ATTACHMENT - seattlepi.comXbox 360 video game console, which retails between $299 and $479. Xbox 360...

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PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION AND FOR APPLICATION OF WASHINGTON LAW (Master Cause No. 07-cv-1121-JCC)

LAW OFFICES OF

KEL L E R ROHR B A C K L.L.P . 1201 THIRD AVENUE, SUITE 3200

SEATTLE, WASHINGTON 98101-3052 T E L E P H O N E : ( 2 0 6 ) 6 2 3 - 1 9 0 0 F A C S I M I L E : ( 2 0 6 ) 6 2 3 - 3 3 8 4

The Honorable John C. Coughenour

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

IN RE MICROSOFT XBOX 360 SCRATCHED DISC LITIGATION

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Master Cause No. 07-cv-1121-JCC

THIS DOCUMENT RELATES TO: ALL ACTIONS

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PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION AND FOR APPLICATION OF WASHINGTON LAW Note on Motion Calendar: April 22, 2009 ORAL ARGUMENT REQUESTED

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Table of Contents I. INTRODUCTION ............................................................................................................ 1

II. STATEMENT OF FACTS ............................................................................................... 2

A. Plaintiffs Seek to Certify a Nationwide Class and Subclass................................. 2

B. The Xbox 360 Was Launched in November 2005 with an Express Warranty. .............................................................................................................. 2

C. Optical Disc Drives (ODDs) are Common in Consumer Products....................... 4

D. The Xbox 360 Was Defectively Designed Under Microsoft’s Defective Specifications. ...................................................................................... 5

E. Microsoft Discovered Prior to Launch that the ODD Scratches Game Discs. .......................................................................................................... 7

F. Microsoft Rejected Three Possible Solutions to its Design Defect. ..................... 8

G. Microsoft Has Received Thousands of Reports of Scratched Discs..................... 9

H. The Xbox 360 Manual and Sticker Do Not Adequately Warn of the Product Defect. ................................................................................................... 10

I. Microsoft Has Turned the Xbox Defective Design into a Profit Generator............................................................................................................. 11

III. ARGUMENT.................................................................................................................. 12

A. This Action is Ideally Suited for Class Action Treatment.................................. 12

B. Plaintiffs Satisfy the Requirements of Rule 23(a). ............................................. 13

1. The Class Is So Numerous That Joinder Is Impracticable...................... 14

2. There are Common Questions of Law and Fact for the Classes..................................................................................................... 14

3. The Class Representatives’ Claims Are Typical of the Classes..................................................................................................... 16

4. Plaintiffs Will Fairly and Adequately Protect the Interests of the Class.............................................................................................. 17

C. Plaintiffs’ Claims Should Be Certified Pursuant to Rule 23(b)(3). .................... 19

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1. Common Issues Predominate.................................................................. 19

2. Class Adjudication is a Superior Method of Resolving These Claims........................................................................................... 23

D. Choice of Law Issues Do Not Prevent Certification........................................... 25

1. Washington Law Applies to Plaintiffs’ Tort Claims. ............................. 26

a. Application of Washington Law is Constitutional...................... 26

b. Choice of Law Analysis Supports the Application of Washington Law..................................................................... 28

(i) Where the Injury Occurred ............................................. 29

(ii) Where the Conduct Causing the Injury Occurred.......................................................................... 30

(iii) The Residence or Domicile of the Parties....................... 31

(iv) Where the Parties’ Relationship Is Centered .................. 32

2. Application of Restatement Section 148 Does Not Alter This Analysis. ......................................................................................... 33

a. The Choice of Law Provision Does Not Change This Analysis. ............................................................................. 34

a. The Court Need Not Reach the Second Prong............................ 35

III. CONCLUSION............................................................................................................... 36

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Table of Authorities Federal Cases

Ali v. Ashcroft, 346 F.3d 873 (9th Cir. 2003) ............................................................................. 13

Allstate Ins. Co. v. Hague, 449 U.S. 302 (1981)......................................................................... 26

Ballard v. Equifax Check Servs., 186 F.R.D. 589 (E.D. Cal. 1999) ........................................... 24

Blackie v. Barrack, 524 F.2d 891 (9th Cir. 1975)................................................................. 17, 23

Brewer v. Dodson Aviation, 447 F. Supp. 2d 1166 (W.D. Wash. 2006) ........................ 31, 32, 36

Califano v. Yamasaki, 442 U.S. 682 (1979). .............................................................................. 13

Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996)......................................................... 25

Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005) ............................................ 13, 15

Chin v. Chrysler Corp., 182 F.R.D. 448 (D.N.J. 1998) .............................................................. 25

Connor v. Automated Accounts, Inc., 202 F.R.D. 265 (E.D. Wash. 2001)................................. 23

Dal Ponte v. Am. Mortg. Exp. Corp., No. 04-2152, 2006 WL 2403982 (D.N.J. Aug. 17, 2006) ...................................................................................................................... 26

Dukes v. Wal-Mart, Inc., 509 F.3d 1168 (9th Cir. 2007).......................................... 14, 15, 16, 24

Epstein v. MCA, Inc., 50 F.3d 644 (9th Cir. 1995) ..................................................................... 25

Fields v. Legacy Health Sys., 413 F.3d 943 (9th Cir. 2005)....................................................... 28

Gable v. Land Rover North America, Inc., No. 07-0376, 2008 WL 4441960 (C.D. Cal. Sept. 29, 2008)............................................................................................................... 22

Grove v. Principal Mut. Life Ins. Co., 14 F. Supp. 2d 1101 (S.D. Iowa 1998) .......................... 26

Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) .................................................. passim

Hanson v. Ticket Track, Inc., 213 F.R.D. 412 (W.D. Wash. 2003)............................................ 16

In re Ford Motor Co. Ignition Switch Prods. Liability Litig., 174 F.R.D. 332 (D.N.J. 1997)......................................................................................................................... 25

In re Gen. Motors Corp. Dex-Cool Prods. Liability Litig., 241 F.R.D. 305 (S.D. Ill. 2007)................................................................................................................................ 25

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Kelley, et al. v. Microsoft Corp., 251 F.R.D. 544 (W.D. Wash. 2008)................................ passim

Kelley, et al. v. Microsoft Corp., No. 08-80030 (9th Cir. Apr. 21, 2008) .................................. 26

Lerwill v. Inflight Motion Pictures, Inc., 582 F.2d 507 (9th Cir. 1978) ..................................... 18

Local Joint Executive Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152 (9th Cir. 2001) ................................................................................ 19, 24

Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994 (9th Cir. 2007) ......................................... 14

Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718 (9th Cir. 2007) ........................................ 16

Mortimore v. FDIC, 197 F.R.D. 432 (W.D. Wash. 2000).............................................. 15, 16, 17

Patton v. Cox, 276 F.3d 493 (9th Cir. 2002)............................................................................... 28

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) ........................................................ 26, 27

Roshandel v. Chertoff, 554 F. Supp. 2d 1194 (W.D. Wash. 2008)............................................. 13

Smith v. Univ. of Wash. Law Sch., 2 F. Supp. 2d 1324 (W.D. Wash. 1998) ........................ 15, 17

Staton v. Boeing, 327 F.3d 938 (9th Cir. 2003) .......................................................................... 14

Valentino v. Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996)............................................... 19

Windham v. Am. Brands, Inc., 565 F.2d 59 (4th Cir. 1977) ....................................................... 23

State Cases

Burnside v. Simpson Paper Co., 123 Wn.2d 93, 864 P.2d 937 (1994)....................................... 28

Haberman v. Wash. Pub. Power Supply Sys., 109 Wn.2d 107, 744 P.2d 1032 (1987).................................................................................................................................... 34

Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 170 P.3d 10 (2007).......................................................................................................... 21, 33

Johnson v. Spider Staging Corp., 87 Wn.2d 577, 555 P.2d 997 (1976).............................. passim

McKee v. AT&T Corp., 164 Wn.2d 372, 191 P.3d 845 (2008)................................................... 35

Pickett v. Holland Am. Line-Westours, Inc., 101 Wn. App. 901, 6 P.3d 63 (2000) ............. 22, 28

Schnall v. AT&T Wireless Servs., Inc., 139 Wn. App. 280, 161 P.3d 395 (2007)............... passim

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Tex. Enters., Inc. v. Brockway Standard, Inc., 110 Wn. App. 197, 39 P.3d 362 (2002).................................................................................................................................... 15

Zenaida-Garcia v. Recovery Sys. Tech., Inc., 128 Wn. App. 256, 115 P.3d 1017 (2005)............................................................................................................................. passim

Federal Statutes

15 U.S.C. § 2310(d)(1) ................................................................................................................. 1

State Statutes

RCW 19.86 ............................................................................................................................. 1, 21

RCW 7.72 ............................................................................................................................... 1, 21

RCW 7.72.030 ............................................................................................................................ 20

Federal Rules

Fed. R. Civ. P. 23(a) ............................................................................................................ passim

Fed. R. Civ. P. 23(b) ....................................................................................................... 13, 19, 23

Fed. R. Civ. P. 23(f).................................................................................................................... 26

Fed. R. Civ. P. 23(g) ................................................................................................................... 18

Other Authorities

7AA Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1778 (3d ed. 2005) ..................................................................................... 20

Restatement (Second) of Conflict of Laws § 145(2) ................................................ 29, 30, 31, 34

Restatement (Second) of Conflict of Laws § 148................................................................. 33, 34


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I. INTRODUCTION

Plaintiffs are purchasers and users of Defendant Microsoft Corporation’s (“Microsoft’s”)

Xbox 360 video game console, which retails between $299 and $479. Xbox 360 games are sold

separately from the Xbox 360 console and retail for approximately $59.99. The Xbox 360 plays

game discs in an Optical Disc Drive (“ODD”) similar to those found in home DVD players and

in desktop and notebook personal computers. The Xbox 360 is defectively designed because

when an Xbox 360 is tilted or swiveled – even slightly – while a game disc is in the ODD, ODD

components can contact the game disc, creating a distinctive circular “gouge” on the underside

of the disc, rendering it permanently unplayable.

