Louisiana Ex Rel. Caldwell v. Allstate Insurance

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
July 18, 2008

No. 08-30465 Charles R. Fulbruge III
Clerk

STATE OF LOUISIANA, EX REL, JAMES D. CALDWELL,

Plaintiffs-Appellants,
v.

ALLSTATE INSURANCE CO., ET AL.,

Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of Louisiana

Before STEWART, OWEN, and SOUTHWICK, Circuit Judges.
CARL E. STEWART, Circuit Judge:
The State of Louisiana, through its former Attorney General, Charles C.
Foti, Jr.,1 along with counsel from a number of private law firms2 [collectively
“Louisiana”], filed a lawsuit which it styled as a parens patriae action against
the following defendants: Allstate Insurance Company, Lafayette Insurance
Company, Xactware Solutions, Inc. (“Xactware”), Marshall & Swift/Boeckh, LLC

1
Under the well-established rules of our federal courts, Attorney General Caldwell was
automatically substituted for former Attorney General Foti. See, e.g., Fed R. App. P. 43(c).
2
The four law firms are: McKernan Law Firm; Herman Herman, Katz &Cotlar, LLP;
Capitelli & Wicker; and Glago Law Firm, LLC
 No. 08-30465

(“MSB”), Insurance Services Office, Inc. (“ISO”),3 State Farm Fire and Casualty
Company, USAA Casualty Insurance Company, Farmers Insurance Exchange,
the Standard Fire Insurance Company, and McKinsey & Company, Inc.
(“McKinsey”) [collectively “Defendants”] in the Civil District for the Parish of
Orleans alleging violations of Louisiana’s antitrust laws. Defendants removed
the action to federal court pursuant to the Class Action Fairness Act (“CAFA”),
28 U.S.C. § 1332(d)(2). 18 U.S.C. § 1453(b). Louisiana moved to remand the
action back to state court, but the district judge denied the motion. Louisiana
petitioned this court for permission to appeal the interlocutory order under
CAFA, which we granted. For the following reasons, we AFFIRM.
FACTUAL AND PROCEDURAL HISTORY
On November 7, 2007, Louisiana filed a petition in state court seeking to
“enforce the laws of this state, and more specifically, the Louisiana Monopolies
Act [Louisiana Revised Statute § 51:123, et seq.], and to redress the wrongs
committed by defendants against this state and its citizens,” alleging that
Defendants worked together to form a “combination” that illegally suppressed
competition in the insurance and related industries. Specifically, Louisiana
contends that “[i]n a scheme to thwart policyholder indemnity and in direct
violation of their fiduciary duties, insurer defendants and others continuously
manipulated Louisiana commerce by rigging the value of policyholder claims and
raising the premiums held in trust by their companies for the benefit of policy
holders to cover their losses as taught by McKinsey Company.”
According to Louisiana, this combination started in the 1980s when
McKinsey, a corporate advising company, engineered a strategy that
undervalued insurance claims, allowing insurance companies and their
shareholders to reap the profits. Initially, McKinsey advised insurers to stop

3
Around August 2006, ISO acquired Xactware, and currently Xactware is a subsidiary
and/or member company of ISO.

2
 No. 08-30465

“premium leakage” by undervaluing claims using the tactics of “deny, delay, and
defend;” as a result, many insurers began hiring McKinsey for management
advice on how to increase their profits. The combination was strengthened by
ISO, “a leading provider of statistical, actuarial, and underwriting information
for the property/casualty insurance and risk management industries,” through
the databases and other computer programs that ISO provided to insurers (such
as Xactimate, which is manufactured by Xactware, and IntergriClaim, which is
manufactured by MSB), because those programs were manipulated to reduce the
value of claims. Louisiana alleges that the defendant insurance companies (and
possibly others) have worked with McKinsey and ISO to undervalue and
underpay policyholders’ claims, particularly in the wake of Hurricanes Katrina
and Rita. Louisiana asserts in its complaint: “An agreement, combination or
conspiracy between all defendants, and other unnamed competing insurance
companies, existed, at all material times herein, to horizontally fix the prices of
repair services utilized in calculating the amount(s) to be paid under the terms
of Louisiana insureds’ insurance contracts with insurers for covered damage to
immovable property.” In its petition, Louisiana contends that such price-fixing
constitutes anti-trust violations under the Louisiana Monopolies Act. Louisiana
is seeking forfeiture of illegal profits, treble damages, and injunctive relief.
On December 7, 2007, Defendants timely removed the case to the United
States District Court for the Eastern District of Louisiana; Louisiana filed a
motion to remand back to state court on January 7, 2008. Before the district
court, Defendants argued that this case is removable under CAFA. They argued
that although labeled parens patriae, this case is in substance and fact a “class
action” or a “mass action” as those terms are used in CAFA because the petition
is seeking treble damages on behalf of Louisiana insurance policyholders.
Defendants urged the district court to look beyond the labels used in the
complaint and determine the real nature of Louisiana’s claims, arguing that all

3
 No. 08-30465

of the procedural requirements of CAFA were satisfied: the putative class
exceeds 100, the minimal diversity requirements are met, and the amount in
controversy exceeds $5,000,000. See 28 U.S.C. § 1332(d). Defendants also
argued that the fact that the Louisiana Attorney General is not proceeding
under Federal Rule of Civil Procedure 23 or the analogous state rule is not
determinative for CAFA purposes. Before the district court, Defendants
highlighted that several other similar purported class actions are and/or were
pending before the same federal district court, where the same group of lawyers
filed, or attempted to file, nearly identical claims as those alleged in this case by
the state of Louisiana, as further evidence that this lawsuit is in fact a class
action. See Muzzy v. USSA Cas. Ins. Co., No. 06-4773, 2008 U.S. Dist. LEXIS
42870 (E.D. La. Feb. 20, 2008); Schafer v, State Farm Fire and Cas. Co., 507 F.
Supp. 2d 587 (E.D. La. 2007); Mornay v. Travelers Ins. Co., No 07-5274 (E.D. La.
filed Aug. 30, 2007).
On April 2, 2008, Judge Zainey held a hearing on the issue of removal. At
the hearing, the district court was primarily concerned about who the real
parties in interest are in this case. In noting that it was his responsibility to
look to the substance of the complaint—to pierce the pleadings—and to
determine the real nature of the claim asserted, he explained: “[I]t’s the Court’s
responsibility to not just merely rely on who a plaintiff chose to sue, or, in this
case, how the plaintiff chose to plead, but I have to look at the specific substance
of . . . the complaint . . . .” Judge Zainey concluded that, while the State was a
nominal party, the real parties in interest were the citizen policyholders.
Ultimately, he denied Louisiana’s motion to remand the case back to state court,
concluding that the lawsuit was properly removed under CAFA.
Subsequently, Louisiana filed the present petition, seeking permission to
appeal the district court’s denial of its motion to remand. This Court granted the
petition pursuant to 28 U.S.C. § 1453(c).

