Case 2:10-cv-00215-WY Document 14 Filed 03/31/10 Page 1 of 3

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF PENNSYLVANIA

ALEX SCHWARTZ, on behalf of )

himself, and other U.S. residents similarly situated, )
) CIVIL ACTION
Plaintiffs, )
)
v. ) 10-CV-215
)
MICROSOFT CORPORATION )
)
Defendant. )

AMENDED MOTION FOR LEAVE TO AMEND

PLAINTIFFS’ SECOND AMENDED CLASS ACTION COMPLAINT

1. Plaintiffs filed a lawsuit against Defendant Microsoft Corporation on January 19, 2010,
for reasons explained in Plaintiffs Third Amended Complaint attached hereto.

2. Plaintiffs have stated that Defendant Microsoft’s alleged forum selection clause is
unenforceable and invalid for several reasons and will respond to same after the attached
Third Amended Complaint (and Defendant’s Motion to dismiss same) is/are properly
filed in the Eastern District of Pennsylvania. A brief discussion of this issue is addressed
in Plaintiffs Memorandum of Law In Support of Plaintiffs Amended Motion For Leave
To Amend Plaintiffs’ Second Amended Complaint. [See e.g. Plaintiffs Memorandum of
Law in Support of Plaintiffs Amended Motion For Leave To Amend Plaintiffs’ Second
Amended Class Action Complaint attached hereto].

3. Plaintiffs Motion For Leave is made in good faith and is not designed to delay
proceedings. Plaintiffs Third Amended Complaint is not subject to dismissal or transfer
as the alleged forum selection clause is invalid and unenforceable due to Microsoft’s
fraud, Microsoft’s monopoly over Xbox digital goods/services/content, recent disclosures
by Microsoft’s counsel regarding “hidden transaction costs” and the U.S. cash value of
Microsoft Points, and the overall mandatory & proprietary use of the Microsoft Points
system to purchase X-box Live, Xbox Live Marketplace, Windows LIVE, Xbox 360, and
Zune digital goods and services.

4. On March 18, 2010, the parties appeared before the Court for a pretrial conference.
Thereafter, the parties failed to reach a stipulation agreement and Plaintiffs filed their
Motion for Leave on March 25, 2010. On March 30, 2010, Defendants filed a response
to Plaintiffs Motion for leave and pointed out that Plaintiffs “failed to submit a brief in
support” of their motion. [See Dkt. No. 13, page 5, line 1] On or about March 31, 2010,
Plaintiffs filed this Amended Motion For leave to include a Memorandum in Support of
their Motion For Leave To File their Third Amended Complaint.

5. Plaintiffs seek to obtain leave of Court to allow them to file a Third Amended Class
Action Complaint attached hereto.

6. As a general proposition of law, leave to amend a pleading should be liberally granted

unless a compelling reason such as prejudice to an opposing party exists. See e.g. Foman
v. Davis, 371 U.S. 178, 182 (1962).
 Case 2:10-cv-00215-WY Document 14 Filed 03/31/10 Page 2 of 3

7. Pursuant to Rule 15(a) of the Federal Rules of Civil Procedure: “A party may amend the
party’s pleading once as a matter of course at any time before a responsive pleading is
served.” Because the Plaintiffs seek to amend their complaint after the Defendant served
their responsive pleading, the Plaintiff “may amend [their complaint] only by leave of
court.” See Fed. R. Civ. P. 15(a). Rule 15(a) clearly states that, “leave shall be freely
given when justice so requires.” See Id. “Among the grounds that could justify a denial
of leave to amend are undue delay, bad faith, dilatory motive, prejudice, and futility.” See
In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997) (citations
omitted); see also Lorenz v. CSX Corp., 1 F.3d 1406, 1413 (3d Cir. 1993). The Third
Circuit has found that “prejudice to the non-moving party is the touchstone for denial of
an amendment.” See Id. at 1414.

