Supreme Court to hear Class Action Fairness case

WASHINGTON, D.C. (Legal Newsline) -- The U.S. Supreme Court on Wednesday is hearing arguments in a Mississippi case in which some say state Attorney General Jim Hood is trying to circumvent the federal Class Action Fairness Act.

Hood, who critics say shows favoritism to trial lawyers donors to his political campaigns, filed a lawsuit against AU Optronics in 2011. In the case, Hood sued on behalf of the state, communities and residents who purchased LCDs. It all relates to a 2006 Justice Department grand jury investigation into price-fixing allegations against LCD makers.

In his suit, Hood named six LCD manufacturers also named in private class-action suits. Of the 206 paragraphs in the filing, 176 of them are identical or nearly identical to the ones in the private class actions. Zimmerman Reid, one of the firms Hood hired as special assistants to litigate the case for the state, filed the private class actions.

Last month, Hood went on the offensive after several of the electronics companies tried to convince the Supreme Court to apply the 2005 Class Action Fairness Act to suits brought by states.

The companies and the Fifth Circuit say the act applies to parens patriae suits because individual consumers are the real parties in interest in the case, Hood wrote in an Oct. 3 brief that the state was the only plaintiff. So, he argued, CAFA does not apply.

"Regardless of whether consumers might ultimately benefit, they are not the legal holders of the claims asserted by the state in its own name under (state law)," Hood's brief states. "States have compelling reasons to file parens patriae actions in state courts and should not be made dependent on federal courts to enforce state law."

The justices must decide if CAFA's requirement that both class and mass actions belong in federal court applies to parens patriae suits filed by state attorneys general.

Hood also contends that the Fifth Circuit's decision last November contradicts four other cases brought by state AGs against the same companies. He and other AGs call the Fifth Circuit ruling an "affront" to states' ability to bring parens patriae cases.

The electronics companies say CAFA doesn't limit states' powers. Instead, they say the case is one of simple statutory interpretation.

According to CAFA, mass actions are cases "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."

An October article on Law360.com says Hood "is improperly trying to modify that requirement to define 'persons' as 'named plaintiffs' to get around the fact that individual consumers, and not the state of Mississippi, are the real parties in interest, the companies argued."

Hood denies that in his October brief, saying "every step of the (companies') argument is flawed."

"Respondents' convoluted statutory interpretation would turn a jurisdictional scheme (where simplicity and administrability are prime virtues) into a procedural nightmare," the brief says. "Trial courts would be forced to ascertain the value of hypothetical and unasserted 'claims' by thousands or millions of consumers, as well as those consumers' views on venue transfer, and to remand to state court 'claims' of consumers that had never been brought in the first place."

He also says CAFA just doesn't extend to cover parents patriae suits. He also argues that if the LCD makers don't think Mississippi has the authority to pursue claims, they should move to dismiss instead of just trying to transfer the case to federal court.

"CAFA's 'mass action' definition refers to actual 'plaintiffs' asserting concrete 'claims,' not to 'unnamed real parties in interest," Hood's brief says. "Respondents implausibly suggest that the term 'plaintiffs' has two different meanings 17 words apart in the same CAFA subsection."

Several states signed a $539 million settlement with the LCD makers. But Mississippi, California, Illinois, South Carolina and Washington decided to pursue cases in their state courts. The defendant companies removed each of the cases, but each state successfully fought to have the cases sent back to state court, except for Mississippi.

The other LCD makers involved in the suit are Toshiba Corp., HannStar Display Corp., Chi Mei Corp., LG Display Co., Samsung Electronics Co. Ltd. and Sharp Corp.

A Nov. 6 editorial in the Wall Street Journal is critical of Hood's efforts.

"This all looks like a run around the 2005 class-action reform," the editorial states. "That law allows defendants hit with civil claims by 100 or more persons to seek removal to federal court, where the rules on classes are stricter and defendants can avoid biased state juries. The private LCD class actions have already been moved to federal court in San Francisco, and at least one defendant, Toshiba, has won a case.

"Mr. Hood and his trial-bar friends are trying to evade federal law by running their class-action through the AG's office. Mr. Hood's retention agreement with Zimmerman Reid and another firm, Abraham & Rideout, reads: 'Assume Recovery by the State of Mississippi of a monetary, sum, benefit, or value equal to $600,000,000.00.' Yes, $600 million."