July 21, 2015 Update: On July 20, 2015, the Ninth Circuit Court of Appeals amended its March 18, 2015, opinion to add a footnote supporting the conclusion that it had jurisdiction because a stipulated dismissal is an appealable judgment.  The amended opinion can be accessed here.

The Ninth Circuit Court of Appeals recently reversed a district court’s decision to strike the class action allegations in Baker v. Microsoft Corp., No. 12-35946, 2015 U.S. App. LEXIS 4317 (9th Cir. Mar. 18, 2015).  In Baker, the putative class alleged that a design defect in Xbox 360 video game consoles caused the consoles to malfunction and scratch game discs – although only 0.4% of Xbox console owners reported such problems.  Id. at *1-4.  The majority opinion held that the district court should have followed an earlier Ninth Circuit decision rejecting the notion that individual manifestations of a defect preclude resolution of claims on a class-wide basis.  Id., citing Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168 (9th Cir. 2010).  “[P]roof that [a alleged design defect] caused individual damages is not necessary . . . Rather, plaintiffs’ breach of express warranty claim presents a common factual question – is there a defect? – and a common mixed question of law and fact – does that defect breach the express warranty?”  Baker, 2015 U.S. App. LEXIS 4317 at *16-17.  Notably, the Ninth Circuit’s decision only determined that the district court misapplied the law in striking the class action allegations from the complaint.  Id. at *20.  The decision expressly disclaimed any determination of whether the issues would be best decided on a class-basis or whether class certification should be granted.  Id. 

The concurring opinion interestingly reasoned that the case should have instead been decided on principles on comity.  Id. at *21-22.  The district court’s decision to strike the class action allegations was based on two prior district court decisions that denied class certification in similar cases.  See In re Microsoft Xbox 360 Scratched Disc Litigation, No. C07-1121, 2009 U.S. Dist. LEXIS 109075 (W.D. Wash. Oct. 5, 2009) (need to consider damages on individual basis and lack of any uniform manifestation of the common design flaw in Xbox consoles prevented class certification); Gable v. LandRover N. Am., Inc., No. CV07-0376, 2008 U.S. Dist. LEXIS 82996 (C.D. Cal. Sept. 29, 2008), rev’d Wolin, 617 F.3d at 1168 (class certification denied where putative class failed to demonstrate that the alleged alignment defect manifested in a majority of vehicles).  The district court reasoned that since no Ninth Circuit or Supreme Court precedent articulated how comity was to operate, it could adopt the American Law Institute rule, which provides that a different district judge ruling on the same subject matter be given a rebuttable presumption of correctness, to determine that the presumption (that class certification should be denied) had not been rebutted.  Baker, 2015 U.S. App. LEXIS 4317 at *9-10.

The concurring Ninth Circuit justice suggested that a district court’s ruling to deny class certification for a similar class should create a rebuttable presumption that the litigation is not amenable to class action treatment – but that the presumption was rebutted in this case when an earlier Ninth Circuit opinion changed the law.  Id. at *22, *29.  The concurring judge proposed that district courts adopt his approach to comity to resolve (or at least reduce) the possibility of repeated certification efforts by a putative class of plaintiffs, while ensuring that putative class members who have new evidence or law in favor of certification not be foreclosed by the failed efforts of their predecessors.  Id. at *33.

For a more detailed explanation of the Ninth Circuit’s reasoning, and the concurring justice’s suggestion that the Ninth Circuit needs to take on the issue of comity, click here.