State attorneys general have increasingly filed lawsuits in state courts under state consumer protection and antitrust statutes seeking recovery for alleged injuries to large groups of people. They are frequently called parens patriae actions (lawsuits that a state brings in a representative capacity to protect its citizens’ interests) Although several federal circuits have denied removal of these actions under the Class Action Fairness Act (CAFA), the 5th Circuit allows defendants to remove them to federal court.
Two recent Mississippi parens patriae federal trial court rulings address CAFA removal. Mississippi ex rel. Jim Hood v. Entergy Mississippi Inc. and Mississippi ex rel. Jim Hood v AU Optronics Corp. were removed under both CAFA’s class action and mass action provisions. Each district court held that the cases were not CAFA class actions because they had not been filed under Rule 23 or a “similar State statute or rule.” Both trial courts did find, however, that the cases were CAFA mass actions per Louisiana ex rel. Caldwell v Allstate Insurance Company. But the courts reached different results. One court remanded the case under CAFA’s general public exception, 28 U.S.C.§ 1332(d)(11)(B)(ii)(III); the other denied the attorney general’s motion to remand.
In Optronics, a price-fixing case involving LCD panels, the court determined that Mississippi’s consumers were real parties in interest under the state’s “request for restitution on their behalf” but remanded the case under CAFA’s general public exception because “the alleged price-fixing was so broad and pervasive as to affect the general public,” making it difficult to identify every Mississippian who had purchased an LCD panel.
By contrast, in Entergy, another court denied the plaintiff’s remand motion. Individual ratepayers (electric utility consumers) who were allegedly overcharged by their provider were real parties in interest, and because of the presence of this “discrete group” of consumers, CAFA’s general public exception was inapplicable.
Defendants in Optronics have petitioned the 5th Circuit for review of the court’s remand order under 28 USC § 1453(c). But in Entergy, the state chose not to appeal the denial of its motion to remand.
The Optronics court determined that it did not have federal CAFA jurisdiction because the case was not a class action and because CAFA’s general public exception required remand. The Optronics defendants appealed both questions. The 5th Circuit did not directly address the general public exception in Caldwell nor, despite its persuasive dicta, did it decide whether these parens patriae cases were CAFA class actions.
The appeal is discretionary; but if accepted, the 5th Circuit can address and clarify the application of the “general public exception” and whether a CAFA class action requires a formal Rule 23 filing or, as Caldwell suggested, that a case simply resemble a class action, the formal label notwithstanding.
These parens patriae cases frequently, if not primarily, are the equivalent of class actions without the protections and standards established under Rule 23 and similar state class action requirements, a concern that CAFA sought to address. In jurisdictions with dangerous venues, these issues are significant and should be monitored closely.