Citations
- 23 F. Supp. 3d 378
Full opinion text
OPINION AND ORDER
JESSE M. FURMAN, District Judge:
This multidistrict litigation (“MDL”) proceeding, comprised of nineteen cases, pits States and the District of Columbia (collectively, the “States”) against a national credit-rating agency, McGraw Hill Financial, Inc. (formerly the McGraw-Hill Companies, Inc.) and its subsidiary, Standard & Poor’s Financial Services LLC (collectively, “S & P”). (As discussed below, one of the States — Mississippi—also names Moody’s Corporation and its subsidiary Moody’s Investor’s Service, Inc. (together, “Moody’s”) as Defendants.) In seventeen of the cases (the “State Cases”), the States brought suit in their own courts to enforce state consumer-protection and deceptive trade practice laws, only to see S & P (and, in Mississippi, Moody’s) remove the cases to federal court. The gra-varaen of the States’ Complaints in those cases is that S & P (and, in the case of Mississippi, Moody’s) misled the States’ citizens in representing that bond ratings were objective and independent rather than influenced by undisclosed and un-managed conflicts of interest. In the remaining two cases (the “Declaratory Judgment Cases”), S & P is on the plaintiffs side of the “v.” suing South Carolina and Tennessee. S & P filed those lawsuits just before the two States filed their civil enforcement actions in state court (actions that were subsequently removed and are among the State Cases that form part of this MDL). S & P principally seeks (1) declarations that the relief requested by South Carolina and Tennessee in their civil enforcement actions would be unconstitutional or otherwise violate federal law; and (2) injunctions against those two States’ civil enforcement actions.
At this stage of these cases, the merits of the States’ and S & P’s claims are not at issue. Instead, the question is where the parties’ disputes should be resolved— namely, whether they should be heard in federal court or in the relevant state courts. The States do not — and, in light of the Credit Rating Agency Reform Act of 2006, Pub.L. No. 109-291, 120 Stat. 1327 (2006) (“CRARA”), cannot — dispute that there is a strong federal interest in the regulation of national credit-rating agencies, including S & P and Moody’s (the two largest credit-rating agencies in the country). Instead, relying on the well-established proposition that federal courts are courts of limited jurisdiction, and citing the long history of States seeking to enforce their own consumer-protection and deceptive trade practices laws in their own courts, the States argue that their disputes with S & P and Moody’s should be litigated in the state courts.
By contrast, the rating agencies contend that the disputes should be litigated in federal court. Specifically, S & P contends that all of the State Cases present substantial federal questions giving rise to jurisdiction under Title 28, United States Code, Section 1331. With respect to the Mississippi case, S & P and Moody’s jointly argue in the alternative that jurisdiction is proper pursuant to either the “mass action” provisions of the Class Action Fairness Act of 2005, Pub.L. No. 109-2, 119 Stat. 4 (2005) (“CAFA”), or the general diversity statute, Title 28, United States Code, Section 1332(a). Finally, although the parties do not dispute the existence of federal jurisdiction with respect to the Declaratory Judgment Cases, South Carolina and Tennessee ask the Court to dismiss those cases in deference to their state civil enforcement actions.
Now pending are two joint motions raising these issues, addressed in three sets of briefs. First, all seventeen States involved in the MDL jointly move, pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, to remand the State Cases back to state court on the ground that, as pleaded, they arise solely under state law, not federal law. Mississippi joins in that motion, and — in light of the fact that S & P and Moody’s removed its ease on alternative grounds — argues in a separate set of briefs that federal jurisdiction is also lacking under both CAFA and the general diversity statute. In addition, Mississippi seeks an order directing S & P and Moody’s to pay the State’s attorney’s fees and costs on the ground that the removal of the case was not objectively reasonable. Finally, Tennessee and South Carolina move to dismiss the Declaratory Judgment Cases brought by S & P, principally on the theory that the Court must refrain from deciding them in light of the States’ parallel civil enforcement actions under the “abstention” doctrine established by the Supreme Court in Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971).
For the reasons discussed below, the States’ motions are granted (except insofar as Mississippi seeks attorney’s fees and costs), the State Cases are all remanded back to state court, and the Declaratory Judgment Cases are dismissed altogether. That result is compelled by the fundamental and oft-repeated proposition that, while state courts are courts of general jurisdiction, federal courts “are courts of limited jurisdiction” and “possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree.” Rasul v. Bush, 542 U.S. 466, 489, 124 S.Ct. 2686, 159 L.Ed.2d 548 (2004) (internal quotation marks omitted). In light of that proposition, the Supreme Court has instructed that a federal court must “presume! ] that a cause lies outside [its] limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (citations omitted). The presumption against federal jurisdiction is especially strong in cases of this sort, involving States seeking to vindicate quasi-sovereign interests in enforcing state laws and protecting their own citizens from deceptive trade practices and the like. Put simply, S & P and Moody’s fail in their efforts to rebut that presumption, as the State Cases arise solely under state law and Congress has not authorized federal courts to hear such cases. Further, in light of that conclusion and the fact that S & P can raise any and all defenses it may have under federal law in state court, indulging S & P’s Declaratory Judgment Cases would constitute an unwarranted interference in South Carolina’s and Tennessee’s state court proceedings.
BACKGROUND
The following background is taken from the States’ Complaints and federal regulatory materials, which are either referenced by the parties or are important to the understanding of the jurisdictional issues in question. Because this Court has an independent obligation to establish the existence of subject-matter jurisdiction over these cases, the facts alleged in the Complaints are accepted as true for purposes of these motions, but no inferences are drawn in either party’s favor; the party asserting jurisdiction must show it affirmatively. See, e.g., Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir.1998). Moreover, in determining whether jurisdiction exists, consideration of extrinsic materials and documents of which judicial notice may be taken is permissible. See, e.g., Phifer v. City of New York, 289 F.3d 49, 55 (2d Cir.2002). For the sake of simplicity- — and following the parties’ lead in their briefing — citations to information common to the Complaints are to the Complaint filed by the State of Tennessee. (Docket No. 1-1, 13 Civ. 4098 (“Tenn. Compl.”)).
