STONEBURNER, Judge.
In 2001, appellants sued respondents Altria Group Inc. (Altria) (formerly Philip Morris Companies Inc.) and Philip Morris Incorporated (Philip Morris) under Minn. Stat. § 8.31, subd. 3a,
Appellants define the class as "[a]ll persons who purchased Marlboro Lights cigarettes in Minnesota for personal consumption from the first date [respondents] sold Marlboro Lights in Minnesota [1972] through the date of the certification of the class." The complaint alleges that respondents "engaged in misrepresentations, unlawful schemes and courses of conduct intended to induce [appellants and class members] to purchase . . . Marlboro Lights cigarettes in violation of Minnesota's law[s]" prohibiting consumer fraud, unlawful and deceptive trade practices, and false advertising, as well as common-law prohibitions against fraud and unjust
The district court initially denied class certification, but on reconsideration certified the class. The district court denied appellants' motion for partial summary judgment based on the application of collateral estoppel to prevent respondents from challenging findings of fact made in federal litigation concerning Philip Morris's violation of consumer-protection laws. The district court denied respondents' motion for partial summary judgment based on the statute of limitations.
The district court later granted partial summary judgment to respondents, dismissing appellants' cause of action under Minn.Stat. § 8.31, subd. 3a, for failure to confer a public benefit and, alternatively, as barred by the release in a prior settlement agreement between the state and respondents. The district court also granted respondents' motion to dismiss appellants' unjust-enrichment claim on the pleadings, concluding that because appellants have an adequate legal remedy, they are not, as a matter of law, entitled to equitable relief under an unjust-enrichment theory. In this appeal and related appeals, appellants and respondents challenge all of the rulings of the district court.
In the 1950s and 1960s, the public-health community began recommending the use of lower-tar cigarettes because of a reported link between tar and disease. In 1966, a confidential Philip Morris report examined the market potential of a "health cigarette." The report concluded, in part, that (1) smokers were concerned about the relationship of cigarette smoking to health; (2) "[t]he market share of health cigarettes increases rapidly for a brief period during each health scare and quickly stabilizes at a new and higher level of market penetration;" and (3) "[t]he illusion of filtration is as important as the fact of filtration . . . [, t]herefore any entry should be by a radically different method of filtration but need not be any more effective." The report states that if Philip Morris "could develop a medically and governmentally endorsed `healthy' cigarette that tasted exactly like a Marlboro, delivered the nicotine of a Marlboro, and was called Marlboro, it would probably become the best selling brand." But the report expressed doubt that the medical profession and the federal government would endorse any cigarette.
In 1967, the Federal Trade Commission (FTC) began using a machine to measure the amount of tar in a cigarette by "smoking" the cigarette using a standardized intensity, duration, and interval between puffs. Data from the FTC's machine showed that, under standardized smoking conditions, "light" cigarettes deliver lower levels of tar than regular cigarettes. Philip Morris advised the FTC that the machine does not replicate human smoking behaviors, which could limit the practical value of test data, but the FTC continued to measure tar with the machine.
In 1971, Philip Morris began manufacturing and marketing Marlboro Lights (Lights). Throughout the 1970s, 1980s, and 1990s, Lights were marketed as having less tar and nicotine than regular Marlboro cigarettes. And the public-health community encouraged the use of
In State by Humphrey v. Philip Morris USA, Inc., which settled in 1998, the Minnesota Attorney General sought damages and injunctive relief on behalf of the state for the increased cost of medical care caused by smoking. No. C1-94-8565 (Minn.Dist.Ct. May 8, 1998). Discovery in that case resulted in the disclosure of internal tobacco-industry documents that had previously been confidential. The settlement (Tobacco Settlement) resulted in billions of dollars in damages being paid to the state, broad injunctive relief controlling various forms of advertising and marketing, and the attorney general being given ongoing power to prevent Philip Morris from engaging in future misrepresentations.
In 2001, the National Cancer Institute reconsidered existing data relating to smoking and health and published "Monograph 13," which stated that "no convincing evidence" exists to show any "important decrease" in disease risks from smoking low-tar, low-nicotine cigarettes. The Monograph 13 authors based their conclusions on formerly confidential internal industry documents that, according to Monograph 13, show "[t]hat the tobacco companies set out to develop cigarette designs that markedly lowered the tar and nicotine yield results as measured by the [FTC] testing method. Yet, these cigarettes can be manipulated by the smoker to increase the intake of tar and nicotine."
After the publication of Monograph 13, appellants sued Altria
The complaint asserts that respondents "engaged in misrepresentations, unlawful schemes and courses of conduct intended to induce [appellants and class members] to purchase . . . [Lights] in violation of Minnesota's laws" prohibiting consumer fraud, unlawful and deceptive trade practices, and false advertising, as well as common-law prohibitions against fraud and unjust enrichment. Appellants initially sought injunctive relief, restitution of the purchase price for all Lights purchased by class members during the relevant period, disgorgement of respondents' profits from the deceptive sale of Lights to class members, attorney fees, interest and costs. During the lengthy course of this litigation, appellants stipulated to dismissal of their common-law claim of fraud and the remedy of injunctive relief. Currently, appellants seek damages only in the form of disgorgement of profits, restitution, attorney fees, interest, and costs.
