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Miss. AG Hood's credit card case waiting on Fifth Circuit guidance

By John O'Brien | Oct 1, 2012


JACKSON, Miss. (Legal Newsline) - Mississippi Attorney General Jim Hood's case against several issuers of credit cards will be stayed pending the result of a jurisdictional battle being decided by a federal appeals court.

U.S. District Judge William Barbour wrote Thursday that he will wait on a ruling from the U.S. Court of Appeals for the Fifth Circuit to decide if Hood's case belongs in federal or state court. The Fifth Circuit is hearing the appeal of companies involved in liquid crystal display panels sued by Hood.

Both cases were brought by private firms that have contributed to Hood's campaign fund.

U.S. District Judge Carlton Reeves ruled earlier this year that the LCD lawsuit belongs in state court.

"(T)he court finds that several of the issues to be decided in the subject appeal appear to have direct bearing on the jurisdictional issues raised in Plaintiff's motion to remand, in particular with respect to the exercise of federal subject matter jurisdiction under the Class Action Fairness Act," Barbour wrote.

Reeves noted that the issue in the LCD case appears to be a matter of first impression in the Fifth Circuit. Other circuits have rejected the notion that cases filed by AGs are actually class action lawsuits subject to removal under CAFA.

Attorneys general respond by saying they are filing lawsuits under their parens patriae powers - to protect the physical and economic well-beings of the residents of their states.

But the Fifth Circuit ruled in a case brought by Louisiana Attorney General Buddy Caldwell that some parens patriae suits may constitute a CAFA mass action. Caldwell had sued insurance companies and their business partners, claiming they had rigged the value of policyholder claims in the aftermath of hurricanes Katrina and Rita.

The Fifth Circuit ruled Louisiana was a real party in interest as to injunctive relief and policyholders were real parties in interest as to treble damages. It said there was minimal diversity of the parties, as required by CAFA.

Hood argued that when the LCD complaint was viewed as a whole, the only real party in interest was the State and not its citizens and local governments. Reeves agreed, and wrote his decision was in accordance with the Fourth, Seventh and Ninth circuits.

Private firms hired to represent Mississippi in the LCD case are Abraham & Rideout of Greenwood, Miss.; Zimmerman Reed of Minneapolis; and Wise, Carter, Child & Caraway of Jackson.

A. Lee Abraham Jr. donated $1,000 to Hood's campaign fund in 2011, while three Zimmerman Reed attorneys each gave Hood $1,000 in 2007.

The Zimmerman Reed firm gave Hood $11,250 from 2007-11.

Hood also hired outside counsel to pursue the cases - now consolidated into one lawsuit - against the credit card issuers. Hood is one of three attorneys general, with West Virginia's Darrell McGraw and Hawaii's David Louie, to have filed suit over the companies' payment-protection products that carry monthly fees.

One of those firms is Houston's Baron & Budd. Russell Budd gave Hood's campaign fund $10,000 in 2005.

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