South Carolina v. LG Display Co., Ltd., No. 3:11–cv–00729–JFA, 2011 WL 4344074 (D.S.C. Sept. 14, 2011) and South Carolina v. AU Optronics Corp., No. 3:11-cv-00731-JFA, 2011 WL 4344079 (D.S.C. Sept. 14, 2011).

A District Court in South Carolina held that under a parens patriae action (that is a fancy law school word for a lawsuit brought by the state on behalf of its citizens), the State has a quasi-sovereign interest in bringing an action to enforce its laws and disgorge the proceeds of ill-gotten gains on behalf of its citizens who fell victim to TV picture price fixing. 

The Attorney General of South Carolina brought two parens patriae suits in the state court, alleging that LG and AU Optronics engaged in a conspiracy from 1996–2006 to fix prices for thin film transistor liquid crystal display (“TFT–LCD”) panels. The AG sought civil forfeitures, statutory penalties, and restitution under state law only (no federal claims) on behalf of the citizens of the State of South Carolina for the ascertainable loss occasioned by the heinous violations of the defendants. 

The defendants removed the current action to the federal court, asserting that the action was a “class action”, and alternatively, a “mass action” both removable under CAFA. 

The State sought to remand claiming that neither traditional or minimal CAFA diversity existed. 

Starting with the traditional diversity analysis, the Court noted “that a State is not a ‘citizen’ for purposes of diversity jurisdiction.” The defendants asked the Court to find that the citizens of South Carolina, not the State of South Carolina, were the real parties in interest for the State’s restitution claim which would create the required minimal diversity.


In making its analysis, the Court noted that if on the basis of the complaint the named plaintiff is merely a nominal party, then a court should look past the complaint to determine if any unnamed plaintiffs are the real parties in interest. In order to be a real party in interest, “the State must articulate an interest apart from the interests of particular private parties, and the State must express a quasi-sovereign interest.” The term quasi-sovereign interest include a State’s “interest in the health and well-being—both physical and economic—of its residents in general.” Again, I want to point out we are talking about TV screens. Which apparently the State of South Carolina has a significant interest in.


In this case, the State sought civil forfeitures and statutory penalties, both of which may clearly be pursued under its parens patriae power, in addition to restitution on behalf of a particular subset of South Carolina citizens. The defendants urged the Court to first look at the State’s case on a claim-by-claim basis rather than at the case as a whole and, second, to look beyond the single named plaintiff of the case to find that the real parties in interest are the consumers of South Carolina

The State, on the other hand, urged the Court to examine the State’s interest in this suit as a whole in determining the real party in interest for the restitution claim. The Court agreed with the State and examined the case as a whole rather than on a claim-by-claim basis. Under a wholesale approach, the Court found the case to be a parens patriae action, where the State had a clear quasi-sovereign interest in enforcing its own antitrust and consumer protection laws. 


Based on this recognized quasi-sovereign interest, the Court found that the State was a real party in interest to the action, and there was no need to pierce the pleadings. As such, the Court concluded that the minimal diversity did not exist.


The Court remarked that even it did adopt the case-by-case approach, the State would still be a real party in interest to the restitution claim, and minimal diversity would still be lacking in the instant case. The Court noted that in Pennsylvania v. Mid–Atlantic Toyota Distributors, Inc., 704 F.2d 125, 129 n. 8 (1983), the Fourth Circuit has recognized a quasi-sovereign interest of a State in bringing an action to enforce its laws, disgorge the proceeds of ill-gotten gains, and refund them to its citizens. The language in Mid–Atlantic admits that “a state can have a legitimate public interest in ensuring the economic well-being of its citizens—and in indirectly promoting a smoothly functioning economy freed of antitrust violations—even though the most obvious beneficiaries may be individual consumers who ultimately recoup money damages.” The Court observed that this language of Mid–Atlantic intimates that it is possible for a State to have multiple interests in a case, including some that are quasi-sovereign and some that are not. While individual consumers may benefit from the restitution sought by the State in this case, the remedies sought in this case also generally inure to all residents of South Carolina by making it less likely LG would engage in future price-fixing and by recovering taxpayer money paid to LG as overcharges, the Court maintained. 

So, the Court determined that minimal diversity did not exist because the State of Carolina had a real interest in making sure its consumers were not gorged when it bought TVs. What a relief to know the State is there for us in our time of need.

If you are looking for help in removing Attorney General actions to federal court, we suggest you read the following scholarly article: “Removal of Attorney General Actions Under the Class Action Fairness Act of 2005,” BNA, Inc. Class Action Litigation Report, Vol. 12, No. 9, May 13, 2011.