, the Justice Department had charged the company with antitrust violations. By 1956, after overseeing a series of pretrial motions, Judge Edelstein approved and signed a settlement reached by the Government and the company.

Under the settlement agreement, known as a consent decree, I.B.M. agreed to segregate services operations from hardware and other businesses. By all accounts, the signing was uneventful. But it marked the beginning of what has become one of the most rancorous -- and one of the longest-running -- relationships between a judge and a corporate defendant in the history of Manhattan's Federal court.

Personalizing the Issues?

While I.B.M. has accused Judge Edelstein of waging a personal crusade against it, some legal experts say that the company and its lawyers have attacked the judge as way of winning their case.

In any event, some legal scholars say that overseeing the I.B.M. consent decree for 38 years has been, for the judge, one of the few remarkable chapters in an otherwise low-profile career. Others predict that he will be reluctant to give up such a big case even as I.B.M. is arguing that the economic and technological rationale for the decree has long since lapsed.

"Every judge likes the feel of an important case," said Harvey J. Goldschmid, a professor and specialist in antitrust cases at Columbia Law School. "The tendency of a good judge is to take on a case like this and not want to let it go."

Judge Edelstein, of the Federal District Court for the Southern District of New York, declined to be interviewed for this article.

In the nearly four decades since the consent decree was signed, I.B.M. has accused Judge Edelstein of bias and of harassing witnesses and altering the court transcript. On three previous occasions, the company has demanded, albeit unsuccessfully, that he remove himself from the case. I.B.M. repeated the request last week.

The judge has so far refused to step aside, arguing that the company had failed to prove its assertions of bias. He clung fiercely to a second I.B.M. antitrust suit, a 13-year case that the Justice Department dropped in 1982. And he once accused I.B.M.'s lawyer on the case for the last 25 years, Thomas D. Barr of Cravath, Swaine & Moore, of "threatening" him during a cross-examination.

Last week, like two old sparring partners meeting in the ring, Mr. Barr, who is 63, appeared once again before Judge Edelstein, now 84. As he stood before Judge Edelstein, Mr. Barr said he was seeking to have the 1956 decree lifted and was asking that the judge step down from the case. In court papers filed last week, he cited "the cumulative evidence of Judge Edelstein's personal bias and prejudice against I.B.M."

But both critics and supporters say that Judge Edelstein will likely fight to the end to hold on to the decree and keep it in his court, underlining what they describe as an unusual, if not bewildering, attachment to the I.B.M. litigation. It is an attachment, they say, with roots in his past, his personality and his politics.

When President Harry S. Truman appointed David Edelstein, a Justice Department lawyer, to a Federal judgeship in 1951, it was over the objections of the American and New York City Bar Associations and of some lawyers, who argued that he did not have enough trial experience.

Since then, Judge Edelstein, who has been on the Federal bench longer than any other active district court judge in the country, has developed a reputation as a combative jurist -- an image cemented by his tenacious, often turbulent supervision of the Government's antitrust case against the giant International Business Machines Corporation.

Thoughtful, Irascible, Difficult

"This is a guy who came to the job with questions raised about his credentials but who has done pretty well," Professor Goldschmid said. "He is a thoughtful judge, but he is irascible. And for I.B.M., he has certainly been difficult."

Whether on the I.B.M. case or other issues before him, critics have frequently accused Judge Edelstein of seeming overly sympathetic to Government lawyers. It is a loyalty, they say, forged during his early years spent working for the Justice Department in the late 1940's in jobs ranging from an assistant United States attorney for the Southern District to Assistant Attorney General.

In at least one case, the Federal appeals court in New York seemed to agree with such criticism. In a 1982 ruling, the court rebuked Judge Edelstein for "a usurpation of power" in his efforts to keep the I.B.M. antitrust suit alive even after the Justice Department dropped it.

A Willingness to Get Tough

Certainly, legal experts said, the judge has shown a willingness to get tough with corporate defendants of various stripes. In 1983, for example, he ordered the Danilow Pastry Company of Brooklyn, which had been convicted of price fixing, to give baked goods to community organizations and forced company employees to help carry this out at Danilow's expense.

Some legal experts and lawyers, including James I. Serota, a former prosecutor who helped bring the Government's case against I.B.M. in 1969, argues that Judge Edelstein is simply motivated by a strong commitment to seeing justice done.

"He is tough with everyone," Mr. Serota said. "That doesn't mean he's not a fair person. He just plays things strictly by the book."

But such defenses do little to quiet critics who contend that Judge Edelstein has pursued I.B.M. as if he were on a mission to take down a corporate giant.

After the Justice Department filed the second antitrust suit against I.B.M. in 1969, the case was not immediately assigned to a single judge. In 1971, Judge Edelstein, who had become Chief Judge of the Southern District and thus had the authority to assign cases, effectively assigned the case to himself, according to lawyers familiar with the proceedings.

Former Attorney General Nicholas deB. Katzenbach, who was I.B.M.'s general counsel at the time and oversaw the litigation with its team of Cravath, Swaine & Moore lawyers, remarked, "I think he wanted the I.B.M. case because it was a big case, and because he thought it would attract a lot of attention and would be a good way to finish a career."

Over the next 13 years, Judge Edelstein became famous for raging against the Cravath lawyers, including Mr. Barr.

During that period, Cravath tried twice to have Judge Edelstein step down from the case. Instead of citing behavior outside the courtroom -- the standard grounds for asking that a Federal judge remove himself from a case -- Cravath accused Judge Edelstein of personal prejudice against I.B.M. during the trial proceedings. Both efforts ultimately failed. (Cravath's third unsuccessful attempt occurred in 1989, when I.B.M. found itself back in Judge Edelstein's courtroom in a copyright lawsuit that the company had brought against a small engineering firm.)

Eleanor M. Fox, a professor at New York University Law School, said that Judge Edelstein had been tough on I.B.M. over the years in part because he apparently believed that the Government had made a strong case against the company, and felt that the Justice Department was "pulling the rug out from under him" by dropping the case in 1982.

I.B.M.'s supporters have not been so generous. "When the Government came in and wanted to dismiss the case," Mr. Katzenbach said, "it was though his life's work was going down the drain, and he didn't want that and he resisted that."

Now, the matter of the consent decree is left. Whether it is lifted, legal experts say, may hinge on whether Judge Edelstein stays on the case.

Last week, in a 50-page motion accompanied by reams of supporting documents, Mr. Barr attempted once again to have the judge remove himself from the case, citing the two sides' contentious history. And yesterday, I.B.M. filed its motion asking that the consent decree be vacated.

Judge Edelstein has not yet ruled on either motion.

Copyright 1994 The New York Times Company