A. The Rating Agencies
As noted, S & P and Moody’s are in the business of selling credit ratings. “A credit rating is a rating agency’s assessment with respect to the ability and willingness of an issuer to make timely payments on a debt instrument, such as a bond, over the life of that instrument.” S.Rep. No. 109-326, at 2 (2005), 2006 U.S.C.C.A.N. 865, 867 (Conf.Rep.). Put more simply, a credit rating is an attempt to predict how likely it is that an entity that has borrowed money will pay that money back. Credit-rating agencies develop their ratings by inputting a series of variables into a computerized model that analyzes the risks associated with the financial instrument in question. (Tenn. Compl. ¶ 43). For residential-mortgage-backed financial products, for example, that information would include the loan principal amount, loan-to-value ratios, price data for the relevant geographic markets, credit scores of the borrowers, and the structure of the product being offered. (Id.). S & P’s analytical models “are built on a series of assumptions with respect to probability of default and asset correlation,” so the models will give different outputs depending on the agency’s estimate of the assumed variables. (Id. ¶ 44). Once the model has been applied to the data, the output is summarized using a letter-grade system that declines in quality as follows: AAA, AA, A, BBB, BB, B, CCC, CC, C, and D. (Tenn. Compl. ¶ 45). See S.Rep. No. 109-326, at 3. The top four grades designate investment-grade products; the other six designate speculative-grade — or “junk”— bonds. S.Rep. No. 109-326, at 3.
A rating of AAA reflects S & P’s judgment that the issuer’s “capacity to meet [its] financial commitment” with respect to the product being rated “is extremely strong.” (Tenn. Compl. ¶ 45). More specifically, the AAA rating is appropriate only if a particular debt offering passes “the most severe stress test” S & P uses. (Tenn. Compl. ¶ 46). Some products, like collateralized debt obligations and residential-mortgage-backed securities, have multiple “tranches,” or tiers, which receive different credit ratings and are sold separately. (Id. ¶¶ 43, 49). In such cases, the expectation is often that the safest, or most “senior,” tier would receive an AAA rating, allowing the issuer to offer a lower interest rate while still attracting customers to buy it. If the senior tier fails to receive such a rating on the first try, however, “S & P is supposed to let the issuer know that [that tier] could only receive a AA or lower rating.” (Id. ¶ 48). In such cases, S & P also informs the issuer of the “credit enhancement” necessary to achieve an AAA rating. (Id. ¶¶ 68-69). The issuer can then choose to issue the security without the AAA rating or alter the product’s structure to obtain the requisite credit enhancement. (Id.).
The supply side of the market for credit ratings is characterized by sharp competition among a small number of firms. Federal law deems only ten firms to be “nationally recognized statistical rating organizations” (“NRSROs”). See Securities & Exchange Commission, Office of Credit Ratings, http://www.sec.gov/about/offices/ ocr.shtml (last visited June 2, 2014) (listing all current NRSRO registrations); see also Securities & Exchange Commission, Annual Report on Nationally Recognized Statistical Rating Organizations, at 4 (2012), available at http://www.sec.gov/ divisions/marketreg/ratingagency/ nrsroannrepl212.pdf (“Annual Report”). Because such a designation operates as a de facto license to enter the business of issuing credit ratings of financial products, those firms control nearly the entire market. (Tenn. Compl. ¶ 50). In fact, as of 2012, the top two firms — S & P and Moody’s — controlled approximately eighty-three percent of the market share for credit ratings; they and Fitch, the third largest firm, issued ninety-six percent of all ratings. See Annual Report, at 8. In short, the credit-rating industry is concentrated and, for the last forty years, has been significantly influenced by federal regulation.
The business is also very lucrative to the few firms who control it. S & P’s annual revenues exceed $1 billion, forty percent of which is attributable to rating structured financial products like residential-mortgage-backed securities. (Tenn. Compl. ¶ 51). There are two primary ways for credit-rating agencies to make money: the issuer-pays model and the subscription model. When the NRSRO designation came into use, the dominant model in the industry was the latter. Under that paradigm, “investors pay the rating agency a subscription fee to access its ratings.” Annual Report, at 13. Today, however, NRSROs tend to employ the issuer-pays model, in which the companies seeking ratings from the rating agencies — who tend to be repeat players — pay the fees associated with issuing their own ratings. (Tenn. Compl. ¶¶ 65, 67). For complex instruments like structured financial products, the fee charged is determined based on “the complexity and size of the ... [product] being analyzed.” (Id. ¶ 65).
The combination of those forces, the States complain, yields a market in which S & P is systematically incentivized to “please” its customers. (Id. ¶ 67). Because S & P can influence its ratings by changing the assumptions that underlie its models, the States allege, S & P is motivated to do so. The threat, should S & P refuse to tinker with its analytical models, is that the issuers will engage in “ratings shopping” to find a competitor who is not as scrupulous. (Id. ¶ 69-70). And because issuers get a second bite at the apple if their initial structure does not yield AAA-rated senior-tier debt, the issuers “can inform S & P of the credit enhancement levels proposed by either Moody’s or Fitch in order to influence the outcome of S & P’s analysis.” (Id. ¶ 69).
Significantly, however, the States explicitly do not challenge the issuer-pays model itself, let alone any individual ratings. (Id. ¶ 12). Instead, the States allege that S & P’s public statements about the integrity, independence, and objectivity of its ratings (and in Mississippi’s case, Moody’s as well) violated their respective consumer-protection laws. (Id. ¶ 260). The States point, for example, to various assertions S & P made that were either contained in, or regarded its adherence to, its Code of Professional Conduct (the “Code of Conduct”). (See, e.g., id. ¶¶ 7, 13, 61, 73, 78, 90-91, 99-105, 260). S & P adopted its Code of Conduct in October 2005, and it explicitly stated that the adoption of the Code of Conduct “represented further alignment of [S & P’s] policies and procedures with the [International Organization of Securities Commissions] (TOSCO’) Code of Conduct [Fundamentals for Credit Rating Agencies].” (Id. ¶ 78 (first alteration in original)). The IOSCO Code of Conduct, first published in December 2004, is a voluntary set of rules promulgated by an international organization of national securities regulators. See Technical Comm, of the Int’l Org. of Sec. Comm’ns, Code of Conduct Fundamentals for Credit Rating Agencies (2004) (“IOSCO Code”), available at http:// www.iosco.org/library/pubdoes/pdf/ IOSCOPD180.pdf. According to the States, a “key principle” of the IOSCO Code of Conduct is “the need for credit rating agencies ... to maintain independence from the issuers who pay it for its ratings.” (Tenn. Compl. ¶ 80).
B. CRARA
In 2006, Congress enacted CRARA to reform the regulatory scheme applicable to credit-rating agencies “by fostering accountability, transparency, and competition.” S.Rep. No. 109-326, at 2, 2006 U.S.C.C.A.N. at 866. Among other things, CRARA requires NRSROs to “establish, maintain, and enforce written policies and procedures reasonably designed ... to address and manage any conflicts of interest that can arise from such business.” 15 U.S.C. § 78o-7(h). The statute further authorizes the Securities and Exchange Commission (“SEC”) to
issue final rules ... to prohibit, or require the management and disclosure of, any conflicts of interest relating to the issuance of credit ratings by a [NRSRO], including, without limitation, conflicts of interest relating to ... the manner in which a [NRSRO] is compensated by the obligor ... for issuing credit ratings.