Microsoft discovered this scratch-inducing design defect prior to launching the Xbox

360, but refused and continues to refuse to remedy the problem. Tens of thousands of Xbox 360

owners have registered complaints with Microsoft that scratches inflicted by the defective design

of the Xbox 360 console have made their game discs unplayable.1

Plaintiffs assert claims for violation of the Washington Consumer Protection Act (RCW

19.86) (“CPA”), breach of express warranty, violation of the Washington Product Liability Act

(RCW 7.72) (“WPLA”), and violation of the Magnuson-Moss Warranty Act (15 U.S.C.

§ 2310(d)(1)). Plaintiffs seek to certify these claims on behalf of two nationwide classes: a

“Console Owners Class” and a “Damaged Disc Subclass.”

The proposed class structure is manageable and practicable because all class members are

members of the first class and only a single additional issue of fact – whether a disc has been

irreparably damaged by the Xbox 360 – is raised by the subclass. All other issues of fact and law 1 Indeed, a significant percentage of these owners claim that their Xbox 360s were not moved at all when their game discs received the distinctive deep circular gouge, a claim which although upsetting, is not relevant to this motion insofar as Microsoft should have designed the Xbox 360 to prevent the deep circular gouging of game discs whether or not the console was moved during normal use.


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remain the same for both classes. Given the relatively small amount of damages sustained by

each individual class member, not only is a class action superior to any other method of

adjudicating these claims, it is pragmatically the only method for Plaintiffs to seek redress.

II. STATEMENT OF FACTS

A. Plaintiffs Seek to Certify a Nationwide Class and Subclass.

Plaintiffs seek certification of a nationwide class and subclass. The first class, the

“Console Owners Class,” is comprised of “all persons residing in the United States who, within

four years preceding the filing of Plaintiffs’ complaint on July 18, 2007, purchased or were given

an Xbox 360 console.” This Class seeks damages for breach of warranty under Washington law

and the Magnuson-Moss Act for the defectively designed Xbox 360, and for violation of the

Washington CPA. Plaintiffs and proposed class representatives Jose Caraballo, Justin Hanson,

Robert Ling, Christine Moskowitz, Luis Torres, and David Wood are members of this Class.2

The “Damaged Disc Subclass” is a Subclass within the Console Owners Class, comprised

of “all members of the Console Owners Class who purchased or were given Xbox 360 game

discs that were subsequently scratched by an Xbox 360 console and rendered unusable.” The

Damaged Disc Subclass seeks damages based on product defect claims and violations of the

CPA and WPLA for the replacement costs of damaged discs. Plaintiffs and proposed class

representatives Caraballo, Hanson, Ling, Moskowitz, Torres, and Wood are members of the

Damaged Disc Subclass. See Pltfs’ Decs.

B. The Xbox 360 Was Launched in November 2005 with an Express Warranty.

The Xbox 360 is Microsoft’s second generation video game console. It was launched in

November 2005 and was originally available in two configurations: the “Xbox 360 Premium” 2 See Declarations of Plaintiffs Caraballo, Hanson, Ling, Moskowitz, Torres, and Wood (collectively, “Pltfs’ Decs.”), filed herewith.


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package retailing at $399, and the “Xbox 360 Core” retailing at $299. The “Xbox 360 Elite”

package was launched in April 2007 and retailed at $479. As of May 14, 2008, Microsoft

reported U.S. sales of 10 million Xbox 360 consoles. Declaration of Amy Williams-Derry

(“Derry Dec.”) Ex 1.

Microsoft provides a uniform, one-year Express Warranty on Xbox 360 consoles

purchased in the United States.3 See Derry Dec. Ex. 3; see also Am. Compl. (Dkt. 45) Ex. B.

The warranty provides that the Xbox 360 console “will substantially conform with the printed

user instruction materials,”4 Derry Dec. Ex. 3 at 5 § A, and that:

If you acquired the Xbox Product in the United States, the laws of the State of Washington, U.S.A., will apply to this Limited Warranty. The laws of your state of residence will apply to any tort claims and/or any claims under any consumer protection statutes.

Id. at 8 § H (emphasis added).

The Xbox 360 console uses hardware and technology similar to a personal computer.

Every version of the Xbox 360 console includes a built-in ODD which is used to play game

discs, music CDs, and DVD movies. Declaration of Michael D. Sidman, Ph.D. (“Sidman Dec.”)

¶ 4. Games for the Xbox 360 console are purchased separately and published by Microsoft and

third-party game publishers with a Microsoft license.

Microsoft specified that the ODD for the Xbox 360 console would be capable of

operating in either a horizontal or vertical position. Id. ¶ 11. Indeed, this optional orientation

and display was one of the key design features from an early stage of the console’s development.

Derry Dec. Ex. 5.

3 Originally the Xbox 360 had only a 90 day warranty, but in December 2006, Microsoft retroactively expanded the warranty to one year. See Derry Dec. Ex. 2.

4 Nothing in the printed user instruction materials advises users that the Xbox 360 ODD is defectively designed, and the word “scratch” appears nowhere in the document. See Derry Dec. Ex. 4.


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In either position, Xbox 360 ODDs are specified by Microsoft to spin game discs at

“12x,” which translates to a rotational speed of 7,500 rpm – a very high speed that is unique in

the home video game industry. Sidman Dec. ¶¶ 32-33.5 Microsoft failed during the ODD

specification phase to account for both the high rate of disc rotational speed and the foreseeable

movement of the console. Id. ¶¶ 19-26. This failure, combined with other mistakes Microsoft

made in specifying the ODD, resulted in the design defect causing injury to Plaintiffs and the

proposed Classes.

C. Optical Disc Drives (ODDs) are Common in Consumer Products.

As explained by Dr. Sidman, ODDs are extremely common and have been in regular use

by consumers since the introduction of the first compact disc players in the early 1980s. Sidman

Dec. ¶¶ 4, 26. Because CD and DVD media supported by ODDs are robust, ODDs are found in

numerous consumer products where they are routinely subjected to high levels of movement, tilt,

swivel, and vibration. Id. For example, ODDs are found in automobile CD and DVD players,

notebook computers, portable DVD players, and digital video camera/recorders (“camcorders”).6

Sony introduced a portable CD player called the “Discman” in 1984, which was designed to play

CDs while users walked, ran, or exercised. Portable CD players of this type are still sold and

commonly used today.

Although these consumer-operated CDs and DVDs are routinely subjected to tilting and

movement while operating, none of the media played in these consumer products have

experienced widespread disc-scratching problems. Indeed (with the conspicuous exception of

5 Xbox 360’s primary competitors in the game industry – the Sony PlayStation 3 and Nintendo’s Wii – spin game discs at a maximum speed of 4,000 and 3,500 rpm, respectively.

6 Because digital camcorders are constantly being reoriented to a vertical orientation as the camcorder is moved from the carrying position to the eye level of the user, camcorders represent an excellent example of how ODDs can be easily designed to operate flawlessly when vertically reoriented while in use. See discussion of Sony Corporation’s U.S. Patent No. 7,283,730 for an Optical Disc Camcorder, Sidman Dec. ¶ 35.


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Microsoft), industry engineers have long anticipated this problem and have learned to provide

simple, inexpensive and obvious measures to protect optical discs in consumer applications

while the ODD is in use and the disc is spinning. Id. ¶ 27. As a result, there is a reasonable

consumer expectation that consumer products with ODDs will not cause media discs to be

scratched even when the products are tilted, vibrated, or slightly rotated in the course of every

day use.

D. The Xbox 360 Was Defectively Designed Under Microsoft’s Defective Specifications.

ODDs are manufactured with three primary designs for disc loading: tray-loading, top-

loading, or slot-loading. Tray-loading ODDs utilize a slide-out tray design to load discs, and

reflect older technology, with magnetic force used to assist in holding the disc on the spindle.

Top-loading ODDs offer greater protection for a spinning disc because the design clamps a disc

directly into the ODD. Slot-loading ODDs use an internal motor to assist in disc insertion and

removal and are most commonly seen in ODDs that are expected to experience movement and

vibration such as in automobile CD and DVD players.

The Xbox 360 employs a tray-loading ODD design. Sidman Dec. ¶ 31. This reflects an

unusual choice for a product designed to be oriented vertically, and which rotates game discs at

12x. Id. ¶¶ 31-33. Both the Sony PlayStation 3 and Nintendo Wii, which can also be oriented

vertically, utilize slot-loading ODDs. Id. ¶¶ 42, 44.

Once a disc is loaded into the Xbox 360’s tray-loading ODD, the disc is lifted slightly off

the tray to allow it to freely revolve around a spindle. The disc is held in place solely by

magnetic force, which when designed properly, should prevent the disc from becoming unstable

while revolving on the spindle. Id. ¶ 31. A laser diode light is focused on the spinning disc and

is reflected back to the optical pickup unit (“OPU”). To read the information embedded in a


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game disc, the OPU must be positioned over the disc’s data track to detect the light being

reflected off the microscopic pits and flat surfaces (“lands”) as they rotate past. Deep scratches,

gouges, or concentric scratches on the disc’s surface that lie parallel to the data track can obstruct

the laser beam, precluding playback of the data to the optical detector. Id. ¶¶ 5-9.

Because the Xbox 360’s ODD rotates Xbox 360 game discs at 7,500 rpm, significant

gyroscopic forces are exerted on a disc while spinning.7 Compared to the gyroscopic forces at

work on a disc rotating at 3,500 or 4,000 rpm, see supra note 5, the greater gyroscopic forces

exerted on an Xbox game disc make it even more likely that any movement of an Xbox 360

console while a game disc is playing will cause the game disc to become uncoupled from the

spindle. Because these greater gyroscopic forces are combined with both a weak magnetic force

for holding the disc in place, and a tray-loaded design that can be oriented vertically, uncoupling

of a disc during normal console use was a predictable result. See id. ¶ 31.

