Five Takeaways From The Supreme Court’s 'AU Optronics' Decision

Court's decision provides key takeaways for class action defendants, including how the decision limits the use of CAFA's mass action provision to suits that actually name 100 or more persons as plaintiffs.

On January 14, the U.S. Supreme Court issued its decision in Mississippi ex rel. Hood v. AU Optronics Corp.,1 holding that a parens patriae action filed by the state of Mississippi on behalf of its citizens was not a "mass action" as defined by the Class Action Fairness Act (CAFA) and thus could not be removed to federal court on that basis. The Court interpreted the definition of "mass action" as requiring 100 or more parties to be actually named as plaintiffs. The Court also rejected arguments that the state's citizens should have been counted as the real unnamed parties in interest for purposes of the 100-person threshold. Instead, Mississippi's parens patriae lawsuit included only one plaintiff, the state.

There are five significant takeaways from AU Optronics that any potential defendant should understand. First, the decision limits the use of CAFA's mass action provision to suits that actually name 100 or more persons as plaintiffs. Second, the ruling likely enhances the incentive for private contingency-fee counsel to pair with state attorneys general and bring parens patriae actions in state court. Third, the opinion underscores the possibility that a defendant may face both class actions and parens patriae actions for the same alleged conduct—often in different courts. Fourth, private contingency-fee counsel may be further encouraged to urge state attorneys general to use parens patriae actions as an alternative to private class actions that would otherwise be barred, such as when potential class members have signed class action waivers. Finally, despite these possibilities, the AU Optronics decision is limited to jurisdiction under CAFA and does not eliminate or restrict the ability of litigants to remove attorney general cases on other grounds.

CAFA's Mass Action Provision

Congress enacted CAFA to expand federal jurisdiction and to provide for jurisdiction over class actions with national importance.2 Among its various provisions, CAFA contemplates two types of cases: class actions and mass actions.3 For both types of actions, CAFA loosened federal statutory jurisdictional requirements by only requiring minimal diversity among the parties4 as well as an aggregate amount in controversy that exceeds $5 million.5 Mass actions are defined under CAFA as the following:

[A]ny civil action (except a [class action] within the scope of section 1711(2)) 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, except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount...