Hood ex rel. Mississippi v. Microsoft Corp.

• Decision Date: 16 April 2006
• Docket Number: No. 3:04 CV 800WS.,3:04 CV 800WS.
• Citation: 428 F.Supp.2d 537
• Parties: Jim HOOD, Attorney General ex rel. State of Mississippi Plaintiff v. MICROSOFT CORPORATION Defendant
• Court: U.S. District Court — Southern District of Mississippi

428 F.Supp.2d 537

Jim HOOD, Attorney General ex rel. State of Mississippi Plaintiff v. MICROSOFT CORPORATION Defendant

No. 3:04 CV 800WS.

United States District Court, S.D. Mississippi, Jackson Division.

April 16, 2006.

Brent Hazzard, Hazzard Law, Harvey Curtis Crowley, Schwartz & Associates, Jackson, MS, for Plaintiff.

Joseph E. Neuhaus, Sullivan & Cromwell, LLP, New York, NY, Cory T. Wilson, David W. Clark, Bradley, Arant, Rose & White LLP, Jackson, MS, for Defendant.

ORDER GRANTING REMAND

WINGATE, Chief Judge.

Before this court are the following: (1) a motion by defendant Microsoft Corporation ("Microsoft") asking this court to stay all proceedings pending transfer by the Judicial Panel on Multidistrict Litigation ("Judicial Panel"), said motion filed pursuant to Title 28 U.S.C. § 1407¹ [docket # 2]; (2) a motion by plaintiff Jim Hood, Attorney General ex rel. State of Mississippi ("Hood") to remand this proceeding to State court, submitted under Title 28 U.S.C. § 1447(c)² [docket # 6]; and (3) a motion by plaintiff Hood for an expedited hearing on his motion to remand, pursuant to Uniform Local Rule 7.2(H)³ [docket # 8]. As this court heard oral argument on this matter on a previous date, Hood's motion for an expedited hearing is hereby terminated as moot. Additionally, for reasons set out in the court's detailed opinion, this court hereby denies Microsoft's motion to stay and grants Hood's motion to remand. On an earlier date, this court announced the above findings, stated that later the court would file a lengthier opinion, and meanwhile instructed the Clerk of Court not to transfer this case to the MDL District Court of Maryland.

Facts and Procedural Posture

This case is related to, but different from, other lawsuits filed against Microsoft nationwide following United States v. Microsoft Corp., 84 F.Supp.2d 9 (D.D.C.1999), aff'd in part, rev'd in part, and vacated, 253 F.3d 34 (D.C.Cir.), cert. denied, 534 U.S. 952, 122 S.Ct. 350, 151 L.Ed.2d 264 (2001). On April 25, 2000, the Judicial Panel issued an order establishing multi-district litigation in the District of Maryland, with the Honorable Frederick Motz, Chief Judge, presiding over the matter. In re Microsoft Corp. Windows Operating Sys. Antitrust Litig., No. 1332, 2000 WL 34448877, 2000 U.S. Dist. LEXIS 5559 (J.P.M.L. Apr. 25, 2000). In the aforementioned multidistrict litigation, that court is confronted with questions of market definition, the existence of Microsoft's monopoly power, the fact and significance of Mircrosoft's alleged anti-competitive conduct, and the " existence and scope of any antitrust injury suffered by the parties to the multidistrict litigation. Id. at *4.

Plaintiff Hood, the Attorney General of the State of Mississippi, filed this case in the Circuit Court of Hinds County, Mississippi, on August 31, 2004. The complaint seeks relief for the following: (1), injuries allegedly suffered by Mississippi in its purchase of software directly and indirectly from Microsoft at unlawfully inflated prices; and (2), injuries allegedly suffered by Mississippi citizens who purchased Microsoft products at inflated prices. Hood's complaint calls for damages and penalties under §§ 75-21-9⁴ and 75-24-15⁵ of the Mississippi Code for injunctive relief for Mississippi and its citizens, and a refund of any and all illegal overcharges for software purchased by Mississippi and its citizens, under a State-law claim of unjust enrichment.

Microsoft removed this action to this federal forum on September 30, 2004, asserting that this court has diversity-of-citizenship subject matter jurisdiction pursuant to the authority of Title 28 U.S.C. § 1332.⁶ The next day, defendant filed a notice of "tag-along action" before the Judicial Panel on October 1, 2004, which lists this case as a potential tag-along action transferable to the multidistrict litigation court under Rule 7.5(e) of the Judicial Panel on Multidistrict Litigation Rules of Procedure.⁷ Now, in its motion to stay Microsoft argues that a stay of all proceedings in this case would conserve judicial resources and prevent inconsistent pretrial rulings. Plaintiff Hood, on the other hand, contending that this is a parens patriae action, argues that this court lacks subject-matter jurisdiction over this case and is presumably without authority to enter Microsoft's requested stay.