8. In this case, there are no reasons to deny Plaintiffs Motion for Leave to Amend the
Second Amended Class Action Complaint. There has been no undue delay in amending
the Second Amended Complaint. The Defendant has not filed an Answer. Although the
parties met for a Preliminary Pretrial Conference Meeting on March 18, 2010, this Court
has not yet entered a Class Certification Schedule. The parties have not engaged in any
Discovery and therefore amending the Second Amended Complaint will not require the
Defendants to re-file an Answer, will not affect the Case Management Report or the
Scheduling Order, and will not affect Discovery as no Discovery has occurred. Plaintiffs
have diligently prosecuted this case and there have been no failures to cure any alleged
deficiencies. In short, there is no reason to deny Plaintiff’s Request for Leave to Amend
their Second Amended Complaint.

9. If the Court grants Plaintiffs motion for leave to file a Third Amended Complaint,
Defendant Microsoft Corporation’s Motion to Dismiss is rendered moot.

10. Plaintiffs, who acted in good faith and fair dealing, were unable to reach a Stipulation
agreement with Defendant Microsoft Corporation in this regard. Furthermore, in
accordance with Local Rule, the undersigned counsel has attempted to confer with
opposing counsel in an additional good faith effort to resolve the issues raised by this
Motion. The most recent discussion with opposing counsel occurred on March 23, 2010,
at which time the undersigned was advised that Defendant Microsoft Corporation
vehemently opposed same.

WHEREFORE, Plaintiffs respectfully request this Honorable Court grant leave of court to
file their Third Amended Class Action Complaint.1

DATED: March 31, 2010

By: Samuel J. Lassoff /s
PO Box 2142
Horsham, PA 19044

Attorney for Class Action Plaintiffs

1
In the event an alternative Order is issued by the Court, Plaintiffs hereby request an additional
20 days to respond to Defendant Microsoft Corporation’s Motion To Dismiss Plaintiff’s Second
Amended Complaint.
 Case 2:10-cv-00215-WY Document 14 Filed 03/31/10 Page 3 of 3
CERTIFICATE OF SERVICE

I HEREBY CERTIFY THAT ON MARCH 31, 2010, I FILED THE FOREGOING

AMENDED MOTION FOR LEAVE TO AMEND PLAINTIFFS’ SECOND AMENDED
CLASS ACTION COMPLAINT USING THE COURT’S CM/ECF SYSTEM, WHICH WILL
SEND E-MAIL NOTIFICATION OF THE FILING TO DEFENDANT’S COUNSEL. THIS
DOCUMENT IS AVAILABLE FOR VIEWING AND DOWNLOADING VIA THE CM/ECF
SYSTEM.

Samuel J. Lassoff /s
 Case 2:10-cv-00215-WY Document 14-1 Filed 03/31/10 Page 1 of 4

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF PENNSYLVANIA

ALEX SCHWARTZ, on behalf of )

himself, and other U.S. residents similarly situated, )
) CIVIL ACTION
Plaintiffs, )
)
v. ) 10-CV-215
)
MICROSOFT CORPORATION )
)
Defendant. )

MEMORANDUM OF LAW IN SUPPORT OF AMENDED MOTION FOR LEAVE TO

AMEND PLAINTIFFS’ SECOND AMENDED CLASS ACTION COMPLAINT

I. INTRODUCTION

Plaintiffs seek to obtain leave of Court to allow them to file a Third Amended Complaint. As
a general proposition of law, leave to amend a pleading should be liberally granted unless a
compelling reason such as prejudice to an opposing party exists. See e.g. Foman v. Davis, 371
U.S. 178, 182 (1962). Pursuant to Rule 15(a) of the Federal Rules of Civil Procedure: “A party
may amend the party’s pleading once as a matter of course at any time before a responsive
pleading is served.” Because the Plaintiffs seek to amend their complaint after the Defendant
served their responsive pleading, the Plaintiff “may amend [their complaint] only by leave of
court.” See Fed. R. Civ. P. 15(a). Rule 15(a) clearly states that, “leave shall be freely given
when justice so requires.” See Id. “Among the grounds that could justify a denial of leave to
amend are undue delay, bad faith, dilatory motive, prejudice, and futility.” See In re Burlington
Coat Factory Secs. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997) (citations omitted); see also
Lorenz v. CSX Corp., 1 F.3d 1406, 1413 (3d Cir. 1993). The Third Circuit has found that
“prejudice to the non-moving party is the touchstone for denial of an amendment.” See Id. at
1414.

