Articles
Bench & Bar of Minnesota is the official publication of the Minnesota State Bar Association.

Notes & Trends – December 2017

CRIMINAL LAW
JUDICIAL LAW

• Sentencing: Zone of privacy aggravating factor applies to individual who commits murder after being invited into another’s home. Appellant was charged with, among other offenses, second-degree intentional murder, for shooting the victim in the forehead in the victim’s home, after the victim, who was armed with a firearm, made a sudden movement that appellant claimed made him fear for his life. After a jury trial, appellant was found guilty of second-degree intentional murder, and the district court imposed an upward durational departure, sentencing appellant to 480 months. The court of appeals affirmed appellant’s conviction, but remanded for resentencing, finding that the district court improperly imposed an upward durational departure.

The Supreme Court finds that the court of appeals erred in its conclusion regarding appellant’s sentence. The district court imposed an upward durational departure based on a “zone of privacy” aggravating factor, after the jury found that the crime was committed in the victim’s home. Appellant argues the “zone of privacy” factor alone was not enough to show his conduct was significantly more serious than the typical crime. The Court previously applied this aggravating factor in a case in which the crime caused either a continuing fear of harm in the home or involved a deliberate invasion, neither of which was the case here. However, there is nothing to suggest that only these two rationales can serve as the basis for using “zone of privacy” factor to enhance a sentence. The Court holds that the “zone-of-privacy factor applies with equal force when an occupant of the home, while attempting to help another in need, invites an individual into his or her home at personal risk and the invitee commits a murder in the home.” Appellant’s conviction and sentence are affirmed. State v. Devon Derrick Parker, Sup. Ct. 10/4/2017.

Disorderly conduct: Contemporaneous witness to underlying conduct not required. Appellant and the victims, the Rosenthals, were neighbors for many years, but their relationship became strained. At one point, the Rosenthals installed exterior security cameras. In August 2013, the cameras recorded when appellant knocked over a garbage can, spilling debris on the Rosenthals’ driveway. Appellant was charged with stalking, trespassing, disorderly conduct, and littering. At trial, the state introduced over two dozen videos documenting a history of confrontation between the neighbors. Appellant admitted pushing the Rosenthals’ garbage over and was found guilty of disorderly conduct and littering. Execution of her 10-day sentence was stayed for one year. On appeal, appellant argues that Minn. Stat. 609.72, subd. 1, requires a contemporaneous witness to the underlying conduct to sustain a conviction for disorderly conduct, and that the video of her conduct was insufficient to support her conviction. She also argues that her actions did not amount to offensive, obscene, abusive, boisterous, or noisy conduct.

By its plain language, the disorderly conduct statute does not require that the “alarm, anger or resentment” occur while witnessing the offensive conduct, as some other statutes do. The Legislature could have included such a requirement, but did not do so. “[W]itnesses to conduct often present the best evidence of offensive conduct,” but one is not required under the plain language of the statute. The evidence presented at trial was also sufficient for the jury to convict appellant of disorderly conduct. State v. Sarah Beth Janecek, Ct. App. 10/9/2017.

Conditional release: Transfer to work release program does not commence conditional release term. Appellant pleaded guilty to first-degree DWI and was sentenced to 48 months, to be followed by a five-year conditional release period. He was transferred from the St. Cloud prison to the work release program in Duluth on 3/13/2012, where he stayed for seven months before being granted supervised release on 10/15/2012. In March 2017, appellant filed a petition for a writ of habeas corpus asking the district court to direct the DOC to correct his conditional release start date to 3/13/2012, and discharge him from his conditional release term. His petition was denied.

Minn. Stat. 169A.276 requires that a five-year conditional release period begin after a defendant convicted of first-degree DWI is “released from prison.” Minnesota’s sentencing scheme requires felony offenders to serve a minimum term of imprisonment that is equal to two-thirds of the executed sentence and a maximum supervised release term that is equal to one-third of the executed sentence. The work release statutes provide that work release is an extension of the limits of confinement. Appellant’s interpretation would allow an inmate to avoid serving the required minimum term of imprisonment and is inconsistent with the work release program statutes’ treatment of the program as a form of confinement.

Held, an inmate is not “released from prison” when participating in a work release program that begins while the inmate is serving the minimum two-thirds term of imprisonment, even though the inmate may be confined in an approved community correction center or a residence approved by the commissioner of corrections rather than a correctional facility. Matthew Mitchell Huseby v. Comm’r of Corrections, Ct. App. 10/9/2017.

• DWI: DFE not a hazardous substance. Appellant was arrested for DWI three times and her blood and urine were tested. Analysis of the samples revealed the presence of clonazepam and the chemical 1,1-difluoroethane (DFE), a refrigerant-based propellant used for cleaning electronic equipment. She was convicted of three counts of third-degree DWI for operating a motor vehicle while under the influence of a hazardous substance. The court of appeals affirmed.

