U.S. Supreme Court To Rule On State's Case Qualifying As Mass Action

U.S. Supreme Court To Rule On State's Case Qualifying As Mass Action

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on May 28 granted a petition for writ of certiorari in a dispute over whether a state's parens patriae lawsuit may be removed to federal court as a "mass action" under the Class Action Fairness Act (CAFA) (State of Mississippi, ex rel. Jim Hood, Attorney General v. AU Optronics Corp., et al., No. 12-1036, U.S. Sup.). 

State Court Complaint 

The State of Mississippi sued nearly two dozen liquid crystal display (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 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. 

Petition Filed 

Mississippi Attorney General Jim Hood filed a petition for writ of certiorari with the U.S. high court on Feb. 19, claiming that there were conflicting rulings on the matter in various federal circuit courts.  

"This circuit conflict has led to inconsistent jurisdictional outcomes.  Indeed, this circuit conflict is so profound that cases involving the same claims, arising out of the same conduct by the very same Defendants have been remanded to state court in the Fourth, Seventh, and Ninth Circuits, but retained in federal court in the Fifth Circuit.  The Fourth, Seventh, and Ninth Circuits found no federal jurisdiction; the Fifth Circuit found federal jurisdiction as a CAFA mass action.  Absent review by this Court, federal jurisdiction over state parens patriae lawsuits will continue to depend entirely on the location of the federal court to which the suit is removed," Hood argued. 

The same question is presented in the certiorari petition in AU Optronics Corp. v. South Carolina, No. 12-911 (that petition is still pending).  But Hood argued that "the instant petition is a better vehicle for deciding this question.  While the Fifth Circuit's approach has been disavowed by every other court of appeals to consider the question, in the decision below, the Fifth Circuit reaffirmed its precedent and its conflict with three other circuits.  The decision in this case contains a full explication of the Fifth Circuit's views, and all relevant dimensions of the question are squarely before this Court." 

Hood of Jackson, Miss., represents the petitioner.  Christopher M. Curran of White & Case in Washington represents the respondent, AU Optronics.  Scott L. Nelson of Public Citizen Litigation Group in Washington filed an amicus curiae brief on behalf of Public Citizen Inc.

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