When a game disc becomes uncoupled (or “unchucked”) in the Xbox 360 ODD, it

wobbles within the ODD and can come into contact with internal ODD components. Id. ¶ 33.

Microsoft has determined through its own internal testing that contact with the lens or printed

circuit board of the OPU of the ODD by an unchucked or gyroscopically deformed game discs is

what causes the deep circular gouges in the underside of the game discs. Id. ¶ 12. In addition,

due to the high level of gyroscopic force exerted on an Xbox 360 game disc while it spins at

7,500 rpm, movement of the console can cause the game disc to “deflect” or warp sufficiently to

come into contact with the OPU even if the disc is not unchucked, which will also cause the deep

7 According to tests by Dr. Sidman, the Sony PlayStation 3, which also uses a magnetic disc holder to hold the game disc in place, exerts an axial holding force on the disc that is nearly twice as strong as that of the Xbox 360. Id. ¶ 42.


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circular gouges in the underside of the game discs. Id. ¶ 34. This is the type of scratch

experienced by Plaintiffs and the members of the proposed Damaged Disc Subclass.

E. Microsoft Discovered Prior to Launch that the ODD Scratches Game Discs.

Prior to its November 2005 sales launch of the Xbox 360, Microsoft was aware that when

the Xbox 360 is reoriented, the game disc inside the Xbox 360 can become scratched and

permanently damaged. Deposition of Hiroo Umeno (“Umeno Dep.”) 312:23-313:4 (Derry Dec.

Ex. 6) (“This is . . . information that we as a team, optical disc drive team, knew about. When

we first discovered the problem in September or October, when we got a first report of disc

movement, we knew this is what’s causing the problem.”).8 Shortly after the launch, Microsoft

dispatched a team of engineers to retail stores across the country to investigate complaints by

store employees that the Xbox 360 was routinely scratching discs during demonstrations.9

During these investigations, Microsoft determined that “if you tilt the [console] to the left or

forward . . . you’ll cause a scratch.” Derry Dec. Ex. 10. Microsoft determined that when

consoles were tilted, game discs become “unchucked” and collide with the OPU, causing deep

circular gouges in the playing discs. Umeno Dep. 312:12-19 (“[G]yroscopic precession force is

what causes the disc to unchuck, which is what we’ve . . . known. In order for the force to act on

the disc, the assembly, the console and the disc drive, which is inside the console, has to move

relative to the rotation of the disc.”). Like a gyroscope that is disturbed from its axis, a revolving

game disc will wobble and potentially come in contact with the OPU. Id. at 312:2-5. Based on

8 Microsoft designated Hiroo Umeno, Jose Garcia, and Douglas Park as its Fed. R. Civ. P. 30(b)(6) representatives. Umeno is a Microsoft program manager involved in specification development for computer software, coordination development and testing efforts, interfacing with other teams relating to Microsoft’s product development, and interfacing with business team product feature developments. Umeno Dep. 7:18-23. Garcia is the senior director of repair and refurbishment programs for the Xbox 360. Garcia Dep. 24:13-14 (Derry Dec. Ex. 7). Park is the senior group manager responsible for Xbox’s escalations group, its on-line support group, and the customer service department’s interactions with Microsoft’s business group. Park Dep. 12:6-9 (Derry Dec. Ex. 8).

9 See Park Dep. 82:20-83:9; Umeno Dep. 208:21-209:3; Derry Dec. Ex. 9.


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his review of Microsoft’s documents, Plaintiffs’ expert agrees that disc unchucking as well as

disc deflection occurs because the clamping force of the disc holder is insufficient to keep the

game disc in place when it is spinning at a rate of approximately 7,500 rpm in a tray-loading

ODD mounted in a vertical position. Sidman Dec. ¶¶ 33-34, 36.

F. Microsoft Rejected Three Possible Solutions to its Design Defect.

After the Xbox 360 was launched, Microsoft considered and rejected three possible

solutions to the console’s defective design. Microsoft rejected a first solution, which would have

increased the magnetic force of the disc holder, because it would allegedly interfere with the

mechanism that opened and closed the disc tray (another consequence of Microsoft’s decision to

use the tray-loading ODD design). Umeno Dep. 230:6-11; Sidman Dec. ¶ 56.

Microsoft rejected a second solution, which would have required slowing down game

disc rotation speed to 8x, because it allegedly would increase the time it took for a game to load,

and thus interfere with the game experience. Umeno Dep. 236:15-237:4; Sidman Dec. ¶ 52.

Microsoft rejected a third solution, installing “bumpers” (small soft patches routinely used in

other consumer ODDs), because it was allegedly too expensive (at as little as 50¢ per machine)

and impractical due to concerns about adhering the bumpers. Park Dep. 145:24-146:4; Umeno

Dep. 228:13-230:5; see also Park Dep. Ex. 6 (Aug. 25, 2006 email from Park noting that with an

aggregate price tag of “$35M to $75M” to install proposed bumpers, Microsoft’s bottom line

wins out over the consumer) (Derry Dec. Ex. 11).10

As Plaintiffs’ expert opines, the systemic hardware design flaws in the Xbox 360’s ODD

make a completely effective solution unlikely without a wholly redesigned ODD. Sidman Dec. ¶

50. Solving the problem will require replacing existing ODDs with new, factory-tested ODDs 10

Dr. Sidman opines that there are innumerable commercial adhesives designed to maintain adhesion under forces well in excess of those in an Xbox 360 ODD. Sidman Dec. ¶¶ 58-59.


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whose design makes scratched game discs significantly less likely. Id. ¶ 51.11 The damages to

the Owner Class will be measured by calculating the anticipated cost of effectuating these repairs

on a mass scale.

G. Microsoft Has Received Thousands of Reports of Scratched Discs.

As of April 30, 2008, Microsoft Manager Douglas Park estimates that Microsoft’s

customer service department has received approximately 55,000 complaints from consumers

regarding disc scratches. Park Dep. 93:7-21. On July 23, 2008, Microsoft finally released a

support article to its customers identifying error messages relating to fatally scratched discs.

Derry Dec. ¶ 13. The Article describes the problem: “[w]hen you try to load a disc in your Xbox

360 console, you receive the following error message: This disc is unreadable. It may be the

wrong region for this console.” The article goes on, stating:

Note Scratches that follow the curve of the disc are very damaging and prevent a disc from being read. If you see that your disc has even one of these types of scratches, the disc is damaged, and you will no longer be able to play it. If this is the case, see step 4.

…

[Step] 4. If the disc is damaged, do one of the following:

• If you think that the disc was already damaged when you bought it, try to exchange it.

• If you have a damaged Microsoft Xbox 360 game disc and would like to order a new one, please visit the following Web site:

http://www.xbox.com/en-US/support/systemuse/xbox360/gameplay/discreplacement-program.htm

• If the game is a non-Microsoft Xbox 360 game disc and was damaged because of misuse of some type, such as not storing the disc properly in its case, the only thing you can do is buy a new one.

11

Third-parties have stepped into the vacuum Microsoft created and begun selling “DVD Scratch Stopper Pads” for the Xbox 360. See Derry Dec. Ex. 12. This is merely an ad hoc solution that attempts to compensate for Microsoft’s inherently flawed ODD design.


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• If you feel that the disc was damaged by the Xbox 360 console in some way, please contact Xbox Customer Support. To do this, please visit the following Microsoft Web site:

http://www.xbox.com/support/contact

Id.

The Article does not indicate that the ODD in the Xbox 360 console is defectively

designed or that the ODD is the cause of the disc damage. Indeed, the Article is deliberately

written so as to preemptively discount the possibility that the Xbox 360 console is the source of

disc damage, stating, “[i]f you feel that the disc was damaged by the Xbox 360 console in some

way.” Id. (emphasis added). There is only one way the Xbox 360 console can damage a game

disc through normal use – where the disc comes into contact with the OPU after the game disc

has become unchucked or deflected due to Microsoft’s defective ODD design.

H. The Xbox 360 Manual and Sticker Do Not Adequately Warn of the Product Defect.

The most recent version of the manual accompanying U.S. sales of the Xbox 360 console

(the “Manual”) contains the following “warning” buried in the middle of the document, on page

11, in what appears to be 8-point font, without any bold or italics apart from the heading:

IMPORTANT To avoid jamming the disc drive and damaging discs or the console: • Remove discs before moving the console or tilting it between the horizontal and vertical positions.

Derry Dec. Ex. 4. This is the only warning arguably related to disc scratching in the Manual.12

At some point following launch of the Xbox 360 (Microsoft’s Rule 30(b)(6) witnesses

were unable to identify the date), Microsoft began adhering a sticker to the front of the ODD tray

advising users in English, French and Spanish, “[d]o not move console with disc in tray.” Park 12

Microsoft’s employees make clear in an internal e-mail that this warning is patently insufficient, in part because they know that few of their customers will read the Manual. Derry Dec. Ex. 14; Park Dep. Ex. 7. Plaintiffs’ expert agrees. Sidman Dec. ¶ 47.


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Dep. 154:18-24; 219:13-220:4; Umeno Dep. 158:24-160:5. However, even this belated warning

failed to reduce the number of complaints Microsoft received from customers regarding

scratched discs. Park Dep. 220:5-13. See also Sidman Dec. ¶ 47 (discussing sticker).

Because even moderate, unintentional tilting or swiveling of the Xbox 360 console may

cause disc scratching if the console is in the vertical position, warning consumers not to move

the console has had little impact in overcoming the defective design of the ODD drive.13

Further, because the “warning” sticker must be removed in order to load a disc into the Xbox 360

ODD the first time it is operated, consumers likely forget the warning shortly after removing it, if

they ever read it at all. Given the seriousness of the damage that may result from movement of

the Xbox 360 and the unlikelihood that consumers would expect such a catastrophic result from

normal use of any other ODD device, Microsoft’s decision not to adhere a permanent warning to

the Xbox 360 is patently insufficient. Microsoft’s indifference to either fixing or warning of this

defect has caused its customers millions of dollars in damage. Of course, Microsoft would not

need any warning on the Xbox 360 if it had properly designed the ODD in the first place.

