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Suits Brought by State AGs Alone Not “Mass Actions”: SCOTUS Sides With 4th, 7th, and 9th Circuits in Clarifying CAFA’s (Class Action Fairness Act) Mass Action Requirements

In Mississippi ex rel. Hood v. AU Optronics Corp., No. 12-1036, 2014 U.S. LEXIS 645 (Jan. 14, 2014) the Supreme Court of the United States addressed the circuit split that arose after the 5th Circuit Court of Appeal’s holding in Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008) that a suit brought by the Louisiana Attorney General qualified as a “mass action” under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(11)(B)(i).  The Fourth CircuitSeventh Circuit, and Ninth Circuit all reached the opposite conclusion.  The Supreme Court, resolving the split in favor of the Fourth, Seventh, and Ninth Circuits, held that the mass action provision can only be invoked to remove a case where the case is brought by 100 or more named plaintiffs.  Lawsuits brought by state attorneys general in which the state is the only named plaintiff do not qualify as “mass actions.”

In 2011, the State of Mississippi sued AU Optronics on behalf of itself and its citizens, alleging violations of the Mississippi Antitrust and Consumer Protection Acts.  AU Optronics filed a notice to remove the case to federal court, arguing that the case was removable under either the “class action” or “mass action” provision of CAFA.

The U.S. District Court for the Southern District of Mississippi remanded.  The court held the following: (1) the case was not a “class action” as it had not been brought pursuant to Federal Rules of Civil Procedure Rule 23; (2) the case was a “mass action” because 100 or more Mississippi consumers had purchased the LCD screens at issue and were therefore real parties in interest to the State’s claim; and (3) the case must nevertheless be remanded because it fell within CAFA’s “general public” exception, which excludes from the definition of “mass actions” civil actions “asserted on behalf of the public.”  The Fifth Circuit agreed with the first two holdings, but reversed on the ground that the case did not fall within the “general public exception.”

The Supreme Court reversed.  The Court held the mass action’s requirement that “100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions” requires that the case be brought by 100 or more named plaintiffs.  Unnamed real parties are not “persons” for the purposes of CAFA’s mass action provision.  The Court noted that the “persons” are also referred to as “plaintiffs,” and stated that a definition of “plaintiff” that included both named and unnamed parties in interest would “stretch[] the meaning of ‘plaintiff’ beyond recognition.”  The Court also noted that the language of the mass action provision intentionally differs from that of the class action provision, which explicitly defines “class members” to include “persons (named or unnamed).”

The Supreme Court’s decision in AU Optronics makes it more difficult for cases to qualify for removal under CAFA’s mass action provision.  In particular, the holding ensures actions brought by state attorneys general on behalf of their citizens will remain in state court.  Companies facing class action litigation should be aware that this decision increases their risk of being forced to defend against suits in multiple forums.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume IV, Number 18
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About this Author

Robin A. Achen, associate attorney, sheppard mullin law firm
Associate

Ms. Achen is an associate in the Business Trial Practice Group in the firm's Los Angeles office.  She is also is a member of the firm’s Food and Beverage Industry Team and the Diversity and Inclusion Attorney Network.  

Areas of Practice

Ms. Achen’s practice focuses on complex commercial litigation in both state and federal court.  She represents clients in a variety of matters including business disputes, securities litigation, and shareholder derivative cases.  Ms. Achen also has experience defending...

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