Louisiana Ex Rel. Caldwell v. Allstate Insurance

Cunningham, Walker, Aaron Jones New STEWART, Before OWEN and Orleans, LA, Solutions, for Xactware Ins. SOUTHWICK, Judges. Circuit Office, and Insurance Services Inc. Beebe, Raymond STEWART, Mark Ronald J. CARL E. Judge: Circuit Sholes, Reese, LA, Orleans, Adams & New Louisiana, through State of its for- Swift/Boeckh, for Marshall & LLC. General, Attorney Foti, mer Charles C. Lee,

Wayne Gulotta, Jr., Jr.,1 J. James C. along with counsel from a number of Walshe, Jr., Quirk Michael private [collectively Justin Paul law firms2 “Louisi- Lemaire, Stone, ana”], Pigman, styled Walther & Witt- filed a lawsuit which it as a 1. Under the well-established rules of our fed- The four law firms are: McKernan Law courts, Firm; Herman, Cotlar, LLP; Attorney eral General Caldwell was & Herman Katz Wicker; Firm, automatically Capitelli Glago substituted for former & and Law See, 43(c). e.g,, R.App. General Foti. Fed P. LLC. by rigging commerce lated the follow- against patriae parens raising claims and policyholder value of Insurance Com- Allstate defendants: ing companies in trust held premiums Company, Insurance Lafayette pany, to cover holders policy the benefit for (“Xactware”), Solutions, Inc. Xactware McKinsey Com- taught their losses as (“MSB”), Swift/Boeckh, LLC & Marshall pany.” (“ISO”),3 Office, Inc. Services Insurance Company, Casualty and Fire Farm Louisiana,

State this combina- According Company, Casualty Insurance McKinsey, USAA the 1980s when tion started the Stan- Exchange, Insurance Farmers engineered advising company, corporate Company, Fire Insurance dard insurance undervalued strategy that (“McKinsey”) Inc. McKinsey Company, & companies claims, allowing insurance in the Civil [collectively “Defendants”] profits. reap their shareholders alleging of Orleans the Parish insurers McKinsey District advised Initially, laws. Louisiana’s antitrust undervaluing leakage” by violations stop “premium “deny, delay, removed the action Defendants the tactics of using claims Fair- Action result, many to the Class insurers defend;” pursuant court as a and (“CAFA”), 28 U.S.C. management McKinsey Act hiring ness for began 1453(b). 1332(d)(2). § Loui- profits. 18 U.S.C. their to increase on how advice to back by remand strengthened moved to siana was The combination court, judge statistical, denied the district ac- but ISO, leading provider state “a petitioned Louisiana tuarial, underwriting the motion. information and the inter- appeal to permission and risk court for insurance property/casualty CAFA, which we under locutory industries,” through order the da- management reasons, following we For the granted. computer programs and other tabases (such Xacti- AFFIRM. to insurers provided ISO Xactware, mate, manufactured which is PROCEDURAL AND FACTUAL which manufactured IntergriClaim, and HISTORY were MSB), programs those because of claims. the value reduce manipulated 7, 2007, filed Louisiana November On in- the defendant alleges “enforce Louisiana seeking to petition others) (and possibly companies surance state, specifical- and of this more the laws McKinsey and ISO to have worked with Act Monopolies [Louisi- ly, the Louisiana underpay policyholders’ 51:123, undervalue and seq.], et and ana Revised Statute of Hurri- claims, in the particularly wake by defen- wrongs committed to redress as- and Rita. Louisiana Katrina citizens,” canes and its this state against dants agreement, complaint: “An in its together serts worked that Defendants alleging all de- conspiracy between combination sup- illegally a “combination” to form competing fendants, unnamed other and and in the competition insurance pressed existed, at all mate- companies, insurance Specifically, Louisiana related industries. herein, horizontally fix the rial times a scheme to thwart that “[i]n contends in calcu- utilized services prices repair direct viola- indemnity and in policyholder amount(s) paid to be duties, lating the insurer de- fiduciary tion of insurance terms of insureds’ continuously manipu- Louisiana and fendants others company of ISO. acquired Xact- member ISO August and/or 3. Around subsidiary ware, currently is a Xactware 2007); Co., Ins. Mornay dam- v. Travelers No for covered with insurers contracts (E.D. 2007). peti- Aug. In its La. filed property.” immovable 07-5274 age to price- tion, contends that such Louisiana 2, 2008, April Judge Zainey held a On un- violations constitutes anti-trust fixing At the hearing on issue removal. Act. Loui- Monopolies der the primarily the district court was hearing, illegal profits, seeking forfeiture of siana is parties the real concerned about who injunctive relief. damages, treble that it noting interest are this case. 7, 2007, timely Defendants December On responsibility his to look to the sub- was the case to the United States removed complaint pierce stance of the —to District of Court for the Eastern District the real na- pleadings- determine —and Louisiana; motion to re- Louisiana filed a asserted, he explained: ture of the claim January court on mand back to state “[Ijt’s just responsibility the Court’s to not court, Defen- Before the district sue, rely merely plaintiff on who chose case is removable argued dants that this case, or, plaintiff in this how the chose to They argued although under CAFA. I at the plead, specific but have to look in sub- patriae, this case is parens labeled ” complaint ... .... substance action” or a “mass and fact “class stance that, Zainey Judge concluded while as those terms are used CAFA action” party, State was nominal the real seeking treble dam- petition because the policyholders. in interest were the citizen poli- insurance ages on behalf of Louisiana Ultimately, he denied Louisiana’s motion urged the district cyholders. Defendants court, to state to remand the case back in labels used the beyond court to look the concluding properly that the lawsuit was nature of and determine the real complaint removed under CAFA. claims, arguing that all of the Louisiana’s Subsequently, pres- Louisiana filed the of CAFA were procedural requirements 100, seeking permission appeal petition, ent putative the class exceeds satisfied: are court’s denial of its motion to diversity requirements minimal the district met, controversy petition ex- granted and the amount This Court remand. 1382(d). 1453(c). $5,000,000. § § 28 U.S.C. ceeds See to 28 pursuant U.S.C. fact that argued also that the Defendants pro- is not Louisiana DISCUSSION of Proce- ceeding under Federal Rule Civil CAFA, pro- which was enacted analogous state rule is not dure 23 or involving for removal of class actions vides Be- purposes. for CAFA determinative diversity. minimal 28 U.S.C. parties with court, high- Defendants fore the district 1332(d)(2). “class ac- § the statute Under purport- lighted that several other similar “any civil action filed tion” is defined as: pending were ed class actions and/or Rules of Civil rule 23 of the Federal under court, the same federal district

