Supreme Court justices who most want to rein in class actions also tend to want to give more deference to states. Those impulses clashed on Wednesday and could explain why class action advocates have a shot at winning a case argued before the court, Mississippi v. AU Optronics.
The case tests whether state attorneys general, acting on behalf of their citizens, can initiate class action-like lawsuits in state court against companies, even though federal law actively encourages similar litigation to take place in federal courts. Businesses generally prefer to be sued in federal courts, not in state courts that can be more plaintiff-friendly.
Mississippi Attorney General Jim Hood, who was present at the high court but did not argue, is trying to salvage a suit he brought against manufacturers of liquid crystal display (LCD) panels for price-fixing. After some companies pleaded guilty to federal charges in 2006, more than 100 private class actions followed on behalf of customers who paid higher prices for televisions, computer screens and other devices as a result. While those suits were pending, several states including Mississippi filed so-called “parens patriae” actions that mirrored—and in some cases copied—the private class actions, in some instances using the same lawyers to file suit.
The LCD manufacturers sought to remove the state actions to federal court, citing the Class Action Fairness Act, passed in 2005 to funnel almost all class actions into federal court. The U.S. Court of Appeals for the Fifth Circuit sided with the companies, prompting Mississippi to take the issue to the Supreme Court.
The state’s advocate, Jonathan Massey, argued that the plain language of the federal class action law could not be interpreted to force state attorney general lawsuits into federal court. The state is the only plaintiff, he said, and whatever restitution results goes to the state to compensate for the damage to its economy. Massey is partner in the DC firm Massey & Gail.
Justices who normally would criticize the growing number of state actions like Mississippi’s were unusually quiet during Massey’s presentation. Chief Justice John Roberts Jr. was the main skeptic, asking Massey, “What prevents attorneys general from around the country sitting back and waiting” for private class actions to succeed, then “taking the same complaint, maybe even hiring the same lawyers, to go and say, ‘Well, we are going to bring our parens patriae action?’ “
Massey replied that the state’s goals and interests are not the same as those of private class actions. He also noted that the Fifth Circuit is the only court that has interpreted the federal law to cover state AG actions. Everywhere else, he said, state actions can proceed in state courts, and there, “the attorneys general are not running around following class actions to try to piggyback on top of them.” More typical, Massey said, is for state AGs to “step into the breach when the private lawyers have not brought class actions because of the difficulty in bringing class actions.”
Christopher Curran of White & Case, who represents Toshiba, argued against the Mississippi action. He asserted that the federal law does in fact cover state AG lawsuits and should be invoked to remove them to federal court. Justices Ruth Bader Ginsburg, Elena Kagan and Justice Antonin Scalia challenged that view. “Sometimes Congress doesn’t do it right, you know?” Scalia said. “Sometimes they try to catch everything, but the language they use doesn’t do it.”
Trying another tack, Curran tried to appeal to the justices’ dislike for class actions. Some Mississippi residents who received settlements under the private class actions, Curran said, also would benefit by Mississippi’s lawsuit. “We view this case as nothing more than an attempt to double dip,” Curran said.
Curran even mocked the name of the state actions: parens patriae, Latin for “parent of the nation.”
“The state attorney generals seem to raise that up as a Latin shield of some kind, suggesting that as long as they invoke that term, issues of federalism prevents removal or something,” he said. “That doesn’t hold up.”
Contact Tony Mauro at email@example.com.