Seth Baker v. Microsoft Corporation
797 F.3d 607
9th Cir.2015Background
- Plaintiffs (putative class of Xbox 360 owners) sued Microsoft alleging a design defect in the Xbox optical disc drive that scratches game discs, rendering them unplayable.
- An earlier consolidated action (Scratched Disc Litigation) in the Western District of Washington denied class certification, relying in part on a district court decision in Gable that emphasized individual causation issues.
- The Ninth Circuit later reversed Gable in Wolin, holding that proof of manifestation of a defect is not a prerequisite to class certification and that common issues (existence of a design defect, warranty breach, unjust enrichment) can predominate.
- In Baker v. Microsoft, the district court struck the class allegations and approved the parties’ stipulation dismissing the case with prejudice, applying a comity-based rebuttable-presumption approach (adopted from ALI) to defer to the earlier denial.
- Plaintiffs appealed after stipulating to dismissal with prejudice; the Ninth Circuit considered (1) whether it had jurisdiction over that appeal and (2) whether the district court abused its discretion by striking class allegations and deferring to the earlier denial despite Wolin.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction after stipulated dismissal with prejudice | Stipulated dismissal after class-allegation-striking leaves an adverse, appealable final judgment | Stipulation to dismiss with prejudice does not create an appealable final judgment | Court held it has jurisdiction: stipulated dismissal with prejudice (absent settlement) is appealable (following Berger) |
| Validity of striking class allegations by deferring to earlier denial (comity) | District court misapplied Wolin; common questions (defect, warranty breach) are susceptible to classwide proof so comity should not bar class allegations | Earlier denial (Scratched Disc Litigation) justified comity-based deference; ALI presumption supported striking | Reversed: district court abused discretion by deferring to prior decision because Wolin controls and undermines the earlier causation rationale |
| Predominance / individual causation | Manifestation timing or frequency affects damages, not predominance; proof of manifestation not required for certification (per Wolin/Blackie) | Because defect manifests in a small fraction and other causes (misuse) exist, individual causation predominates and precludes class treatment | Held for plaintiffs on legal standard: individual manifestations relate to damages not whether consoles were sold with a defect; district court erred to resolve merits and strike allegations |
| Proper approach to comity between district courts (concurrence) | (Concurrence) Adopt ALI’s rebuttable-presumption framework but allow rebuttal by change in law, changed facts, or clear error; review for abuse of discretion | Microsoft urged deference to earlier denial without treating Wolin as rebutsing precedent | Majority did not adopt full ALI framework; concurrence would adopt a rebuttable-presumption rule and found presumption rebutted here; the panel reversed on narrower ground (misapplication of Wolin) |
Key Cases Cited
- Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168 (9th Cir. 2010) (design-defect class may be certified; manifestation proof not prerequisite)
- Blackie v. Barrack, 524 F.2d 891 (9th Cir. 1975) (proof of defect manifestation is not required for class certification)
- Smith v. Bayer Corp., 131 S. Ct. 2368 (U.S. 2011) (unnamed putative class members cannot be bound by earlier denial of certification; courts should apply comity principles)
- Berger v. Home Depot USA, 741 F.3d 1061 (9th Cir. 2014) (stipulated dismissal with prejudice following denial of class certification remains an adverse, appealable judgment)