A federal multidistrict litigation (MDL) court in California has determined that lawsuits brought by state attorneys general cannot be removed to federal court under the Class Action Fairness Act (CAFA). In re: TFT-LCD (Flat Panel) Antitrust Litig., MDL No. 1827 (U.S. Dist. Ct., N.D. Cal., decided February 15, 2011). The ruling affects lawsuits filed by Washington and California attorneys general alleging that the defendants, who manufacture liquid crystal display (LCD) panels, engaged in a price-fixing conspiracy, which resulted in state agencies and consumers paying inflated prices for products containing these panels. The defendants removed the actions to federal court where they were transferred to an MDL court with dozens of similar lawsuits. The states moved to remand their actions to their respective state courts.

Noting that “a state court action is only removable to federal court if it might have been brought there originally,” the court explores the nature of a lawsuit brought by a state. According to the states, their actions “are parens patriae actions that are neither ‘class actions’ nor ‘mass actions’ under CAFA.” The defendants argued that the states are not the real party in interest in such actions, and the court must “adopt a claim-by-claim approach because, due to CAFA’s minimal diversity requirement, ‘the presence of any real parties in interest other than the State creates the minimal diversity required by § 1332(d)(2).” The defendants contended that the attorneys general are representing a specific group of individuals who are the real parties in interest, and thus, minimal diversity is satisfied.

Carefully parsing the claims, the court determined that the states “are the real parties in interest because both States have a sovereign interest in the enforcement of their consumer protection and antitrust laws…. Both states seek wide-ranging injunctive relief and Washington seeks significant civil penalties. The damages that California seeks, while on behalf of its consumers, would first be paid to the State and distributed on an equitable basis. The fact that private parties may benefit from the States’ actions does not negate the States’ substantial interests in these cases.” The court also concluded that the actions could not be construed as “class actions” and that CAFA’s “mass action” numerosity requirement was not met. The court granted the states’ motions and remanded the actions to state court.