Argument analysis: Justices spar over federal jurisdiction for state AG actions
on Nov 8, 2013 at 11:10 am
The Justices certainly did not speak with one voice when they heard arguments Wednesday in Mississippi v. AU Optronics Corp. That case involves 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, which resulted in federal criminal convictions as well as more than one hundred class actions, eventually consolidated in the Northern District of California. Mississippi brought this case (which has not been consolidated) in a state court in Mississippi, relying on a Mississippi statute that allows it to seek (among other things) restitution both for its own harms and for those suffered by individual Mississippi residents. The defendants removed the case to federal court, relying on the CAFA, and eventually the Fifth Circuit agreed with the defendants that removal was proper.
Jonathan Massey argued first (for Mississippi). He emphasized his textual argument – the statute refers to actions by “plaintiffs,” in which the claims of “plaintiffs” will be tried together. Because this case has only one plaintiff (though many victims), the Fifth Circuit’s decision to apply the statute here (he repeatedly emphasized) presents a “square-peg-round-hole kind of problem.” His strategy at the argument was to stick to a specific understanding of “plaintiff” as meaning the party that holds the cause of action under applicable law, and accept the consequences of that interpretation, wherever they might lead him.
Massey’s argument drew the most attention from the Chief Justice, who repeatedly emphasized the debilitating problems of leaving these actions out of the CAFA. First, he wondered, if Mississippi can hold this action in state court, how could a defendant ever settle with individual defendants, given the possibility of a later and wholly duplicative “parens patriae” action. He queried: “What prevents attorneys general from around the country sitting back and waiting . . . as private class actions proceed, and as soon as one settles or the plaintiffs’ class prevails, taking the same complaint, maybe even hiring the same lawyers ?”
And sticking to the point, after further inquiry, he concluded: “So the answer is that there is nothing to prevent 50 attorneys general, 51, from saying, every time there is a successful class action as to which somebody in my State purchased one of the items, we are going to file a parens patriae action, the complaint is going to look an awful lot like the class action complaint, and we want our money?”
But the Court was even less receptive to Christopher Curran, arguing on behalf of the defendants (LCD manufacturers). At times, it seemed as if Justices Scalia, Kagan, and Sotomayor were sparring to see who could be the most forceful in rejecting Curran’s reading of the statute.
Justice Kagan’s principal point was that the statute’s reference to “common questions of law or fact” seems plainly to refer to an inquiry under Federal Rule of Civil Procedure 23, which has no place in the statutory scheme on which Mississippi relies here. Justice Scalia then took up that point and tied it back to the statutory text. Specifically, he noted that the statute applies only if the case is being tried jointly “on the ground that the plaintiffs’ claims involve common questions of law or fact.” But nothing in the Mississippi statute requires the state to prove commonality, so how can we say that the claims are being tried together on that basis?
Again, Justice Kagan emphasized the “demanding showing” Rule 23 typically requires to show commonality and found it implausible that Mississippi should have to satisfy that showing if Mississippi law doesn’t require it. It makes no sense that Mississippi’s ability to satisfy that showing should put the case in federal court when Mississippi doesn’t want to make that showing and wouldn’t have to make it in state court. On the same point, Justice Sotomayor concluded that Curran’s argument “mean[s] that before someone can remove, [the court] has to decide whether the class is certifiable.”
Driven to back off from the text by the withering attacks, Curran next floated the idea that his reading makes sense because of the purpose of the statute is to bring these large actions into federal court. But all three of his main critics — Justices Kagan, Sotomayor, and Scalia – jumped in to reject the suggestion that his reading of the statute is even plausible. The discussion closed with Justice Scalia’s effort to summarize the argument as showing that “[s]ometimes, they try to catch everything, but the language they use doesn’t do it.”
The Chief Justice’s comments certainly suggests a strongly held concern about ruling for the state, but it is hard to believe that the defendants will get votes from Scalia, Kagan, and Sotomayor. So the argument seems to me to leave the result still up in the air, though certainly most of the Justices seemed more sympathetic to the state than to the defendants. Perhaps the most interesting thing about the argument is the limited discussion of the “states’ rights” argument around which Mississippi framed its brief. I suggested in my preview that the case might turn on a balance between support for states’ rights and aversion to class actions. But the states’ rights side of it, at least as far as the argument suggests, might not even make it to the table.
One thing to look for in the opinions will be how the Justices line up on the various issues, because the Justices that tend to be most sympathetic to the interests of the states (which would suggest a vote here for Mississippi) are for the most part the same group as those that tend to be most concerned about abusive class actions (which would suggest a vote here for the defendants).