Mississippi ex rel. Hood v. AU Optronics Corp., Cause No. 3:11–CV–345–CWR–FKB.

Decision Date03 May 2012
Docket NumberCause No. 3:11–CV–345–CWR–FKB.
Citation876 F.Supp.2d 758
PartiesState of MISSISSIPPI ex rel. Jim HOOD, Attorney General, Plaintiff v. AU OPTRONICS CORPORATION; AU Optronics Corporation America, Inc.; Chi Mei Corporation; Chi Me Optoelectronics Corporation; Chi Mei Optoelectronics USA, Inc.; CMO Japan Co., Ltd.; Chunghwa Picture Tubes Ltd.; Hannstar Display Corporation; Hitachi, Ltd.; Hitachi Electronic Devices (USA), Inc.; Japan Display East, Inc.; LG Display Co.; LG Display America, Inc.; Samsung Electronics Co., Ltd.; Samsung Semiconductor, Inc.; Samsung Electronics America, Inc.; Sharp Corporation; Sharp Electronics Corporation; Toshiba Corporation; Toshiba Mobile Display Co., Ltd.; Toshiba America Electronic Components, Inc.; Toshiba America Information Systems, Inc., Defendants.
CourtU.S. District Court — Southern District of Mississippi

OPINION TEXT STARTS HERE

A. Lee Abraham, Jr., Preston D. Rideout, Jr., Abraham & Associates, Greenwood, MS, Carolyn Glass Anderson, Zimmerman Reed, PLLP, Minneapolis, MN, Geoffrey C. Morgan, George W. Neville, Meredith McCollum Aldridge, Office of the Attorney General, Jackson, MS, for Plaintiff.

Charles E. Ross, Michael B. Wallace, Wise, Carter, Child & Caraway, James W. Shelson, Luther T. Munford, Phelps Dunbar, LLP, Stephen Lee Thomas, Bradley Arant Boult Cummings LLP, Walter H. Boone, Forman, Perry, Watkins, Krutz & Tardy, LLP, John Adam Crawford, Jr., P. Ryan Beckett, Butler, Snow, O'Mara, Stevens & Cannada, Jackson, MS, Herman J. Hoying, Kent M. Roger, Minna L. Naranjo, Morgan, Lewis & Bockius, LLP, San Francisco, CA, Robert A. Miller, Butler, Snow, O'Mara, Stevens & Cannada, Ridgeland, MS, for Defendants.

ORDER

CARLTON W. REEVES, District Judge.

Pending before the Court is the plaintiff's motion to remand. Docket No. 19. The defendants have responded in opposition, Docket No. 25, the plaintiff has replied, Docket No. 29, and the Court is ready to rule. The motion to remand will be granted. Also pending is the defendants' motion to strike portions of the plaintiff's reply brief. Docket No. 30. That motion is fully briefed, see Docket Nos. 31 & 33, and will be granted.

I. Factual and Procedural History

On March 25, 2011, the State of Mississippi filed a complaint in the Chancery Court of Hinds County alleging that the defendants had engaged in price-fixing in violation of the Mississippi Consumer Protection Act (“MCPA”), Miss.Code § 75–24–1 et seq., and the Mississippi Antitrust Act (“MAA”), id.§ 75–21–1 et seq. Docket No. 1–1.

The action was brought by the Attorney General of Mississippi, who sought to protect the State's “quasi-sovereign interest” in its economy and its citizens' economic well-being. Id. at 3. The State claimed that the number of citizens harmed by the defendants' conduct is “a sufficiently substantial segment of the State's population to establish Mississippi's quasi-sovereign interests, as relief is sought on behalf of all local governmental entities and consumers (not limited groups of private parties) who bought a wide range of price-fixed products.” Id. at 4. With this and other language, the Attorney General invoked his authority to file suit as parens patriae on behalf of the State and its citizens. Id. at 3–4.

The defendants are companies that manufactured, marketed, sold, and/or distributed LCD panels, which are components of computers, televisions, and a wide variety of other electronic devices. Id. at 4–9. According to the State, the defendants formed an international cartel that conspired to artificially limit the supply and increase the price of LCD panels between 1996 and 2006, thereby increasing the price of every product containing a LCD panel during that time period. Id. at 3–4, 11–12, and 20. The complaint described how the defendants, who together make up over 80% of the market for LCD panels, carried out their scheme through regular meetings of high-level executives, public statements, and a tangled web of cross-licensing and cross-purchasing agreements and joint ventures. Id. at 11–36. As a result of these acts, when Mississippi's consumers, local governments, and state agencies purchased products containing LCD panels, they allegedly paid more than they otherwise would have, had the market been fair and competitive. Id. at 19 and 39–49.