Held, DFE is not a hazardous substance under Minn. Stat. 169A.03, subd. 9, because it is not listed as a hazardous substance in Minn. R. ch. 5206. The DWI statute defines “hazardous substance” as “any chemical or chemical compound that is listed as a hazardous substance in the rules adopted under chapter 182 (occupational health and safety).” The occupational safety and health rules in Minn. R. ch. 5206 were promulgated in accordance with Minn. Stat. ch. 182, and include a definition and list of “hazardous substances,” although Minn. R. 5206.0400, subp. 1, does state that the list does not include all hazardous substances and will not always be current.

Section 169A.03 uses the word “listed,” so the statute cannot be referring to the definition of hazardous substances. By its plain language, the statute limits the types of hazardous substances that can give rise to a DWI conviction to those specifically listed in Minn. R. 5206.0400, subp. 5. Reversed and remanded. State v. Chantel Lynn Carson, Sup. Ct. 10/11/2017.

Frederic Bruno 

Bruno Law

Samantha Foertsch

Bruno Law

 

EMPLOYMENT & LABOR LAW
JUDICIAL LAW

Labor law; unfair practices claim dismissed. The dismissal of a lawsuit by grocery stores in the Twin Cities against a labor union for alleged unfair labor practices in picketing and a related publicity campaign was upheld by the 8th Circuit Court of Appeals. It affirmed the ruling of U.S. District Court Judge David Doty in Minnesota on grounds that the resulting cessation of business by one of the stores did not constitute a violation of the §158 (b)(4)(ii)(B) of the National Labor Relations Act. Wartman v. United Food & Commercial Workers Local 653, 871 F.3d 638 (Minn. 9/15/2017).

• Rehabilitation benefits; suitable employment. An employee who obtains suitable, gainful employment may not be actively barred from continued rehabilitation benefits under the Worker’s Compensation Act without a showing of “good cause” by the employer. The Supreme Court affirmed a ruling of the Worker’s Compensation Court of Appeals requiring “good cause” under Minn. Stat. §176.102, subd. 6 (a) and Minn.R. 5220.0100, subps. 22 & 34 to terminate their benefits. Halvorson v. B&F Fastener Supply, 2017 Minn. App. LEXIS (Minn. App. 9/30/2017) (unpublished).

• Sick-leave laws; injunction denied. An effort to enjoin enforcement of the new Minneapolis ordinance regarding mandatory sick leave for employees failed before the court of appeals. It upheld a ruling of the Hennepin County District Court upholding the law but prohibiting its enforcement against employers doing “similar” businesses outside of the city. Minn. Chamber of Commerce v. City of Minneapolis, 2017 Minn. App. LEXIS 840 (Minn. App. 9/18/2017) (unpublished).

• Disability discrimination; claims dismissed. Dismissal of a variety of disability-related discriminatory claims by a railroad worker was upheld. The court of appeals held that the claimant was stopped from disability claims because of contrary representations she made to a Railroad Retirement Board, and that the amount of costs and expert witness fees to the railroad was proper. Grosch v. Soo Line R.R. Co., 2017 Minn. App. LEXIS 842 (Minn. App. 9/18/ 2017) (unpublished).

• Unemployment compensation; intoxication bars benefits. An employee who came to work intoxicated was denied unemployment compensation benefits. The appellate court noted that the employee had previously been warned against doing so, which supported a determination of disqualifying “misconduct.” Peroni v. Minnesota Dep’t. of Natural Resources, 2017 Minn. App. LEXIS 869 (Minn. App. 10/9/2017) (unpublished).

• Unemployment compensation; quitter loses again. As usual, an employee who quit a job lost her claim for unemployment benefits. The court of appeals held that an employee’s dislike of a potential dress code did not constitute “good reason” caused by the employer to resign. Manni v. Duluth Clinic, Ltd., 2017 Minn. App. LEXIS 911 (Minn. App. 11/6/2017) (unpublished).

• Unemployment compensation; driver disqualified. A driver of disabled individuals was denied benefits due to a series of incidents that violated company policies and put vulnerable individuals at risk. Although the behavior was not intentional, the appellate court deemed the episodes to constitute disqualifying “misconduct.” O’Neill v. Ebenezer Realty Services, 2017 Minn. App. LEXIS 911 (Minn. App. 11/6/2017) (unpublished).  

Marshall H. Tanick

Hellmuth & Johnson, PLLC

 

ENVIRONMENTAL LAW
JUDICIAL LAW

• California Federal District Court prohibits postponement of methane rule provisions. In October the U.S. District Court for the Northern District of California ruled that the Bureau of Land Management (BLM) could not postpone enforcement of provisions of the November 2017 final rule “Waste Prevention, Production Subject to Royalties, and Resource Conservation” (methane rule). The rule, which took effect in January 2017, regulates the waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore federal and Indian leases.

Three months after the methane rule took effect, President Donald Trump, on 3/28/2017, issued Executive Order No. 13783 on “Promoting Energy Independence and Economic Growth,” which called for the suspension, revision, or rescission of federal agency actions that unduly burden the development of domestic energy resources. After reviewing the methane rule pursuant to this order, the BLM issued a notice of postponement of the compliance dates associated with the methane rule. The agency cited Section 705 of the Administrative Procedure Act (APA), stating that an agency may postpone the effective date of an action taken by it when “justice so requires.” Immediately after the issuance of the notice, environmental groups, as well as the state of California and the state of New Mexico, sued BLM. The lawsuits were consolidated and argued in the Northern District of California.