II. PROCEDURAL AND FACTUAL BACKGROUND

Plaintiffs filed a lawsuit against Defendant Microsoft Corporation on January 19, 2010, for
reasons explained in Plaintiffs Third Amended Complaint.
Plaintiffs have stated that Defendant Microsoft’s alleged forum selection clause is
unenforceable and invalid for several reasons and will respond to same after the Third Amended
Complaint and Defendant’s Motion to dismiss same are filed in the Eastern District of
Pennsylvania.
On March 18, 2010, the parties appeared before the Court for a pretrial conference.
Thereafter, the parties failed to reach a stipulation agreement and Plaintiffs filed their Motion for
Leave on March 25, 2010.
On or about March 31, 2010, Plaintiffs filed this Amended Motion For leave to include a
Memorandum in Support of their Motion For Leave To File their Third Amended Complaint.
 Case 2:10-cv-00215-WY Document 14-1 Filed 03/31/10 Page 2 of 4

III. ARGUMENT

The parties appeared before the Court for a pretrial conference on March 18, 2010. During
the conference, Defendant Microsoft’s counsel Charles Casper and John Papianou misstated
material facts to the tribunal about the number of Plaintiffs (Microsoft Point System consumers)
affected who now have residual Microsoft point balances. Microsoft’s counsel stated that they
“didn’t know”; however, immediately after the pretrial conference during stipulation discussions
it was revealed and disclosed by Microsoft’s counsel John Papianou and Charles Casper that
Microsoft had knowledge that several million Plaintiffs were affected. Furthermore, when Judge
Yohn asked at the pretrial conference why Defendant Microsoft did not use cash for purchases of
its digital goods and services; Defendant’s counsel John Papianou stated to Judge Yohn “to keep
transaction costs low” and further admitted that Defendant Microsoft had “hidden transaction
costs” which were not disclosed to consumers; and that Microsoft’s external transactions in cash
cost Microsoft more money and are more burdensome. Defendant’s counsel Charles Casper
stated to Judge Yohn that “the Microsoft Points system began as early as the year 2000,” and
then Mr. Casper revealed that, “400 Microsoft Points equals $5.00 U.S. currency”.
After said pretrial conference there was no stipulation reached between the parties because
Defendant’s counsel John Papianou and Charles Casper attempted to materially change the
wording of the proposed stipulation in bad faith to read incorrectly in favor of Defendant
Microsoft. The words “First Amended Complaint” were used in bad faith instead of the agreed
words “Second Amended Complaint” and there was no mention of Microsoft’s agreement to
immediately file an Answer to Plaintiffs’ Third Amended Complaint in the Western District of
Washington. Plaintiffs made no additional demands regarding a/the proposed stipulation as any
alleged demands were all discussed verbally in detail between the parties on March 18, 2010, at
the failed stipulation conference.

In this case, there are no reasons to deny Plaintiffs Motion for Leave to Amend the Second
Amended Class Action Complaint. There has been no undue delay in amending the Second
Amended Complaint. The Defendant has not filed an Answer. Although the parties met for a
Preliminary Pretrial Conference Meeting on March 18, 2010, this Court has not yet entered a
Class Certification Schedule. The parties have not engaged in any Discovery and therefore
amending the Second Amended Complaint will not require the Defendants to re-file an Answer,
will not affect the Case Management Report or the Scheduling Order, and will not affect
Discovery as no Discovery has occurred. Plaintiffs have diligently prosecuted this case and there
have been no failures to cure any alleged deficiencies. In short, there is no reason to deny
Plaintiff’s Request for Leave to Amend their Second Amended Complaint.

If the Court grants Plaintiffs motion for leave to file a Third Amended Complaint, Defendant
Microsoft Corporation’s Motion to Dismiss is rendered moot.

Plaintiffs, who acted in good faith and fair dealing, were unable to reach a Stipulation
agreement with Defendant Microsoft Corporation in this regard. Furthermore, in accordance
with Local Rule, the undersigned counsel has attempted to confer with opposing counsel in an
additional good faith effort to resolve the issues raised by this Motion. The most recent
discussion with opposing counsel occurred on March 23, 2010, at which time the undersigned
was advised that Defendant Microsoft Corporation vehemently opposed same.
 Case 2:10-cv-00215-WY Document 14-1 Filed 03/31/10 Page 3 of 4

