US SC dismisses suit against Microsoft over Xbox 360 ‘defect’

The US Supreme Court on Monday ruled in favour of Microsoft Corp which sought to fend off class action claims by Xbox 360 owners who said the popular videogame console gouges discs because of a design defect.

The court, in a unanimous 8-0 ruling, overturned a 2015 decision by the San Francisco-based 9th US Circuit Court of Appeals that allowed console owners to appeal the dismissal of their class action lawsuit by a federal judge in Seattle in 2012.

The Supreme Court thus gave Microsoft another chance to stop the class action lawsuit filed by owners of the Xbox 360 video game system.

The ruling on Monday said game owners could not use a procedural tactic to appeal a lower court decision denying them class action status. Such appeals typically aren't allowed until a lower court makes a final ruling on the merits of the case.
 
Business groups, including the US Chamber of Commerce, had urged the court to side with Microsoft. They said a ruling for the Xbox 360 owners would have made defending against class action lawsuits more expensive and pushed businesses to settle claims.

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.

Justice Ruth Bader Ginsburg, writing on behalf of the court, said such a move was not permitted because a voluntary dismissal of a lawsuit is not a final decision and thus cannot be appealed. The approach sought by the plaintiffs would undermine litigation rules ''designed to guard against piecemeal appeals'', Ginsburg wrote.

The plaintiffs instead have to litigate their claims individually and get a final judgment before they can appeal, Ginsburg said.

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 per cent of Xbox owners reported disc scratches, and that misuse was the cause.

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.

When a handful of Xbox 360 owners sued, a federal judge initially said the lawsuit couldn't proceed as a class action. An appeals court declined to consider an appeal of that decision. The Xbox 360 owners then asked the judge to dismiss their case, a procedural move designed to get the appeals court to weigh in. Microsoft said that shouldn't be allowed to happen.

Ginsburg's majority opinion was joined by Justices Anthony Kennedy, Stephen Breyer, Sonia Sotomayor and Elena Kagan.

Justice Clarence Thomas agreed with the outcome, but wrote separately to offer different reasons. He said the game owners no longer had a case at all against Microsoft once they agreed to dismiss their claims. Thomas was joined by Chief Justice John Roberts and Justice Samuel Alito.

Justice Neil Gorsuch did not participate in the case, which was argued before he was confirmed to the court.