Friday, March 06, 2009

Microsoft Vista False Advertising Suit Loses Class-Action Status

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices.

The federal district court in Seattle decertified customers’ Washington Consumer Protection Act (CPA) class action against Microsoft for allegedly false claims concerning its Vista operating system. However, the court denied Microsoft’s motion for summary judgment and will hear the customers’ CPA claims.

In 2006, Microsoft authorized computer manufacturers to place “Windows Vista Capable” stickers on computers about a year before Vista was released. The named plaintiff in the class action bought a Vista-capable computer and upgraded once the Vista software was released. Four versions of Vista were released, and the customer claimed that certain customers could only upgrade to the most basic version.

Deceptive Advertising Claim

The customer brought a CPA class action lawsuit against Microsoft, alleging that Microsoft engaged in a price inflation scheme and that the “Vista Capable” stickers were deceptive. Microsoft argued that because the advertising campaign made the distinction between the levels of Vista by noting that computers without a “Premium Ready” sticker could only run the basic version, the advertising was not deceptive or misleading.

Common Issues v. Individual Issues

Although originally certified, the class action was decertified after completion of discovery because common issues of law and fact did not predominate over the individual issues alleged in the complaint. Judges are free to revisit the issue of class certification when necessary in light of subsequent developments in the case.

Price Inflation Scheme

In order to state a CPA claim, the customer needed to show that Microsoft committed an unfair or deceptive act, that the “Vista Capable” designation had the capacity to deceive consumers, and that the deceptive act caused an injury. The customer claimed that Microsoft engaged in an unfair price inflation scheme by putting the Vista capable stickers on computers to artificially inflate the price and demand for computers.

However, the customer failed to present evidence of a specific shift in the demand for Vista capable computers on a class-wide level. The customer also failed to establish that the Vista capable stickers had a price effect on computers. Because the customer failed to present evidence of class-wide inflation, the court decertified the class action.

Pursuit of Individual Claims

Microsoft was not entitled to summary judgment, however, because the customer stated genuine issues of law and fact in the CPA complaint. The customer was not bound by the price-inflation theory by pursuing the individual claims.

The February 18 decision in Kelley v. Microsoft Corporation will appear in CCH State Unfair Trade Practices Law.

No comments: