354 F. Supp. 3d 1122
N.D. Cal.2019Background
- In 2018 Illinois Cook County State's Attorney Kimberly Foxx sued Facebook in state court under the Illinois Consumer Fraud and Deceptive Business Practices Act on behalf of the People of Illinois seeking statewide injunctive relief and civil penalties (no restitution/damages to individuals).
- Facebook removed the case to federal court asserting diversity jurisdiction (Cook County/Illinois plaintiff v. Facebook citizens of CA and DE). Foxx moved to remand. The case was transferred into MDL and the remand motion is before this Court.
- Legal question: whether a suit brought by a State's Attorney in the name of the People of Illinois makes the State the "real party in interest" such that diversity jurisdiction is lacking.
- Controlling legal principles: a state (or the state as real party in interest) is not a ‘‘citizen’’ for diversity jurisdiction; courts apply a whole‑case inquiry to determine whether the state is the real party in interest, resolving doubts in favor of remand.
- Facebook advanced four main arguments: (1) precedent requires relief to "enure to the state alone" for the state to be the real party in interest; (2) a subordinate prosecutor (not the Attorney General) cannot represent the state for this purpose; (3) Illinois law does not authorize a State's Attorney to seek statewide relief; (4) civil penalties would likely go to the county treasury, so the state is not the real party in interest.
- The court concluded Illinois is the real party in interest because Foxx’s suit primarily vindicates statewide sovereign interests (penalties and statewide injunctive relief) and Illinois law authorizes State's Attorneys to bring such actions.
Issues
| Issue | Plaintiff's Argument (Foxx) | Defendant's Argument (Facebook) | Held |
|---|---|---|---|
| Whether the State of Illinois is the "real party in interest" (so diversity is lacking) | Foxx: suit brought in name of the People; statute authorizes State's Attorneys to sue on behalf of the State to obtain statewide relief, so Illinois is the real party in interest | Facebook: precedent requires relief to "enure to the state alone"; subordinate prosecutors can't represent the State for diversity purposes; penalties go to county, so county (not State) is real party | Held: Illinois is the real party in interest; remand required (no diversity jurisdiction) |
| Whether the "enures to the state alone" language from Missouri Railroad bars finding the State as real party where private/parochial benefits also exist | Foxx: whole‑case, sovereign‑interest inquiry controls; private benefits do not defeat state interest | Facebook: Missouri Railroad requires benefit only to the State to be real party | Held: Court rejects rigid reading; "enures to the state alone" is not the sole test—court adopts whole‑case analysis (Ninth Circuit approach) |
| Whether a subordinate official (State's Attorney) can represent the State for real‑party analysis | Foxx: Illinois law and legislative history give State's Attorneys authority to enforce Consumer Fraud Act statewide; State's Attorneys are state officers | Facebook: only the Attorney General should be treated as representing statewide interests for diversity purposes | Held: Authority to represent State is a state‑law question; if authorized, the federal real‑party test is the same regardless of which state officer brings suit; here Foxx has authority |
| Whether county receipt of penalties undermines finding the State is real party | Foxx: penalties punish and deter statewide wrongdoing and counties are state political subdivisions—awarding penalties to county still serves state interests | Facebook: likely penalties will go to Cook County treasury, indicating a county (not State) interest | Held: County receipt of penalties is not dispositive; penalties still serve statewide public interests and counties are state subdivisions—does not defeat state status |
Key Cases Cited
- Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161 (recognizing that a State is not a citizen for diversity purposes)
- Missouri, Kansas & Texas Railway Co. v. Missouri Railroad & Warehouse Commissioners, 183 U.S. 53 (early articulation that suits serving parochial interests may not make State the real party)
- Port of Seattle v. Oregon & Washington Railroad Co., 255 U.S. 56 (local entity’s parochial interest distinguished from state interest)
- Nevada v. Bank of America Corp., 672 F.3d 661 (Ninth Circuit: whole‑case inquiry; state may be real party despite restitution to private parties)
- Dep’t of Fair Employment & Housing v. Lucent Techs., Inc., 642 F.3d 728 (Ninth Circuit: example where suit primarily vindicated individual’s interest, not the State)
- AU Optronics Corp. v. South Carolina, 699 F.3d 385 (Fourth Circuit adopting whole‑case approach and recognizing state’s quasi‑sovereign interests)
- United States ex rel. Eisenstein v. City of New York, 556 U.S. 928 (qui tam context recognizing government as real party in interest)
- Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1 (principle of comity and caution before federal courts intrude on state prosecutions)