I. Microsoft Has Turned the Xbox Defective Design into a Profit Generator.

In response to the avalanche of customer complaints that the Xbox 360 destroys game

discs, Microsoft adopted a policy of replacing ODDs whenever a customer complains forcefully

enough that their Xbox 360 has scratched a disc. However, if a console is outside warranty, the

consumer must pay Microsoft roughly $100 to replace one defective ODD for another defective

ODD. Garcia Dep. 159:10-160:17; 168:19-170:9; Garcia Dep. Ex. 14 (Derry Dec. Ex. 15)

13

There are several cabled peripherals such as game controllers that plug directly into the front of the Xbox 360 console. Pulling cables connected to the Xbox 360 console during vigorous game play, such that the console is unintentionally moved, or reaching around the back of the console to access the power source, are the most likely causes of the console tilting or swiveling that will cause the disc to unchuck and scratch.


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As Microsoft admits, because all of the Xbox 360 ODDs are defectively designed, a

replacement ODD is just as likely to scratch game discs as the prior ODD. When asked why

Microsoft would attempt to assuage an unhappy customer by replacing an ODD with a new

ODD of the same defective design, Microsoft’s corporate representative testified, “although we

know…the console must have been moved, we still want to give the customer an option or an

opportunity to keep playing the [Xbox 360] and enjoying the system.” Park Dep. 105:20-25.

Jose Garcia, the Microsoft head of Repair and Refurbishment, likewise testified that the

replacement was, “[j]ust to give the customer a new optical drive so that…from a customer’s

perspective, they’re getting a new device, and that improves customer satisfaction.” Garcia Dep.

158:18-22. As of May 1, 2008, Microsoft had replaced roughly 7,200 ODDs based on customer

complaints. Garcia Dep. Ex. 14 (Derry Dec. Ex. 15); Garcia Dep. 147:25-148:11.14

In a second attempt to profit from its own defective design at its customers’ expense,

Microsoft adopted the “Xbox 360 Disc Replacement Program.” The Disc Replacement Program

provides that when a customer complains that the Xbox 360 console has destroyed a Microsoft-

published game disc, the game disc will be replaced for a $20 fee notwithstanding that there is

only an incremental cost, if any, to Microsoft for simply copying a DVD game disc. Microsoft

does not offer the Disc Replacement Program for games published by third parties. This $20 fee

is an easily quantifiable element of damages for members of the Damaged Disc Subclass.

III. ARGUMENT

A. This Action is Ideally Suited for Class Action Treatment.

The party seeking class certification bears the burden of demonstrating that he or she

meets all four requirements of Fed. R. Civ. P. 23(a) and at least one of the requirements of Rule 14

Plaintiffs may later seek leave to certify an additional “ODD Replacement Subclass” for customers who paid Microsoft to replace their ODD, if a class representative willing to represent that subclass can be identified.


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23(b). Roshandel v. Chertoff, 554 F. Supp. 2d 1194, 1203 (W.D. Wash. 2008). As a product

defect case, this action is ideally suited for class action treatment. In Chamberlan v. Ford Motor

Co., 402 F.3d 952, 956-57 (9th Cir. 2005), the Ninth Circuit found that a district court properly

granted class certification based upon the following common factual and legal questions: (a)

whether the design of the product was defective; (b) whether the defendant was aware of the

defect; (c) whether the defendant had a duty to disclose; (d) whether the defendant failed to

disclose; (e) whether the facts that were not disclosed were material; and (f) whether the failure

to disclose violated state consumer protection laws. Here, comparable common questions

predominate.

Further, because all members of the class are parties to the same express warranty by

Microsoft, a further set of comparable common questions predominate: (a) whether the failure to

repair Xbox 360 consoles known to be defective was a breach of that warranty; (b) whether the

warranty’s one year limitations period is applicable when Microsoft knew of an existing defect

during the warranty period; (c) whether the limitations set forth in the warranty are enforceable;

and (d) whether Microsoft’s attempts to set forth different governing law for different types of

claims are enforceable.15 This case is ideal for class action treatment.

B. Plaintiffs Satisfy the Requirements of Rule 23(a).

“[C]ertification of a nationwide class is ‘committed in the first instance to the discretion

of the district court.’” Ali v. Ashcroft, 346 F.3d 873, 888 (9th Cir. 2003), rev'd on other grounds,

421 F.3d 795 (9th Cir. 2005), quoting Califano v. Yamasaki, 442 U.S. 682, 702-03 (1979). The

four prerequisites of Rule 23(a) are: (1) the class is so numerous that joinder of all members is

impracticable, (2) there are questions of law or fact common to the class, (3) the named 15

As discussed in Section D infra, contractual choice of law provisions do not dictate the choice of law for tort claims or consumer protection act claims, and Washington law should apply.


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plaintiffs’ claims or defenses are typical of the claims or defenses of the class, and (4) the named

plaintiffs will fairly and adequately protect the interests of the class. The classes for which

Plaintiffs seek certification fully satisfy these requirements.

1. The Class Is So Numerous That Joinder Is Impracticable.

Rule 23(a)(1) provides that a class action may be maintained only if “the class is so

numerous that joinder of all members is impracticable.” Dukes v. Wal-Mart, Inc., 509 F.3d 1168,

1176 (9th Cir. 2007); Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). While

courts have never defined a minimum number of putative class members needed for certification,

classes numbering in the hundreds or thousands routinely satisfy the requirement. Lowdermilk v.

U.S. Bank Nat’l Ass’n, 479 F.3d 994, 997 (9th Cir. 2007).

The Console Owners Class includes the owners of the roughly ten million Xbox 360

consoles sold in the U.S. The Damaged Disc Subclass includes (but is not limited to) consumers

who contacted Microsoft to report that the Xbox 360 console damaged their discs. Microsoft has

received at least 55,000 such complaints. Park Dep. 93:7-21. The proposed classes easily satisfy

the numerosity requirement.

2. There are Common Questions of Law and Fact for the Classes.

Rule 23(a)(2) requires that there be “questions of law or fact common to the class.”

Commonality under Rule 23(a)(2) is liberally and permissively construed. Dukes, 509 F.3d at

1177 (quoting Hanlon, 150 F.3d at 1019). “All questions of fact and law need not be common to

satisfy the rule. The existence of shared legal issues with divergent factual predicates is

sufficient, as is a common core of salient facts coupled with disparate legal remedies within the

class.” Staton v. Boeing, 327 F.3d 938, 953 (9th Cir. 2003) (quoting Hanlon, 150 F.3d at 1019).


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Indeed, the commonality requirement is satisfied if the claims of the prospective class share even

one central question of fact or law. Dukes, 509 F.3d at 1177; Hanlon, 150 F.3d at 1019-20.

Commonality exists when there are underlying facts or legal theories common throughout

the class, even if the common facts support different legal theories or common legal theories rest

on different facts. Hanlon, 150 F.3d at 1019-20; Mortimore v. FDIC, 197 F.R.D. 432, 436 (W.D.

Wash. 2000). A defendant’s actions need not affect each class member in the same manner, and

individual differences in damages will not defeat class treatment. Smith v. Univ. of Wash. Law

Sch., 2 F. Supp. 2d 1324, 1342 (W.D. Wash. 1998) (Zilly, J.).

In Hanlon and Chamberlan, the Ninth Circuit found commonality in product defect cases

where questions of defectiveness, adequacy of warnings, and consumer protection violations

predominated. See Chamberlan, 402 F.3d at 962, Hanlon, 150 F.3d at 1023. Similarly, here,

Plaintiffs allege the following common legal issues: that the Xbox 360 console was defectively

designed due to Microsoft’s defective ODD specifications; that Microsoft failed to adequately

warn consumers of the defect; that Microsoft knew about its defective product and withheld that

information from consumers; that Microsoft violated the CPA, and that the Console Owner Class

is entitled to repair damages under Microsoft’s express warranty. For the Damaged Disc

Subclass, Plaintiffs allege one additional common factual and legal issue: that the class

members’ discs have been scratched and rendered unplayable by the Xbox 360 console, in

violation of the Washington CPA and the WPLA. These issues are more than sufficient to

satisfy the requirements of Rule 23(a)(2).16

16

Insofar as Washington law requires privity between buyers and remote sellers in order to assert claims based on implied warranties of merchantability and fitness for a particular purpose, see, e.g., Tex. Enters., Inc. v. Brockway Standard, Inc., 110 Wn. App. 197, 39 P.3d 362 (2002), rev’d on other grounds, 149 Wn. 2d 204, 66 P.3d 625 (2003), Plaintiffs are not seeking to certify a class on the cause of action for breach of implied warranties set forth in the Amended Consolidated Complaint.


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There are also numerous common questions of fact at the heart of each class members’

claims, all of which focus squarely on Microsoft’s product specification, design and conduct.

These include whether the ODD design for the Xbox 360 is defective, whether Microsoft’s

purported warnings to the class of potential disc damage from movement of the console were

sufficient, and whether the defect in the ODD design for the Xbox 360 can be economically

remediated. Because Microsoft acted in the same manner on each of these issues with respect to

every member of the class, a determination of these factual issues will resolve all class claims.

3. The Class Representatives’ Claims Are Typical of the Classes.

Rule 23(a)(3) is satisfied where “the claims or defenses of the representative parties are

typical of the claims or defenses of the class.” As with commonality, typicality is liberally

construed. Hanlon, 150 F.3d at 1020. Typicality’s purpose is to assure that the named

representatives’ interests align with those of the class. Mortimore, 197 F.R.D. at 437. Instead of

requiring absolute or substantial uniformity of claims, typicality requires only that named

plaintiffs demonstrate that their factual circumstances or underlying legal theories are reasonably

aligned or coextensive with the class members’ interests. Dukes, 509 F.3d at 1184; Hanlon, 150

F.3d at 1020. Applying these standards, courts generally find the typicality requirement to be

satisfied if the claims arise from the same or similar injury, the action is based on conduct that is

not unique to the named plaintiffs, and other class members have been injured by the same or

similar course of conduct. Hanson v. Ticket Track, Inc., 213 F.R.D. 412, 415 (W.D. Wash.

