On CAFA, Parens Patriae, And Class Actions

One of the many methods of aggregating litigation is an action filed by a governmental unit acting as “parens patriae.”  See Principles of the Law of Aggregate Litigation §1.02 & Reporters notes to comment b(1)(B) (ALI 2010).  Such actions, in which a “[g]overnmental actor” has “authority to speak for citizens on matters of public concern,” id. in many ways resemble class actions – including, as we’ve mentioned before, preclusive effect on subsequent actions by individual citizens:

Where the interest to be protected is one held by members of the public at large, an action by a public official in behalf of that interest may be held preemptive of private remedies and preclusive effects accordingly given to a judgment in an action involving the official. . . .  The existence of such an interest is clearest when a government or public official sues parens patriae.

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The right to sue parens patriae being established . . ., it remained to be considered whether a judgment in a parens patriae action precludes a subsequent civil suit by a citizen brought to vindicate the same public interest.  The U.S. Supreme Court answered affirmatively. . . .  In principle, parens patriae actions can preclude large numbers of individuals from suing.  In this respect, they resemble class actions.

Id. Reporters’ Notes at pp. 20-21.

But are parens patriae actions “class actions” for purposes of removal under the Class Action Fairness Act ("CAFA")?  Regrettably, apparently not.  CAFA’s definition of “class action” for purposes of removal is narrower than the observations of the ALI’s reporters.  Under CAFA, a “class action” is merely “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule.”  28 U.S.C. §24 1332(d)(1)(B).  In a recent opinion, Purdue Pharma L.P. v. Commonwealth of Kentucky, ___ F.3d ___, No. 11-4087-mv, slip op. (2d Cir. Jan. 9, 2013), the court held, in essence, that because parens patriae actions aren’t brought under class action rules, they’re not class actions under CAFA.  Slip op. at 5-6, 11-12.  While, the ALI’s august reporters might view that as a triumph of form over substance (as, indeed, the defendant-petitioner argued, see slip op. at 13-15), that’s apparently where the Courts of Appeal have been headed.  The Second Circuit states that “every Circuit to consider this precise issue” has so held, and goes on to cite four other decisions – in the Fourth, Fifth, Seventh, and Ninth Circuits.  Purdue Pharma, slip op. at 6.  With the score now 5-0 against the argument that “class action” can include state parens patriae actions, things don’t look good for this more liberal approach to CAFA jurisdiction.

But there appears still to be life for the related argument that this sort of action is removable under CAFA as a “mass action” – a separate Schrödinger’s cat-like basis for federal jurisdiction.  See Purdue Pharma, slip op. at 8 n.4.  We haven’t done independent research, but the Second Circuit mentions one decision that has recognized jurisdiction on this basis.  Id. at 15 (discussing Louisiana ex rel. Caldwell v. Allstate Insurance Co., 536 F.3d 418 (5th Cir. 2008)).  However, due to one of the many quirks of CAFA, “mass action” removal was not at issue.  Purdue Pharma, slip op. at 15-16.

Why?

That’s tied to the answer to our initial question when we first encountered Purdue Pharma, before we’d even read a word of the opinion itself – “What the heck is a case brought by the Commonwealth (quick:  How many U.S. jurisdictions are commonwealths?) of Kentucky doing in the Second Circuit?”  The answer is MDL transfer, and CAFA does not allow non-consensual transfer of “mass actions” (as opposed to class actions) to multi-district proceedings.  See Purdue Pharma, slip op. at 16 n.9 (citing 28 U.S.C. §1332(d)(11)(C)(i)).

So all hope of federal jurisdiction for parens patriae actions is not lost.

 

 

 

By the way, the answer to the trivia question is six.