In a significant decision concerning the scope of the Class Action Fairness Act (CAFA), the U.S. Court of Appeals for the Fourth Circuit has ruled that a parens patriae action brought by West Virginia’s Attorney General on behalf of West Virginia consumers seeking recovery of “excess charges” for prescriptions by various pharmacies was not a “class action” under CAFA and thus could not be removed to federal court.

In its 2-1 decision in State of West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., on May 20, 2011, the Court rejected the defendants’ argument that the case was a “disguised class action” because West Virginia sought to recover for thousands of consumers the alleged overcharges they had paid. The majority stated that, to be removable to federal court under CAFA, a case must be a “class action,” defined by the statute as “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.” 28 U.S.C. Section 1332(d)(1)(B).

The parens patriae suit, filed in State court by the West Virginia Attorney General, did not invoke West Virginia Civil Rule of Procedure 23, which governs class actions, but instead relied on State consumer protection statutes. Those statutes do not contain any numerosity, commonality, or typicality requirements, and do not require provision of notice to consumers, and the Attorney General did not allege that he was a member of a class. Thus, the majority found that the parens patriae suit was not a “class action” under CAFA, and it affirmed the trial court’s order remanding the case to State court.

The dissent asserted that the CAFA definition of a “class action” is “essentially circular” and pointed to the definition in Black’s Law Dictionary: “A lawsuit in which the court authorizes a single person or a small group of people to represent the interests of a larger group.” The dissent concluded that the Attorney General’s suit “squarely fits within that authoritative definition of a class action.” It stated that the absence from the complaint of the “bells and whistles” of allegations concerning numerosity, commonality, typicality, and adequacy of representation was not significant. The dissent concluded that “if something looks like a duck, walks like a duck, and quacks like a duck, it is probably a duck. To my mind this case ‘quacks’ much more like a CAFA class action than a parens patriae case.”