Supreme Court dumps Microsoft, Best Buy appeal

The U.S. Supreme Court declined on Monday to take on a case that accuses Microsoft and Best Buy of deliberately tricking customers into signing up for MSN Internet service and improperly charging them when a trial period expires.

Microsoft and Best Buy had asked the high court to review the matter after the Ninth Circuit Court of Appeals opted in May to let a class action suit against the companies proceed. The Supreme Court's decision not to review the case, which arrived without comment, means the class action can theoretically move forward.

The case began in 2003, when a California man named James Odom sued the companies, accusing them of violating federal racketeering law through a $200 million marketing agreement (the Racketeer Influenced and Corrupt Organizations Act, or RICO, to be precise), according to the appeals court opinion (PDF).

Odom said Microsoft had agreed to promote Best Buy's online store, and in return, Best Buy employees would distribute trial versions of Microsoft's MSN Internet access service with certain product purchases. Employees would scan those CDs at the point of sale, and when asked why, the employee would say it was for inventory control, Odom's suit alleged. In reality, the information would be sent to Microsoft to initiate a trial subscription period without the customer's permission, Odom alleged.

Thousands of customers have received such treatment, which amounts to violations of racketeering law, Odom alleged in his suit. Another woman who joined the suit said a Best Buy employee signed her up for the MSN trial service without her knowledge and alleged she was never refunded the MSN charges when her trial period expired. When some customers reached Microsoft representatives to dispute the charges, the company would direct them to contest the charges with their debit or credit card providers, Odom's suit alleged.

No affected customer had been "fully compensated" for his or her losses, including a full refund of the unauthorized charges, any finance charges that occurred, interest on the money during the time Microsoft held it, and payback for the "time, effort and expense" associated with canceling the accounts and seeking refunds, Odom alleged.

A similar class action suit is pending in Washington state court.

Microsoft and Best Buy have denied any wrongdoing. They received backing from the U.S. Chamber of Commerce, the prominent pro-business group, which filed a friend-of-the-court brief, urging the high court to reverse the Ninth Circuit's findings or risk damage to the U.S. economy.

A "garden variety marketing agreement" like the Microsoft-Best Buy one shouldn't be subject to RICO, the chamber said, and allowing the Ninth Circuit's "improper" interpretation to stand could undermine future business partnerships. There's potentially a lot of money at stake: RICO violations can lead to triple damages in civil cases.

"RICO was designed to deter organized crime, not to be used as a tool to force legitimate companies to pay treble damages," Robin Conrad, an executive vice president with the chamber, said in September. "Courts should prevent RICO from being turned into the litigation equivalent of a thermonuclear device."