2003).

Under Rule 23(a)(3), it is not necessary that all class members suffer the same injury as

the class representative. Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718, 734 (9th Cir.

2007). As the Ninth Circuit has noted, “[t]he amount of damages is invariably an individual


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question and does not defeat class action treatment.” Blackie v. Barrack, 524 F.2d 891, 905 (9th

Cir. 1975).17 Typicality can be shown even where factual variations exist between the claims of

the named representative and the other class members. Smith, 2 F. Supp. 2d at 1342.

Here, both the Plaintiffs’ claims and the putative class members’ claims arise from the

same conduct: Microsoft’s design, manufacture and distribution of defective Xbox 360 consoles

in violation of the CPA. The Console Owners Class is comprised of all owners of Xbox 360

consoles. Each Xbox 360 console has a comparable defect, all subject to the same Microsoft

warranty for repair. See Hanlon, 150 F.3d at 1022-23 (common issues relate to warranty claims

in product defect case). All of the class members’ warranty claims are governed by Washington

law. Derry Dec. Ex. 3 at 8 § H (“the laws of the State of Washington, U.S.A., will apply to this

Limited Warranty”). Typicality is satisfied for this class.

Likewise, the Damaged Disc Subclass is comprised of owners of Xbox 360 consoles

whose discs have been irreparably scratched by contact with the OPU. Each member of the Disc

Subclass, which includes all of the class representatives, were commonly injured by the

console’s defective design and its lack of tolerance for any movement, swiveling, or tilting in

normally anticipated consumer use.

4. Plaintiffs Will Fairly and Adequately Protect the Interests of the Class.

Rule 23(a)(4) requires a showing that “the representative parties will fairly and

adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). This requirement is

grounded in constitutional due process concerns. “[A]bsent class members must be afforded

adequate representation before entry of a judgment which binds them.” Hanlon, 150 F.3d at

17

See also Mortimore, 197 F.R.D. at 436 (Coughenour, J.) (“The ‘overwhelming weight of authority’ holds that the need for individual damages calculations does not diminish the appropriateness of class action certification where common questions as to liability predominate”) (internal citation omitted).


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1020. The court must resolve two questions: “(1) do the named plaintiffs and their counsel have

any conflicts of interest with other class members and (2) will the named plaintiffs and their

counsel prosecute the action vigorously on behalf of the class?” Id. (citing Lerwill v. Inflight

Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978)). Both of these elements are met here.

Plaintiffs bring the same claims for similar remedies under the same legal theories as the

other members of the class. There are no actual or potential conflicts of interest between the

Plaintiffs and the class members. Plaintiffs and the putative class members have been injured in

the same manner by Microsoft and seek identical forms of relief. The representative Plaintiffs

understand and are prepared to fulfill their duties to the Classes. See Pltfs. Decs. Accordingly,

the interests of the representative Plaintiffs and the Class members in recovering their damages

are well aligned.

Plaintiffs have also retained adequate counsel. Under Rule 23(g), a court certifying a

class must appoint class counsel. Fed. R. Civ. P. 23(g)(1). Rule 23(g)(1)(A) provides that the

court “must consider: (i) the work counsel has done in identifying or investigating potential

claims in the action; (ii) counsel’s experience in handling class actions, other complex litigation,

and claims of the type asserted in the action; (iii) counsel’s knowledge of the applicable law; and

(iv) the resources counsel will commit to representing the class.”

Plaintiffs have retained highly capable counsel with extensive experience in prosecuting

class actions on behalf of consumers throughout the United States. Plaintiffs’ counsel are

capable of, and committed to, prosecuting this action vigorously on behalf of the Class.18 The

Court previously appointed counsel as Interim Class Counsel in this matter. See Dkt. 27 (Oct. 9,

18

The resumes of Stritmatter Kessler Whelan Coluccio; The Kopelowitz Ostrow Firm, P.A.; Chitwood Harley Harnes LLP; Kabateck Brown Kellner LLP; Keller Rohrback LLP; Krause Kalfayan Benink & Slavens, LLP; and Wasserman, Comden & Casselman are attached to the Derry Dec. as Exs. 16 – 22.


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2007).19 Plaintiffs’ counsel has already demonstrated their competency by collaborating in

drafting the consolidated complaint and pursuing extensive document discovery. Plaintiffs’

counsel have taken the depositions of several Microsoft witnesses, and are collaborating

efficiently in prosecuting this action. These firms have devoted considerable attorney resources

to this case, will continue to devote all necessary resources to prosecuting this matter, and

possess the resources necessary to adequately represent the proposed Classes.

C. Plaintiffs’ Claims Should Be Certified Pursuant to Rule 23(b)(3).

After all four prerequisites of Rule 23(a) are satisfied, a court must determine whether to

certify the class under one of the three subsections of Rule 23(b). Plaintiffs seek certification

under Rule 23(b)(3), which permits certification where “the court finds that the questions of law

or fact common to the members of the class predominate over any questions affecting only

individual members, and that a class action is superior to other available methods for the fair and

efficient adjudication of the controversy.” Both criteria are met here.

1. Common Issues Predominate.

The focus of the “predominance” inquiry is on the relationship between – as well as the

relative importance of – common and individual issues. Local Joint Executive Bd. of

Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1162 (9th Cir. 2001).

When common questions present a significant aspect of the case and they can be resolved for all

members of the class in a single adjudication, handling the dispute on a representative rather than

on an individual basis is preferred. Hanlon, 150 F.3d at 1022. “Implicit in the…predominance

test is the notion that the adjudication of common issues will help achieve judicial economy.”

Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996). 19

An additional firm, Lee & Amtzis, P.L., was admitted pro hac vice to represent Plaintiffs on Nov. 7, 2007 (Dkt. 34), and also seeks appointment as Class Counsel. See Derry Dec. Ex. 23 (Lee & Amtzis, P.L. firm resume).


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Predominance of common issues does not mean, however, that there can be no individual

issues. Hanlon, 150 F.3d at 1022-23. Nor does it mean that common questions alone must

completely dispose of the litigation. 7AA Charles Alan Wright, Arthur R. Miller & Mary Kay

Kane, Federal Practice and Procedure § 1778 at 123-24 (3d ed. 2005)

Here, common questions of law and fact predominate over any individual issues. There

are well-defined issues: whether the design and manufacture of the Xbox 360 was reasonably

safe for its intended use and whether or not adequate warnings were given to consumers. The

design and manufacture of all Xbox 360s is defective in the same way. To the extent Microsoft

claims that it provided notice of the defect, these notices were uniformly provided.20

Further, “[i]n determining whether a product was not reasonably safe under this section,

the trier of fact shall consider whether the product was unsafe to an extent beyond that which

would be contemplated by the ordinary consumer.” RCW 7.72.030(3) (emphasis added). Thus,

the issue of whether the product was defective is based on the ordinary person standard, a

standard that does not require any individual adjudication.

With respect to the Console Owners Class, the common issues are: (a) whether the Xbox

360 console is defectively designed; (b) whether the Xbox 360’s defective design constitutes a

breach of Microsoft’s express warranty; and (c) whether the class is entitled to damages for the

cost of repairing the Xbox 360 console. Again, all of these issues constitute common issues of

fact and law that predominate over any individual issues. See Hanlon, 150 F.3d at 1022-23.

With respect to the Damaged Disc Subclass, Microsoft specifically concedes that the

Xbox 360 can scratch discs. See Sidman Dec. ¶ 12 & exhibits cited therein. Microsoft’s liability 20

At an unidentified date after launching the Xbox 360, Microsoft placed a removable sticker advising users not to move the console “with disc in tray.” For purposes of this motion only, and because we believe that Microsoft’s sticker will be determined to be inadequate as a matter of law, we will concede that all Xbox 360s sold in the United States had such a sticker although this was demonstrably not the case.


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will be based upon the WPLA, RCW 7.72. The pertinent issues here will be: (a) was the Xbox

360 not reasonably safe as designed; or (b) was the Xbox 360 not reasonably safe due to

inadequate warnings; and (c) did defendant’s negligence proximately cause Plaintiffs’ and the

class members’ damages.

The issue of the Xbox 360’s design is a one-time analysis that is not dependent on

individual issues. Rather, this Court will examine Microsoft’s uniform warnings – to the extent

any were given – to determine whether they were adequate in light of the console’s defective

design. Finally, the legal question of whether Microsoft’s negligence proximately caused

Plaintiffs’ and the class members’ damages can be answered without inquiry into each individual

class member’s activities. Indeed, Plaintiffs’ expert will opine that the deep circular gouge

caused by the defective design (resulting from the wobbling of the game disc) is a signature

damage incurred by all members of the Damaged Disc Subclass. All of these issues constitute

common issues of fact and law that predominate over any individual issues.

Microsoft’s liability to the Damaged Disc Subclass will also be based upon the

Washington CPA, RCW 19.86. To prevail on a CPA claim, the plaintiff must show (1) an unfair

or deceptive act or practice, (2) that occurs in trade or commerce, (3) a public interest, (4) injury

to the plaintiff in his or her business or property, and (5) a causal link between the unfair or

deceptive act and the injury suffered. Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash.,

Inc., 162 Wn.2d 59, 74, 170 P.3d 10 (2007). A plaintiff must satisfy all five elements to prevail.

Id. Here, whether Microsoft’s sale of the defectively designed Xbox 360 constituted an unfair or

deceptive act or practice, whether such sales occurred in trade or commerce, whether the sale of

Xbox 360s impacts the public interest, and whether the class was damaged by buying an

inherently and deceptively defective product are all inquiries free from any individual issues.


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The issue to be decided is whether the Console Owners Class – simply as buyers of the defective

Xbox 360 – received what they bargained for.

