Lg Display Company v. Lisa Madigan ( 2011 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-8017
LG D ISPLAY C O ., L TD., et al.,
Petitioners,
v.
L ISA M ADIGAN, Attorney General of the State of Illinois,
Respondent.
Petition for Permission to Appeal
from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:10-cv-05720—Robert M. Dow, Jr., Judge.
S UBMITTED JULY 18, 2011—D ECIDED N OVEMBER 18, 2011
Before F LAUM, W ILLIAMS, and T INDER, Circuit Judges.
T INDER, Circuit Judge. The Illinois Attorney General filed
suit in the Circuit Court of Cook County against eight
manufacturers of LCD panels for violations of the Illinois
Antitrust Act (“IAA”). The complaint alleges that the
defendants unlawfully inflated prices on LCD products
sold to the state, its agencies, and residents and requests
injunctive relief, civil penalties, and treble statutory
2 No. 11-8017
damages for the state as a purchaser and, as parens patriae,
for harmed residents. The defendants removed the case
to federal court under the Class Action Fairness Act of
2005 (“CAFA”), 28 U.S.C. §§ 1332(d), 1453. The Attorney
General moved to remand and argued that the suit
did not meet CAFA requirements and that, therefore, the
district court did not have jurisdiction. The district
court agreed and granted the motion to remand. The
defendants now petition for permission to appeal the
remand order.
In most situations, “[a]n order remanding a case . . .
is not reviewable on appeal or otherwise.” 28 U.S.C.
§ 1447(d); Anderson v. Bayer Corp., 610 F.3d 390, 394 (7th
Cir. 2010). The defendants argue, however, that the At-
torney General’s parens patriae suit is actually a disguised
“class action” or “mass action” (and otherwise meets
CAFA requirements) and so, under CAFA, this court
may consider an appeal of the remand order. 28 U.S.C.
§ 1453(c). In addition, the defendants argue we should
grant their petition because this case presents unsettled
CAFA-related questions. Specifically, they note we have
yet to decide whether the “represented parties” in a parens
patriae action—in this case, Illinois purchasers of LCD
panels—are the real parties in interest (and so may
satisfy CAFA’s minimal diversity requirement) and
whether such an action may be removed as a class action
or mass action.
As we explain below, we disagree with the defendants’
characterization of the case as a disguised class action
or mass action and, in this case, we are not convinced
that the petition should be granted because of its novelty.
No. 11-8017 3
To reach a functionally equivalent result—that a parens
patriae action such as this is not removable under
CAFA—at least two other circuits have granted petitions
to appeal and then denied the appeals on the merits.
Washington v. Chimei Innolux Corp., ___ F.3d ___, No. 11-
16862, 2011 WL 4543086 (9th Cir. October 3, 2011);
West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., 646 F.3d
169, 179 (4th Cir. 2011). In this case, however, the proper
course is to deny the petition for lack of jurisdic-
tion. See Lincoln Nat’l Life Ins. Co. v. Bezich, 610 F.3d 448,
449 (7th Cir. 2010); Anderson, 610 F.3d at 394. On limited
occasions we have concluded that we have jurisdiction
to grant a petition in a CAFA case that presents a signifi-
cant novel issue. See Koral v. Boeing Co., 628 F.3d 945, 946
(7th Cir. 2011) (citing CAFA cases where petitions for
appeal have been granted “because the appeal presents
novel issues”); Brullard v. Burlington Northern Santa Fe
Ry., 535 F.3d 759, 761 (7th Cir. 2008) (granting a petition
because of a “novel” CAFA issue that had “not been
addressed in this or any other circuit”). But as the discus-
sion below and the recent decisions from the Fourth
and Ninth Circuits illustrate, the novelty of this case is
superficial. And because the jurisdictional inquiry
overlaps with the merits, that is, whether this case falls
under CAFA, the fact that our approach is technically
different from what the Ninth and Fourth Circuits have
done in similar cases does not put us at odds with them.
To the contrary, we find their discussions of the relation-
ship between parens patriae actions and CAFA helpful
and persuasive.
Before getting to the reasons why this parens patriae suit
is not a class action or mass action under CAFA, a little
4 No. 11-8017
background on parens patriae suits will be helpful. The
“parent of the country” action is rooted in the English
common-law concept of the “royal prerogative,” which
included the power of the king to act “as guardian of
persons under legal disabilities to act for themselves.”
Hawaii v. Standard Oil Co., 405 U.S. 251, 257 (1972). In the
United States the “royal prerogative” and the king’s
parens patriae power passed to the states, and the scope
of parens patriae suits has expanded beyond what existed
in England. Id. A state will have standing to sue as
parens patriae where it can “articulate an interest apart
from the interests of particular private parties” and
“express a quasi-sovereign interest.” Alfred L. Snapp &
Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592, 607 (1982).