IV. CONCLUSION

Plaintiffs Motion For Leave is made in good faith and is not designed to delay proceedings.
Plaintiffs Third Amended Complaint is not subject to dismissal or transfer as the alleged forum
selection clause is invalid and unenforceable due to Microsoft’s fraud, Microsoft’s monopoly
over Xbox digital goods/services/content, recent disclosures by Microsoft’s counsel regarding
“hidden transaction costs” and the U.S. cash value of Microsoft Points, and the overall
mandatory & proprietary use of the Microsoft Points system to purchase X-box Live, Xbox Live
Marketplace, Windows LIVE, Xbox 360, and Zune digital goods and services. Plaintiffs
respectfully request this Honorable Court grant leave of court to file their Third Amended
Complaint in the Eastern District of Pennsylvania.

DATED: March 31, 2010

By: Samuel J. Lassoff /s

PO Box 2142
Horsham, PA 19044

Attorney for Class Action Plaintiffs

 Case 2:10-cv-00215-WY Document 14-1 Filed 03/31/10 Page 4 of 4

CERTIFICATE OF SERVICE

I HEREBY CERTIFY THAT ON MARCH 31, 2010, I FILED THE FOREGOING

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’ AMENDED MOTION FOR
LEAVE TO AMEND PLAINTIFFS’ SECOND AMENDED CLASS ACTION
COMPLAINT USING THE COURT’S CM/ECF SYSTEM, WHICH WILL SEND E-MAIL
NOTIFICATION OF THE FILING TO DEFENDANT’S COUNSEL. THIS DOCUMENT IS
AVAILABLE FOR VIEWING AND DOWNLOADING VIA THE CM/ECF SYSTEM.

Samuel J. Lassoff /s
 Case 2:10-cv-00215-WY Document 14-2 Filed 03/31/10 Page 1 of 1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF PENNSYLVANIA

ALEX SCHWARTZ, on behalf of )

himself, and other U.S. residents similarly situated, )
) CIVIL ACTION
Plaintiffs, )
)
v. ) 10-CV-215
)
MICROSOFT CORPORATION )
)
Defendant. )

ORDER

AND NOW, this day of , 2010, upon consideration of Plaintiff’s

Amended Motion for Leave to Amend Plaintiffs’ Second Amended Class Action Complaint,
Memorandum of Law In Support To Plaintiff’s Amended Motion for Leave to Amend Plaintiffs’
Second Amended Class Action Complaint and Defendant Microsoft’s response thereto, it is
hereby ORDERED that Plaintiff’s Motion is GRANTED.

1. The clerk is directed to accept the Third Amended Class Action Complaint as filed.

2. The Third Amended Class Action Complaint having been filed, Defendant’s motion
to dismiss the second amended complaint is DISMISSED as moot.

______________________
William H. Yohn Jr.
United States District Judge
 Case 2:10-cv-00215-WY Document 14-3 Filed 03/31/10 Page 1 of 2

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF PENNSYLVANIA

ALEX SCHWARTZ, on behalf of )

himself, and other U.S. residents similarly situated, )
) CIVIL ACTION
Plaintiffs, )
)
v. ) 10-CV-215
)
MICROSOFT CORPORATION )
)
Defendant. )

DECLARATION OF SAMUEL LASSOFF

I, Samuel Lassoff, hereby declare as follows:

1. Identity of Declarant. I am Class Action Plaintiffs’ attorney of record. I have personal
knowledge of the facts set forth herein. The contents hereof are true and correct to the best of
my knowledge, information, and belief. If called to testify, I could and would testify
competently thereto.
2. Web pages. I did not contact Plaintiff Alex Schwartz through the use of Facebook
through a posting dated February 22, 2010. Plaintiff Alex Schwartz was referred to my office.
3. March 18 Pretrial Conference. On March 18, 2010, I attended a pretrial conference
with the Court, Defendant’s attorneys Mr. Papianou & Charles B. Casper.
4. With the Courts suggestion after the conference, Mr. Papianou and Charles Casper agreed
to sit down and discuss a proposed stipulation whereby Defendant Microsoft would file an
answer to Plaintiffs Third Amended Complaint; and allow Plaintiff to amend his Second
Amended Class Action Complaint substituting Mr. Muniz for Mr. Schwartz as the named
plaintiff. There was additional discussion and disagreement regarding the invalidity and
unenforceabilty of the Defendant’s alleged forum selection clause. No preliminary or final
agreement was reached; and the parties agreed to attempt to iron out several other issues based
on their initial discussions and disclosures.
5. March 19 Draft Stipulation. On or about Friday March 19, 2010, John Papianou sent
my office a draft “proposed” stipulation. This stipulation was prepared in bad faith and
maliciously listed a reference and language to the “First Amended Complaint” rather than the
agreed language of the “Second Amended Complaint”; this dishonest drafting heavily favored
Defendant Microsoft. There also was no mention of Microsoft’s agreement to immediately
 Case 2:10-cv-00215-WY Document 14-3 Filed 03/31/10 Page 2 of 2

