Supreme Court's CAFA Decision Changes Law in Fifth Circuit

On January 14, 2014, the U.S. Supreme Court held, in Mississippi ex rel. Hood v. AU Optronics Corp., that because Mississippi is the sole named plaintiff in a parens patriae suit, the case does not constitute a removable “mass action” under the Class Action Fairness Act (CAFA) despite the fact that the state’s suit includes claims for “restitution based on injuries suffered by the state’s citizens.” 134 S. Ct. 736, 739 (2014). This is a marked deviation from prior precedent by the U.S. Fifth Circuit Court of Appeals that a state parens patriae action seeking damages on behalf of the state, its local subdivisions, and its citizens is removable as a mass action under CAFA where the “real parties in interest” include non-party citizens. Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418, 428–30 (5th Cir. 2008). In rejecting the Fifth Circuit’s Caldwell analysis, the Supreme Court issued a bright-line rule that courts should look solely to the named plaintiffs in determining whether the suit is a “mass action” and therefore subject to CAFA removal. While the practical result of Hood is that state parens patriae actions are likely no longer subject to CAFA mass-action removal, a broader question is whether Hood will encourage the filing of parens patriae actions in place of traditional Rule 23 class actions, which have been increasingly difficult to certify.