State Of Illinois v. AU Optronics Corporation et al

Filing 99

MEMORANDUM Opinion and Order Signed by the Honorable Robert M. Dow, Jr on 6/6/2011. (nf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
STATE OF ILLINOIS,
Plaintiff,
v.
AU OPTRONICS CORP., et al.,
Defendants.

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Case No. 10-cv-5720
Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER
On August 10, 2010, the State of Illinois (“the State” or “Plaintiff”), through its Attorney
General Lisa Madigan, filed a lawsuit against AU Optronics Corporation, et al. (“Defendants”)
in the Circuit Court of Cook County, Illinois, pursuant to the Illinois Antitrust Act (“IAA”).
Plaintiff’s complaint alleges that Defendants engaged in a conspiracy to fix prices of thin film
transistor liquid crystal display (“LCD”) panels between 1998 and 2006. Plaintiff seeks civil
penalties, injunctive relief, declaratory relief, and damages based on alleged overcharges that the
State and individual Illinois residents paid for LCD products.
Defendants removed the case to this Court, invoking its diversity jurisdiction under the
Class Action Fairness Act (“CAFA”).1 Pending before the Court is Plaintiff’s motion to remand
the case to the Circuit Court of Cook County [28]. For the reasons stated below, the Court grants
Plaintiff’s motion.

1

Following the removal of this case, the Judicial Panel on Multidistrict Litigation (“JPML”) entered an
order conditionally transferring this action to the Northern District of California for inclusion in In re:
TFT-LCD (Flat Panel Antitrust Litig., MDL No. 1827. Plaintiff moved to vacate the conditional transfer
order. On February 3, 2011, the JPML entered an order [MDL docket entry 165] postponing its decision
on Plaintiff’s motion to vacate until this Court issues its ruling on Plaintiff’s motion to remand [28].

I.

Legal Standard
In general, an action filed in state court may be removed to federal court only if the action

originally could have been brought in federal court. 28 U.S.C. § 1441(a). Courts are to interpret
the removal statute narrowly. Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 758 (7th
Cir. 2009). Any doubts that persist regarding the propriety of removal are to be resolved in favor
of the plaintiff’s choice of forum in the state courts. Id.
CAFA enacts special rules governing removal of class actions.

Under CAFA, a

defendant may remove a class action to federal district court so long as the case satisfies the
statute’s special diversity and procedural requirements. First, CAFA requires minimal diversity
of citizenship among parties to the action. 28 U.S.C. § 1332(d)(2). Thus, for covered class
actions, CAFA abdicates the complete diversity rule that generally applies in federal diversity
cases. See Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 680, 684 (9th Cir. 2006).
Second, an action removable under CAFA must satisfy the statute’s definition of a “class action”
or a “mass action.” CAFA defines a “class action” as “any civil action filed under rule 23 of the
Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing
an action to be brought by 1 or more representative persons as a class action.” 28 U.S.C. §
1332(d)(1)(B). CAFA defines a “mass action” as “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 Seventh Circuit has explained that CAFA did not alter the established legal rule that
the proponent of federal jurisdiction bears the burden of establishing removal jurisdiction. Brill

2

v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005). Nor did CAFA displace
the principle that a plaintiff is the master of its complaint and may choose to structure its claims
to “remain outside of CAFA’s grant of jurisdiction.” Anderson v. Bayer Corp., 610 F.3d 390,
393 (7th Cir. 2010).
II.

Analysis
Plaintiff has filed a motion to remand this action to state court on the ground that this

Court lacks subject matter jurisdiction under CAFA. [28.] Plaintiff’s motion presents three
questions: (1) whether this case satisfies the minimal diversity requirement necessary to create
federal subject matter jurisdiction under CAFA, (2) whether the case constitutes a “class action”
under CAFA, and (3) whether the case constitutes a “mass action” under CAFA.
A.

Whether Minimal Diversity Exists Between the Parties so as to Establish
Jurisdiction in this Court Under CAFA

Whether minimal diversity exists under CAFA hinges on the identity of the real party in
interest. See Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 460-61 (1980). Accordingly, the first
question presented by Plaintiff’s remand motion is whether the State of Illinois is a real party in
interest. If it is, then the action fails to comport with the minimal diversity jurisdictional
requirement of CAFA. However, if individual Illinois residents who would benefit from the
damages claims brought by the State are the real parties in interest, they would create the
minimal diversity sufficient to vest jurisdiction in this Court.
The Supreme Court long ago established that, for diversity purposes, a “citiz en” must be
a “real and substantial part[y] to the controversy.” Navarro, 446 U.S. at 460-61 (1980) (citing
McNutt v. Bland, 2 How. 9, 15 (1844); Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 32829 (1854); Coal Co. v. Blatchford, 11 Wall. 172, 177 (1871)).