The district court’s 10/4/2017 order held that the BLM could not rely upon Section 705 of the APA to postpone future compliance dates because the rule had already taken effect. Furthermore, the court held that in order to repeal the methane rule, BLM would be required to follow the same notice and comment procedures that are required for promulgation of a rule. The day after the court’s order, BLM published a proposed rule proposing to temporarily suspend or delay certain requirements until 1/17/2019. State of California and Sierra Club, et al. v. BLM, et al., No. 3:17-cv-03804-EDL (10/4/2017).

• MN appeals court rejects neighbor’s nuisance & trespass claims for asbestos exposure. The Minnesota Court of Appeals affirmed the district court’s dismissal of public and private nuisance, trespass, and tortious interference with economic advantage claims in a case involving alleged asbestos exposure. The pro se plaintiff claimed the exposure occurred when his next-door neighbor undertook common gardening activities, potentially disturbing allegedly contaminated soil that had been improperly deposited on the defendant’s property by the plaintiff’s own contractor, and thereby exposing plaintiff to the contamination. The court confirmed the plaintiff had no standing to maintain a public nuisance claim because the plaintiff did not sufficiently allege he had suffered some special or peculiar damage not common to the general public. Additionally, the court found the plaintiff failed to allege any activity on the defendant’s part that amounted to a nuisance. Relying upon the private nuisance statute, Minn. Stat. §561.01, the court held that the plaintiff’s mother’s observation of the defendant “pulling weeds and shaking off dirt a year and a half after the alleged contamination” was “too remote, too speculative, and too isolated to support a cause of action for nuisance.” The court further held that plaintiff’s living arrangement with his mother to live in her home was insufficient as a possessory interest in the property to support a trespass claim, and the allegations of defendant’s activity of weeding in her yard did not demonstrate a wrongful entry upon the property. The court affirmed dismissal of the claim for tortious interference with economic advantage because the plaintiff failed to allege the defendant interfered with specific third party relationships and failed to allege defendant’s conduct was wrongful or intentional. Moore v. Fletcher, No. 27-CV-16-7615, 2017 WL 3863835 (9/5/2017). (Contributed by Susan Wiens)

ADMINISTRATIVE ACTION

• MPCA adopts tiered aquatic life use framework for Class 2 streams. On 10/16/2017, the Minnesota Pollution Control Agency (MPCA) finalized amendments to its water quality rules in chapters 7050 and 7052 of the Minnesota Rules, establishing a refined approach for classifying Class 2 streams to better protect aquatic life and reflect the diversity of Minnesota streams. The amended rules, which became effective 10/23/2017, establish a so-called “tiered aquatic life use” (TALU) framework to classify streams based on the aquatic life each supports or has the potential to support. The TALU framework only applies to Class 2 streams—those protected for aquatic life and recreation uses—including Classes 2A (cold water aquatic life and also drinking water), Class 2B (warm water aquatic life), and Class 2Bd (warm water aquatic life and also drinking water).

Formerly, all streams within each of these Class 2 categories were subject to a single narrative biological standard for aquatic life, regardless of stream size, location, condition, or other factors. The amended rules establish new beneficial use subclasses for each category, including separate “exceptional,” “general,” and “modified” (lower quality) narrative standards. For example, whereas under the former rule the quality of all Class 2Bd streams had to “permit the propagation and maintenance of a healthy community of cool or warm water sport or commercial fish,” waters in the new “2Bde” (“exceptional”) subclass must be “capable of supporting and maintaining an exceptional and balanced, integrated, adaptive community of warm or cool water aquatic organisms…” For each subclass of Class 2 streams, the amended rules set numerical biological standards (“biocriteria”), which are based on factors such as location, size, gradient, and land cover. As part of the rulemaking, MPCA reclassified 141 streams as either exceptional or modified. All other Class 2 streams will remain classified as “general use” unless and until MPCA undertakes rulemaking to reclassify a stream as exceptional or modified. For a list of the reclassified streams and for more information, see the TALU framework page on MPCA’s website (www.pca.state.mn.us). 42 Minn. Reg. 441 (10/16/2017).

• DOJ and EPA adopt policies affecting EPA settlements and consent decrees. Two recently adopted federal policies may have significant ramifications for Environmental Protection Agency (EPA) settlement agreements and consent decrees. First, in June of this year, U.S. Attorney General Jeff Sessions issued a memo prohibiting Department of Justice attorneys from entering into settlement agreements that would provide payments to any non-government entity or other third parties who were not parties to the lawsuit. Attorney General Sessions said this directive is meant to end the practice of bankrolling third-party special-interest groups and “to ensure that settlement funds are only used to compensate victims, redress harm, and punish and deter unlawful conduct.”