Id. Although this exclusively delegated power unambiguously includes the authority to “prohibit” conflicts of interest arising from the issuer-pays model, the SEC has chosen a more measured course. Through notice-and-comment rulemaking, the SEC issued regulations permitting, albeit closely regulating, use of the issuer-pays model. See, e.g., 17 C.F.R. § 240.17g-5 (2014) (deeming the issuer-pays model to represent a “conflict of interest” for purposes of federal regulations and regulating such conflicts). As a general matter, the regulations permit NRSROs to employ the issuer-pays model only if they (1) disclose such conflicts of interest; and (2) maintain written policies to address and manage such conflicts. See 17 C.F.R. § 240.17g-5(a) (2014). In announcing its regulations, the SEC stated that prohibiting the issuer-pays model might “adversely impact the ability of an NRSRO to operate as a credit rating agency.” Oversight of Credit Rating Agencies Registered as Nationally Recognized Statistical Rating Organizations, Exchange Act Release No. 55857, 72 Fed.Reg. 33564, 33595 (June 18, 2007). The SEC also stated that disclosure of such arrangements would be adequate to allow consumers to evaluate whether, and to what extent, credit-rating agencies’ judgment was influenced by the fact that they were paid by the companies whose securities they rate. See id.
Importantly, CRARA does not purport to preempt all state laws as applied to NRSROs. Indeed, CRARA’s preemption is explicitly limited to “the substance of credit ratings or the procedures and methodologies by which any [NRSRO] determines credit ratings.” 15 U.S.C. § 78o-7(c)(2). Underscoring the limited nature of CRARA’s preemptive effect, the statute explicitly provides that “[n]othing in this subsection prohibits the securities commission (or any agency or office performing like functions) of any State from investigating and bringing an enforcement action with respect to fraud or deceit against any [NRSRO].” 15 U.S.C. § 78o-7(o). Thus, CRARA delineates the respective duties of the SEC and its State counterparts. Likewise, the SEC’s regulations do not purport to trammel on the States’ authority, explicitly reserved by CRARA’s text, to enforce state consumer-protection laws by bringing fraud suits against NRSROs. And while SEC regulations require NRSROs to disclose and manage conflicts of interest— and indeed prohibit States from regulating the substance of credit ratings — those regulations do not expressly prohibit States from preventing, through litigation, NRSROs from publicly stating that they adequately disclose and manage conflicts of interest when they do not.
As part of this scheme, CRARA and the regulations promulgated thereunder incorporate — and make binding on NRSROs in the United States — many of the provisions of the IOSCO Code of Conduct. (See Def.’s Mem. Law Opp. Pis.’ Mot. Remand (Docket No. 88) 17-18 (comparing IOSCO Code and CRARA provisions)). Like CRARA and its related regulations, the IOSCO Code requires disclosure and promulgation of written procedures governing conflicts of interest, including the use of the issuer-pays model. See IOSCO Code §§ 2.6-2.8. But S & P’s Code of Conduct, which was adopted in October 2005, “represented further alignment of its policies and procedures with the [IOSCO Code of Conduct].” (Tenn. Compl. ¶ 78). Thus, similarities between the S & P Code of Conduct, on the one hand, and IOSCO’s and CRARA’s standards, on the other, are more likely attributable to S & P’s desire to adhere to IOSCO’s Code of Conduct than they are to the requirements of CRARA, for the simple reason that the S & P Code of Conduct predated CRARA, which was enacted on September 29, 2006, and did not take effect until June 26, 2007. See Pub.L. No. 109-291, 120 Stat. 1327. (Tenn. Compl. ¶¶ 78-80). Today, unlike in 2005, SEC regulations require any aspiring NRSRO to file its Code of Conduct with that agency, 17 C.F.R. §§ 240.17g-1(a) & (f); 17 C.F.R. § 240.17g-5(a)(2), and CRARA requires that the SEC review such filings at least annually and any time they are changed, 15 U.S.C. § 78o-7(h)(4)(B).
C. Procedural History
The seventeen State Cases consolidated before this Court are part of a wave of state civil enforcement actions brought against S & P and Moody’s. Ml of the suits are brought under state consumer-protection and deceptive trade practices statutes; they seek various remedies, including injunctive relief, civil penalties, and disgorgement. (Tenn. Compl. 64-65). Of the cases in the MDL, Mississippi’s suit— against both S & P and Moody’s — was filed first, on May 10, 2011. (Docket No. 1-1, 13 Civ. 4049). S & P and Moody’s removed that case to the United States District Court for the Southern District of Mississippi on June 7, 2011, invoking federal jurisdiction under both the general diversity statute, Title 28, United States Code, Section 1332(a), and CAFA. (Docket No. 1, 13 Civ. 4049). In February 2013, another thirteen States and the District of Columbia filed similar suits, albeit only against S & P. On March 6, 2013, S & P removed those cases to federal court, but instead of relying on CAFA or the general diversity statute, S & P invoked federal-question jurisdiction. On that same date, 5 & P (but not Moody’s) filed a supplemental notice of removal in the Mississippi action asserting that the federal court also had jurisdiction pursuant to the federal-question statute. The last two State Cases forming this MDL were filed against S & P on June 27, 2013, and October 9, 2013; S 6 P removed them as well on the basis of federal-question jurisdiction.
As noted, the last two suits that form this MDL are declaratory judgment actions brought by S & P against the States of South Carolina and Tennessee. S & P filed the suits in federal court after receiving statutory notice letters from the States advising S & P that they were contemplating bringing civil enforcement proceedings in state court. (Mem. Law Opp’n Defs.’ Mots. To Dismiss (Docket No. 34) 3). S & P filed the suits on February 4, 2013, after receiving assurances from at least one of the state attorneys general that the State would not file its own suit until at least the following day. (Decl. Olha N.M. Rybakoff Pursuant 28 U.S.C. § 1746 (Docket No. 21, 13 Civ. 4100) ¶ 5; Decl. Jennifer E. Peacock Pursuant 28 U.S.C. § 1746 (Docket No. 23,13 Civ. 4100) ¶ 10). On that following day, Tennessee did in fact file its state civil enforcement action, which was subsequently removed to federal court and transferred here as part of the MDL. (Notice of Removal (Docket No. 1, 13 Civ. 4098); id., Ex. A). Just over one week later, South Carolina filed an analogous civil enforcement action; it too was later removed to federal court and made part of this MDL. (Notice of Removal (Docket No. 1, 13 Civ. 4051); id., Ex. A). In its declaratory judgment action Complaints, as amended, S & P seeks (1) declarations that the relief requested by South Carolina and Tennessee in their civil enforcement actions would be unconstitutional; and (2) injunctions against the state civil enforcement actions, as well as attorneys’ fees and costs. (Am. Compl. (Docket No. 15, 13 Civ. 4052) 7-8; Am. Compl. (Docket No. 12, 13 Civ. 4100) 6; Mem. Law Opp’n Defs.’ Mots. To Dismiss 4-5). Notably, S & P concedes that it filed the actions to preempt the States’ civil enforcement actions and secure a federal forum. (Oct. 4, 2013 Conference Tr. (Docket No. 54) (“Oral Arg. Tr.”) 60; Deck Jennifer E. Peacock (Docket No. 29), Am. Ex. A, at 26-27).