Answer Plaintiff’s Third Amended Class Action Complaint in the Western District of
Washington.
6. Approximately two hours later on Friday March 19, 2010, at 5:35pm I sent Defendant’s
counsel John Papianou an e-mail attaching his draft stipulation with several material changes to
that draft stipulation and asked that he contact me to discuss problems and concerns with same. I
even wrote the words, “please reply” because I needed to discuss the issues of whether Microsoft
would Answer the Complaint in the Western District of Washington; and whether Microsoft had
acted in bad faith when it used the wrong language in its draft; and whether Microsoft would
agree to allow Plaintiffs to file their Third Amended Class Action Complaint in the Eastern
District of Pennsylvania.
7. At all times I made it clear to the Court and to Defendant’s counsel that I reserved the
right to respond to Defendant Microsoft’s Motion To Dismiss if a stipulation could not be
reached based on the good faith belief that Defendants forum selection clause is invalid and
unenforceable in this case.
8. At some point I sent an e-mail and called Defendant Microsoft’s counsel and stated there
would be no stipulation agreement due to the inability of the parties to reach an accord with
regards to the draft stipulation and initial verbal conference.
9. I never stated to Defendant Microsoft’s counsel John Papianou, Esquire, that I would
delay transfer by filing “amendment after amendment” in this Court and would keep the case
going in this district “for five years”.
10. Mr. Papianou and his firm were being unethical, unprofessional and acting in bad faith
with regards to their representation of their client Defendant Microsoft Corporation in regards to
the proposed draft stipulation.
11. The conversation ended when I repeated that no stipulation agreement had been reached
unless Defendant Microsoft agreed to waive its right to file motions in the Western District of
Washington and Answer to the merits of Plaintiffs Third Amended Class Action Complaint. Mr.
Papianou hung up the phone.

I declare under penalty of perjury that the foregoing is true and correct.

Executed this 31st day of March, 2010.

Samuel Lassoff /s
Samuel Lassoff
 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 1 of 8

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF PENNSYLVANIA

FRANK MUNIZ, on behalf of )

himself, and other U.S. residents similarly situated, )
) CIVIL ACTION
Plaintiffs, )
)
v. ) 10-CV-215
)
MICROSOFT CORPORATION )
)
Defendant. )

THIRD AMENDED CLASS ACTION COMPLAINT

Plaintiffs make the following allegations, except as to allegations specifically pertaining

to plaintiffs and plaintiffs’ counsel, based upon the investigation undertaken by plaintiffs’
counsel, which investigation included analysis of publicly-available news articles and reports,
public filings, press releases and other matters of public record.

NATURE OF THE ACTION

1. This is a class action on behalf of several million U.S. customers exposed to point fraud
following fraud, breach of contract, negligence, unjust enrichment, and unfair business practices
on the part of the defendant Microsoft Corporation.

JURISDICTION AND VENUE

2. This Court has jurisdiction over the subject matter of this action and venue is proper in this
District.

PARTIES

3. Plaintiff FRANK MUNIZ is a resident of Los Angeles County, California. Mr. Muniz was a
customer of defendant Microsoft Corporation’s Microsoft Points system, X-box Live, Xbox Live
Marketplace, Windows LIVE, Xbox 360, and Zune services when his account was exposed to
point fraud.
 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 2 of 8

4. Defendant Microsoft is a corporation organized under the laws of the State of Washington,
with its principle place of business in Redmond, Washington. Microsoft Corporation is a
worldwide developer of software and services and provides an online, renewable, stored-value
system called Microsoft Points that lets people buy digital goods and services from Microsoft
services such as X-box Live Marketplace, Windows LIVE, Xbox 360, and Zune throughout the
United States. Purchasers of such Microsoft Point system, X-box Live, Windows LIVE, Xbox
360, and Zune services presumptively include citizens of every state in the United States.

