David Stebbins from Arkansas file the lawsuit in a Seattle court. According to Stebbins, he entered into a legally binding contract with Microsoft by accepting the terms of service for using the Xbox Live. However, he decided on May 6 against going along with the TOS he had signed earlier, and therefore submitted a notice to Microsoft that he was "unilaterally amending the terms of service".
The notice he served had a clause giving the company a 10 day period to terminate his membership, failing which the modified version of the TOS would come into effect. Microsoft failed to respond even as the deadline expired, prompting Stebbins to invite the company to arbitrate a legal dispute in which he claimed $500 billion in damages. When Microsoft didn't respond to the arbitrage request, Stebbins filed a lawsuit seeking the "forfeit victory clause" in his contract to be honoured and demanding the compensation.
While Microsoft continues to decline to comment about the issue to the press, Stebbins has went public about his claims for such exorbitant amounts by stating, "My true goal is not to just harass, and it's not just to get rich. My true goal is to level the playing field". When it was found that he had similarly filed lawsuits against other organisations before, he retorted, "Yes, I've sued numerous organisations. What of it? I do not see how this means that my cases are frivolous".
Microsoft will be legally required to respond to the lawsuit soon. However, it seems that the software giant surely has some ace up its sleeve. Whatever may be the case, the result of this case will set a precedent for not just all Xbox Live users, but for anyone accepting a TOS and then finding it faulty.