Xbox Owners Face Skeptics on Supreme Court Left

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By Perry Cooper

Xbox gamers in a product liability suit faced tough questions from the U.S. Supreme Court March 21 about how they were able to get an immediate appeal of an adverse class status ruling by voluntarily dismissing their case ( Microsoft Corp. v. Baker, U.S., No. 15-457, argued 3/21/17 ).

The toughest questions came from the justices the gamers need most on their team: those who often side with plaintiffs.

Justice Ruth Bader Ginsburg in particular seemed uncomfortable with the strategy the Xbox owners used to get a second shot at appellate review, after the lower court refused to let them proceed as a class in their suit over gaming consoles that allegedly destroy discs.

“This device seems to be just a way to get around 23(f),” Ginsburg said. She referred to Federal Rule of Civil Procedure 23(f), which gives appellate courts the discretion to immediately review certification decisions—appeals they rarely accept.

The class certification decision is critical to consumers’ ability to bring small-value claims. It allows plaintiffs to band together—here, the owners of more than 25 million Xbox units sold—to sue companies for wrongdoing when it wouldn’t make financial sense for them to sue individually.

Chief Justice Roberts and the other conservative justices also gave the plaintiffs a hard time. Roberts asked what grounds the plaintiffs had to appeal when they were the ones who asked for their case to be dismissed in the first place.

Potential for Abuse?

Ginsburg seemed especially concerned about the plaintiffs’ practice of voluntarily dismissing their suit to create a final judgment that could be immediately appealed.

By doing so, plaintiffs could bypass Rule 23(f) entirely, appealing every intermediate decision they didn’t like, Ginsburg said. This, in turn, could cause litigation to go on and on.

Justices may ask pointed questions to play devil’s advocate, but Ginsburg wrote an opinion last term criticizing another class-action procedural tactic—one employed by the defense bar.

In Campbell-Ewald Co. v. Gomez, the court barred defendants from paying off lead plaintiffs to defeat class cases.

Justice Stephen G. Breyer followed Ginsburg’s lead at oral argument, asking if “anything terrible would happen” if the court found in favor of Xbox-maker Microsoft Corp. and barred the voluntary dismissal strategy.

Counsel for the Xbox owners, Peter K. Stris of Stris & Maher LLP in Los Angeles, took a different tack, assuring Ginsburg and Breyer that siding with the plaintiffs wouldn’t lead to abuse of the appellate process.

Stris said that allowing plaintiffs to—in words that you would expect to come from Microsoft’s counsel—"manufacture finality” to get another shot at immediate appeal actually makes class actions more efficient.

It makes more sense to decide class certification right away than to let a named plaintiff litigate her individual claims to the end and then appeal the certification decision, he said.

Otherwise “small dollar value individual claims” will be “abandoned without regard to merit,” Stris said.

Jeffrey Fisher of Stanford, Calif., arguing for Microsoft, told the justices that the drafters of Rule 23(f) considered these sorts of appeals very carefully and ended up with a rule that only allowed for discretionary appeal.

But Stris said Rule 23(f) doesn’t bar the voluntary dismissal tactic, and any changes “should be done through rulemaking,” he said.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

For More Information

Transcript available at http://src.bna.com/ncl.

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