The Supreme Court ruled on Monday that the tens of thousands of gamers who complained that the Microsoft Xbox 360 console scratched game discs cannot sue Microsoft together in a class-action lawsuit.

A class-action lawsuit, brought in 2012, claims that small movements or vibrations of the console could result in the optical drive scratching discs. The suit accused Microsoft of knowing about the alleged issue before the Xbox 360 launched in 2005. The suit claimed there were 55,000 complaints about the issue by 2008.

The court's highly nuanced decision rested on federal appellate procedure. But the outcome means that if aggrieved gamers want to sue Microsoft over the issue, they must do so individually—at least for now. That's a big deal for a variety of reasons.

Compared to individual suits, class actions are much more costly to fend off, and they expose companies to far greater damage awards—often resulting in settlements with large fee awards given to the suing attorneys. On the flip side, the incentive for lawyers to sue is greatly diminished outside the class-action context because of the financial risks of representing a single plaintiff.

Microsoft contended that unhappy gamers could bring lawsuits individually, not collectively, because only 0.4 percent of console owners reported problems. Microsoft also maintained that the cause of the problem was gamers' misuse. A lower court sided with Microsoft, ruling that individuals had to litigate individually because there could be myriad reasons discs were scratched, including human error.

The San Francisco-based 9th US Circuit Court of Appeals reversed the lower court and reinstated the class action. The appellate court ruled (PDF) that even though "individual factors may affect the timing and extent of the disc scratching, they do not affect whether the Xboxes were sold with a defective disc system. Plaintiffs contend that (1) whether the Xbox is defectively designed and (2) whether such design defect breaches an express or an implied warranty are both issues capable of common proof."

Microsoft appealed to the Supreme Court.

The justices on Monday, ruling 8-0, concluded (PDF) that the individuals who were denied class certification at the Washington state federal trial court were not eligible to appeal to the 9th Circuit. Because there was no "final decision" in the lower courts, the Supreme Court held, appellate rules do not allow the plaintiffs to appeal the Washington state judge's ruling dismissing the class action. Therefore, the named plaintiffs needed to litigate their complaints individually before they could appeal whether they were improperly denied a chance at a class action.

The suit, meanwhile, claims among other things that Microsoft considered but rejected three solutions before releasing the console. The possible solutions included increasing magnetic force of the disc holder, slowing the discs' rotational speed, and installing soft patches or "bumpers."