Meaning of "Mass Actions" Under CAFA clarified by SCOTUS

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In one of its first decisions of the year, the United States Supreme Court unanimously held that a civil action filed solely by the State of Mississippi did not constitute a “mass action” under the Class Action Fairness Act of 2005 (“CAFA”) (Mississippi ex rel. Hood v. AU Optronics Corp.).

CAFA permits defendants in civil suits to remove “mass actions,” a statutorily defined term, from state to federal court. CAFA defines a “mass action” as “any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(11)(B)(i)

In Hood, the State of Mississippi sued a group of LCD manufacturers in Mississippi state court, alleging violations of state law. The suit sought restitution for injuries suffered by Mississippi citizens. The defendants, the LCD manufacturers, removed the case to U.S. District Court, asserting that federal jurisdiction was appropriate under CAFA’s mass action provision. 

The District Court agreed with the defendants and found that the suit qualified as a “mass action” under CAFA because it sought recovery of restitution on behalf of more than 100 Mississippi residents. However, the District Court still remanded to state court on the ground that it fell within CAFA’s “general public” exception. 

The Fifth Circuit reversed, agreeing with the district court that the suit was a mass action but finding that the “general public” exception did not apply. The Fifth Circuit’s ruling created a split with the Fourth, Seventh, and Ninth Circuits, all of which had previously held that similar lawsuits were not “mass actions.” 

On review, and in order to alleviate the split between the Circuits, the Supreme Court unanimously held that removal was improper. The Court stated that CAFA’s “100 or more persons” condition does not include unnamed individuals who are real parties in interest to claims brought by named plaintiffs. 

Rather, a mass action must involve monetary claims brought by 100 or more named plaintiffs. Here, because the State of Mississippi was the sole named plaintiff, the Supreme Court found the lawsuit did not constitute a mass action under CAFA, and therefore, was remanded to state court.

Natalie Ferrall also contributed to this article.

 

Topics:  CAFA, Class Action, Mass Action, Mississippi ex rel. Hood v. AU Optronics, SCOTUS

Published In: Civil Procedure Updates

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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