The Supreme Court today unanimously held that a state’s lawsuit on behalf of its injured citizens cannot be removed to federal court under the “mass action” provision of the Class Action Fairness Act.
In Mississippi v. AU Optronics Corp., the Court overturned a Fifth Circuit decision that permitted an LCD manufacturer to remove an antitrust and consumer protection lawsuit brought by the Mississippi attorney general on behalf of LCD purchasers. The Fifth Circuit held that the case was removable under CAFA’s mass action provision, which permits removal of a lawsuit that proposes the joint trial, based on common issues, of monetary relief claims of at least 100 persons with an amount in controversy of at least $75,000. The court interpreted the mass action provision as requiring it to “pierce the pleadings” and identify the “real parties in interest”—which in the case, said the court, were the injured citizens.
The Supreme Court, however, dismissed the “real parties in interest” concept as inapplicable to CAFA. Congress, the Court held, did not require a real party in interest inquiry in adopting CAFA, and federal courts have generally conducted such an inquiry only in the context of ascertaining diversity jurisdiction. The mass action provision, therefore, applies only where there are 100 plaintiffs—not 100 real parties in interest.
The Court had taken the case largely to resolve a circuit split, as the Seventh and Ninth circuits had previously required the remand of cases brought by states and removed to federal court under CAFA’s mass action provision. Like the Fifth Circuit, however, those courts had embraced the real party in interest inquiry, but had merely determined that the citizens on whose behalf the state sued were not the real parties in interest. The Court, by squelching the real party in interest inquiry under CAFA, has effectively rejected the approaches of all three lower courts.