Locations

People Search

Filter
View All
Loading... Sorry, No results.
bscr
{{attorney.N}} {{attorney.R}}
{{attorney.O}}
Page {{currentPage + 1}} of {{totalPages}} [{{attorneys.length}} results]

loading trending trending Insights on baker sterchi

FILTER
Jan 22, 2014

Mississippi v. Au Optronics: Will There be an Increase in Parens Patriae Suits?

On January 14th, the Supreme Court issued its decision in Mississippi ex rel. Jim Hood, Attorney General v. Au Optronics Corp., et al., No. 12-1036, 2014 U.S. LEXIS 645, and made clear that in order to sustain a “mass action” in federal court pursuant to the Class Action Fairness Act of 2005 (“CAFA”), plaintiffs must be named parties before the court. 

In Mississippi v. Au Optronics, the State of Mississippi (the sole named plaintiff) filed a parens patriae suit against liquid-crystal display (“LCD”) manufacturers in state court, alleging price-fixing and seeking restitution for LCD purchases made by itself and its citizens. The doctrine of parens patriae permits a state to bring an action on behalf of its citizens to protect the state’s sovereign or quasi-sovereign interests. The LCD manufacturers sought to remove the case to federal court. The District Court held that the suit qualified as a mass action, but remanded the suit to state court on the ground that it fell within CAFA’s “general public” exception.[1]  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 question before the Supreme Court was whether a suit filed by a State as the sole plaintiff constitutes a “mass action” under CAFA where it includes a claim for restitution based on injuries suffered by the State’s citizens. For the following reasons, the Court held that it did not constitute a mass action, and remanded the case to state court.

            a) CAFA provides: “The term mass action means any civil action (except a class 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). The parties did not dispute that this provision encompasses suits that are brought jointly by 100 or more named plaintiffs who propose to try their claims together. The issue was whether this provision includes suits brought by fewer than 100 named plaintiffs on the theory that there may be 100 or more unnamed persons who are real parties in interest as beneficiaries to any of the plaintiffs’ claims. The LCD manufacturers argued that “plaintiff” could be read to refer to the underlying claimants on whose behalf relief was sought. However, Justice Sotomayor, writing for a unanimous Court, thought that reading “would stretch the meaning of ‘plaintiff’ beyond recognition.”

            b) The Court pointed out practical problems that would arise if “100 or more persons” and the proposed “plaintiffs” were not interpreted as one and the same. For example, since plaintiffs in mass actions must meet the $75,000 amount in controversy requirement, district courts would have to remand to state court the claims of all individuals whose claims were valued at less than $75,000 (who could not be readily identified if such persons were unnamed and plaintiffs were not seeking class certification) while allowing other claims exceeding $75,000 to proceed in federal court, resulting in parallel actions. In addition, CAFA provides that once removal occurs, a case shall not be transferred to another court “unless a majority of the plaintiffs in the action request transfer”.If “plaintiffs” included unnamed parties, it would be exceptionally difficult for a court to poll the enormous number of real parties in interest to decide whether an action may be transferred. 

            c) As the final prong of its analysis, the Court noted that the Fifth Circuit found it necessary to perform an inquiry regarding the real party in interest on the basis that “federal courts look to the substance of the action and not only at the labels that the parties may attach.” This was error according to the Supreme Court, as Congress did not intend this background inquiry to apply to the mass action provision.  Rather, the Fifth Circuit should have relied on the text of CAFA. 

In sum, the Supreme Court’s decision establishes that parens patriae actions are not removable “mass actions” under CAFA. It is not unusual for private plaintiffs’ attorneys to represent the states in parens patriae actions on a contingency fee basis. As such, Plaintiffs’ attorneys seeking to avoid federal court could solicit such actions on behalf of the states. Consequently, as a result of this decision we could see an increase in parens patriae actions.


[1]The “general public” exception excludes from the mass action definition 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.