Xbox Live Gamers Sue Microsoft For Faulty Service, Lawyer Speaks Out: Exclusive

Class-action lawsuit seeks more than $5 million in damages for December failures in the online gaming service.

When three Texas gamers couldn’t get online to play “Call of Duty 4″ or “Halo 3″ on their Xbox 360s last December, they decided to sue.

In a class-action lawsuit filed January 4, gamers Keith Kay, Orlando Perez and Shannon Smith claim that they and millions of other Xbox Live users suffered damages in excess of $5 million.

What kind of person sues over their online gaming service not working? And why haven’t Microsoft’s announcements that they’re fixing the problem not been enough? In his first interview with the press, the plaintiffs’ lawyer, Jason Gibson, explained the gamers’ side of things to MTV News.

“These are not guys looking to get rich,” Gibson said in a telephone interview from Houston Tuesday. “They are in their late 20s and 30s. They are college-educated. These are not young kids who just turned 18 and [want] to sue for the fun of it. This is, to them, a real issue.”

Gibson said he was first contacted by Smith, who had been trouble connecting with Xbox Live sometime in December. Smith wrote to Microsoft trying to get an explanation of why the subscription service, which gives users the ability to download games and play competitively against friends, was not working. According to Gibson, Smith got no response.

As more and more gamers experienced these problems over the Christmas holiday, Microsoft’s chief Xbox blogger, Larry “Major Nelson” Hryb, noted them in a December 30 post. “You may have noticed that the Live service has been having a few issues over the past few days,” he wrote. “This includes things like signing in, matchmaking and account recovery. Not everyone has had problems, but I know some of you have and I wanted to give you and update. While the service was never completely offline, problems like this are not acceptable.” He said repairs were underway.

On January 3, Hryb posted a letter from Xbox Live general manager Marc Whitten apologizing for the problems and explaining that the intermittent service was the result of a record-setting number of new signups to the Live service and the most concurrent users ever seen in one day. To help make amends, the company said it would offer all Xbox Live subscribers a free downloadable game from its Xbox Live Arcade service.

But the Texas gamers’ plans for a lawsuit were already underway, and they called in Gibson to help them sue for a reimbursement of part of their $50 annual Live subscription.

Hryb then announced earlier this week that he could not offer further Xbox Live status updates due to the lawsuit. When reached for comment by MTV News about the status of Xbox Live and any progress addressing the issues, Microsoft spokesman David Dennis said that “given the pending litigation, we can’t comment on these details.”

At least some gamers’ hopes lie with Gibson, a consumer-fraud attorney who claims he’s never lost a trial and who has recently been working on a case against coin dealers who allegedly suckered elderly collectors into bad deals (one of the alternate URLs for Gibson’s law firm is coinfraud.com).

“When you have one person who is mad and they can’t get a response, and they can’t get their complaints addressed by a company like Microsoft, the only way to get their attention is in numbers,” Gibson said. He said the company had to have known what was going to happen with the Xbox Live overload. “If they had not anticipated the sales, then they would not have put out that many units of the Xbox to begin with.” Last week, Microsoft announced that Live had reached 10 million subscribers and claimed record-setting revenue for consoles sold in 2007, covering strong sales through the holiday season. Gibson said that proves Microsoft’s priorities were out of order.

“They take the money for the subscriptions, but they don’t make sure that the service is going to be there,” Gibson said. “They kind of put the cart before the horse. To me, you make sure the service is going to be there. Make sure the product is going to be there. And then feel good about taking money for the service and the product.”

Dennis said Microsoft could not comment on the lawsuit because the company has yet to be served. Gibson is in the process of doing so, after which Microsoft will have 20 days to respond to the suit.

Asked if any alleviation of the Xbox Live issues would nix the suit, Gibson said the damage has already been done and that he would proceed. He said he has received more than 500 e-mails from gamers, 10 percent of them mocking or questioning the lawsuit but the rest expressing solidarity. He said that more than 50 more plaintiffs have joined Kay, Smith and Perez in the suit.

“What they would like to see is Microsoft fix the problem,” Gibson said. “They’d like to be reimbursed for the money they spent when they haven’t received the service, and hopefully it will make Microsoft do the right thing in the future.”

With Gibson proceeding and Xbox blogger Hryb gagged from updating gamers about Live’s status via his site and his Twitter feed, gamers will have a harder time figuring out just how well Live is working. When asked where gamers should go for status updates, Microsoft’s Dennis said, “We will be communicating with our customers through our normal channels, such as Xbox.com and other means.”

Gibson said his three main clients continue to have Live troubles. As for his own experience, he’s not a gamer. His two daughters have an Xbox 360 and like to play “Guitar Hero III,” but they don’t subscribe to the full $50 Xbox Live service.

And what of the gamers who dismiss the lawsuit? On the gaming blog Joystiq, gamer “NATO Duke” posted: “This kind of junk lawsuit is what makes us lawyers look bad. It also makes the country look sue-happy and too quick to file suit.”

Gibson is undeterred. “They’re not going to get a windfall or anything like that,” he said. “Contrary to what other people might say about the lawyers involved, I’m on the right side of this deal. I tend to fight for the underdog.”