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

Notes & Trends – May/June 2018

CIVIL PROCEDURE
JUDICIAL LAW

• Minn. R. Civ. P. 25.01; dismissing appeal for lack of jurisdiction. Plaintiff was convicted of multiple counts of first degree-murder following a jury trial. In 2014, plaintiff filed an “Amended Petition for Post-Conviction Relief” arguing newly discovered DNA evidence placed an alternative suspect at two crime scenes. During the pendency of that motion the plaintiff died.

The state moved to dismiss the petiion as moot given plaintiff’s death. Before deciding that motion, the personal representative for plaintiff’s estate moved to substitute herself as the petitioner of the postconviction case. The district court granted the state’s motion to dismiss without addressing the personal representative’s motion to substitute. The attorneys for the personal representative appealed.

The Minnesota Supreme Court dismissed the appeal for lack of jurisdiction, holding that the attorneys who filed the appeal did not represent any aggrieved party before the court: The attorney’s representation of the plaintiff ended upon his death, the personal representative’s motion for substitution had not yet been granted by the district court, and the attorneys were not personally aggrieved. Although Rule 25.01 did not limit the time within which a motion to substitute must be brought, the appeal was not filed by a party properly before the Court. Glaze v. State, 909 N.W.2d 322 (Minn. 2018).

• Minn. R. Civ. P. 56.03; summary judgment reversed. The Minnesota Supreme Court reversed the district court’s decision granting summary judgment to the defendant, who argued plaintiff failed to satisfy the actual-notice provision of the Minnesota Civil Damages Act, Section 340A.802, subd. 2 (2016). After clarifying that the actual-notice subsection of the Civil Damages Act merely required actual notice of sufficient facts to put the dram-shop on inquiry notice of a potential claim, the Court concluded that the facts and inferences drawn therefrom, when viewed in the light most favorable to the non-movant, show the plaintiff satisfied the actual-notice standard.

The dissent joined the majority’s analysis of the Civil Damages Act, but criticized the majority’s application of Rule 56.03, arguing the majority incorrectly drew its inferences from the absence of facts in the record, arguing that if there are no facts in the record, there are no inferences to be made. Buskey v. American Legion Post #270, 2018 WL 1633326 (Minn. 4/4/2018)

• Minn. R. Civ. P. 52.02; permitting multiple motions to amend the findings. In an unpublished decision, the Minnesota Court of Appeals determined Minnesota Rule of Civil Procedure 52.02 does not prohibit a district court from amending an order that had previously been amended under the same rule. Rule 52.02 only requires the motion to be served and heard within the time allowed under Rule 59.03, or 30 days. Moslais X. Vue n/k/a Moslais Michele Xiong, Petitioner v. Kue Vue, Respondent, 2018 WL 1701847 (4/9/2018).

Michael Mather

HKM, P.A.

 

COMMERCIAL AND CONSUMER LAW
JUDICIAL LAW

• Navigating chaos. The Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq., is a statute that seeks to protect consumer debtors from abusive, deceptive, and unfair debt collection practices asserted to be employed by many debt collectors. Perhaps because it seeks order in dark places, it tends to use words with general and often uncertain meanings, such as “abuse,” and to state its prohibitions in absolute terms. For example, 15 U.S.C. §1692f prohibits a debt collector from using unfair or unconscionable means to collect, or attempt to collect, any debt. The section goes on to provide several illustrations, such as the collection of any amount, unless such amount is expressly authorized by the agreement creating the debt or permitted by law. §1692f(1).

In Hill v. Accounts Receivable Services, LLC, No. 16-4356 (8th Cir. 2018), the plaintiff Hill was sued as defendant in state court for the payment of a medical debt that the medical services provider had assigned to the plaintiff in that action. The plaintiff in that action lost, and Hill, subsequently as plaintiff, sued in another action for violations of the Fair Debt Collection Practices Act. In the subsequent litigation, among other violations, Hill asserted a violation of §1692f(1) based on Minnesota law, because the earlier action to enforce the debt had included a claim as part of the debt pre-verdict interest.