In 2002, the district court denied Altria's motion to dismiss the complaint against Altria for lack of personal jurisdiction. In January 2004, the district court denied appellants' motion for class certification, concluding that "[i]ndividual issues of law and fact predominate over common ones. . . necessitat[ing] individual inquiries into each class member's reasons for smoking
The district court granted appellants' request for reconsideration of class certification and, in November 2004, reversed itself and certified the class. On reconsideration, the district court stated that, because the injury claimed is economic and not physical, all class members have been similarly injured by the alleged conduct of respondents. After considering the possibility of delay and the high cost of litigation, the district court found that class certification is "pragmatically, the only method whereby purchasers of Marlboro Lights in Minnesota can seek redress for the alleged deception."
In March 2009, appellants moved for partial summary judgment based on collateral estoppel. Appellants sought to apply certain findings of fact from United States v. Philip Morris USA Inc., 449 F.Supp.2d 1 (D.D.C.2006) (DOJ), aff'd in part, vacated in part, 566 F.3d 1095 (D.C.Cir.2009), to summarily establish that Philip Morris represented that Lights contain lower tar and nicotine in relation to other cigarettes while knowing these statements to be false. The district court declined to exercise its discretion to apply non-mutual offensive collateral estoppel and, therefore, denied appellants' motion for partial summary judgment.
In June 2009, Congress passed the Family Smoking Prevention and Tobacco Control Act, Pub.L. No. 111-31, § 101(b)(3), 123 Stat. 1776, 1812 (2009). The act bans marketing of tobacco products using descriptors such as "light" and "low tar."
In October 2009, the district court denied respondents' motion for partial summary judgment based on the statute of limitations, but dismissed appellants' claims under Minn.Stat. § 8.31, subd. 3a, concluding that the prior lawsuit by the state and the enactment of federal legislation precluded appellants from being able to meet the public-benefit element required to bring such an action. The district court held, in the alternative, that appellants' claims under Minn.Stat. § 8.31, subd. 3a, are barred by the release contained in the Tobacco Settlement. Subsequently, the district court granted judgment on the pleadings in favor of respondents, dismissing appellants' only remaining claim: unjust enrichment.
Appellants now challenge dismissal of their actions under Minn.Stat. § 8.31, subd. 3a. Appellants also seek reinstatement of their unjust-enrichment claim and challenge denial of their motion that sought to establish facts through collateral estoppel.
Respondents, in related appeals, challenge class certification and denial of the motion to limit appellants' claims based on the statute of limitations. Altria challenges denial of its motion to dismiss for lack of personal jurisdiction.
Altria argues that the district court erred in denying its motion to dismiss for lack of personal jurisdiction. Altria argues that it is a legal entity that is separate and distinct from Philip Morris and that appellants have failed to demonstrate a legal basis for Minnesota's assertion of personal jurisdiction over Altria. Whether personal jurisdiction exists is a question of law, reviewed de novo. Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 569 (Minn.2004). Any doubts should be resolved in favor of retaining jurisdiction. Nw. Airlines, Inc. v. Friday, 617 N.W.2d 590, 592 (Minn.App. 2000).
When a defendant challenges jurisdiction, the burden of proof to demonstrate jurisdiction is on the plaintiff. Dent-Air, Inc. v. Beech Mountain Air Serv., 332 N.W.2d 904, 907 n. 1 (Minn.1983). And the plaintiff cannot rely on general statements in the pleadings to sustain that burden when the defendant's motion to dismiss is supported by affidavits. Sausser v. Republic Mortg. Investors, 269 N.W.2d 758, 761 (Minn.1978).
Minnesota's long-arm statute provides that
Minn.Stat. § 543.19, subd. 1 (2008). "[The supreme court] has repeatedly held that the legislature designed the long-arm statute to extend the personal jurisdiction of Minnesota courts as far as the Due Process clause of the federal constitution allows." Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410 (Minn.1992) (stating that "when analyzing most personal jurisdiction questions, Minnesota courts may simply apply the federal case law," id. at 411).
Id. at 411. To satisfy a minimum-contacts analysis, the defendant must have "purposefully avail[ed] itself of the privilege of conducting activities within the forum" state and be able to "reasonably anticipate" the exercise of personal jurisdiction by the state. Marshall v. Inn on Madeline Island, 610 N.W.2d 670, 674 (Minn. App.2000) (quotation omitted). To determine if minimum contacts exist, Minnesota courts evaluate five factors:
Rostad v. On-Deck, Inc., 372 N.W.2d 717, 719-20 (Minn.1985) cert. denied, 474 U.S. 1006, 106 S.Ct. 528, 88 L.Ed.2d 460 (1985). The last two factors are less important than the first three. Id. at 720.
Personal jurisdiction can be "general" or "specific." Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984). General personal jurisdiction is satisfied when a defendant conducts continuous and systematic business within a state such that the state can properly assert jurisdiction over the defendant for any purpose within the constraints of traditional notions of fair play and substantial justice. Id. "Specific [personal] jurisdiction can arise from a single contact with the forum if the cause of action arose out of that contact." Marshall, 610 N.W.2d at 674.
It is not disputed that the general conduct of Philip Morris in Minnesota subjects Philip Morris to personal jurisdiction in Minnesota. In this case, the district court did not base jurisdiction over Altria on specific or general conduct of Altria in Minnesota. Instead, the district court found that Altria exercises extensive control over Philip Morris, subjecting Altria to vicarious personal jurisdiction for the general conduct of Philip Morris in Minnesota.
