Xbox Class Cert. Remains Denied After Microsoft Appeals to SCOTUS

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The U.S. Supreme Court says plaintiffs in an Xbox class action lawsuit can’t use a procedural tactic to get around denial of Class certification.

In a unanimous decision, the U.S. Supreme Court concluded that plaintiffs in the Xbox class action lawsuit cannot seek appeal of the trial court’s denial of Class certification after they voluntarily dismissed their own claims.

Plaintiff Seth Baker and others launched this Xbox class action lawsuit in 2011 over allegations that the Xbox 360 video game console has a defect that causes it to scratch game discs.

U.S. District Court Judge Ricardo S. Martinez denied the plaintiffs’ bid for Class certification in 2012. Citing a 2009 denial in a similar Xbox class action lawsuit, the judge determined the plaintiffs’ claims raised predominantly individual issues, not common issues shared across the proposed Class.

Generally, a trial court’s decisions on subordinate issues like Class certification are not subject to appeal until the court has reached a final decision on the merits of the whole case.

The plaintiffs sought to work around that restriction by voluntarily dismissing their own claims. After their motion for Class certification was denied, the plaintiffs withdrew their own individual claims against Microsoft – ostensibly in an attempt to retroactively make the certification denial a final decision suitable for appeal.

The Ninth Circuit agreed to hear the appeal, and in 2015 it reversed the trial court’s denial of Class certification. The appeals court said that issues like whether the Xbox was defective and whether such defects constitute a breach of warranty are indeed common to the whole proposed Class.

Microsoft then appealed that decision to the Supreme Court. The company argued that not only should the Ninth Circuit have left the denial of certification in place, it should have declined to hear the appeal in the first place.

In reversing the Ninth Circuit’s decision, all nine justices joined in the Court’s final decision, though they parted ways on the rationale behind it. In her majority opinion, Justice Ruth Bader Ginsburg said that allowing parties to get to the appeals court by voluntarily dismissing their claims would invite “protracted litigation and piecemeal appeals.”

The tactic, if allowed, would also be available only to plaintiffs and not to defendants, who are not in a position to unilaterally dismiss any claims.

Such a procedural disparity could be grossly unfair to defendants, Justice Ginsburg said, especially on an issue like Class certification that can make a significant difference in the relative strengths of each party. Class certification gives plaintiffs vastly more bargaining leverage against defendants, and it tends to lead to more plaintiff-friendly settlements.

Justice Robert Thomas wrote a concurring opinion concluding that the plaintiffs gave up any right to appeal that they may have had when they voluntarily dismissed their own claims. The dismissal left them with no remaining issue against Microsoft at all, he reasoned.

The plaintiffs are represented by Brendan Maher, Peter Stris, Daniel L. Geyser, Radha A. Pathak, Dana Berkowitz, Douglas D. Geyser, Victor O’Connell and Thomas E. Logan of Stris & Maher LLP; Darren T. Kaplan of Stueve Siegel Hanson LLP; Robert L. Esensten of Esenseten Law; Jeffrey M. Ostrow and Jonathan M. Streisfeld of Kopelowitz Ostrow Ferguson Weiselberg Gilbert PA; Mark A. Griffin, Amy Williams-Derry and Benjamin Gould of Keller Rohrback LLP; and Paul L. Stritmatter and Bradley J. Moore of Stritmatter Kessler Whelan Koehler Moore Kahler.

The Xbox Scratched Disc Class Action Lawsuit is Microsoft Corp. v. Seth Baker, et al., Case No. 15-457, in the Supreme Court of the United States.