The Supreme Court’s recent rejection of Class Action Fairness Act (“CAFA”) jurisdiction inparens patriae suits (suits brought by state attorneys general on behalf of the state or state’s citizens in general) will likely increase the filing of such suits asserting claims and rights of individual citizens of the state, including for monetary damages. Such lawsuits—which are often prosecuted by private class counsel pursuant to contingency fee retainer agreements with the state attorney general—are becoming a more and more common method to avoid the impact of CAFA and recent pro-defendant class action rulings by the Supreme Court under the federal class action rule.
The Mississippi v. AU Optronics Corp. case decided by the Supreme Court involved claims filed by the state attorney general (through private retained counsel pursuant to a contingency-fee agreement) alleging price fixing in the liquid crystal display (LCD) market. Those claims largely mirrored the claims made in a private class action that was settled by the defendants in a series of agreements for a total of approximately $1.1 billion (a settlement reached after more than 100 putative private class actions were filed asserting essentially the same claims against various groups of defendants). The Mississippi suit sought money damages in the form of restitution based on the same purchases that would have been covered (and released) by the private class action settlements.
Given the increase of high-profile data breaches, it is likely that these “parens patriae” suits will expand into the privacy realm. A coalition of state attorneys general have already formed to investigate the recent Target breach. Additionally, the parens patriae loophole to CAFA may ultimately allow private class attorneys to bring data breach damages claims in state court thus not only allowing the litigation to remain in what class counsel may view as a more plaintiff-friendly jurisdiction, but also potentially avoiding the biggest obstacle to such suits thus far—federal decisions dismissing such cases based on a lack of an injury-in-fact as required for Article III standing. Indeed, most legal analysts to discuss customer private class actions against Target have made this very point, a point that may be moot if state attorney generals simply file essentially the same claims as part of a “parens patriae” action.