Microsoft has been on the receiving end of a class-action lawsuit for a while now, after many players filed against them, alleging that defective Xbox 360s were scratching up their discs. Finally, a 9th U.S. Circuit Court may have dealt the finishing blow, after denying a petition by Microsoft for a rehearing. The highly technical court decision seems to imply the decision was not an easy one, but in the end the involve parties agreed on the outcome (though apparently, not the reasoning for the outcome).
The case started in 2008, when the Xbox 360 was still a fairly new console, when a handful of players filed a motion for a class-action lawsuit against Microsoft. They said that a malfunction in the Xbox 360 would sometimes result in mild shaking (like say, when the Xbox is running in any capacity) would jar the disc drive and rattle the disc inside, causing scratching and gauges, rendering the games unplayable. The claim states that Microsoft received around 55,000 complaints regarding the problem. The court ruled against Microsoft, 3-0. This response comes after Microsoft attempted to file for a rehearing, confidently saying that had won in lower courts before. That confidence was apparently not enough, as now Microsoft will have to take the case to the Supreme Court or undergo litigation.
Microsoft has insisted that damages caused by the Xbox 360 were due to consumer misuse, such as moving the console with a disc in the tray. As well, they offered to replace Microsoft published games for free. They attempted to kill the class-action suit by comparing it to a similar case regarding the Land Rover LR3. That lawsuit was eventually dropped, but the judge didn't believe the cases were similar enough to justify dropping the Microsoft case. The plaintiffs argue that even if consumer misuse is a factor, it may only impact the extent of the damage caused by the defect, but that the defect still exists.
Microsoft has yet to comment on the decision.