This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.
An action brought by the State of Mississippi against companies that manufacture liquid crystal display (LCD) panels for conspiring to fix prices in violation of the Mississippi state law was remanded to state court by the federal district court in Jackson.
The companies removed the case to federal court pursuant to the Class Action Fairness Act of 2005 (CAFA); however, remand was appropriate because the action was neither a class action nor a mass action subject to removal.
Class Action Fairness Act
To establish jurisdiction under CAFA, the companies needed to show that the parties were minimally diverse and that the action was a class action or a mass action not subject to CAFA exceptions. CAFA’s diversity requirement was met, the court ruled, because Mississippi’s consumers and local governments—the real parties in interest—but no defendant was a citizen of Mississippi. The court rejected the state’s argument that it was the real party in interest, and, therefore, there was no minimal diversity because the state was not a “citizen” for purposes of diversity jurisdiction.
Because the claims were not brought pursuant to the Federal Rule of Civil Procedure 23 or a similar state statute, the suit was not a CAFA class action, the court ruled. Mississippi had no comparable class action statute. Nor did the Mississippi Consumer Protection Act and Mississippi Antitrust Act impose class action-like requirements.
Rejected was the defending companies’ contention that legislative history supported its position that a lawsuit that resembled a purported class action should be considered a class action for the purpose of applying CAFA. Because CAFA unambiguously defined class action, it was unnecessary to consider the legislative history offered by the defendants, which was questionable in any event.
Although the suit was a mass action, a statutory exception for actions brought on behalf of the general public required remand. A suit brought by the Mississippi Attorney General (AG) could be defined as a mass action under CAFA, as the real parties in interest numbered at least 100 persons seeking monetary relief and the AG proposed to try the claims jointly on the grounds that they involved common questions of law or fact. However, a general public exception applied that excluded actions asserted on behalf of the general public, and not on behalf of individuals or a purported class, pursuant to state statutes.
Based on the sheer number of LCD panel products bought by consumers, the case was clearly brought on behalf of the general public and fell within the state’s quasi-sovereign interest. Also, the claims were brought under state statutes that specifically authorized these kinds of suits. Therefore, the claims fell under the general public exception, in the court’s view.
The manufacturers could not show that the Sherman Act completely preempted the Mississippi antitrust claims. Where plaintiffs have artfully avoided any suggestion of federal issues, removal is allowed where the state law is subject to complete preemption. However, the court rejected the manufacturers’ contention that the artful pleading doctrine applied because the Sherman Act applied to the claims, which were interstate and international in nature.
The decision is State of Mississippi v. AU Optronics Corp., 2012-1 Trade Cases ¶77,883.