Supreme Court Says Unnamed Interested Parties Insufficient for Mass Action Removal Under Class Action Fairness Act
In Mississippi v. AU Optronics, the United States Supreme Court recently held that consumer actions filed in state court by an attorney general on behalf of the state’s citizens cannot be removed to federal court as “mass actions” under the Class Action Fairness Act (“CAFA”). In the unanimous opinion, authored by Justice Sotomayor, the Supreme Court held that even though the State of Mississippi was suing in a representative capacity, the Mississippi attorney general was only one person and therefore did not satisfy the 100-person requirement for removal to federal court under CAFA. While AU Optronics involved an action by the state attorney general, the Supreme Court’s ruling is instructive on the standards for removal of a mass action under CAFA and is applicable to public and private actions alike.
CAFA establishes federal jurisdiction over class actions filed under Fed. R. Civ. P. 23, where any plaintiff is a citizen of a different state than any defendant and the aggregate amount in controversy exceeds $5 million. CAFA also confers federal jurisdiction over mass actions, which are defined as civil actions in which the monetary claims of 100 or more persons are proposed to be tried jointly and the amount in controversy exceeds $5 million.
In AU Optronics, the Attorney General for the State of Mississippi sued multiple manufacturers of LCD screens alleging collusion and price fixing in violation of Mississippi antitrust and consumer protection laws. The defendants attempted to remove the case to federal court, arguing that it was either a class action or a mass action under CAFA. The District Court held that the case did not qualify as a class action because it was not filed pursuant to Fed. R. Civ. P. 23 or an analogous state statute, but that it did qualify as a mass action because it involved the claims of 100 or more persons. The District Court found that the terms “person” and “plaintiff” referred to “real parties in interest” and that there were more than 100 unidentified Mississippi consumers who had purchased LCD screens and were therefore, the real parties in interest. Though the District Court found that the case fit the definition of a mass action, the court nonetheless remanded the matter to state court based on CAFA’s “general public exception,” which excludes from mass actions, all claims asserted on behalf of the general public pursuant to a state statute. On appeal, the Fifth Circuit agreed that the case fit within CAFA’s definition of a mass action. However, the Court of Appeals held that the “general public exception” did not apply because it requires that claims be asserted on behalf of the public at large, and here, the real parties in interest were individual Mississippi consumers. Ultimately, the Fifth Circuit reversed the District Court and held that federal jurisdiction was proper. The Supreme Court granted certiorari to resolve to the issue of whether a suit filed by a state for injuries suffered by its citizens constitutes a mass action under CAFA.
The Supreme Court held that a lawsuit brought by a state attorney general, as the sole plaintiff, does not fall within the definition of a “mass action” and therefore may not be removed to federal court under CAFA. The Court explained that the “100 or more persons” in the definition of a mass action refers exclusively to plaintiffs actually named in the complaint and not just anyone, named or unnamed, whom the lawsuit may benefit. The Court explained that although Congress used the phrase “named or unnamed” in defining members of a class action, it employed no such language in defining members of a mass action. Moreover, the Court found that in defining a mass action, the term “plaintiffs” is used twice immediately following and referring to the “100 or more persons”, and that the conventional meaning of the term “plaintiff” is “a party who brings a civil suit.” The Supreme Court therefore concluded that the “100 or more persons” in a mass action must be actual, named plaintiffs and not just real parties in interest. In remanding the matter to state court, the Supreme Court never reached the issue of the “general public exception” due to the lack of initial federal jurisdiction.
While AU Optronics involved an action brought by the State of Mississippi, the extent of the Supreme Court’s ruling goes beyond state actions on behalf of citizens and applies to public and private actions alike. Rather than relying on CAFA’s “general public exception,” the Supreme Court focused on the basic definition of a mass action, emphasizing the distinction between real parties in interest and actual named plaintiffs. Thus, an action filed by less than 100 private plaintiffs is also not removable to federal court even if countless other individuals may have an interest in, or benefit from the litigation. Regardless of whether the plaintiff is a public or private entity, the Supreme Court’s ruling in AU Optronics makes clear that in order to fit within the definition of a mass action and potentially be removable under CAFA, there must be 100 or more plaintiffs named in the complaint.