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

Are Parens Patriae Suits Just Class Actions In Disguise?

Posted in Legal Publications and Articles

Alexander Lemann, Sheep In Wolves’ Clothing: Removing Parens Patriae Suits Under The Class Action Fairness Act, 111 Colum. L. Rev. 121.

In his article, Alexander Lemann, a 2011 J.D. Candidate at Columbia Law School, examined the applicability of CAFA’s removal provisions to parens patriae suits. CAFA, essentially, expanded the federal jurisdiction to include state law class actions with minimal diversity, doing away with a rule that had kept most class actions in the state court. The author noted that CAFA was the culmination of years of congressional effort to address widespread abuses in class action litigation. Before CAFA, federal diversity jurisdiction kept even the largest class actions out of the federal court, while attorneys were allowed to file suit in virtually any jurisdiction in the country. CAFA changed this, and ever since it was enacted, attempted to discipline the class plaintiffs and their attorneys. 

Only class actions and mass actions can be removed under CAFA. The author noted that because parens patrie suits necessarily involve the rights of large number of people; they resemble class actions, even if the only plaintiff is the state. The author noted that Congress debated extensively, and eventually dropped an amendment exempting parens patriae suits from the scope of CAFA. 

The article refers to first few cases that dealt with parens patriae suits in relation to CAFA, where the federal courts universally treated parens patriae suits as not removable under CAFA. The article noted that Louisiana ex rel. Caldwell v. Allstate Insurance Co., 536 F.3d 418 (5th Cir. 2008), as the first case to hold otherwise. In Allstate, affirming the district court’s grant of removal, the Fifth Circuit held that the presence of only one plaintiff on the pleadings did not end its inquiry. Instead, it reasoned, courts should pierce the pleadings to determine the real parties in interest. If those parties were a class of people, the court could apply CAFA’s grant of diversity jurisdiction and allow removal.

This author argued that CAFA should not be applied to states’ parens patriae actions. According to the author, applying CAFA to these suits contravenes the most important motivations behind CAFA and creates unsound doctrine. The author noted that questionable practices by plaintiffs’ attorneys were a strong motivating force behind CAFA. The debate over class action reform saw invectives hurled at plaintiffs’ attorneys, both for forum shopping and for other less easily defensible practices. 

According to the author,  Congress rejected the idea of class action litigation as a legitimate form of regulation. One of the arguments advanced by opponents of CAFA during debates was that class action litigation helps regulate where government has failed to do so. Congress responded to the array of problems primarily by making it easier for defendants in class actions to remove to federal court, through enacting CAFA. 

The author noted that the doctrine of parens patriae (literally, ‘parent of his or her country’)_ allows a state to sue in a representative capacity to protect the interests of its citizens. Although the concept was originally quite limited, the scope of parens patriae expanded gradually over the course of the twentieth century and now includes a broad range of quasi-sovereign interests. 

Parens patriae suits bear an inherent resemblance to class actions: like class actions, parens patriae suits necessarily involve injuries to a group of people. Suits brought pursuant to quasi-sovereign interests were, like class actions, representative, and dealt with harms that would probably not lead to individual lawsuits. Although, attorneys general often hired plaintiffs’ lawyers to help prosecute parens patriae suits, parens patriae suits do not involve a set class of citizens, nor are they required to satisfy Rule 23 or state equivalents. Still, the conceptual similarity between the two, as the author noted, was unavoidable.

The author noted that faced with a legitimate parens patriae suit, the Allstate court held that it must examine the real parties in interest as a possible basis for removal. This conclusion was based on Congress’ rejection of an amendment that would have exempted all suits brought by attorneys general as well as suggestions, in the accompanying debates, that such a provision would create a loophole that could be exploited by plaintiffs’ lawyers. As a solution to this problem, although, the real party in interest inquiry was overinclusive, theoretically allowing removal of virtually all parens patriae suits and not just class actions in disguise.

In conclusion, the author noted that the application of CAFA’s removal provisions to parens patriae actions was deeply problematic, embodying an expansion of CAFA that was justified by neither its text nor its legislative history. The author concedes that it was true that CAFA sought to stamp out jurisdictional gamesmanship by plaintiffs’ attorneys, but looking to the purported real parties in interest who were not before the court was a troubling solution to this problem. The author concluded that parens patriae actions were not a likely refuge to class action lawyers seeking shelter from CAFA’s removal provisions.

Editors’ Note: The Editors of the CAFA Law Blog disagree with the conclusion of this article. We assert that many parens patriae cases are merely disguised class actions, and those that are disguised class actions, should be removable under CAFA. Watch for our own scholarly article soon.