before or rule or similar State statute Procedure filed, lawyers group the same where authorizing an action judicial procedure file, nearly claims as attempted to identical by representative 1 or more brought to be alleged by in this case the state of those as a class action.” 28 U.S.C. persons Louisiana, that as further evidence 1331(d)(1)(B). a “mass § CAFA defines in fact a action. See Muz- lawsuit is class ... “any civil action which Co., 06-4773, action” as: Cas. Ins. No. zy v. USSA (E.D.La. per- of 100 or more monetary relief claims Dist. LEXIS 42870 2008 U.S. jointly on the 2008); v, proposed to be tried Fire sons are State Farm Feb. Schafer (E.D.La. claims involve Co., plaintiffs’ that F.Supp.2d ground and Cas. Cir.2008) (5th [hereafter fact, F.3d except of law or questions common his- legislative (discussing only Home”] over those “Road shall exist jurisdiction that CAFA).4 in a mass action tory claims whose plaintiffs require- amount satisfy the district argues that the Louisiana 1332(a)].” U.S.C. [28 ment to re motion by denying its court erred 1332(d)(ll)(B)(I). U.S.C. state back to Louisiana lawsuit mand this CAFA, Congress emphasized In passing action is not that this It asserts court. be de- action” should that the term “class action, parens patriae rather class but “jurisdictional prevent broadly fined Attorney Gen action which gamesmanship:” constitutionally au statutorily and eral is that the further notes Committee [T]he true that bring. It thorized inter- action” is to be of “class definition do “mass action” “class action” or words should liberally. application Its preted complaint. in Louisiana’s appear not that solely to lawsuits confined not be However, inquiry. our that does not end by named actions” “class are labeled determining It is well-established authori- rulemaking state plaintiff jurisdiction, there whether Generally speaking, lawsuits ty. the action look to substance courts action should purported class resemble labels pur- action for class be considered Ciba-Geigy, See Grassi may attach. applying provisions. these pose of Cir.1990) (5th Ltd., F.2d 109-14, (2005), at 35 U.S.Code S.Rep. No. (“[Jjurisdictional used to may rules not be Con- p. 3. Cong. & Admin.News ill-practice üpon a fraud or perpetrate rejected an considered gress also de creating or improperly either exempted have amendment jurisdiction. Were diversity stroying attorneys gen- actions class filed occur, form over would not elevate we See 151 under CAFA. eral from removal accomplish whatever but would substance S1157, (daily Feb. 1163-64 ed. Cong. Rec. nec adjustments considered piercing Hatch) (“At (statement 2005) 9, of Sen. jurisdiction.” essary protect the court’s to loop- worst, will amendment] create [the (internal and citation quotation marks law- enterprising plaintiffs’ that some hole omitted)); Nat’l Enam also Wecker v. see in to manipulate yers surely will order Co., 176, 185- Stamping 204 U.S. eling & in class action lawsuits keep their lucrative (1907) 184, 86, 430 27 51 L.Ed. S.Ct. legislation en- If this State court .... (“Federal de sanction courts should not keep to all attorneys general ables State to a removal prevent to vices intended court, it take in will not class actions State right, one has that court where Federal out lawyers figure to long plaintiffs’ for protect to equally vigilant be and should impact they to to avoid that all need do in Federal court right proceed to attorney a State persuade of is to [CAFA] courts, in proper permit as to the state the name his general simply to lend of jurisdiction.”). cases, action.”); retain own to class see to a private her office Insurance, recognized “defendants This AAA 524 v. also Louisiana patriae attorneys general parens rejected the State appears some Senators It suits, direct representative suits or thought similar they it was un- amendment because actions, they do not See, it is clear e.g., Cong. at 1163 enforcement necessary. 151 Rec. 9, 2005) (statement action]. class [of this definition of Sen. fall within (daily ed. Feb. brought State attor- ("The that cases action.’ That means Grassley) key phrase [] 'class bill.”) by this Hence, neys general will not be affected brought all civil because almost suits

