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US Supreme Court Agrees To Hear Microsoft Appeal Over Xbox 360 Class Action Lawsuit

16 January 2016, 10:01 am EST By Ted Ranosa Tech Times
The U.S. Supreme Court has agreed to hear an appeal on a class action case filed against Microsoft by several Xbox 360 owners over a design defect on the game console that causes damages on game discs. The plaintiffs are challenging an earlier ruling by a lower court, which has denied their request for class certification.  ( Christian Petersen I Getty Images )

The U.S. Supreme Court announced on Friday that it has agreed to hear an appeal regarding a class action case filed by several Xbox 360 owners against Microsoft. The plaintiffs accuse the tech company of allowing a design defect on the video game console that causes game discs to be damaged when played.

The federal court said that it will review a ruling made by the Ninth Circuit Court of Appeals in March 2015 on the issue of whether the plaintiffs can challenge a lower court's decision to deny their request for class certification.

Class action claims can result in larger damages or a wider range of legal remedies compared to individual lawsuits that are often too expensive to pursue.

Under normal circumstances, interlocutory appeals such as that of the Xbox 360 owners would be denied. Other circuits have already refused to let lawyers challenge an order by a judge regarding class certification in this manner, but the appellate court's Ninth Circuit, as is it is currently framed, allowed the appeal to push through.

According to the class action suit, several units of the popular Xbox 360 game console are fitted with a faulty optical disc drive that is affected even by small vibrations. This defect allegedly causes video game discs to spin erratically when played, resulting in severe damaging that leaves the discs unusable.

Microsoft, however, contests that the class certification given to the plaintiffs was improper because only a small fraction of Xbox 360 owners (0.4 percent) reported having damaged discs, which were mainly caused by misuse on the part of the users.

The tech company pointed out that the case is crucial to the correct administration of the class device. Providing plaintiff lawyers with the ability to challenge every ruling of lower courts rejecting class certification will put significant pressure on companies to enter a settlement and choose to pay them a fee in order to make them go away.

Microsoft said the ruling by the Ninth Circuit is an attempt to make use of a "death knell" doctrine, which the Supreme Court had killed off in an earlier case.

In 1977, the high court rejected a concept during the Coopers & Lybrand v. Livesay case that would have allowed plaintiff lawyers to challenge rulings by lower courts, rendering lawsuits unsustainable simply because claimants would not be able to individually sue over small amounts.

The class action suit filed by the Xbox 360 owners was dismissed in a Seattle court by U.S. District Judge Ricardo Martinez in 2012. Martinez based his decision on a 2009 ruling where a judge hearing a similar case said that class certification is ruled out when there are not enough complaints.

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