4
 No. 08-30465

DISCUSSION
CAFA, which was enacted in 2005, provides for removal of class actions
involving parties with minimal diversity. 28 U.S.C. § 1332(d)(2). Under the
statute “class action” is defined as: “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. § 1331(d)(1)(B). CAFA defines a “mass
action” as: “any civil action . . . in which monetary relief claims of 100 or more
persons are proposed to be tried jointly on the ground that the plaintiffs’ claims
involve common questions of law or fact, except that jurisdiction shall exist only
over those plaintiffs whose claims in a mass action satisfy the jurisdiction
amount requirement under [28 U.S.C. § 1332(a)].” 28 U.S.C. § 1332(d)(11)(B)(I).
In passing CAFA, Congress emphasized that the term “class action” should
be defined broadly to prevent “jurisdictional gamesmanship:”
[T]he Committee further notes that the definition of “class action” is
to be interpreted liberally. Its application should not be confined
solely to lawsuits that are labeled “class actions” by the named
plaintiff or the state rulemaking authority. Generally speaking,
lawsuits that resemble a purported class action should be considered
class action for the purpose of applying these provisions.

S. Rep. No. 109-14, at 35 (2005). Congress also considered and rejected an
amendment that would have exempted class actions filed by state attorneys
general from removal under CAFA. See 151 Cong. Rec. S1157, 1163-64 (daily ed.
Feb. 9, 2005) (statement of Sen. Hatch) (“At worst, [the amendment] will create
a loophole that some enterprising plaintiffs’ lawyers will surely manipulate in
order to keep their lucrative class action lawsuits in State court. . . . If this
legislation enables State attorneys general to keep all class actions in State
court, it will not take long for plaintiffs’ lawyers to figure out that all they need
to do to avoid the impact of [CAFA] is to persuade a State attorney general to

5
 No. 08-30465

simply lend the name of his or her office to a private class action.”); see also
Louisiana v. AAA Insurance, 524 F.3d 700, 705 (5th Cir. 2008) [hereafter “Road
Home”] (discussing legislative history of CAFA).4
Louisiana argues that the district court erred by denying its motion to
remand this lawsuit back to Louisiana state court. It asserts that this action is
not a class action, but rather a parens patriae action which the Louisiana
Attorney General is statutorily and constitutionally authorized to bring. It is
true that the words “class action” or “mass action” do not appear in Louisiana’s
complaint. However, that does not end our inquiry. It is well-established that
in determining whether there is jurisdiction, federal courts look to the substance
of the action and not only at the labels that the parties may attach. See Grassi
v. Ciba-Geigy, Ltd., 894 F.2d 181, 185 (5th Cir. 1990) (“[J]urisdictional rules may
not be used to perpetrate a fraud or ill-practice upon the court by either
improperly creating or destroying diversity jurisdiction. Were that to occur, we
would not elevate form over substance but would accomplish whatever piercing
and adjustments considered necessary to protect the court’s jurisdiction.”
(internal quotation marks and citation omitted)); see also Wecker v. Nat’l
Enameling & Stamping Co., 204 U.S. 176, 185-86 (1907) (“Federal courts should
not sanction devices intended to prevent a removal to Federal court where one
has that right, and should be equally vigilant to protect the right to proceed in
the Federal court as to permit the state courts, in proper cases, to retain their
own jurisdiction.”). This court has recognized that “defendants may pierce the
pleadings to show that the . . . . claim has been fraudulently pleaded to prevent

4
It appears that some Senators rejected the amendment because they thought it was
unnecessary. See, e.g., 151 Cong. Rec. at 1163 (daily ed. Feb. 9, 2005) (statement of Sen.
Grassley) (“The key phrase [ ] is “class action.” Hence, because almost all civil suits brought
by State attorneys general are parens patriae suits, similar representative suits or direct
enforcement actions, it is clear they do not fall within this definition [of class action]. That
means that cases brought by State attorneys general will not be affected by this bill.”)

6
 No. 08-30465

removal.” See Burchett v. Cargill, Inc., 48 F.3d 173, 175 (5th Cir. 1995) (internal
quotation marks and citation omitted).
We review a district court’s decision to pierce the pleadings as well as the
procedure for doing so for abuse of discretion. Guillory v. PPG Indus., Inc., 434
F.3d 303, 309 (5th Cir. 2005). However, Louisiana did not raise any objections
to Judge Zainey’s decision to pierce the pleadings or his procedure for doing so
in this appeal. As such, that issue is waived. See Chambers v. Mukasey, 520
F.3d 445, 448 n.1 (5th Cir. 2008) (“Petitioner, however, does not brief this issue.
Accordingly, it is waived.” (internal citation omitted)). Therefore, we turn to the
central issue in this appeal: namely, whether the district court erred in denying
Louisiana’s motion to remand. “This court conducts a de novo review of the
district court’s remand order.” Preston v. Tenet Healthsystem Mem. Med. Ctr.,
485 F.3d 793, 796 (5th Cir. 2007) (internal citations omitted).
The parties vigorously dispute whether Louisiana’s action is a parens
patriae action or whether, as the district court found, “the citizen policyholders
are the real parties in interest.” In resolving this dispute, we first turn to a
discussion of the jurisprudence concerning parens patriae actions.
I.
The concept of parens patriae stems from the English constitutional
system, where the King retained certain duties and powers, referred to as the
“royal prerogative,” which he exercised in his capacity as “father of the country.”
Hawaii v. Standard Oil Co. of Ca., 405 U.S. 251, 257 (1972). Historically, the
term referenced the King’s power as guardian over people who lacked the legal
capacity to act for themselves. Id. The concept of parens patriae has also been
established in this country’s jurisprudence; the Supreme Court has written:
“This prerogative of parens patriae is inherent in the supreme power of every
state, whether that power is lodged in a royal person or in the legislature [and]
is a most beneficent function . . . often necessary to be exercised in the interest

