Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Supreme Court Asked to Consider Class Action Fairness Act Mass Action Jurisdiction, (Jan 28, 2013)

By Jeffrey May, J.D.

Manufacturers of liquid crystal display (LCD) panels have asked the U.S. Supreme Court to review a decision of the U.S. Court of Appeals in Richmond, Virginia, upholding the remand of two lawsuits brought by the State of South Carolina against the manufacturers for conspiring to fix LCD prices in violation of the state’s antitrust law and Unfair Trade Practices Act. In their petition for certiorari, filed on January 23, 2013, LCD panel makers AU Optronics Corporation and LG Display Company contend that removal was proper because federal court jurisdiction exists under the Class Action Fairness Act of 2005 (CAFA) (AU Optronics Corp. v. State of South Carolina, Dkt. 12-911).

At issue is a Fourth Circuit decision (699 F.3d 385, 2012-2 Trade Cases ¶78,100), concluding that the State of South Carolina was entitled to remand of the suits because diversity did not exist under either the traditional framework or the minimal diversity requirements of CAFA. The court noted that the single plaintiff in the action was the state, and it was well-established that a state was not a citizen for purposes of diversity jurisdiction.

Moreover, the state was a real party in interest, and by seeking civil forfeitures and statutory penalties, it was asserting a quasi-sovereign interest—to protect and vindicate the rights of the public in general. The action could not be removed as a CAFA class action because it was brought by the state under state statutes that were not similar to Federal Rule of Civil Procedure 23. It also did not constitute a mass action under CAFA, since it failed to satisfy CAFA’s numerosity requirement and the minimal diversity required for mass actions under CAFA did not exist, the appellate court ruled.

“The Fourth Circuit's interpretation allows plaintiff's counsel to circumvent CAFA and bring what is essentially a class action in state court without fear of removal under CAFA,” the petitioners argued. They contended that the state seeks restitution “on behalf of” its citizens who suffered a loss as a result of the alleged conspiracy to fix prices for LCD panels, which are components of various electronic products. There is minimal diversity between the petitioners and the citizens—the real parties in interest—it was argued. The petitioners sought removal based on CAFA's mass action jurisdiction.

Specifically, AU Optronics and LG Display asked the Court whether the citizenship of the persons on whose behalf monetary relief claims are brought by a state may satisfy CAFA’s minimal diversity requirement as set forth in 28 U.S.C. § 1332(d)(2)(A)-(C) and (d)(1)(D) for purposes of mass action jurisdiction under CAFA even if those persons are not named plaintiffs.

The LCD manufacturers argued that there was a split among the circuits on the issue. “[D]ecisions from the Fifth, Fourth, and Ninth Circuits make clear that courts in the Fifth Circuit would find CAFA's minimal diversity requirement satisfied in this case, while the Fourth Circuit did not, and the Ninth Circuit would not.”

In State of Mississippi v. AU Optronics Corp. (701 F.3d 796, 2012-2 Trade Cases ¶78,150), the Fifth Circuit recently held that Mississippi Consumer Protection Act and Antitrust Act claims brought by the State of Mississippi against LCD panel manufacturers and distributors qualified as a mass action under CAFA. The LCD manufacturers contended that the actions brought by South Carolina are almost identical to the actions brought by Mississippi.

Attorneys: Henry L. Parr Jr. (Wyche, P.A.) for petitioners.

Companies: AU Optronics Corp.; LG Display Co.

News: Antitrust ConsumerProtection