425 over guardian people to show that the er as who lacked the pleadings may pierce fraudulently pleaded legal capacity to act for themselves. Id. .... claim has been v. concept parens patriae removal.” See Burchett Car The of has also prevent (5th Cir.1995) 173, Inc., country’s F.3d gill, jurispru been established this (internal dence; citation quotation marks and Supreme Court has written: omitted). prerogative parens patriae “This of is in supreme power every herent in the of court’s deci review a district We state, power lodged whether that as well as the pierce pleadings sion royal person legislature is a [and] doing for abuse of discre procedure for so ... most beneficent function often neces Indus., Inc., 434 Guillory v. PPG tion. sary to be exercised in the of interest (5th Cir.2005). However, F.3d humanity, prevention injury and for the any objections Louisiana did raise protect who cannot themselves.” those Zainey’s pierce decision to Judge Rico, L. v. Snapp & Son Puerto ex Alfred doing so in procedure or his pleadings Barez, 592, 600, rel. 458 U.S. 102 S.Ct. such, is waived. appeal. As that issue this (quoting 73 L.Ed.2d 995 Mormon 520 F.3d Mukasey, See Chambers (Late Corp. Church Jesus Church (5th Cir.2008) (“Petitioner, howev n. 1 Saints) Latter-Day v. United Christ of er, Accordingly, not brief this issue. does States, 1, 57, 136 U.S. S.Ct. (internal omitted)). waived.” citation it is (1890)). However, in this coun L.Ed. 478 Therefore, issue in we turn to the central expanded consid try concept has been namely, whether the district appeal: this Ieyoub P. erably. generally See Richard denying Louisiana’s motion court erred Eisenberg, & Theodore State “This court conducts de to remand. Actions, Litigation, the Tobacco court’s remand review of the district novo Patriae, 74 and the Doctrine Parens Healthsystem Preston v. Tenet order.” (2000) (discussing the Su Tul. L.Rev. 1859 (5th Ctr., 485 F.3d Mem. Med. preme precedent acknowledging Court Cir.2007) (internal omitted), citations parens patriae authori expanding state’s vigorously dispute whether Hawaii, 257-60, ty); 405 U.S. at see also patriae ac- parens Louisiana’s action is (same). 92 S.Ct. 885 found, whether, as the district court tion or policyholders par- are the real Snapp Supreme “the citizen is one of the dispute, In resolving pronouncements ties in interest.” on Court’s most recent juris- bring par- turn to a of the a standing we first discussion a state has to when patriae ac- prudence concerning parens are not called patriae ens action. We today tions. whether the upon to decide standing bring present the General has I. claims, Supreme the discussion but Court’s In illuminating. is parens patriae stems of concept parens patriae The that in order for a system, Snapp, the Court wrote English constitutional from the asserting it standing and have must be King the retained certain duties state to where sovereignty. to its an interest that relates “royal preroga- referred to as the powers, 600-01, The tive,” as at S.Ct. 3260. capacity which he exercised in his U.S. everything a recognized that not country.” the Hawaii v. Stan- Court “father of Ca., 251, 257, “sovereign char does is based on its 405 U.S. 92 State dard Oil Co. of (1972). 601, 102 3260. Two Histori- acter.” Id. at S.Ct. 31 L.Ed.2d 184 S.Ct. interests, which would King’s pow- non-sovereign cally, the term referenced the citizens suffices and welfare of its a health standing parens for a with provide state parens standing to sue action, give interests the State proprietary are patriae state, injury is one that by patriae is whether pursued interests private and could, State, likely attempt only acting as a nominal if it state is where the 601-02, 3260. As through sovereign at S.Ct. its lawmak- party. Id. to address concerned, the category latter as the ing powers.” far Id. wrote: Court decisions Supreme Court’s reasons, variety of may, for a [A] State Snapp and are useful illus in Hawaii interests of a pursue attempt reach of the limitations and trating both interests pursue and those private party, Hawaii, In patriae actions. parens party in the real only for the sake of a lawsuit brought of Hawaii feder state private Interests of interest. court, variety asserting a al district sover- obviously not themselves are against Standard Oil Com antitrust claims interests, they not become and do eign defendants related pany of California and by of the State’s aid- simply virtue such sale, marketing, and distribu due to their such situa- achievement. ing in their petroleum products. tion of refined a nomi- tions, is no more than the State 252-56, 885. One at S.Ct. U.S. party. nal alleged that of the complaint counts sovereign 3260. One

