State Attorney General Lawsuit Not Removable under CAFA, Supreme Court Holds

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Resolving a conflict in the circuits, the U.S. Supreme Court has unanimously ruled that a parens patriae action brought by a state attorney general is not removable from state to federal court as a “mass action” under the Class Action Fairness Act (CAFA). This decision will likely make such lawsuits more difficult to defend.

In Mississippi ex rel. Hood v. AU Optronics Corp., the Mississippi Attorney General had brought a price-fixing lawsuit in state court against various manufacturers of liquid crystal displays (LCDs). The Attorney General alleged violations of state law and sought restitution for Mississippi purchasers of LCDs. Invoking CAFA, the defendants removed the case to federal court, but the district court ordered a remand to state court.

On appeal, however, the Fifth Circuit reversed, holding that the case was a “mass action” that was removable under CAFA. The law provides that a “mass action” may be removed to federal court if it seeks to try jointly the monetary relief claims of 100 or more persons, involves common questions of law or fact, and seeks at least $5 million in damages. The Fifth Circuit held that, in the Mississippi Attorney General’s suit, the “real parties in interest… are those more than 100 persons” whose rights the State was seeking to enforce, not the State itself.

The Supreme Court granted certiorari to resolve the conflict between the opinion by the Fifth Circuit and the decisions in three other circuits. The other circuits had held that similar parens patriae suits by state attorneys general were not “mass actions” that could be removed to federal court under CAFA.

In an opinion by Justice Sotomayor, the Court held that a suit filed by a state as the sole plaintiff does not constitute a “mass action” under CAFA even though it includes a claim for restitution based on injuries suffered by the state’s citizens. The Court explained that “[a]ccording to CAFA's plain text, a 'mass action' must involve monetary claims brought by 100 or more persons who propose to try those claims jointly as named plaintiffs. Because the State of Mississippi is the only named plaintiff in the instant action, the case must be remanded to state court.” The Court emphasized that the term “plaintiffs” in CAFA “refers to actual named parties as opposed to unnamed real parties in interest.”

Topics:  CAFA, Class Action, Parens Patriae, Removal, SCOTUS

Published In: Civil Procedure Updates, Consumer Protection 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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