While this directive will take effect across all areas of law, it will have an acute effect on environmental law and enforcement. For more than 40 years, the EPA has included supplemental environmental projects (SEPs) in its settlements with polluters and violators. The EPA describes SEPs as environmentally beneficial projects that a responsible party agrees to undertake in exchange for mitigation of the penalty to be paid. Historically, SEPs are funded by the violator but managed and carried forward by nonprofit organizations or local community groups in order to improve public health, prevent and reduce pollution, as well as restore and protect the environment in the area damaged by the responsible party’s pollution. Under the new directive, SEPs would be prohibited unless the projects were conducted by the violators themselves, rather than the violator funding a local environmental nonprofit to do the restoration and protection.

Second, in October, EPA Administrator Scott Pruitt issued an agency-wide directive to end the practice of “sue-and-settle agreements,” in which environmental groups sue EPA to force the agency to take a certain action, and the agency resolves the lawsuit through consent decrees or settlement agreements. The directive states that those agreements “appear to be the result of collusion with outside groups,” and those actions had the effect of creating priorities and rules “outside the normal administrative process.”

In order to fulfill this objective, the directive lays out many steps “to promote transparency and public participation in the consent decree and settlement agreement process.” Some of the new procedures include publishing any notices of intent to sue the agency; directly notifying and seeking the concurrence of any affected states or regulated entities before entering into a consent decree or settlement agreement; and requiring proposed consent decrees and settlements to be published for public review and comment for a 30-day period.

This directive does not affect the right of outside environmental groups to sue EPA, only how the agency follows through with the lawsuits once they have happened. However, due to the many new procedures put in place by the directive—including mandatory public comment periods, and the seeking of concurrence of affected states and entities—the directive may result in fewer attempts to force regulation through litigation, and the suits that are filed will more likely undergo the full litigation process, rather than being settled.

Jeremy P. Greenhouse
The Environmental Law Group, Ltd.

Jake Beckstrom
Vermont Law School, 2015

Erik Ordahl
Mitchell-Hamline School of Law, 2017 

 

FAMILY LAW
JUDICIAL LAW

• Federal preemption; military disability compensation. In a published decision, the court of appeals held that federal law preempted the enforcement of the portion of a stipulated Minnesota dissolution decree dividing a veteran’s military disability compensation as part of the division of property.

The parties’ stipulated dissolution decree provided that wife would receive 40% of husband’s military retirement pay as well as his military disability compensation as part of the division of property. After husband failed to make the payments to wife, she obtained an order from the district court requiring husband to make the payments. Husband appealed, arguing that the Uniformed Services Former Spouses’ Protection Act preempted enforcement of the portion of the decree requiring him to pay wife her share of his disability compensation. The Act allows military retired pay to be divided between former spouses but does not specifically allow for the division of disability compensation.

The court of appeals agreed with husband, citing the United States Supreme Court’s decision in Howell v. Howell, 137 S. Ct. 1400 (2017). Howell involved a dissolution decree that awarded the veteran’s former spouse 50% of his military retired pay. Years later, the veteran waived a portion of his military retired pay to obtain disability compensation, which reduced the amount of military retired pay his former spouse received. The Supreme Court held that the decree was preempted by the Act and that any attempt to indemnify the former spouse on equitable grounds was likewise preempted by the Act since that would thwart congressional intent in making disability compensation non-divisible. In light of Howell, the court of appeals reversed the district court’s order enforcing the portion of the dissolution decree dividing husband’s disability compensation.

The court of appeals also noted that Howell had functionally overruled its holding in Gatfield v. Gatfield, 682 N.W.2d 632 (Minn. App. 2004), that federal law did not preempt enforcement of a stipulated dissolution decree providing that a veteran’s former spouse would be entitled to receive a share of the veteran’s disability compensation if he waived his military retirement pay to receive disability compensation. Berberich v. Mattson, ___ N.W.2d ___ (Minn. App. 2017).

• “Hold harmless” language. In a published decision, the court of appeals held that “hold harmless” language in a stipulated dissolution judgment with respect to the obligations associated with the marital homestead could not be enforced by a post-decree order requiring the sale of the homestead.

A dissolution judgment entered in December 2012 awarded the marital homestead to wife, made her solely responsible for the mortgage and expenses, and required her to “hold [husband] harmless.” Just two months later, in February 2013, wife stopped making the mortgage payments. Litigation ensued and in May 2013, the district court ordered wife to refinance the mortgage. After she was unable to do so, the district court ordered wife to sell the homestead and noted the harm being done to husband’s credit. Wife failed to make any attempt to sell the homestead as required. Eventually, in 2016, the district court issued an order allowing husband to take possession of the homestead and sell it for market value if wife failed to refinance or sell in 60 days. The order awarded wife the net proceeds from the sale.

Wife appealed and the court of appeals reversed. The court of appeals interpreted the stipulated hold harmless language in the dissolution decree as an indemnification agreement. The court noted that while the dissolution decree could have provided for the sale of the homestead as a remedy in the event of wife’s breach, it did not do so. And since breach of an indemnification agreement is a legal claim, rather than an equitable claim, the remedy for the breach is typically a money judgment. By imposing a nonmonetary remedy to enforce the breach of an indemnification agreement, the district court misapplied the law and abused its discretion. Johnson v. Johnson, ___ N.W.2d ___ (Minn. App. 2017).