Minnesota Statutes Sec. 344.01 Subdivision 1, states in part the interest for any legal indebtedness shall be at the rate of $6 upon $100 for a year absent a different rate contracted for in writing. As noted by the 8th Circuit on appeal from the state court, the Minnesota Supreme Court had not yet decided whether a person in the position of the defendant would be entitled to pre-verdict interest under this statute, but the statute did not prohibit recovery of such interest, and then held that the plaintiff may have had a valid legal defense to the application of the statute but that does not mean that there was an attempt to collect interest that is not permitted by law.

Observation: Interestingly, another Minnesota statute, Sec. 549.09 Subdivision 1(b), provides in part that, except as otherwise provided by contract or allowed by law, pre-verdict interest on pecuniary damages shall be computed as provided in paragraph (c) from the time of commencement of the action or written notice of the claim, whichever occurs first. However, there are some time limitations, which perhaps barred use of this provision. Nonetheless, if the contract for medical services had included a provision for pre-verdict interest, reliance on the law would not have been necessary. 

Fred Miller

Ballard Spahr

 

CRIMINAL LAW
JUDICIAL LAW

• Involuntary intoxication: Defense not permitted if source of intoxication unascertainable. Appellant was convicted of indecent exposure. The arresting officer testified at trial that appellant appeared to be intoxicated, but no chemical tests were administered. Appellant testified he smoked what he believed to shisha, flavored tobacco in a hookah, at the home of an unidentified acquaintance, but that he had an intense reaction, causing him to vomit and black out prior to the incident. The district court found appellant was not entitled to an instruction on voluntary or involuntary intoxication.

First, the court of appeals finds that the district court properly instructed the jury on the intent element of indecent exposure. Indecent exposure is a general intent crime, because it simply prohibits willful conduct: voluntary, knowing, and intentional indecent or lewd exposures with no intent to cause a particular result. Because indecent exposure is a general intent offense, the court of appeals next affirms the district court’s refusal to instruct the jury on the defense of voluntary intoxication. The voluntary intoxication defense is available only for specific intent crimes, under Minn. Stat. §609.075.

Finally, the court of appeals finds the district court did not err in refusing to instruct the jury on the common law defense of involuntary intoxication. Based on appellant’s trial testimony, he sought to pursue a theory of innocent-involuntary intoxication, which occurs “when intoxication results from an innocent mistake by the defendant about the character of the substance.” For an instruction on this defense, appellant was required to make a prima facie showing that (1) he was innocently mistaken as to the nature of the substance taken, (2) the intoxication was caused by the intoxicating substance in question and not by some other intoxicant, and (3) he was temporarily mentally ill at the time of the offense. 

The court of appeals finds that appellant did not identify what, if any, substance was the source of his intoxication, so he did not establish that he innocently mistook the shisha he voluntarily consumed for something other than the flavored tobacco he believed it to be. Also, because appellant failed to show his intoxication was due to an unknown and unidentified substance, rather than the other substances in the shisha he voluntarily consumed, it is impossible to ascertain whether appellant’s intoxication was caused by the tobacco, the flavoring, some unknown intoxicant, or something else he ingested that day. Finally, when police arrived, he attempted to hide his exposed genitals, which demonstrates he knew his actions were wrong. Thus, because appellant did not make a prima facie showing on the elements of involuntary intoxication, he was not entitled to a jury instruction on the defense. State v. Mohamed Musa Jama, A17-0481, 908 N.W.2d 372 (Minn. Ct. App. 3/5/2018).

• Search and seizure: Robbery suspect’s purse subject to search incident to arrest when it remains immediately associated with person. A grocery store investigator observed appellant place two food items in her purse and leave the store without paying. The investigator took appellant’s purse when she tried to hand it to a friend who had also been in the store. Appellant was handcuffed and escorted to the manager’s office with her purse, which was placed on the manager’s desk. When police arrived, an officer arrested appellant, who had outstanding warrants, and searched her purse, finding narcotics. Appellant was convicted of fifth-degree controlled substance crimes and misdemeanor theft and she appealed, challenging the search of her purse.

