Civil Practice – Federal Jurisdiction – Removal – Class Action Fairness Act – State as Plaintiff – Parens Patriae – Remand — Antitrust

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South Carolina v. LG Display Co. (Lawyers Weekly No. 002-031-11, 13 pp.) (Joseph F. Anderson Jr., J.) D.S.C.

Holding: The State of South Carolina filed this antitrust action seeking civil forfeitures and statutory penalties pursuant to its parens patriae power in addition to seeking restitution on behalf of a particular subset of S.C. citizens. As such, this case is not removable under the Class Action Fairness Act.

The state’s motion to remand to state court is granted.

A number of other states’ attorneys general have filed actions based on the same conduct alleged by South Carolina: a conspiracy to fix prices for thin film transistor liquid crystal display panels. Many of those cases have been transferred to multidistrict litigation in federal court in California.

Most of those actions include both federal and state law claims. All of the similar cases that assert only state law claims – as does the instant case — have been remanded to their respective state courts.

Even though the Class Action Fairness Act (CAFA) requires only minimal diversity, even minimal diversity cannot exist when a state is the only plaintiff because a state is not a citizen for purposes of diversity jurisdiction.

South Carolina’s complaint is framed as a parens patriae suit. In order to be a real party in interest in a parens patriae suit, the state must articulate a quasi-sovereign interest.

South Carolina is seeking civil forfeitures and statutory penalties, both of which clearly may be pursued under its parens partiae power, in addition to restitution on behalf of a particular subset of S.C. citizens.

The court will examine the case as a whole – as urged by the state – rather than on a claim-by-claim basis – as urged by defendants. Under a wholesale approach, the case is a parens patriae action, where the state has a clear quasi-sovereign interest in enforcing its own antitrust and consumer protection laws. Based on this recognized quasi- sovereign interest, the state is the real party in interest to the action, and there is no need to pierce the pleadings. As such, minimal diversity does not exist.

Even were this court to adopt the case-by-case approach proffered by defendants, the state would still be a real party in interest to the restitution claim, and minimal diversity would still be lacking in the instant case. Even the state’s claim seeking wide-ranging relief on behalf of its citizens from the alleged price-fixing qualifies as a quasi-sovereign interest.

The Fourth Circuit has recognized a quasi-sovereign interest of a state in bringing an action to enforce its laws, disgorge the proceeds of ill-gotten gains, and refund them to its citizens. While individual consumers may benefit from the restitution sought by South Carolina, the remedies sought in this case also generally inure to all residents of South Carolina by making it less likely these defendants will engage in future price-fixing and by recovering taxpayer money paid to the defendants as overcharges. Further bolstering this court’s finding that the state has a quasi-sovereign interest in pursuing its restitution claim under the S.C. Unfair Trade Practices Act, the S.C. Court of Appeals has interpreted the language of the Act to require that suits brought under the Act address more than just a private interest.

This court is unconvinced by defendants’ contention that the state is not a real party in interest to its restitution claim. Though the claim has been brought on behalf of S.C. consumers, the state has a quasi-sovereign interest in pursuing the claim.

Under West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., 646 F.3d 169 (4th Cir. 2011), as this case was brought by the state under state statutes that are not similar to Fed. R. Civ. P. 23, it is not removable under CAFA as a class action.

Finally, since the state is the real party in interest, it does not satisfy the numerosity requirement for a “mass action” under CAFA.

Remanded.