• Custody modification; two-year procedural bar. The Minnesota Court of Appeals issued an important published decision breathing life into the two-year procedural bar against bringing successive motions to modify custody.

A 2009 order granted mother sole legal and physical custody of the parties’ children. Father brought motions to modify custody in 2014, 2015, and 2016, none of which were successful. In February 2017, father once again moved to modify custody and the district court once again denied his motion. Father appealed and the court of appeals affirmed, citing a statutory procedural bar not relied upon by the district court in denying father’s motion.

“If a motion for modification has been heard, whether or not it was granted, unless agreed to in writing by the parties no subsequent motion may be filed within two years after disposition of the prior motion on the merits, except in accordance with paragraph (c).” Minn. Stat. §518.18(b). Paragraph (c) provides that the two-year bar from paragraph (b) does not apply “if the court finds that there is persistent and willful denial or interference with parenting time, or has reason to believe that the child’s present environment may endanger the child’s physical or emotional health or impair the child’s emotional development.” Minn. Stat. §518.18(c). Citing the above provisions, the court of appeals noted that father’s 2017 motion to modify was filed within two years of his 2016 motion to modify. Because the district court had not made a finding required by paragraph (c) to except father’s motion from the two-year bar imposed by paragraph (b), father’s motion was procedurally barred and he was not entitled to have his motion considered on its merits even though the district court had done so and denied his motion anyway.

Although father had alleged the children were endangered, “he failed to provide the district court with a reason to believe that the children’s present environment endangers their physical or emotional health or development.” Additionally, it did not make a difference that mother had not objected to father’s motion on procedural grounds because father’s motion was barred regardless. Medvedovski v. Medvedovski, ___ N.W.2d ___ (Minn. App. 2017).

Jaime Driggs

Henson & Efron PA 

FEDERAL PRACTICE
JUDICIAL LAW

• 28 U.S.C. §2107; Fed. R. App. P. 4(a)(5)(C); extensions of time to appeal. In its first opinion of the current term, the Supreme Court unanimously held that Fed. R. App. P. 4(a)(5)(C) is a nonjurisdictional claim-processing rule subject to waiver, rather than a jursidictional statutory provision, and remanded the action to the 7th Circuit to determine whether the respondents had waived any objection to the district court’s extension of time to appeal that exceeded the limit set forth in Rule 4(a)(5)(C). Hamer v. Neighborhood Housing Servs., ___ S. Ct. ___ (2017).

• CAFA; remand affirmed; application of “viewpoint” rules. Finding that the defendant could not meet its burden to establish the required amount in controversy under either the “plaintiffs’ viewpoint” rule or the “either viewpoint” rule, the 8th Circuit declined to resolve which of these two rules applies in determining the amount in controversy under CAFA, and affirmed the remand of the action. Waters v. Ferrara Candy Co., 873 F.3d 633 (8th Cir. 2017).

• Multiple motions to amend denied. The 8th Circuit affirmed denial of an untimely motion for leave to amend a complaint, finding that there was no need to address “complex” issues relating to the alleged futility of the proposed amendments after finding that the plaintiff had not been diligent and therefore could not establish the required good cause. Kmak v. Am. Century Cos., 873 F.3d 1030 (8th Cir. 2017).

Judge Magnuson rejected the plaintiff’s request to amend her complaint included in her opposition to the defendant’s motion to dismiss, where the plaintiff did not identify what additional facts she could allege, and where the plaintiff had failed to submit the proposed amended complaint and redline required by Local Rule 15.1(b). Kunza v. Clarity Servs., Inc., 2017 WL 4685060 (D. Minn. 10/16/2017).

• Motion to dismiss for lack of personal jurisdiction denied; registered agent. Following existing 8th Circuit law and denying the defendant’s motion to dismiss for lack of personal jurisdiction where the defendant had registered with the Minnesota Secretary of State and had appointed an agent for service, Judge Frank rejected the defendant’s argument that the Supreme Court’s BNSF decision (BNSF Rwy Co. v. Tyrell, 137 S. Ct. 1549 (2017)) had overruled 8th Circuit’s precedent (Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196 (8th Cir. 1990)). Ritchie Capital Mgmt., Ltd. v. Costco Wholesale Corp., 2017 WL 4990520 (D. Minn. 10/30/2017).

• “Informal request” for leave to file untimely motion for attorney’s fees denied. Where the prevailing plaintiff’s counsel waited almost a year after the entry of judgment before making an “informal request” for an extension of time to file a motion for attorney’s fees, Judge Frank found that the informal request did not comply with Fed. R. Civ. P. 6(b)(1)(B), and that counsel’s admitted “inadvertence, mistake and carelessness” did not constitute “excusable neglect.” Sapp v. City of Brooklyn Park, 2017 WL 5157447 (D. Minn. 11/6/2017).

• Expedited motion to stay remand pending appeal denied. Judge Nelson denied the defendant’s expedited motion to stay remand pending appeal, finding that the defendant had not made the required “strong showing” of a likelihood of success on the merits, or that he would be irreparably harmed absent a stay. Medtronic Sofamor Danek, Inc. v. Gannon, 2017 WL 5135556 (D. Minn. 11/3/2017).