A search of the arrestee’s person incident to their lawful arrest encompasses personal property immediately associated with the person, and the Minnesota Supreme Court has previously held that a “shoulder purse is so closely associated with the person that it is identified with and included within the concept of one’s person.” State v. Wynne, 552 N.W.2d 218, 220 (Minn. 1996). 

Here, however, appellant’s purse was detained by the store’s employee, so the question is whether it remained immediately associated with appellant, an issue of first impression in Minnesota. Prior cases have held that a purse may remain immediately associated with a suspect’s person, even if seized and the suspect detained, if the suspect was in possession of the purse when detained. Because appellant carried the purse when she was detained by the store employee, the purse remained immediately associated with her person during the detention, and police knew or had reason to know appellant was in possession of the purse when detained, based on the store employee’s statement to police, the officer justifiably searched the purse along with appellant’s person incident to her lawful arrest. State v. Traci Rankin Bradley, A17-0466, 908 N.W.2d 366 (Minn. Ct. App. 3/5/2018).

• Search and seizure: Entering property and searching camper in backyard violates implied license to enter property for “knock and talk.” B.F. saw his stolen camper in respondent’s backyard and notified police. The responding officer verified from the end of the driveway that the camper matched the missing camper’s description. The officer drove halfway down the driveway and parked, then walked to the camper. The VIN and license plate had been removed from the camper, but the officer found a partial VIN stamped on the camper’s frame, which matched part of the stolen camper’s VIN. The officer then entered the camper and found an item of B.F.’s personal property. The officer walked to the backyard garage, where he made contact with respondent. Respondent allowed the officer to search the garage, where additional items of B.F.’s personal property were found. Respondent then consented to a search of his house, where more of B.F.’s property was found. The district court denied respondent’s motion to suppress all evidence found from the searches of his property, and respondent was found guilty of possessing stolen property after a jury trial. The court of appeals, however, found that the search of the camper violated respondent’s 4th Amendment rights and tainted the subsequent search of the home, and the state filed a petition for review.

The parties disagree as to whether the officer performed a trespassory search of the camper when he entered the property to examine it. This question turns on whether the camper was located on respondent’s property’s curtilage, property afforded the constitutional protections of the home. The camper was within the curtilage of the property if located in an area intimately tied to the home. 

Here, the part of the driveway on which the camper was parked was in close proximity to his home. Part of the backyard and driveway were also bordered by a tall, opaque fence, a wooded area, and trees, which clearly demark his backyard and provide privacy to the area where the camper was parked. The dirt driveway was also respondent’s main route of entering his home, included a firepit in the center of a turnaround in the driveway, and was often used by respondent for storage, activities closely related to the home and associated with the privacies of life. While the driveway where the camper was parked is visible from the public road, the curtilage of a home need not be completely shielded from public view to maintain an expectation of privacy in that area. Based on these facts, the Supreme Court finds that the camper was parked on the curtilage of respondent’s property.

Next, the Court considers whether respondent gave the police express or implied license to enter onto the curtilage for a brief “knock and talk.” Respondent had implicitly granted public access to his backyard to seek a back door entrance to the house and garage, based on the well-worn dirt area and definable pathway in the area where the camper was parked. However, the police violated the limitations of this implied license to enter respondent’s property. The officer deviated substantially from the route that would take him to the back door of the house or garage to get to the camper, parked at the end of the driveway, past the house, and in the back corner of the backyard. The officer entered and inspected the camper thoroughly before turning back to the house. The officer’s purpose in entering respondent’s property was to inspect the camper, not to question the resident of the house. He also remained long enough to thoroughly inspect the interior and exterior of the camper. Thus, the examination of the camper was an unlawful search. The court of appeals is affirmed. State v. Quentin Todd Chute, A15-2053, 908 N.W.2d 578 (Minn. 3/14/2018). 

