U.S. Supreme Court Rejects CAFA "Mass Action" Removal (as the 4th Circuit and Judge Anderson did)

Per the United States Supreme Court's unanimous ruling in Mississippi v. AU Optronics Corp. (issued on January 14, 2014), a state's lawsuit seeking restitution for the benefit of its citizens does not meet the definition of a "mass action" under the Class Action Fairness Act of 2005 (CAFA) and cannot be removed to federal court.



CAFA defines "mass action" 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."  28 U.S.C Section 1332(d)(11)(B)(i).

This case reached the Supreme Court following the 5th Circuit's determination that Mississippi's lawsuit against AU Optronics qualified as a "mass action" under CAFA.  According to the 5th Circuit, even though the State of Mississippi was the only "named plaintiff," the "real parties in interest" were those (100 or more) citizens of Mississippi who purchased AU Optronics' products.

As the 5th Circuit's ruling was at odds with decisions of the 4th, 7th, and 9th Circuits reaching the opposite conclusion, the Supreme Court granted certiorari.  As described hereJudge Joseph F. Anderson, Jr. and the 4th Circuit ruled that South Carolina's lawsuit against AU Optronics was not a "mass action."



Justice Sotomayor used both the text of CAFA and its context in concluding that "persons"  means "plaintiffs" and not "unnamed real parties in interest."

The statute refers to "persons" as "plaintiffs" in the sentence defining a "mass action."  Moreover, Rule 20, FRCP, also refers to "persons" and "plaintiffs" interchangeably ("[p]ersons may join in one action as plaintiffs if they assert any right to relief jointly . . . ."). Additionally, because CAFA also provides that "jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional requiremen[t]" of $75,000, any definition of "mass action" including unnamed parties in interest would present an "administrative nightmare" to a district court attempting to identify those parties.

With respect to context, Section 1332(d)(11)(C)(i) forbids the transfer of a mass action to another court "unless a majority of the plaintiffs in the action request transfer."  Accordingly, deciding a transfer motion based upon "unnamed real parties in interest" would be "surpassingly difficult."

Finally, in response to the argument that one or more "background principles" required the Court to "look behind the pleadings" to analyze the existence of diversity jurisdiction, Justice Sotomayor found no such concept underpinning or informing the definition of "mass action."  Particularly, there is no indication Congress intended to incorporate any "background principle" that would support counting plaintiffs differently for purposes of CAFA.  Indeed, Congress expressed a contrary intent in excluding from the definition of a "mass action" those cases where  "the claims are joined upon motion of a defendant." Section 1332(d)(11)(B)(ii)(11).



As characterized by the Supreme Court, a "mass action" is principally 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."  Accordingly, CAFA's removal provisions are not available absent a lawsuit with the requisite number of named plaintiffs. 

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