• Attorney’s fees on discovery motion denied. Relying on Fed. R. Civ. P. 37(a)(5)(A)(iii), Judge Nelson declined to award the plaintiff attorney’s fees related to a motion to compel, finding that the parties had “engaged in good faith efforts” to resolve the dispute, and that “no bad faith was alleged.” Amador v. U.S. Bank N.A., 2017 WL 5151680 (11/6/2017).

• Motion to reconsider granted. Acknowledging the “unique posture” of the motion, Judge Nelson granted the plaintiff’s motion for reconsideration of Judge Kyle’s previous denial of his motion for summary judgment brought pursuant to Local Rule 7.1(j) after the case was reassigned to Judge Nelson. Johnston v. BNSF Railway Co., 2017 WL 4685012 (D. Minn. 10/16/2017).

• First-filed rule; declaratory judgment; second-filed action transferred. Adopting a report and recommendation by Magistrate Judge Brisbois, Chief Judge Tunheim transferred a second-filed action to the District of Nevada, where the first-filed action was pending. Magistrate Brisbois’ report and recommendation acknowledged that the Nevada action was primarily a declaratory judgment action that may have resulted from a “race to the courthouse,” but found that the “anticipatory nature” of that action was “only a factor to be considered,” and was “not dispositive.” Cirrus Design Corp. v. Cirrus Aviation Servs., LLC, 2017 WL 4863054 (D. Minn. 10/5/2017), Report and Recommendation adopted, 2017 WL 4863199 (D. Minn. 10/26/2017).

• Attorney’s fees; nominal damages. Where a jury awarded the plaintiff only $1 in damages on one claim against one defendant, Chief Judge Tunheim found that the plaintiff’s victory was not “merely technical,” and awarded her more than $305,000 in attorney’s fees and almost $19,000 in costs. Jenkins v. Univ. of Minnesota, 2017 WL 4657853 (D. Minn. 10/13/2017).

Josh Jacobson

Law Office of Josh Jacobson 

 

IMMIGRATION LAW
JUDICIAL LAW

• Where’s the love? The 8th Circuit Court of Appeals held that the Board of Immigration Appeals’ determination that the petitioner’s attempt to procure permanent residence by willfully misrepresenting his marriage to a U.S. citizen as bona fide was supported by substantial evidence that it was in fact a sham. “We conclude that the testimony and documentary evidence submitted by DHS—and not refuted by credible evidence that Abuya and Maldonado ever lived together—was substantial evidence that supported the IJ’s [immigration judge’s] finding that the marriage of Abuya and Maldonado was fraudulent under §1182(a)(6)(C)(i) and therefore Abuya is removable under §1227(a)(1)(A).” Abuya v. Sessions, No. 16-3407, slip op. (8th Cir. 10/17/2017). http://media.ca8.uscourts.gov/opndir/17/10/163407P.pdf

ADMINISTRATIVE ACTION

• DOJ and DOS partner to combat fraud and protect U.S. workers from discrimination. On 10/11/2017, the Departments of Justice and State announced that they had signed a Memorandum of Understanding whereby the Civil Rights Division and Bureau of Consular Affairs will share information about employers that may be engaged in unlawful discrimination, committing fraud, or making other misrepresentations in their use of employment-based visas, such as H-1B, H-2A, and H-2B visas. Acting Assistant Attorney General John M. Gore of DOJ’s Civil Rights Division declared “today’s agreement reflects the Civil Rights Division’s commitment to use all available tools, including collaboration with other federal agencies, to protect U.S. workers from discrimination. The Division welcomes the Department of State as a partner in this effort.” https://www.justice.gov/opa/pr/departments-justice-and-state-partner-protect-us-workers-discrimination-and-combat-fraud 

• BALCA overturns denial of labor cert given different guidelines for ad placement in local/ethnic newspapers.
On 10/3/2017, the Board of Alien Labor Certification Appeals (BALCA) overturned a labor certification denial, finding the regulations controlling placement of an ad in a general circulation Sunday newspaper differ from those for an ad in a local/ethnic newspaper. The employer was not required to place an ad in a local/ethnic newspaper “most likely to bring responses” as called for with ads in a general circulation Sunday newspaper. To do otherwise would impose new requirements on ads in local/ethnic newspapers. “The Employer has established that the Navajo Times is an appropriate paper for the job opportunity. The teaching position will entail working primarily with Navajo Indian children and the Navajo Times focuses its coverage on the Navajo Indian community. It is reasonable to conclude that an advertisement in the Navajo Times is an appropriate method to recruit for teachers at a school with many Navajo Indian students.” Matter of Gallup McKinley County Schools, 2013-PER-03215 (10/3/2017). https://www.oalj.dol.gov/decisions/alj/per/2013/in_re_gallup_mckinley_coun_2013per03215_(oct_03_2017)_094808_cadec_pd.pdf 