• Controlled substances: Possession of chemical reagents or precursors with intent to manufacture methamphetamine; error to not instruct jury as to which items in defendant’s possession are chemical reagents or precursors. Appellant was convicted of a number of offenses, including possession of chemical reagents or precursors to the manufacture of methamphetamine, under Minn. Stat. §152.0262, subd. 1(b), after a search of his mother’s residence revealed methamphetamine, a bottle of Drano, batteries, a funnel, and a recipe for methamphetamine. In its jury instructions, the district court did not instruct the jury as to which items in appellant’s possession were chemical reagents or precursors under the statute. Inconsistent with the model jury instructions, the jury here was instructed that one element of possession of substances with intent to manufacture methamphetamine is the defendant’s possession of chemicals or reagents with the intent to manufacture methamphetamine, but was not instructed that two of the substances found during the search were among those identified in Minn. Stat. §152.0262, subd. 1(b) as “chemical reagents or precursors.” It was plain error for the district court to omit such an instruction. However, the court of appeals declines to reverse appellant’s conviction, finding it is not reasonably likely the omitted instruction had a significant, or any, effect, on the jury’s verdict, because the jury heard testimony that the search revealed a recipe, ingredients, and equipment for making methamphetamine. 

However, the court reverses appellant’s sentences for possession of chemicals or reagents with intent to manufacture methamphetamine and a fifth-degree controlled substance crime, finding they are precluded by his sentence for a second-degree controlled substance crime. His sentences for the second-degree controlled substance crime, being a prohibited person in possession of a firearm, and possession of a short-barreled shotgun are affirmed. State v. Russell Vincent Winbush, A17-0344, __ N.W.2d __, 2018 WL 1247240 (Minn. Ct. App. 3/12/2018). 

• Plea: District court’s participation in plea negotiations is improper and triggers totality of circumstances inquiry into voluntariness of plea. Appellant pleaded guilty to aiding and abetting second-degree unintentional murder arising from the death of E.S., which was witnessed by appellant’s children. Prior to her plea, the district court encouraged the parties to attempt to resolve the case, commenting on the “serious situation” of having appellant’s children testify against their mother. Later, before trial, the state updated the court via email regarding the status of the plea negotiations. The court replied that it would not be willing to accept the defendant’s offer of second-degree manslaughter and thought the state’s offer of second-degree unintentional murder was more appropriate. Once trial commenced, the court inquired about the negotiations. After the first two days of trial, appellant entered a guilty plea to aiding and abetting second-degree unintentional murder. At sentencing, both parties and the court commented that the plea decisions were based largely on avoiding having appellant’s children testify. Appellant filed a postconviction petition seeking to withdraw her plea based on the district court’s improper participation in plea negotiations. An affidavit submitted by appellant’s trial counsel stated that, but for the court’s participation, the parties would not have agreed to a plea deal. Appellant’s petition was summarily denied, and the court of appeals affirmed, finding that the district court did not excessively involve itself in negotiations.

The Supreme Court first considers under what circumstances a district court “participates” in plea negotiations, and explains its statement in State v. Johnson, 156 N.W.2d __, 223 (Minn. ___), that “the court should [not]… participate in the plea bargaining negotiation itself.” The Minnesota Rules of Criminal Procedure do not discuss what the judge may do, if anything, as plea negotiations unfold. The Supreme Court looks unfavorably upon recent court of appeals decisions interpreting Johnson as prohibiting the district court’s excessive involvement in plea negotiations, and “reaffirms the principle that a district court judge should not participate in plea bargaining negotiation itself,” “overrul[ing] court of appeals decisions to the extent that they are inconsistent with this principle.” A judge may only approve or reject a plea submitted for judicial acceptance. However, this rule does not prohibit inquiries into the status of negotiations, sharing sentencing practices, or disclosing nonbinding plea and sentencing information at the parties’ joint request.

Here, the district court’s requests to be updated on the status of plea negotiations were appropriate, but the court participated in the negotiations when it gave unsolicited feedback regarding the parties’ settlement offers. The Supreme Court notes that most of the information provided by the judge would not have constituted “participation” if the parties had jointly requested it, but they did not in this case. A statement by the judge that a particular sentence seemed “more realistic” to him, however, essentially presented a counteroffer to the parties’ settlement offers, and under no circumstances should a judge generate or propose a plea deal not presented by the parties.