A nonresident corporation may be subject to jurisdiction in a state by virtue of its subsidiary's activities in that state if the companies are organized and operated so that the subsidiary is an instrumentality or alter ego of the parent. Zimmerman v. Am. Inter-Ins. Exch., 386 N.W.2d 825, 828 (Minn.App.1986) (citing Scott v. Mego Int'l, Inc., 519 F.Supp. 1118, 1126 (D.Minn.1981)), review denied (Minn. July 31, 1986). Appellants assert that the record supports the district court's finding that Altria exercises "total control [over] and day-to-day interference" with its wholly owned subsidiary, Philip Morris. We disagree and conclude that the district court's finding is clearly erroneous.
This court recently addressed the issue of vicarious personal jurisdiction over a nonresident parent company based on control of its subsidiary in JL Schwieters Const., Inc. v. Goldridge Const., Inc., 788 N.W.2d 529 (Minn.App.2010). In JL Schwieters, we relied in part on Scott, to conclude that there was sufficient evidence to support an inference that defendant parent corporation operated its involved subsidiary as its alter ego in Minnesota, thereby warranting vicarious personal jurisdiction over the parent corporation. Id. at 536-37. But several factors distinguish the relationship between Altria and Philip Morris from the relationships between the parent companies and subsidiaries in JL Schwieters and Scott.
In Scott, the factors found to be significant in determining that a subsidiary corporation was the mere instrumentality of its parent were (1) the parent maintained offices at the same location as the subsidiary; (2) the same two people were the directors of both corporations; (3) a number of the same people were officers of both corporations; (4) the corporations issued consolidated summaries of operations, financial statements, statements of income, statements of changes in financial position, and statements of shareholders' equity; (5) the parent and its subsidiaries filed consolidated federal income tax returns; and (6) the parent guaranteed the credit facility of its domestic subsidiaries and funded their pension plans. 519 F.Supp. at 1126.
Altria did not exist until 1985, when it was created as a holding company to own Philip Morris and other corporations. The district court found that before 1985, Altria and Philip Morris "were one and the same." But we agree with Altria that this is not a legally accurate finding. Altria is not a successor to Philip Morris, which continues to exist as a separate corporation. Altria is a separate corporation that did not exist before 1985; therefore, there is no factual or legal basis to find that the corporations were "one and the same" before Altria's existence.
Initially, Altria and Philip Morris had identical board members, but Altria's evidence demonstrates that shortly after Altria's inception, Philip Morris's board members made up less than one-fourth of the Altria board until 1991. By 2001, when this action started, Altria and Philip Morris did not have any common officers or directors. This court has not been directed to any evidence in the record demonstrating that Altria has ever maintained a physical presence in Minnesota or that Altria and Philip Morris are operated from the same office.
Caselaw recognizes that ordinary supervision of a subsidiary by a parent corporation is not sufficient to extend personal jurisdiction over the subsidiary to the parent. See Seltzer v. I.C. Optics, Ltd., 339 F.Supp.2d 601, 611 (D.N.J.2004) (finding lack of personal jurisdiction over parent, despite allegations that parent exerted a considerable amount of influence and control over the subsidiary, because the parent's "activities did not deviate from the normal amount of control a parent has over its subsidiary").
The only evidence that appellants have cited of Altria's control over Philip Morris is Geoffrey C. Bible's concession during testimony in the 1998 state litigation that, as CEO of Altria, he has the power to make a decision about what Philip Morris will say regarding smoking and health. But this statement is not evidence that Altria exercises, or has ever exercised, such power over Philip Morris. There is no evidence in the record that Altria is or ever has been involved in day-to-day control over production or distribution of Phillip Morris's products. See United States v. Advance Mach. Co., 547 F.Supp. 1085, 1093-94 (D.Minn.1982) (stating that "[t]he strongest evidence of the independence of [a subsidiary] was its degree of autonomy in the day-to-day production and distribution of [its product] and its financial strength").
On appeal, appellants assert four additional arguments to support personal jurisdiction over Altria: (1) Altria's supporting affidavits lack credibility; (2) the streamof-commerce doctrine supports jurisdiction; (3) the parent-subsidiary relationship itself is a basis of minimum-contacts jurisdiction; and (4) an agency theory supports a finding of jurisdiction. But the district court did not find that Altria's affidavits
On this record, we conclude that appellants have not established that Altria operated Philip Morris as its Minnesota alter ego such that Minnesota has vicarious personal jurisdiction over Altria. Therefore, we hold that the district court erred by denying Altria's motion to dismiss for lack of personal jurisdiction. Because Altria is not a proper party to this lawsuit, we refer only to Phillip Morris in the remainder of this opinion.
The district court summarily dismissed appellants' claims under Minn.Stat. § 8.31, subd. 3a, primarily based on its conclusion that appellants failed to satisfy the "public benefit" element of an action under this statute. "When the district court grants summary judgment based on the application of a statute to undisputed facts, the result is a legal conclusion that we review de novo." Weston v. McWilliams & Assocs., 716 N.W.2d 634, 638 (Minn.2006).
