F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

S E T H B A K

E R ; M A T T H E W D A

N Z I G ; J A M E S J A R

R E T T ; N A T H A

N M A R L O W ; M A R K R I S K , individually and on behalf of all others similarly situated, Plaintiffs-Appellants

,

v

.

M I C R O S O F T C O R

P O R A T I O N , a W ashing ton Corporation,

Defendant-Appellee

. N o. 12-35946

D.C. No. 2:11-cv-00722- RSM

ORDER AND AMENDED OPI NI ON

A ppeal from the United States District Court for the W e stern District of W ashing ton Ricardo S. Martinez , District J udg e, Presiding

Arg ued and Submitted April 7, 2014—Seattle, W ashing ton

F iled March 18, 2015 Amended J u ly

20, 2015

B efore: Michael Daly

Hawkins, J ohnnie B . Rawlinson, and Carlos T. B ea, Circuit J udg es.

Order; Opinion by

J u dg e Rawlinson; Concurrence by

J udg e B eaB A K E R V

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SUMMARY *

C lass Certif

ication

T he panel reversed the d istrict c ourt’s stipulated dismissa l

a nd o r der striking class alleg ations in a diversity action broug ht by a putative c lass o f o wners of Microsoft Corporation’s Xbox 360 video g ame console.

T h e p u tative class alleg ed a d esig n defect in the Xb o x

conso l e t h a t g oug ed g a me discs. I n striking the class alleg ations, the district court concluded that comity r equired deferral to an earlier class certification denial fro m a nother district court decision involving a similar putative class.

The panel held that there was jurisdiction under 2 8 U .S.C. § 1291 to hear the appeal because the district c o u rt’s dismissal o f the action with prejudice was a s ufficiently adverse, and appealable, final decision, even tho u gh the dismissal was the product of a stipulation. T h e p anel also held that the decision in W o lin v. Jaguar Land Rover N. Am., LLC
, 617 F

. 3d 1 1 6 8, 1173 (9th Cir. 2 010) (rejecting the notion that individual manifestati o n s of a d efect precluded resolution of the claims on a cl a s s -wide b asis), was controlling

, and the district court’s decision striking the class action a lleg ations from the complaint contravened W olin a nd

was a n abuse o f discre tion. The panel remanded for f urther proceeding s.

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.B A K E R V

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J udg e B ea concurred in the result, but not the reasoning

, of the majority opinion. J udg e B ea would hold that u nder the principles of comity a f

ederal d i s t r i ct court faced with an

e a r lier denial of class certification in an earlier co m m o n dispute heard in a different district court should ad o p t a rebuttable presumption of c orrectness; and J udg e B ea would conclude that presumption was rebutted in this case.

COUNSEL

B enjamin Gould (arg

ued), Mark A. Griffin, and Amy C. W illiams-Derry

, Keller Rohrback L L P, Seattle, W ashing ton; Paul L

. Stritmatter, Stritmatter K essler W helan Coluccio, Hoquiam, W ashing ton; B r ad J

. Moore, Stritmatter Kessler W h elan Coluccio, Seattle, W ashing ton; Robe r t L

. Esensten, W a sserman, Comden, Casselman & Esensten, L L P, T arz ana, California; Darren T. Kaplan, Darren Kaplan L aw F irm, P.C., N ew York, New York; Greg ory E. Keller, Chitwood Harley Harnes L L P, Atlanta, G eorg ia; and J effrey M. Ostrow, Kopelowitz Ostrow F e rg us o n W eiselberg Keechl, F o rt L auderdale, F lorida, for Plaintiffs-Appellants.

Stephen M. Rummag e ( a rg ued), F rederick B

. B urnside, a nd J ohn Goldmark, Davis W r ig ht Tremai n e L L P, Seattle, W a shing ton, for Defendant-Appellee.B A K E R V

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ORDER

The slip o pinion dated March 1 8
, 2015 is h ereby amended as follows:

Pag e 11 - insert the foll o w i n g f ootnote at the end o f the first parag raph:

Our decision in Huey v. Teledyn e , Inc
., 6 0 8 F.2d 1234 (9th Cir. 1979), is not to the contrary

. There, p ut ative class plaintiff Huey ’s motion for class certificati o n was denied in the di s t r i c t c ourt. Id

. at 1236. Subsequently

, Huey ’s individua l action was called for trial, but Huey made no appearance; according ly

, the district court dismissed Hue y ’ s a ction for want of prosecution. Id

. Huey attempted to appeal the denial of cl ass certification, b u t this court e x plained that it lacked jurisdiction ov er the appeal. W e

ex p lained that the strong policy of g iving trial judg es the a

bility “to a ch i eve the orderly a nd

e x peditious disposition o f cases” meant tha t plaintiffs who had failed to prosecute their claims lost the a

b ility to appeal the denial o f class c ertification. Id

. at 1239 (quoting Sullivan v. Pacific Indem. Co ., 566 F .2d 444, 445–46 (3rd Cir. 1977)).

However, Huey does not control here. Unlike that proceeding

, Ba k er did not f ail to appear before the district court a f ter the class a c tion alleg ations were struck. I n fact, B aker stipulated to dismiss h i s individual claim,B A K E R V

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g iving up a valuable rig ht in the process. Our

cases recog niz e that a stipulated dismissal o f

an indiv idual c laim is a n adverse a

nd appealable fi n al judg ment, Berger
, 741 F .3d
at 1065, as does a leading treatise. See 7B C h a rles Allan W rig h t, A rthur R. Miller, & Mary Kay Kane, F ederal Practi c e & Procedure § 1802 (3d ed. 2005).

W ith this amendment, J udg es Rawlinson and B e a v oted, and J udg e Hawkins recommended, to deny the Petition for E n B anc Rehearing

.

The full cou rt has been advised of the Petition for E n B anc Rehearing

, and no judg e of th e c o u r t has requested a vote.

Microsoft Corporation’s Petition for En B anc Rehearing

, filed on April 1, 2015, is DENIED . No further petitions for rehearing or rehearing

en banc will be accepted.

OP INION

RAW L I NSON, Circuit J udg e:

Pl a intiffs, a putative c lass of owners of Microsoft Corporation’s (Microsoft ) Xbox 3 60 ® video g a me console (Xbox ), appeal from the s t ipulated dismissal with prejudice of their lawsuit and f

rom the o rde r s t r i king their class alleg ations. I n striking the c lass alleg ations, the district court deferred to a

n e arlier c lass certification denial order involving

a similar putative class. See B aker v. Microsoft Corp.
, 851 F

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Supp.2d 1274, 127 6 (W .D. W ash. 2012) (citing In re Microsoft Xb o x 360 Scratched Disc Litig.
, No. C07-1121, 2009 WL 10219350 (W

. D. W ash. Oct. 5, 2009) ( Scratched Disc Litigation )). W e have jurisdiction p ursuant to 2 8 U .S.C. § 1291 a

nd reverse the order striking the c lass action alleg ations because the district court misapplied th e l aw a s established in W

o l i n v. Jaguar Land Rover N. Am., LLC
, 617 F .3d 1168, 1173 (9th Cir. 2010), constituting a n abuse o f discretion.

I. BACK G ROUND

This case involves an a lleg ed desig n defec t in the X box console that g oug es g ame discs. S ee B a ker

, 8 51 F

. Supp.2d at 1275. Plaintiffs specifically alleg ed that the Xbox optical disc drive is unable to withstand e v en the smallest o f vibrations, and that d

uring normal g ame play ing conditions discs spin out of control and crash i n t o internal console components, resulting in scratched disc s t hat are rendered permanentl y unplay able. Microsoft countered that the overwhelming majority of Xbox es do n o t manifest the alleg ed defect—only 0.4% o f Xbox owners have reported disc scratch ing —and that the cause of any disc scratching is consumer misuse, not a product defect.

