Breaking News

Argument preview: Is this case about class actions or about states’ rights?

The Court ventures once again into the class-action debate next month, when it hears arguments in Mississippi v. AU Optronics Corp.  This time, the Justices confront  the Class Action Fairness Act of 2001 (the “CAFA”), which allows defendants to remove to federal court large class actions filed in state court. The question is whether that statute applies to this case – an action brought by the state of Mississippi (which obviously is not a class) based on the injuries that defendants’ products caused to a large number of Mississippi residents (who could be a class).

The case arises out of allegations of price-fixing in the liquid-crystal display (“LCD”) industry.  The allegations apparently had some merit, because they resulted in a series of federal criminal convictions and fines. Promptly after the federal investigation became public, attorneys around the country filed about one hundred class actions against the defendants (members of the Asian corporate groups that manufacture the displays).  Eventually, the Judicial Panel on Multidistrict Litigation consolidated all of the federal litigation in the Northern District of California.  The consolidated matter included class actions by the direct and indirect purchasers (wholesalers, retailers, consumers, etc.), as well as several actions brought by state attorneys general.

Mississippi brought this case (which has not been consolidated) in a state court in Mississippi, seeking restitution both for its own harms and for those suffered by individual Mississippi residents.  The cause of action arose under state law (a Mississippi statute authorizing this sort of action), and the parties were not diverse (for technical reasons, there can be no diversity in an action to which a state is a party).  Still, the defendants removed the case to federal court, relying on the CAFA. The state objected, contending that its suit isn’t a class action of any kind, much less one covered by the CAFA.  The Fifth Circuit, however, rejected that contention, holding that the case was properly removed. The Court granted review, presumably because the courts of appeals that considered similar actions brought by other states had held that they were not removable under the CAFA.

The briefing on both sides is spirited and lucid, with both parties struggling to situate the controversy against a favorable backdrop. In a nutshell, both sides claim that the plain language of the statute supports them (big surprise there).  Mississippi, however, portrays a gross intrusion on state sovereignty; surely Congress would have spoken clearly if it intended to prevent a state from pursuing a parens patriae action like this one on behalf of its citizens. AU Optronics, for its part, complains that this is just the kind of class action Congress intended to bring into federal court – the pleadings are filed by the same lawyers (as agents of the state) who filed the class actions already consolidated into California.  The pleadings are almost word-for-word replicas of the pleadings in those consolidated cases.  The case involves the claims of huge numbers of individuals against large out-of-state corporations with no particular connection to the forum. Congress has spoken clearly to rein in large class actions. This is exactly the situation in which Congress would have worried about in-state bias by state courts. There is no reason the Court should hesitate to implement the statute with vigor.

To the outside observer, the state seems to have far the better of the debate about the text.  The statute describes itself as extending to cases in which the “plaintiffs’” claims involve common questions of law or fact, and limit federal adjudication to “those plaintiffs” who satisfy the amount-in-controversy requirement.  Taking the words literally, this case involves only one plaintiff – the state of Mississippi, so it does not have “plaintiffs” at all. To be sure, AU Optronics presents a spirited argument that the statute’s references to “plaintiffs” plainly refer to the millions of Mississippi residents whose injuries are at stake.

The debate is reminiscent of last year’s Sebelius v. Cloer – in which the Solicitor General had to argue that a “filing” required not only the acceptance of papers by a court for processing (what you might think of as the literal meaning), but also the formal determination by a court that the document satisfied the statute of limitations.  The Justices unanimously rejected that argument, at least in part because of the statute’s pervasive use of the term “filing” in places where the Solicitor General’s definition simply would not work.

I expect that the Justices will approach the case with a strong inclination to the same outcome here.  Mississippi’s presentation about the CAFA transfer provision is particularly telling – the provision permits a transfer upon request of “a majority of the plaintiffs in the action”; even AU Optronics acknowledges that this provision would not make sense here if it referred to the individuals for whom Mississippi is seeking relief, who have no direct connection to the lawsuit.

Having said that, AU Optronics is at its strongest when it emphasizes the serious policy concerns that motivated Congress to centralize large class actions in the federal courts.  Some of the Justices, at least, are likely to take those concerns just as seriously here as they have in the other cases in which the Court has cut back on class actions in the last few years (Wal-Mart v. Dukes, Comcast v. Behrend, Genesis HealthCare Corp. v. Symczyk, etc.).

So in the end, I see this as a case in which the interpretive frame is all important. The Justices who view this as a “states’ rights” case will lean toward accepting what the statute seems to say.  By contrast, those who view this as an “abusive class action” will struggle to hold for the defendants.  One of the most interesting dynamics comes from the reality that the case inverts the normal groupings of the Justices: the Justices most reliably protective of state interests are, for the most part, the Justices most concerned about the burgeoning of class actions.  So we can expect a fully engaged bench next week when the Justices hear arguments.


Recommended Citation: Ronald Mann, Argument preview: Is this case about class actions or about states’ rights?, SCOTUSblog (Oct. 31, 2013, 11:58 AM),