Likewise, questions of injury to property of the Damaged Disc Subclass and causation are

common questions that predominate over individual issues where, as here, there is a common set

of operative facts that will establish liability and “computing individual damages will be virtually

a mechanical task.” Pickett v. Holland Am. Line-Westours, Inc., 101 Wn. App. 901, 920-21, 6

P.3d 63 (2000), rev’d on other grounds, 145 Wn. 2d 178, 35 P.3d 351.

Plaintiffs anticipate Microsoft will challenge predominance based on individual inquiries

to determine the console movement involved in scratching game discs. However, Plaintiffs

anticipate that it will also be undisputed that the Xbox 360 console creates a concentric gouge in

game discs when it is tilted between the vertical and horizontal positions, or swiveled along the

central axis when the console is in a vertical position. Accordingly, because Plaintiffs’ expert

will opine that these rotations are within the normal expected use of the product, and that such

rotations cause the complained-of circular gouge in the game discs, the precise manner in which

the injury occurs is a “red herring” issue for purposes of this class action. Sidman Dec. ¶ 18.

The only relevant issue for the Damaged Disc Subclass is whether their game discs manifest the

circular gouge which (as Plaintiffs’ expert opines) can only be caused by the Xbox 360 console’s

defective design.21

21

A recent case in the Central District of California wherein the court denied class certification illustrates why individual issues do not predominate here. In Gable v. Land Rover North America, Inc., No. 07-0376, 2008 WL 4441960 (C.D. Cal. Sept. 29, 2008), plaintiff alleged that Land Rover’s LR3 model had a manufacturing defect that misaligned the tires, causing them to wear out too quickly as well as creating “an extremely rough ride” and “excessive noise.” Id. at *1. The proposed class was “all current and former owners and lessees of 2004, 2005, and 2006 LR3s purchased or leased in the state of Michigan.” Id. (alteration omitted). The district court denied class certification on the ground that only a fraction of the proposed class’s members had actually experienced the defect and because misalignment could have many different causes. Id. at *3-4. Here, in contrast, the design defect appears in every Xbox 360 console sold and the injury linked to the defect – the distinctive deep circular gouges in game discs – can plausibly come from only one cause: the defective Xbox 360 ODD design.


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Because the Xbox 360 causes distinctive damage to game discs, the Damaged Disc

Subclass can be easily ascertained and individual issues of liability, causation and damage do not

predominate. Individual questions of damages are no barrier to class certification if “computing

individual damages will be virtually a mechanical task,” Blackie, 524 F.2d at 905, or if damages

are “capable of mathematical or formula calculation.” Windham v. Am. Brands, Inc., 565 F.2d

59, 68 (4th Cir. 1977). The court in Connor v. Automated Accounts, Inc., 202 F.R.D. 265, 271

(E.D. Wash. 2001), held that “conducting a ministerial review of [defendant’s] records…do[es]

not overwhelm the common central legal question.” Here, determination of damages for each

plaintiff involves the ministerial task of calculating how many discs were damaged and

multiplying by a replacement cost. Plaintiffs’ claims thus satisfy the predominance requirement.

2. Class Adjudication is a Superior Method of Resolving These Claims.

Rule 23(b)(3) also requires that class resolution must be “superior to other available

methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The

superiority inquiry involves determining whether the objectives of the class-action procedure

will be achieved in the particular case and comparing alternative mechanisms of dispute

resolution. Hanlon, 150 F.3d at 1022. Superiority is demonstrated where “class litigation of

common issues will reduce litigation costs and promote greater efficiency.” Connor, 202 F.R.D.

at 271.

Rule 23(b)(3) identifies four factors pertinent to the superiority inquiry: (1) the interest of

members of the class in individually controlling the prosecution or defense of separate actions;

(2) the extent and nature of any litigation concerning the controversy already commenced by or

against members of the class; (3) the desirability or undesirability of concentrating the litigation


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of the claims in the particular forum; and (4) the difficulties likely to be encountered in the

management of a class action.

Here, class certification will promote judicial efficiency because common claims and

issues will be tried once with a binding effect on all parties. Importantly, putative class members

have no interest in, nor can they afford, individually prosecuting their claims against Microsoft.

Indeed, to the best of counsel’s knowledge and awareness, not a single individual action has been

instituted against Microsoft arising from the facts underlying this action. The unequal economic

power of class members compared to Microsoft further weighs against raising these issues

through individual suits. See Culinary/Bartender Trust Fund, 244 F.3d at 1163.

As to manageability, any such problems must be factual, unavoidable obstacles to the

litigation before they can be considered obstacles to class certification. See Ballard v. Equifax

Check Servs., 186 F.R.D. 589, 600 (E.D. Cal. 1999). There do not appear to be any such

problems here, nor are any such problems likely to arise given the predominance of common

legal and factual issues. Moreover, any case-management problems that may arise upon

certification of the class must be compared to the alternatives, i.e., potentially thousands of

actions by individual class members. See Culinary/Bartender Trust Fund, 244 F.3d at 1163.

If class members were required to proceed with separate actions, this litigation would be

unwieldy and unmanageable. Viewed from this perspective, class treatment of Plaintiffs’ claims

is the most efficient and equitable method for resolving the parties’ disputes. Dukes, 509 F.3d at

1193 (no abuse of discretion to conclude that litigating claims in a single lawsuit is superior to

“clogging the federal courts with innumerable individual suits litigating the same issues

repeatedly”). Indeed, this consolidated action is itself the result of five separate suits,

demonstrating the need for coordinated and efficient litigation of these claims.


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Because individual litigation of each claim would be highly inefficient and impracticable

and because of the commonality of all claims, a class action is the superior means for

adjudicating this action. See Epstein v. MCA, Inc., 50 F.3d 644, 668 (9th Cir. 1995) (reversing

denial of class certification; class action was superior to other methods because otherwise

thousands of identical complaints would have to be filed), rev’d on other grounds, 516 U.S. 367

(1996). The class-action device is superior to and more manageable than any other procedure

available for treating the factual and legal issues raised by Plaintiffs’ claims.

D. Choice of Law Issues Do Not Prevent Certification.

Variations in state law can affect the Court’s analysis of predominance and superiority

under Fed. R. Civ. P. 23. See Castano v. Am. Tobacco Co., 84 F.3d 734, 740 (5th Cir. 1996).

Although some courts in putative nationwide consumer class actions have determined that the

law of the state where each plaintiff resides and purchased the product should apply,22 other

federal courts have determined that choice of law issues do not raise individual issues that will

predominate if either the law of a single state may be applied to all class members’ claims or if

there is no conflict of law between the forum state and other states. See, e.g., Kelley, et al. v.

Microsoft Corp., 251 F.R.D. 544 (W.D. Wash. 2008) (Pechman, J.) (certifying nationwide class

in case against Microsoft after finding that Washington CPA applied to all class member

22

See, e.g., In re Gen. Motors Corp. Dex-Cool Prods. Liability Litig., 241 F.R.D. 305, 316-19 (S.D. Ill. 2007) (determining that law of state where each plaintiff resides should apply to claims for breach of warranty); Chin v. Chrysler Corp., 182 F.R.D. 448, 457 (D.N.J. 1998) (deciding that law of each plaintiff’s home state should apply to claims for fraud and breach of warranty); In re Ford Motor Co. Ignition Switch Prods. Liability Litig., 174 F.R.D. 332, 347-48 (D.N.J. 1997) (holding that law of each plaintiff’s home state should apply to claims for fraud, breach of warranty, and other consumer-protection violations).


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claims).23 Here, a class may be certified because Washington law will apply to all class member

claims.

1. Washington Law Applies to Plaintiffs’ Tort Claims.

To determine whether Washington law applies to this class action, the Court must engage

in a two-part inquiry. The Court must first look to whether the application of Washington law is

constitutional, and if so, whether its application is appropriate under Washington’s choice of law

rules. Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985); Kelley, 251 F.R.D. at 549. Both of

these elements are met, and the Court should apply Washington law to Plaintiffs’ claims.

a. Application of Washington Law is Constitutional.

A forum state’s substantive law may be constitutionally applied in a class action if the

forum state has “a ‘significant contact or significant aggregation of contacts’ to the claims

asserted by each member of the plaintiff class,” such that the choice of the forum state’s law is

neither arbitrary nor fundamentally unfair. Shutts, 472 U.S. at 821-22 (quoting Allstate Ins. Co.

v. Hague, 449 U.S. 302, 313 (1981)). The Constitution places only “modest restrictions” on the

application of forum law; it need only be “casually or slightly” related to the action. Id. at 818-

19.

At least one court in this district has already found that Washington law may properly be

applied to nationwide class actions against Microsoft. Kelley, 251 F.R.D. at 553.24 In Kelley,

Judge Pechman specifically addressed whether Washington’s Consumer Protection Act (“CPA”)

23

See also Dal Ponte v. Am. Mortg. Exp. Corp., No. 04-2152, 2006 WL 2403982 (D.N.J. Aug. 17, 2006) (certifying nationwide class after finding that New Jersey consumer fraud statute applied in claims brought against New Jersey mortgage lender); Grove v. Principal Mut. Life Ins. Co., 14 F. Supp. 2d 1101 (S.D. Iowa 1998) (holding that Iowa law applied to class action claims for fraud, negligence and breach of contract brought by Florida residents against Iowa insurer).

24 Microsoft petitioned the Ninth Circuit for permission to appeal this ruling under Fed. R. Civ. P. 23(f). The petition was denied. See Slip Op., Kelley, et al. v. Microsoft Corp., No. 08-80030 (9th Cir. Apr. 21, 2008), Derry Dec. Ex. 24.


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could constitutionally be applied to a nationwide class of plaintiffs. 251 F.R.D. at 550. Judge

Pechman recognized that Microsoft’s contacts with Washington were more than “casually or

slightly related to the action” because Microsoft had created its allegedly deceptive and unfair

marketing scheme in Washington; Microsoft was incorporated, did business, and was

headquartered in Washington; one of the named plaintiffs was a Washington resident; and the

contracts required litigation under Washington law. Id.