• TPS extended for South Sudan. On 9/21/2017, the Department of Homeland Security extended temporary protected status (TPS) for South Sudanese holders of that status from 11/3/2017 through 5/2/2019.  According to Acting DHS Secretary Elaine Duke, such action is “warranted because the ongoing armed conflict and extraordinary and temporary conditions that prompted the 2016 TPS redesignation have persisted, and in some cases deteriorated, and would pose a serious threat to the personal safety of South Sudanese nationals if they were required to return to their country.” 82 Fed. Reg. 44205-11 (9/21/2017). https://www.gpo.gov/fdsys/pkg/FR-2017-09-21/html/2017-20174.htm 

• Foreign terrorist designations for Jaish-e-Mohammed and Islamic Jihad Union. On 10/11/2017, Secretary of State Rex Tillerson announced that the designations of Jaish-e-Mohammed and Islamic Jihad Union as foreign terrorist organizations would continue to be maintained pursuant to Section 219 of the Immigration and Nationality Act (8 U.S.C. §1189).  82 Fed. Reg. 50728 (11/01/2017). https://www.gpo.gov/fdsys/pkg/FR-2017-11-01/pdf/2017-23796.pdf

R. Mark Frey

Frey Law Office

 

PROBATE & TRUST LAW
JUDICIAL LAW

• Real property devolves immediately upon death despite a personal representative’s power to possess and control the property. A piece of real property was left to decedent’s three children through a residuary clause in decedent’s will. Prior to initiation of the probate proceeding, one of the beneficiaries transferred an interest in the property by quit-claim deed. The personal representative brought a quiet title claim seeking to undo the transfer. The district court concluded that the quit-claim deed did not transfer a valid ownership interest and granted summary judgment against the personal representative on the quiet title claim.

The court of appeals reversed, holding that real property devolves immediately upon a testator’s death, even when the property passes through a residuary clause rather than as a specific devise. In order to reach that holding, the court had to address the personal representative’s power to possess and control real property during estate administration. The court held that although the personal representative has power to possess and control real property during administration, that power does not divest the beneficiary of a valid and transferrable ownership interest in the property. Laymon v. Minn. Premier Props., LLC, No. 27-CV-15-15949, 2017 WL 2278228 (Minn. Ct. App. 10/9/2017).

Casey D. Marshall

Bassford Remele PA

 

REAL PROPERTY
JUDICIAL LAW

• Americans with Disabilities Act. In one of “dozens” of lawsuits brought by plaintiff Smith against businesses for failure to comply with the ADA, Smith demanded the right to conduct a full site inspection at the defendant’s business. Smith’s purported goal was to “hunt for other possible violations of the ADA,” according to the court. The court held that the ADA does not provide plaintiffs the right to comb through a property to support further injunctive relief (after the known barriers are remedied) because plaintiffs must have some form of knowledge of impediments or barriers to request injunctive relief. Smith v. RW’s Bierstube, Inc., No. 17-cv-1866, 2017 WL 5186346 (D. Minn. 11/8/2017).

• Land use. In an interim use permit (IUP) application case, a mine operator obtained a National Pollutant Discharge Elimination Systems Permit from the Minnesota Pollution Control Agency (MPCA) relating to a proposed aggregate mine and eventual 36-acre groundwater pond. Scott County denied the IUP on the basis of water-quality and traffic issues. Scott County determined that the project would pose health and safety risks, and that there was too great a risk of contamination of the aquifer and local wells. The county also determined that the applicant had not provided satisfactory assurances and agreements to pay for expected roadway improvements necessitated by the anticipated heavy traffic. With respect to the denial on water issues, the applicant argued that the MPCA’s grant of a permit sets a ceiling on the requirements that lesser governmental entities can impose. In other words, Scott County must accept all projects permitted by state agencies. The court of appeals appeared to give short shrift to the applicant’s argument and determined that Scott County had provided a sufficiently rational basis for denying the IUP application. With respect to the denial on traffic issues, the applicant argued that the relevant ordinance required a finding that its traffic “will” burden public facilities whereas Scott County only found that the traffic “could” burden public facilities. The court upheld the denial on the basis that the applicant proposed several haul routes, all of which posed concerns, and that the applicant failed to enter into development agreements and funding plans for expected road upgrades. A Resolution Setting Forth Findings of Fact and Conclusions of Law and Order Denying S. M. Hentges & Sons, Inc. and Jordan Gravel, LLC Application for an Interim Use Permit for Aggregate Mining and Processing Operation in Sand Creek Township, No. A16-1768, 2017 WL 5242456 (Minn. Ct. App. 11/13/2017) (designated as unpublished).

Joseph P. Bottrell

Meagher & Geer, PLLP

TAX LAW
JUDICIAL LAW

• Property tax: Rejection of arbitrary “political boundaries.” The Menards home improvement center in Cottage Grove occupies a parcel of approximately 649,000 square feet, and is improved by two structures. In this property tax dispute, each appraiser valued only the heated retail space, considering the other improvements ancillary. After determining that being a “big-box store” is that property’s highest and best use, the tax court turned to analyze the three approaches of market valuation (cost, income, and sales comparison). Equitable Life Assur. Soc’y of the U.S. v. Ramsey Co., 530 N.W.2d 544, 552 (Minn. 1995). The court determined that the sales comparison approach produced the most reliable market value of the property.

