When the Supreme Court decided The Standard Fire Ins. Co. v. Knowles several months ago (see my March 20, 2013 post), the defense bar was happy that plaintiffs’ tactics in evading The Class Action Fairness Act (“CAFA”) would be curbed. Recall that a unanimous court held that a plaintiff could not avoid CAFA removal to federal court by stipulating — on behalf of a class that the named plaintiff did not yet represent and may never represent — that class damages would not exceed $5 million.
Now, however, in Mississippi ex rel. Jim Hood v. AU Optronics Corp., No. 12-1036 (Jan. 14, 2014), another CAFA case (see my June 2, 2013 post), the same court has also held unanimously that actions brought by state attorneys general do not qualify as “mass actions” under CAFA and therefore are not removable under CAFA. In an opinion authored by Justice Sotomayor, the Court held that a real party in interest analysis does not pertain, and that a lone AG does not meet the hundred person mass action requirement for CAFA removal, even if the AG represents hundreds of people: “According to CAFA’s plain text, a ‘mass action’ must involve monetary claims brought by 100 or more persons who propose to try those claims jointly as named plaintiffs. Because the State of Mississippi is the only named plaintiff in the instant action, the case must be remanded to state court.”
The practical upshot of the AU Optronics decision is obvious — plaintiffs’ lawyers can now team up with attorneys general to bring cases that will remain in state court, and the purpose of CAFA — which was precisely to put an end to plaintiffs’ efforts to keep class (or mass) actions in state court — will be subverted. In the end, the Supreme Court opted — unanimously — to construe the CAFA statute in a way that just does not accord with its purpose, and it is only a matter of time before the effects of the decision reverberate throughout the state courts.