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State of Illinois v. Au Optronics Corp.

June 6, 2011

STATE OF ILLINOIS, PLAINTIFF,
v.
AU OPTRONICS CORP., ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: 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").*fn1 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.

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 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, 328-29 (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 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., 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 ...


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