Id. at 102 S.Ct. parens patriae a lawsuit was “easily identified” that was interest tre was entitled to recover that the State of sover- of “the exercise Court consists Act, Clayton § 4 damages under of the ble and entities power over individuals eign § 15. Id. The district court 15 U.S.C. in- the relevant within —this dismiss, motion to denied the defendants’ and enforce a ” power to create volves Id. at reversed. the Ninth Circuit but .... code, civil criminal both legal certiorari, 256-57, On 92 S.Ct. 885. The Court also at 102 S.Ct. Id. 3260. Circuit, affirmed the Ninth Supreme Court bring parens can a that explained Clayton § 4 Act did not holding that of the seeking action if it is to vindicate patriae damages for authorize a state to sue for Id. While “quasi-sovereign interest.” injury economy allegedly attributable to its vague, that conceding term Id. at of antitrust laws. 263- to violation wrote, reviewing after the relevant Court the Court ac 92 S.Ct. 885. While quasi-sover- precedent, that “a State § 4 Hawaii to knowledged permits in the health and well-be- interest eign for proprietary capacity sue in its treble economic—of its physical and ing—both if it were to damages, explained 607,102 general.” S.Ct. Id. residents permit to also states construe section explained also there The Court damages injuries to recover proportion on the no “definitive limits open the door to economies “we would that must be population of the State Id. at duplicative recoveries.” challenged be- adversely affected by concluded ob S.Ct. 885. The Court patri- a parens in order to support havior” actions, par- than that class rather serving action; rather a determination ae such actions, patriae preferred are the vehi ens “sufficiently substantial on whether turns violations. Id. addressing cle for antitrust is af- population” of [the State’s] segment Snapp, In the Com at 92 S.Ct. 885. by direct indirect effects of fected parens Rico sued as monwealth of Puerto sug- alleged injury. The Court Id. migrant Puerto Rican farm- patriae in for helpful deter- gested: “One indication in against Virginian applegrowers alleged injury an to the workers mining whether 427 patriae standing court, enjoin to to sue to secure its resi- seeking district Ricans against Puerto discrimination dents from the harmful effects of discrimi- under various federal statutes workers Id. at 609-10, nation. 102 S.Ct. 3260. 594-99, 102 458 U.S. at S.Ct. regulations. Thus, on based these two cases is clear The district court dismissed 3260. parens patriae while actions are not Puerto Rico grounds case on roots, restricted to their common law there sue; however, standing to lacked limitations, particularly are some when a Id. at 102 reversed. Fourth Circuit seeking damages state is to recover for affirmed, Supreme Court S.Ct. injuries economy.5 to alleged its parens that Puerto Rico has explaining patriae parens patriae persons concept parens has also been on behalf of natural 5. The of residing any in by legislative ex such state in district court expanded enactments. For having jurisdiction of United States of Frito-Lay, the Ninth ample, in v. California defendant, monetary to secure relief as of could Circuit held that the State California provided injury in this section for sustained parens representative capacity as not sue in a by persons property by such natural to their damages treble on patriae in order to recover any reason of violation of sections 1 to 7 of alleged behalf of its citizens-consumers this title ... injuries by them due to the defen suffered (1976). provides 15 U.S.C. 15c Section 15h laws. violations of federal antitrust dants’ state, apply any that the Act "shall unless 1973). (9th Cir. In so hold 474 F.2d provides non-applicability such state for its explained an action ing, the court that such short, such state.” 15 U.S.C. 15h. In expand concept of the common-law statutory parens patriae HSRA created ac- recognized patriae it has parens "as been attorneys general. tion for state country to date” because California did clear, language As the of HSRA makes sovereign quasi-sovereign have its own not statutory parens patriae right of action is asserting. at 775-76. interest that it was Id. right. broader than the common law See actions, explained that class The court also Toyota, 704 at n. 8 Mid-Atlantic F.2d procedural attendant rules and with all their ("We right agree statutory safeguards appropriate par- than were more parens expansive [Common more .... law types patriae for such of actions. Id. at ens patriae do actions such embrace] actions not Frito-Lay, response Con 777 n. 11. In to where the state sues on as those here in issue gress Clayton § 4 Act amended residents.”). injured natural behalf of passing Im the Hart-Scott-Rodino Antitrust Toyota, ex- Mid-Atlantic the Fourth Circuit ("HSRA”), provements U.S.C. Act of 1976 attorneys general not plained that state do primarily §§ "[T]he 15c-15h. Act was aimed specific statutory au- need or constitutional enlarging potential for consumer recov thority bring parens patriae to actions under by effectively by ery for antitrust violations Rather, the wrote HSRA. Id. at 129. passing requirements of Rule the burdensome attorney general long has that as state Federal Rules of Civil [of Procedure] bring authority to lawsuits in the name private litigants might tend to dissuade respective state that enforce causes his/her pursuing conventional consumer class from by federal law and has authori- action created Therefore, injury. actions for antitrust litigation vindi- ty pursue that advances or to constituting Act is best understood as interests, attorney general public cates states, acting through attorneys general, bring patriae standing parens action un- advocates in the en [antitrust] as consumer Similarly, this der HSRA. Id. at 130-31. process.” Pennsylvania v. Mid-At forcement law, held that Texas which does court has Distribs., (4th Toyota lantic F.2d attorney general specific provide with au- its 1983) (internal quotation and cita Cir. marks actions, permit- thority bring parens patriae HSRA, omitted). which contains its tions statutory attorney general bring a ted the safeguards procedural protections and own parens patriae action under HSRA. Texas representation facilitate the of consumers Co., F.2d 1027-28 Scott & Fetzer attorneys general, see federal court (5th 1983). highlight in As Defendants Cir. ibid, provides, part: in relevant laws, brief, a states enacted their number of HSRA, Attorney may bring many are after Any General of a State of which modeled State, attorneys general authority provide with a civil action in the name of such statutory has and attorney general that its correctly The district court authority bring parens Attorney constitutional that if the General discerned Re actions. Louisiana antitrust policyholders patriae and the party, a nominal the At interest, empowers § 51:1386 then the vised Statute parties are the real Monopolies to enforce the torney General must be ex of the claims asserted nature civilly, and to seek criminally and they removable Act both if amined to determine on behalf of both against redress violators Generally speaking, party under CAFA. Similarly, private parties. and it is “di the state in interest when party is a real Monopolies Act provision of the in the out another rectly concerned personally that his states: litigation to the extent come of the genuine ‘a therein will insure

participation jurisdiction to courts have The district adversary between issue violation of this and restrain prevent v. La. Part, Creameries Attorney Land O’Lakes or the and the General Health, 387, F.Supp. attorneys respective Bd. in their dis- State district (E.D.La.1958) v. (quoting United States of the Attor- tricts under the direction 1075, Johnson, 63 S.Ct. shall insti- ney governor, 319 U.S. or the General (1943)). That court ex proceedings prevent L.Ed. 1413 tute restrain lacking an interest is when .... plained: “Such violations particular to sue for the a state undertakes Further, § we 5L128.7 La.Rev.Stat. Ann. .... of citizens of a limited number benefit provisions from the Louisiana agree show a direct interest The State must provide Constitution ” par- In the context of .... Id. its own in- to vindicate the with broad discretion actions, another federal dis patriae Const, ens § art IV 8 terests of the State. La. the real trict wrote: “The state is attorney general authority (affording the when an action concerns party interest institute, any intervene in prosecute, “to ‘injury’ that the state either has type of see also Loui- proceeding”); civil action or likely attempt to ad addressed or would Borden, No. 94- Ieyoub ex rel. v. siana to further the ‘well- through its laws dress 59548, **2-3, 1995 U.S. 1995 WL ” Harvey Block populace.’ of its v. being (E.D.La. 1921 at *8 Feb. Dist. LEXIS (D.N.J. buster, 749, 755 F.Supp.2d 1995) on the aforementioned Loui- (relying 2005) (quoting Snapp, 458 U.S. statutory provi- constitutional and siana 3260). sions, S.Ct. attorney general explain authority though even parens patriae