The district court held in the alternative that even if appellants' claims provide a public benefit, they are nonetheless barred by the Tobacco Settlement release, which precludes further action by or on behalf of the state. A settlement agreement is a contract, and contract interpretation is reviewed de novo. State by Humphrey v. Philip Morris USA, Inc., 713 N.W.2d 350, 355 (Minn.2006). "Unambiguous language in the settlement agreement is to be given its plain and ordinary meaning." Id.
Appellants' claims under Minn. Stat. § 8.31, subd. 3a, allege violations of the following consumer-protection statutes: (1) the Minnesota Prevention of Consumer Fraud Act (CFA), Minn.Stat. §§ 325F.68-.70 (2008); (2) the Minnesota Unlawful Trade Practices Act (UTPA), Minn.Stat. §§ 325D.09-.16 (2008); (3) the Minnesota Uniform Deceptive Trade Practices Act (DTPA), Minn.Stat. §§ 325D.43-.48 (2008); and (4) the Minnesota False Statement in Advertisement Act (FSAA), Minn.Stat. §§ 325F.67 (2008). Appellants seek compensatory damages for injury caused by the alleged violations.
Minn.Stat. § 8.31, subd. 3a, frequently referred to as the "private attorney general statute," provides that
In Ly v. Nystrom, the supreme court addressed the issue of whether an individual victim of common-law fraud in the private sale of a restaurant has a cause of action for a violation of the CFA under Minn.Stat. § 8.31, subd. 3a. 615 N.W.2d 302, 307, 311 (Minn.2000). The supreme court concluded that, although the unlawful practices alleged by the victim fell within the practices prohibited by the CFA, the scope of the private-remedies provision in Minn.Stat. § 8.31, subd. 3a, is limited to actions that protect public rights such that
In Collins v. Minn. Sch. of Bus., the supreme court considered whether the claims of eighteen former students of the Minnesota School of Business (MSB), brought under Minn.Stat. § 8.31, subd. 3a, "benefitted the public as required by Ly v. Nystrom." 655 N.W.2d 320 (Minn.2003). The supreme court stated that by dismissing the students' claims because "only a relatively small group of persons were injured by MSB's fraudulent activities[,] . . . [the district court] misapplied the holding in Nystrom by ignoring the fact that MSB misrepresented the nature of its program to the public at large." Id. at 330 (emphasis added). The supreme court held that the students' successful prosecution of their claims benefited the public, entitling them to reasonable attorney fees under Minn.Stat. § 8.31, subd. 3a. Id.
Appellants' claims against Philip Morris involve allegedly fraudulent representations made to the public at large over a long period of time, affecting hundreds of thousands of consumers in Minnesota. To the extent that Nystrom and Collins define what constitutes a public benefit, appellants plainly have established that their claims provide such benefit.
The district court concluded that appellants cannot meet the public-benefit element of Minn.Stat. § 8.31, subd. 3a, because the action by the attorney general against Philip Morris, which asserted the same violations of law asserted by appellants, has already conferred any public benefit that could result from appellants' action.
The district court relied on an unpublished opinion of this court and an unpublished opinion from the Minnesota federal district court for the proposition that once an attorney general's action has benefitted the public by obtaining a permanent injunction against future harmful conduct, a subsequent private action based on the same conduct cannot benefit the public. See Weigand v. Walser Auto. Grp., Inc., No. A05-1911, 2006 WL 1529511, at *4 (Minn.App. June 6, 2006) (concluding that prior settlement agreement between a car dealership and the state attorney general precluded customers' post-settlement claims); Simonson v. Ameriquest Mortg. Co., Civil No. 06-2943, 2006 WL 3463000, (D.Minn. Nov. 30, 2006) (finding that a settlement reached between a mortgage company and the attorney general limits post-settlement lawsuits, which could only provide a "negligible additional public benefit"). But these opinions do not have any precedential effect, and the circumstances of each case are distinguishable from the instant case.
In Weigand, the attorney general's settlement agreement and consent order specifically provided a remedy for individual consumers claiming to have been injured by the complained-of practices. 2006 WL 1529511, at *3-4 (noting that the consent order provides a remedy for consumers affected by misrepresentations, including
In Simonson, fraud claims were dismissed based on the statute of limitations and, alternatively, on the fact that the claims involved a single, one-on-one transaction. 2006 WL 3463000 at *4. The statement that the state attorneys general settlements with the defendant "suggest that [Simonson]'s lawsuit can confer only a negligible additional public benefit" is dictum. Id. Here, the Minnesota Attorney General has filed an amicus curiae brief that argues, in relevant part, that the release in the Tobacco Settlement does not preclude appellants' claims. The attorney general writes, "[t]his Office believes that Appellants' private action does provide an ancillary and/or residual benefit to the public regardless of the attorney general's earlier lawsuit against Respondents." And appellants cite the recent unpublished case of In re Nat'l Arbitration Forum Trade Practices Litig., in which the Minnesota federal district court rejected the assertion that plaintiffs' claims for violation of Minnesota consumer-protection laws did not confer a public benefit because the attorney general had already sued to enforce the statutes and obtained a consent decree. 704 F.Supp.2d 832, 839 (D.Minn. 2010). The federal district court stated that
Id.