On June 6, 2013, with motions to dismiss pending in the two Declaratory Judgment Cases and motions to remand pending in most of the State Cases, the Judicial Panel on Multidistrict Litigation (“JPML”) ordered that all the cases pending in federal court at the time (other than the federal civil enforcement action) be transferred to this District for pretrial purposes; the cases filed later by Indiana and New Jersey were transferred thereafter. (Transfer Order (Docket No. 1) (“Transfer Order”), at 1; Conditional Transfer Order (CTO-1) (Docket No. 23); Conditional Transfer Order (CTO-2), Docket No. 56). On July 16, 2013, this Court ordered new briefing on the motions to dismiss the Declaratory Judgment Cases and the motions to remand the State Cases (including separate briefing on issues exclusive to the Mississippi case because of the rating agencies’ alternative theories for removal). (Docket No. 20). (The United States Department of Justice submitted a Statement of Interest urging remand of the State Cases. (Docket No. 24).) The Court heard oral argument on the motions on October 4, 2013, and ordered post-argument letter briefs on several issues. (Docket Nos. 47, 48, 50, 51). On December 12, 2013, the Court requested that S & P, Tennessee, and South Carolina file letter briefs addressing what impact, if any, the Supreme Court’s decision in Sprint Communications, Inc. v. Jacobs, — U.S. —, 134 S.Ct. 584, 187 L.Ed.2d 505 (2013), had on their arguments on the motion to dismiss. (Docket No. 61). On January 14, 2014, the Court requested that S & P, Moody’s, and Mississippi file letter briefs addressing what impact, if any, the Supreme Court’s decision in Mississippi ex rel. Hood v. AU Optronics Corp., — U.S. —, 134 S.Ct. 736, 187 L.Ed.2d 654 (2014), had on their arguments on Mississippi’s motion to remand. (Docket No. 67).
As a result of the foregoing, there are now three sets of briefs regarding the motions pending before the Court. The first concerns the joint motion to remand filed by the States of Arizona, Arkansas, Colorado, Delaware, Idaho, Indiana, Iowa, Maine, Mississippi, Missouri, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, and Washington. (Pis.’ Consolidated Br. Supp. PL States Mot. Remand (Docket No. 31) 1; Docket No. 57 (permitting New Jersey to move for remand and join the States’ previously filed consolidated remand briefs)). The question presented in that motion is whether the States’ actions raise a federal question sufficient to support jurisdiction under Title 28, United States Code, Section 1331. (See Docket Nos. 31, 33, 40). The second set of briefs concerns issues particular to the motion to remand filed by the State of Mississippi — namely, whether this Court has jurisdiction over that case under the “mass action” removal provisions of CAFA or the general diversity statute, Title 28, United States Code, Section 1332(a). (See Docket Nos. 27, 35, 38). Those papers also include the parties’ letter briefs in response to this Court’s January 14th Order. (See Docket Nos. 69-70). The third set of briefs concerns whether this Court should dismiss, primarily on Younger abstention grounds, S & P’s Declaratory Judgment Cases against the States of Tennessee and South Carolina. (See Docket Nos. 26, 34, 39). That last set of papers also includes the letter briefs filed in response to this Court’s December 12th Order. (See Docket Nos. 62-63). The Court addresses each set of arguments in turn.
DISCUSSION
A. The Motions To Remand
It is axiomatic that “federal courts are courts of limited jurisdiction and, as such, lack the power to disregard such limits as have been imposed by the Constitution or Congress.” Purdue Pharma L.P. v. Kentucky, 704 F.3d 208, 213 (2d Cir.2013) (internal quotation marks omitted). As a general matter, Congress has granted federal district courts original jurisdiction over cases in which there is a federal question, see 28 U.S.C. § 1331, and certain cases between citizens of different States, see 28 U.S.C. § 1332. See generally Ortiz v. City of New York, 13 Civ. 136(JMF), 2013 WL 2413724, at *1 (S.D.N.Y. June 4, 2013). Where a plaintiff files such a case in state court, Title 28, United States Code, Section 1441(a) allows a defendant — with some exceptions not relevant here — to “remove[ ]” the case to federal district court. In other words, an action may be removed “only if the case could have been originally filed in federal court.” Hernandez v. Conriv Realty Assocs., 116 F.3d 35, 38 (2d Cir.1997). “Judicial scrutiny is especially important in the context of removal, where considerations of comity play an important role.” Veneruso v. Mount Vernon Neighborhood Health Ctr., 933 F.Supp.2d 613, 618 (S.D.N.Y.2013) (internal quotation marks omitted). And the importance of such scrutiny is at its zenith where, as here, the suit was brought by a State itself, as “the claim of sovereign protection from removal” in such circumstances “arises in its most powerful form.” Nevada v. Bank of Am. Corp., 672 F.3d 661, 676 (9th Cir.2012) (internal quotation marks omitted).
In fact, “ ‘[i]n light of the congressional intent to restrict federal court jurisdiction, as well as the importance of preserving the independence of state governments, federal courts construe the removal statute narrowly, resolving any doubts against removability.’ ” Purdue Pharma, 704 F.3d at 213 (quoting Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269, 274 (2d Cir.1994)); accord Veneruso, 933 F.Supp.2d at 618. Such “strict construction of the right of removal” also “makes good sense,” as “[a]n order denying a motion to remand a case to state court is ordinarily not appealable until after a final judgment or order is filed in the case.” 16 James Wm. Moore et al., Moore’s Federal Practice § 107.05 (3d ed.2012). “If the court of appeals determines that the case should have been remanded on the ground that there was no federal jurisdiction, the judgment on the merits must also be vacated because of the lack of jurisdiction. If the case was improperly remanded, at least the state court judgment will not be invalidated because of a lack of subject matter jurisdiction.” Id.; cf. New York v. Shinnecock Indian Nation, 686 F.3d 133, 136 (2d Cir.2012) (vacating a judgment, after nine years of litigation and trial, for lack of subject-matter jurisdiction, where the district court had denied remand).
In considering a motion to remand, courts generally look at the original complaint. See, e.g., In re Rezulin Prods. Liab. Litig., 133 F.Supp.2d 272, 284-85 & 284 n. 35 (S.D.N.Y.2001). The removing party — here, the rating agencies — bears the burden of establishing the existence of jurisdiction. See, e.g., Blockbuster, Inc. v. Galeno, 472 F.3d 53, 57-58 (2d Cir.2006).