In other words, a court

determining whether it has diversity jurisdiction over an action “must disregard nominal or

3

formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.”
Id. (emphasis added).
Courts have defined a real party in interest as a party that has a substantial stake in the
case. See Illinois v. SDS West Corp., 640 F. Supp. 2d 1047, 1052 (C.D. Ill. 2009) (citing
Wisconsin v. Abbott Labs., 341 F. Supp. 2d 1057, 1061 (W.D. Wis. 2004)). In determining
whether a named plaintiff is a real party in interest, a court must examine the “essential nature
and effect of the proceeding, as it appears from the entire record.” In re New York, 256 U.S. 490,
500 (1921) (citing cases); see also Nuclear Eng’g Co. v. Scott, 660 F.2d 241, 250 (7th Cir. 1981)
(citing Ford Motor Co. v. Dep’t of Treasury, 323 U.S. 459, 464 (1945) (overruled on other
grounds by Lapides v. Board of Regents of Univ. Sys. of Georgia, 535 U.S. 613 (2002))). If a
court determines on the basis of the complaint that the named plaintiff is merely a nominal party,
then the court should look past the complaint to determine if any unnamed plaintiffs are the real
parties in interest. See Navarro, 446 U.S. at 461.
A court may not consider a plaintiff-State a “citizen” for diversity jurisdiction purposes if
the State is a real party in interest. Nuclear Eng’g Co., 660 F.2d at 250 (citing Ford, 323 U.S. at
464). A State is a real party in interest when it “articulate[s] an interest apart from the interests
of particular private parties, i.e., the State must be more than a nominal party. The State must
express a quasi-sovereign interest.” Illinois v. Life of Mid-America Ins. Co., 805 F.2d 763, 766
(7th Cir. 1986) (quoting Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 607 (1982))
(emphasis added); see also SDS West Corp., 640 F. Supp. 2d at 1050 (holding that when a State
sues on behalf of its residents without a sovereign or quasi-sovereign interest, it is only a
nominal party and thus not the real party in interest). Advancing a quasi-sovereign interest is
enough to make a State a real party in interest. See Hood ex. rel Mississippi v. Microsoft Corp.,

4

428 F. Supp. 2d 537, 542 (S.D. Miss. 2006); Alabama ex rel. Galanos v. Star Service &
Petroleum Co., Inc., 616 F. Supp. 429, 431 (D. C. Ala. 1985); New York ex rel. Abrams v.
General Motors Corp., 547 F. Supp. 703, 706 n.5 (S.D.N.Y. 1982). Similarly, advancing a
sovereign or quasi-sovereign interest allows a State to sue as parens patriae on behalf of its
citizens. See SDS West Corp., 640 F. Supp. 2d at 1050 (holding that a State must articulate a
quasi-sovereign interest in order to have parens patriae standing).
An action brought by a State advances a quasi-sovereign interest (such that the State is
the real party in interest) when the action concerns a “substantial segment of the [State’s]
population.” SDS West Corp. 640 F. Supp. 2d at 1050 (quoting Snapp, 458 U.S. at 607). The
Supreme Court has ruled that “a State has a quasi-sovereign interest in the health and well-being
– both physical and economic – of its residents in general.” Snapp, 458 U.S. at 607. The Court
suggested in Snapp that “[o]ne helpful indication in determining whether an alleged injury to the
health and welfare of its citizens suffices to give the State standing to sue as parens patriae is
whether the injury is one that the State, if it could, would likely attempt to address through its
sovereign lawmaking powers.” Id. For example, where a State legislature enacts a statute that
seeks to “secur[e] an honest marketplace” for State residents, then the statute expresses a quasisovereign interest and grants the State standing to bring a parens patriae suit. SDS West Corp.,
640 F. Supp. 2d at 1050 (holding that “securing an honest marketplace” is “a well established
quasi-sovereign interest”).
A State that brings a suit in which it asserts not a quasi-sovereign interest but exclusively
the private interests of a small subset of the State’s population is not a real party in interest;
rather, it is only a nominal party. Snapp, 458 U.S. at 601-02. “[A] State may, for a variety of
reasons, attempt to pursue the interests of a private party, and pursue those interests only for the

