High court to decide if state claim is ‘mass action’ under CAFA

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In a case that will have a major effect on the way states bring consumer protection actions against alleged corporate wrongdoers, the U.S. Supreme Court has agreed to decide whether a state-law -based parens patriae action is removable as a “mass action” under the Class Action Fairness Act when the state is the sole plaintiff.

That case, Mississippi ex rel. Hood v. AU Optronics Corp., was brought by the state’s attorney general against manufacturers and distributors of liquid crystal display panels alleging price fixing in violation of the state’s antitrust and consumer protection statutes.

The companies removed the case to federal district court on the grounds that the suit was a “class action” or a “mass action” under the Class Action Fairness Act. The state successfully moved to remand the case to state court, and the companies appealed.

The 5th U.S. Circuit Court of Appeals reversed the district court’s remand order.

Although the court agreed with the state that the case was not a “class action” under CAFA because it was not filed under Federal Rule of Civil Procedure 23, the court found that it did qualify as a “mass action,” which the statute defines in relevant part as a claim of “100 or more persons.”

“The real parties in interest in Mississippi’s suit are those more than 100 persons who, ‘by substantive law, possess the right sought to be enforced, and not necessarily the person who will ultimately benefit from the recovery,’” the court held, citing circuit precedent.

“[E]ven assuming arguendo that the State has parens patriae standing to bring the claims here (an issue that we do not decide), that standing does not change the fact that Mississippi is acting, not in its parens patriae capacity, but essentially as a class representative.”

Mississippi is one of 14 states that have brought such claims including Michigan, Missouri, New York, Oregon, South Carolina and Wisconsin.

A decision from the Supreme Court is expected next term.