II. explicitly provisions none of those author- attorney general at hand. As ize the to sue such turn to the issue We Ieyoub rel. matter, capacity); Louisiana ex agree an initial we with Louisiana provision the en- patriae 6. This states: "All suits for parens antitrust actions to file similar of this Part shall be instituted in forcement law. court has never ad- under state This General, by Attorney courts on district a statute could shield a dressed whether such the direction of the his own motion representative removal under action from governor ...." 51.138. La.Rev.Stat. CAFA; Ann. Toyota and and both Mid-Atlantic were decided before CAFAwas Scott & Fetzer Moreover, Louisiana Revised Statute However, enacted. we need not address gives attorney general § 13:5036 discre- undisputed that Louisi- issue here since any prosecute and all tion to “institute and statute, has it ana has not enacted such a nor may necessary protec- he deem for the suits Monopolies explicitly in- amended the Act to rights tion of the interests and state." clude such action. 13:5036. La.Rev.Stat. Ann. (La. Trim, property” Monopo or under the business So.2d Classic Soft recovery damages.” [treble] that the afore lies Act “shall (explaining Ct.App.1995) Attorney plain language provision The of that provide the makes provisions mentioned bring right to that have the to capacity clear individuals procedural with General “alleging patriae provision. Accordingly, antitrust action enforce this we parens and unfair monopolies court and that agree of the with district hold violations laws.”). § policyholders, under and practices trade State, in parties are the real interest.8 debate parties vigorously Louisiana ex rel. Guste v. Fedders See parens Attorney General’s whether (M.D.La.1981) Corp., F.Supp. enough to patriae authority is extensive (explaining sought that where the relief damages sue for treble allow the State to in “operates only favor of Louisiana con capacity representative in a by a sumers are affected who defendant’s that not address issue. law. We need conduct,” unlawful those consumers “are assuming arguendo that the Attor Even interest_”). fact, parties the real standing bring to such a ney has General argument only Louisiana’s that it is the action, be the narrow issue representative by the party peti real in interest is belied are the real fore court is who court, it in state which tion filed makes or policyholders the individual interest: seeking damages clear that is to recover it that as far as the We conclude the State. policyholders,9 individual suffered We damages is con request for treble State’s argument not address Louisiana’s need cerned, real par are the policyholders Monopolies gives § Act 137 of the interest. The text ties in authority all to enforce Act, the re which authorizes Monopolies of the Act. Once provisions Monopolies damages, plainly states covery of treble assuming arguendo again, even such injured his “any person who conspiracy be- proprietary agreement, combination or acting in its Louisiana were 8. If defendants, damages to its own and capacity it could sue for tween all other unnamed But, existed, property under companies, business or 137. competing insurance discussed, proprie- already herein, been state’s horizontally fix all times to material grant parens tary to interest is not sufficient repair in calcu- prices of services utilized standing. patriae amount(s) paid lating to be under the insureds’ insurance con- terms of Louisiana example, petition the fol- contains For damage insurers for covered tracts with lowing allegations: to thwart "In scheme ... property;” insurers "[T]hese immovable ...;” indemnity continu- policyholder "This intentionally price in or- deflated the market unjust ad- arrangement gave insurers ous underpay policyholders their der to and/or holders;” "[Ijnsurers vantage policy have over deflate, deflate, attempt artificially con- wealth for to accumulate vast combined mar- repair costs in the affected struction and fiduciary by violating ... their themselves ket;” purpose of the combination "The insureds;” in- their "Louisiana’s duties depress paid conspiracy the amount was buy property insurance were forced to sureds of the insurance con- out under the terms homeowners) (commercial likely which deprive Lou- price market tracts to below loss;” provide coverage full never " value the actual cash isiana insureds of and/or payouts and their have reduced ‘Insurers damaged property;” replacement value of by turning profits their maximized sup- collusion intentional and "Defendants’ operations "profit into centers” us- claims Louisiana insureds pressing payments to techniques ing computer programs and other ” examples; a few .... These policyholder routinely underpay designed to ” make claims;' petition rife with statements Insurers intentional- [] "Defendant par- policyholders are the real clear damaged property ly the value of the deflate insureds;” in this action. ties in interest "An payments owed to Louisiana correct, will not extend these litigation it and we law is interpretation of state into that endeavor.” See appellate in this hands the central issue not resolve does at 712.11 “person [was] the who id. whether appeal: property” in his business injured —in that Having policyhold- determined the the real policyholders the this case —are interest, agree we parties ers are real no reason to in interest. have parties We pur- removed properly that this action was not, given they especially that are believe requirements because the suant CAFA antitrust treble dam- purpose that easily given action” are met of a “mass private encourage are to ages provisions circumstances of this case: this is factual inju- individuals for by aggrieved lawsuits involving monetary claims civil action See, property. ries to their businesses proposed that is persons of 100 or more 262, 885.10 at S.Ct. U.S. Hawaii that jointly ground tried on the be of law or questions claims involve common that in this action are mindful We fact; controversy amount in aggregate remedy of seeking also Louisiana is million, this action involves is at least $5 only If Louisiana were injunctive relief. than 100 Louisiana citizens claims of more clearly on remedy, that which is seeking minimally are diverse from Defen- who State, argument that it is its behalf of dants, being brought repre- it be party real in interest would of those who capacity sentative on behalf Home, a In Road compelling. much more suffered harm. See 28 U.S.C. allegedly same involving many of the case 1332(d)(ll)(B)(i). have con- Since we court, currently before the that are properly that case was re- cluded this possibili left to the district court panel provi- action” moved under CAFA’s “mass ty that the various claims could be severed sion, this we need not address whether that claims that were removable so those could, following proceed- lawsuit further would remain federal under CAFA remand, ings properly proceed on that Louisiana’s claims could be court but action under CAFA. We leave class at 711- to state court. 524 F.3d remanded manner judge’s capable district hands the here, again possibility 12. raise We policyholders which the individual to consider on re for the district court again, action. we to be added to this Once this we are making suggestion, mand. into appellate need not extend our hands judge mindful of the fact district matters that the district court is well-able injunctive relief himself noted to address. seeking type Louisiana was was the remedy attorneys general’s have state III. actions, pursued through parens patriae Finally, we address Louisiana’s conten- acknowledge that the district but we also in this case manager complex of this tion court “is the able Moreover, provision would save this action from remov- 10. Louisiana’s reliance on Mid-At- misplaced. Toyota & supra lantic and Scott al CAFA. See note 5. Fetzer under brought Both of those cases involve lawsuits HSRA, specifically con- a statute that during argument, We oral also note that templates attorneys general bringing state insistently maintained counsel for Louisiana representative actions such as the one issue option State that severance was an was 127; Toyota, F.2d at here. Mid-Atlantic However, per- pursuing. if not interested Fetzer, 1024; F.2d at see also Scott & and the chance has reconsidered Further, already supra note 5. as we have judge appropriate, we leave district finds discussed, analog even if Louisiana had an open possibility. statute, it is not clear whether such a no for it rights, place and we see tional Amendment the Eleventh violate (internal and cita- quotation here.” marks contends that Louisiana the Constitution. omitted)). tion sovereignty “system of dual nation’s our of CAFA application prevents ... the issue of Eleventh We review Attor through acting [their] State[s] immunity Amendment de novo. United did argues It CAFA neys General.” Touche, ex rel. Barron v. Deloitte & States Tenth abrogate or the States’ preempt not (5th Cir.2004). 438, F.3d 439 rights as dual Amendment or Eleventh Eleventh Amendment states: “The Judi only Congress can ab because sovereigns shall not power cial of the United States Amendment Eleventh the States’ rogate in any to extend to suit law be construed statement. immunity by legislative a clear equity, prosecuted or commenced or 44, 56, 116 Fla., Tribe v. 517 U.S. Seminole by against one of the United States Citi (1996) (“ ‘To 1114, 134 L.Ed.2d S.Ct. State, by zens of another Citizens acknowledged powers Congress’ temper Foreign Subjects any State.” U.S. the Elev concern for abrogation with due Const, Maine, v. amend XI. Alden an essential role as enth Amendment’s that: Supreme explained Court structure, of our constitutional component immunity derives not from the sovereign stringent but applied simple we have from the Eleventh Amendment but abrogate the States’ Congress may test: it- original of the Constitution structure immunity from constitutionally secured The Eleventh Amendment con- self. by making its only in federal court suit sovereign than established firmed rather clear in the lan unmistakably intention it immunity principle; as a constitutional (citing Dellmuth guage of the statute.” im- scope that the of the State’s follows 223, 227-28, Muth, 109 S.Ct. 491 U.S. munity from suit is demarcated (1989))). 2397, Louisiana 105 L.Ed.2d Amendment alone but the text of the language of CAFA plain that “[t]he asserts implicit postulates fundamental a statement of con completely devoid of design. constitutional litiga force a state to intent to gressional 728-29, 119 S.Ct. 527 U.S. sovereign.” of another tion the courts (internal (1999) citations omit- L.Ed.2d 636 Further, contends that Louisiana ted). constructively cannot hold that court recently addressed This its Eleventh Amend consents to or waives immunity in Amendment issue of Eleventh Supreme immunity because ment brought by of a class can the context that a state Court has established Home. 524 Road language State of immunity by express waive such case, panel, after at 706. In that Atas F.3d or state statute. in its Constitution Arti Scanlon, debates over reviewing the Founders’ 473 U.S. Hosp. v. cadero State III, that the amendment was explained cle 87 L.Ed.2d n. 105 S.Ct. (“we having states from (1985) designed prevent in unequivocal require was litigation to consent defend themselves intends dication State at 709- courts. Id. brought in the federal that otherwise would none of the found that panel 10. While the by the Eleventh Amendment. be barred Amend relating to Eleventh written,] precedent construc previously [have As we of this dispositive were commonly immunity ment a doctrine tive consent is not it,12 Louisi- it concluded that before of constitu- issue the surrender associated with only applica- interpret- ed the Eleventh Amendment circuit courts have 12. A number of immunity by joining its CONCLUSION ana had waived at 711 parties in the lawsuit. Id. private reasons, foregoing For the the district (“That said, founding none of the cases or remand mo- court’s denial of Louisiana’s hand, history directly to the speak issue RE- tion is AFFIRMED and this case is might well raise a constitutional con- which MANDED. immunity by had the not waived cern State private citizens: bringing suit with suing a as a plaintiff