A. S C R A T C H E D D I S C L I T I G A T I O N

I n 2007, other X box owners sued Micros o f t , alleg ing claims simil a r to those asserted in this case. These cases

were c onsolidated b efore Uni t e d States District J udg e J ohn Coug h enour. See S

cratched D isc Litig.
, 2009 W L 10219350,
at *1–*2. J u dg e Coug henour denied class certification on the basis that individual issues of f act a nd law predominated over common issues of fact and law. See id. at *5–*6.B A K E R V

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J udg e Coug henour relied heavily on the reasoning from another district court decision, Ga b l e v. LandRover N. Am., Inc.
, N o. CV07-0376, 2008 W L 4441960 (C.D. Cal. Sept. 29, 2 0 0 8 ), rev’d

, W olin

, 617 F .3d at 1176. See Scratched Di s c Litig.
, 2009 W L 10219350, a t * 6

. T he putative class action plaintiffs in Gable allege d t h a t the L and Rover L R3 had a defect in its alig nment that caused uneven, prematu r e tire

wear. See Gable

, 2008 WL 4 4 4 1 9 6 0
, at *1. 1 I n opposing class certification, defendant L and Rover arg ued that because the alleg ed d e f

ect did not manifest in every vehicle, an individual inquiry would be required to ascertain whether any g iven class member ex perienced the defect. Se e i d

. a t *3. L and Rover a lso asserted that because tires h a v e a limited useful life, a

n i n dividual inquiry would be required to determine w hether any g iven tire wear resulted from a defect and not another cause, such as individual driving habits. See id

. The district court ag reed w ith L and R o v e r, and denied class certification because the p laintiffs f ailed to demonstrate that the purported d e f

ect manifested in a majority of vehicles. See id

. at *4–*5. The district court d i d n o t address L a nd Rover’s causation arg

ument.

I n Scra t c h ed Disc Litigation
, J udg e Coug h enour reasoned that, like the L and Rover owners in Gable

, most Xbox owners have n ot ex perienced the purported defect. S e e S c ratched Disc Litig.
, 2009 W L 1 0 2 1 9 350, at *7. J udg e Coug henour focused on the fact that the defect asserted by the X box plaintiffs “actually manifest[ ed] in fewer than one percent” o f the total number of consoles purchased. Id. a t * 6

. The vast

1 In p articu l ar, th e p lain tif f s co n ten d ed th at th e f

ro n t o f e a c h o f t h e

v eh icle’s r e a r t ires w as f

arth er o u t f

ro m th e cen ter lin e th an th e b ack of each tire, a co n d itio n th e d istrict co u rt d escrib ed as “ d u ck

- f o o ted .” Ga b le

, 2 0 0 8 W L 4 4 4 1 9 6 0 , at * 1

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number of satisfied purchasers who ex peri e n c ed no defect before replacing the rapidly obsolescing g ame sy stems were determi n e d to have r eceived the benefit of the barg ain. See id. B ecause not all purchasers sustained damag es under this rationale, J u dg e Coug h eno u r r uled that the n eed to consider damag es on an individual basis “preclude[ d] the c ertific a t i o n ” of the class of Xbox owners. Id.

J udg e Coug henour rejected the X b ox plaintiffs’ attempt to disting ui sh Gable on the basis that the desig n defect

ex isted in every Xbox console and could only stem from o ne cause, whereas in G able “only a fraction of the proposed class members had actually ex perienced the defect a nd because misalig nment could have many different causes.” Id. J udg e Coug henour observed that the Xbox plaintiffs and the Gable plaintiffs both asserted a defect involving a common desig n flaw. The circumstance that prevented c l a ss certificat i o n in both cases w as the lack of u niform manifestation of the acknowledg ed desig n flaw. See id.

Althoug h the district court in Gable refrained f rom eng ag ing in a n ex haustive causation analy sis, J udg e Coug h en o u r nevertheless cited Gable for the notion that individual issues of causation p redominate because differing

causes may h ave p roduced the same defect. See id. According to J udg e Coug henour, “ [ E] ven if one link of [ the causation] chain is a d esig n defect, the other links are unique
to each plaintiff and require individu a l a t t e n t ion.

. . .” Id. The required i n d ividual attention to issues of law and fact ruled out class certification. See id.B A K E R V

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B. W O L I N D E C I S I O N

Ten months a fter dismissal of Scratched Disc Litigation
, we reversed t h e Gable decision upon which J udg e Coug h enour h a d s o heavily relied in deny ing class certificat i on. See W

olin

, 6 17 F .3d at 1170, 1176. W e concluded that the distric t c o u rt in Gable “erred when it

c o n c l u d e d

, w ithout discussion, that certificat i o n i s inappropriate because [plaintiffs] did not prove that the defect manifested i n a majority of the class’s vehicles.

. . . ” I d. at 1173. I n d e e d

, in the past, “we have held that proof of the manifestation of a defect is not a prerequisite to class certification.” Id. (citing Blackie v

. Barrack

, 524 F

. 2 d 891, 901 (9th C i r

. 1 975)). W e observed that rather than challeng ing the predominanc e o f common leg al a nd f actual issues, L and Rover was actually argu i n g t h e merits of the

case. See id. W e concluded that while “individ ual f actors may a ffect premature tire wear, they d o not a ffect whether the vehicles were sold with an alig nment defect.” Id

.
[ W ] e reject[ ed] L and Rover’s sug g estion that automobile defect cases can categ orically

never be c ertified as a class. Gable and W olin

as s e r t [ ed] that the defect ex ists in the alig nment g eometry , n ot in the tires, that L a nd Rover failed to reveal material facts in violation of c onsumer p rotection laws, a nd th a t L and Rover was u n

justly enriched when it sold a defective vehicle. A ll o f t h ese alleg ations a

re s u sceptible to proof b y g eneraliz ed evidence.

Id

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L and Rover also asserted that the claims of plaintiffs G a ble and W olin were not ty pical because the wear on the i r tires was not a ttributable to misalig nment. S e e id. at 1175. W e were not persuaded to t h i s v iew because L and Rover failed to identify any defenses that were unique to Gable a nd W o lin. See id. W e decided that r e ga r d l ess of when the premature tire wear was ex perienced, the fact remained that all class members at some p oint ex perienced the same injury due to the same defect. The timing of the defect affected the
amount o f damag es, not the appropriateness of class certification. S

ee id. I n sum, we held that the requirement o f ty picality “can b e satisfied despite different f actual

c i rcumstances surrounding the manifestation of the d efect.” Id. (citation o mitted). W e concluded that Gable, Wolin, a nd the other c lass members could have a v iable claim ag ainst L and Rover reg ardless of how the d e f e c t manifested in the individual vehicles. S

ee id. W e ru l e d that the asserted alig nment defect, the asserted violation of warranty , and the asserted unjust enrichment due to the less e n ed value of the vehicles were “issues common to a ll class members

. . .” Id. at 1176.

The d istrict court in this case d et e r m i ned that our ruling in W olin did not u ndermine the causation analy sis a rticulated in Scratched Disc Litigation
, and t h a t comity r equired d e f e r r al to the earlier certification order. See Baker

, 8 51 F. Supp.2d at 1279–81 (striking the c lass action alleg a tions from the complaint). The district c ourt n oted that no Ninth Circuit

or Supreme Court precedent articulated the mechanism b y which c om i t y w as to operate; thus it a dopted the sug g estion of the American L aw I nstitu t e (A L I ) that a prior denial o f class certification on t h e s ame subject matter by a different district court judg e be g iven a r ebuttable presumpti o n o f
correct n e s s

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d e t e rm ined that the presumption had not been rebutted, a n d d e ferred to J u dg e Coug henour’s p rior d ecision. S ee id. at 1280.