7
 No. 08-30465

of humanity, and for the prevention of injury to those who cannot protect
themselves.” Alfred L. Snapp & Son v. Puerto Rico, ex rel. Barez, 458 U.S. 592,
600 (quoting Mormon Church v. United States, 136 U.S. 1, 57 (1890)). However,
in this country the concept has been expanded considerably. See generally
Richard P. Ieyoub & Theodore Eisenberg, State Attorney General Actions, the
Tobacco Litigation, and the Doctrine of Parens Patriae, 74 Tul. L. Rev. 1859
(2000) (discussing the Supreme Court precedent acknowledging and expanding
state’s parens patriae authority); see also Hawaii, 405 U.S. at 257-60 (same).
Snapp is one of the Supreme Court’s most recent pronouncements on when
a state has standing to bring a parens patriae action. We are not called upon to
decide today whether the Attorney General has standing to bring the present
claims, but the Supreme Court’s discussion of parens patriae is illuminating. In
Snapp, the Court wrote that in order for a state to have standing it must be
asserting an interest that relates to its sovereignty. 458 U.S. at 600-01. The
Court recognized that not everything a State does is based on its “sovereign
character.” Id. at 601. Two non-sovereign interests, which would not provide a
state with standing for a parens patriae action, are proprietary interests and
private interests pursued by the state, where the state is only acting as a
nominal party. Id. at 601-02. As far as the latter category is concerned, the
Court wrote:
[A] State may, for a variety of reasons, attempt to pursue the
interests of a private party, and pursue those interests only for the
sake of the real party in interest. Interests of private parties are
obviously not in themselves sovereign interests, and they do not
become such simply by virtue of the State’s aiding in their
achievement. In such situations, the State is no more than a
nominal party.

Id. at 602. One sovereign interest that was “easily identified” by the Court
consists of “the exercise of sovereign power over individuals and entities within

8
 No. 08-30465

the relevant jurisdiction—this involves the power to create and enforce a legal
code, both civil and criminal . . . .” Id. at 601. The Court also explained that a
state can bring a parens patriae action if it is seeking to vindicate a “quasi-
sovereign interest.” Id. While conceding that this term is vague, the Court
wrote, after reviewing the relevant precedent, that “a State has a quasi-
sovereign interest in the health and well-being—both physical and economic—of
its residents in general.” Id. at 607. The Court also explained that there are no
“definitive limits on the proportion of the population of the State that must be
adversely affected by the challenged behavior” in order to support a parens
patriae action; rather such a determination turns on whether a “sufficiently
substantial segment of [the State’s] population” is affected by the direct and
indirect effects of the alleged injury. Id. The Court suggested: “One helpful
indication in determining whether an alleged injury to the health and welfare
of its citizens suffices to give the State standing to sue as parens patriae is
whether the injury is one that the State, if it could, would likely attempt to
address through its sovereign lawmaking powers.” Id.
The Supreme Court’s decisions in Hawaii and Snapp are useful in
illustrating both the limitations and reach of parens patriae actions. In Hawaii,
the state of Hawaii brought a lawsuit in federal district court, asserting a variety
of antitrust claims against Standard Oil Company of California and related
defendants due to their sale, marketing, and distribution of refined petroleum
products. 405 U.S. at 252-56. One of the counts of the complaint alleged that
the lawsuit was a parens patriae action and that the State was entitled to
recover treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15. Id. The
district court denied the defendants’ motion to dismiss, but the Ninth Circuit
reversed. Id. at 256-57. On certiorari, the Supreme Court affirmed the Ninth
Circuit, holding that § 4 of the Clayton Act did not authorize a state to sue for
damages for an injury to its economy allegedly attributable to a violation of

9
 No. 08-30465

antitrust laws. Id. at 263-65. While the Court acknowledged that § 4 permits
Hawaii to sue in its proprietary capacity for treble damages, it explained that if
it were to construe that section to also permit states to recover damages for
injuries to their economies “we would open the door to duplicative recoveries.”
Id. at 264. The Court concluded by observing that class actions, rather than
parens patriae actions, are the preferred vehicle for addressing antitrust
violations. Id. at 266. In Snapp, the Commonwealth of Puerto Rico sued as
parens patriae for Puerto Rican migrant farmworkers against Virginian
applegrowers in federal district court, seeking to enjoin discrimination against
Puerto Ricans workers under various federal statutes and regulations. 458 U.S.
at 594-99. The district court dismissed the case on the grounds that Puerto Rico
lacked standing to sue; however, the Fourth Circuit reversed. Id. at 599. The
Supreme Court affirmed, explaining that Puerto Rico has parens patriae
standing to sue to secure its residents from the harmful effects of discrimination.
Id. at 609-10. Thus, based on these two cases it is clear that while parens
patriae actions are not restricted to their common law roots, there are some
limitations, particularly when a state is seeking to recover damages for alleged
injuries to its economy.5