A state, for example, “has a quasi-sovereign interest in
the health and well-being—both physical and eco-
nomic—of its residents in general.” Id. To decide
whether a state’s interest pertains to “its residents in
general” as opposed to an “identifiable group of indi-
vidual residents,” a court should consider the direct
and indirect effects of the alleged injury. Id. An “alleged
injury to the health and welfare of its citizens suffices
to give the State standing to sue as parens patriae [if] the
injury is one that the State, if it could, would likely
attempt to address through its sovereign lawmaking
powers.” Id. Although the American concept of parens
patriae is broad, it “does not involve the States stepping
in to represent the interests of particular citizens who,
for whatever reason, cannot represent themselves.” If
that is the case, “i.e., if the State is only a nominal party
without a real interest of its own—then it will not have
standing under the parens patriae doctrine.” Id. at 600.
No. 11-8017 5
We have jurisdiction over this parens patriae action
only if it is also (or actually) a “class action” or “mass
action.” As defined by CAFA, a class action is “any civil
action filed under Rule 23 of the Federal Rules of Civil
Procedure or similar State statute or rule of judicial proce-
dure authorizing an action to be brought by 1 or more
representative persons as a class action.” 28 U.S.C.
§ 1332(d)(1)(B). A mass action is “any civil action . . . 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, except that jurisdiction shall exist only over
those plaintiffs whose claims in a mass action satisfy the
jurisdictional amount requirements under [28 U.S.C.
§ 1332(a)].” 28 U.S.C. § 1332(d)(11)(B)(i).
The district court reasoned that this suit cannot be a
class action because it was not filed under Rule 23 of the
Federal Rules of Civil Procedure or the state equivalent,
735 ILCS 5/2-801, but is instead a parens patriae suit
under the IAA. The defendants maintain that because the
IAA provides that “no person shall be authorized to
maintain a class action in any court of this State for
indirect purchasers asserting claims under this Act, with
the sole exception of this State’s Attorney General, who
may maintain an action parens patriae,” 740 ILCS 10/7,
the Illinois legislature “considers this parens patriae auth-
ority as a species of class action.”
But the phrasing of the IAA is insufficient to support
a conclusion that the Attorney General’s suit is really
a class action. A class action must be brought under
6 No. 11-8017
Rule 23 or the state equivalent. This case was brought
under the IAA, not Rule 23 or 735 ILCS 5/2-801. A class
action must be brought by a “representative person.” This
case was brought by the Attorney General, not by a
representative of a class. A class action must be brought
as a class action. This case was brought as a parens patriae
suit under the IAA, which does not impose any of the
familiar Rule 23 constraints. The IAA does not impose,
for example, requirements for adequacy, numerosity,
commonality, or typicality. Procedurally, Rule 23 and
the IAA are entirely different beasts.
This conclusion is consistent with recent decisions
from the Fourth and Ninth Circuits. In CVS Pharmacy, 646
F.3d at 172, the Fourth Circuit held that a parens patriae
suit brought by the Attorney General of West Virginia
alleging violations of the state generic drug statute and
state credit protection act was not removable as a class
action because the West Virginia laws did not include
provisions typical of a class action “addressing the ade-
quacy of representation, numerosity, commonality, and
typicality.” In Chimei Innolux Corp., 2011 WL 4543086,
the Ninth Circuit reached the same conclusion about
parens patriae suits brought as by the Attorney Generals of
Washington and California alleging that defendants
conspired to fix prices on products containing LCD
panels. In affirming the district court’s remand order, the
Ninth Circuit expressly joined the Fourth Circuit and
explained: “The question under CAFA is whether the
state statute authorizes the suit ‘as a class action.’ The
statutes at issue here do not.” Id. at *3.
No. 11-8017 7
So, this case is not a class action. As a fallback, defen-
dants argue that this case is a mass action because “mone-
tary 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.” 28 U.S.C.
§ 1332(d)(11)(B)(i). Here, however, only the Illinois Attor-
ney General makes a claim for damages (among other
things), precisely as authorized by the IAA. By the plain
language of § 1332, this suit is not removable as a mass
action. Anderson, 610 F.3d at 393. Moreover, a suit is not
a mass action under 28 U.S.C § 1332(d)(11)(B)(ii)(III) if
“all of the claims in the action are asserted on behalf
of the general public (and not on behalf of individual
claimants or members of a purported class) pursuant to
a State statute specifically authorizing such action.” By
the plain language of that provision, too, this case is not
a mass action.
Against this, the defendants argue that if we consider
what’s really going on in this suit, we will see that
Illinois resident purchasers are the real parties in
interest and, building on that premise, conclude that
the 100 or more plaintiffs, minimal diversity, and amount-
in-controversy requirements are met. To reach the con-
clusion that Illinois resident purchasers are the real
parties in interest, however, the petitioners ask us to
separately determine the parties in interest in each of
the Attorney General’s claims. They concede that the
state is the real party in interest for the enforcement-
related claims, but they deny that the state is the real
party in interest for the damages claims asserted on
behalf of Illinois consumers.
8 No. 11-8017
The petitioners find support for that kind of claim-by-
claim approach in Louisiana ex rel. Caldwell v. Allstate
Insurance Co., 536 F.3d 418 (5th Cir. 2008), and West Virginia
ex rel. McGraw v. Comcast Corp., 705 F. Supp. 2d 441 (E.D.