P laintiffs initially petitioned for an interlocutory appe a l

, which was denied. The pa r t i e s subsequently stipulated to dismiss the case with prejudice, and t h e district court approved the stipulation. Plaintiffs timely appealed. 2

II. DISCUSSION

A. J U R I S D I C T I O N

Microsoft contends that we lack jurisdiction to consider this appeal because the voluntary dismissal with prejudice did
not create appellate jurisdiction. B ecause jurisdiction is a threshold issue, we resolve this matter before addressing the merits. See Maya v

. Centex Corp.
, 658 F .3d 1060, 1 068 (9th Cir. 2011).

Microsoft takes the position that a voluntary d ismissal with prejudice does not sufficien t l y a ffect the merits of the

2 Co u rts h av e g r a p p led w ith th e b alan ce betw een p rev en tin g rep eated f riv o lo u s ef

f o rts t o certif

y a class an d preserv in g d u e p ro cess rig h ts. S ee, e.g

. , In re Brid

gesto n e/Firesto n e, In c., T ires Pro d

u cts Lia b

. Litig

. , 3 3 3 F.3 d 7 6 3
, 7 6 8

– 6 9 (7 th Cir. 2 0 03 ) (b in d in g p u tativ e class m em b ers

w h eth er o r n o t n am ed ). Desp i t e t he Su p rem e Co u rt’ s reco g n itio n of

“ po licy co n c e r n s relatin g to u se of th e class actio n d ev ice,” th e Co u rt rej ected t h e Sev en th Circu i t’ s ap p ro a c h an d d ecid ed th at “ p rin cip les of
sta re d ecisis an d co m ity am o n g co u rts” w o u ld h av e t o “ m itig ate th e

so m etim es s u b stan t ial co sts o f sim ilar litig atio n b ro u g h t b y d if f eren t p lain tif f s.” S mith v. Ba

yer Co rp

. , 13 1 S.Ct. 2 36 8
, 2 3 8 1 (2 0 1 1 ). T h e d istrict co u rt’ s ap p licatio n o f th e A L I p ro p o sal m ay b e v iew ed as an ef f o rt to reco n cile th ese v alu e s a n d f o llo w th e Su

p rem e Co u rt’ s g u id an ce in S mith

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substantive claims to c onstitute an appealable final judg ment. 3 However, we rejected a similar a rg ument in Berger
, where as in this c ase, the parties stip u l ated to dismissal of the case w ith prejudice following d enial of a class certification motion. 741 F .3d at 1064. L ike Microsoft, the defendant in Berge r c h a l leng ed our jurisdiction over an appeal resulting from stipulated dismissal of a putative class action. See id. a t 1065. W e disag r eed, r u l i n g t h at “in the absence of a settlement, a stipulation that leads to a d ismissal with prejudice does not destroy the adversity in that judg ment necessary to su p p o r t a n appeal.

. . .” Id. a t 1064. W e disting uished a stipulated dismissal without a settlement from

a stipulated dismissal with a settl ement. The former retains sufficient adversity to sustain an appeal. The latter d oes not. See id. at 1065.

As this case did n o t i n v olve a settlement, Berger establishes that “[ w] e have jurisdic t i o n under 28 U .S.C. § 1291 b ecause a dismissal of a n action with p r ejudice, even when such dismissal is the product of a s t i p u l ation, is a sufficiently a dverse—and thus a ppealable

— final decision.” Id

. 4

3 Micro so f

t also co n ten d s th at b ecau se th e P lain tif f s u n su ccessf

u lly

m o v ed f o r in terlo cu to ry ap p eal u n d er Ru le 2 3 (f ), th e y m u s t litig ate th e

m erits o f th eir claim s to f in al j u d g m en t to ob tain ap pellate rev iew

. Ho w ev er, Micro so f

t h as n o t p resen ted a p rin cip led b asis f o r th is p ro po s ed d istin ctio n

b etw een th e p resen t case an d Berg er

.

4 Ou r d ecisio n in Hu ey v. Teled yn e, In c ., 60 8 F.2 d 1 2 3 4 (9 th Cir. 1 9 7 9 ), is n o t to t h e co n t r a r y

. T h ere, p u tativ e class plain tif f Hu ey ’ s m o tio n f

or class certif

icatio n w as d en ied in th e d istrict co u rt. Id

. at 1 2 3 6

. Su b seq u en tly

, Hu ey ’ s in d iv id u al act i o n w a s called f o r trial, b u t Hu ey

m a d e n o ap pearan ce; acco rd in g ly

, th e d istrict co u rt d i sm issed Hu e y ’s actio n f o r w an t o f

p ro secu tio n

. Id

. Hu ey attem p ted to ap p eal th e d en i al

o f class certif

icatio n , b u t th is co u rt ex p lain ed th at it lack ed j u r i s d ictio nB A K E R V

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B. S T R I K I N G O F C L A S S A C T I O N A L L E G A T I O N S F R O M
T H E C O M P L A I N T

J udg e Martinez struck t h e Xbox Plaintiffs’ class action alleg ations from the complaint bas e d l a rg ely on J udg e Coug h enour ’ s f

inding in Scratched D isc Litigation that individual issues o f c a usation predominated in that earlier Xbox d e f e c t c a se. See B aker

, 8 51 F

. Supp.2d at 1276–77. J udg e Martinez determined that, althoug h W olin reversed the holding in Gable that J udg e Coug henour relied on, W olin did
not und e r m i ne the causation analy sis set forth in Scratched Disc Litigation

. See id. at 1279–80. W e do not ag r ee.

J udg e Martinez c ited J udg e Coug henour’s description o f the causation a

naly sis in Gable for the n o tion that individual issues of causation predominated in this case. He o b s e rved that J udg e Coug henour found persu asive the analy sis in Gable discussing alternative causes of tire defect manifestation, and that J udg e Coug henour followed that reasoning in determining that individual i s sues of causation predominated in Scratched Disc Litigation

. See id. at 1279.

o v er th e ap p eal. W e ex p lain ed th at th e stro n g p o l icy o f g iv in g trial j u d g es th e ab ility “ to ach iev e th e o rd erly an d ex p ed i tio u s d isp o sitio n o f c a s e s ”

m ean t th at p lain tif

f s w h o h ad f ailed to p ro secu te th eir c l aim s lo st th e ab ility to ap peal th e d en ial o f class certif icatio n

. Id

. a t 1 2 3 9 (q u o tin g S u lliva n v. Pa cific In d

em. Co ., 5 6 6 F.2 d 4 4 4 , 4 45

– 4 6 (3 rd Cir. 1 97 7 )).

Ho w ev er, H

u ey d o es n o t co n tro l h ere. Un lik e th at p ro ceed in g , B ak er d id n o t f ail to ap p ear b ef

o re th e d istrict co u rt af

ter th e class actio n alleg atio n s w ere s tru ck

. In f act, B ak er s tip u lated to d ism iss h i s i n d iv id u al claim

, g i v in g u

p a v alu ab le rig h t in th e p ro cess. Ou r cases reco g n ize th at

a stip u l ated d ism issal of an in d iv id u al claim is an ad v erse an d ap p ealab le f in al j u d g m en t, Berg er , 7 4 1 F.3 d at 1 0 6 5
, as do es a lead in g treatise. S ee 7 B Ch arles A llan W rig h t, A rth ur R

. Miller, & Mary Kay Kan e, Fed eral P ractice & P ro ced u re § 1 80 2 (3 d ed . 2 00 5 ).B A K E R V

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J udg e Martinez ’s order applied this s a me causation analy sis
to reach h i s c o n c l usion that “[ t] h e discs at issue in this case

are analog ous to the tires at issue in Gable / W olin b ecause, a s J udg e Coug henour recog niz ed, both products may be damag ed for a

ny number of r easons

. . .” Id. This discussion reveals that J udg e Mar t i n ez relied heavily on Gable for its causation analy sis.