It was further alleged that several of the defendants and their co-conspirators had pled guilty to criminal charges brought by the United States Department of Justice for this conduct and paid more than $890 million in criminal fines to the United States government. Id. at 3 and 38–39. The State claimed that none of those fines were dedicated to recompense Mississippi's consumers and governmental entities, nor were funds set aside for civil penalties owed to States under state laws. Id. at 3.

The State sought the following relief: (1) a permanent injunction prohibiting the defendants from continuing to engage in anti-competitive behavior; (2) civil penalties of $10,000 per LCD panel product sold in Mississippi during the relevant time period, pursuant to the MCPA 1; (3) civil penalties of up to $2,000 per month, per defendant for violations of the MAA during the relevant time period; (4) restitution to the State for its own losses caused by purchasing LCD panel products during the relevant time period; (5) restitution to the State on behalf of its citizens and local governments who suffered losses by purchasing LCD panel products during the relevant time period; (6) punitive damages; and (7) other relief including costs of court, pre- and post-judgment interest, and attorney's fees. Id. at 55–56.

On June 9, 2011, the defendants jointly removed the case to this Court. Docket No. 1. They asserted that federal jurisdiction was satisfied under the Class Action Fairness Act (“CAFA”), 28 U.S.C. §§ 1332(d) and 1453. Id. at 4. That law establishes federal jurisdiction over certain suits determined to be “class actions” or “mass actions.” 28 U.S.C. § 1332(d). The defendants further asserted that a federal question existed pursuant to the Sherman Act, 15 U.S.C. § 7 et seq. Docket No. 1–1, at 10.

Shortly thereafter, the United States Judicial Panel on Multidistrict Litigation issued a Conditional Transfer Order transferring this case to the United States District Court for the Northern District of California, where Judge Illston presides over a number of other suits against LCD panel manufacturers. Docket No. 19–1; see In re TFT–LCD (Flat Panel) Antitrust Litig., No. C07–1827, 2011 WL 560593 (N.D.Cal. Feb. 15, 2011). That Order was postponed to await a decision on the motion to remand. Docket No. 24.

II. Standard of Review

“The party seeking removal bears the burden of showing that federal jurisdiction is proper.” Lone Star OB/GYN Assoc. v. Aetna Health Inc., 579 F.3d 525, 528 (5th Cir.2009) (citation omitted); see Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921). [B]ecausethe effect of removal is to deprive the state court of an action properly before it, removal raises significant federalism concerns.” Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365–66 (5th Cir.1995) (citations omitted). “The removal statute is therefore to be strictly construed and any doubt as to the propriety of removal should be resolved in favor of remand.” In re Hot–Hed Inc., 477 F.3d 320, 323 (5th Cir.2007) (citations omitted). “The court has wide, but not unfettered, discretion to determine what evidence to use in making its determination of jurisdiction.” Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564, 570–71 (5th Cir.2011) (quotation marks and citations omitted) (affirming the district court's decision to decline federal jurisdiction pursuant to a CAFA exception).

III. Discussion

The defendants claimed two independent sources of federal jurisdiction: diversity jurisdiction under CAFA and a federal question presented under the Sherman Act. Each will be evaluated below. The Court will begin, though, with a discussion of parens patriae actions and a summary of a significant Fifth Circuit case that addressed some of the issues presented here.

A. The Nature of These Actions

“The concept of parens patriae stems from the English constitutional system, where the King retained certain duties and powers, referred to as the ‘royal prerogative,’ which he exercised in his capacity as father of the country.’ Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418, 425 (5th Cir.2008) (citation omitted); see Alfred L. Snapp & Son, Inc. v. Puerto Rico, ex rel. Barez, 458 U.S. 592, 600–02, 102 S.Ct. 3260, 73 L.Ed.2d 995 (1982). While the term originally meant the King's power to protect those without “the legal capacity to act for themselves,” Caldwell, 536 F.3d at 425, in the United States parens patriae actions were “greatly expanded” over the 1900s, Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251, 257, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972) (collecting cases). Today they are “an increasingly popular vehicle for state attorneys general to vindicate the rights of their constituents.” Alexander Lemann, Sheep in Wolves' Clothing: Removing Parens Patriae Suits Under the Class Action Fairness Act, 111 Colum. L.Rev. 121, 122 (2011).

Parens patriae actions are brought to protect a state's “quasi-sovereign interests,” which include interests in “the health and well-being—both physical and economic—of its residents in general ... [and] not being discriminatorily denied its rightful status within the federal system.” Snapp, 458 U.S. at 607, 102 S.Ct. 3260 (emphasis added). More specifically, quasi-sovereign interests have been held to include suits seeking to abate public nuisances, maintain access to energy sources, and halt price fixing 2. Id. at 604–06, 102 S.Ct. 3260 (collecting cases).

There are boundaries on the parens patriae authority. “A State is not permitted to enter a controversy as a nominal party in order to forward the claims of individual citizens. But it may act as the...

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