5
The concept of parens patriae has also been expanded by legislative enactments. For
example, in California v. Frito-Lay, the Ninth Circuit held that the State of California could
not sue in a representative capacity as parens patriae in order to recover treble damages on
behalf of its citizens-consumers for alleged injuries suffered by them due to the defendants’
violations of federal antitrust laws. 474 F.2d 774, 775 (9th Cir. 1973). In so holding, the court
explained that such an action would expand the common-law concept of parens patriae “as it
has been recognized in this country to date” because California did not have its own sovereign
or quasi-sovereign interest that it was asserting. Id. at 775-76. The court also explained that
class actions, with all their attendant procedural rules and safeguards were more appropriate
than parens patriae for such types of actions. Id. at 777 n.11. In response to Frito-Lay,
Congress amended § 4 of the Clayton Act by passing the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (“HSRA”), 15 U.S.C. §§ 15c-15h. “[T]he Act was aimed primarily
at enlarging the potential for consumer recovery for antitrust violations by effectively
bypassing the burdensome requirements of Rule 23 [of the Federal Rules of Civil Procedure]
that might tend to dissuade private litigants from pursuing conventional consumer class
actions for antitrust injury. Therefore, the Act is best understood as constituting the states,

10
 No. 08-30465

The district court correctly discerned that if the Attorney General is only
a nominal party, and the policyholders are the real parties in interest, then the
nature of the claims asserted must be examined to determine if they are
removable under CAFA. Generally speaking, a party is a real party in interest
when it is “directly and personally concerned in the outcome of the litigation to
the extent that his participation therein will insure ‘a genuine adversary issue

acting through their attorneys general, as consumer advocates in the [antitrust] enforcement
process.” Pennsylvania v. Mid-Atlantic Toyota Distribs., 704 F.2d 125, 128 (4th Cir. 1983)
(internal quotation marks and citations omitted). HSRA, which contains its own procedural
protections and safeguards to facilitate the representation of consumers in federal court by
state attorneys general, see ibid, provides, in relevant part:

Any Attorney General of a State may bring a civil action in the name of such
State, as parens patriae on behalf of natural persons residing in such state in
any district court of the United States having jurisdiction of the defendant, to
secure monetary relief as provided in this section for injury sustained by such
natural persons to their property by reason of any violation of sections 1 to 7 of
this title . . .

15 U.S.C. § 15c (1976). Section 15h provides that the Act “shall apply in any state, unless such
state provides for its non-applicability in such state.” 15 U.S.C. § 15h. In short, HSRA created
a statutory parens patriae action for state attorneys general.
As the language of HSRA makes clear, the statutory parens patriae right of action is
broader than the common law right. See Mid-Atlantic Toyota, 704 F.2d at 129 n.8 (“We agree
that the statutory right of action is more expansive. . . . [Common law parens patriae actions
do not embrace] actions such as those here in issue where the state sues on behalf of injured
natural residents.”). In Mid-Atlantic Toyota, the Fourth Circuit explained that state attorneys
general do not need specific statutory or constitutional authority to bring parens patriae actions
under HSRA. Id. at 129. Rather, the court wrote that as long as a state attorney general has
authority to bring lawsuits in the name of his/her respective state that enforce causes of action
created by federal law and has authority to pursue litigation that advances or vindicates public
interests, an attorney general has standing to bring a parens patriae action under HSRA. Id.
at 130-31. Similarly, this court has held that Texas law, which does not provide its attorney
general with specific authority to bring parens patriae actions, permitted the attorney general
to bring a statutory parens patriae action under HSRA. Texas v. Scott & Fetzer Co., 709 F.2d
1024, 1027-28 (5th Cir. 1983). As Defendants highlight in their brief, a number of states
enacted laws, many of which are modeled after HSRA, that provide their attorneys general
with authority to file similar parens patriae antitrust actions under state law. This court has
never addressed whether such a statute could shield a representative action from removal
under CAFA; and both Mid-Atlantic Toyota and Scott & Fetzer were decided before CAFA was
enacted. However, we need not address that issue here since it is undisputed that Louisiana
has not enacted such a statute, nor has it amended the Monopolies Act to explicitly include
such an action.

11
 No. 08-30465

between the parties . . . .’” Land O’Lakes Creameries v. La. State Bd. of Health,
160 F. Supp. 387, 388 (E.D. La. 1958) (quoting United States v. Johnson, 319
U.S. 302, 304 (1943)). That court explained: “Such an interest is lacking when
a state undertakes to sue for the particular benefit of a limited number of
citizens. . . . The State must show a direct interest of its own . . . .” Id. In the
context of parens patriae actions, another federal district court wrote: “The state
is the real party in interest when an action concerns a type of ‘injury’ that the
state either has addressed or would likely attempt to address through its laws
to further the ‘well-being of its populace.’” Harvey v. Blockbuster, 384 F.Supp. 2d
749, 755 (D.N.J. 2005) (quoting Snapp, 458 U.S. at 602).
II.
We turn to the issue at hand. As an initial matter, we agree with
Louisiana that its attorney general has statutory and constitutional authority
to bring parens patriae antitrust actions. Louisiana Revised Statute § 51.1386
empowers the Attorney General to enforce the Monopolies Act both criminally
and civilly, and to seek redress against violators on behalf of both the state and
private parties. Similarly, another provision of the Monopolies Act states:
The district courts have jurisdiction to prevent and restrain
violation of this Part, and the Attorney General or the district
attorneys in their respective districts under the direction of the
Attorney General or the governor, shall institute proceedings to
prevent and restrain violations . . . .

LA. REV. STAT. ANN. § 51:128.7 Further, we agree that provisions from the
Louisiana Constitution provide the Attorney General with broad discretion to

6
This provision states: “All suits for the enforcement of this Part shall be instituted
in the district courts by the Attorney General, on his own motion or by the direction of the
governor . . . .” LA. REV. STAT. ANN. § 51.138.
7
Moreover, Louisiana Revised Statute § 13:5036 gives the attorney general discretion
to “institute and prosecute any and all suits he may deem necessary for the protection of the
interests and rights of the state.” LA. REV. STAT. ANN. § 13:5036.