J udg e Martinez determined t h at “nothing in W olin undermines J udg e Coug henour’s c ausation analy sis

. . .” Id.
at 1 280. However, our read i n g o f W olin leads to a different conclusion. I n W

olin

, we ex pressly and specifically rejected the notion t hat individual manifestations of the defect precluded resolution of the claims o n a class-wide b asis. W e held that “[ a] lthoug h individual f actors may affect premature ti re w e ar, they do not affect whether the vehicles were sold with an a lig nment defect.” 617 F .3d at 1 1 7 3

. W e were not p e r s u aded b y L and Rover’s efforts to disting uish the

r epresentative plaintiffs’ claims from those o f other prospective c lass members. W e noted th a t a ll prospective class m e m bers a lleg ed the same injury from a defective alig nment in their vehicles. All prospective class members
soug h t recovery pursuant to the same leg al theories, and L a nd Rover failed to identify any d efenses that were unique to the representative plaintiffs. See i d

. a t 1 175. I n W olin

, we clarified that the individual manifestations of the d e fect were relevan t “to the ex tent of [ plaintiffs’] damag es and not whether [ Gable and W olin] posses s the same interest a nd suffered the same injury a s t h e class members.

. . .” Id. (citation, alteration, a

nd internal qu otation marks omitted). W e concluded in W

olin :

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L imited W arranty for defects within the vehicle, and w hether L and Rover was unjustly enriched because consumers’ vehicles a re worth less due to the defect are issues

common to all class members and can be litig ated tog ether. . . .

Id. at 1176.

Similarly in this case, althoug h individual factors may affect the timing and e x tent of the d isc scratching

, they d o not affect whether the Xbox es were s old with a defective disc
sy stem. Plaintiffs c o n t end that (1) whether the X box is defectively d esign e d and (2) whether such desig n defect breaches a

n ex press or an implied warranty a r e b o th issues capable of common proof. W e ag ree that, as in W olin

, these issues are susceptible to proof b y g e neraliz ed evidence and do
not require proof of individual causation. See id. at 1172–74, 1176.

Among the common questions identified u n d er the warranty claims are:

i. T h e ex istence o f any ex press warranties made by Microsoft concer ning the Xbox 360;

ii. The application o f any such ex press warranti e s to the claims asserted in this action;

iii. W h ether Microsoft has breached any o f its

ex p ress warranties, as alleg ed herein;B A K E R V

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iv. The e x is t e n ce of any implied warranties

made b y Microsoft concerning the Xbox 360;

v. The application of any such impl i e d warranties to the claims ass e rted in this action;

vi. W h ether Microsoft has breached any of its implied warranties, as alleg ed herein;

. . .

Microsoft contends that plaintiffs’ e x press wa r r a n t y claim is not a menable to class treatment because individual proof o f causation is n e c e s s ary to determine if there was a breach o f its ex p r e s s warranty

. According to Microsoft, like the Tire W a r ranty at issue in W

olin

, a determinatio n of whether the alleg edly defective Xbox disc sy stem caused a g i v e n disc to scratch requires proof specific to that class member. However, this analog y is inapt because plaintiffs’ position is that the desig n defect itself breaches the ex press warranty

.

The most that ca n b e said of the holding in W olin that would be of assistance to Micr o soft is our recog nition that “early tire wear cases may be part i cularly p roblematic for plaintiffs seeking class c ertification

. . .” Id. at 1173 (emphasis added). Nevertheless, in that case, we “reject[ ed] L and Ro v e r’ s sug g estion that automobile defect cases can categ orically never be certified as a c lass.” Id. I n W olin

, plaintiffs alleg ed the ex istence of a d esig n defect, L a nd Rover’s failure to reveal material facts and L and R o v er’s unjust enrichment due to the sa l e o f d e fective vehicles. See id. W e held that these alleg ations were “susceptible to proof by g eneraliz ed evidence. Althoug h individual factor s m ayB A K E R V

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a f fect premature tire wear, they [ did] not affect whether t h e vehicles were sold with an alig nment defect.” Id.

Similarly

, proof that t h e alleg edly defective disc sy stem caused individual damag e s i s n ot necessary to determine whether the ex istence o f the alleg e d d esig n defect breaches Microsoft’s ex press warranty

. Rather, plaintif fs’ breach o f

ex p res s warranty claim presents a common f actual question—is there a d efect? —and a common mix ed question of law a n d f

act—does that d efect breach the ex press warranty ? W e conclude, a s we did in W olin

, that the district
court e rred in finding that individual issues o f causation predominate over these common questions. See id.

Microsoft attempts to furth er d isting uish W olin b y arg uing that, u n l i k e the vehicles in W olin

, with their “ duckfooted” tires that inevitably caused uneven, pre m a ture tire

w e a r , the defect here may never manifest. Microsoft contends that it proved in the S cratched Disc Litigation that the alleg ed defect does n ot manifest in th e vast majority o f X b o x e s. However, we debunked this arg ument in W olin b y referencing the rule from Blackie

, 5 24 F .2d a t 9 0 1
, that “proof of the manifestation of a d efect is not a prerequisite to class certification. . . .” Id.

W h at Microsoft is really arg uing is that plaintiffs cannot prevail on the merits. See id. However, Microsoft’s meritsbased contention has no place in the d etermination o f whether

an action m a y p roceed on a class-wide basis. W h en the district court relied on G able to conduct this merits-based analy sis, see Baker

, 851 F

. Supp.2d at 1279–80, it e rred, thereby abusing its discretion.B A K E R V

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Microsoft n ex t arg ues that, “unlike the W olin plaintiffs— who alleg ed the a lig n ment defect made their lux ury vehicles ‘worth less,’

. . . —Plaintiffs n e ither claimed the alleg ed de fe c t made Xbox 360 consoles worth less nor offered

common evidence of d a mage or loss to the proposed class.” This arg ument misconstrues the a lleg ations o f the complaint. L ike the plaintiffs in W

olin

, p laintiffs in this case a lleg ed that a desig n defect diminished the value of the Xbox

.

I n a footnote, Microsoft also sug g ests t h at individual issues of state warranty law predominate for implied warranty clai m s. However, Microsoft has not identified any material differences in the applicable state implied warranty laws that would req u i r e an individualiz ed inquiry reg a rding the commonly asserted defect. I ndeed, M i c r o soft noted in its appellate brief the similarity amon g t h e implied warranty statutes in W ashing ton, California, I llin o is, New Y ork a nd Michig an.

F inally

, Microsoft seeks to characteri z e plaintiffs’ class action alleg ations as proceeding on the t heory that W olin created a per se rule r e q uiring cl a s s c e rtification of defect claims. Microsoft’s c o ntentio n i s premature and misses the mark. A s a

n initial matter, in W

olin we did not adopt a per se rule requiring class certification of defect claims. I ndeed, the

converse is true. Rather than adopting a per s e rule, we simply rejected L and Rover’s sug g estion that we s hould categ orically decline to certify classes in automobi le defect

cases. See W

o lin

, 617 F .3d at 1173. Moreover, plaintiffs in this c ase never moved f

o r class certification. I nst e ad

, t h e district court erroneously ruled that defect alleg ations a re not

ame n a b le to r esolution on a class-wide basis and struck the class alleg ations from th e co m plaint. See Baker

, 851 F

. Supp.2d at 1280–81. Microsoft makes several arg uments toB A K E R V

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this c ourt attempting to disting uish W o l i n and to show that certification of this class would violate F ederal Rule of Civil Procedu r e 23. However, our ruling that the district court’s
ap p lication of comity was misplaced means that these
arg uments are better addressed if and when plaintiffs move for class certification. I t suffices for n ow to hold that because the district c ourt misread W olin

, it did not ac c o u n t for the chang e in applicable law that made deference to J udg e Coug h enour’s opinion erroneous. 5

W e ex press no opinion on whether the specific common issues identified in this c ase are amenable to adjudication b y way of a class action, or whether plaintiffs should prevail on

a motion for c lass c ertification if such a motion is filed. W e hold only that the district court committed an error of law a nd abused its discretion when i t s t ruck the class action alleg ations from the complaint in contravention of applicable Ninth Circuit precedent.