1. The Joint Motion To Remand for Lack of a Federal Question
S & P removed each State Case on the ground that it presents a federal question. As noted, under Title 28, United States Code, Section 1441(a), a party may remove “[a]ny civil action of which the district courts have original jurisdiction.” Section 1331, the federal-question statute, provides that “[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. As a general matter, a claim falls within that grant of jurisdiction “only [in] those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiffs right to relief necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). Under this so-called “well-pleaded complaint rule, the plaintiff is the master of the complaint, free to avoid federal jurisdiction by pleading only state claims even where a federal claim is also available.” Marcus v. AT & T Corp., 138 F.3d 46, 52 (2d Cir.1998).
The well-pleaded complaint rule, however, has a “corollary ... — the ‘artful pleading’ rule — pursuant to which plaintiff cannot avoid removal by declining to plead ‘necessary federal questions.’ ” Romano v. Kazacos, 609 F.3d 512, 518-19 (2d Cir.2010) (quoting Rivet v. Regions Bank, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998)); see Sullivan v. Am. Airlines, Inc., 424 F.3d 267, 271 (2d Cir.2005) (“[A] plaintiff may not defeat federal subject-matter jurisdiction by ‘artfully pleading’ his complaint as if it arises under state law where the plaintiffs suit is, in essence, based on federal law.”). One application of that rule is the “substantial federal question doctrine,” which recognizes that “in certain cases federal-question jurisdiction will lie over state-law claims that implicate significant federal issues.” Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 312, 125 S.Ct. 2363,162 L.Ed.2d 257 (2005); see also Veneruso, 933 F.Supp.2d at 619, 622-23; Sung ex rel. Lazard Ltd. v. Wasserstein, 415 F.Supp.2d 393, 402 (S.D.N.Y. 2006). As the Supreme Court has explained, that doctrine “captures the commonsense notion that a federal court ought to be able to hear claims recognized under state law that nonetheless turn on substantial questions of federal law, and thus justify resort to the experience, solicitude, and hope of uniformity that a federal forum offers on federal issues.” Grable, 545 U.S. at 312, 125 S.Ct. 2363.
Grable, the leading modern case on the substantial federal-question doctrine, involved a suit to quiet title to property that the Internal Revenue Service (“IRS”) had seized from the plaintiff to satisfy a federal tax delinquency, which the IRS then sold to the defendant. The plaintiff alleged that the defendant’s record title was invalid because, in providing notice of the seizure by mail rather than by personal service, the IRS had failed to comply with the notice requirements of federal law. See id. at 311, 125 S.Ct. 2363. The defendant removed the case to federal court, and that removal was upheld by the lower courts. In reviewing the case, the Supreme Court held that “federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Gunn v. Minton, — U.S. —, 133 S.Ct. 1059, 1065, 185 L.Ed.2d 72 (2013) (discussing Grable). “Where all four of these requirements are met ..., jurisdiction is proper because there is a ‘serious federal interest in claiming the advantages thought to be inherent in a federal forum,’ which can be vindicated without disrupting Congress’s intended division of labor between state and federal courts.” Id. (quoting Grable, 545 U.S. at 313-14, 125 S.Ct. 2363).
Applying that test, the Grable Court held that removal of the plaintiffs suit to quiet title was proper. First, the plaintiff had “premised its superior title claim on a failure by the IRS to give it adequate notice, as defined by federal law.” 545 U.S. at 314-15, 125 S.Ct. 2363. Thus, whether the plaintiff had received notice adequate within the meaning of federal law was “an essential element of its quiet title claim.” Id. at 315, 125 S.Ct. 2363. Second, “the meaning of the federal statute [was] actually in dispute”; in fact, it appeared “to be the only legal or factual issue contested in the case.” Id. Third, the Court concluded that “[t]he meaning of the federal tax provision [was] an important issue of federal law that sensibly belonged] in a federal court” given the IRS’s “strong interest in the prompt and certain collection of delinquent taxes,” and the interest of “buyers (as well as tax delinquents)” in having “judges used to federal tax matters” resolve whether the IRS “has touched the bases necessary for good title.” Id. (internal quotation marks omitted). Finally, the Court held that federal jurisdiction would not disrupt the federal-state balance “because it will be the rare state title case that raises a contested matter of federal law.” Id. Thus, “federal jurisdiction to resolve genuine disagreement over federal tax title provisions will portend only a microscopic effect on the federal-state division of labor.” Id.
Significantly, the Supreme Court has made clear that Grable calls for federal jurisdiction over only a “special and small category” of cases. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006); See id. at 701, 126 S.Ct. 2121 (referring to “the slim category that Grable exemplifies”); see also Gunn, 133 S.Ct. at 1064-65 (same). For example, “[t]he ‘mere presence’ of a federal issue in a state cause of action” and the “mere assertion of a federal interest” are not enough to confer federal jurisdiction. Veneruso, 933 F.Supp.2d at 622 (quoting Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986), and citing Empire Healthchoice, 547 U.S. at 701, 126 S.Ct. 2121); accord Bank of Am., 672 F.3d at 674-75. Nor does the presence of a federal defense suffice— “even if the parties concede that the defense is the only disputed issue in the case” and, in that sense, “necessary to the resolution” of the state law claim. Shinnecock Indian Nation, 686 F.3d at 138-40 & n. 5; See id. at 140 n. 4 (stating that jurisdiction is inappropriate under Grable where a federal issue is “not necessarily raised by [the plaintiffs] affirmative claims,” but rather “comes into the case as a defense”); see also, e.g., Gilmore v. Weatherford, 694 F.3d 1160, 1173 (10th Cir.2012) (“To determine whether an issue is ‘necessarily’ raised, the Supreme Court has focused on whether the issue is an ‘essential element’ of a plaintiffs claim.” (quoting Grable, 545 U.S. at 315, 125 S.Ct. 2363)); see generally Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425 (holding that a federal defense to a state cause of action does not support federal-question jurisdiction). And finally, if a claim does not present “a nearly pure issue of law, one that could be settled once and for all and thereafter would govern numerous ... cases,” but rather is “fact-bound and situation specific,” federal-question jurisdiction will generally be inappropriate. Empire Healthchoice, 547 U.S. at 700-01, 126 S.Ct. 2121 (internal quotation marks omitted).
