Supreme Court Holds That State Attorney General Suits Brought On Behalf Of A State's Residents Cannot Be Removed To Federal Court Under The Class Action Fairness Act

Introduction

On January 14, 2014, in Mississippi ex rel. Hood v. AU Optronics Corp., the U.S. Supreme Court unanimously held that lawsuits brought by state attorneys general seeking, among other things, recovery of funds for the benefit of a state's residents, do not qualify for removal to federal court under the "mass action" provision of the Class Action Fairness Act of 2005. The ruling is significant for corporate defendants because they will have to defend such suits, including suits seeking redress for violations of state consumer protection laws, in state court. Because state attorneys general, and a significant segment of the class action bar, prefer litigating in state court, it may be that the effect of the Supreme Court's decision will be to increase state attorney general suits brought on behalf of a state's residents, with the active assistance of class action plaintiffs' lawyers.

Background

Under the Class Action Fairness Act of 2005 ("CAFA"), defendants in civil suits may remove certain "mass actions" from state to federal court. CAFA defines a "mass action" 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 question or law or fact."1 CAFA also contains a "general public" exception which excludes from the "mass action" definition "any civil action in which...all 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 authorized such action."2

Mississippiv. AU Optronics Corp.

On March 25, 2011, Jim Hood ("Hood"), the state attorney general of Mississippi, filed a complaint against several manufacturers, marketers, sellers and distributors of LCD panels, which are components of computers, televisions and a wide variety of other electronic devices. The complaint alleged that the defendants had engaged in price-fixing in violation of the Mississippi Consumer Protection Act ("MCPA") and the Mississippi Antitrust Act by forming an international cartel that conspired to artificially limit the supply and increase the price of LCD panels between 1996 and 2006, thereby increasing the price of every product containing an LCD panel during that time period.3 The complaint also alleged that several of the defendants and their co-conspirators had pled guilty to criminal charges brought by the U.S...