5 A l th ou g h n o circu i t h as ad o p ted t h e A L I ru l e sin ce its p u

b lica t i o n i n 2 0 1 0 (n o r d id th e Su

p rem e Co u rt en d o rse it in Smi t h ), th e d istrict co u rt

m isap p lied th e ru l e b y r ely in g on th e w ro n g leg al stan d ard

. T h e d istrict

co u rt g av e a p resu m

p tio n o f co rrectn ess t o J u d g e Co u g h en o u r’ s p rio r

ru lin g , b u t im

p ro p erly d eterm in ed t h at a ch an g e in law (o u r d ecisio n in W o lin ) d id n o t reb u t th e p resu m p tio n

. In o th er w ord s, assu m in g a rg u en d

o th e v alid ity of th e A L I ru le, th e d istrict co u rt ’s m isread in g of th e p rio r

ru lin g ren d ered ap p lic a t i o n of th e p resu m p tio n o f co m ity an ab u se of d iscretio n

. S

ee Un ited S t a t es v. Hin kso n , 5 8 5 F.3 d 1 2 4 7
, 1 2 5 1 (9 th Cir. 2 0 0 9 ) (en b an c) (ab u se o f d iscretio n t o id en tif y w ro n g leg al stan d ard ); see

a lso Ba r a p i n d v. Ren o , 2 25 F.3 d 1 1 0 0
, 1 1 0 9 (9 th Cir. 2 0 00 ) (d ecisio n to d ism iss u n d er co m ity d o ctrin e rev iew ed f o r ab u se o f d iscretio n ). G i ven th at w e can d ecid e th is c a s e o n a n arro w er an d m o re w ell estab lish ed
g ro u n d , th ere is n o reaso n to ad o p t th e A L I ru le h ere.B A K E R V

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III. CONCLUSION

W e conclude that we have jurisdiction over t h is appeal despite the p a r t ies’ stipulation to dismiss the case following the d istrict c ourt’s ruling striking the c lass action a lleg ations. W e hold that our decision in W olin is controlling

, a n d t h e district court’s d e c i sion striking the class action alleg ations from t h e c omplaint contravened W olin and was an abuse o f discretion.

R E VE R S E D and R EMANDED f o r f u r t h e r proceedings consistent w ith this opinion

.

B EA, Circuit J udg e, concurring in the result:

Th i s case presents a

n important question of first i mpression in the federal c ourts of appeal: W hat principl e s

s h o u ld g uide a federal district court’s a pplication o f comity
to a fellow district court’s earlier denial of class certification, when a ddressing a later motion for class certifi c a t i on by a similar class o f plaintiffs? The parties asked this q uestion o f J udg e Martinez in the district court, w ho answered (“[ i] n the absence of any specific g uidance” f rom o u r co urt) b y adopting the American L eg al I nstitute’s (“AL I ”) s u g g estion that the earlier denia l o f class certification be a ccorded a rebuttable presumption o f correctness. Baker v

. Microsoft Corp.
, 851 F

. Supp. 2d 1274, 1 278 (W .D. W ash. 2012). W e should be aware that litig ants in other cases have added to the chorus of voices requesting g uidance, reinforcing just h ow important this question is to effective a d j u d ication of class action litig at i o n

. See, e

. g. , Ott v

. Mortgage Investors Corp.B A K E R V

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of Ohio

, 2 014 W L 6 851964 at *13 (D. Or. D ec. 3
, 2 014) (citing Baker

, 851 F . Supp. 2d at 1278).

I believe our court owes it to district courts to g ive them the g uidance w hich J udg e Martinez f ound, quite correctly

, was absent. Moreover, I respect fully disag ree with the majority opinion’s assertion that this case can be d ecided on the “narrower and more well established g round” that J udg e Ma r t i n e z e rred in basing h is ruling on the tire d efect cases. Maj. Op. at 19 n. 5 (citin g Gable v. Land Rover North America, Inc.
, 2008 W L 4441960 (C.D. Cal. Sept. 29, 2008), rev’d sub nom W

olin v. Jaguar Land Rover North Am., LLC
, 617 F .3d 1168 (9th Cir. 2010)). That simply was not the basis for J udg e Martinez ’s r uling

. Rather, J u d ge Martinez based h is ruling on the only g round u rg ed by Microsoft: that he should defe r , f

o r reasons of comity

, to J udg e Coug h enour’s denial of class certifi c a tion in an earlier, similar class action. 1 F or that reason, I do n o t c oncur in the majority opinion. I nstead, I would h o ld that a federal district

c o u r t f a ced w ith an earlier denial of class certification in an earlier common dispute heard in a dif f erent district court should a dopt t h e r e buttable presumption of c orrectness

s u g g e sted by the AL I and adopted by J udg e Martinez

. Bu t because I conclude that presumption was rebutted in this c ase, I concur in the result reached by the majority

.

1 S ee in fra f o o tn o t e 5 an d acco m

p an y in g tex t.B A K E R V

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I. Background

F irst, a brief h istory of this action may be helpful to bring fo c u s

. I n Gable

, 2 the district court denied certification of a class of L and Rover owners who alleg e d a defect in the wheel alig nment of their vehicles that caused u neven, premature tire

wear. The district court judg e believed that t he individual issue w hether or not the defect actually had manifested itself by causing damag e to the tire predominated over the common issue whether the car had defective wheel alig n ment. Gable

v. Land Rover North America, Inc.
, 2008 W L 44 4 1 9 6 0, *5 (C.D. Cal. Sept. 29, 2008).

A y ear later, District J udg e Coug henour in In re Microsoft Xbox 360 Scratched Disc Litigation
, 2 009 WL 10219350 (W .D. W a sh. Oct. 5, 2009), was p r e s e n ted with a p utative class of X-B ox owners who, similar to plaintiffs here, alleg ed their X-B ox devices had scratched the ir video g ame discs. He r elied o n the causation analy sis of Gable to deny certification of the class. He reason e d t h a t much as e ach L and Rover owner in G able had to show that th e a l i gn ment defect h ad manifested itself b y causing tire d amag e in his car,

so too each video g a me sy stem owner in Microsoft Xbox 360 Scratched Disc Litigation had to show that t h e scratching defect of his g ame console had manifested itself by damag ing

a disc. T he manifested effect o f t h e p roduct defect would tend to be d ifferent as to e ach p laintiff’s tire o r disc. Notably

, J udg e Coug henour ruled against t he plaintiffs’ attempts to disting ui sh Gable

, say ing that the two cases presented identical questions of predominance of individual issues over

2 G a b l e v

. La n d Ro ver No rth America

, In c. , 2 0 0 8 W L 4 4 4 1 9 6 0 (C.D. Cal. Sep t. 2 9
, 2 0 08 ), r e v ’d su b n om W o lin v. Ja g u a r La n d Ro ver No r th Am., LLC , 6 1 7 F.3 d 1 1 6 8 (9 th Cir. 2 0 1 0 ).B A K E R V

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common class issues. M

icrosoft Scratched Disc Litigation at *7. That scratched disc case was settled later that y ear.