12
 No. 08-30465

vindicate the interests of the State. LA. CONST. art IV § 8 (affording the attorney
general authority “to institute, prosecute, or intervene in any civil action or
proceeding”); see also Louisiana ex rel. Ieyoub v. Borden, No. 94-3640, 1995 U.S.
Dist. LEXIS 1921 at *8 (E.D. La. Feb. 10, 1995) (relying on the aforementioned
Louisiana constitutional and statutory provisions, to explain that the attorney
general has parens patriae authority even though none of those provisions
explicitly authorize the attorney general to sue in such a capacity); Louisiana ex
rel. Ieyoub v. Classic Soft Trim, 663 So. 2d 835, 836 (La. Ct. App. 1995)
(explaining that the aforementioned provisions provide the Attorney General
with procedural capacity to bring a parens patriae antitrust action “alleging
violations of the monopolies and unfair trade practices laws.”).
The parties vigorously debate whether the Attorney General’s parens
patriae authority is extensive enough to allow the State to sue for treble
damages in a representative capacity under state law. We need not address
that issue. Even assuming arguendo that the Attorney General has standing to
bring such a representative action, the narrow issue before this court is who are
the real parties in interest: the individual policyholders or the State. We
conclude that as far as the State’s request for treble damages is concerned, the
policyholders are the real parties in interest. The text of § 137 of the Monopolies
Act, which authorizes the recovery of treble damages, plainly states that “any
person who is injured in his business or property” under the Monopolies Act
“shall recovery [treble] damages.” The plain language of that provision makes
clear that individuals have the right to enforce this provision. Accordingly, we
agree with the district court and hold that under § 137 the policyholders, and not
the State, are the real parties in interest.8 See Louisiana ex rel. Guste v. Fedders

8
If Louisiana were acting in its proprietary capacity it could sue for damages to its own
business or property under § 137. But, as has already been discussed, a state’s proprietary
interest is not sufficient to grant it parens patriae standing.

13
 No. 08-30465

Corp., 524 F. Supp. 552, 557 (M.D. La. 1981) (explaining that where the relief
sought “operates only in favor of Louisiana consumers who are affected by a
defendant’s unlawful conduct,” those consumers “are the real parties in interest
. . . .”). In fact, Louisiana’s argument that it is the only real party in interest is
belied by the petition it filed in state court, which makes clear that it is seeking
to recover damages suffered by individual policyholders.9 We need not address
Louisiana’s argument that § 138 of the Monopolies Act gives the Attorney
General authority to enforce all provisions of the Monopolies Act. Once again,
even assuming arguendo that such an interpretation of state law is correct, it
does not resolve the central issue in this appeal: whether the “person who [was]
injured in his business or property”—in this case the policyholders—are the real
parties in interest. We have no reason to believe that they are not, especially
given that the purpose of antitrust treble damages provisions are to encourage

9
For example, the petition contains the following allegations: “In a scheme to thwart
policyholder indemnity . . . ;” “This continuous arrangement gave insurers an unjust advantage
over policy holders;” “[I]nsurers have combined to accumulate vast wealth for themselves . .
. by violating their fiduciary duties to their insureds;” “Louisiana’s insureds were forced to buy
property insurance (commercial or homeowners) which likely would never provide full coverage
for a loss;” “‘Insurers have reduced their payouts and maximized their profits by turning their
claims operations into ‘profit centers’ by using computer programs and other techniques
designed to routinely underpay policyholder claims;’” “Defendant Insurers [ ] intentionally
deflate the value of the damaged property payments owed to Louisiana insureds;” “An
agreement, combination or conspiracy between all defendants, and other unnamed competing
insurance companies, existed, at all material times herein, to horizontally fix the prices of
repair services utilized in calculating the amount(s) to be paid under the terms of Louisiana
insureds’ insurance contracts with insurers for covered damage to immovable property;”
“[T]hese insurers . . . intentionally deflated the market price in order to underpay their
policyholders and/or artificially deflate, or attempt to deflate, construction and repair costs in
the affected market;” “The purpose of the combination and conspiracy was to depress the
amount paid out under the terms of the insurance contracts to below market price and deprive
Louisiana insureds of the actual cash value and/or replacement value of the damaged
property;” and “Defendants’ intentional collusion in suppressing payments to Louisiana
insureds . . . .” These are only a few examples; the petition is rife with statements that make
clear that the policyholders are the real parties in interest in this action.

14
 No. 08-30465

private lawsuits by aggrieved individuals for injuries to their businesses or
property. See, Hawaii, 405 U.S. at 262.10
We are mindful that in this action Louisiana is also seeking the remedy
of injunctive relief. If Louisiana were only seeking that remedy, which is clearly
on behalf of the State, its argument that it is the only real party in interest
would be much more compelling. In Road Home, a case involving many of the
same parties that are currently before the court, the panel left to the district
court the possibility that the various claims could be severed so that those claims
that were removable under CAFA would remain in federal court but that
Louisiana’s claims could be remanded to state court. 524 F.3d at 711-12. We
again raise that possibility here, for the district court to consider on remand. In
making this suggestion, we are mindful of the fact that the district judge himself
noted that the injunctive relief Louisiana was seeking was the type of remedy
that state attorneys general’s have pursued through parens patriae actions, but
we also acknowledge that the district court “is the able manager of this complex
litigation and we will not extend these appellate hands into that endeavor.” See
id. at 712.11
Having determined that the policyholders are real parties in interest, we
agree that this action was properly removed pursuant to CAFA because the
requirements of a “mass action”are easily met given the factual circumstances

10
Moreover, Louisiana’s reliance on Mid-Atlantic Toyota and Scott & Fetzer is
misplaced. Both of those cases involve lawsuits brought under HSRA, a statute that
specifically contemplates state attorneys general bringing representative actions such as the
one at issue here. Mid-Atlantic Toyota, 704 F.2d at 127; Scott & Fetzer, 709 F.2d at 1024; see
also supra note 5. Further, as we have already discussed, even if Louisiana had an analog
state statute, it is not clear whether such a provision would save this action from removal
under CAFA. See supra note 5.
11
We also note that during oral argument, counsel for Louisiana insistently maintained
that severance was an option the State was not interested in pursuing. However, if perchance
Louisiana has reconsidered and the district judge finds it appropriate, we leave open this
possibility.

