High Court Limits Class-Action Suits in Microsoft Ruling

The U.S. Supreme Court’s June 12 ruling in Microsoft v. Baker is an important victory for manufacturers because it could prevent certain types of class-action lawsuits and expensive piecemeal litigation.

In the underlying case, owners of Microsoft’s Xbox 360 sought to file a class-action lawsuit alleging a design defect in the game console. The District Court’s order said that class allegations could not be included in the complaint against Microsoft, and the 9th Circuit Court of Appeals denied the plaintiffs’ request to appeal that order. This meant that while Xbox 360 owners could not bring a class-action suit against Microsoft, they were free to pursue their individual claims. The Xbox owners decided to voluntarily dismiss their claims against Microsoft with prejudice and only challenge the District Court’s order that prevented them from pursuing a class-action suit.

The 9th Circuit Court of Appeals ruled that it had jurisdiction to hear the appeal challenging the striking of class allegations even though the order from the District Court was not a final decision by a lower court, as understood by Congress. As a result, the case was dismissed, effectively eliminating a controversy.

Congress granted federal courts of appeal authority to review a lower court’s decision when that decision was final. Said another way, Congress did not give the federal courts the authority to hear all disputed decisions of lower courts. The National Association of Manufacturers (NAM) has long argued for the faithful adherence to this general rule in order to avoid a backlog of piecemeal litigation at the federal courts on every matter taken up by lower courts. The NAM’s Legal Center filed amicus briefs in this matter urging the Court to affirm longstanding congressional intent.

The Supreme Court agreed, and Justice Ruth Bader Ginsberg in her majority opinion stated, “Congress chose the rulemaking process to settle the matter, and the rulemakers did so by adopting Rule 23(f )’s evenhanded prescription. It is not the prerogative of litigants or federal courts to disturb that settlement.” Furthermore, Ginsburg explained that a plaintiff could not transform an order into a final judgment simply by dismissing his or her claims with prejudice.

The Supreme Court’s ruling is exactly what the Legal Center called on the Court to do in its briefs: It preserves adherence to jurisdictional statutes enacted by Congress and prevents the development of multiple, piecemeal appeals from a single district court proceeding. We applaud Microsoft for fighting this case in the High Court and helping to preserve efficiency in the court system.

Patrick Forrest

Patrick Forrest

Vice President and Deputy General Counsel at National Association of Manufacturers
Patrick Forrest is the vice president and deputy general counsel for the National Association of Manufacturers (NAM). As part of the Manufacturers' Center for Legal Action, Forrest works to strengthen the NAM's ability to promote manufacturing policy objectives through litigation. Mr. Forrest's background includes legal, policy and government relations experience on a wide range of issues.
Patrick Forrest

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