I n 2010, the Ninth Circuit reversed Gable ’s determination of the predominance question. W e held the common question whether a d efect e x isted in the wheel alig nment predominated

ove r the individual question of the manifestation of the defective wheel alig nment throug h uneven tire wear. 3 J udg e Martinez

, the district c o urt judg e here, heard Mi c r o soft’s motion to strike class claims in 2012, and was faced with an unusual conundrum.

The Supreme Court had recently held that federal district
courts are ex pected “ to apply principles of c o mity to e ach other’s class certific at i o n decisions when addressing a

common dispute.” Smith v. B a yer , 131 S.Ct. 2368, 2382 (2011). B ut no Ninth Circuit or Supreme Court p recedent

ex isted to interpret how principles o f c o m i ty should be applied. J u dg e Martinez thus a d opted the s u gge s t ion of the American L e g al I nstitute (“AL I ”) that an earlier c lass certification decision of a different distric t c o u r t should be af f o r ded a rebuttable presumption of preclusive effect. Apply ing this presumption, he held t h at the presumption o f preclusive eff

e c t a s to J u dg e Coug henour’s ruling in Microsoft Xbox 360 Scratched Disc Litigation had not been rebutted, and g ranted the motion to strike. J udg e Martinez did not opine on the issues raised by the motion to strike d e

3 T h e Nin th Circu i t rev ersed u n d er a d if fe r e n t n a m e

. W

o lin v. Ja gu a r La n d Ro ver No rth Am., LLC
, 61 7 F.3 d 1 16 8 (9 th Cir. 2 0 1 0 ). T h u s, W o lin ref ers u n am big u o u sly to t h e Nin t

h Circu it ru lin g , w

h ile Ga b le ref

ers

u n am big u o u sly to th e d istrict co u rt ru lin g

.B A K E R V

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novo, and the def

e n d a n t s did not base their motion to strike
on any g rounds bey ond comity

. 4

W a s J udg e Martinez ’s a

p plication of comity correct? A s I have n oted, this is a q uestion of first impression in t h i s circuit, and a difficult one. And it puts the wrong question in this case to assert, as the majority does, that J udg e Martinez misconstrued this court’s opinion in W olin

. 5 A fter a ll, in the ty pical comity case, where a US court is considering whether
to g ive effect to a foreig n judg ment, “the mere assertion of [ a] party that the [ earlier] ju d gm e n t was e r roneous in law or in fact” does not suffice to d isrupt the p r esumpt i o n t hat the foreig n judg ment be g iven leg al effect. Asvesta v. Petroutsas
, 580 F .3d 1000, 1011 (9th Cir. ( 2009)) (quoting Hilton v

. Guyot
, 159 U.S. 113 (1895))

. I n those cases, a “special

4 S ee ER 45 (m ak in g th e co m ity arg u m en t as t o th e m o tio n t o strik e, th en arg u in g th at “ In th e A lt e r n ativ e, th e Co u rt Sh o u ld Den y Certif

icatio n of P lain tif f s’ P ro p o s ed Classes.”). C ertif icatio n raises issu es an d p ro ced u res q u ite d if f eren t f ro m a m o t io n to strik e, an d d ef en d an ts w ere u

n am b i g u o u s i n r e l y in g o n th e co m ity arg u m en t alo n e f o r th eir m o tio n to strik e

. P lain tif f s rep lied th at “ co m ity d o es n o t a p p ly ” b ecau s e W o l i n w as an in terv en in g ch an g e in law ; as t h e ALI ex p lain s, th e co m ity p resu m p tio n

o f co rrectn e s s i s reb u t t ed “ w h en th e b asis f

o r an earlier d en ial.

. . is n o lo n g er p resen t.” Dk

t. 23 at 1 7 (citin g A m

. L aw

. In st., Prin cip l e s o f th e La w o f Ag g reg a te Litig a tio n § 2 .1 1 cm t. c. (2 0 1 0 )).

5 I ag ree th at J u d g e Martin ez m isu n d ersto o d W

o lin

. S ee P art III, in

fra

. He d id n o t s ee W

o lin as a ch an g e in th e law

, d esp ite J u dg e Co u g h en o u r’ s relian ce o n th e decisi o n W o lin o v erru l ed

. Bu t I d o n ot ag ree th at J u dg e Martin ez relied o n W

o l i n , s i n c e n o t

h in g in h is o rd er su g g ests su ch relian ce. T o th e co n trary , th e o rd er su g g ests h e relie d o n J u dg e Co u g h en ou r’ s earlier ru lin g

. Mo reo v er, t h ere i s n o au th ority th e m aj o rity

can cite f or th e p ro p o sitio n

th at if J u dg e Martin ez h ad u n d ersto o d W o lin

as a ch an g e in th e law

, h e w as o b lig ed to ref u se co m ity d ef

eren ce to J u dg e Co u g h en ou r’ s earlier ru lin g

. In d eed

, th at is th e v ery q u estio n th e m aj o rity sh o u ld h av e an sw ered in th is case, an d w ith w h ich th is co n cu rren ce d eals.B A K E R V

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r eason why the comity of this nation” should not attach i s needed. Id. Perhaps such solicitousness makes less sense in the federal district court contex t; since f ederal district court judg es are not sovereig ns, their decisions mig ht not require a “special reason” to be ig nored. B ut if that is the conclusion we come to, we should say so.

There is n o g overning precedent from the Supreme Court

or from o ur c ourt discussing a p p lication of principles o f comity to orders of d enials of class certification enter e d b y district courts in cases involving similar class claims. B ut the notion of comity between federal district courts under federal common law is not new to our circuit.

I ndeed, as J udg e Martinez noted, comity between federal district courts in this circuit has long encompassed decisions by the courts d esig n ed to promote the smooth working s o f the federal ju diciary and to avoid the embarrassment o f inconsistent results. Baker

, 851 F .Su p p

. 2 d a t 1 278. F o r instance, in Church of S

cientology of California v. U.S. D ept. of Army
, 611 F .2d 738 (9th Cir. 1 979), the Church o f Scientolog y fi l e d a request pursuant to the F reedom o f I nformation Act for any g o v e r n m ent materials involving itself

or its founder, L

. Ron Hubbard. The releva n t ag ency (the Department of the Army ) r e f used to release a c ertain document. L itig ation involving this document proceeded in the federal d istrict courts of the Central D istrict of California and of the District of Columbia. The California district court declined to compel the release of the d o cument on the
g rounds t h a t t h e D.C. court was considering the same issue, and the issue was better litig ated in D.C. O n appeal, the Ninth Circuit held that since the d istrict court in D.C. h ad

a l r e ady issued its decision, which had been reversed by the D.C. Circuit and remanded f or future proceeding s, theB A K E R V

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interests of comity

were best served by deferring to the D.C. case, where proceeding s were further advanced. 6

Since the recog n ition and application of comity to courts’ earlier decisions is a ma t t e r of federal common law, and no Supreme Court precedent g u ides our inquiry

, this cou r t has discretion to craft the rules of federal d istrict court comity it thinks should apply

. Since J udg e Martinez ’s decision cannot be affirmed o r reversed, in my view, without ex plaining whether his v i sion of comity was correct, I turn to that question.

