Namco Bandai official policy.
If you purchased your game new from your retailer and discovered a broken or scratched disc when you first opened the jewel case, please return the game back to the retailer for an exchange. If you have a broken or scratched disc but the above does not apply to you, please refer to Namco’s limited warranty policy information found in the back of your game manual.
Basically it does not look like they have a return program. However all is not lost there are products that restore damaged discs. Remember the data is not in the plastic it is on the foil on top of the disc, so if you use one of these products the game may function perfectly.
For those blaming the hardware. Microsoft gives pretty explicit instructions on how to properly operate your machine, and I am pretty certain that it says not to run the machine in the vertical. Which means the original poster was tempting fate.
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