A case now before the U.S. Supreme Court involves an issue that could affect all states and the people in those states nationwide. The question of whether certain suits brought by state attorneys general can be removed to federal court could have huge implications for consumers in the states. Companies facing multijurisdictional litigation about anything from price-fixing to product liability will also be interested in this issue.
The justices will determine whether so-called parens patriae cases — suits brought by state attorneys general to recover damages on behalf of consumers — met the definition of mass actions under the Class Action Fairness Act (CAFA). This Act defines these cases as suits that would jointly try the “monetary relief claims of 100 or more persons.” The key question for the justices will be whether that means cases must involve at least 100 separate Plaintiffs to qualify as mass actions or that cases filed by a state attorney general, designed to recover damages for more than 100 individuals, can qualify even if the state is the only named Plaintiff.
The case before the Supreme Court arises out of long-running litigation accusing a group of electronics companies of fixing the price of liquid crystal display panels. As did many other attorneys general, Mississippi’s Jim Hood sued on behalf of state residents after a 2006 U.S. Department of Justice investigation revealed that AU Optronics Corp. and other LCD makers orchestrated a global conspiracy to fix prices on the displays. These displays are widely used in laptops, monitors and other electronic devices. Although the other states reached a $539 million settlement, Mississippi, California, Illinois, South Carolina and Washington opted to pursue “parens patriae cases” in their respective state courts. The defendants removed each of the cases to federal court, but each state successfully fought to have the cases sent back to state court.
The U.S. District Court ruled in the Mississippi case that the attorney general’s suit was a mass action, but concluded that the case fell under an exception in CAFA for suits brought on behalf of the general public. This meant the case was improperly removed from state court. In November 2012, the Fifth Circuit Court of Appeals disagreed, determining that individual consumers, in addition to the state, are the real parties in interest. That meant the claims were not asserted on behalf of the general public.
The court’s ruling said Attorney General Hood was essentially a class representative. The Supreme Court agreed in May to take the case. The high court will resolve a circuit split over whether CAFA applied to parens patriae cases. The result in this case will be very important to not only the citizens of Mississippi but also to folks in all of the show.
Attorney General Hood has received support from 46 other states in this case. The dispute that has wound up before the high court involves a question of a state’s ability to protect its own interests. Attorney General Hood wrote in a brief filed with the court:
Ultimately, this is a case about federalism and respect for the institutional sovereignty of the states and their chief legal officers, legislatures and judicial systems. Whatever “abuses” may have been CAFA’s targets, they did not include parens patriae actions to vindicate the states’ sovereign and quasi-sovereign interests, filed by their politically accountable chief legal officers.
This case will be watched closely by the attorneys general of all states and by the big bosses in Corporate America. In my opinion, a successful outcome for Attorney General Hood is very important to the citizens of all states. A state court should be allowed to hear a lawsuit filed on behalf of the people in that state by the state’s attorney general. Hopefully, the U.S. Supreme Court will agree!
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.