by Cory Clements, a 2013 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.
In their ongoing quest to circumvent the Class Action Fairness Act (CAFA), plaintiffs’ lawyers have increasingly enlisted the aid of sympathetic state Attorney Generals (AG). In order to keep class action (or “mass action”) lawsuits in state court, plaintiffs’ lawyers pitch their ideas to state AGs who in turn bring suit on behalf of the state as parens patriae. This trick works because a suit brought only in the name of an AG on behalf of the state evades federal removal jurisdiction. Historically, because states are not considered “citizens” for purposes of diversity jurisdiction, when a state brings suit against an out-of-state corporation there can be no diversity, which will keep the suit in state court. But state court judges and juries often are biased against out-of-state interests. That works out well for the plaintiffs’ lawyers.
Late last year the U.S. Court of Appeals for the Fifth Circuit held in Mississippi v. AU Optronics Corp. that a suit brought by Mississippi AG Jim Hood (with an assist from a Minnesota plaintiffs’ firm) against a manufacturer of liquid crystal display (LCD) screens on behalf of Mississippi citizens was removable to federal court under CAFA’s mass action provision. Citing binding authority from a previous Fifth Circuit case, Louisiana ex rel. Caldwell v. Allstate Insurance Company, the court reasoned that “[i]t is well-established that in determining whether there is jurisdiction, federal courts look to the substance of the action and not only at the labels that the parties may attach.” Citing CAFA, Judge Stewart lauded application of this rule in order “to prevent jurisdictional gamesmanship.” Continue reading