5

sake of the real party in interest. Interests of private parties are obviously not in themselves
sovereign interests, and they do not become such simply by virtue of the State’s aiding in their
achievement. In such situations, the State is no more than a nominal party.” Id. (emphasis
added)). Because the State is a nominal party in that circumstance, a court may look beyond the
complaint to determine whether certain unnamed plaintiffs (rather than the State) are the real
parties in interest. See Missouri ex rel. Koster v. Portfolio Recovery Assocs., Inc., 686 F. Supp.
2d 942, 945-46 (E.D. Mo. 2010).
The analysis is somewhat complicated when a State brings an action, like the one at bar,
that seeks both broad injunctive relief and damages for a particular subset of citizens.
Defendants urge the Court to adopt the Fifth Circuit rule (also followed by one district court in
the Third Circuit) that a court dissect the claims in the complaint and find jurisdiction over a case
in which the unnamed plaintiffs on whose behalf a State asserts damages are minimally diverse
from the defendant under CAFA, even if the State is indisputably a real party in interest with
respect to other claims. See Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th
Cir. 2008); West Virginia ex rel. McGraw v. Comcast Corp., 705 F. Supp. 2d 441 (E.D. Pa.
2010); see also West Virginia ex rel. McGraw v. CVS Pharmacy, Inc., 2011 WL 1902678, at *10
(4th Cir. May 20, 2011) (Gilman, J., dissenting).2
Allstate involved an antitrust parens patriae action in which the State attorney general
sought damages for residents as well as broad-based injunctive relief and forfeiture. Allstate,
536 F.3d at 422-23. The defendant removed the case to federal court, and the district court
denied the plaintiff’s motion to remand. Id. at 423-24. Affirming the district court’s decision,

2

In Hood v. F. Hoffman-La Roche, Ltd., the District Court of the District of Columbia noted that it found
Allstate to be “instructive,” but ultimately did not decide the same issue, as it deemed the State to be a real
party in interest with respect to some of the claims asserted and held that the State’s presence in the
lawsuit defeated diversity. 639 F. Supp. 2d 25, 29-32 (D.D.C. 2009).

6

the Fifth Circuit opined that “defendants may pierce the pleadings to show that the * * * claim
has been fraudulently pleaded to prevent removal.” Id. at 424-25. The court first stated that
because the State did not object to the district court’s decision to pierce the pleadings, that issue
was waived. Id. at 425. The court next observed that the State had statutory authority to bring
parens patriae antitrust actions, but explained that:
The parties vigorously debate whether the Attorney General’s parens patriae
authority is extensive enough to allow the State to sue for treble damages in a
representative capacity under state law. We need not address that issue. Even
assuming arguendo that the Attorney General has standing to bring such a
representative action, the narrow issue before this court is who are the real parties
in interest: the individual policyholders or the State. We conclude that as far as
the State’s request for treble damages is concerned, the policyholders are the real
parties in interest.
Id. at 429. Notably, the court did not address the fact that the State presumably had a sovereign
or quasi-sovereign interest in the injunctive relief and forfeiture claims. In other words, the court
did not expressly determine whether the State was a real party in interest or only a nominal party
in the action as a whole. Nor did the court determine that the State had fraudulently pleaded the
complaint to prevent federal jurisdiction. Rather, the court simply looked beyond the complaint
and determined that unnamed plaintiffs were real parties in interest as to the suit’s claims for
money damages.

Id. at 429.

The court determined that these unnamed plaintiffs created

diversity and that the district court therefore had jurisdiction over the case. Id. at 430.
Relying on Allstate, Defendants argue that, although the State here may be a real party in
interest with respect to the enforcement-related claims in the complaint, it is not a real party in
interest with respect to the money damages claims asserted for the benefit of the overcharged
individuals.

Defendants further argue that because CAFA requires only minimal and not

complete diversity, this Court has jurisdiction by virtue of the unnamed plaintiffs who are real
parties in interest as to the damages claims.

7

The Supreme Court, Seventh Circuit, and district courts in this and other circuits have
taken a different approach to assessing real-party-in-interest questions, pursuant to which courts
examine the State’s interest in the action as a whole in deciding real-party-in-interest questions.
See Ford Motor Co., 323 U.S. at 463; In re New York, 256 U.S. at 500; Nuclear Eng’g Co., 660
F.2d at 250; SDS West, 640 F. Supp. 2d at 1052 (acknowledging that although a minority of
courts have divided complaints according to the relief sought in deciding real-party-in-interest
issues, “[m]ost have rejected [that approach] and viewed the complaint as a whole,” and noting
that “Illinois law appears to be in accord with the latter view” (citing People ex rel. Hartigan v.
Lann, 587 N.E.2d 521 (1992)); Abbott Labs., 341 F. Supp. 2d at 1062 (rejecting defendant’s
argument that the court should split the State’s complaint into two categories – claims made on
behalf of private entities and claims made on behalf of the State – and instead holding that “most
courts analyze real party in interest questions by examining the state’s interest in a lawsuit as a
whole”)); Illinois ex rel. Scott v. Hunt Int’l Resources Corp., 481 F. Supp. 71, 74 (N.D. Ill. 1979)
(holding that a court should look past a named party that does not have a pecuniary interest in the
case to unnamed parties only in cases that “involve the collusive naming of a representative * * *
to create jurisdiction * * *. On the other hand, the good faith naming of a representative that
defeats federal jurisdiction has long been allowed” (citations omitted)).3

