Microsoft wins U.S. Supreme Court ruling in decade-old case over scratched Xbox 360 games

The Supreme Court issued a ruling on a lawsuit from 2007 over Microsoft’s Xbox 360. (Flickr Photo / Shaun Greiner)

Microsoft won a U.S. Supreme Court ruling in a complex case that goes back close to a decade, involving scratched Xbox 360 games.

In an opinion authored by Justice Ruth Bader Ginsburg, the Supreme Court kicked the case back down to a lower court, reversing a decision by the Ninth Circuit of Appeals largely siding with the gamers. The case has become less about the initial issue of scratched games and more about class action certification. To fully understand the decision, it is helpful to go through the history of the case.

(Wikimedia Photo)

In 2007, a group of gamers sued Microsoft, claiming the Xbox 360 console scratched their video games because of a product defect. Those individuals filed for class action status — meaning the plaintiffs would be considered as a group, with bigger legal consequences — but a federal judge in Seattle denied them class certification.

After filing another lawsuit in 2011, the plaintiffs tried, unsuccessfully, to get the Ninth Circuit Court of Appeals to review the decision on their class certification. The problem was, federal appeals courts typically can only review the final decisions of district courts. Although the plaintiffs in the lawsuit were denied class action status, the individual lawsuits, brought by people who said the Xbox 360 scratched their discs, lived on. That meant the appeals court couldn’t review them.

The plaintiffs argued the case only made sense with class action status because the damages to individuals’ games were negligible when compared with the cost of legal proceedings. The district court’s decision not to certify the plaintiffs as a class would have meant the end of the road, as happens with most cases filed as class actions.

Then the twist. In an unusual (but not unprecedented) move, the individual plaintiffs asked the courts to voluntarily “dismiss” their cases which, in legal terms, is a final decision. Of course, legal terms aren’t always common-sense terms. In this case, the plaintiffs dismissed their claims under the condition that they could be revived if the appeals court granted class-action status.

The legal rigmarole resulted in a Ninth Circuit Court of Appeals decision that largely sided with the plaintiffs.

Microsoft then asked the Supreme Court to review the case and determine whether the loophole is legally permissible. That’s how we got to today’s decision from the Supreme Court.

The precise question considered was, “Whether a federal court of appeals has jurisdiction under both Article III and 28 U. S. C. §1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice.” The Supreme Court held that the appeals court did not have jurisdiction to rule on class action certification following plaintiffs’ voluntary dismissal of their claims as that move did not represent a “final decision” in the case.

Justices Anthony Kennedy, Stephen Breyer, Sonia Sotomayor, and Elena Kagan joined Ginsburg’s opinion. Justice Clarence Thomas filed a “concurring opinion” in the case, and he was joined by justices John Roberts and Samuel Alito. Newly confirmed judge Neil Gorsuch did not participate in the case