5. Defendant Microsoft Corporation is liable for its fraudulent handling of plaintiffs’ Microsoft
Point system, X-box Live, Windows LIVE, Xbox 360, and Zune accounts and for a failure to
immediately warn Plaintiff of its fraud. Plaintiffs who paid for digital goods and services using
the Microsoft point system paid more than the actual price of the digital good or service they
wanted because the cost to buy Microsoft points is more than the cost of most digital goods or
services being sold leaving a residual non-refundable point value in favor of Microsoft that is
useless until Plaintiffs supplant their accounts with more Microsoft points. It is almost
impossible for Plaintiffs to purchase a specific number of points that would correspond to the
number actually needed to buy a particular digital good or service. Plaintiffs must buy Microsoft
points in unreasonably large non-refundable pre-set blocks, the remainder of which are spent at a
later date, and depending on how often a consumer buys, these unspent non-refundable points
effectively function as a free loan to Microsoft. Plaintiffs must buy Microsoft points in non-
refundable pre-set blocks, the remainder of which serve to unjustly enrich Microsoft for goods
and services never provided to Plaintiffs if unused or unusable by Plaintiffs. Plaintiffs are
required to supplant their X-box Live, Windows LIVE, Xbox 360, and Zune accounts with large
blocks of more Microsoft points to use their remaining residual points or accept no goods or
services for their remaining value. Microsoft Corporation knew about this fraud, or at some
point knew about this fraud, and knowingly continued its fraud on Microsoft point consumers.
There is no way for Plaintiffs to combine non-refundanble Microsoft points with money to make
a purchase for the exact amount of a digital good or service offered by Microsoft. No where did
Microsoft advise Plaintiffs that they would not be able to use the value of all their Microsoft
points unless they purchased an unreasonably large amount of Microsoft points for an
unreasonably large amount of purchases. Microsoft executive Aaron Greenberg, Xbox group
product manager, has admitted knowingly defrauding Microsoft point consumers.
 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 3 of 8

PLAINTIFF’S CLASS ACTION ALLEGATIONS

6. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil Procedure 23(a)
and (b)(3) on behalf of a Class, consisting of U.S. customers whose Microsoft Point system, X-
box Live, Xbox Live Marketplace, Windows LIVE, Xbox 360, and Zune accounts were
fraudulently and or negligently handled by Defendant between January 1st, 2000 through April
30th, 2010, inclusive (the “Class Period”), and who were damaged thereby. Excluded from the
Class are Defendant, members of the immediate family of Defendant, any subsidiary or affiliate
of Defendant and the directors, officers and employees of Defendant or its subsidiaries or
affiliates, or any entity in which any excluded person has a controlling interest, and the legal
representatives, heirs, successors and assigns of any excluded person.

7. The members of the class are so numerous that joinder of all members is impracticable.
While the exact number of Class members is unknown to plaintiffs at this time and can only be
ascertained through appropriate discovery, plaintiffs believe that there are thousands of members
of the Class located throughout the United States. U.S. customer members of the Class may be
identified from records maintained by defendants and/or its transfer agents and may be notified
of the pendency of this action by mail, using a form of notice similar to that customarily used in
class actions.

8. Plaintiff’s claims are typical of the claims of the other members of the Class as all members of
the Class were similarly affected by Defendants’ wrongful conduct.

9. Plaintiff will fairly and adequately protect the interests of the members of the Class.

10. Common questions of law and fact exist as to all members of the Class and predominate over
any questions solely affecting individual members of the Class. Among the questions of law and
fact common to the Class are:

whether the defendant committed fraud against the plaintiffs

 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 4 of 8

whether defendant negligently handled plaintiffs’ Microsoft Point system, X-box Live,
Windows LIVE, Xbox 360, and Zune account

whether defendant failed to adequately protect plaintiffs once it discovered plaintiffs’
account was fraudulently charged

whether defendant participated in and pursued the common course of conduct
complained of herein

whether statements made by defendant to the public during the Class Period
misrepresented and/or omitted to disclose material facts about the negligent mishandling
of plaintiffs’ Microsoft Point system, X-box Live, Windows LIVE, Xbox 360, and Zune
account

whether defendant made material misrepresentations and or failed to correct the material
misrepresentations; and

the extent to which the members of the Class have sustained damages and the proper
measure of damages.