In Group Health Plan, Inc. v. Philip Morris, Inc., answering two questions certified to it by the federal district court, the Minnesota Supreme Court "determine[d] the scope of statutory claims for relief under [Minnesota consumer-protection laws], first, as to who may bring a claim and, second, as to the nature of the pleading and proof that is necessary to such a claim." 621 N.W.2d 2, 5 (Minn.2001). Justice Page, writing for the unanimous court, rejected defendants' argument that actions under Minn.Stat. § 8.31, subd. 3a, should be limited to consumers of the product claiming misrepresentation, stating that
Id. at 9. We find this statement instructive, and we decline to further narrow a person's right to pursue an action under Minn. Stat. § 8.31, subd. 3a, by expanding restrictive conditions not plainly stated in the statute. We conclude that the public-benefit requirement is met in this case, as it was in Collins, 655 N.W.2d at 330, by the fact that Philip Morris made allegedly false representations to the general public, and we reject the argument that prior action by the attorney general deprives this lawsuit of public benefit. Subdivision 3a plainly provides that a private civil action for damages is "[i]n addition to the remedies otherwise provided by law."
For the same reason, we conclude that the district court erred by holding that the Family Smoking Prevention and Tobacco Control Act, Pub.L. No. 111-31, § 101(b)(3), 123 Stat. 1776, 1812 (2009), banning the marketing of tobacco products using descriptors such as "light" and "low tar," makes it "impossible for [appellants'] suit to have any public benefit that the Act has not already conferred on the public." The Minnesota Legislature provided for a cause of action for individuals injured by violation of Minnesota's consumer-protection laws. There is nothing in the plain language of Minn.Stat. § 8.31, subd. 3a, or the public-benefit requirement added by the caselaw, that justifies dismissing an action simply because, subsequent to initiation of the action, federal legislation addresses the allegedly harmful conduct.
We also reject the district court's determination that appellants "cannot demonstrate that monetary recoveries for the class members here will have any effect on Philip Morris' conduct," and that receipt of "only . . . monetary recovery for a large number of private individuals . . . is not enough to establish a private benefit." The plain language of Minn.Stat. § 8.31, subd. 3a, provides for an action to recover damages. To the extent that the legislature intended to require a public-benefit element, it plainly intended that a monetary recovery could support such a benefit.
The district court concluded that, even if appellants met the public-benefit requirement to maintain an action under Minn.Stat. § 8.31, subd. 3a, the action is barred by the release in the Tobacco Settlement. The language of the Tobacco Settlement relied on by the district court states that
The district court concluded that appellants are directly or indirectly representatives of the state such that their claims have been released by the Tobacco Settlement. The district court relied on the common reference to Minn.Stat. § 8.31, subd. 3a, as the "private attorney general statute." The district court adopted the Minnesota federal district court's finding that an individual who pursues a claim as a private attorney general "assume[s] the role and duties of the attorney general
With all due respect to the federal district courts and the district court in this case, we conclude that there is no legal basis or binding authority requiring conversion of an action by private individuals into state action. See Lake George Park, L.L.C. v. IBM Mid-America Emps. Fed. Credit Union, 576 N.W.2d 463, 466 (Minn. App.1998) (stating that "[t]his court, as an error correcting court, is without authority to change the law"), review denied (Minn. June 17, 1998). Minn.Stat. § 8.31, subd. 3a, plainly provides that "[i]n addition to the remedies otherwise provided by law, any person injured by a violation" of the listed consumer-protection statutes "may bring a civil action" for such injuries. The statute does not limit such actions to situations in which the state has failed to act to enforce consumer-protection laws or provide that a person pursuing such an action becomes a representative of the state. The Tobacco Settlement states that "[e]xcept as expressly provided in this Settlement Agreement, no portion of this Settlement Agreement shall bind any non-party or determine, limit or prejudice the rights of any such person or entity." We conclude that the district court erred by characterizing appellants' action as a state action and erred by concluding that the Tobacco Settlement bars appellants' claims under Minn.Stat. § 8.31, subd. 3a.
Because the appellants' claims meet the public-benefit test established by the supreme court and are not barred by the Tobacco Settlement release, we reverse the partial summary judgment dismissing appellants' Minn.Stat. § 8.31, subd. 3a, claims and remand for further proceedings on those claims.
The district court granted Philip Morris's motion to dismiss appellants' unjust-enrichment claim for failure to state a claim on which relief can be granted. "When reviewing a case dismissed pursuant to Minn. R. Civ. P. 12.02(e) for failure to state a claim on which relief can be granted, the question before [the reviewing] court is whether the complaint sets forth a legally sufficient claim for relief." Hebert v. City of Fifty Lakes, 744 N.W.2d 226, 229 (Minn.2008). Reviewing courts examine whether the district court properly dismissed a claim under Minn. R. Civ. P. 12.02 de novo. Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn.2003).
Unjust enrichment is an equitable doctrine that does not permit recovery where there is an adequate remedy at law. Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn. App.1992). The district court concluded that (1) appellants had an adequate legal remedy based on common-law fraud and under Minn.Stat. § 8.31, subd. 3a; (2) dismissal of the fraud claim and failure to meet the requirements to pursue their statutory remedy did not entitle appellants to equitable relief; and (3) appellants' unjust-enrichment
Because we have reinstated appellants' claims under Minn.Stat. § 8.31, subd. 3a, we affirm dismissal of appellants' unjust-enrichment claim based on the availability of a legal remedy. But, for the reasons stated above, we conclude that the district court erred in holding that appellants' unjust-enrichment claim is barred by the Tobacco Settlement release.
