States Unite Against Supreme Court, Argue Class Action Fairness Act

At the beginning of June, the Mississippi attorney general, Jim Hood, criticized the Fifth Circuit’s decision to remove a price-fixing suit to federal courts. The decision was made under the Class Action Fairness Act, a piece of legislation that gives federal jurisdiction to class actions with large numbers of plaintiffs, and affected a suit filed by Hood on behalf of Mississippi consumers against the makers of LCD panels.

Now, Hood has promised to fight the ruling, urging the Supreme Court to rule against CAFA’s use – and almost every other state in the union has joined him.

Almost every other state in the union has joined the lawsuit.

Only Georgia, New Jersey, and Alabama are left out of an amicus brief filed jointly by 46 state attorneys general on Wednesday that called the Fifth Circuit’s decision an “affront” to state sovereignty that undermined the nature of U.S. federalism.

The LCD price fixing case dates back to 2006 when the U.S. Department of Justice revealed that LCD manufacturers were operating an illegal price-fixing scheme on the display panels. Hood, along with other attorneys general, sued on behalf of the residents of his state. However, while several states signed a $539 million settlement, five states – California, Illinois, Washington, South Carolina, and Mississippi – chose to take the matter to state courts. The defendants attempted to remove these cases to federal courts, but was unsuccessful in each case. In Mississippi, the court found that Hood’s suit was a mass action, but that it could be exempted from CAFA because the law allowed suits brought on behalf of the general public to remain in-state.

If things had settled there, the story would be different. The Fifth Circuit, however, ruled in November 2012 that individual consumers, as well as the state, were the ‘parties of interest,’ rather than the public at large. Under this understanding of the class membership, Hood, as attorney general, was essentially the class representative, the court ruled – and the case fell under federal jurisdiction.

Hood’s appeal to the Supreme Court has received the backing of 46 states as well as AARP, consumer rights group Public Citizen, and The Center for State Enforcement of Antitrust and Consumer Protection Laws Inc. He asked for the court’s review in February, and the justices agreed in May.

“The removal to federal court of a state parens patriae action brought under state law in a state court based on in-state conduct is an affront to established principles of federal-state comity,” the states’ complaint said on Wednesday. For Hood, the importance of states’ sovereignty, and their ability to act for their own residents’ behalf, seems to be at the heart of the battle. He has also argued that the decision contradicts every other federal appeal court ruling on CAFA removal, and was never intended by Congress.

For the Supreme Court, there’s a fine line to tread. State courts are known to be more consumer-friendly than their federal counterparts, and it’s no surprise that big business plaintiffs are keen to see cases taken out of individual state’s court systems. The nature of federalism in the U.S., however, grants liberties and jurisdiction to states that they are unlikely to part with willingly. While the entire matter may swing on what amounts to somewhat of a technicality – whether the LCD lawsuit was filed on behalf of the public, or consumers – the support of so many other states will be something for the Supreme Court to consider very seriously.