So was Steve just making shit up? i.e., he won the negotiation because he was so full of shit that they didn't see any way to talk sense into him?
The Feds are unlikely, IMHO, to win the case. Here's something that Greg Sandoval and I wrote at the time the lawsuit was announced, and I think it holds up well today: http://news.cnet.com/8301-13578_3-57412861-38/