11. A class action is superior to all other available methods for the fair and efficient adjudication
of this controversy since joinder of all members is impracticable. Furthermore, as the damages
suffered by individual Class members may be relatively small, the expense and burden of
individual litigation make it impossible for members of the Class to individually redress the
wrongs done to them. There will be no difficulty in the management of this suit as a class action.

SUBSTANTIVE ALLEGATIONS

12. Plaintiff had non-refundable residual Microsoft points in his X-box Live account he could
not use after making a Microsoft Point purchase. The unusable non-refundable residual points
were in effect a free loan to Defendant Microsoft Corporation. In order to use his remaining
Microsoft point balance, plaintiff was required to supplant his account with additional Microsoft
points in order to purchase a digital good. Plaintiff was unable to use both money and points to
make his purchase for the exact points and or purchase price. After the purchase, Plaintiff again
had non-refundable Microsoft points in his account he could not use. Plaintiff was the victim of
Microsoft Point fraud.

13. The defendant engaged in a scheme to unjustly enrich itself through their fraudulent handling
of plaintiffs’ account. Plaintiff paid for digital goods and services using the Microsoft point
system and paid more than the actual price of the digital good or service he wanted because the
cost to buy Microsoft points is more than the cost of the digital goods or services being sold
leaving a residual non-refundable point value in favor of Microsoft that is useless until Plaintiff
 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 5 of 8

supplants his account with more Microsoft points. It is almost impossible for Plaintiff to
purchase a specific number of points that would correspond to the number actually needed to buy
a particular digital good or service. Plaintiff was required by Microsoft to buy Microsoft points
in unreasonably large non-refundable pre-set blocks, the remainder of which are spent at a later
date, these unspent non-refundable points effectively function as a free loan to Microsoft.
Plaintiff was required by Microsoft to buy Microsoft points in non-refundable pre-set blocks, the
remainder of which serve to unjustly enrich Microsoft for goods and services never provided to
Plaintiff if unused or unusable by Plaintiff. Plaintiff was required to supplant his X-box Live,
Windows LIVE, Xbox 360, and Zune account with a large block of more Microsoft points to use
his remaining residual points or accept no goods or services for their remaining value. Microsoft
Corporation knew about this fraud, or at some point knew about this fraud, and knowingly
continued its fraud on Plaintiff. There is no way for Plaintiff to combine non-refundable
Microsoft points with money to make a purchase for the exact amount of a digital good or
service offered by Microsoft. No where did Microsoft advise Plaintiff that he would not be able
to use the value of all his Microsoft points unless he purchased an unreasonably large amount of
Microsoft points for an unreasonably large amount of purchases. Microsoft executive Aaron
Greenberg, Xbox group product manager, admitted knowingly defrauding Plaintiff.

COUNT I

FRAUD
14. Microsoft Corporation’s conduct in illegally charging Plaintiff and the class for point fraud,
as alleged hereinabove, violated State and Federal law because it was unlawful, unfair and/or
fraudulent business act and practice.

15. As a proximate result of Microsoft Corporation’s conduct alleged herein, both Plaintiff and
the class have sustained pecuniary loss.

16. Unless restrained by this Court, Defendant Microsoft Corporation will continue to engage in
the unlawful, unfair, and/or fraudulent business acts or practices alleged above, in violation of
Pennsylvania, New Jersey, and Federal law thus tending to render judgment in the instant action
ineffectual. Plaintiff has no adequate remedy at law, in that Defendant will continue to engage in
 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 6 of 8

such practices, as alleged above, in violation of State and Federal law thus engendering a
multiplicity of judicial proceedings.

17. Plaintiff and the Class are entitled to the disgorgement of any profits Microsoft Corporation
obtained as a result of charging Plaintiff and the Class for point fraud and attorneys’ fees as
provided by State and Federal law.

COUNT II

BREACH OF Contract
18. Plaintiff repeats and realleges each and every allegation contained above as if fully set forth
herein.