Applying the foregoing standards, S & P’s arguments for federal-question jurisdiction fail. As an initial matter, there is no dispute that the States’ Complaints exclusively assert state-law causes of action — for fraud, deceptive business practices, violations of state consumer protection statutes, and the like. (Tenn. Compl. ¶¶ 258-61; accord Mem. Law Opp’n Pis.’ Mots. Remand 13, 20). The crux of those claims is that S & P made false representations, in its Code of Conduct and otherwise, and that those representations harmed the citizens of the relevant State. Tennessee’s statute, by way of example, gives the attorney general authority to bring suit against a business that “[e]ngag[es] in any ... act or practice which is deceptive to the consumer or to any other person.” Tenn.Code Ann. § 47-18-104(b)(27). To establish a violation of that statute, he must show “(1) that the defendant engaged in an unfair or deceptive act or practice declared unlawful by the [Tennessee Consumer Protection Act] and (2) that the defendant’s conduct caused an ‘ascertainable loss of money or property, real, personal, or mixed, or any other article, commodity, or „ thing of value wherever situated....’” Hanson v. J.C. Hobbs Co., Inc., No. W2001-02523-COA-R3-CV, 2012 WL 5873582, at *9 (Tenn.Ct.App. Nov. 21, 2012) (quoting Tenn.Code Ann. § 47-18-109(a)(l)). To prevail, therefore, the Tennessee attorney general need not show that S & P violated CRARA or any other federal provision. That is, the right that he seeks to vindicate “is the right not to be lied to in a fashion that causes reliance and results in financial injury, a right possessed by all [Tennessee] residents,” not a right created by federal law. Fin. & Trading Ltd. v. Rhodia S.A., No. 04 Civ. 6083(MBM), 2004 WL 2754862, at *6 (S.D.N.Y. Nov. 30, 2004) (Mukasey, J.). Notwithstanding the fact that S & P is an NRSRO, and thus subject to federal regulation, Tennessee’s claims “may be assessed entirely by applying [state] common law standards to the facts in this case.” Id. at *7.
The contrast with Grable and its progeny is telling — and dispositive. In Grable, the plaintiff would “necessarily” have had to show a violation of federal law even if the defendant had never removed the case to federal court and even if the defendant had never invoked federal law as a defense. See 545 U.S. at 314-15, 125 S.Ct. 2363; see also Gunn, 133 S.Ct. at 1065 (holding that the first Grable requirement was met where the plaintiff, in order to prevail on his legal malpractice claim, had to show that he would have prevailed on his claim under federal patent law); Broder v. Cablevision Sys. Corp., 418 F.3d 187, 195 (2d Cir.2005) (holding the same where the plaintiff alleged breach of a contract provision that incorporated federal law by reference and breach of a New York statute by failing to provide uniform rates allegedly required by federal law). By contrast, if S & P had never invoked federal law in these cases, the States would not have had to prove a violation of CRARA or any other federal law (and may still not need to) in order to prevail on their claims. In that sense, proving the States’ claims does not necessarily depend on an interpretation of CRARA or any regulations enacted pursuant to CRARA. See, e.g., Bank of Am., 672 F.3d at 674-75 (rejecting removal of claims alleging violations of Nevada’s Deceptive Trade Practices Act even where they alleged that misrepresentations violated the federal Fair Debt Collection Practices Act); Glazer Capital Mgmt., LP v. Elec. Clearing House, Inc., 672 F.Supp.2d 371, 377 (S.D.N.Y.2009) (“That plaintiffs could have brought federal ... claims based on the factual allegations contained in the complaint is not sufficient to convert the state law claims [of fraud and negligent misrepresentation] into federal questions.”); Baker v. BDO Seidman, L.L.P., 390 F.Supp.2d 919, 925 (N.D.Cal.2005) (holding that plaintiffs’ “claims of fraud and deceit and all the other cognate claims derived therefrom are capable of being resolved on state law bases without the interpretation of federal law”).
In arguing otherwise, S & P contends that, in order to determine whether its statements were false, a court will necessarily have to consult CRARA to determine the content of concepts such as “independence” and “objectivity” as applied to NRSROs. (See Mem. Law Opp’n Pis.’ Mots. To Remand 19, 22-23). S & P acknowledges that the States allege violations of S & P’s own internal Code of Conduct (that is, that S & P’s representations in its Code of Conduct and elsewhere were false or fraudulent), but argues that because CRARA requires it to maintain such a Code of Conduct, the implication of the States’ Complaints is that S & P has violated federal law. (Id. at 14). Noting that S & P’s Code of Conduct is referenced at least 234 times by the States’ Complaints, S & P argues that the States’ suits “turn on whether S & P was in compliance with CRARA’s provisions requiring it to maintain and enforce written policies and procedures reasonably designed to manage conflicts of interest.” (Id. at 15). According to S & P, therefore, the decisive factor conferring jurisdiction in this case is the fact that CRARA affirmatively requires S & P to maintain and make publicly available its Code of Conduct, and further that CRARA provides globally applicable definitions of concepts like “objectivity” and “independence.” Moreover, S & P asserts that the Complaints’ frequent references to the IOSCO Code of Conduct are just a way to artfully plead around the federal issues upon which their claims rest. (Id. at 16-19).
S & P’s argument is creative but ultimately unpersuasive. First, although S & P is indeed required by federal law to have a code of conduct, “[t]he source of’ that requirement “is irrelevant to the theory of the [States’] complaint[s].” New York v. Grasso, 350 F.Supp.2d 498, 503 (S.D.N.Y.2004). Instead, “the existence” of S & P’s code (and, of course, its truth or falsity) “is all that is necessary to ground the allegation[s]” of false representations and fraud. Id.; see also, e.g., Sung, 415 F.Supp.2d at 406 (“[T]hat the [allegedly false and misleading] statements were made in a federally required document does not change the inquiry whether, standing alone, they were false or misleading ... under state law.”). Second, and in any event, “nothing in CRARA says that the SEC defines the truth or falsity of statements made about the independence of S & P’s credit rating process; indeed, the statute provides that the SEC may not regulate the substance of credit ratings or the procedures or methodologies used to determine them.” McGraw-Hill Cos., 2013 WL 1874279, at *4 (citing 15 U.S.C. § 78o-7(c)(2)). At bottom, to the extent that there is anything in CRARA that speaks to the States’ claims, S & P’s argument is nothing more than a claim of defensive preemption — that is, a claim that the States’ actions, or certain aspects of the relief they seek, are preempted by the scope and nature of CRARA and its regulatoiy scheme. As noted above, it is well established that— except for the rare case of complete preemption, which S & P concedes this is not (see Defs.’ Mem. Opp’n Pl.’s Mot. Remand and Costs (Docket No. 30, 13 Civ. 4098) 3) — claims of defensive preemption are not sufficient to give rise to federal jurisdiction. See, e.g., Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425.