3

Defendants attempt to distinguish SDS West Corp. on the ground that, unlike here, the defendant in that
case sought removal on traditional diversity rather than CAFA grounds. SDS West Corp., 640 F. Supp.
2d at 1049. In other words, SDS West Corp. hinged on the complete diversity requirement, rather than
CAFA’s minimal diversity requirement. Similarly, Defendants seek to distinguish Hunt Int’l on the
ground that the court in that case held that there was no traditional diversity when the Attorney General
was present in the case. Hunt Int’l, 481 F. Supp. at 74. Finally, Defendants state that Lann is inapposite
because it involved not removal, but a rejection by the court of the defendants’ effort to impose discovery
obligations on the individuals for whom the state sought restitution through the action. Lann, 587 N.E.2d
at 523. The Court acknowledges that factual peculiarities of all three cases set them apart from the case at
bar, but nonetheless finds their enunciation and application of the general rules regarding real-party-ininterest questions to be instructive.

8

Under that approach, viewing a State’s complaint as a whole, a court seeking to identify
the real party in interest must ask “not whether the state alone will benefit, but whether the state
has ‘a substantial stake in the outcome of the case.’” SDS West Corp., 640 F. Supp. 2d at 1052
(quoting Abbott Labs., 341 F. Supp. 2d at 1062)). If the State seeks relief that affects the
economic well-being of its citizens broadly, then the State is the real party in interest, and the
court need not look to unnamed parties to determine if some of the claims asserted also would
benefit them. See Kansas ex rel. Stovall v. Home Cable, Inc., 35 F. Supp. 2d 783, 785-86 (D.
Kan. 1998) (holding that “[t]he fact that one of the remedies sought by the State of Kansas is
restitution to the allegedly aggrieved Kansas consumers does not transform the State of Kansas
into a ‘citizen’ for purposes of establishing diversity jurisdiction”); Hunt Int’l, 481 F. Supp. at 74
(holding that because there was “absolutely no indication that the Attorney General sought to
bring this class suit in order to defeat diversity jurisdiction * * * [t]his court will not disregard
the presence of the Attorney General, the only plaintiff presently before the court”); Lann, 587
N.E.2d at 524-25 (holding that the State was a real party in interest when the Attorney General
filed suit under the Illinois Consumer Fraud Act on behalf of residents who were specifically
aggrieved by violations of the Act because the Attorney General decides whether to bring the
litigation and maintains control of it in her role as protector of the public, and not as personal
representative of the consumers for whom she seeks restitution). As many courts have held, a
State is not automatically rendered a nominal party when it seeks both broad injunctive relief and
monetary damages for injured residents, but rather may be found to be a real party in interest so
long as the quasi-sovereign interest it asserts meets the “substantial stake” test. See Home Cable
Inc., 35 F. Supp. 2d at 785-86. To hold otherwise would be to prevent the plaintiff from acting
as the master of the complaint and choosing its forum. See Tanoh v. Dow Chem. Co., 561 F.3d

9

945, 953 (9th Cir. 2009) (restating the “well-established rule that plaintiffs, as masters of their
complaint, may choose their forum by selecting state over federal court”); accord Anderson, 610
F.3d at 393 (agreeing with Tanoh in holding that a plaintiff, as master of the complaint, may
plead around CAFA requirements to determine the forum); cf. CVS Pharmacy, 2011 WL
1902678, at *7 (stressing that “CAFA is also sensitive to deeply-rooted principles of federalism,
reserving to the States primarily local matters” and that “[c]omity demands that we step most
carefully before ‘snatch[ing] case which a State has brought from the courts of that State, unless
some clear rule demands it’” (quoting Franchise Tax Bd. V. Constr. Laborers Vacation Trust,
463 U.S. 1, 21 n.22 (1983)).
A number of courts have expressly taken issue with the Allstate decision (followed by
Comcast) on the ground that it disregarded the State’s ostensible quasi-sovereign interest in at
least some of the claims and “pierced” the pleadings to find that unnamed parties were real
parties in interest. See Portfolio Recovery Assocs., Inc., 686 F. Supp. 2d at 945-46 (stating that
the legal analysis in Allstate is unpersuasive because it (1) “is counter to the Supreme Court’s
directive that removal statutes are to be ‘strictly construed,’ especially those that undermine the
authority of the state” and (2) “pierced” the plaintiff’s pleading although “it does not appear
defendants had alleged that the plaintiffs used fraud to destroy federal jurisdiction and despite the
fact that the Fifth Circuit acknowledged that the State * * * had the authority to bring parens
patriae antitrust actions” (citations omitted)); Virginia v. SupportKids Servs., Inc., 2010 WL
1381420, at *2 n.2 (E.D. Va. Mar. 30, 2010) (stating that Allstate was mistaken for the “glaring
reason[]” that “the court in that case actually found that Louisiana was a real party in interest”).
Most recently, a court in the Northern District of California granted plaintiff-States
Washington’s and California’s motions to remand their suits against AU Optronics for

