The Ninth Circuit Court of Appeals on Monday reversed a 2011 dismissal of a class action lawsuit accusing Sony Computer Entertainment America LLC of issuing a firmware update that disabled other operating systems from being able to run on its PlayStation 3 console — a key feature that was promised in ads for the PS3.
In its Jan. 6 decision, the three-judge panel at the federal appellate court in San Francisco said the district court was wrong to dismiss five of the 15 claims against Sony.
They said that the plaintiffs provided “sufficient facts” when they alleged that the public was likely to be deceived by the statements made by Sony that the PlayStation 3 would have dual functionality, allowing users to use two different operating systems on the one machine.
“They allege that Sony’s misrepresentations at the time of the sale mischaracterized the dual functionality of the PS3 — and were likely to deceive members of the public — because Sony later restricted users to using either the other OS feature or accessing the PlayStation Network feature, but not both,” the panel wrote.
The plaintiffs said they made their assessment to purchase PS3 consoles based on statements made on Sony’s website, other articles they reviewed on the Internet, and statements made on the console itself.
“Plaintiffs allege that they suffered damages because they paid more for the PS3 than they would have otherwise because of the supposed dual functionality,” the panel wrote. “Plaintiffs’ damages were in the form of lost ‘premium’ payments.”
The appellate court also upheld the claim that Sony had violated California’s Unfair Competition Law.
“They could not have reasonably avoided this injury because they would have lost access to the PSN if they chose not to download the update which disabled the other OS feature,” the opinion said. “There are no countervailing benefits to consumers or competition that outweigh the substantial injury to consumers.”
The judges are sending the PS3 class action lawsuit back to the district court.
The plaintiffs allege that the PlayStation 3 was advertised by Sony in 2006, when it was first released, as having the capability of allowing customers to install Linux on their PS3s or other operating systems and even use the machines as their personal computers.
However, when Sony released a software update in 2010, this capability was disabled. Sony said it was necessary because they needed to protect the system from hackers and Sony’s intellectual property. However, the plaintiffs claim that the change was made so the electronics company could save money.
If PS3 owners opted not to install the update, it kept them from being able to access the PlayStation Network and kept them from using any new games as well as Blu-ray videos and other features.
The district court had dismissed the entire class action lawsuit with prejudice, meaning that they could not amend it further. U.S. District Judge Richard Seeborg argued that the plaintiffs had not proved that Sony’s alleged wrongdoing had created a liability for its customers.
“Plaintiffs sufficiently allege that Sony caused them substantial injury by charging a premium for the PS3’s dual functionality and then discontinuing access to both the other OS and the PSN features,” the panel explained.
Circuit Judges Michael Daly Hawkins, N. Randy Smith and Jacqueline H. Nguyen sat on the panel that reached Monday’s decision.
The plaintiffs are represented by Finkelstein Thompson LLP, Hausfeld LLP and Calvo Fisher & Jacob LLP, among others.
The PlayStation 3 OS Update Class Action Lawsuit is Anthony Ventura, et al. v. Sony Computer Entertainment America Inc., et al., Case No. 11-18066, in the U.S. Court of Appeals for the Ninth Circuit.
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