A procedural take on the Microsoft class action
Posted by Liz Surette on October 17, 2008For a class of plaintiffs commence a consumer class action in California, the named plaintiffs (those who will actually be in court litigating) must show that It is impracticable to bring all members of the class (those similarly situated–for example everyone who purchased an Xbox 360 in California and suffered a Red Ring of Death) before the court, that all members of the class share a substantially similar question law or fact, that the claims of the named plaintiffs are typical of the claims of the entire class, and that the named plaintiffs will fairly and adequately protect and represent the interests of that class.
It is surely safe to say that it would be impossible to haul everyone in California who was hit with a RROD into Sacremento County Superior Court–I can’t even begin to imagine the elbowing. Furthermore, all of those people would need to show one thing in order to prevail–that did Microsoft intentionally conceal the 50% chance of a RROD in order to sell consoles. In this way, the claims of the named plaintiffs are the same as the claims all other members of the class would have. Lastly, an exhausted Boston student attorney such as myself can hardly vouch for the named plaintiffs’ fair representation of the class, but I can only assume they meet this requirement because there are no foreseeable conflicts of interest between the named plaintiffs and the rest of the class–they all want the same thing essentially.
The California courts were chosen as the forum rather than the federal courts because of the state’s extensive comsumer protection laws, which feed into the image of the state as sympathetic to those ordinary working Joes who were wronged by a big corporation. Microsoft could choose to remove the suit to the federal courts which may be less consumer plaintiff-friendly, but California law would probably still govern. (Maybe some day I will teach you all about the Erie Doctrine that lays down the rules for which law governs federal cases. Then again, maybe not.)
This action was brought under The Consumers Legal Remedies Act of California which expressly prohibits the following unfair practices relating to this case:
“Representing that goods or services have…characteristics…which they do not have”
“Representing that goods or services are of a particular standard, quality, or grade…if they are of another”
“Advertising goods or services with intent not to sell them as advertised”
“Advertising goods or services with intent not to supply reasonably expectable demand, unless the advertisement discloses a limitation of quantity” (Okay, so that one isn’t exactly relevant to THIS analysis but it still deserves to be mentioned *cough*.)
If the plaintiffs are successful, they may receive actual damages (cost of replacement or repair), injunctive relief against Microsoft preventing them from engaging in such acts in the future, restitution of property, punitive damages, or any other remedy the court finds just and proper. The harms alleged in this case probably do not rise to the gross misconduct needed for a court to award punitive damages, and it does not appear that the plaintiffs are asking for such. Should the plaintiffs win, they will also be awarded the cost of legal fees automatically, whereas if Microsoft wins they will only receive legal fees if the plaintiffs’ suit was in bad faith.
The complaint cites several articles which contend that Microsoft knew that at least 50% of the units were defective on launch, but whether those articles are admissible is doubtful due to the hearsay rules–possibly a story for another day…
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Just a quick discussion re: Erie doctrine, because I’m kind of OCD about civil procedure– This isn’t an Erie doctrine issue, it’s a choice of law issue. Erie doctrine is simple– Federal court can use federal procedural rules, but it must apply the substantive law of the state in which is sits, subject to that state’s choice of law doctrine. The distinction between substantive and procedural is deceptively simple to state– will use of the rule effect the outcome of the case?
The choice of law issue could potentially still become an issue even if it is not removed to the Federal Courts. You can pretty much always raise choice of law if you can raise a colorable argument that the laws of another state should apply in an action.
“The Ninth Circuit has characterized California’s choice-of-law inquiry as a three-step process. First, a court must examine the substantive law both in the foreign jurisdiction and in California to determine if these laws differ as applied to the facts of the particular case. Next, if the laws differ as applied, then the court determines whether both jurisdictions have an interest in having their laws applied. Finally, if they both have such an interest, then there is a ‘true conflict,’ and the court employs the ‘comparative impairment’ approach to determine which jurisdiction’s interest would be more impaired if its policy were subordinated to the policy of the other. ‘The conflict should be resolved by applying the law of the jurisdiction whose interest would be more impaired if its law were not applied.’” In re Pizza Time Theatre Sec. Litigation, 112 F.R.D. 15, 19 (N.D.Cal. 1986) (citing Liew v. Official Receiver and Liquidator, 685 F.2d 1192, 1196 (9th Cir. 1982)).
In a class action like this, several states have an interest– XBox has a number of manufacturers in various regions, so the regions where the goods were manufactured obviously has an interest in ensuring that its manufacturers don’t produce faulty products. Washington has an interest because all business decisions relating to XBox probably come out of Redmond, and Washington has an interest in regulating its companies. In fact, California has no specific interest in this claim apart from protecting its own consumers– who may not be a majority of those who experienced the RROD.
Oh yeah, I meant to make the distinction between procedural and substantive law but I didn’t want to–um….complicate things
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