Illinois Attorney General’s Price Fixing Suit Not a Removable “Class Action”

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

A suit filed by the Illinois Attorney General against eight manufacturers of liquid crystal display (LCD) panels for alleged price fixing in violation of the Illinois Antitrust Act was not a "disguised" class action subject to removal to federal district court under the Class Action Fairness Act of 2005 (CAFA), according to the U.S. Court of Appeals in Chicago.

The appellate court denied a petition for permission to appeal a district court’s remand order on the ground that the appellate court lacked jurisdiction over an appeal.

Parens Patriae Suit

A class action had to be brought by a "representative person" under Rule 23 of the Federal Rules of Civil Procedure or the state equivalent, the appellate court explained. The state attorney general’s action, which sought relief on behalf of the state as a purchaser LCD panels and as parens patriae for harmed residents, was brought under the Illinois Antitrust Act, which did not impose any of the familiar Rule 23 constraints.

Mass Action?

The appellate court also rejected the defendants’ argument that the case was a mass action because "monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact."

Only the Illinois Attorney General made a claim for damages, precisely as authorized by the Illinois Antitrust Act. Moreover, a suit is not a mass action if the claims were asserted on behalf of the general public and not on behalf of individual claimants or members of a purported class. Looking to the complaint as a whole, the state was the real party in interest. The court rejected the notion that Illinois resident purchasers were the real parties in interest based on a claim-by-claim analysis.

Developments in Other Circuits

The Seventh Circuit decision follows similar decisions in two other federal circuits. The U.S. Court of Appeals in San Francisco (2011-2 Trade Cases ¶77,615) recently held that parens patriae actions filed by the Attorneys General of Washington and California on behalf of their state citizens, alleging an LCD price fixing conspiracy in violation of state antitrust laws, did not constitute class actions under CAFA.

In West Virginia ex rel. McGraw v. CVS Pharm., Inc., 646 F.3d 169, the U.S. Court of Appeals in Richmond, Virginia, earlier this year, held that an action brought by the West Virginia Attorney General against five pharmacies, alleging that they sold generic drugs to in-state consumers without passing along the cost savings in violation of three state statutes, was not a class action under CAFA. On November 28, the U.S. Supreme Court denied a petition for review of that decision.

The decision in LG Display Co., Ltd. v. Madigan appears at 2011-2 Trade Cases ¶77,686.

State Parens Patriae Antitrust Suits Not Removable Class Actions

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Parens patriae actions filed by the Attorneys General of Washington and California on behalf of their state citizens, alleging an international conspiracy to fix the prices of thin-film transistor liquid crystal display (TFT-LCD) panels in violation of state antitrust laws, did not constitute class actions within the meaning of the Class Action Fairness Act of 2005 (CAFA), the U.S. Court of Appeals in San Francisco ruled yesterday.

Removal of the actions to federal court, based on federal jurisdiction under CAFA, was improper because the suits were not “class actions” within the plain meaning of CAFA. Remand to state court was upheld.

“Class Actions”

CAFA defined the term class action as “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.” Neither lawsuit was filed under Rule 23 of the Federal Rules of Civil Procedure or a similar state statute, it was decided.

The appellate court rejected the defendants’ contention that the states’ parens patriae suits were class actions within the meaning of CAFA because they were representative actions with sufficient “similarity” to a class action under Rule 23. CAFA applied to state actions that were filed under a statute that was both “similar” to Rule 23 and authorized an action “as a class action.”

Defining Attributes

Parens patriae suits were not labeled class actions and lacked the defining attributes of true class actions. They lacked the statutory requirements for numerosity, commonality, typicality, or adequacy of representation, and they did not contain certification procedures, the court explained.

The Ninth Circuit noted that the Fourth Circuit was the only other federal appellate court to have squarely considered the question of whether parens patriae lawsuits are class actions under CAFA.

In West Virginia ex rel. McGraw v. CVS Pharm., Inc., 646 F.3d 169 (CA-4, 2011), the U.S. Court of Appeals in Richmond, Virginia, similarly held that an action brought by the West Virginia Attorney General against five pharmacies, alleging that they sold generic drugs to in-state consumers without passing along the cost savings, in violation of three state statutes, was not a class action under CAFA.

The October 3, 2011, decision in Washington State v. Chimei Innolux Corp. will appear in CCH Trade Regulation Reporter.