19. Defendants either expressly and/or implicitly, contractually agreed to provide an online,
renewable, stored-value system called Microsoft Points that lets Plaintiffs buy digital goods and
services from X-box Live Marketplace, Windows LIVE, Xbox 360, and Zune and only charge
Plaintiffs for the complete, whole and or actual digital goods and services purchased by
Plaintiffs. Defendant breached that contract by collecting revenues for digital goods and services
which were not provided. Accordingly, Plaintiffs seek a refund of all improper and/or illicit
charges.

20. Defendants, by their negligent handling of Microsoft Point control, X-box Live Marketplace,
Windows LIVE, Xbox 360, and Zune accounts, breached their contract to plaintiff and the Class,
causing damages to Plaintiff and the Class.

COUNT III

NEGLIGENCE
21. Plaintiff repeats and realleges each and every allegation contained above.

22. The Defendant owes and owed a duty to plaintiff and the Class to monitor its online,
renewable, stored-value system called Microsoft Points for point fraud and to protect plaintiff
and the Class from point fraud to ensure that Plaintiff and the Class were charged only for
complete, whole and or actual digital goods and services purchased by Plaintiffs.
 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 7 of 8

23. Microsoft Corporation has breached its duty to plaintiff and the Class to adequately monitor
its Microsoft Point system for point fraud and to protect plaintiff and the Class from point fraud,
and by charging plaintiff and the Class for incomplete and or partial downloads of digital goods
and services; and refusing to refund same.

COUNT IV

UNJUST ENRICHMENT
24. Plaintiff repeats and realleges each and every allegation contained above.

25. Microsoft Corporation has received and retained money belonging to plaintiff and the Class
resulting from point fraud. A common issue among the Plaintiffs is that each Plaintiff did not get
what they paid for.

26. Under principles of equity and good conscience, Microsoft Corporation should not be
permitted to retain the money belonging to Plaintiff and the Class which Microsoft Corporation
has unjustly received as a result of its actions.

COUNT V

UNFAIR BUSINESS PRACTICES

27. Plaintiff repeats and realleges each and every allegation contained above.

28. Microsoft Corporation’s conduct in charging Plaintiff and the class for point fraud, as
alleged hereinabove, violated Pennsylvania, New Jersey, and Federal law because it was
unlawful, unfair and/or fraudulent business act and practice.

29. As a proximate result of Microsoft Corporation’s conduct alleged herein, both Plaintiff and
the class have sustained pecuniary loss.

30. Unless restrained by this Court, Defendant s Microsoft Corporation will continue to engage
in the unlawful, unfair, and/or fraudulent business acts or practices alleged above, in violation of
Pennsylvania, New Jersey, and Federal law thus tending to render judgment in the instant action
ineffectual. Plaintiff has no adequate remedy at law, in that Defendant will continue to engage in
 Case 2:10-cv-00215-WY Document 14-4 Filed 03/31/10 Page 8 of 8

such practices, as alleged above, in violation of Pennsylvania, New Jersey, and Federal law thus
engendering a multiplicity of judicial proceedings.

31. Plaintiff and the Class are entitled to the disgorgement of any profits Microsoft Corporation
obtained as a result of charging Plaintiff and the Class for point fraud, restitution of any monies
Plaintiff and the Class paid for incomplete and or partial downloads and attorneys’ fees as
provided by U.S., Pennsylvania, New Jersey, and Federal law.

WHEREFORE, plaintiff prays for relief and judgment, as follows:

1. Determining that this action is a proper opt-out class action and certifying Plaintiff as class
representative under Rule 23 of the Federal Rules of Civil Procedure;
2. Awarding compensatory damages in favor of Plaintiff and the other Class members against
defendant, jointly and severally, for all damages sustained as a result of defendant’s wrongdoing,
in an amount to be proven at trial, including interest thereon;
3. Pre-judgment interest and post judgment interest from the date of entry until the date of
satisfaction at the highest rates allowable by law;
4. Punitive and exemplary damages to the extent permitted by law;
5. Awarding Plaintiff and the Class their reasonable costs and expenses incurred in this action,
including attorneys fees and expert fees; and
6. Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.

DATED: March 31, 2010

By: Samuel J. Lassoff /s

PO Box 2142
Horsham, PA 19044

Attorney for Plaintiffs