For similar reasons, S & P’s heavy reliance on D’Alessio v. New York Stock Exchange, Inc., 258 F.3d 93 (2d Cir.2001), is misplaced. D’Alessio involved a floor broker who was suspended by the New York Stock Exchange (“NYSE”) after a Government investigation into his compliance with Section 11(a) of the Securities Exchange Act of 1934. Thereafter, D’Alessio sued the NYSE in state court, “alleging that the NYSE and various senior officials employed by the NYSE conspired to violate applicable statutory and regulatory prohibitions governing unlawful trading,” including Section 11(a) and regulations thereunder. Id. at 97. On appeal, the Second Circuit held that the case was properly removed to federal court because adjudication of the plaintiffs claims “necessarily require[d] an inquiry” into the meaning of Section 11(a) and other provisions of federal law. Id. at 103; see also id. at 101 (noting that “the gravamen of D’AIessio’s state law claims is that the NYSE and its officers conspired to violate the federal securities laws and various rules promulgated by the NYSE and failed to perform its statutory duty, created under federal law, to enforce its members’ compliance with those laws”). In other words, D’AIessio’s claim “involved an act that could be interpreted only in relation to federal securities laws. As the facts were alleged in that complaint, D’Alessio would have had no state law cause of action if no federal law had been violated, thus his case rested substantially upon federal law and was justifiably removed.” Fin. & Trading Ltd., 2004 WL 2754862 at *7.
In these cases, by contrast, the States’ claims do not necessarily rest on violation of federal laws. To be sure, CRARA and the rules promulgated thereunder require S & P to promulgate a code of conduct and, to some extent, regulate the content of that code. But an assessment of whether S & P’s statements, in its Code of Conduct and elsewhere, were false and misleading does not necessarily depend on an examination of federal standards; instead, the States could prevail merely by showing a gap between S & P’s representations — whether required by law or not— and its conduct. In that regard, these cases are closer to Barbara v. New York Stock Exchange, Inc., 99 F.3d 49 (2d Cir.1996), in which the Second Circuit disapproved of the removal of a lawsuit alleging that “disciplinary proceedings initiated by the NYSE were [injconsistent with its own internal rules and its contractual obligations to its members.” D’Alessio, 258 F.3d at 101. Significantly, it did so even though the NYSE had a duty under federal law “to promulgate and enforce rules governing the conduct of its members,” and to submit those rules to the SEC for approval. Barbara, 99 F.3d at 51. Despite that connection to federal law, the plaintiffs claims ultimately turned solely on “the internal rules of the NYSE, which are contractual in nature, and ‘thus interpreted pursuant to ordinary principles of contract law, an area in which the federal courts have no special expertise.’ ” D’Alessio, 258 F.3d at 101 (quoting Barbara, 99 F.3d at 55). So too here, “although federal ... laws do indeed relate to the subject matter of plaintiffs’ case, plaintiffs’ claims do not rest upon violation of federal laws.” Fin. & Trading Ltd., 2004 WL 2754862 at *8. Put simply, “[tjhere is no reason why ... state common law standards for determining fraud and negligent misrepresentation cannot form the sole basis for assessing” S & P’s representations. Id.; see also Glazer, 672 F.Supp.2d at 377 (holding that D’Alessio did not justify removal where “the gravamen of plaintiffs’ complaint [was] that defendants made materially false statements to them in a manner prohibited by New York law and in violation of duties created by New York law” and “[n]o construction or interpretation of federal law [was] required”).
S & P’s final argument — that the States’ cases “arise under” federal law because many of the state statutes at issue contain statutory exemptions or carve-outs for conduct that complies with a federal regulatory regime (Mem. Law Opp’n Pls.’ Mot. To Remand (Docket No. 33) 23-24)— also falls short. First, only some of the state statutes even contain such a carve-out. See, e.g., Ariz.Rev.Stat. Ann. § 44-1523 (providing a carve-out for, among others, newspaper publishers, but not for general compliance with federal law). Second, of those that do, some of the statutes have been construed to provide only a defense rather than to impose an additional element of the cause of action, see, e.g., Bostick Oil Co. v. Michelin Tire Corp., 702 F.2d 1207, 1219 & n. 23 (4th Cir.1983) (interpreting S.C.Code Ann. § 39-5-40 to provide an affirmative defense), which is plainly insufficient to support federal-question jurisdiction, see, e.g., Shinnecock Indian Nation, 686 F.3d at 138-40. Third, even where the statutes at issue have not been so read, it is likely that courts in their respective States would read them in that way. At a minimum, there is no basis to conclude that the relevant State would have to prove a negative — S & P’s noncompliance with federal law — as an “essential element” of its affirmative case. See, e.g., McGraw-Hill Cos., 2013 WL 1874279, at *5 (rejecting S & P’s argument based on the carve-out provisions of Illinois law, which are not expressly identified as defenses). In fact, S & P effectively conceded as much at oral argument by acknowledging that the States did not need to plead S & P’s non-compliance with federal law to survive a Rule 12(b)(6) motion for failure to state a plausible claim. (Oral Arg. Tr. 37:9-38:7).
In any event, even if S & P were right that a court would “necessarily” have to grapple with federal law in some States because of the statutory exemptions for compliance with federal standards, federal jurisdiction would fail the Grable test for two other reasons. First, whether the exemptions apply in a particular case requires an individualized assessment of both the scope of the exemption at issue and the particular conduct alleged to fall within (or without) that exemption. See, e.g., Vogt v. Seattle-First Nat’l Bank, 117 Wash.2d 541, 817 P.2d 1364, 1370 (1991) (noting that the Washington Consumer Protection Act is to be liberally construed and “does not exempt actions or transactions merely because they are regulated generally,” but “only if the particular practice found to be unfair or deceptive is specifically permitted, prohibited!,] or regulated” (emphasis added)); see also, e.g., Skinner v. Steele, 730 S.W.2d 335, 337 (Tenn.Ct.App.1987) (similar). As a result, the applicability vel non of the exemptions at issue is the type of “fact-bound and situation-specific” issue that does not generally warrant federal jurisdiction. Empire Healthchoice, 547 U.S. at 701, 126 S.Ct. 2121. Second, if the exemption provisions were sufficient to support federal jurisdiction, it would follow that any action brought under a state consumer-protection statute with such a provision would be subject to removal. Such a result would plainly disturb the “con-gressionally approved balance of federal and state judicial responsibilities,” Grable, 545 U.S. at 314, 125 S.Ct. 2363, as “the long history of state common-law and statutory remedies against ... unfair business practices” makes “plain that this is an area traditionally regulated by the States,” California v. ARC Am. Corp., 490 U.S. 93, 101, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989); cf. Gunn, 133 S.Ct. at 1068 (holding that federal jurisdiction would run afoul of Grable’s fourth requirement where the issue implicated an area traditionally addressed by the States). In fact, CRARA itself honors that “long history” by expressly preserving the right of States to investigate and bring an enforcement action against an NRSRO “with respect to fraud or deceit.” 15 U.S.C. § 78o-7(o )(2).
