WASHINGTON (Reuters) - The U.S. Supreme Court appeared divided on Wednesday as it considered a dispute between states and electronics manufacturers over whether restitution claims based on alleged price-fixing in the market for liquid crystal display panels should be heard in state or federal court.
South Carolina and Mississippi are among 13 states that have sued various manufacturers, including AU Optronics Corp, LG Display Co Ltd and LG Electronics Inc. They seek restitution over an alleged conspiracy among the companies to fix prices, which has been the subject of a criminal probe and multiple lawsuits.
The Supreme Court will decide whether a lawsuit filed by Mississippi on behalf of citizens can be viewed as similar to a class action, meaning they can be moved to federal court.
Legal reforms, including the 2005 Class Action Fairness Act, have increasingly shifted class actions to federal court, which is viewed as friendlier to defendants. At the same time, the Supreme Court has tightened up the rules for what class action claims can go forward in federal court.
In Wednesday’s argument, some of the justices who have signaled hostility to class actions in the past appeared more sympathetic to the companies.
Justice Samuel Alito challenged the state’s attorney, Jonathan Massey, over his interpretation of the Class Action Fairness Act. Alito indicated that he thought the law could apply to actions brought by state attorneys general.
Massey was also forced onto the defensive over the fact that a consumer class action case making the same claims as those made by Mississippi already has been settled. Some justices, including Chief Justice John Roberts, appeared concerned that state attorneys general around the country could simply file copycat suits similar to those filed by plaintiffs’ lawyers, forcing defendants to pay out twice.
“The complaint is going to look an awful lot like a class action complaint,” Roberts said.
Justice Elena Kagan appeared more sympathetic to the state, noting that an attorney general should not have to meet the same burdens that a plaintiffs’ lawyer does in a class action case.
“All that the attorney general has to do is to stand up and say, ‘I have a state interest in protecting my citizens and in deterring improper behavior and here is my substantive right,’” she said.
A ruling in favor of the companies would nip in the bud what lawyers representing business say is a growing trend of class action-type cases being brought in the name of state attorneys general. As in the Optronics case, plaintiffs’ lawyers, working on a contingency fee basis, join with the state to pursue a case in more plaintiff-friendly state courts that might otherwise be heard in federal court.
Lawyers like John Beisner, a partner at the Skadden law firm who supported enactment of the 2005 law, see the Optronics case as an example of plaintiffs’ lawyers trying to game the system. “This is a battle over a growing trend that we are seeing in litigation,” he said.
Mississippi’s supporters, including consumer advocacy group Public Citizen, counter that defense lawyers are trying to shoehorn state attorney general actions into the Class Action Fairness Act when in reality the law does not apply to such cases.
A ruling is expected by the end of June.
The case is Mississippi v. AU Optronics Corp, U.S. Supreme Court, No. 12-1036.
Reporting by Lawrence Hurley; editing by Andrew Hay