Identical factors apply here, and this Court should also apply Washington law in this

action. Microsoft is still headquartered in Redmond, and is still incorporated under the laws of

this state. Am. Compl. ¶ 3.7. In addition, one of the named plaintiffs, Justin Hanson, is a

Washington resident. Id. ¶ 3.1.

The Xbox 360 was designed and developed in Washington, and many, if not all, of the

repair policies and procedures relating to the Xbox 360 were formulated in Washington. Umeno

Dep. 20:5-20; Garcia Dep. 33:6-18; 71:19-22; Park Dep. 238:20-22. The Xbox warranty terms

were developed in Washington. Park Dep. 238:20-22. The customer service policies were

formulated and developed in Washington. Park Dep. 60:21-61:5. All of the testing protocols

and requirements for the Xbox 360 that Microsoft implemented were developed in Washington.

Umeno Dep. 17:14-19:19; 39:12-15. Even the portion of Xbox 360 testing that occurred outside

of Washington followed protocols laid out by Microsoft employees in Redmond. Id. at 22:22-

23:1. Just as in Kelley, here Microsoft’s contacts with Washington are more than “casually or

slightly related to the litigation.” See Shutts, 472 U.S. at 819.

Further, Washington state courts have routinely held that Washington law may be applied

to nationwide class actions involving Washington companies. In Schnall v. AT&T Wireless

Servs., Inc., 139 Wn. App. 280, 294, 161 P.3d 395 (2007), plaintiffs brought a nationwide class


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action against AT&T alleging violations under Washington’s CPA for misrepresenting a user

fee. The court found that the CPA applied to all class members because the injury-causing

conduct occurred in Washington. Id. AT&T argued that the court should apply the law of each

state where a consumer made a purchase and was deceived. The Court of Appeals rejected this

argument, finding that the most significant relationships were in Washington based on AT&T’s

Washington activities and because “most importantly, as a Washington business, AT&T is

subject to Washington law.” Id. at 293-94.25

Microsoft’s contacts with Washington are as great, if not greater, than those of other

companies whose conduct has been held subject to Washington law. Unlike AT&T, Microsoft is

both headquartered and incorporated in Washington, and Microsoft has affirmatively selected

Washington law in the Xbox 360 warranty to govern Plaintiffs’ breach of warranty claims.

Derry Dec. Ex. 3, § H. Washington has significant contacts with the parties and claims in this

action such that its substantive laws may and should be applied.

b. Choice of Law Analysis Supports the Application of Washington Law.

“Federal courts sitting in diversity must apply ‘the forum state’s choice of law rules to

determine the controlling substantive law.’” Fields v. Legacy Health Sys., 413 F.3d 943, 950

(9th Cir. 2005) (quoting Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002)). As this diversity suit

was brought in the Western District of Washington, Washington’s choice of law rules apply.

Under Washington law, Microsoft has the burden of demonstrating an actual conflict

between Washington and other applicable state laws. Burnside v. Simpson Paper Co., 123

Wn.2d 93, 103-04, 864 P.2d 937 (1994). If Microsoft cannot show an actual conflict,

25

See also Pickett, 101 Wn. App. at 910 (holding Washington CPA applied to class claims for nationwide action brought under Washington CPA against Washington company marketing uniform contract with a choice of law clause selecting Washington law).


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Washington law applies. Assuming it can demonstrate a conflict, Washington has adopted the

“most significant relationship” test for determining choice of law outcomes. See, e.g., Johnson v.

Spider Staging Corp., 87 Wn.2d 577, 555 P.2d 997 (1976). “Under this approach, the rights and

liabilities of the parties are determined by the local law of the state which, with respect to that

issue, has the most significant relationship to the occurrence and the parties.” Zenaida-Garcia v.

Recovery Sys. Tech., Inc., 128 Wn. App. 256, 260, 115 P.3d 1017 (2005).

Washington applies a two-step analysis to determine which state’s law should apply to a

specific issue. First, the court evaluates the contacts with each potentially interested state. Id.

Then, only if the states’ contacts are evenly balanced, will the court engage in the second step,

which is an “evaluation of the interests and public policies of the concerned states, to determine

which state has a greater interest in determination of the particular issue.” Id. at 260-61.

In evaluating the competing states’ contacts under the first prong, Washington courts

consider: (1) where the injury occurred; (2) where the conduct causing the injury occurred; (3)

the domicile, residence, nationality, place of incorporation and place of business of the parties;

and (4) where the relationship, if any, between the parties is centered. Id. at 260; Schnall, 139

Wn. App. at 293; Restatement (Second) of Conflict of Laws (“Restatement”) § 145(2) (1971).

The court should not engage in merely counting contacts, but instead should focus on the most

significant and where those contacts are found. Johnson, 87 Wn.2d at 581. Here, these factors

weigh steeply in favor of applying the Washington CPA and the WPLA to Plaintiffs’ claims.

(i) Where the Injury Occurred

One factor to consider in determining which state’s law should apply is where the injury

occurs. However, several courts have recognized that the state where the injury occurs is not

entitled to substantial weight in a class action context or a consumer protection case. Kelley, 251


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F.R.D. at 552; Schnall, 139 Wn. App. 402-03. In Kelley, the Court, relying on Restatement §

145 cmt. e, recognized that:

The place of injury is of lower importance in a case of deceptive trade practices or misrepresentation. The Restatement suggests that “when the place of injury can be said to be fortuitous . . . as in the case of fraud and misrepresentation ... there may be little reason in logic or persuasiveness to say that one state rather than another is the place of injury . . . .” In such a case, the state in which the fraudulent conduct arises has a stronger relationship to the action. Where the defendant’s conduct causes harm in two or more states, the “place where the defendant’s conduct occurred will usually be given particular weight in determining the state of the applicable law.” Here, the Defendant’s allegedly unfair or deceptive acts caused injury throughout the country. The location of the harm suffered is fortuitous.

251 F.R.D. at 552 (emphasis added) (internal citations omitted). Likewise, in Schnall, the court

found that the CPA applied to all members of the nationwide class because the injury-causing

conduct occurred in Washington. 139 Wn. App. at 294. In so finding, the court rejected

AT&T’s argument that the laws of the plaintiffs’ home states should apply because they were

more numerous and because that is where the plaintiffs’ injuries occurred. Id. at 293-94.

The proposed class includes plaintiffs nationwide, and the named Plaintiffs reside in

Washington, California, and Pennsylvania, rendering the location where the injury occurred of

less import than the other choice of law factors. See Kelley, 251 F.R.D. at 552; Restatement §

145, cmt. e. Furthermore, the Xbox 360 was distributed nationwide, and Microsoft’s policies

were applied evenly to consumers throughout the United States. Park Dep. 26:9-19; 34:14-35:3;

51:13-52:16; 203:24-204:1. All plaintiffs suffer the same injury, regardless of their residence.

The place of injury is fortuitous. Washington should apply its own laws to Plaintiffs’ claims.

(ii) Where the Conduct Causing the Injury Occurred

“In a products liability action, the ‘place where the conduct causing the injury occurred’

is the place where the defendant designed, manufactured, or was otherwise involved with the


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product in question.” Brewer v. Dodson Aviation, 447 F. Supp. 2d 1166, 1179 (W.D. Wash.

2006) (Zilly, J.). As the Court noted in Zenaida-Garcia, “the defendant is a Washington

corporation engaged in designing and manufacturing trommels in Washington; the cause of

action is negligent and unsafe design of the trommel. Thus, the conduct causing the injury, and

the place where the relationship is centered, is Washington.” 128 Wn. App. at 263.

In a CPA case, the state where the conduct causing the injury occurred is the state where

the defendant developed the allegedly deceptive representations. Kelley, 251 F.R.D. at 552.

Moreover, where the place of injury is fortuitous (as it is here), the court should give greater

weight to the location of the source of the injury. Id., at 553; Restatement § 145, cmt. e.

Microsoft’s design team was located in Washington, Microsoft developed the Xbox 360

in Washington, and Microsoft produced the unfair and deceptive customer service and repair

protocols for the Xbox 360 in Washington. Umeno Dep. 20:5-20; Garcia Dep. 33:6-18; 71:19-

22; Park Dep. 238:20-22. Microsoft was aware that the Xbox 360 had the potential to scratch

discs prior to launching the Xbox 360. Despite this, Microsoft did not adequately warn

consumers that there was a design defect inherent in the Xbox 360 that caused its ODD to

scratch discs. Thus, the conduct causing the injury occurred in Washington. This factor favors

application of Washington law.

(iii) The Residence or Domicile of the Parties

The third factor that the Court should analyze is the residence, place of incorporation, and

place of business of the parties. Johnson, 87 Wn.2d at 581. Microsoft is incorporated and

headquartered in Washington. Am. Compl. ¶ 3.7; Kelley, 251 F.R.D. at 550. In fact, as the

Kelley court noted, “Washington has a unique and substantial relationship with [Microsoft], one

of Washington’s largest corporate citizens.” Id. at 553. Plaintiff and proposed class


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representative Hanson also resides in Washington. Am. Compl. (Dkt. 45) ¶ 3.1. The proposed

class will undoubtedly include thousands of additional residents of Washington. The fact that

Microsoft, one of Washington’s largest businesses, and one of the named plaintiffs, are

domiciled in Washington indicates that Washington has the most significant contacts with this

litigation. Kelley, 251 F.R.D. at 552; Schnall, 139 Wn. App. at 294.26

(iv) Where the Parties’ Relationship Is Centered

The court must also look at where the relationship, if any, between the parties is centered.

Johnson, 87 Wn.2d at 580-81. In a product liability action, “the place where the relationship is

centered is the same as the place where the conduct causing the injury occurred.” Brewer, 447 F.

Supp. 2d at 1179-80 (citing Zenaida-Garcia, 128 Wn. App. at 263). Plaintiffs’ claims under the

CPA are likewise centered in Washington, if anywhere. See Kelley, 251 F.R.D. at 552; see also

Schnall, 139 Wn. App. at 294.

