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The Supreme Court recently held in a unanimous ruling authored by Judge Sotomayor, Mississippi ex. Rel. Hood v. AU Optronics, that a state antitrust and consumer protection action brought by the state of Mississippi as the sole plaintiff did not constitute a “mass action” under the Class Action Fairness Act (“CAFA”) and therefore should be remanded to Mississippi state court. The Court’s rationale was that, according 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, and the State of Mississippi was the only named plaintiff in the instant action. The practical effect of this ruling could be a green light for state attorneys general to continue (and increase) bringing suits in plaintiff-friendly state courts rather than be subjected to the more rigorous federal court class action standards.  While the Courts’ opinion can perhaps be viewed by some as a state rights’ victory, it does not bode well for businesses.


In March 2011, the State of Mississippi sued AU Optronics, manufacturers of liquid crystal displays (“LCD”), in state court, alleging that AU Optronics had formed an international cartel to restrict competition and raise prices in the LCD market in violation of the Mississippi Antitrust Act and the Mississippi Consumer Protection Act.  (In 2012, the DOJ won a $500 million verdict against the largest LCD manufacturer based on the jury's finding it had engaged in a five-year conspiracy to fix LCD prices sold worldwide – click here.) The State sought injunctive relief and civil penalties under both statutes, along with punitive damages, costs, and attorney’s fees. It also sought restitution for its own purchases “of LCD products and the purchases of its citizens.”


AU Optronics sought to remove the case on the basis that it was either a “class action” (defined under the act as “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure”) or a “mass action” (defined under the Act as “any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact”).  The district court rejected the argument that the suit was a class action but agreed it was a mass action.  Nevertheless, the district court remanded the case to state court under the general public exception of CAFA, which excludes from the mass action definition “any civil action in which . . . all of the claims in the action are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class) pursuant to a State statute specifically authorizing such action.”  The Fifth Circuit affirmed the district court’s holding that the action was a mass action (but not a class action); however, it held that the case did not fall under the general public exception and therefore should remain in federal court. 


In a ScotusBlog post (click here). Robert Munn described the briefing in this case as “spirited and lucid.” He notes that Mississippi was attempting to cast the case as "a gross intrusion on state sovereignty."  Munn states that “AU Optronics complains this is just the kind of class action Congress intended to bring into federal court – the pleadings are filed by the same lawyers (as agents of the state) who filed the class actions already consolidated into California.  The pleadings are almost word-for-word replicas of the pleadings in those consolidated cases.  The case involves the claims of huge numbers of individuals against large out-of-state corporations with no particular connection to the forum.”  The interesting backdrop and flavor of the pleadings, however, does not make its way into the cut-and-dried opinion of the Court premised on statutory interpretation and construction. 


At the outset, the Court noted that the parties do not dispute that CAFA encompasses suits that are brought jointly by 100 or more named plaintiffs who propose to try their claims together. Rather, “the question is whether the provision also includes suits brought by fewer than 100 named plaintiffs on the theory that there may be 100 or more unnamed persons who are real parties in interest as beneficiaries to any of the plaintiffs' claims.” The Court rejected AU Optronics’ argument that the provision covers such suits because "claims of 100 or more persons" refers to "the persons to whom the claim belongs, i.e., the real parties in interest to the claims," regardless of whether those persons are named or unnamed.  The Court first began with an interpretation of the relevant statutory language, noting that “the statute says ‘100 or more persons,’ not ‘100 or more named or unnamed real parties in interest.’ Had Congress intended the latter, it easily could have drafted language to that effect.”  Second, the Court explained that “[m]ore fundamentally, AG Optronics’ interpretation cannot be reconciled with the fact that the ‘100 or more persons’ referred to in the statute are not unspecified individuals who have no actual participation in the suit, but instead are the very "plaintiffs" referred to later in the sentence-the parties who are proposing to join their claims in a single trial.”  The Court also found that consideration of the statutory context also supported this holding because CAFA provides that once a mass action has been removed to federal court, it "shall not thereafter be transferred to any other court . . . unless a majority of the plaintiffs in the action request transfer."  The Court noted that if "plaintiffs" means "unnamed parties in interest," it would necessitate (as the district court noted) contacting "hundreds of thousands if not millions of real parties in interest" to "pol[l] [them] about their preferred forum" if AG Optronics' 'interpretation were correct.  For all these reasons, the Court held that the action should be remanded to Mississippi state court.