Keywords: Supreme Court, Class Action Fairness Act, mass actions
On May 27, 2013 the Supreme Court granted certiorari in one case of interest to the business community:
Class Action Fairness Act—Removal of Parens Patriae Suits As "Mass Actions"
Under the Class Action Fairness Act, defendants may remove certain "mass actions" involving "monetary relief claims of 100 or more persons" from state court to federal court. 28 U.S.C. § 1332(d)(11)(B)(i). Today, the Supreme Court granted certiorari in Mississippi ex rel. Hood v. AU Optronics Corp., No. 12-1036, to resolve a circuit split concerning whether parens patriae suits—which are filed by state attorneys general to recover money on behalf of their citizens—may be removed as mass actions under CAFA.
The case arises from a lawsuit that the Mississippi attorney general filed in state court against manufacturers of liquid crystal display panels. In the lawsuit, the Mississippi attorney general alleged that the LCD manufacturers had conspired to fix prices. Among other relief, the state-court complaint sought restitution on behalf of Mississippi consumers who had purchased LCD panels during the period when prices were allegedly fixed at artificially high levels. After the defendant manufacturers removed the case to federal court, Mississippi moved to remand (i.e., send the case back to state court), contending that it did not fall within the scope of CAFA jurisdiction.
The district court granted Mississippi's motion to remand, but the Fifth Circuit reversed. See Mississippi ex rel. Hood v. AU Optronics Corp., 701 F.3d 796 (5th Cir. 2012). The Fifth Circuit concluded that Mississippi's suit constituted a mass action because the individual consumers are "[t]he real parties in interest." Id. at 800. The court reasoned that, insofar as Mississippi brought claims to enforce the rights of consumers, the state was "not asserting its sovereign interest[s]" but was instead acting "as a class representative" and "pursu[ing] the interests of ... private part[ies]." Id. at 801. The case therefore remained in federal court.
A number of other state attorneys general have filed similar lawsuits against the LCD manufacturers. In a number of those lawsuits, however, the Fourth, Seventh, and Ninth Circuits have held that removal is not permitted under CAFA. The Supreme Court granted review in order to resolve the circuit split.
The Supreme Court's decision in this case will be significant for businesses, as state attorneys general have been filing enforcement actions in increasing numbers. Indeed, as we have covered on Mayer Brown's class action blog, Class Defense, some members of the plaintiffs' bar have been lobbying states to deputize them as acting attorneys general so that they may file lawsuits as parens patriae actions in order to avoid federal jurisdiction. Moreover, as we have reported, the Court's decision may be relevant to litigation over the scope of the Securities Litigation Uniform Standards Act of 1998, 15 U.S.C. § 78bb(f), which prohibits "private part[ies]"—but not states—from filing certain securities-fraud class actions in state court.
Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on July 19, 2013, and amicus briefs in support of the respondents will be due on August 19, 2013.
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