Here, Microsoft developed the Xbox 360 in Washington, and Microsoft’s customer

service policies relating to the Xbox 360, scratched discs, and the disc replacement program are

all based in Washington. Park Dep. 60:21-61:5. These policies and programs were deceptive

and unfair because they failed to inform Microsoft’s consumers that the Xbox 360 could

potentially damage consumers’ game discs during normal, expected use, despite the fact that

Microsoft was aware during the development of the Xbox 360 console that this was both

foreseeable and likely. Thus, Washington is the state where the parties’ relationship is centered.

26

Indeed, the Washington Attorney General Consumer Protection Division has been forced to intervene against Microsoft on numerous occasions on behalf of Xbox 360 game disc owners throughout the United States whose discs have been rendered unplayable by the Xbox 360 defective design which has scratched their discs. See Derry Dec. Ex. 25 (attaching complaints and related correspondence).


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2. Application of Restatement Section 148 Does Not Alter This Analysis.

Microsoft may argue, as it did in Kelley, that the Court should ignore the factors set out in

Section 145 of the Restatement, and instead focus solely on the factors set out in § 148 to

determine which state’s law should govern Plaintiffs’ consumer protection claim. See 251

F.R.D. at 551. Section 148, which applies to claims of fraud and misrepresentation, directs the

court to consider several factors in addition to those laid out in § 145, including:

a) the place, or places, where the plaintiff acted in reliance upon the defendant’s representations,

b) the place where the plaintiff received the representations,

c) the place where the defendant made the representations,

d) the domicil[e], residence, nationality, place of incorporation and place of business of the parties,

e) the place where a tangible thing which is the subject of the transaction between the parties was situated at the time, and

f) the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.

Id. at 552; Restatement § 148(2). However, as Microsoft itself recognized in Kelley, “the

outcome is the same” under both §§ 145 and 148 of the Restatement. 251 F.R.D. at 551.

Because the Washington CPA does not require Plaintiffs to prove reliance, see Indoor

Billboard, 162 Wn.2d at 80-83, the first factor of §148 is of little import. Further, while

Plaintiffs received and relied on Microsoft’s alleged misrepresentations in Washington,

California, and Pennsylvania (or, upon certification of the class, nationwide), see Am. Compl. ¶¶

3.1-3.6, the location of these events is merely fortuitous. Kelley, 251 F.R.D. at 553 (“As it must,

the Court gives greater weight to the fact that the allegedly deceptive and unfair acts originated

in Washington given that the location of the injury is fortuitous.”). Microsoft originated its

deceptive scheme in Washington. See supra at 27, 31 (citing to Park, Garcia, and Umeno Deps.).

The Defendant and one of the Plaintiffs reside here. Am. Compl. ¶¶ 3.1, 3.7.


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Just as the Kelley court found the location of the tangible goods that were the subject of

the litigation to be “irrelevant,” so to is the location of the Plaintiffs’ Xbox 360s and scratched

game discs irrelevant. Microsoft’s policies and procedures with respect to the Xbox 360, its

warranty, and the disc replacement program are uniform nationwide. See supra at 30 (citing to

Park Dep.). The final factor, too, weighs in favor of applying Washington law because the only

contract claim at issue is Plaintiffs’ breach of warranty claim, which is governed by Washington

law. See Derry Dec. Ex. 3 at 8 § H.

For these reasons, under the factors of Restatement §§ 148 and 145, the result is the

same; Washington has the most significant contacts to this action and to Plaintiffs’ claims.

a. The Choice of Law Provision Does Not Change This Analysis.

Microsoft will invariably point to the terms of the Xbox 360’s limited warranty to argue

that the laws of the plaintiffs’ home states should govern each plaintiff’s individual tort claims.

The limited warranty asserts that the laws of a consumer’s state of residence will apply.

Derry Dec. Ex. 3 at 8 § H.

However, contractual choice of law provisions “do not dictate the choice of law for tort

claims.” Schnall, 139 Wn. App. at 294 (citing Haberman v. Wash. Pub. Power Supply Sys., 109

Wn.2d 107, 159, 744 P.2d 1032 (1987)).27 The same is true for statutory causes of action such as

Plaintiffs’ CPA and WPLA claims. See id. at 293. In Schnall, the court analyzed Washington’s

contacts with the action, and applied the Washington CPA to a nationwide class action against

AT&T, despite a choice of law clause in the customer contract calling for the law of the

plaintiff’s forum state to apply. Id. Likewise, here, given Washington’s significant contacts with

27

The parties agree that Washington law applies to Plaintiffs’ breach of warranty claims. Compare Am. Compl. (Dkt. 45) ¶ 8.7, with Microsoft’s Answer (Dkt. 39) at Aff. Def. No. 8. (Microsoft has not yet answered Plaintiffs’ Amended Complaint, filed on March 27, 2008).


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this action, Plaintiffs’ tort and statutory causes of action are not bound by the choice of law

provision in the Xbox 360’s limited warranty.

b. The Court Need Not Reach the Second Prong.

Here, because the contacts tip sharply in Washington’s favor, the Court need not reach

the second prong. See Kelley, 251 F.R.D. at 553; Johnson, 87 Wn.2d at 582. However, if the

Court determines that the contacts between Washington and some other state are “evenly

balanced,” the Court should then conduct an “evaluation of the interests and public policies of

the concerned states, to determine which state has the greater interest in determination of the

particular issue.” Zenaida-Garcia, 128 Wn. App at 260-61.

In Kelley, the court found that Washington had the most significant contacts, eliminating

the need to conduct this secondary inquiry. 251 F.R.D. at 553. Despite this, the court analyzed

the interests of Washington vis-à-vis other interested states, finding that Washington has a

“paramount interest” in applying its law to this action:

The CPA targets all unfair trade practices either originating from Washington businesses or harming Washington citizens. Application of the CPA to Plaintiffs’ claims “effectuates the broad purpose of CPA and its deterrent purpose, especially as applied to one of Washington’s most important corporate citizens.

Id.; see also McKee v. AT&T Corp., 164 Wn.2d 372, 385-86, 191 P.3d 845 (2008) (recognizing

the strong Washington public policy supporting the use of class action claims to pursue actions

for small-dollar damage claims under the Washington CPA). The same rationale applies here.

The Court should apply the Washington CPA to Plaintiffs’ claims.

The Court should also apply the WPLA to Plaintiffs’ claims. Several Washington courts

have applied Washington law to product liability cases involving Washington businesses and out

of state residents. E.g., Zenaida-Garcia, 128 Wn. App. at 266; Johnson, 87 Wn.2d at 584.

Zenaida-Garcia involved a suit over an allegedly defective piece of machinery that was


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manufactured in Washington, but caused an accident in Oregon. 128 Wn. App. at 258. After

weighing the respective interests of the two states, the court found that Washington “has strong

policy interests in deterring the design, manufacture and sale of unsafe products within its

borders,” and applied the WPLA. Id. at 266. In Johnson, a case decided prior to the adoption of

the WPLA, the court found that Washington law applied to product liability claims brought by a

Kansas resident against a Washington manufacturer arising from a fatal accident that occurred in

Kansas. 87 Wn.2d at 578-79.

Finally, in Brewer, Judge Zilly found that Washington law did not apply to a product

liability claim brought by a Washington resident against several out of state corporations. 447 F.

Supp. 2d at 1181-86. Instead, the Court found that the interests of the states where the defendant

corporations were located and had designed and manufactured the allegedly defective products

outweighed those of Washington. Id.

For all of these reasons, even if Washington’s contacts were evenly balanced with some

other state, which they are not, Washington’s interest in this litigation, involving one of its most

important corporate citizens, outweighs the interests of any other state.

IV. CONCLUSION

For the foregoing reasons, Plaintiffs respectfully request that the Court grant Plaintiffs’

Motion. A proposed order is attached.

RESPECTFULLY SUBMITTED this 21st day of November, 2008.

KELLER ROHRBACK L.L.P. By: s/ Amy Williams-Derry Mark A. Griffin, WSBA # 16296 Amy Williams-Derry, WSBA #28711 Shane P. Cramer, WSBA # 35099 1201 Third Avenue, Suite 3200 Seattle, Washington 98101


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Telephone: (206) 623-1900 Facsimile: (206) 623-3384 [email protected] [email protected] [email protected] Interim Class Counsel STRITMATTER KESSLER WHELAN COLUCCIO Paul L. Stritmatter, WSBA # 4532 Kevin Coluccio, WSBA # 16245 200 Second Avenue West Seattle, Washington 98119 Telephone: (206) 448-1777 Facsimile: (206) 728-2131 Plaintiffs’ Liaison Counsel CHITWOOD HARLEY HARNES LLP Gregory E. Keller, WSBA #13040 Darren T. Kaplan 2300 Promenade II 1230 Peachtree Street, N.E. Atlanta, Georgia 30309 Telephone: (404) 873-3900 Facsimile: (404) 876-4476 THE KOPELOWITZ OSTROW FIRM, P.A. Jeffrey M. Ostrow David Ferguson 200 SW 1st Avenue, 12th Floor Ft Lauderdale, Florida 33301 Telephone: (954) 525-4100 Facsimile: (954) 525-4300 Co-Lead Plaintiffs’ Counsel KABATECK BROWN KELLNER LLP Brian S. Kabateck Richard L. Kellner 644 South Figueroa Street Los Angeles, California 90017 Telephone: (213) 217-5000 Facsimile: (213) 217-5010


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KRAUSE KALFAYAN BENINK & SLAVENS, LLP James C. Krause Eric J. Benink 625 Broadway, Suite 635 San Diego, California 92101 Telephone: (619) 232-0331 Facsimile: (619) 232-4019

WASSERMAN, COMDEN & CASSELMAN, LLP Melissa M. Harnett 5567 Reseda Boulevard, Suite 330 Tarzana, California 91357 Telephone: (818) 705 - 6800 Facsimile: (818) 996 - 8266 Interim Class Counsel LEE & AMTZIS, P.L. Eric Lee 5550 Glades Road, Suite 401 Boca Raton, FL 33431 Tel: (561) 981-9988 Fax: (561) 981-9980 Plaintiffs’ Counsel


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