Pa. 2010). In Allstate, the Fifth Circuit affirmed the denial
of a motion to remand a suit filed by the State of
Louisiana “along with counsel from a number of private
law firms” against several insurance companies for
alleged violations of the Louisiana Monopolies Act. 536
F.3d at 422. Although the suit was brought as a parens
patriae action, the defendants argued that the suit was
actually a class action or mass action under CAFA
because Louisiana sought treble damages for Louisiana
insurance policyholders. Id. at 423. The district court
pierced the pleadings to determine the real nature of
Louisiana’s claims—an action that, the Fifth Circuit
noted, Louisiana did not object to on appeal—and con-
cluded that removal was appropriate because Louisiana
policyholders were the real parties in interest. Id. at 425.
In affirming the district court’s decision, the Fifth
Circuit emphasized that, “[i]n passing CAFA, Congress
emphasized that the term ‘class action’ should be
defined broadly to prevent ‘jurisdictional gamesman-
ship.’ ” Id. at 424.
In Comcast, a Pennsylvania district court concluded that
a parens patriae antitrust and consumer protection suit
brought by West Virginia was removable as a class
action under CAFA. Examining West Virginia’s interest
in the suit to determine whether CAFA’s minimal diver-
sity requirement had been met, the district court
followed Allstate’s claim-by-claim approach and deter-
No. 11-8017 9
mined that there was minimal diversity because West
Virginia consumers were the real parties in interest for
West Virginia’s treble damages claim. 705 F. Supp. 2d at
447, 450. The district court believed that claim-by-claim
analysis “is most consistent with Congress’s intent under
CAFA to expand federal jurisdiction over class actions.” Id.
In this case, the district court rejected the claim-by-
claim analysis used in Allstate and Comcast. The district
court was in good company; claim-by-claim analysis
has been questioned by a number of courts. See In re TFT-
LCD (Flat Panel) Antitrust Litig., MDL No. 1827, 2011 WL
560593, *3 (N.D. Cal. Feb. 15, 2011); Missouri ex rel. Koster v.
Portfolio Recovery Assocs., Inc., 686 F. Supp. 2d 942, 945-46
(E.D. Mo. 2010); Illinois v. SDS West Corp., 640 F. Supp. 2d
1047, 1050-53 (C.D. Ill. 2009). Instead, the district court
“look[ed] to the complaint as a whole” and concluded
that the State is the real party in interest. We agree with
the district court’s approach. Whether a state is the
real party in interest in a suit “is a question to be deter-
mined from the ‘essential nature and effect of the pro-
ceeding.’ ” Nuclear Engineering Co. v. Scott, 660 F.2d 241,
250 (7th Cir. 1981) (quoting Ford Motor Co. v. Dep’t of
Treasury, 323 U.S. 459, 464 (1945)). The courts in Allstate
and Comcast did not adopt the claim-by-claim approach
based on any language in CAFA itself, nor is there any
such language to be found. The Fifth Circuit rationalized
its claim-by-claim approach as consistent with Congress’
intent to broaden federal jurisdiction over class actions
through CAFA. But, as Judge Illston pointed out in her
order remanding the parens patriae actions filed by the
State Attorney Generals of California and Washington,
10 No. 11-8017
just because CAFA was meant to expand federal courts’
jurisdiction over class actions, it does not follow that
“federal courts are required to deviate from the tradi-
tional ‘whole complaint’ analysis when evaluating
whether a State is the real party in interest in a parens
patriae case.” In re TFT-LCD (Flat Panel) Antitrust Litig., 2011
WL 560593, *3. See also First Bank v. DJL Prop., LLC, 598
F.3d 915, 917 (7th Cir. 2010) (“It does not follow from
the fact that the 2005 Act expands the set of removable
cases that it must use ‘defendant’ in a novel way.”).
Restraint is particularly appropriate in light of the
Supreme Court’s directive that removal statues should
be “strictly construed,” Syngenta Crop Protection, Inc. v.
Henson, 537 U.S. 28, 32 (2002), and the sovereignty
concerns that arise when a case brought by a state in its
own courts is removed to federal court. As the Supreme
Court has noted, “considerations of comity make us
reluctant to snatch cases which a State has brought from
the courts of that State, unless some clear rule demands
it.” Franchise Tax Bd. v. Construction Laborers Vacation
Trust, 463 U.S. 1, 21 n.22 (1983). See also CVS Pharmacy,
646 F.3d at 178 (“While it is true that West Virginia volun-
tarily entered into its own courts to enforce its laws, it
did not voluntarily consent to removal of its case to a
federal court, and a federal court should be most
reluctant to compel such removal, reserving its constitu-
tional supremacy only for when removal serves an over-
riding federal interest.”).
The district court correctly determined that this case
is not a class action or mass action under CAFA. We
No. 11-8017 11
therefore lack jurisdiction over an appeal from the district
court’s remand order. The petition for leave to appeal
is D ENIED.
11-18-11