10

overcharging for LCD panels after concluding that the claim-by-claim approach taken in Allstate
and Comcast was unsupported by the language or legislative history of CAFA. In re: TFT-LCD
(Flat Panel) Antitrust Litigation, No. 07-cv-1827 SI, 2011 WL 560593, at *3 (N.D. Ca. Feb. 15,
2011) (stating that the court was “unpersuaded by defendants’ argument that simply because
CAFA was intended to broaden federal jurisdiction over class actions, federal courts are required
to deviate from the traditional ‘whole complaint’ analysis when evaluating whether a State is the
real party in interest in a parens patriae case” (citing SDS West Corp., 640 F. Supp. at 1052)).
Here, Plaintiff argues that it has a substantial stake in the outcome of this case. Plaintiff
contends that the treble damages for overcharges that customers and the State paid, as well
ascivil penalties, declaratory relief, and injunctive relief that it seeks would secure a more honest
marketplace and positively affect a substantial segment of the population. Plaintiff further
argues that its sovereign interest in this type of action was recognized by the legislature when it
designed the IAA to permit the Attorney General to bring parens patriae actions to recover
damages for antitrust violations. See 740 ILCS 10/7. By virtue of the legislature’s grant of
express authority, Plaintiff argues, it has a considerable interest in the outcome of this lawsuit.
Plaintiff further argues that it has a substantial interest in advancing its sovereign interest by
enforcing its own laws – namely, the IAA. Finally, Plaintiff contends that its interest is neither
diminished nor rendered nominal because the action in part seeks monetary relief for those
Illinois residents who paid overcharges. Plaintiff contends that the damages component of the
lawsuit could benefit Illinois’s residents as a whole given that payment of damages against those
individuals may have a deterrent effect.
In sum, viewing as a whole the nature and effect of the suit, Plaintiff argues that the
potential of the suit to impact the Illinois populace writ large means that (1) Plaintiff is a real

11

party in interest, (2) the Court thus need not look beyond the complaint to determine whether
unnamed plaintiffs have a more significant stake in the outcome of the litigation, and (3) the
Court lacks diversity jurisdiction under CAFA and should remand the case to state court. See
Hunt Int’l, 481 F. Supp. at 74 (remanding an action in which the Attorney General sought
injunctive and monetary relief despite the fact that unnamed defrauded residents also stood to
benefit from the suit); see also Lann, 587 N.E.2d at 524 (holding that injured consumers for
whom the State sought restitution were not real parties in the State’s parens patriae suit).
Defendants raise two arguments in response, both of which track Allstate in urging the
Court to dissect the claims of the complaint and consider the relative import of the various claims
asserted within it. First, Defendants argue that the State does not have a quasi-sovereign interest
in recovering damages on behalf of a specific subset of residents.

Therefore, Defendants

contend, the State is not the real party of interest with respect to the money damages claims;
rather, the injured residents are. Given that the injured residents are the real parties in interest,
Defendants assert that federal diversity jurisdiction under CAFA exists, and the motion to
remand should be denied. Second, Defendants contend that the amount of damages sought for
private individuals in the State’s damages claims is greater than the amount sought (pursuant to a
statutory cap) in the State’s claim for civil penalties. Defendants submit that the claim for
injunctive relief thus “has little significance,” because the State does not allege that the
conspiracy to overcharge customers is ongoing. [50, at 5.] Defendants suggest that these facts
belie the true nature of this action as one brought for the benefit of a select class of Illinois
residents, thus making those residents rather than the State the real parties in interest.4

4

Defendants cite State of Calif. v. Frito-Lay, Inc., 474 F.2d 774 (9th Cir. 1973), for the proposition that
monetary recovery for a subset of residents precludes sovereign interest in the case. In Frito Lay, the
court ruled that the State attorney general did not have a quasi-sovereign interest in enforcing a federal
antitrust law, as the law pertained to a different sovereign. The case is thus distinguishable from the one