whether state defen- SOUTHWICK, Judge, Circuit regulatory authori- dants over whom has dissenting: state ty in court under its own laws state for the members great respect It is with may removed to federal court on diver- be majority they of the and the care have CAFA, rather than sity grounds under analysis taken with their that I nonethe- jurisdiction.” (emphasis in question offer this less dissent. original)). have held that the indi majority’s

Since we my summary This is of the in policyholders parties (1) vidual are the real parties conclusions: the real interest interest, this issue controlled Road is damage treble are the indi- for the claims Home, that Louisiana and we hold (2) holders; policy authority of vidual immunity. waived its Eleventh Amendment Attorney a representa- General to be (“We persuaded Id. the State tive of individual claimants to treble dam- pull cannot these citizens under its claimed ages Monopolies under the Act can be protection umbrella of in frustration of a (3) assumed; may adjudi- these claims be congressional give decision to access to (4) action; cated as a mass and the district federal district courts to defendants ex necessary court on remand is to make the ”). claims .... posed private these adjustments litigation. to restructure the acknowledge the argu While we State’s My point departure majority of from waiver, by circuit ments on we are bound upon we our role is how understand States, precedent. See Brown United receiving a (5th Cir.1989) (The case removed from state court 1329, F.2d 1336 under the Class Action Fairness Act “law of the circuit” rule that “one states (“CAFA”), 109-2, Pub.L. No. 119 Stat. 4 may Fifth panel Circuit not overrule (2005). decision, my right wrong, prior pan disagreement or a The source of of el.”). to the result is that I believe when we ("the 1997) applies ble when a state is a ex defendant. Eleventh Amendment California state, Inc., state.”); Lockyer v.Dynegy, ‘against’ rel. 375 F.3d suits not suits Cir.2004) Huber, Hunt, Nichols, (9th ("[A] voluntarily state that & Inc. v. Architectural Co., (5th Cir.1980) brings plaintiff suit as a in state court cannot Stone 625 F.2d 24 n. 6 course, ("of inap- invoke the Eleventh Amendment when the eleventh amendment is plicable plaintiff.”). defendant seeks removal to a federal court of where a state is a This is competent jurisdiction.”); Supreme precedent. ex rel. Oklahoma consistent with Court Co., Alden, 728-29, Magnolia Transp. Edmondson v. Marine 527 U.S. at S.Ct. (10th Cir.2004) (”[T]he (“... scope immunity 359 F.3d and the of the States' added)); abrogation (emphasis Eleventh Amendment’s of federal suit ....” Ames v. from Kansas, 449, 462,