15
 No. 08-30465

of this case: this is a civil action involving the monetary claims of 100 or more
persons that is proposed to be tried jointly on the ground that the claims involve
common questions of law or fact; the aggregate amount in controversy is at least
$5 million, this action involves claims of more than 100 Louisiana citizens who
are minimally diverse from Defendants, and it is being brought in a
representative capacity on behalf of those who allegedly suffered harm. See 28
U.S.C. § 1332(d)(11)(B)(I). Since we have concluded that this case was properly
removed under CAFA’s “mass action” provision, we need not address whether
this lawsuit could, following further proceedings on remand, properly proceed as
a class action under CAFA. We leave to the district judge’s capable hands the
manner by which the individual policyholders are to be added to this action.
Once again, we need not extend our appellate hands into matters that the
district court is well-able to address.
III.
Finally, we address Louisiana’s contention that federal jurisdiction in this
case would violate the Eleventh Amendment of the Constitution. Louisiana
contends that our nation’s “system of dual sovereignty . . . prevents the
application of CAFA to the State[s] acting through [their] Attorneys General.”
It argues that CAFA did not preempt or abrogate the States’ Tenth or Eleventh
Amendment rights as dual sovereigns because Congress can only abrogate the
States’ Eleventh Amendment immunity by a clear legislative statement.
Seminole Tribe v. Fla., 517 U.S. 44, 56 (1996) (“‘To temper Congress’
acknowledged powers of abrogation with due concern for the Eleventh
Amendment’s role as an essential component of our constitutional structure, we
have applied a simple but stringent test: Congress may abrogate the States’
constitutionally secured immunity from suit in federal court only by making its
intention unmistakably clear in the language of the statute.” (citing Dellmuth
v. Muth, 491 U.S. 223, 227-28 (1989))). Louisiana asserts that “[t]he plain

16
 No. 08-30465

language of CAFA is completely devoid of a statement of congressional intent to
force a state to litigation in the courts of another sovereign.” Further, Louisiana
contends that this court cannot hold that it constructively consents to or waives
its Eleventh Amendment immunity because the Supreme Court has established
that a state can only waive such immunity by express language in its
Constitution or state statute. Atascadero State Hosp. v. Scanlon, 473 U.S. 234,
238 n.1 (1985) (“we require an unequivocal indication that the State intends to
consent to federal jurisdiction that otherwise would be barred by the Eleventh
Amendment. As we [have previously written,] constructive consent is not a
doctrine commonly associated with the surrender of constitutional rights, and
we see no place for it here.” (internal quotation marks and citation omitted)).
We review the issue of Eleventh Amendment immunity de novo. United
States ex rel. Barron v. Deloitte & Touche, 381 F.3d 438, 439 (5th Cir. 2004). The
Eleventh Amendment states: “The Judicial power of the United States shall not
be construed to extend to any suit in law or equity, commenced or prosecuted
against one of the United States by Citizens of another State, or by Citizens or
Subjects of any Foreign State.” U.S. CONST. amend XI. In Alden v. Maine, the
Supreme Court explained that:
sovereign immunity derives not from the Eleventh Amendment but
from the structure of the original Constitution itself. The Eleventh
Amendment confirmed rather than established sovereign immunity
as a constitutional principle; it follows that the scope of the State’s
immunity from suit is demarcated not by the text of the Amendment
alone but by fundamental postulates implicit in the constitutional
design.

527 U.S. 706, 728-29 (1999) (internal citations omitted).
This court recently addressed the issue of Eleventh Amendment immunity
in the context of a class action brought by the State of Louisiana in Road Home.
524 F.3d at 706. In that case, the panel, after reviewing the Founders’ debates
over Article III, explained that the amendment was designed to prevent states

17
 No. 08-30465

from having to defend themselves in litigation that was brought in the federal
courts. Id. at 709-10. While the panel found that none of the precedent relating
to Eleventh Amendment immunity were dispositive of this issue before it,12 it
concluded that Louisiana had waived its immunity by joining private parties in
the lawsuit. Id. at 711 (“That said, none of the cases or founding history speak
directly to the issue at hand, which might well raise a constitutional concern had
the State not waived immunity by bringing a suit with private citizens: whether
a state as a plaintiff suing defendants over whom it has regulatory authority in
state court under its own state laws may be removed to federal court on diversity
grounds under CAFA, rather than federal question jurisdiction.” (emphasis in
original)).
Since we have held that the individual policyholders are the real parties
in interest, this issue is controlled by Road Home, and we hold that Louisiana
has waived its Eleventh Amendment immunity. Id. (“We are persuaded that the
State cannot pull these citizens under its claimed umbrella of protection in
frustration of a congressional decision to give access to federal district courts to
defendants exposed to these private claims . . . .”). While we acknowledge the

12
A number of circuit courts have interpreted the Eleventh Amendment as only
applicable when a state is a defendant. California ex rel. Lochyer v. Dynegy, Inc., 375 F.3d 831,
848 (9th Cir. 2004) (“[A] state that voluntarily brings suit as a plaintiff in state court cannot
invoke the Eleventh Amendment when the defendant seeks removal to a federal court of
competent jurisdiction.”); Oklahoma ex rel. Edmondson v. Magnolia Marine Transp. Co., 359
F.3d 1237, 1239 (10th Cir. 2004) (“[T]he Eleventh Amendment’s abrogation of federal judicial
power ‘over any suit . . . commenced or prosecuted against one of the United States’ does not
apply to suits commenced or prosecuted by a State.” (emphasis in original)); Regents of the
Univ. of California v. Eli Lilly & Co., 119 F.3d 1559, 1564-65 (Fed. Cir. 1997) (“the Eleventh
Amendment applies to suits ‘against’ a state, not suits by a state.”); Huber, Hunt, & Nichols,
Inc. v. Architectural Stone Co., 625 F.2d 22, 24 n.6 (5th Cir. 1980) (“of course, the eleventh
amendment is inapplicable where a state is a plaintiff.”). This is consistent with Supreme
Court precedent. Alden, 527 U.S. at 728-29 (“. . . and the scope of the States’ immunity from
suit . . . .” (emphasis added)); Ames v. Kansas, 111 U.S. 449, 462 (1884) (“a suit brought by a
State in one of its own courts, against a corporation amendable to its own process . . . can be
removed to the Circuit Court of the United States . . . .”).

