By Jeffrey May, J.D.
The State of Mississippi should not be prevented from pursuing a parens patriae action against manufacturers and distributors of liquid crystal display (LCD) panels for conspiring to fix prices in state court, the state’s lawyer argued to the U.S. Supreme Court today. At issue is a decision of the U.S. Court of Appeals in New Orleans, concluding that Mississippi’s suit qualified as a “mass action” under the Class Action Fairness Act (CAFA) and should be removed to federal court (State of Mississippi v. AU Optronics Corp., Dkt. 12-1036).
In May, the Court granted the state’s petition for certiorari, asking whether a parens patriae action can be removed from state court as a mass action under CAFA when the state is the sole plaintiff, the claims arise under state law, and the state attorney general possesses statutory and common law authority to assert all of the claims. According to the state, the Fifth Circuit is at odds with every other circuit that has decided this issue.
The state’s suit remains pending, while the consumers of Mississippi have already settled an indirect purchaser action against the defendants. Apparently, the class action settlement did not bar the state’s action, which the defending manufacturers suggest is a “copycat” complaint.
“The text and structure of the Class Action Fairness Act of 2005, which is known as CAFA, show that it does not extend to state parens patriae actions,” Jonathan S. Massey argued on behalf of the State of Mississippi. “The disposition of the case today, we believe, is straightforward. There is only one plaintiff in this case, the State of Mississippi. It is not a citizen for purposes of diversity jurisdiction, and therefore, the requirements of even minimal diversity, let alone the 100-person numerosity requirement of CAFA, cannot be met.”
The issue of the removability of state parens patriae actions under CAFA did not appear to be so straightforward, however. Chief Justice John Roberts expressed concern that, under the state’s approach, defendants in a class action brought by consumers might not settle the case because they would fear that a state might later sue the defendants seeking restitution.
“What prevents attorneys general from around the country sitting back and waiting until private class actions proceed, and as soon as one settles or the plaintiffs’ class prevails, taking the same complaint, maybe even hiring the same lawyers, to go and say, well, now we are going to bring our parens patriaeaction,” Roberts questioned. Roberts suggested that states might do so with even greater frequency if Mississippi were to prevail in this case.
Massey argued that the state was protecting the general public as opposed to individual claimants. In response to a question from Justice Stephen Breyer about where the money would go if the state were to win, Massey explained that it would probably go to the state treasury, because it would be too difficult to trace who had been harmed. “It’s very unlikely to go to the individual consumers,” Massey said.
Christopher M. Curran, arguing for respondent AU Optronics Corporation, said that this case was “nothing more than an attempt to double dip.” He contended that every antitrust case has the issue of identifying the victims and compensating them. However, the people were identified in the class action. “They’re getting the money that’s being distributed. People can turn in receipts.”
Justice Ruth Bader Ginsburg suggested that the State of Mississippi “has a stake,” because the individual claims were settled in the class action. Ginsburg questioned whether there were any individual claimants left to be represented.
In response, Curran pointed out that the Mississippi statute requires that the money go to the state’s citizens. “The Attorney General here is basically suing as a representative or a conduit for those citizens,” according to Curran.
The attorney general’s interpretation of CAFA’s mass action definition “cannot be squared with the statutory language, the purpose of the Act and the structure of the Act,” Curran argued. In addition, Curran suggested that federalism principles did not require the Court to side with the state. The state raised Eleventh Amendment and sovereign immunity issues; however, “those precedents and that Amendment deal only with situations where the state is a defendant,” Curran said. “And here, where we are talking about the state as a plaintiff, and the only intrusion we are talking about is removal from state court to federal court.”
Attorneys: Jonathan S. Massey (Massey & Gail LLP) argued for State of Mississippi. Christopher M. Curran (White & Case LLP) argued for AU Optronics Corp.
Companies: AU Optronics Corp.
MainStory: TopStory Antitrust MississippiNews
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