judicial power any ... ‘over suit commenced 111 U.S. 4 S.Ct. (1884) ("a prosecuted against brought by one of the United L.Ed. 482 suit a State courts, against corporation apply States’ does not to suits commenced or in one of its own prosecuted by (emphasis origi process a State.” amendable to own ... can be its nal)); Regents the Univ. v. Eli removed to the Circuit Court of the United California Co., (Fed.Cir. ”). Lilly & 119 F.3d States .... 1564-65 a federal pleadings reveals piercing these under removable a suit is decide whether case. case what CAFA, determine we should the relief if all it must be is, not what court. a remand state I would order If litigation. of the part to be requested get there Defendants could the suit is majority correct (1) questions: law to these state answers have deformed, do not I find we presently have does necessary transfor- until the damage bring the treble authority to occurs. or class into a mass mation so, Act; (2) if Monopolies claims mech- using the bring suit without may he difference evidence The clearest (3) action; if a class or mass anism of majori- that of from my perspective employed, does must be such mechanism have colleagues focused my able ty is that to amend the Attorney General wish who are issues: exclusively legal on two damage dismiss the treble suit and the effect in interest real claims? resolu- on our Amendment the Eleventh My opinion issues. procedural my disagreement.

tion of the to explain I seek now neither, I find deci- the because discusses the Louisiana is elsewhere. 1. actions under point

sion Class Monopolies Act below, one attempt explain I to As will that this action was expect agree I all ac- “class for a CAFA-removable predicate legitimately if can removed we properly a brought under that the suit be is tion” fits CAFA’s it is a suit that within find that author- that procedure rule of statute Fed- a or mass action. class definition is, action, that state a representative izes may not be defeated jurisdiction eral struc- presently Rule 23. As equivalent Grassi, disguise. F.2d use of tured, brought under such suit is not the looking underneath But when even pres- the case rule. Neither is statute nature of discern the true pleadings to justifi- ends the action. That ently a mass suit, proposition that the begin with the we removal. cation CAFA all complaint; of his is the master plaintiff class a mass or the suit is not Though “any ambigui- of fact and issues contested The Attor action, be. perhaps should uncertainty controlling ty or bring may no business ney have General party against the be resolved law” must they damage claims because the treble ing claim,that upon a removal based who seeks hand, per the other others. On belong to case. a federal disguised has plaintiff may really law he haps under Flores, 234, 238-39 481 F.3d v. See Rico them just as he asserts the claims pursue Cir.2007). (5th necessity of complaint without his are of removal propriety about Doubts or mass a class converting the suit into Guillory v. remand. in favor of resolved view, though, such issues my action. Inc., Indus., F.3d 308-09 PPG no have to We are for us resolve. Cir.2005). (5th that standard I find fed removed to until jurisdiction there appropriate when particularly review in the brought manner an action eral court is removable that suit argument name by whatever requires, that CAFA that it disguise despite CAFA under are not limited disguise. used as We wears. See party that a chose. Grassi the labels remov- (5th constitutes a what Ltd., To determine F.2d Ciba-Geigy, first action, I would look or mass Cir.1990). able class though, agree, I do not in interest. Even if that is so—a language parties of CAFA. Under the to statute, “any agree I not reach—I do not point “class action” is defined as: do such a conclusion makes this a mass civil action filed under rule 23 of Fed- suit Instead, I that he Procedure or similar action. would find eral Rules of Civil judicial procedure simply pleading or rule of filed a defective State statute brought by an action to 1 or Louisiana authorizing be law. representative persons more as a class Attorney I find that we cannot force the $5,000,000 ag- over action” which seeks litigate posture in the of a General gregate damages. U.S.C. or, plaintiff in a mass action as the Defen- (d)(2)(A). 1332(d)(1)(B), A ac- “mass argued, representa- dants have as a class “any action ... in which mon- tion” is civil tive, jurisdiction. order confer federal etary persons relief claims of 100 or more Weight, 7AA Arthur R. See Alan Charles jointly proposed to be tried on Kay Kane, MilleR & MaRY Fedeeal PRAC- plaintiffs’ claims involve ground ed.1998) (3d TICE & Procedure fact, questions except common of law or (recognizing principle that a court over those shall exist try an “should not force the in a plaintiffs whose claims mass action they prefer action as a class suit when jurisdictional satisfy require- amount litigate capacities”). in their individual In- (a).” ments under subsection 28 U.S.C. stead, relief to which the 1332(d)(ll)(B)(i). is not entitled can If treble be denied. it, Attorney damages requires Attorney

The denies that he has relief the General brought a class or mass action under the General needs to decide whether to make Act. that a Monopolies Only He maintains he is this class or mass action. when acting capacity, necessary in a and if that purely parens patriae decision becomes will certify jurisdic- thus there is no need to a class or the federal court be assured its join parties. additional The Defendants tion. Attorney may assert that the seek clear, my To be concern is not over damages Monopolies treble under the Act complaint proce- whether this or Louisiana parens patriae capacity.

