Class Action

Microsoft Vista Class Action Defense Cases-Kelley v. Microsoft: Washington Federal Court Certifies Nationwide Class Action Against Microsoft For Class Action Complaint Challenging OEM Marketing Of Vista Operating System

By Michael J. Hassen

Class Action Challenging Labeling PCs as “Windows Vista Capable” even if PCs could not Run Premium Vista Properly Certified as Nationwide Class Action and Washington State Law may be Applied to Claims of All Members of Class Action Washington Federal Court Holds

Plaintiffs filed a putative class action lawsuit against Microsoft challenging the marketing of its new “Windows Vista Capable” and “Express Upgrade” programs; specifically, the class action complaint alleged that almost a year before its release of the new Vista operating system, Microsoft “authorized original equipment manufacturers…to place a sticker on personal computers… indicating that the PCs had been certified by Microsoft as ‘Windows Vista Capable.’” Kelley v. Microsoft Corp., ___ F.Supp.2d ___ (W.D. Wash. February 22, 2008) [Slip Opn., at 1]. The class action alleged further that a substantial number of PCs that were advertised as “Windows Vista Capable” were limited to “Vista Home Basic” which, according to the complaint, “does not include any of the enhanced features unique to Vista and which make Vista attractive to customers.” Id., at 2. Some PCs were labeled as “Premium Ready” rather than “Windows Vista Capable,” id., but at that time consumers were unaware of the various Vista operating systems that would be available or the differences between them. The class action also alleged that Microsoft offered an “Express Upgrade Guarantee Program” to PC customers that would allow purchasers to “Windows Vista Capable” PCs to upgrade to Vista for little or no cost, but failed to disclose that the upgrade generally would be limited to Vista Home Basic. Id. Plaintiffs moved for the district court to certify the litigation as a nationwide class action and to apply Washington law to the class action. Id., at 1. Defense attorneys opposed both motions. The district court granted class action certification and agreed that Washington law governs the lawsuits.

The gravamen of the class action complaint was that “Microsoft eventually released four versions of Vista - Basic, Premium, Business, and Ultimate” - but that “the Premium version that is the ‘real’ Vista.” Kelley, at 2. Computers were advertised as “Windows Vista Capable,” the class action alleged, in order to “boost holiday sales of personal computers after delaying the release of Vista from March 2006 to early 2007” because Microsoft was “concerned that consumers looking to buy a new computer would delay their purchases until the release of Vista (and therefore after the holiday season).” Id. Thus, Microsoft allegedly engaged in the false and deceptive business practice of advertising PCs as “Windows Vista Capable” even if they could only run the Basic version “because Microsoft was concerned that few PCs on the market at the time could run the more premium versions of Vista” and so it “endeavored to assure consumers that their new computers would run the soon-to-be released Vista operating system.” Id. Microsoft countered that while Vista Home Basic “lack[ed] some of the capabilities of the premium versions of Vista, [it] still provides material improvements over Microsoft’s earlier operating system, Windows XP,” id., and pointed to various “marketing materials, sales aids, and training materials that described what features the different Windows Vista editions would provide and explained that not every ‘Windows Vista Capable’ computer would be able to provide every advanced feature available in every edition of Windows Vista,” id., at 3.

At the time plaintiffs sought class action treatment, the complaint sought relief for unjust enrichment and for violation of Washington’s Consumer Protection Act (CPA) or other state consumer protection acts. Kelley, at 4. Plaintiffs sought to certify a nationwide class action, and argued that Washington law applied to the claims of all class members. Id. The district court began its analysis by addressing the choice of law question, id. Defense attorneys argued that “the laws of all 50 states are relevant to Plaintiffs’ claims,” id., at 5. The federal court explained that it must first determine whether applying Washington law would be unconstitutional, and if not, whether applying Washington law would be “appropriate under Washington’s choice of law rules.” Id. (citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)). The district court easily concluded that applying Washington law would not violate the Constitution because “[a]lthough the injury to Plaintiffs and the potential class members may have occurred outside of Washington, application of Washington law is not arbitrary, unfair, or unforeseeable.” Id., at 5-6 (citation omitted). The court’s analysis of Washington’s choice of law rules was much more extensive, see id., at 6-11. Washington law requires a determination first of whether an actual conflict exists between the laws of Washington and other states, and if so, “the forum or fora that have the ‘most significant relationship’ to the action to determine the applicable law.” Id., at 6 (citation omitted).

Full post as published by Class Action Defense Blog on February 25, 2008 (boomark / email).