Legal Alert: Supreme Court to Decide Removability of Parens Patriae Actions Under CAFA

On May 28, 2013, the U.S. Supreme Court granted certiorari in Mississippi v. AU Optronics Corporation, No. 12-1036, to consider whether a parens patriae action brought by a state attorney general is removable as a “mass action” under the Class Action Fairness Act (CAFA). Parens patriae is a doctrine under which a State, acting as named plaintiff, may maintain a legal action as a representative of its citizens where the State’s citizens have been allegedly harmed and where the State maintains a quasi-sovereign interest. The Fifth Circuit Court of Appeals has held that a parens patriae lawsuit is analogous to a mass action and is therefore removable to federal court under CAFA, which provides for removal of class actions and mass actions where there is minimal diversity and the amount in controversy exceeds $5 million, among other requirements. Three circuits — the Fourth, Seventh, and Ninth — have held otherwise.

In AU Optronics, Mississippi filed an action in state court alleging that the defendants had engaged in price fixing. The lawsuit was brought in the name of the state, asserting claims under the Mississippi Antitrust Act and the Mississippi Consumer Protection Act, seeking injunctive relief, civil penalties, and restitution to the State and to its citizens who purchased products from defendants. Defendants sought to remove the case to federal court. The district court, relying on Fifth Circuit precedent, Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008), found that the action was a mass action under CAFA. 28 U.S.C. §1332(d). However, the district court remanded the case because it found that all of the claims had been asserted “on behalf of the general public (and not on behalf of individual claimants or members of a purported class)” and therefore fell into the “general public exception” to CAFA mass action jurisdiction. On appeal, the Fifth Circuit reversed. Applying a “claim-by-claim approach” set out in Caldwell, the Fifth Circuit found that “the real parties in interest include not only the State, but also individual consumers residing in Mississippi.” Mississippi ex rel. Hood v. AU Optronics Corp., 701 F.3d 796 (5th Cir. 2012).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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