When a state attorney general files a lawsuit that is not expressly pled as a class action, but the suit seeks a recovery on behalf of consumers that would put money in their pockets just like a class action, is that a “class action” within the meaning of the Class Action Fairness Act (CAFA)?  The Fourth Circuit answered “No” on the facts presented by West Virginia ex. rel. McGraw v. CVS Pharmacy, Inc.  In a 2-1 decision, the majority concluded that “[b]ecause this action was brought by the State under state statutes that are not ‘similar’ to Federal Rule of Civil Procedure 23, we conclude that it is not removable under CAFA as a class action.”  Under this decision, a state attorney general who wants to bring a suit equivalent to a class action but wants to stay out of federal court likely can find a way to frame the suit to have a strong chance of staying in state court.  The Fifth Circuit, however, reached a contrary result in an attorney general suit it found was a “mass action” under CAFA, see Louisiana ex.. rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008).

In this case, the attorney general brought suit under the West Virginia Pharmacy Act, which requires pharmacists to fill prescriptions with generic drugs, when appropriate, and pass on certain savings to consumers.  The attorney general contended that various pharmacies named as defendants failed to comply with this statute and also violated the West Virginia Consumer Credit Protection Act.  The attorney general sought monetary refunds on behalf of all affected West Virginia consumers.

The court focused on CAFA’s definition of “class action,” which is “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representative persons as a class action.”  28 U.S.C. § 1332(d)(1)(B).  The majority reasoned that:  (1) CAFA’s definition of “class action” should be interpreted to require that the state statute or rule at issue have typicality and adequacy of representation requirements, which are not applicable to West Virginia’s Pharmacy Act or Consumer Credit Protection Act; (2) the attorney general’s role was “more analogous to the role of the EEOC or other regulator when it brings an action on behalf of a large group of employees or a segment of the public”; and (3) a finding of federal jurisdiction “would risk trampling on the sovereign dignity of the State,” although the court does not find that the Eleventh Amendment applies.

The dissent was by Judge Gilman, a senior circuit judge of the Sixth Circuit, sitting on the Fourth Circuit by designation.  He concluded that: (1) this case would meet Black’s Law Dictionary’s definition of “class action” because the plaintiff seeks to represent the interests of a group of people; (2) the real parties in interest on the primary claim were consumers; (3) the legislative history of CAFA, including rejection of an amendment that would have exempted attorney general suits from CAFA, supports finding that jurisdiction exists; and (4) sovereign immunity concerns were inapplicable where the state voluntarily brought the suit.  Judge Gilman’s most quotable line was:

In sum, there is a saying that if something looks like a duck, walks like a duck, and quacks like a duck, it is probably a duck.  To my mind this case “quacks” much more like a CAFA class action than a parens patriae case.

Here are my thoughts: 

  • Look for an en banc petition or petition for certiorari in this case.  The strong dissent, the conflict with the Fifth Circuit decision (although that involved a “mass action”) and the prominence of this issue might lead to further review.  The Fourth Circuit takes more en banc petitions than most circuits.  If further review is sought, industry associations may want to weigh in with amicus briefs. 
  • Attorney general and insurance commissioner suits may increase.  Depending on the political climate in particular jurisdictions, insurers may see an increase in the filing of “class action-like” suits, particularly in the event of catastrophes.  In some states insurance commissioners can file suits on their own, in others they have to go through the attorney general. 
  • CAFA jurisdiction in each case still will depend on its own facts.  Under the Fourth Circuit’s test for what is a “class action,” each state statute asserted by an attorney general must be analyzed carefully to determine whether it is sufficiently “similar” to Federal Rule 23 for CAFA to apply.  It appears that key issues will include whether there are requirements similar to typicality and adequacy of representation. 
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.