Appellants challenge the district court's denial of their motion for partial summary judgment based on their assertion that, under principles of collateral estoppel, Philip Morris's violation of consumer-protection laws has been established by findings of fact and conclusions of law made in DOJ, 449 F.Supp.2d 1. "Whether collateral estoppel precludes litigation of an issue is a mixed question of law and fact that we review de novo." Hauschildt v. Beckingham, 686 N.W.2d 829, 837 (Minn.2004). "Once it is determined that collateral estoppel is available, the decision to apply the doctrine is left to the [district] court's discretion." In re Trusts Created by Hormel, 504 N.W.2d 505, 509 (Minn.App.1993), review denied (Minn. Oct. 19, 1993). "The district court's decision to apply [or not to apply] collateral estoppel will be reversed only upon a demonstrated abuse of discretion." Pope Cnty. Bd. of Comm'rs v. Pryzmus, 682 N.W.2d 666, 669 (Minn.App.2004), review denied (Minn. Sept. 29, 2004).
In Illinois Farmers Ins. Co. v. Reed, we noted that "[t]he doctrine of collateral estoppel originated in the English common law" and "is based on the judicial policy considerations of conservation of judicial resources, preservation of the courts' integrity by preventing inconsistent results, promotion of final judgments, and protection of parties from relitigating the same issues." 647 N.W.2d 553, 560 (Minn. App.2002), rev'd on other grounds, 662 N.W.2d 529, 529-30 (Minn.2003).
Barth v. Stenwick, 761 N.W.2d 502, 508 (Minn.App.2009) (quotations and citations omitted).
In DOJ, the United States alleged multiple acts of misconduct by eleven major U.S. tobacco companies, arguing that the companies defrauded consumers through misleading advertisements for low-tar cigarettes in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968. 449 F.Supp.2d at 31-32. The United States sought equitable relief to prevent future RICO violations. Id. After a bench trial, the United States District Court for the District of Columbia concluded
Appellants argue that the conclusions of law and many of the findings in DOJ should preclude relitigation of the same issues in the instant case. The findings that appellants seek to apply in this case, from among the thousands of findings in DOJ, include the following:
Id. at 430-31 (citations omitted). Appellants also argue that Philip Morris should be bound, under the principles of collateral estoppel, by DOJ findings of fact 2146-2215, which describe Philip Morris's recognition that low-tar cigarettes are not less harmful than full-flavor cigarettes. Appellants also sought to establish that collateral estoppel bars relitigation of DOJ findings of fact 2401-04, 2410, 2411, and 2445-47, which describe Philip Morris's continued marketing and public statements suggesting that low-tar cigarettes are less harmful than full-flavor cigarettes, despite its knowledge of the contrary. Id. at 456-57, 513-14, 521-22.
Appellants argue that they seek to prove the very same facts in this case, asserting that, although the cause of action in DOJ was based on a different statute, the elements of Minnesota's CFA are satisfied by the findings of fact and conclusions of law in DOJ. Appellants assert that the two causes of action are identical for the purposes of applying collateral estoppel.
The district court did not address each element of collateral estoppel. It noted that the causes of action and relief sought in this case are not identical to those in DOJ. But the district court, citing Walden Bros. Lumber Inc. v. Wiggin, acknowledged that the cause of action need not be identical in both actions for collateral estoppel to apply. 408 N.W.2d 675, 677 (Minn.App.1987) (stating that for collateral estoppel to apply, the issues to be precluded must be identical, but the claims or causes of action need not be identical), review denied (Minn. Aug. 19, 1987). The district court concluded that "there may be a strong argument for the application of collateral estoppel." But the district court noted that Philip Morris has won similar cases brought against it and that the United States Supreme Court has stated that courts should not apply collateral estoppel where "the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 329-30, 99 S.Ct. 645, 651, 58 L.Ed.2d 552 (1979). Additionally, the district court found that, because the instant case will be tried to a jury and DOJ was a bench trial, Philip Morris should have the benefit of a jury determination, rather than applying collateral estoppel.
Ultimately, the district court acknowledged that it had the discretion to apply collateral estoppel as requested by appellants in this case but chose to exercise "its sound discretion in denying" appellants' motion for partial summary judgment based on collateral estoppel. Therefore, even if appellants are correct that application of the doctrine would not have been an abuse of discretion, they have failed to demonstrate that denying application of collateral estoppel in this case is a clear abuse of discretion. For that reason, we affirm the district court's exercise of its discretion to deny appellants' motion.
"Trial courts have considerable discretionary power to determine whether class actions may be maintained." Streich v. Am. Family Mut. Ins. Co., 399 N.W.2d 210, 213 (Minn.App.1987), review denied (Minn. Mar. 25, 1987). "[I]t is clear that our review of [a] district court's certification decision should be for abuse of discretion." Whitaker v. 3M Co., 764 N.W.2d 631, 635 (Minn.App.2009), review denied (Minn. July 22, 2009). By notice of a
Minn. R. Civ. P. 23.01 provides four prerequisites to a class action:
If the prerequisites are satisfied, one of three additional conditions contained in Minn. R. Civ. P. 23.02 must be met in order for an action to be maintained as a class action.