Law and Application

Motion to Stay

A district, court has the inherent power to stay its proceedings. This power to stay is "incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed. 153 (1936); Petrus v. Bowen, 833 F.2d 581 (5th Cir.1987). This power is best accomplished by the "exercise of judgment, which must weigh competing interests and maintain an even balance." Landis, 299 U.S. at 254-55, 57 S.Ct. 163.

In the instant case, Microsoft has moved for a stay of proceedings while the Judicial Panel considers its motion for transfer and consolidation. Rule 1.5 of the Rules of the Judicial Panel on Multidistrict Litigation states the following:

The pendency of a motion, order to show cause, conditional transfer order or conditional remand order before the Panel concerning transfer or remand of an action pursuant to 28 U.S.C. § 1407 does not affect or suspend orders and pretrial proceedings in the district court in which the action is pending and does not in any way limit the pretrial jurisdiction of that court.

In other words, a district judge should not automatically stay discovery, postpone rulings on pending motions, or generally suspend further rulings upon a party's motion to the Judicial Panel for transfer and consolidation. MANUAL FOR COMPLEX LITIGATION (FOURTH) § 20.131 (2004). Granting a stay is within the court's discretion and a stay is appropriate when it serves the interests of judicial economy and efficiency. 15 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3866, at 612 (3d ed. 1998 & Supp.2004). This court is persuaded to deny Microsoft's motion to stay this proceeding; instead, this court will move on Hood's motion to remand this case to State court.

Motion to Remand/Subject-Matter Jurisdiction

Standard of Review

"Federal courts are courts of limited jurisdiction ... [and] must presume that a suit lies outside this limited jurisdiction." Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.), cert. denied, 534 U.S. 993, 122 S.Ct. 459, 151 L.Ed.2d 377 (2001). The party removing an action to this federal forum has the burden of proving that the federal court has jurisdiction to hear the case. Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir.1993), cert. denied, 510 U.S. 868, 114 S.Ct. 192, 126 L.Ed.2d 150 (1993); B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir.1981). So Microsoft, as the removing party, bears this burden. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002); see also 14C CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE, supra § 3739, at 424 ("it is ... well-settled under the case law that the burden is on the party seeking to preserve the district court's removal jurisdiction ... to show that the requirements for removal have been met.").

The removal statutes are to be strictly construed with all doubts and ambiguities to be resolved against a finding of proper removal. Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir.1992). If this burden is not met, the court is bound to remand this action to State court pursuant to § 1447(c). Buchner v. F.D.LC., 981 F.2d 816, 819 (5th Cir.1993).

Plaintiff Hood argues that removal of this case was improper for three reasons: (1), lack of diversity jurisdiction because the State of Mississippi is the real party in interest; (2), the bar to removal posed by the Eleventh Amendment; and (3), because these issues have already been decided in Moore ex rel. State of Mississippi v. Abbott Labs., Inc., 900 F.Supp. 26 (S.D.Miss.1995).

This court is persuaded that Mississippi is the real party in interest and that this court does not have diversity jurisdiction over the case. Because this court's agreement with plaintiff's first argument is sufficient to decide this motion, it expresses no opinion on plaintiff's arguments regarding the Eleventh Amendment. The court, however, will briefly address the Moore decision, infra.

Real Party in interest/Parens Patriae Authority

The removal statute, Title 28 U.S.C. § 1441(a), states in pertinent part:

[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

In its notice of removal, defendant Microsoft alleges that this court has original jurisdiction over this case by way of diversity. Diversity jurisdiction requires that the parties be citizens of different States and the dispute between them exceed $75,000.00, exclusive of interest and costs. Id. § 1332.

A State is not a citizen for diversity purposes. Moor v. County of Alameda, 411 U.S. 693, 717, 93 S.Ct. 1785, 1796-97, 36 L.Ed.2d 596 (1973); Postal Tel. Cable Co. v. Alabama, 155 U.S. 482, 15 S.Ct. 192, 39 L.Ed. 231 (1891); PYCA Indus. v. Harrison County Waste Water Mgmt. Dist., 81 F.3d 1412, 1416 (5th Cir. 1996). To determine whether diversity jurisdiction exists, courts must look beyond the named parties and consider the citizenship of the real parties in interest. Navarro Savings Ass'n v. Lee, 446 U.S. 458, 460, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980); Corfield v. Dallas Glen Hills LP, 355 F.3d 853, 857 (5th Cir.2003). So here, if the State of Mississippi is more than a nominal party in this...