Supreme Court Affirms AGO’s Right to File Lawsuits in State Court

January 14, 2014

In a case brought by Attorney General Jim Hood, the U.S. Supreme Court today unanimously upheld the right of attorneys general across the country to enforce their state’s laws in state court. The Supreme Court ruled in Mississippi ex rel. Hood v. AU Optronics Corp. that a state attorney general asserting state law claims for damages incurred by its citizens can have that case resolved by its state court, and is not required to be removed to federal court under the Class Action Fairness Act (CAFA).

All nine Justices agreed to reverse the Fifth Circuit Court of Appeals’ ruling that the State’s antitrust and consumer protection enforcement suit could not proceed in Mississippi state court. The Fifth Circuit had encroached on state courts’ rights to hear important public matters by significantly broadening the interpretation of what can constitute a federal “mass action.” Under CAFA, that requires the presence of 100 or more individual “plaintiffs.” The Fifth Circuit had ruled that, despite the State Attorney General being the only plaintiff in the case, the court would treat all Mississippi residents as “plaintiffs” so that CAFA’s 100 person requirement could be considered satisfied, depriving the state courts of the right to interpret their own laws.

Having recognized the important state sovereignty issues at stake, all U.S. Courts of Appeals that had addressed the issue – except the Fifth Circuit – had flatly rejected this analysis. The Supreme Court has now corrected the Fifth Circuit’s error, and Mississippi’s case will properly be returned to Mississippi Chancery Court.

Attorney General Jim Hood stated, “The United States Supreme Court was crystal clear that federal courts have no jurisdiction under the so-called Class Action Fairness Act over actions brought by state Attorneys General for consumer and anti-trust violations. For far too long, large corporations have abused the federal judiciary by trying to drag every action filed by an Attorney General in state court into federal courts. The working people of Mississippi and other states won one this time.”

Justice Sonia Sotomayor wrote that an action by an attorney general on behalf of the state’s citizens does not fit within CAFA’s language. The Court held that, because the State of Mississippi, through its attorney general, is the only plaintiff, this suit does not constitute a mass action.

The State sued makers of liquid crystal displays (LCD) in Mississippi state court in January 2011, alleging that these manufacturers had formed an international cartel to restrict competition and boost prices in the LCD market. Several of the defendants in the State’s case pled guilty to charges brought by the U.S. Department of Justice and paid criminal fines to the U.S. Government. The Mississippi Attorney General sued to recover for the economic harm to the State and its citizens.

The LCD manufacturers removed the case to federal court and the Fifth Circuit affirmed that removal. The Mississippi Attorney General appealed to the U.S. Supreme Court. 46 other state attorneys general, supported Mississippi’s appeal, filing an amicus brief with the Supreme Court contending the Fifth Circuit’s ruling, “forces States to litigate in federal court cases they bring in their own courts, under their own laws, for conduct occurring within their own borders. Worse, this approach encourages federal courts to override a State’s determination that a particular action and mode of relief will serve the public interest.”

 

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