Baker v. Microsoft Corporation: Game Companies Beware, Ninth Circuit Court Of Appeals Decision May Make It More Difficult To Defeat Class Actions

A Quick Overview

The Ninth Circuit Court of Appeals recently reversed a district court's decision to strike the class action allegations of a putative class action against Microsoft.1 The Ninth Circuit's decision means that the district court must reconsider whether to allow the case to proceed as a class action. Because the decision as to whether to certify a class generally determines whether a class action will proceed, the Ninth Circuit's decision is an important one for game companies, which are often confronted with class action lawsuits.

The Baker lawsuit alleged that a design defect in Xbox 360 video game consoles caused the consoles to malfunction and scratch game discs―although only 0.4% of Xbox console owners reported such problems.2 The majority opinion held that the district court misapplied the law and should have followed an earlier Ninth Circuit decision rejecting the notion that individual manifestations of a defect preclude resolution of claims on a class-wide basis.3 Rather, the majority held, where a lawsuit presents issues as to whether a defect exists and whether the defect breached an express warranty that are common to all of the would-be members of the class, proof that the alleged defect caused any damages to any individual in the class is not necessary for a class action to be certified.4

The takeaway for game companies? The Ninth Circuit's decision in Baker v. Microsoft isn't a road map for obtaining class certification in defective product cases, but it may smooth the path to certification in such cases, and thereby encourage more class actions. On the other hand, companies may give greater attention to limiting or disclaiming warranties, in order to avoid the kind of claims that the decision addresses.

If you want a more detailed explanation of the Ninth Circuit's reasoning, and the concurring judge's suggestion that the Ninth Circuit needs to take on the issue of "comity" and what it means for class action lawsuits, read on.

The Gory Details

The district court's decision to strike the class action allegations was based on two prior district court decisions that denied class certification in similar cases. In Gable v. LandRover N. Am., Inc.,5 the putative class action plaintiffs alleged that the defendant's vehicles had a defect in their alignment that caused uneven and premature tire wear. The district court denied class certification because the plaintiffs failed to demonstrate that the purported defect...