WASHINGTON (Legal Newsline) -- A Washington D.C.-based legal foundation is urging the U.S. Supreme Court to uphold the right of out-of-state business defendants to a federal forum in a mass action that, it contends, was strategically filed by Mississippi Attorney General Jim Hood.
In an amicus brief filed Tuesday, the Washington Legal Foundation asked the nation's high court not to allow Hood to deprive foreign defendants of the right to a federal forum simply by filing a parens patriae suit in state court.
In its brief filed in State of Mississippi ex rel. Hood v. AU Optronics Corp., WLF argues that out-of-state defendants in interstate cases of national importance ought to be permitted to remove those cases from state to federal court.
The foundation contends Congress adopted the Class Action Fairness Act, or CAFA, in 2005 to ensure that the right of removal is protected for most such defendants, particularly in cases seeking significant damages and in which the plaintiff -- as in this case -- is suing to collect for alleged injuries on behalf of numerous individuals.
In its brief, WLF expressed concern that remanding such cases to state court will only allow plaintiffs' lawyers to game the system and avoid removal -- the very thing that Congress sought to avoid when it adopted CAFA.
"The Mississippi AG seeks to frustrate the desire of Congress that cases of this sort be removable to federal court as a means of ensuring that out-of-state defendants can have their cases heard in an impartial forum," WLF Senior Litigation Counsel Cory Andrews said in a statement after filing the foundation's brief.
"Under these circumstances, allowing the AG to 'home cook' these defendants in state court would only serve as a road map for plaintiffs' lawyers seeking to keep their lawsuits out of federal court."
In May, the nation's high court agreed to decide whether federal courts have jurisdiction over lawsuits filed in state courts by attorneys general on behalf of consumers.
This week, DRI: The Voice of the Defense Bar also filed an amicus brief in the case.
"Our position is that under CAFA's minimal-diversity requirement, the inclusion of a State as a party should not destroy diversity if the action filed by the State seeks to recover for monetary relief claims on behalf of unnamed persons who are real parties in interest and any one of them is diverse from any defendant," DRI President Mary Massaron Ross said in a statement Wednesday.
Ross co-authored the brief, which was filed with the court Monday.
"If the Mississippi attorney general is allowed to defeat removal here it will create a huge potential exception to the rule permitting removal and thus circumvent the will of Congress as expressed in CAFA," she said.
In July, a group of 46 state attorneys general filed an amicus brief, backing Hood. They want a November ruling by the U.S. Court of Appeals for the Fifth Circuit overturned by the Supreme Court.
The attorneys general said the Fifth Circuit imposed a "novel limit" on parens patriae authority in ruling that the removal of a lawsuit involving liquid crystal display panels to a federal district court was proper.
In Hood's lawsuit, several companies from Japan, Korea and Taiwan were accused of fixing prices for thin film transistor LCD panels from 1999 to 2006.
The Fifth Circuit found that the suit qualified as a "mass action" under CAFA.
The federal statute, passed in 2005, gives federal courts jurisdiction to certain class actions in which the amount in controversy exceeds $5 million, and in which any of the members of a class of plaintiffs is a citizen of a state different from any defendant, unless at least two-thirds or more of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the state in which the action was originally filed.
Business groups and tort reform supporters had lobbied for the legislation, arguing that it was needed to prevent class-action lawsuit abuse.
"After analyzing the complaint, the relevant statutes and the parens patriae authority of the State, we hold that the real parties in interest in this suit include both the State and individual consumers of LCD products. Because it is undisputed that there are more than 100 consumers, we find that there are more than 100 claims at issue in this case. The suit therefore meets the CAFA definition of a 'mass action,'" Judge E. Grady Jolly wrote for the Fifth Circuit in a Nov. 21 opinion.
Hood, who sued several major suppliers of the LCD panels in Hinds County Chancery Court in March 2011, argues that the suit should remain in a state court.
The attorney general said he filed the suit under his parens patriae powers -- to protect the physical and economic well-being of the residents of his state.
"First, it is beyond reasonable dispute that the Fifth Circuit's decision directly conflicts with the decisions of the Fourth, Seventh and Ninth Circuits. The Fifth Circuit's judgment also conflicts with this court's precedent regarding the nature of parens patriae actions, the real party in interest test, and the requirement that removal statutes such as CAFA be strictly construed," Hood wrote in his Feb. 19 petition to the Supreme Court.
"The decision below involves an important and recurring issue of federal law and runs counter to deeply-rooted principles of federalism. The Fifth Circuit's decision will result in additional, wasteful jurisdictional battles and administrative complexity. Review by this court is amply warranted."
The Supreme Court has set oral arguments in the case for Nov. 6.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.