In this case, the parties agree that the condition applicable to this case is contained in Minn. R. Civ. P. 23.02(c), which provides that the court must find that
Minn. R. Civ. P. 23.02(c).
Initially, the district court denied class certification after considering all of the requirements for certification contained in Minn. R. Civ. P. 23, concluding that appellants failed to demonstrate that the questions of law or fact common to the members of the class predominate over questions affecting only individual members. The district court later granted appellants' request for reconsideration of the class certification decision and certified the class, finding that appellants "all have been similarly injured" and that "[w]ere there to be individual trials, the common aspects of . . . Philip Morris's conduct would become a predominant aspect of each trial." The district court also stated that "[c]onsiderations of delay, and high costs provide additional support for the appropriateness of class certification," and concluded that "a class action is not only an appropriate method to resolve the plaintiffs' allegations, but pragmatically, the only method whereby purchasers of Marlboro Lights in Minnesota can seek redress for the alleged deception."
Philip Morris asserts that the district court, on reconsideration, misapplied the law and failed to require appellants to prove by a preponderance of evidence that the requirement of Minn. R. Civ. P. 23.02(c) has been met. Philip Morris focuses on the evidence required to establish causation but has not conceded that common questions predominate to establish statutory violations. The district court implicitly found that common questions predominate regarding statutory violations, and from our extensive review of the record, we conclude that this finding is amply supported by evidence in the record.
Id. at 14-15.
Philip Morris argues that the district court failed to conduct an inquiry into whether the required causation in this case is capable of proof at trial through evidence that is common to the class rather than individual members. See Whitaker, 764 N.W.2d at 638 (stating that because the nature of the evidence sufficient to resolve a question determines whether the question is common or individual, rule 23 certification requirements must be analyzed with specific reference to the cause of action asserted in a particular case; and holding that in an age discrimination case, statistical evidence may "bridge the gap between . . . individual claims of discrimination and the existence of a class of similarly situated employees"). In Whitaker, this court held that to determine whether the requirements for class certification under rule 23 have been proved by a preponderance of the evidence, the district court "must address and resolve factual disputes relevant to class-certification requirements, including disputes among expert witnesses." Id. at 640.
Philip Morris asserts that appellants failed to offer any expert opinion to support their theory of common classwide proof and that the district court erred by failing to consider, in deciding the certification issue, Philip Morris's evidence that individual issues predominate. We disagree. The district court's analysis is not extensive, but it found that all members of the class have been similarly injured by Philip Morris's alleged lengthy course of prohibited conduct. And the record supports this finding.
Each of the class representatives testified in depositions that he or she thought that Lights were safer than regular cigarettes. Each class representative's testimony supports that he or she likely would not have purchased Lights if he or she had known that Philip Morris intentionally misrepresented Lights. And documents in the record, obtained from Philip Morris, demonstrate Philip Morris's early and continuing awareness of smokers' attitudes toward health issues, recognition of the market potential of a cigarette perceived by consumers to be healthier than regular cigarettes, and recognition that the reason smokers accept low-tar cigarettes is due to the health reassurance they seem to offer.
As we understand it, appellants' theory of damages is that, no matter what individual factors may have been involved in a class member's decision to purchase Lights, all consumers of Lights were led by false advertising to believe that Lights were healthier than regular cigarettes when they were not, such that purchasers are entitled to reimbursement for all amounts spent on the misrepresented cigarettes. Here, as in Peterson, appellants allege that the impact of the manufacturer's conduct on consumers was designed by the manufacturer to be the same for all members of the class: instilling a belief about the nature of a product. Therefore, the causal nexus is a question common to all class members.
Philip Morris argues that, if smoked in a particular manner, Lights may have delivered what was advertised, which makes the inquiry into the falseness of its claims an individual inquiry. But appellants counter that Philip Morris purposefully withheld this important information about smoking methods from all consumers and expended enormous sums in deceptive advertising (the prohibited conduct) to influence consumers to pay money (the damages claimed) for a misrepresented product.
Group Health instructs that the required causal nexus may be established when there is something to connect "the claimed damages and the alleged prohibited conduct." 621 N.W.2d at 14. The district court appropriately relied on supreme court cases issued after its initial denial of class certification for the proposition that the proof of causation required in consumer-protection class actions is less stringent than proof of causation required in actions for common-law fraud and does not require proof of individual reliance, but merely a causal relationship between the advertiser's actions and the alleged injury. See Wiegand v. Walser Auto. Grps., Inc., 683 N.W.2d 807, 811-12 (Minn.2004) (stating that a showing of "individual consumer reliance" is not necessary to state a claim for damages under Minn.Stat. § 8.31, subd. 3a); Peterson v. BASF Corp., 675 N.W.2d 57,
The district court's exercise of discretion in granting class certification is further supported by its recognition that "pragmatically, [class action is] the only method whereby purchasers of [Lights] in Minnesota can seek redress for the alleged deception." See 1 David F. Herr & Roger S. Haydock, Minnesota Practice § 23:8 (5th ed.2009) (stating that "[t]he analysis of Rule 23.02 is intended to be practical rather than theoretical, and is designed to permit cases in which the class action improves the efficiency of the resolution of claims to proceed as class actions, and to exclude those cases in which class treatment would not be advantageous"). We therefore affirm the district court's order certifying the class.
