News & Events

Fifth Circuit Reverses Remand of Mississippi Attorney General Parens Patriae Action under CAFA

On November 21, 2012, the United States Court of Appeals for the Fifth Circuit handed down its opinion in State of Mississippi ex rel. Jim Hood, Attorney General v. AU Optronics Corporation et al., No. 12-60704, reversing a remand order entered by the Southern District of Mississippi under the Class Action Fairness Act, 28 U.S.C. § 1332(d)(11)(B) (“CAFA”).  See 2012 U.S. App. LEXIS 24096, Slip. Opinion (Judges Jolly, Clement, and Elrod).

The AU Optronics case involves indirect purchaser antitrust claims brought by Attorney General Hood against the makers and distributors of liquid crystal display (“LCD”) panels, a common component in televisions, cellular telephones and other electronic devices.  Attorney General Hood brought claims both on behalf of the State for direct purchases of LCD products and parens patriae on behalf of Mississippi consumers for their purchases of LCD products.  Defendants removed the action from Mississippi state court to the Southern District of Mississippi alleging diversity of citizenship under CAFA.

The Fifth Circuit held that Attorney General Hood’s action was a “mass action” for CAFA removal purposes because more than 100 individual Mississippi consumers who purchased the product were “real parties in interest.”  See Slip Op. at pp. 7-8.  The Court reasoned that the allegations in the Complaint “indicate[] the injury it seeks to remedy with money damages is the injury suffered by the purchaser consumers.”  Id. at p. 5.  In addition, the State did not “own” these claims on behalf of consumers because it would be impermissible under Mississippi law for the State to effectively usurp the consumers’ remedies.  Id. at p. 5-7.  Having determined that the action was a “mass action,” the Fifth Circuit reversed the District Court’s decision that CAFA’s “general public” exception applied to the facts of this case.  The Court reasoned that because individual consumers were real parties in interest, “there is no way that ‘all of the claims’ are ‘asserted on behalf of the general public’” as required to invoke that exception.  Id. at p. 8. (emphasis added).

The AU Optronics opinion was authored by Judge Jolly, on behalf of a 3-Judge panel that included Judges Clement and Elrod.  Judge Elrod wrote a concurring opinion urging the Fifth Circuit to overturn the Court’s prior decision in Louisiana ex rel. Caldwell v. Allstate Insurance Co., 536 F.3d 418 (5th Cir. 2008), which serves at least partially as the basis for the AU Optronics decision.  On December 5, 2012, Attorney General Hood filed an Application for Rehearing En Banc, claiming that the panel’s decision (1) conflicts with the authoritative decisions of the Fourth, Seventh, and Ninth Circuits, (2) involves federalism concerns that threaten to tread on the sovereign decisions and policy choices made by state legislatures within the Fifth Circuit, and (3) should be reviewed en banc given the Fifth Circuit’s rule of orderliness, which forbids one panel from overruling another.  To be heard, a majority of the Fifth Circuit’s 18 Justices must agree to grant the Application.  Pursuant to Fed. R. App. P. 35(e), the Defendants are not permitted to file an opposition unless the Court requests same.  As of the date of the posting of this article, the Fifth Circuit has not yet ruled on this Application nor asked the Defendants to submit an Opposition.

-P. Ryan Beckett