18
 No. 08-30465

State’s arguments on waiver, we are bound by circuit precedent. See Brown v.
United States, 890 F.2d 1329, 1336 (5th Cir. 1989) (The “law of the circuit” rule
states that “one Fifth Circuit panel may not overrule the decision, right or
wrong, of a prior panel.”).
CONCLUSION
For the foregoing reasons, the district court’s denial of Louisiana’s remand
motion is AFFIRMED and this case is REMANDED.

19
 No. 08-30465

SOUTHWICK, Circuit Judge, dissenting:
It is with great respect for the members of the majority and the care
they have taken with their analysis that I nonetheless offer this dissent.
This is my summary of the majority’s conclusions: (1) the real parties in
interest for the treble damage claims are the individual policy holders; (2) the
authority of the Attorney General to be a representative of individual
claimants to treble damages under the Monopolies Act can be assumed; (3)
these claims may be adjudicated as a mass action; and (4) the district court on
remand is to make the necessary adjustments to restructure the litigation.
My point of departure from the majority is in how we understand our
role upon receiving a case removed from state court under the Class Action
Fairness Act (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (2005). The source of
my disagreement as to the result is that I believe when we decide whether a
suit is removable under CAFA, we should determine what the case is, not
what it must be if all the relief requested is to be part of the litigation. If the
majority is correct and the suit is presently deformed, I find we do not have
jurisdiction until the necessary transformation into a mass or class action
occurs.
The clearest evidence of the difference in my perspective from that of
the majority is that my able colleagues have focused exclusively on two legal
issues: who are the real parties in interest and the effect of the Eleventh
Amendment on our resolution of the procedural issues. My opinion discusses
neither, because I find the decision point is elsewhere.
As I will attempt to explain below, one predicate for a CAFA-removable
“class action” is that the suit be brought under a statute or rule of procedure
that authorizes a representative action, that is, a state equivalent of Rule 23.
As presently structured, this suit is not brought under such a statute or rule.

20
 No. 08-30465

Neither is the case presently a mass action. That ends the justification for
CAFA removal.
Though the suit is not a mass or class action, perhaps it should be. The
Attorney General may have no business bringing the treble damage claims
because they belong to others. On the other hand, perhaps under Louisiana
law he really may pursue the claims just as he asserts them in his complaint
without the necessity of converting the suit into a class or mass action. In my
view, though, such issues are not for us to resolve. We have no jurisdiction
until there is removed to federal court an action brought in the manner that
CAFA requires, by whatever name used as a disguise. We are not limited by
the labels that a party chose. See Grassi v. Ciba-Geigy, Ltd., 894 F.2d 181,
185 (5th Cir. 1990). I do not agree, though, that piercing these pleadings
reveals a federal case.
I would order a remand to state court. The Defendants could there get
state court answers to these state law questions: (1) does the Louisiana
Attorney General have authority to bring the treble damage claims under the
Monopolies Act; (2) if so, may he bring suit without using the mechanism of a
class or mass action; and (3) if such a mechanism must be employed, does the
Attorney General wish to amend the suit or to dismiss the treble damage
claims?
I now seek to explain my disagreement.

I. Class actions under the Louisiana Monopolies Act
I expect all agree that this action was properly removed if we can
legitimately find that it is a suit that fits within CAFA’s definition of a class
or mass action. Federal jurisdiction may not be defeated by use of a disguise.
Grassi, 894 F.2d at 185. But even when looking underneath the pleadings to
discern the true nature of the suit, we begin with the proposition that the

21
 No. 08-30465

plaintiff is the master of his complaint; all contested issues of fact and “any
ambiguity or uncertainty in the controlling state law” must be resolved
against the party who seeks removal based upon a claim that the plaintiff has
disguised a federal case. See Rico v. Flores, 481 F.3d 234, 238-39 (5th Cir.
2007).
Doubts about propriety of removal are resolved in favor of remand.
Guillory v. PPG Indus., Inc., 434 F.3d 303, 308-09 (5th Cir. 2005). I find that
standard of review particularly appropriate when the argument is that the
suit is removable under CAFA despite the disguise that it wears.
To determine what constitutes a removable class or mass action, I
would look first to the language of CAFA. Under the statute, “class action” is
defined as: “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”
which seeks over $5,000,000 in aggregate damages. 28 U.S.C. § 1332(d)(1)(B),
(d)(2)(A). A “mass action” is “any civil action . . . in which monetary relief
claims of 100 or more persons are proposed to be tried jointly on the ground
that the plaintiffs’ claims involve common questions of law or fact, except that
jurisdiction shall exist only over those plaintiffs whose claims in a mass
action satisfy the jurisdictional amount requirements under subsection (a).”
28 U.S.C. § 1332(d)(11)(B)(i).
The Attorney General denies that he has brought a class or mass action
under the Monopolies Act. He maintains that he is acting purely in a parens
patriae capacity, thus there is no need to certify a class or join additional
parties. The Defendants assert that the Attorney General may seek treble
damages under the Monopolies Act but not in his parens patriae capacity.
Instead, the Defendants argue that he may only do so by bringing a class or
mass action. This may be a concession; instead, it may be an adroit assertion