II. A F ram ew ork f

o r Com ity

I sug g est the following framework for district courts faced with earlier class certification denials for the same o r similar plaintiff classes. First, a district court that is f aced with the earlier ruling of another district court d e n y ing class certification for a similar putative class shou l d a d opt as a rebuttable presumption that the litig ation is n o t a menable to class action treatment. 7 Second, t hat presumption may be rebutted by proof f

rom the putati v e class representative that

6 T h e m o re co m

m o n f ed eral co m ity

case o ccu rs w

h en a f ed eral d istrict

co u rt d eclin es j u risd ictio n o v e r a case o n th e g ro u n d s th at an actio n relatin g t o th e sam e su

b j ect m atter h as alread y b een co m m en ced in

an o th er d istrict. T h e f

irst- to

- f ile ru l e is tech n ically an ab d icatio n b y th e d istrict co u rt; if su

b j ect m atter j u risd ictio n ex ists, th e seco n d co u rt is n o t req u ired b y an y co n stitu tio n al p rin cip le to d esist. It d o es so f o r th e

u n rem ark ab l e reaso n th at th e p u blic in terest—co n serv atio n o f j u d icial

reso u rces an d m in im izatio n o f th e risk o f in co n sisten t d ecisio n s—is b etter

serv ed b y so d o in g

.

7 T h u s, I w ou ld h av e t

h e d istrict co u rt p resen ted w ith a m o tio n to strik e class alleg atio n s, as in th is case, g iv e co m i ty d ef eren ce to an earlier ru lin g

o n class certif

icatio n as to sim ilar class claim s.B A K E R V

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s hows a chang e in f

actual or leg al circumstances since th e entry of the earlier order which c h a n g e r ebuts the presumption. A lternatively

, the presumption may be rebutted by a showing that the e a

rlier distric t court ruling w as based

on clear e rror. F inally

, this c o urt should review a district court’s decision on w hether the rebuttable presumption attaches or has bee n r eb u t t ed for abuse of discretion. How does this approach play

out; and, will it work?

A. An Earlier Denial o

f Certification of a Similar Class Should Give Rise to a R ebuttable Presumption That the Litigation is Not Amenable To Class Treatment

The basic po sture of this case is not new: a defendant faces a putative class of plaintiffs, b ut there is substantial uncertainty as to w hether the putative c lass will be able to satisfy F ederal Rule of Procedure 2 3’s requirements for class
treatment. As the Supreme Court has recog niz ed, the decision w hether or not the class is certified is usua l l y the
most important ruling in such a case; once a class is certified, plaintiffs who broug ht claims of even d ubious validity can

ex tract a n “ in terrorem” settlement f rom innocent defendants who fear the massive losses they f a ce upon an adverse jury verdict. See, e.g. , A T& T Mobility LLC v. C oncepcion
, 131 S.Ct. 1 740, 1752 (2011) ( “F aced with even a small chance o f

a devastating loss, defendants will be pressured into settling questionable claims.”).

Thus, pla i n tiff’s counsel need not present meritorious claims to achieve victory ; they need obtain only a f av o rable class certification ruling

. I n l i ght of the minimal costs o f filing a class complaint, an o bvious strateg y sug g e sts itself: keep filing the class action c omplaint with different namedB A K E R V

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plaintiffs 8 until some judg e, somewhere, g rants the motion to certify

. So long as s u c h a d e cision is reached while the plaintiffs w ho have not y et filed are numerous e n oug h to justify c lass treatment, the plaintiffs will have a certified class that they can use to ex tract an in terrorem settlement.

I f in terrorem settlements are bad, duplicative lawsuits employ e d to ex tract such a settlement are worse. I t is no surprise, then, that appellat e c o u r t s have long been try ing to solve this problem. One solution w as put forth by the Seventh Circuit in In re B ridgestone/Firestone, I n c

. Tires Prod uct Liability Litigation
, 333 F

. 3d 763 (7th Cir. 2003). There, the Seventh Circuit held that an earlier denial of class certification would be binding on all putative members of the class, whether or not named in the action, so long as they

were adequately represented by the named litig ants and class counsel. Thus, there would be an irrebut t a b l e presumption that an earlier denial of class certification had binding effect.

However, the Supreme C ourt abrog ated Bridgestone/ Firestone in S

mith v. B ayer

. Bayer
, 1 3 1 S

. C t. at 2380–81. There, the Court made clear that despite “ policy concerns relating to use of the clas s a ct i on device,” individuals not present before the district c o u r t c ould not b e bound by its judg ment, as the court s imply lacked authority to bind them because they were not parties to the litig ation, nor did they fit into any of the narrow ex ceptions to the party preclusion rule announced in Ta

y l o r v. Sturgell

, 553 U.S. 880 (2008). This

was not, the Supreme Court said, to deny the force o f defense

8 Dif f eren t n am ed plain t if

f s w ou l d b e r e q u ired becau se th e o rig in al

n am ed p lain tif

f

, as p arty to th e s u it, w o u ld b e p reclu ded f ro m relitig atin g th e m atter. S

ee T a ylo r v. S tu r

g ell

, 5 5 3 U.S. 8 8 0
, 8 9 2 (2 0 0 8 ) (d escrib in g b asic p rin cip les o f

claim an d issu e p reclu sio n ).B A K E R V

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counsel’s policy o b

j e c t ion, but to state that “principles o f
stare decisis a

nd comity among c o u r t s ” would have to “mitig ate the sometimes substantial costs of similar litig ation broug ht by different plaintiffs.” B ayer , 131 S.Ct. at 2380–81.

T h u s, two principles g uide application of c omity in this
contex t. F irst, a district court cannot treat an earlier denial o f certification of class status to a similar plaintiff class a s conclusive pr o o f that the subject matter is not amenable to class treatment. Bayer
, 131 S.Ct. at 2380–81. Second, district
courts should adopt an a

pproach to comity which resolves (or
at l e a s t reduces) the p olicy c oncern of repeated c ertification efforts by plaintiffs seeking a n in terrorem settlement. A T& T Mobility LLC
, 131 S.Ct. at 1752 (2011). T aken tog e ther, these principles recommend that d istrict c ourts be g iven a w a y to clear their dockets of questionable successive class certification requests, while ensuring th a t p utative class members who have unearthed new evidence o r ne w law in favor of certification, o r clear erro r i n the earlier ruling

, not be foreclosed by

the failed efforts of their predecessors.

I n lig ht of the need to disting uish between leg itimate a nd illeg itimate successi ve class c e rtification request, a presumption of correctness to earlier denials of c ertification that can be rebutted by a showing of chang ed factual or leg al circumstances, or earlier clear error, makes sense. F irst, t he district c ourt is justified as a matter of procedure in assuming that the e arlier denial of certificati o n was correct; if it was not, plainti f

f s i n the e arlier action could have pursued an interlocutory a

ppeal 9 and had the decision vacated; the

9 A n in terlo cu to ry ap p eal o f th is o rd er is ex p licitly allo w e d u n der Fed eral Ru l e o f Civ i l P r o c ed u re 2 3(f ), w h ich allo w s circu it co u rts to p erm i t an im

m ed iate ap p eal f

ro m t h e d en ial o f class certif

i catio n “ if aB A K E R V

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inference of correctness from its continu ed ex istence is reasonable. 1 0 Second, if the presumption of corr ectness is rebuttable, this rule does not run afoul of the Supreme Court’s teaching in Smith v

. B a yer that unnamed members of a putative class cannot be bound by the denial of certification. Plaintiffs are g iven an o p p o rtunity to challeng e that earlier denial o f class certification by rebutting the presumption, a nd the presumption will be rebutted in any case where there are
g ood g rounds to reconsider the initial determination that the

s u b ject matter of the case is n ot amenable to a g g rega t e tr e atment. Third, the policy concern about the cost o f defending ag ainst successive certification motions is reduced by putting the onus on plaintiffs to ex plain why the earlier ruling should n ot be g iven e f f e c t: so long as there is no new evidence, chang e in the law, or clear error i n t h e earlier dismissal, defendants can r e l y on their first victory to stave off in terrorem settlements. 1 1 Fo u r t h, as the district court noted in this case, adoption o f a rebuttable presump t i o n h a s scholarly s u p port. See Baker v. Microsoft Corp.
, 851

p etitio n f or p erm issio n to a p p eal is f iled w i th th e circu it clerk w ith in 1 4 d ay s” o f th e d en ial.

