State AG Lawsuit Not Removable under CAFA, Second Circuit Holds

by Ballard Spahr LLP

The U.S. Court of Appeals for the Second Circuit has ruled that a parens patriae action brought by a state attorney general is not removable from state to federal court as a “class action” under the Class Action Fairness Act.

In Purdue Pharma, L.P. v. Commonwealth of Kentucky, the Kentucky Attorney General had filed a parens patriae action in state court alleging that the defendants had violated state law by misleading health care providers, consumers, and government officials about the risks associated with a prescription drug they manufactured and marketed. The AG sought recovery of prescription and health care costs incurred by the state and prescription costs incurred by consumers.

After the defendants removed the case to a Kentucky federal district court, it was transferred to a New York federal district court, which granted the AG’s motion to remand because the case failed to meet CAFA’s requirements. The defendants then filed a petition with the Second Circuit seeking leave to appeal the remand order. The Second Circuit denied that petition, finding that the order was proper.

Under CAFA, a “class action” can be removed to federal court if the proposed class contains at least 100 members, minimal diversity exists between the parties, and the aggregate amount in controversy exceeds $5 million. According to the Second Circuit, for a case to qualify as a “class action” under CAFA, it “must be filed under a statute or rule that is both similar to Rule 23 [of the Federal Rules of Civil Procedure] and authorizes the action to proceed ‘as a class action.’”

The Second Circuit found that none of the Kentucky statutes used by the AG to bring the substantive claims authorized a suit as a class action or required a suit to satisfy any of the conditions of Rule 23 class actions such as adequacy of representation, numerosity, commonality, typicality, or the requirement of class certification. Characterizing the case as filed by the AG on behalf of the sovereign and not by a class representative on behalf of similarly-situated plaintiffs, the Second Circuit held that the case did not qualify as a “class action” because “[i]n form as well as function, parens patriae suits lack the equivalency to Rule 23 that CAFA demands.”

In ruling that a parens patriae suit is not removable under CAFA as a “class action,” the Second Circuit joins the Fourth, Seventh, and Ninth Circuits. The Fifth Circuit, however, has ruled that a parens patriae action is removable under CAFA as a “mass action.” To reach that result, the Fifth Circuit followed a “claim-by-claim” approach, under which it looked behind the pleadings and found that the state was bringing claims on behalf of individuals who, rather than the state, were the true parties in interest.

Rejecting the defendants’ argument that it should follow a similar approach, the Second Circuit observed that the Fifth Circuit’s holding only addressed CAFA’s “mass action” provisions and not the “class action” provisions at issue. While acknowledging that a claim-by-claim approach (versus a whole-complaint approach) might be relevant for purposes of determining diversity, the Second Circuit stated that it had no bearing on the question of whether a parens patriae suit qualifies as a “class action” under CAFA.

Because the defendants did not argue that the case qualified as a “mass action,” the Second Circuit declined to address whether the AG’s action could otherwise qualify as a “mass action.’ Nevertheless, the court observed that CAFA’s definition of “mass action” excludes any civil action in which “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.”  

Allowing the removal of attorney general parens patriae suits from state to federal court is very beneficial to defendants. It remains to be seen whether this circuit split will result in a request for rehearing en banc in the Second Circuit or a petition for certiorari to the Supreme Court by the defendants.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its skill in litigation defense and avoidance. We have been retained on a number of occasions by clients who have been sued by federal and state government enforcement agencies, including parens patriae cases brought by state attorneys general.

For more information, please contact Practice Leader Alan S. Kaplinsky at 215.864.8544 or, Burt M. Rublin at 215.864.8116 or, or  Christopher J. Willis at 678.420.9436 or

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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