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State ex rel McGraw v. Comcast Corp.

March 31, 2010

STATE OF WEST VIRGINIA EX REL. DARRELL V. MCGRAW, JR., ATTORNEY GENERAL, PLAINTIFF,
v.
COMCAST CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Anita B. Brody, J.

MEMORANDUM

TABLE OF CONTENTS

I. Introduction................................................................ 3

II. Background................................................................ 3

III. Discussion................................................................ 5

A. Subject Matter Jurisdiction............................................. 5

B. CAFA's Jurisdictional Requirements Are Met.............................. 6

1. Minimal Diversity Requirement Satisfied............................ 6

a. State Interest Should Be Examined on a Claim-by-Claim Basis rather than a Wholesale Basis................................. 9

i. CAFA's Purpose Is to Expand Federal Jurisdiction over Class Actions....................................... 11

ii. Caldwell Framework Is Consistent with CAFA's Goals.... 13 b. Comcast's Premium Subscribers in West Virginia Are Real Parties in Interest............................................. 14

c. Statutory Parens Patriae Authority Does Not Provide Real-Party-in-Interest Status........................................ 16

2. Numerosity Requirement Satisfied................................. 19

3. "Class Action" Exists as Defined under CAFA....................... 19

C. Sovereign Immunity Is Not Violated when a State Acts as Plaintiff............. 23

IV. Conclusion.............................................................. 26

I. INTRODUCTION

Plaintiff, the State of West Virginia ("West Virginia"), acting through its Attorney General, Darrell V. McGraw, Jr., filed this antitrust and consumer protection suit as a parens patriae action in the Circuit Court of Marshall County, West Virginia. Defendants, Comcast Corporation, Comcast Holdings Corporation, Comcast Cable Communications, LLC, and Comcast Cable Communications Holdings, Inc. (collectively "Comcast"), removed the case to the U.S. District Court for the Northern District of West Virginia. Comcast contends that there are three bases for removal: (1) the suit is a "class action" under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d)(1), and therefore removable under CAFA's removal provision, § 1453(b); (2) the suit is a "mass action" under CAFA, § 1332(d)(11), and therefore removable under § 1453(b); and (3) the suit is removable under §§ 1441 & 1446 on traditional diversity grounds, § 1332(a). West Virginia filed a Motion to Remand and the parties filed supplementary briefs in support of their respective positions. In addition, I heard oral argument on the remand motion. I conclude that this matter is removable as a class action under CAFA and therefore, the Motion to Remand is denied.*fn1

II.BACKGROUND

Comcast is a major provider of cable television services in the United States, servicing millions of customers nationwide, including numerous residents of West Virginia. Comcast provides cable services in exchange for a monthly fee based upon the level of service provided. Customers who seek "premium" services, including high definition television, digital cable, digital On-Demand, digital video recorder, and premium movie channels, pay higher monthly fees than those who request "basic" or "standard" cable television services.*fn2 Comcast's premium subscribers pay a monthly rental fee for a set-top cable box consisting of a converter box and cable descrambler. The cable box enables premium subscribers to view premium content and use premium services. Comcast estimates that it serves approximately 89,000 premium subscribers in West Virginia who utilize more than 132,000 set-top cable boxes.

The Complaint alleges that cable boxes with equivalent capabilities exist in the open market and that Comcast's purported requirement that premium subscribers rent the boxes only from Comcast constitutes impermissible tying behavior in violation of the West Virginia Antitrust Act ("WVAA"), W. Va. Code §§ 47-18-1, et seq., the West Virginia Consumer Credit and Protection Act ("WVCCPA"), W. Va. Code §§ 46A-6-101, et seq., and the common law of West Virginia. West Virginia seeks treble damages under the WVAA, damages under the WVCCPA, restitution, disgorgement, civil penalties under both the WVAA and the WVCCPA, an injunction against the alleged improper tying, and attorneys' fees and litigation expenses.

The U.S. Judicial Panel on Multidistrict Litigation ("MDL Panel") has consolidated 23 cases under my jurisdiction: 22 putative class actions, including one that was originally filed in the U.S. District Court for the Southern District of West Virginia, and this matter. The putative class actions all involve damage claims based on Comcast's alleged tying of premium cable services to the rental of set-top cable boxes. The MDL Panel conditionally transferred this action to my jurisdiction while West Virginia's remand motion lay pending before Judge Frederick P. Stamp, Jr., of the U.S. District Court for the Northern District of West Virginia. The State initially opposed the transfer but later agreed to withdraw its opposition, allowing the MDL Panel to finalize the transfer. In the interim, Judge Stamp and I agreed that I would decide the issue. Now that the transfer has been finalized, the Motion to Remand is before me.

III.DISCUSSION

A. Subject Matter Jurisdiction

This suit has been brought by the State of West Virginia alone, in its capacity as parens patriae. (Compl. ¶2.) Comcast removed the case from state court under CAFA and on traditional diversity grounds. The issue before me is whether removal was proper.

A federal court has jurisdiction over a civil case initiated in state court and removed by the defendant to federal district court if the case originally could have been brought in federal court. Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005). The original jurisdiction of federal district courts includes actions involving federal questions, 28 U.S.C. § 1331,*fn3 and those in which the diversity of citizenship requirements of 28 U.S.C. § 1332 are met. Diversity jurisdiction under CAFA exists if CAFA's requirements for class action suits are met. Those requirements are that:

* the amount in controversy must exceed $5,000,000 in the aggregate, 28 U.S.C. §§ 1332(d)(2) & (6);

* at least one class member must be a citizen of a different state than any defendant, ยง 1332(d)(2)(A), known as ...


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