Microsoft Corp. v. Baker

137 S.Ct. 1702 (2017)

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Nature of the Case

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Facts

Baker (Ps) filed this lawsuit as a nationwide class of Xbox owners based on design defect that the Xbox scratched (and thus destroyed) game discs during normal game-playing conditions. In an earlier attempt at class certification in a prior suit, the District Court denied class certification, holding that individual issues of damages and causation predominated over common issues. The plaintiffs, in the earlier suit, petitioned the Ninth Circuit under Rule 23(f) for leave to appeal the class-certification denial, but the Ninth Circuit denied the request. The court in this suit determined that comity required adherence to the earlier certification denial and therefore struck Ps' class allegations. Invoking Rule 23(f), Ps petitioned the Ninth Circuit for permission to appeal that ruling. Ps argued that interlocutory review was appropriate in this case because the District Court’s order striking the class allegations created a “death-knell situation”: The “small size of their claims made it economically irrational to bear the cost of litigating the case to final judgment,” so the order would “effectively kill the case.” The Ninth Circuit denied the petition. P then had several options. They could have settled their individual claims or petitioned the District Court, pursuant to §1292(b), to certify the interlocutory order for appeal. They could also have proceeded to litigate their case, hoping the District Court could later reverse course and certify the proposed class. Worst case Ps could have litigated the case to final judgment and then appealed. Ps moved to dismiss their case with prejudice. In Ps’ view, the voluntary dismissal enabled them “to pursue their individual claims or to pursue relief solely on behalf of the class, should the certification decision be reversed.” The District Court granted the stipulated motion to dismiss, Ps appealed. They challenged only the District Court’s interlocutory order striking their class allegations, not the dismissal order which they invited. The Ninth Circuit held it had jurisdiction to entertain the appeal under §1291. Because the stipulated dismissal “did not involve a settlement,” the court reasoned, it was “‘a sufficiently adverse-and thus appealable-final decision’” under §1291. The Ninth Circuit held that the District Court had abused its discretion by misapplying the comity doctrine. Whether a class should be certified, the court said, was a question for remand, “better addressed if and when P moved for class certification.” The Supreme Court granted certiorari.