12

After careful consideration of the parties’ respective positions in light of the pertinent
authority, the Court respectfully rejects Defendants’ arguments and concludes that it should look
to the complaint as a whole to determine the real party in interest. See Ford Motor Co., 323 U.S.
at 463; In re New York, 256 U.S. at 500; Nuclear Eng’g Co., 660 F.2d at 250; SDS West, 640 F.
Supp. 2d at 1052. However, the Court adds that even if it parsed the claims separately, the result
would be the same in this instance because Plaintiff has a quasi-sovereign interest in both its
claims for injunctive relief and penalties and its damages claims, which seek recovery on behalf
of a wide range of consumers and aim to deter future antitrust conduct by corporations in Illinois.
See In re TFT-LCD (Flat Panel) Antitrust Litig., 2011 WL 560593, at *5 (contrasting cases in
which States sued only on behalf of limited groups of private parties).
The Court’s conclusion is bolstered by the express purpose of the IAA, which is “to
promote the unhampered growth of commerce and industry throughout Illinois.” 740 ILCS 10/2.
This goal is consistent with that of parens patriae actions at common law – namely, to allow the
State to serve as the “watchdog of its quasi-sovereign interests.” Pennsylvania v. Mid-Atlantic
Toyota Distributors, Inc., 704 F.2d 125, 129 n.8 (4th Cir.1983) (internal quotation marks and
citations omitted). The IAA provides that:
The Attorney General may also bring an action in the name of this State, as parens
patriae on behalf of persons residing in this State, to recover the damages under
this subsection or any comparable federal law. The powers granted in this Section
are in addition to and not in derogation of the common law powers of the
Attorney General to act as parens patriae.
740 ILCS 10/7. The IAA thus specifically authorizes the Attorney General to bring suit for
damages in the public interest on behalf of those individuals affected by antitrust violations in

at bar, in which the State seeks to enforce a state statute. Attorneys general have a sovereign interest in
enforcing their own state laws. Pennsylvania v. Mid-Atlantic Toyota Distribs., Inc., 704 F.2d 125, 131
(4th Cir. 1983). Thus, Frito Lay is not persuasive authority on the facts presented here.

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order to protect the economic health and well-being of the State. See Lann, 587 N.E.2d at 524
(interpreting the Illinois consumer fraud act as imparting a duty on the attorney general to
enforce the law, which was designed to protect the public, even as it sought damages for
transactions involving individual consumers, and holding that “[a]lthough restitution may benefit
aggrieved consumers * * * the legislature did not intend the individual consumers to be treated as
parties to the action for any purposes even under a liberal construction of the Act”); see also SDS
West Corp., 640 F. Supp. 2d at 1051 (finding that “[a]lthough the number of persons directly
harmed [and on whose behalf the State sought damages under the state consumer fraud act] may
be small relative to Illinois’s population, the indirect benefits of barring unscrupulous companies
from soliciting further business accrues to the population at large. Indeed, that is why securing
an honest marketplace is a quasi-sovereign interest. Thus, Illinois has a quasi-sovereign interest
in this litigation”). Indeed, some courts have suggested that if a statute confers on the State alone
authorization to bring suit, then the State is a real party in interest. Brooks v. Tyger Const. Co.,
Inc., 1990 WL 488977, at *2 (M.D.N.C. Apr. 30, 1990). Here, given that the IAA limits
standing for aggregated, indirect purchaser claims to the Attorney General, it would be contrary
to the statutory language and purpose to hold that the Attorney General, representing the State, is
not the real party in interest.5
In view of the State’s quasi-sovereign interest in bringing this action, the State is a real
party in interest in this case. The State is not rendered a nominal party by virtue of the damages

5

Defendants argue that a finding of lack of jurisdiction would contravene Congress’s intent in creating
CAFA – namely, to prevent plaintiffs from “artificially structuring their suits to avoid federal
jurisdiction.” Freeman v. Blue Ridge Paper Prods., Inc., 551 F.3d 405, 407 (6th Cir. 2008). Yet,
Defendants do not contend that Plaintiff fraudulently pleaded claims to avoid federal jurisdiction or
colluded with private individuals for that purpose. (Indeed, it appears that Plaintiff has in good faith sued
in its name alone.) Moreover, Defendants do not appear to dispute that the State has a quasi-sovereign
interest in the claims for injunctive relief and civil penalties under the IAA.

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claims that it asserts on behalf of particular Illinois residents. See, e.g., In re TFT-LCD (Flat
Panel) Antitrust Litig., 2011 WL 560593, at *5; Lann, 587 N.E.2d at 524. As a State, Plaintiff is
not a citizen for diversity purposes.

Accordingly, the minimal diversity jurisdictional

requirements of CAFA have not been met.6
B.

