We’ve blogged before about whether parens patriae lawsuits filed by state attorneys’ general to recover money on behalf of state citizens can be removed under the Class Action Fairness Act (CAFA). (CAFA authorizes defendants to 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 on this issue.
The case arises from a lawsuit that the Mississippi attorney general filed in state court against manufacturers of liquid crystal display panels, alleging a price-fixing conspiracy. Among other relief, the complaint sought restitution on behalf of Mississippi consumers who had purchased LCD panels during the period when prices were allegedly fixed. After the defendant manufacturers removed the case to federal court as a “mass action” under CAFA, Mississippi moved to remand, 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. 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.
Many 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 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, we have blogged about how 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 discussed in the past, 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.