but not in his any particular dures use label such as Instead, argue may the Defendants that he Instead, relying “class action.”1 I am on only bringing do so a'class or mass what CAFA declares to be the essentials concession; instead, may This a action. be a removable action. definitive as- The may be adroit assertion of the Attor- pect of action” a CAFA-removable “class is authority ney General’s that assists the procedure statute rule of that or author- argument Defendants’ that this case is al- a representative izes action a class ac- ready a or removable class mass action. tion, is, equivalent a state of Rule 23. majority dispute Monopolies appears The finds this irrele- The Louisiana Act because, Attorney vant even if the be no such statute. the Act Gener- Nowhere does parens patriae authority representative al’s is as exten- authorize a action. To be claimed, sure, change empowers Attorney sive as it cannot the fact the Act Gen- that he than a provisions. will never be more nominal eral to enforce its La.Rev. in party pursuit damages. provision his of treble In Stat. 51:138. But this does not view, policyholders are the real cast the General in the role of a equivalent neatly 1. A class-action of Rule 23 fit exists into CAFA's class action definition. However, parties Louisiana. La.Code Civ. Proc. arts. 591-597. have not invoked the brought provisions equivalent A suit under those Rule Louisiana “right,” we have possible. not Whoever is every he time representative class Rule caselaw, statute, or to no Further, been directed Act. to enforce seeks directly sup- commentator addi- learned joined has neither Attorney General State trial either assertion. ports class- invoked Louisiana nor tional these issues exist. raising procedures “class action” CAFA’s procedures. action are need- pleadings amendments to the If federal to confer is not meant provision they proceed, case to for this ed order party removing time the any jurisdiction a federal court forced in a should not be must act plaintiff asserts wrong court for is the after removal. This “mass Nor is its capacity. representative discretionary choices because forcing such meant to confer provision action” jurisdiction is of our removing the source simply because jurisdiction a way cure CAFA. best suggests party join 100 additional is pleading

defective believing we should reason for The other parties. that whether way in this is proceed a brought statute should be this to be if this suit has summary, even (as action before argue) or a class or mass Defendants rule as class action concludes), may seek (as Attorney General majority Louisiana mass a func damages primarily until the these treble suit is no there judi of state law. authoritative brought under Rule tion been indeed all issue are of that interpreters action in cial as a mass equivalent has indi jurisdictional is- state courts. Research Louisiana distinguish I court. removal, unfamil cated, involving though procedures one the usual sue from might easily me, par- that the Defendants particular iar deciding whether which Act in Monopolies evaluating the reach of the when test the ignored be ty should a motion by filing Voiding the ef- state court diversity. completeness Attorney joined challenges that fraudulently litis diversity of a limine fect on tre bring claims for capacity for removal basis General’s confirms the party he that has. Deciding damages that in the manner jurisdiction. ble upholds federal Fire & Marine mass New York a class Polk v. be or See case should a removed (La. Inc., Underwriters, anything. confirm So.2d create or does not Mahaist, La. Crv. L. 1 FRANK parties Ct.App.1966); opinion It our states ed.2007). fact, (2d § 6:6 should L. Treatise state court work procedural after authorizes Act Monopolies expressly action. a this removable make motion, “exception,” and called an such need urgent no 2. There is federal review expedited for provides question. court to resolve the motion. on ruling trial court’s § 51:134. La.Rev.Stat. legal concerned the My first discussion sec- This final to removal. impediments that motion ruling on court’s The state matters. prudential will consider tion might interlocutory any appeals on dispositive be permitted would he is be argues that not be Erie us and issues before Act to Monopolies authorized does not case Because this guesswork. repre- damage claim as a treble bring diversity is- non-CAFA typical, present without injured policyholders sentative to rush sues, reason perceive can no I certifying the policyholders joining the federal law into of state questions as- The Defendants policyholders. class of may not Generally, a defendant courts. acrobatics procedural that such sert jurisdiction remove a case “on the basis of Loyd WRIGHT, year if a as Administrator of

conferred section 1332” has O’Neal, was commenced. passed since the suit The Estate of Jimmie Lee 1446(b); see v. U.S.C. Warner- Deceased, Plaintiff-Appellant, Tedford (5th Co., 327 F.3d 426-27 Lambert Cir.2003). However, Congress deleted one-year period limitations for removals COUNTY, Defendant- HARRIS under CAFA. 28 U.S.C. 1453. Con Appellee. gress thereby any ended need for has accompanies haste that other times de No. 07-20413 fendant’s efforts to show that a case is Summary Calendar. diversity juris on removable the basis of Appeals, United States Court

diction. This makes sense when one rec ognizes every that not state statute or rule Fifth Circuit. procedure permits representative July may actions will mirror Rule 23. It take procedural time for state mecha some give enough shape “represen

nisms to to a

tative” state-court action for a federal say confidently type

court to that it is the “equivalent” Congress

of class action

intended to make removable under CAFA.

I recognize that federal courts have a

duty jurisdiction to determine their based

on presented the case at the time of trying

removal. I am to follow that com- complaint present

mand. This does not face,

class or mass action on its and it is brought

not under a statute rule autho-

rizing a class action. We should find that been shown.

I would reverse and order remand to order, fairly

state court. short

skirmishing expected, of motions can be

that would resolve there the issues that majority If resolves here. the result

of those motions is to create class or action,

mass then no doubt removal will

again occur.

My disagreement majority with the is on timing. Respectfully,

forum and I believe wrong making premature court is

decision.

Case Details

Case Name: Louisiana Ex Rel. Caldwell v. Allstate Insurance

Court Name: Court of Appeals for the Fifth Circuit

Date Published: Jul 18, 2008

Citation: 536 F.3d 418

Docket Number: 08-30465

Court Abbreviation: 5th Cir.