Supreme Court Could Be Leaning Toward Microsoft in Xbox Case

March 21, 2017, 6:18 PM UTC

U.S. Supreme Court justices expressed support on Tuesday for Microsoft’s bid to fend off class action claims by Xbox 360 owners who say the video game console gouges discs because of a design defect.

Microsoft (MSFT) told the court in oral arguments that the San Francisco-based 9th U.S. Circuit Court of Appeals’ 2015 ruling allowing console owners to appeal the dismissal of their class action lawsuit was unfair to defendants.

Typically parties cannot appeal a class certification ruling until the entire case has reached a conclusion. But the 9th Circuit allowed the console owners to voluntarily dismiss their lawsuit so they could immediately appeal the denial of a class certification.

Microsoft lawyer Jeff Fisher said defendants could not use this maneuver because they cannot voluntarily dismiss a lawsuit if they want to get an automatic appeal of a decision granting class certification.

Class action cases can lead to larger damages or broader remedies than individual lawsuits. The prospect of winning large damages in a class action can be the only way for consumers to find lawyers to take their cases, so a denial of this certification can effectively end some lawsuits.

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Justice Ruth Bader Ginsburg emerged as the harshest critic of the 9th Circuit ruling. She suggested allowing plaintiffs to manufacture a final judgment to trigger an automatic appeal could have negative repercussions, like permitting parties to skip over the district court on a legal question.

The Xbox console owners filed a proposed class action against Microsoft in federal court in 2011, saying the design of the console was defective and that its optical disc drive could not withstand even small vibrations. They said this caused game discs to spin out of control and become scratched even under normal playing conditions, making them unusable.

Microsoft has sold tens of millions of Xbox 360 consoles since introducing them in 2005.

The company said class certification was improper because just 0.4% of Xbox owners reported disc scratches, and that misuse was the cause. A federal judge in Seattle dismissed the class action claims in 2012.

The Supreme Court is expected to decide the case by the end of the term in June.

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