In its related appeal, Philip Morris asserts that the district court erred in denying its summary judgment motion seeking to limit appellants' claims based on the applicable statute of limitations. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law." Minn. R. Civ. P. 56.03. "In reviewing an appeal from the denial of summary judgment, we must determine whether there are genuine issues of material fact and whether the district court erred in applying the law." Mumm v. Mornson, 708 N.W.2d 475, 481 (Minn. 2006). We consider the evidence in the light most favorable to the nonmoving party. Id. A reviewing court reviews de novo whether there are genuine issues of material fact and "whether the district court erred in its application of the law." STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 77 (Minn.2002).
A six-year statute of limitations applies to claims under Minnesota's consumer-protection statutes. Minn.Stat. § 541.05, subd. 1(2) (2008) (providing that actions on liability created by statute, other than those arising on a penalty or forfeiture or where a shorter period is provided by Minn.Stat. § 541.07 (2008), "shall be commenced within six years").
We reject Philip Morris's assertion that the fraudulent concealment rule does not apply to consumer-protection actions. The argument is based on equating the doctrine of fraudulent concealment to the discovery rule. Philip Morris argues that "[b]ecause the discovery rule and the fraudulent concealment doctrine `achieve the same result'—preventing the statute of limitations from running until the plaintiff learns, or should learn, of his cause of action—where the discovery rule does not apply, neither does fraudulent concealment."
Philip Morris cites Kopperud v. Agers, 312 N.W.2d 443 (Minn.1981), to support this argument. In Kopperud, a question was certified from the district court to the supreme court, asking "whether equity tolls the statute of limitations for causes of action based on securities law violations when the plaintiffs allege that defendants fraudulently concealed the violations." 312 N.W.2d at 444, 446. Based on the language of Minn.Stat. § 80.26 (1971),
In Kopperud, the plaintiffs had stated a timely cause of action for common-law fraud because the legislature specifically provided that a cause of action for common-law fraud does not accrue "until the discovery by the aggrieved party of the facts constituting the fraud." Id. at 446 (quoting Minn.Stat. § 541.05, subd. 1(6) (1971)). The supreme court was "mindful" that it has "followed the rule that fraudulent concealment of [a] cause of action will prevent the running of the statute of limitations," and stated that the "theoretical difference [between the discovery rule and
Contrary to Philip Morris's interpretation of Kopperud, the case stands for the proposition that, absent express legislative intent to the contrary, if the discovery rule does not apply to accrual of the applicable cause of action, fraudulent concealment will toll the running of the statute of limitations on the claim. Id. The parties agree that consumer-protection actions accrue when the violation occurs. But we hold that fraudulent concealment tolls the running of the statute of limitations because the legislature has not expressed intent to the contrary.
Philip Morris argues that even if the fraudulent concealment rule applies, appellants have failed to produce evidence creating a genuine issue of material fact about whether fraudulent concealment occurred. We disagree. A genuine issue of material fact exists if a rational trier of fact, considering the record as a whole, could find for the party against whom summary judgment was granted. Frieler v. Carlson Mktg. Grp., Inc., 751 N.W.2d 558, 564 (Minn.2008). "[I]f a party conceals a fact material to the transaction, and peculiarly within his own knowledge, knowing that the other party acts on the presumption that no such fact exists, it is as much a fraud as if the existence of such facts were expressly denied. . . ." Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 365, 244 N.W.2d 648, 650 (1976) (quotation omitted).
In this case, the record is bursting with government documents, scientific studies, surveys, newspaper reports, "confidential" memos, affidavits, depositions, and other evidence describing who knew what and when it was known.
Appellants failed to establish that Altria used Philip Morris as its alter ego in Minnesota such that the doctrine of vicarious personal jurisdiction conferred jurisdiction over Altria. We therefore reverse the district court's denial of Altria's motion to dismiss for lack of personal jurisdiction.
The district court erred in dismissing appellants' claims under Minn.Stat. § 8.31, subd. 3a, because appellants have established a sufficient public benefit to maintain the action, and neither the attorney general's litigation against Philip Morris, nor recent federal legislation governing Philip Morris's conduct deprives this action of the public benefit required to pursue an action under Minn.Stat. § 8.31, subd. 3a. The district court also erred in concluding that appellants, in pursuing this action, act as agents or representatives of the state such that their claims are barred by the Tobacco Settlement release. We therefore reverse dismissal of appellants' claims under Minn.Stat. § 8.31, subd. 3a, and remand for further proceedings on those claims. Because we have reinstated
The district court did not abuse its broad discretion in declining to apply the doctrine of non-mutual, offensive collateral estoppel under the circumstances of this case. And because the record sufficiently supports the district court's finding that questions of law or fact common to the members of the class predominate over any questions affecting only individual members, the district court did not abuse its discretion in certifying the class.
We hold that fraudulent concealment can toll the six-year statute of limitations for actions based on a violation of Minnesota's consumer-protection statutes. But material-fact questions exist concerning whether Philip Morris fraudulently concealed facts that would have established appellants' cause of action. Therefore, the district court did not err in denying respondents' motion for partial summary judgment based on the statute of limitations.