Posted on 05/08/2007 10:07:59 PM PDT by BlueDragon
Court upholds racketeering claims of Best Buy customers
Microsoft Corp. must face racketeering claims in a lawsuit filed by Best Buy Co. customers who say they were improperly charged for MSN Internet service, a federal appeals court ruled Friday.
The 9th U.S. Circuit Court of Appeals in San Francisco reinstated a lawsuit claiming that Microsoft and Best Buy cooperated to activate MSN Internet service and charge for it without customers' knowledge.
One contributor to the [above] discussion claims customers where told they could get "$400 off" their purchase by agreeing to sign up for the "free" MSN trial offer.
The original plaintiff, Odem, tells a somewhat different tale; [from a PDF file of the case now before the UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT]
Named plaintiff James Odom — then the only plaintiff — filed the first complaint in this action in the Northern District of California, alleging that defendants Microsoft and Best Buy had violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c) and (d). Odom alleged that in April 2000 defendants entered into an agreement under which “Microsoft invested $200 million in Best Buy and agreed to promote Best Buy’s online store through its MSN service.” MSN is a division of Microsoft offering Internet access services. In return, “Best Buy agreed to promote MSN service and other Microsoft products in its stores and advertising.” Odom alleged that pursuant to their agreement, Best Buy employees distributed different Microsoft compact discs (“Trial CDs”) depending on what the customer purchased. For example, a customer who purchased a computer would receive a Trial CD providing a free six-month subscription to MSN. A customer who purchased a cell phone would receive a Trial CD providing a free thirty-day subscription. Odom alleged that if the customer was paying by debit or credit card the Best Buy employee would scan the Trial CD. If asked why the Trial CD had been scanned, the Best Buy employee would claim it was for “inventory control or otherwise misrepresent[ ] the purpose of the scanning.” Odom alleged that what this scanning actually did was send the information to Microsoft. Microsoft would then, without the customer’s knowledge or permission, activate an MSN account in the customer’s name. If the customer did not cancel the account before the expiration of the free trial period, Microsoft would start billing the debit or credit card number. Odom further alleged that when customers called to dispute these charges, Microsoft directed some of them to “seek relief from their debit or credit card issuers.” Odom alleged that the “policies and practices by Best Buy and its employees relating to distribution of the Trial CDs —
including but not limited to the deliberate failure to make disclosures and making of misrepresentations — have been formulated and implemented by Best Buy jointly with Microsoft, by agreement with Microsoft, and/or with Microsoft’s knowledge and approval for the benefit of both Best Buy and Microsoft.”
Odom alleged that no affected customer had been fully compensated for his or her losses, defined as (1) a full refund of the unauthorized charges; (2) a full refund of the accrued finance charges; (3) payment of interest on the money during the time it was held by Microsoft; and (4) compensation for the “time, effort, and expense” incurred in cancelling MSN accounts and seeking refunds. Odom alleged that these losses resulted from defendants’ actions taken pursuant to their agreement.
Odom alleged that he purchased a laptop computer by credit card from a Best Buy store in Contra Costa County, California, in May 2002. He alleged that he told the Best Buy employee that he did not need the Trial CD because he already had another Internet service, and that the Best Buy employee did not tell him that an MSN account with Microsoft was being established in his name or that any financial obligation was being imposed on him. He further alleged that he never used the free six-month service that came with his computer purchase.
After the six-month period, Microsoft began charging his account. Odom alleged that when he noticed the charges he called Microsoft and cancelled the service. Odom alleged that defendants’ acts constituted violations of civil RICO, 18 U.S.C. §§ 1962(c) and (d). Odom alleged that Best Buy and Microsoft, acting together pursuant to their agreement, constituted an associated-in-fact enterprise under RICO; that their actions, involving “thousands” of consumers, constituted a “pattern of racketeering activity” under RICO; and that they committed the RICO “racketeering activity” predicate act of wire fraud in violation of 18 U.S.C. § 1343
This one looks sort-of wobbly, to me. [no Socialists’ Republic of Washington, International Workers of the World pun intended]
If it happened to me I’d be p!ssed enough to sue.
Yeah...
I don’t know. But then again it probably wouldnt be too hard to make a defense for it if the contracts were similar to say a cell phone company contract.
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