Tuesday, September 26, 2023
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One State Suing Does|Not a Mass Action Make

WASHINGTON (CN) - A federal judge should not be the one to resolve Mississippi's lawsuit against manufacturers and distributors of liquid crystal display panels, the U.S. Supreme Court ruled.

Claims over a long-running LCD price-fixing date back to 2007, when consumers accused several companies of fixing, raising, stabilizing and maintaining "prices for LCD panels sold indirectly to plaintiffs and the members of the other indirect-purchaser classes."

Mississippi, a state that explicitly prohibits class actions, brought its complaint under the Mississippi Consumer Protection Act and the Mississippi Antitrust Act. While the consumer law forbids class actions, the antitrust law makes no requirements typical of class actions brought under Rule 23 of the Federal Rules of Civil Procedure.

AU Optronics and the other companies named in Mississippi's state court complaint, removed the case to federal court. They said the Class Action Fairness Act, or CAFA, warranted removal since the complaint either qualified as a class action or "mass action."

A federal judge in Mississippi disagreed on both counts and remanded the action, but the 5th Circuit reversed in November 2012, leading the U.S. Supreme Court to take up the case this past spring.

On Tuesday, the justices unanimously concluded that the case belongs in state court.

"According to CAFA's plain text, a 'mass action" must involve monetary claims brought by 100 or more persons who propose to try those claims jointly as named plain­tiffs," Justice Sonia Sotomayor wrote for the court. "Because the state of Mississippi is the only named plaintiff in the instant action, the case must be remanded to state court."

There is no basis to support an argument that the phrase "claims of 100 or more persons" in the statutory definition of mass action covers "refers to 'the persons to whom the claim belongs, i.e., the real parties in interest to the claims,' regardless of whether those persons are named or unnamed," the decision states (emphasis in original).

"To start, the statute says '100 or more persons,' not '100 or more named or unnamed real parties in interest,' Sotomayor continued. "Had Congress intended the latter, it easily could have drafted language to that effect. Indeed, when Congress wanted a numerosity requirement in CAFA to be satisfied by counting unnamed parties in interest in addition to named plaintiffs, it explicitly said so: CAFA provides that in order for a class action to be removable, 'the number of members of all proposed plaintiff classes' must be 100 or greater, and it defines 'class members' to mean 'the persons (named or unnamed) who fall within the definition of the proposed or certified class.' Congress chose not to use the phrase 'named or unnamed' in CAFA's mass action provision, a decision we understand to be intentional."

Taking the extension to the hyperbolic, the justices questioned how the unnamed parties would be identified.

"Would the court in this case, for instance, have to hold an eviden­tiary hearing to determine the identity of each of the hundreds of thousands of unnamed Mississippi citizens who purchased one of respondents' LCD products between 1996 and 2006 (the period alleged in the complaint)?" Sotomayor asked (parentheses in original). "Even if it could identify every such person, how would it ascer­tain the amount in controversy for each individual claim? Respondents suggest that '[i]n some circumstances, de­fendants may be able to identify from their payment rec­ords any persons who may have claims for overpayments,' but they stop notably short of claiming to possess such decades-old records themselves."

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