The Tenth Circuit Is Poised to Decide Important CAFA Question Involving Parens Patriae Suits
The Class Action Fairness Act provides a mechanism for the removal of class actions and so-called "mass actions" to federal court to prevent defendants from getting "hometowned" as the "foreigner" in state court. Sometimes a state -- often hiring contingency-fee lawyers to represent it -- files a suit in state court to assert the rights of certain of its citizens. This sometimes is called the "parens patriae" power of the state.
Ordinarily, lawsuits brought by the state using its law enforcement power are not removable to federal court. But where a state sues to recover money for an identifiable group of people, isn't that tantamount to a class or "mass" action? It is seeking money. For individuals. Based on their individual rights.
If it looks like a duck, quacks like a duck, and walks like a duck, then it's a duck. At least that's what the Fifth Circuit said in Louisiana, ex rel., Caldwell v. Allstate Insurance Co. (5th Cir. 2008), which allowed defendant insurers to remove a parens patriae suit brought by Louisiana asserting the individual rights to recovery of its resident policyowners.
Recently, Oklahoma AG Drew Edmondson (employing Boies, Schiller; Brent Coon; and the Trimble Law Office, among others) brought a common law parens patriae action in state court against various gas companies, alleging that they manipulated the price of propane in violation of the Oklahoma Consumer Protection Act. He sought restitution for Oklahoma consumers, civil penalties and injunctive relief. Defendant BP removed the case to federal court, invoking CAFA and its "mass action" provision. BP asserted that it is individual Oklahoma propane purchasers -- not the state -- who are the real parties in interest, that there are more than 100 of them, and that the AG's lawsuit proposes that their claims be tried jointly.
The district court disagreed and instructed the clerk to send the remand notice to state court. Days later -- but within the statutory period for appealing the remand order -- the defendants filed their appeal to the Tenth Circuit. AG Edmondson argued that the clerk's mailing of the notice of remand divested the Tenth Circuit of jurisdiction. Reading the plain language of CAFA, the court held otherwise. See BP America, Inc. v. Oklahoma, No. 09-705 (10th Cir. July 29, 2010). Moreover, after evaluating the factors governing whether it should take the appeal, the court decided to take the appeal and ordered the parties to brief the merits. Thus, we look forward to another opinion analyzing the applicability of CAFA to state parens patriae actions. Rest assured that when the opinion on the merits comes down, it will be covered here.