In the final analysis, the States assert in these cases that S & P failed to adhere to its own promises, not that S & P violated CRARA or any other provision of federal law. To separate merits and defenses from jurisdiction: Whether or not S & P deceived consumers, and whether or not S & P had license from the federal government to do so, the States’ claims are derived entirely from state law. That is, in order to prove their cases, the States will have to show only that S & P made certain statements and that those statements were deceptive. They do not have to, and indeed may very well have forgone the opportunity to, prove that S & P issued its Code of Conduct in a way that violated CRARA or any other federal law. Having made that choice, the States cannot now be forced to litigate in a forum they did not choose. See Marcus, 138 F.3d at 52 (“[T]he plaintiff is the master of the complaint, free to avoid federal jurisdiction by pleading only state claims even where a federal claim is also available.”); see also, e.g., Bank of Am., 672 F.3d at 676 (noting that where a State has brought suit in state court to enforce its own consumer-protection laws, the “claim of sovereign protection from removal arises in its most powerful form,” and that “considerations of comity make federal courts reluctant to snatch [such] cases ... from the courts of that State, unless some clear rule demands it” or doing so “serve[s] an overriding federal interest” (internal quotation marks and alterations omitted)). Accordingly, Section 1331 provides no basis for federal jurisdiction over the State Cases.
2. Mississippi’s Motion To Remand • for Lack of CAFA Jurisdiction
The foregoing analysis disposes of all the State Cases but one: the Mississipal action, which S & P and Moody’s independently removed under CAFA’s “mass action” provisions and on diversity grounds. The parties’ briefs with respect to the Mississippi case are largely devoted to the propriety of the removal as a “mass action” under CAFA, but those arguments have been mooted by the Supreme Court’s January 14, 2014 decision in Mississippi ex rel. Hood v. AU Optronics Corp., — U.S. —, 134 S.Ct. 736, 187 L.Ed.2d 654 (2014) {“Hood”). In that ease, the Court held that a “mass action” under CAFA “must involve monetary claims brought by 100 or more persons who propose to try those claims jointly as named plaintiffs,” and remanded a case — like this one— brought in the name of Mississippi by the state attorney general for lack of federal jurisdiction. Id. at 739 (emphasis added). The Court unambiguously held that CAFA’s mass action. provision, does not “include[ ] suits brought by fewer than 100 named plaintiffs on the theory that there may be 100 or more unnamed persons who are real parties in interest as beneficiaries to any of the plaintiffs’ claims.” Id. at 742. That was precisely S & P’s and Moody’s theory of removal, and it is unquestionably invalid after Hood. It follows that the Mississippi case was not removable under CAFA, a conclusion that S & P and Moody’s all but concede. (Docket. No. 98).
As a fallback position, however, S & P and Moody’s continue to maintain that the Mississippi action was properly removed under the general diversity statute, Title 28, United States Code, Section 1332(a). (Id.; see also Defs.’ Remand Mem. 23-25). At first glance, that would seem to be an even tougher sell, as the general diversity statute requires complete diversity of citizenship among the parties whereas CAFA requires only minimal diversity. See Hood, 134 S.Ct. at 740. Moreover, it is well established that a State is not a citizen for purposes of the general diversity statute, so if Mississippi is the only plaintiff, the Court would indisputably lack jurisdiction under the statute. See, e.g., Moor v. Alameda County, 411 U.S. 693, 717, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973); Stone v. South Carolina, 117 U.S. 430, 433, 6 S.Ct. 799, 29 L.Ed. 962 (1886). But whereas the Supreme Court in Hood held that a court may not look' beyond the named plaintiffs for purposes of CAFA, it did not disturb the longstanding rule that, in determining citizenship for purposes of the general diversity statute, a court looks to the real parties in interest. See, e.g., Hood, 134 S.Ct. at 745-46 (acknowledging that “in cases involving a State or state official” where jurisdiction is premised on diversity, “we have inquired into the real party in interest because a State’s presence as a party will destroy complete diversity”); see also Navarro Savings Ass’n v. Lee, 446 U.S. 458, 460-61, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980). Relying on that principle, S & P and Moody’s — both citizens of New York — contend that the complete diversity requirement is met because the real parties in interest on the plaintiffs side of this//case are a discrete group of consumers in Mississippi — that is, Mississippi citizens — rather than the State of Mississippi itself. • (Defs.’ Remand Mem. 23-25).
Complicating matters, there is disagreement with respect to how a court should analyze whether a State or rather some subset of its citizens is the real party in interest in cases of this sort. The Fifth Circuit and some district courts, including some within this Circuit, have applied a “claim-by-claim” analysis, under which a court must dissect the complaint and de-cidé whether the State or a group of its citizens is the beneficiary for each type of relief. See Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418, 430 (5th Cir.2008); see also, e.g., Connecticut v. Chubb Grp. of Ins. Cos., No. 3:11-cv-997 (AWT), 2012 WL 1110488, at *3 (D.Conn. Mar. 31, 2012); West Virginia ex rel. McGraw v. Comcast Corp., 705 F.Supp.2d 441, 447-49 (E.D.Pa.2010); Butler v. Cadbury Beverages, Inc., No. 3:97-cv-2241 (EBB), 1998 WL 422863, at *2 (D.Conn. July 1, 1998); Connecticut v. Levi Strauss & Co., 471 F.Supp. 363, 370-71 (D.Conn.1979). By contrast, the Fourth, Seventh, and Ninth Circuits, and district courts within this Circuit and beyond have applied a holistic approach, which requires a court to consider the complaint in its entirety to determine what interest, if any, the State possesses in the lawsuit as a whole. See, e.g., AU Optronics Corp. v. South Carolina, 699 F.3d 385, 392-94 (4th Cir.2012), cert. denied, — U.S. —, 134 S.Ct. 999, 187 L.Ed.2d 850 (2014); LG Display Co., Ltd. v. Madigan, 665 F.3d 768, 773 (7th Cir.2011); Bank of Am., 672 F.3d at 671; see also, e.g., MyInfoGuard v. Sorrell, Nos. 2:12-cv074, 2:12-cv-102, 2012 WL 5469913, at *4-5 (D.Vt. Nov. 9, 2012); Connecticut v. Moody’s Corp., No. 3:10cv546 (JBA), 2011 WL 63905, at *3-4 (D.Conn. Jan. 5, 2011); New York ex rel. Cuomo v. Charles Schwab & Co., Inc., No. 09 Civ. 7709(LMM), 2010 WL 286629, at *4-6 (S.D.N.Y. Jan. 19, 2010); New York ex rel. Abrams v. Gen. Motors Corp., 547 F.Supp. 703, 704-07 (S.D.N.Y.1982)