Happy belated New Year everyone. We had a great first year here at the Missouri Kansas Class Action Blog and look to continue the trend into 2014. Let’s start off the new year with a look at a recent Supreme Court opinion involving the Class Action Fairness Act of 2005 (CAFA). Although the 2012-13 term produced some important class action jurisprudence from the nation’s highest court (which we wrote about here and here), the Supreme Court’s decision in Mississippi ex rel. Hood v. AU Optronics Corp., No. 12-1036 (U.S. Jan. 14, 2014) will probably not affect most practitioners; it is, however, blog-worthy because the Court resolved a circuit split on the issue and arguably narrows the reach of the statute based on the its plain meaning.
In the case, the Mississippi attorney general filed a parens patriae action in state court against several liquid crystal display (LCD) manufacturers for violating state antitrust and consumer protection laws for allegedly restricting competition and raising prices (is that why my flat panel TV costs so much?).
The defendants removed the case to federal court under CAFA on the basis that the state represented a class of LCD screen purchasers. The District Court for the Southern District of Mississippi granted the state’s motion to remand, but the Fifth Circuit reversed, holding that the state’s parens patriae action qualified as a “mass action” under CAFA, because it involved claims of “100 or more persons” and in the Mississippi AG’s suit the “real parties in interest” are the hundreds of consumers in the state, and not the State itself.
SCOTUS subsequently granted certiorari to resolve a circuit split between the Fifth Circuit and previous conflicting decisions by the Fourth, Seventh, and Ninth Circuits. In a unanimous decision, the Court reversed the Fifth Circuit and held that a suit filed by a state as the sole plaintiff does not constitute a “mass action” under CAFA. Justice Sotomayor, writing for the Court, explained that its decision was mandated by the plain language of the statute: “[a]ccording to CAFA’s plain text, a ‘mass action’ must involve monetary claims brought by 100 or more persons who propose to try those claims jointly as named plaintiffs. Because the State of Mississippi is the only named plaintiff in the instant action, the case must be remanded to state court.”
The Court further noted that this interpretation is consistent with CAFA’s statutory language as a whole, as the statute also refers to the “100 or more persons” in a removable mass action as “plaintiffs” – a term which does not include unnamed parties such as the AG suit at issue.
While readers of this blog may not encounter parens patriae actions in their daily practice, state attorney generals continue to aggressively enforce their state’s consumer protection laws. The Hood decision means that these actions will definitively be contested in state court.