Application of the sales comparison approach required analysis of recent sales of other similar properties to determine the comparability of those properties to the subject property, and the adjustments on the sale prices as necessary for such features such as age, size, location, and condition to make those properties comparable to the subject. Appraisal Institute, Appraisal of Real Estate 366, 381-82. Menards showed evidence of sales from nine comparable properties, including some outside of the seven-county metropolitan area. Washington County argued that sales outside of the metropolitan area should be rejected as evidence. Minnesota law, however, rejects arbitrary “political boundaries” when exploring potential comparable sales. See McNeilus Truck & Mfg., Inc. v. Dodge Co., 105 N.W.2d 410,414 (Minn. 2005). Because the county could not identify a rule to support its limitation, the tax court relied exclusively on Menard’s evidence. With Menard’s evidence, the tax court determined the county over-valued the property under the sales approach and decreased property taxes from the assessment. Menard, Inc. v. Washington Co., Nos. 82-CV-14-1681 82-CV-15-1045 82-CV-15-3560 (Minn. T.C. 9/11/2017).

• Constitutional challenge rejected; taxpayer entitled to summary judgment. Walgreens Specialty Pharmacy, LLC, owned by Walgreens Co., is engaged in the retail specialty pharmacy business. Though Walgreens is a familiar retail pharmacy in the state, Walgreens Specialty Pharmacy (hereinafter Walgreens) does not have a specialty pharmacy located in Minnesota. Walgreens does, however, own six such pharmacies that are licensed by the Minnesota Board of Pharmacy to dispense drugs to Minnesota residents. Some of the drugs sold to Minnesota residents include “legend drugs” for purposes of Minnesota’s Legend Drug Tax. The Legend Drug Tax imposes a tax on the receipt of prescription drugs for resale or use in Minnesota. Minn. Stat. §295.52, subd. 4(a) (2016). Specifically, the legend tax imposes a 2% tax rate to provide state-subsidized health care coverage for low-income individuals.

Walgreens challenged the imposition of the Legend Drug Tax to its Minnesota sales. The company raised a constitutional challenge, and sought a nearly $15 million refund. Walgreens argued that the due process clause and the commerce clause of the United States Constitution prohibit Minnesota from imposing a use tax on legend drugs received in other states when those drugs are then delivered to a common carrier outside of Minnesota before being delivered into the state. Walgreens also raised a dormant commerce clause argument. The tax court granted Walgreens’ motion for summary judgment, but not on constitutional grounds. The tax is not unconstitutional, the court held, if it applies to drugs that are received or delivered within Minnesota. See Morton Blds., Inc. v. Comm’r, 488 N.W.2d 254, 258 (Minn. 1992). The court reasoned that because these activities occur solely in Minnesota, they do not violate the due process clause. The taxpayer was entitled to summary judgment, however, because Walgreens received the legend drugs outside of the state, and the statute imposes a tax only on the receipt of such drugs within the state. Walgreens Specialty Pharmacy, LLC v. Comm’r, No. 8902-R (Minn. T.C. 10/16/2017).

LOOKING AHEAD

The Republican plan for tax reform is a work in progress. As we write this month’s article, the most recent congressional plans include elimination of the deduction for state and local taxes, and a reduction in the cap on mortgage interest deductions. Estimates from the Congressional Budget Office indicate that one version of the plan will increase the federal deficit by about $1.7 trillion over 10 years. The president has said that he hopes to sign the tax bill before Christmas.

Morgan Holcomb
Mitchell Hamline School of Law

Jessica Dahlberg
Grant Thornton

 

TORTS & INSURANCE
JUDICIAL LAW

n Noncompete agreement; independent consideration. Defendant interviewed for employment with plaintiff. The next day, plaintiff sent defendant a letter to “confirm [defendant’s] acceptance of the position [plaintiff] offered [her].” The letter did not mention a noncompete agreement. One week later, defendant showed up for work as requested in the letter. At that time, defendant completed new-hire paperwork and executed a non-compete agreement. Years later, defendant resigned and started performing work that allegedly violated the terms of the noncompete agreement. Plaintiff filed suit alleging breach of the noncompete agreement and other related claims. After a bench trial on the enforceability of the non-compete agreement, the district court found that the noncompete agreement was not ancillary to the employment agreement between the parties and was not supported by independent consideration. The district court entered judgment in favor of defendant.

The Minnesota Court of Appeals affirmed. The court initially held that
“[w]here a noncompete agreement is not ancillary to an employment agreement, independent consideration must be provided to the employee to render the agreement valid and enforceable.” The court went on to hold that the district court did not clearly err in finding that the noncompete was not ancillary to the employment agreement. The court reasoned that the letter sent by plaintiff after the interview supported a finding that employment had been offered and accepted before defendant was presented with or notified of the noncompete agreement. Since plaintiff made no argument that independent consideration was provided to defendant in connection with the noncompete agreement, the court affirmed the judgment of the district court. Safety Center, Inc. v. Stier, No. A17-0360 (Minn. Ct. App. 11/6/2017). https://mn.gov/law-library-stat/archive/ctappub/2017/OPa170360-110617.pdf

Jeff Mulder
Bassford Remele

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