10 O r, as in th is case, plain tif f s c o u ld v o lu n tarily d ism iss th eir claim s

w ith p rej u d ice an d ap p eal a s o f r i g h t. I co n cu r w ith th e o pin io n ’ s j u risd ictio n al an d stan d in g an aly s is b ased o n Berg er , so it is c o m m o n g ro u n d t h at p lain tif

f s h av e created p ro p er ap p ellate j u risd ictio n in th is

m an n er.

11 My s u g g estio n b alan ces th e f in ality v alu e o f a d ef

in itiv e ru l in g in d ef en d an t s’ f

av o r w ith th e d an g er o f an erro n eo u s f irst d en ial o f c l a s s certif icatio n cu rtailin g leg i t i m ate claim s b y allo w in g th e seco n d d istrict

co u rt to en g ag e in clear- erro r rev iew o f th e f irst co u rt’ s ru lin g

.B A K E R V

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F .Supp.2d 1274, 1278 (W .D. W ash. 2012) (citing A L I Principles of the L aw of Ag g reg ate L itig ation). 1 2

I n particular, when there h as been a chang e in the l a w g overning whether a matter is am e n a b le to class
treatment—as there was in the Rang e Rover wheel alig nment case—that should be g r ound s for rebutting the presumption in favor of the e a r l i e r ruling which was based on abrog ated law and which denied class c ertification. This i s b e c a u se there a re pro-class action policy arg uments that we should not ig nore. I n particular, class actions are an impo rt a n t way o f resolving so-called “n e ga t ive value c laims”; that is, c laims that are leg itimate, but c o st too much to litig ate individually

. Thus, deny ing class certification to claims that can be treated in the ag g reg a te is equivalent to denying those claims on the merits. W h en the law h as c hang ed to recog niz e those c laims

as amenable to ag g reg ate treatment, apply ing that chang e to g ive the new plaintiff an opportunity to represent t h e class makes sense. Moreover, since the chang e i n the law has
recog niz ed a c laim that w ould n ot otherwise have been viable, this is not a “second bite a t t h e a p p l e ” of the sort animating claim p r eclusion principles. I nstead, the chang e in the law has presented a different apple.

12 P l a i n t if f s in th is case alleg e th at a reb u ttab le p resu m p tio n serv es to

u n d u ly co n strain d istrict co u rt d iscretio n

. Bu t discreti o n d o es n o t m ean

u n b o u n d ed d iscretio n , an d t

h e po licy arg u m en ts ag ain st d u p licativ e class actio n s reco g n ized by th e Su p rem e Co u rt in S

m ith v. Ba yer req u ire so m e restrictio n s o n th e d i scretio n o f d istrict co u rts t o certif y a class. 1 3 1 S.Ct.
at 2 3 8 1

. A reb u

ttab le p resu m

p tio n , co u

p led w ith ab u se- o f

- d iscre t i on

rev iew by th i s co u rt, th u s p reserv es d i strict co u rt d iscretio n w ith o u t allo w in g d istrict co u

rts to stray

to o f ar.B A K E R V

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B. A Decision W

hich Applies Comity’s Presumption of Correct Denial of Certification Should Be Reviewed on an Abuse of Discretion Standard

I t is settled law that the decision to apply principles o f comity is discretionary

, not mandatory

. B ird v. Glacier Elec. Coop., Inc.
, 255 F .3d 1136, 1140 ( 9th Cir. 2001). Therefore, this court reviews a district court’s d e c i s i o n to g r ant comity deference to a state or tribal court’s determination of an issue for abuse of discretion. Stock W est Corp. v. Taylor

, 964 F .2d 912, 9 1 8 (9th Cir. 1992). This principle h as been ex tended to

co m ity to f

ederal court d ecisions; a district court’s decision
to d ismiss an action under the federal comity doctrine’s “first
to file” rule is reviewed f

or an abuse of d iscretion. Barapind v. Reno , 225 F .3d 1100, 1109 (9th Cir. 2000).

Since the district c ourt’s choice t o apply principles o f comity is discretionary

, an abuse of discretion standard o f review should be applied. Moreover, I see no justification for

a less string ent standard of review fo r a decision to g ive preclusive effect to the substance of a n o r der than to the decision to defer to duplicative litig ati o n a s in the “first to file” contex t. Thus, I sug g est adoption for use h ere of the familiar abuse of d i s cretion standard: a district court abuses its discr etion when it identifies the wrong leg al standard for decision, o r makes f

i n d i n g s of fact (or applications of the facts it h as f

ound) that are “illog ical, implausible, or without support in inferences that may be drawn from fa c t s i n t he record.” U.S

. v

. H

i n kson

, 585 F .3d 1247, 1251 (9th Cir. 2009) (en banc).B A K E R V

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III. This Case

Apply ing the framew o r k enunciated above, I conclude that the rebuttable presumption that individual is s ues predominated over class-wide issues was rebutted here.

At the first step, J udg e Martinez correctly a pplied comity ’s rebu t t a ble presumption in favor o f J udg e Coug h enour’s e arlier denial o f class certification. At the second step, however, the district court erred by finding that W olin was not a chang e in law that rebutted the presumption in favor of the earlier denial of class certification. The district c ourt made this mistake because it misunderstood the
g rounds o f J udg e Coug henour’s earlier denial of class certification.

J udg e Martinez concluded that the pr e s u m p tion had not been rebutted b ecause the Gable / W olin L and Rover litig ation

was disting uishable from the scratched dis c l i tig ation. However, the lang uag e he quoted from J udg e Coug henour’s earlier denial was lang uag e justify ing J udg e Coug henour’s conclusion that Gable could not b e disting uished from the XB ox scratch case. In re Microsoft X b o x 360 Scratched Disc Litigation
, 2 009 W L 10219350, at *7 (W .D. W ash. Oct. 5, 2009) ( “ Plaintiffs attempt to disting uish Gable

, but f ail

. . . The Gable court acknowledg e d that every L and Rover suffered the same desig n flaw, b u t nonetheless r efused to certify the cla s s , b e c ause the defect had not manifested in
every L and R o v er

. T h at is ex actly the case here.”). J udg e Martinez committed two errors of law. F irst, he read J udg e Coug h enour’s earlier denial o f class certification as based on

a f i n d i ng that the Gable/W

olin decision was disting uishable from the scratched disc l i t ig a tion; to the contrary , J udg e C o u g h enour had stated that the scratched disc and tire we a rB A K E R V

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a c t i ons were not disting uishable. Second, it was leg a l e r r o r for him to defer to J udg e Coug henour ’ s d e n i al of class certification in lig ht of the c hang e in law wroug ht by Gable ’s reversal in W

olin , as discussed fully in the majority opinion. Maj. Op. at 14–15.

Thus, J udg e Marti n e z abused his discretion by g ranting comity deference to an earlier denial o f c l as s c ertification despite a n intervening change i n the law that should have rebutted t h e presumption in favor o f that denial. Notably

, Microso ft made no arg ument in the district court in support of the motion to strike other than reliance o n comity ; its
arg uments about the propriety of class treatment in this case

were only to justify the “alternative relief” of denial o f certification. Since the district co u r t has not y et opined on whether plaintiffs’ class should be certified, I ag ree that this issue should remain open on remand, where defendants will be free to renew their motion to deny certification.

IV. Conclusion

Our court should not misconstrue the district court ruling s it reviews, and it should g ive g uidance to district courts w ho face d ifficult questions of law. As the majority opinion does
not satisfy either of these duties, I concur in its result, but not its reasoning

.