Baker v. Microsoft Corp.
| Citation | 797 F.3d 607 |
| Decision Date | 18 March 2015 |
| Docket Number | No. 12–35946.,12–35946. |
| Parties | Seth BAKER ; Matthew Danzig; James Jarrett; Nathan Marlow; Mark Risk, individually and on behalf of all others similarly situated, Plaintiffs–Appellants, v. MICROSOFT CORPORATION, a Washington Corporation, Defendant–Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Benjamin Gould (argued), Mark A. Griffin, and Amy C. Williams–Derry, Keller Rohrback LLP, Seattle, WA; Paul L. Stritmatter, Stritmatter Kessler Whelan Coluccio, Hoquiam, WA; Brad J. Moore, Stritmatter Kessler Whelan Coluccio, Seattle, WA; Robert L. Esensten, Wasserman, Comden, Casselman & Esensten, LLP, Tarzana, CA; Darren T. Kaplan, Darren Kaplan Law Firm, P.C., New York, N.Y.; Gregory E. Keller, Chitwood Harley Harnes LLP, Atlanta, GA; and Jeffrey M. Ostrow, Kopelowitz Ostrow Ferguson Weiselberg Keechl, Fort Lauderdale, FL, for Plaintiffs–Appellants.
Stephen M. Rummage (argued), Frederick B. Burnside, and John Goldmark, Davis Wright Tremaine LLP, Seattle, WA; Charles B. Casper, Patrick T Ryan, Jennifer E. Canfield, Montgomery, McCracken, Walker & Rhoads, LLP, Philadelphia, PA, for Defendant–Appellee.
Appeal from the United States District Court for the Western District of Washington, Ricardo S. Martinez, District Judge, Presiding. D.C. No. 2:11–cv–00722–RSM.
Before: MICHAEL DALY HAWKINS, JOHNNIE B. RAWLINSON, and CARLOS T. BEA, Circuit Judges.
ORDER
The slip opinion dated March 18, 2015 is hereby amended as follows:
Page 11 —insert the following footnote at the end of the first paragraph:
With this amendment, Judges Rawlinson and Bea voted, and Judge Hawkins recommended, to deny the Petition for En Banc Rehearing.
The full court has been advised of the Petition for En Banc Rehearing, and no judge of the court has requested a vote.
Microsoft Corporation's Petition for En Banc Rehearing, filed on April 1, 2015, is DENIED. No further petitions for rehearing or rehearing en banc will be accepted.
Plaintiffs, a putative class of owners of Microsoft Corporation's (Microsoft) Xbox 360® video game console (Xbox), appeal from the stipulated dismissal with prejudice of their lawsuit and from the order striking their class allegations. In striking the class allegations, the district court deferred to an earlier class certification denial order involving a similar putative class.See Baker v. Microsoft Corp., 851 F.Supp.2d 1274, 1276 (W.D.Wash.2012) (citing In re Microsoft Xbox 360 Scratched Disc Litig., No. C07–1121, 2009 WL 10219350 (W.D.Wash. Oct. 5, 2009) (Scratched Disc Litigation )). We have jurisdiction pursuant to 28 U.S.C. § 1291 and reverse the order striking the class action allegations because the district court misapplied the law as established in Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1173 (9th Cir.2010), constituting an abuse of discretion.
This case involves an alleged design defect in the Xbox console that gouges game discs. See Baker, 851 F.Supp.2d at 1275. Plaintiffs specifically alleged that the Xbox optical disc drive is unable to withstand even the smallest of vibrations, and that during normal game playing conditions discs spin out of control and crash into internal console components, resulting in scratched discs that are rendered permanently unplayable. Microsoft countered that the overwhelming majority of Xboxes do not manifest the alleged defect—only 0.4% of Xbox owners have reported disc scratching—and that the cause of any disc scratching is consumer misuse, not a product defect.
In 2007, other Xbox owners sued Microsoft, alleging claims similar to those asserted in this case. These cases were consolidated before United States District Judge John Coughenour. See Scratched Disc Litig., 2009 WL 10219350, at *1–*2. Judge Coughenour denied class certification on the basis that individual issues of fact and law predominated over common issues of fact and law. See id. at *5–*6.
Judge Coughenour relied heavily on the reasoning from another district court decision, Gable v. Land Rover N. Am., Inc., No. CV07–0376, 2008 WL 4441960 (C.D.Cal. Sept. 29, 2008), rev'd, Wolin, 617 F.3d at 1176. See Scratched Disc Litig., 2009 WL 10219350, at *6. The putative class action plaintiffs in Gable alleged that the Land Rover LR3 had a defect in its alignment that caused uneven, premature tire wear. See Gable, 2008 WL 4441960, at *1.1 In opposing class certification, defendant Land Rover argued that because the alleged defect did not manifest in every vehicle, an individual inquiry would be required to ascertain whether any given class member experienced the defect. See id. at *3. Land Rover also asserted that because tires have a limited useful life, an individual inquiry would be required to determine whether any given tire wear resulted from a defect and not another cause, such as individual driving habits. See id. The district court agreed with Land Rover, and denied class certification because the plaintiffs failed to demonstrate that the purported defect manifested in a majority of vehicles. See id. at *4–*5. The district court did not address Land Rover's causation argument.
In Scratched Disc Litigation, Judge Coughenour reasoned that, like the Land Rover owners in Gable , most Xbox owners have not experienced the purported defect. See Scratched Disc Litig., 2009 WL 10219350, at *7. Judge Coughenour focused on the fact that the defect asserted by the Xbox plaintiffs “actually manifest[ed] in fewer than one percent” of the total number of consoles purchased. Id. at *6. The vast number of satisfied purchasers who experienced no defect before replacing the rapidly obsolescing game systems were determined to have received the benefit of the bargain. See id. Because not all purchasers sustained damages under this rationale, Judge Coughenour ruled that the need to consider damages on an individual basis “preclude[d] the certification” of the class of Xbox owners.Id.
Judge Coughenour rejected the Xbox plaintiffs' attempt to distinguish Gable on the basis that the design defect existed in every Xbox console and could only stem from one cause, whereas in Gable “only a fraction of the proposed class members had actually experienced the defect and because misalignment could have many different causes.” Id. Judge Coughenour observed that the Xbox plaintiffs and the Gable plaintiffs both asserted a defect involving a common design flaw. The circumstance that prevented class certification in both cases was the lack of uniform manifestation of the acknowledged design flaw. See id.
Although the district court in Gable refrained from engaging in an exhaustive causation analysis, Judge Coughenour nevertheless cited Gable for the notion that individual issues of causation predominate because differing causes may have produced the same defect. See id. According to Judge Coughenour, “[E]ven if one link of [the causation] chain is a design defect, the other links are unique to each plaintiff and require individual attention....” Id. The required individual attention to issues of law and fact ruled out class certification. See id.
Ten months after dismissal of Scratched Disc Litigation, we reversed the Gable decision upon which Judge Coughenour had so heavily relied in denying class certification. See Wolin, 617 F.3d at 1170, 1176. We concluded that the district court in Gable “erred when it concluded, without discussion, that certification is inappropriate because [plaintiffs] did not prove that the defect manifested in a majority of the class's vehicles....” Id. at 1173. Indeed, in the past, “we have held that proof of the manifestation of a defect is not a prerequisite to class certification.” Id. (citing Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir.1975) ). We observed that rather than challenging the predominance of common legal and factual issues, Land Rover was actually arguing the merits of the case. See id. We concluded that while “individual factors may affect premature tire wear, they do not affect whether the vehicles were sold with an alignment defect.” Id.
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