22
 No. 08-30465

of the Attorney General’s authority that assists the Defendants’ argument
that this case is already a removable class or mass action.
The majority finds this dispute irrelevant because, even if the Attorney
General’s parens patriae authority is as extensive as claimed, it cannot
change the fact that he will never be more than a nominal party in his
pursuit of treble damages. In their view, the policyholders are the real
parties in interest. Even if that is so – a point I do not reach – I do not agree
that such a conclusion makes this suit a mass action. Instead, I would find
that he has simply filed a defective pleading under Louisiana law.
I find that we cannot force the Attorney General to litigate in the
posture of a plaintiff in a mass action or, as the Defendants have argued, as a
class representative, in order to confer federal jurisdiction. See 7AA CHARLES
ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1785
(3d ed. 1998) (recognizing the principle that a court “should not force the
parties to try an action as a class suit when they prefer to litigate in their
individual capacities”). Instead, relief to which the Attorney General is not
entitled can be denied. If treble damages relief requires it, the Attorney
General needs to decide whether to make this a class or mass action. Only
when and if that decision becomes necessary will the federal court be assured
of its jurisdiction.
To be clear, my concern is not over whether this complaint or Louisiana
procedures use any particular label such as “class action.”13 Instead, I am
relying on what CAFA declares to be the essentials of a removable action.
The definitive aspect of CAFA-removable “class action” is a statute or rule of
procedure that authorizes a representative action as a class action, that is, a

13
A class-action equivalent of Rule 23 exists in Louisiana. La. Code Civ. Proc. arts.
591-597. A suit brought under those provisions would fit neatly into CAFA’s class action
definition. However, the parties have not invoked the Louisiana equivalent of Rule 23.

23
 No. 08-30465

state equivalent of Rule 23. The Louisiana Monopolies Act appears to be no
such statute. Nowhere does the Act authorize a representative action. To be
sure, the Act empowers the Attorney General to enforce its provisions. La.
Rev. Stat. § 51:138. But this provision does not cast the Attorney General in
the role of a Rule 23 class representative every time he seeks to enforce the
Act. Further, the Attorney General has neither joined additional parties nor
invoked Louisiana class-action procedures. CAFA’s “class action” provision is
not meant to confer federal jurisdiction any time the removing party asserts
that the plaintiff must act in a representative capacity. Nor is its “mass
action” provision meant to confer federal jurisdiction simply because the
removing party suggests that the best way to cure a defective pleading is to
join 100 additional parties.
In summary, even if this suit should be a class action (as the
Defendants argue) or a mass action (as the majority concludes), there is no
jurisdiction until the suit has indeed been brought under a Rule 23 equivalent
or as a mass action in state court. I distinguish this jurisdictional issue from
the usual one involving removal, which is deciding whether a particular party
should be ignored when evaluating the completeness of diversity. Voiding the
effect on diversity of a fraudulently joined party confirms the basis for
removal and upholds federal jurisdiction. Deciding that a removed case
should be a class or mass action does not create or confirm anything. It only
states our opinion that the parties after procedural work in state court should
make this a removable action.

2. There is no urgent need for the federal court to resolve this question.
My first discussion concerned the legal impediments to removal. This
final section will consider prudential matters.

24
 No. 08-30465

The Attorney General argues that he is authorized under the
Monopolies Act to bring the treble damage claim as a representative of
injured policyholders without joining the policyholders or certifying a class of
policyholders. The Defendants assert that such procedural acrobatics are not
possible. Whoever is “right,” we have been directed to no statute, caselaw, or
learned commentator that directly supports either assertion. State trial court
procedures for raising these issues exist. If amendments to the pleadings are
needed in order for this case to proceed, they should not be forced by a federal
court after removal. This is the wrong court for forcing such discretionary
choices because the only source of our jurisdiction is CAFA.
The other reason for believing we should not proceed in this way is that
whether this has to be brought under a statute or rule as a class or mass
action before the Louisiana Attorney General may seek these treble damages
is primarily a function of state law. The authoritative judicial interpreters of
that issue are all in Louisiana state courts. Research has indicated, though
the procedures are unfamiliar to me, that the Defendants might easily test
the reach of the Monopolies Act in the Louisiana state court by filing a motion
in limine litis that challenges the Attorney General’s capacity to bring claims
for treble damages in the manner that he has. See Polk v. New York Fire &
Marine Underwriters, Inc., 192 So. 2d 667, 670 (La. Ct. App. 1966); 1 FRANK
L. MARAIST, LA. CIV. L. TREATISE § 6:6 (2d ed. 2007). In fact, the Monopolies
Act expressly authorizes such a motion, called an “exception,” and provides
for an expedited review of the state trial court’s ruling on the motion. La.
Rev. Stat. § 51:134.
The state court’s ruling on that motion and any interlocutory appeals
that might be permitted would be dispositive on the issues before us and
would not be Erie guesswork. Because this case does not present typical, non-
CAFA diversity issues, I can perceive no reason to rush questions of state law

25
 No. 08-30465

into the federal courts. Generally, a defendant may not remove a case “on the
basis of jurisdiction conferred by section 1332” if a year has passed since the
suit was commenced. 28 U.S.C. § 1446(b); see Tedford v. Waner-Lambert Co.,
327 F.3d 423, 426-27 (5th Cir. 2003). However, Congress deleted the one-year
limitations period for removals under CAFA. 28 U.S.C. § 1453. Congress has
thereby ended any need for haste that other times accompanies a defendant’s
efforts to show that a case is removable on the basis of diversity jurisdiction.
This makes sense when one recognizes that not every state statute or rule of
procedure that permits representative actions will mirror Rule 23. It may
take some time for state procedural mechanisms to give enough shape to a
“representative” state-court action for a federal court to say confidently that it
is the type of class action “equivalent” that Congress intended to make
removable under CAFA.
I recognize that federal courts have a duty to determine their
jurisdiction based on the case that is presented at the time of removal. I am
trying to follow that command. This complaint does not present a class or
mass action on its face, and it is not brought under a statute or rule
authorizing a class action. We should find that federal jurisdiction has not
been shown.
I would reverse and order remand to state court. In fairly short order,
the skirmishing of motions can be expected, that would resolve there the
issues that the majority resolves here. If the result of those motions is to
create a class or mass action, then no doubt removal will again occur.
My disagreement with the majority is on forum and timing.
Respectfully, I believe the wrong court is making a premature decision.

26