Whether the Action Is a “Class Action” the Term Is Defined in CAFA

Plaintiff also argues that remand is warranted because the case is not a “class action,” as
that term is defined in CAFA. CAFA provides that “the term ‘class action’ means any civil
action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule
of judicial procedure authorizing an action to be brought by 1 or more representative persons as a
class action.” 28 U.S.C. § 1332(d)(1)(B). The Fourth Circuit recently held that a state statute or
rule is similar to Rule 23 if, “at a minimum, [it] provide[s] a procedure by which a member of a
class whose claim is typical of all members of the class can bring an action not only on his own
behalf but also on behalf of all others in the class, such that it would not be unfair to bind all
class members to the judgment entered for or against the representative party.” West Virginia ex
rel. McGraw v. CVS Pharmacy, Inc., 2011 WL 1902678, at *4 (4th Cir. May 20, 2011).

6

Both parties devote a significant number of pages to arguing that CAFA’s legislative history supports
their respective positions. For example, Defendants submit that CAFA’s legislative history indicates that
the statute was not designed to prevent removal of suits brought by states’ attorneys general, as Congress
rejected an amendment that would explicitly have prevented such removal. However, as the Northern
District of California recently found in its order remanding Washington and California State cases against
AU Optronics to state courts, “the legislative history of CAFA * * * does not clearly demonstrate a
congressional intent that CAFA should apply to parens patriae actions. See also Harvey v. Blockbuster,
Inc., 384 F. Supp. 2d 749, 752-54 (D.N.J. 2005) (surveying CAFA’s legislative history and concluding
that it was not Congress’[s] intent to encroach upon States’ authority to bring parens patriae actions).” In
re TFT-LCD (Flat Panel Antitrust Litig.), 2011 WL 560593, at *3. This Court need not delve into the
legislative history to resolve the remand motion. However, the Court notes that, in view of the long
history of parens patriae actions and the traditional approach to determining the real party in interest in a
lawsuit, the absence of any express provision in CAFA authorizing removal of parens patriae suits more
strongly suggests that Congress did not intend CAFA to apply to actions in which the State (through its
Attorney General) asserts sovereign or quasi-sovereign interests in litigation.

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The parties agree that this lawsuit was not filed as a class action under Rule 23, but rather
as a parens patriae action under the IAA. The IAA provides in pertinent part that “[t]he
Attorney General may * * * bring an action in the name of this State, as parens patriae on behalf
of persons residing in this State, to recover the damages under this subsection or any comparable
federal law.” 740 ILCS 10/7(2). In the same provision, the IAA states 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 as provided in this subsection.” Id.
Plaintiff contends that a parens patriae action is so different in its nature, prerequisites,
and procedural safeguards from a class action that the IAA’s explicit grant of authority to the
State to bring a parens patriae suit excludes this action from the ambit of CAFA. With respect
to the nature of the suit, Plaintiff notes that parens patriae authority has its origin in common law
rather than statute. Plaintiff also states that the function of parens patriae suits is to provide a
substantive power to the State to protect its citizens rather than a procedural device to
consolidate individual claims. See Illinois v. Huddleston, 816 N.E.2d 322, 337 (Ill. 2004).
Plaintiff further states that while a class action generally is a private lawsuit pursued for private
interests and represented by private attorneys who work on a contingency-fee basis, a parens
patriae lawsuit is brought by a public entity in its sovereign or quasi-sovereign interest and
represented by salaried states’ attorneys. With respect to the prerequisites, Plaintiff contends that
this type of suit is fundamentally different than a class action: the latter requires numerosity,
typicality, and commonality, whereas the former imposes no such constraints. Finally, Plaintiff
argues that class actions impose rigorous procedural safeguards to protect absent class members;
by contrast, in parens patriae suits, the safeguards are limited to due process and the democratic

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process. Plaintiff thus concludes that this action is a “separate and distinct procedural vehicle
from a class action.” Breakman v. AOL LLC, 545 F. Supp. 2d 96, 101, 102 (D.D.C. 2008)
(holding that a District of Columbia consumer protection statute that authorized representative
actions and did not reference class action requirements or mandate class certification was a
separate and distinct procedural vehicle from a class action, and thus did not constitute a class
action under CAFA); see also Harvey v. Blockbuster, Inc., 384 F. Supp. 2d 749, 754 (D.N.J.
2005); Portfolio Recovery Assocs., Inc., 686 F. Supp. 2d at 946-47; cf. Comcast, 705 F. Supp. 2d
at 454.
Defendants counter that the authority bestowed on the State by the IAA to represent
private consumers in essence makes the State a class action representative notwithstanding the
parens patriae label of the suit. Defendants first point out that the suit is “congruent” with the
MDL class actions that other States have brought against AU Optronics. Defendants then
contend that because the IAA makes the State’s authority to bring this type of suit an exception
to the general rule against indirect purchaser class actions, it “clearly” intends that parens patriae
actions should be substitutes for class actions and thus synonymous with them. According to
Defendants, the IAA’s authorization of this type of suit qualifies the suit as a class action under
CAFA. Defendants cite Comcast in support of their argument. In Comcast, the court considered
whether a parens patriae suit brought under a state statute was a class action under CAFA.
Comcast, 705 F. Supp. 2d at 453-54. The court held that although the statute was not identical to
Rule 23, it so mimicked the Rule with respect to its rigorous safeguards regarding absent parties
that it qualified as a “similar statute” under CAFA. Id. at 454.
The Court finds Plaintiff’s arguments persuasive: because (1) the case was not filed as a
class action under Rule 23 (or a state equivalent) and (2) the case instead is a parens patriae suit

