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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Only Actual Named Parties Qualify As Plaintiffs

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Miss. ex rel. Hood v. AU Optronics Corp., 2014 WL 113485 (U.S. Jan. 14, 2014).

The United States Supreme Court remanded an action holding that the mass action provision of CAFA did not apply because the term “plaintiffs” refers to actual named parties as opposed to unnamed real parties in interest.

The State of Mississippi’s Attorney General filed a Parens Patriae suit on behalf of the State in state court against manufacturers, marketers, sellers, and distributors of liquid crystal display (“LCD”) panels, alleging that the defendants formed an international cartel by engaging in price fixing scheme of the panels to restrict competition and raise prices in the LCD market.  The Attorney General alleged that the defendants had violated the Mississippi’s Antitrust and Consumer Protection Acts.  The Attorney General sought injunctive relief and civil penalties under both statutes, along with punitive damages, costs, and attorney’s fees, in addition to restitution for its own purchases of LCD products and the purchases of its citizens.

After the defendants removed the action asserting CAFA, the District Court found that the action qualified as mass action because the action involved the monetary relief claims of 100 or more persons.  CAFA defines a mass action in §1332(d)(11)(B)(i) as any civil action in which 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.  The District Court had relied on Louisiana ex rel. Caldwell v. Allstate Insurance Company, 536 F. 3d 418 (5th Cir. 2008), which it observed stood for the proposition that the words ‘persons’ and ‘plaintiffs’ in the mass action definition were to be defined as ‘real parties in interest.’  Thus, the District Court applied that rule and stated that 100 or more unidentified Mississippi consumers had purchased LCD screens and were, therefore, real parties in interest to the State’s restitution claim.

The District Court, nevertheless, remanded the case holding that CAFA’s “general public exception” applied.  The general public exception excludes from the “mass action” definition any civil action in which all of the claims in the action are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class) pursuant to a State statute specifically authorizing such action.

The Fifth Circuit then reversed the order stating that although the suit qualified as a mass action it did not fall within the general public exception.  On appeal, the Supreme Court reversed holding that because the State was the only named plaintiff, this suit did not constitute a mass action under CAFA.

The parties’ main dispute focused on whether the mass action provision included suits brought by fewer than 100 named plaintiffs on the theory that there may be 100 or more unnamed persons who are real parties in interest as beneficiaries to any of the plaintiffs’ claims.

The Supreme Court observed that CAFA referred to “100 or more persons,” not “100 or more named or unnamed real parties in interest.”  In addition, the Supreme Court noted that CAFA provides that for an action to be removable, the number of members of all proposed plaintiff classes must be 100 or greater.  It defines “class members” to mean “the persons (named or unnamed) who fall within the definition of the proposed or certified class.  The Supreme Court remarked that Congress chose not to use the phrase “named or unnamed” in CAFA’s mass action provision.

The Supreme Court noted that the mass action provision requires that the claims of 100 or more persons must be proposed to be tried jointly.  On the other hand, Rule 20, which governs joinder, provides that persons may join in one action as plaintiffs if they assert any right to relief jointly and any question of law or fact common to all plaintiffs will arise in the action.  Thus, the Supreme Court opined that as in Rule 20, the term “persons” in §1332(d)(11)(B)(i) refers to the individuals who are proposing to join as plaintiffs in a single action.

Additionally, the Supreme Court remarked that claims of one set of unnamed individuals could not be proposed for joint trial on the ground that the claims of some completely different group of named plaintiffs share common questions, and that Congress meant for the “100 or more persons” and the proposed “plaintiffs” to be one and the same.

Recognizing that the statute’s use of the term “persons” could be a reference to proposed plaintiffs, the defendants asserted that the plaintiffs, like persons, should be construed to include both named and unnamed real parties in interest.  The Supreme Court, however, noted that plaintiff was a party who brings a civil suit in a court of law, and it did not include anyone, named or unnamed, whom a suit may benefit.  Accordingly, the Supreme Court stated that the term “plaintiffs” refers to actual named parties as opposed to unnamed real parties in interest.  The mass action provision thus functions largely as a backstop to ensure that CAFA’s relaxed jurisdictional rules for class actions cannot be evaded by a suit that names a host of plaintiffs rather than using the class device.

Next, the Supreme Court noted that at issue was not just whether there exists some background principle of analyzing the real parties in interest to a suit; but rather the question of whether Congress intended that courts engage in that analysis when deciding whether a suit is a mass action.  The Supreme Court observed that the background real party in interest inquiry identifies what party’s citizenship should be considered in determining diversity, and the Congress had provided express indications that it did not want the principle to apply to the mass action provision by specifying that the term ‘mass action’ shall not include any civil action in which the claims are joined upon motion of a defendant.

The Supreme Court stated that the Congress prohibited defendants from joining unnamed individuals to a lawsuit in order to turn it into a mass action, thereby demonstrating its focus on the persons who are actually proposing to join together as named plaintiffs in the suit.  The Supreme Court remarked that requiring district courts to pierce the pleadings to identify unnamed persons interested in the suit would run afoul of that intent.

Here, because the State was the only named plaintiff, the Supreme Court opined that this action was not a mass action under CAFA, and accordingly, reversed the order of the Fifth Circuit and remanded for further proceedings.