U.S. High Court Hears Arguments over Classifying State’s Suit as a Mass Action

U.S. High Court Hears Arguments over Classifying State’s Suit as a Mass Action

 WASHINGTON, D.C. — (Mealey’s) A state’s lawsuit may not be removed to federal court under the Class Action Fairness Act (CAFA), Jonathan S. Massey of Washington, representing the State of Mississippi’s attorney general, told the U.S. Supreme Court on Nov. 6 (State of Mississippi, ex rel. Jim Hood, Attorney General v. AU Optronics Corp., et al., No. 12-1036, U.S. Sup.; See October 2013).

“There is only one plaintiff in this case, the State of Mississippi.  It is not a citizen for purposes of diversity jurisdiction, and therefore, the requirements of even minimal diversity, let alone the 100-person numerosity requirement of CAFA, cannot be met,” Massey told the justices.

State Court Complaint

The State of Mississippi sued nearly two dozen LCD companies in the Hinds County, Miss., Chancery Court, alleging that the defendants’ conduct artificially inflated prices, which harmed the consumers, who were forced to pay higher prices.  The defendants removed the case to the U.S. District Court for the Southern District of Mississippi, claiming that the action was a class action or a mass action under CAFA.

The state moved to remand the case to state court, and the District Court granted the motion.  The defendants appealed to the Fifth Circuit.

Reversing the District Court’s remand order, the appellate panel opined that not only are there more than 100 consumers, resulting in more than 100 claims at issue in this case, but also that CAFA’s general public exception is inapplicable.  “It provides that a suit is not a mass action if ‘all of the claims in the action are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class) pursuant to a State statute specifically authorizing such action.’  28 U.S.C. § 1332(d)(11)(B)(ii)(III).  But this public exception does not exempt this case from the CAFA and federal jurisdiction.  The requirement that ‘all of the claims’ be asserted on behalf of the public is not met here,” Judge E. Grady Jolly wrote for the panel.

However, the panel added that it acknowledged “the concern that finding the general public exception inapplicable here may render such statutory exception a dead letter (because finding a suit to be a mass action negates the possibility of the exception applying), and we welcome congressional clarification of this issue.”

Judge Edith Brown Clement joined in the opinion.

Judge Jennifer Walker Elrod concurred, but only in judgment.  “I concur in judgment because the majority opinion is a fair application of our binding precedent, namely Louisiana ex rel. Caldwell v. Allstate Insurance Co., 536 F.3d 418 (5th Cir. 2008).  I write separately, however, to express my concerns with CaldwellCaldwell’s claim-by-claim approach is problematic when applied to CAFA’s ‘mass action’ provision in parens patriae suits such as the instant case.  Moreover, and just as troubling, applying Caldwell’s reasoning to CAFA’s general public exception may render the exception a dead letter in this circuit.  We should reconsider Caldwell and correct our course in this area of the law,” the judge said.

High Court Appeal

Hood petitioned the U.S. Supreme Court, which granted the petition on May 28.

Arguing against the Fifth Circuit’s ruling, Massey told the Supreme Court justices that “the attempt to force State actions into the mass action definition is a square-peg-round-hole kind of problem.  The mass action definition addresses the situation of mass consolidation or mass joinder when there are 100 individual plaintiffs or more in a case.  . . .  But that does not apply to this situation.  CAFA refers to real plaintiffs asserting concrete claims and further provides that those claims must be proposed to be tried jointly.  None of that happens in a parens patriae case where the State is the only Plaintiff.”

Arguing on behalf of the LCD companies, Christopher M. Curran of White & Case in Washington told the justices that the attorney general’s definition of a mass action is incorrect. 

“The attorney general’s interpretation of the mass action definition requires this Court to conclude that a mass action can only be one of the actions with 100 or more named plaintiffs, and can never be a representative action.  This interpretation cannot be squared with the statutory language, the purpose of the Act and the structure of the Act,” Curran argued.

Counsel

Cory L. Andrews of Washington Legal Foundation in Washington filed an amicus curiae brief on behalf of Washington Legal Foundation.  Charles J. Cooper of Cooper & Kirk in Washington filed an amicus brief on behalf of Access to Courts Initiative Inc. and National Association of Manufacturers.  Richard L. Fenton of Dentons US in Chicago filed an amicus brief on behalf of Allstate Insurance Co.  Stephen D. Houck of Menaker & Herrmann in New York filed the amicus brief on behalf of The Center for State Enforcement of Antitrust and Consumer Protection Laws Inc. 

Noah A. Levine of Wilmer, Cutler, Pickering, Hale & Dorr in New York filed an amicus brief on behalf of Pharmaceutical Research and Manufacturers of America and American Bankers Association.  Scott L. Nelson of Public Citizen Litigation Group in Washington filed the amicus brief on behalf of Public Citizen.  Julie Nepveu of AARP Foundation Litigation in Washington filed the amicus brief on behalf of AARP.  Mary M. Ross of DRI – The Voice of the Defense Bar in Bloomfield Hills, Mich., filed an amicus brief on behalf of DRI – The Voice of the Defense Bar.  Solicitor General Michael A. Scodro in Chicago filed the amicus brief on behalf of Illinois and 45 other states. 

Mealey's is now available in eBook format!

For more information about LexisNexis products and solutions connect with us through our corporate site. antitrust