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brought under the IAA, it is both in form and substance distinct from an action brought under
Rule 23 or a state class action statute. To borrow from the Fourth Circuit’s recent opinion in
CVS Pharmacy, the IAA “authorizes the Attorney General to bring enforcement actions against
violators and, in so doing, to pursue relief on behalf of aggrieved individuals. Yet that type of
representation by the State is [not] characteristic of the representational nature of a class action
* * *.” 2011 WL 1902678, at *6. Rather, it “is more analogous to the role of the EEOC or other
regulator when it brings an action on behalf of a large group of employees or a segment of the
public.” Id. Accordingly, the Court concludes that this action is not a “class action” under
CAFA. See, e.g., id.; Portfolio Recovery Assocs., Inc., 686 F. Supp. 2d at 946-47; In re TFTLCD (Flat Panel) Antitrust Litig., 2011 WL 560593, at *6-*7; Allstate, 536 F.3d at 434-35
(Southwick, J., dissenting). Instead, it is “a statutorily authorized action” filed “on the State’s
behalf” by its top legal officer, the Attorney General. CVS Pharmacy, 2011 WL 1902678, at *4.
C.

Whether this Action is a “Mass Action” as that Term Is Defined by CAFA

CAFA provides that “mass actions” are removable to federal court.

28 U.S.C. §

1332(d)(11)(A). CAFA defines a mass action as “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 requirements under
subsection (a) [‘where the matter in controversy exceeds the sum or value of $75,000, exclusive
of interest and costs’].” 28 U.S.C. § 1332(d)(11)(B)(I) & § 1332(a).
Plaintiff argues that the mass action provisions of CAFA do not confer jurisdiction here
for three reasons. First, Plaintiff states that this case does not satisfy CAFA’s numerosity
requirement. 28 U.S.C. § 1332(d)(11)(B)(i). Second, Plaintiff argues that the suit is not a mass

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action because it does not meet CAFA’s $75,000 jurisdictional threshold requirement for mass
actions. Id. Third, Plaintiff contends that the suit does not fall within CAFA’s jurisdictional
exception for cases brought on behalf of the general public.

See 28 U.S.C. §

1332(d)(11)(B)(ii)(III).7
The Court concludes that, for the same reasons that it found the State to be a real party in
interest, this suit does not constitute a “mass action” under CAFA. See Tanoh, 561 F.3d at 952
(holding that CAFA’s requirement of 100 or more plaintiffs refers only to actual, named
plaintiffs); Cal. Pub. Employees Ret. Sys. v. Moody’s Corp., 2009 WL 3809816, at *7 (N.D. Cal.
Nov. 10, 2009) (interpreting the mass action provisions of CAFA as requiring plaintiffs to appear
and make claims in order to count toward the numerosity requirement, and refusing to count 490
unnamed plaintiffs represented by an unincorporated association who failed to do so toward the
numerosity requirements); Kitazado v. Black Diamond Hospitality Invs., LLC,, 2009 WL
3209298, at *6 (D. Haw. Oct. 6, 2009). Rather, as another court recently summarized in words
that apply equally here, “[b]ecause the State is a real party in interest and sues to protect and
vindicate the rights of the public in general [under the IAA], this action is not a ‘mass action.’”
Connecticut v. Moody’s Corp., 2011 WL 63905, at *4 (D. Conn. Jan. 5, 2011).

7

CAFA’s mass action “carve-out” provision states that “the term ‘mass action’ shall not include any civil
action in which (III) 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 * * *.” 28 U.S.C. § 1332(d)(11)(B)(ii)(III).

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III.

Conclusion
For the reasons stated above, the Court grants Plaintiff’s motion to remand [28]; this case

is remanded to the Circuit Court of Cook County.

Dated: June 6, 2011

______________________________
Robert M. Dow, Jr.
United States District Judge

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