The Court rejects a blanket rule of per se invalidity and automatic plea vacatur for a district court’s participation in plea negotiations. Instead, plea withdrawal is appropriate only where a manifest injustice occurs, specifically, where the court’s participation in plea negotiations makes the defendant’s plea involuntarily, based on the totality of the circumstances. Reversed and remanded to allow appellant to amend petition under the rule of law announced by the Supreme Court. Jetaun Helen Wheeler v. State, A16-0835, __ N.W.2d __, 2018 WL 1414708 (Minn. 3/21/2018).

• Attorney-client relationship: Death of client eliminates attorney’s standing to appeal on client’s behalf. Billy Glaze was convicted in 1989 of multiple counts of first-degree murder and second-degree intentional murder. In 2007, he began postconviction proceedings that continued until his death in December 2015. The state then moved to dismiss the postconviction petition as moot. The personal representative of Glaze’s estate moved to substitute herself as the petitioner, but the district court granted the state’s motion to dismiss. The personal representative’s attorneys then filed a notice of appeal on Glaze’s behalf.

The court of appeals finds that the appeal was not filed by Glaze, who died before the district court’s dismissal order, or his personal representative, who is neither listed in the caption nor mentioned in the body of the notice of appeal, but was instead filed by the attorneys who represented Glaze before his death. Held, Glaze’s attorneys do not have standing to pursue his postconviction claims on appeal, as their attorney-client relationship with Glaze terminated upon his death and they are not aggrieved parties themselves. The Court finds that it lacks jurisdiction to consider the appeal, because there is no aggrieved party before the Court. Billy Richard Glaze v. State, A16-2028, __ N.W.2d __, 2018 WL 1414713 (Minn. 3/21/2018).

• Restitution: Hearing must be scheduled when restitution challenged. After pleading guilty to second-degree murder, appellant was ordered to pay restitution. He challenged the order based on his inability to pay and requested a restitution hearing. The district court amended its order without a hearing, reducing the amount of restitution. Appellant’s postconviction petition challenging the restitution order was denied, and he appealed.

Appellant timely requested a hearing after the district court’s original restitution order, and was, therefore, entitled to a restitution hearing under Minn. Stat. §611A.045, subd. 3(b). The state’s argument that appellant’s affidavit challenging the order was not detailed enough fails, as the plain language of Minn. Stat. §611A.045, subd. 3(a), requires only that an affidavit to meet the offender’s burden of production be served on the state and the court five days before the restitution hearing. This five-day deadline never arose, as a restitution hearing was never scheduled. The district court abused its discretion by not scheduling a restitution hearing. Rico Patrick Howard v. State, No. A17-0976, __ N.W.2d __, 2018 WL 1462296 (Minn. Ct. App. 3/26/2018).

• 5th Amendment: No 5th Amendment violation to request DNA sample after invocation of right to remain silent. Appellant and two others were found at a residence during the execution of a search warrant at a residence. In an upstairs bedroom, police found a short-barreled shotgun and shells next to a box containing mail addressed to appellant. Appellant is a convicted felon and not permitted to possess firearms. In a squad car outside the residence, an officer read appellant a Miranda warning, but appellant invoked his privilege against self-incrimination. Appellant was arrested and brought to jail. At the jail two hours later, an officer asked if appellant would sign a written consent to provide a DNA sample. The form was read to and signed by appellant. While the DNA sample was being taken, appellant asked why the sample was being taken. After an officer told him it was to compare the sample to DNA found on the shotgun, appellant said he “had already handled the gun.” Later testing confirmed appellant’s DNA profile was consistent with the major male profile developed from the samples taken from the shotgun. 

Before his trial for possession of a firearm by an ineligible person and possession of a short-barreled shotgun, appellant motion to suppress the DNA evidence and his admission to handling the shotgun was denied. The court of appeals concluded officers could not reasonably have expected the request for written consent to a DNA sample would elicit appellant’s incriminating statements, and the DNA sample was merely a physical test, not a testimonial communication, and not protected by the 5th Amendment.

The Supreme Court finds that consenting to a search and providing a DNA sample are not incriminating testimonial communications that trigger the 5th Amendment’s privilege against self-incrimination. Appellant was not “interrogated” when asked if he would consent to taking a DNA sample or when officers responded to his inquiry about why they wanted to take his DNA sample, because neither act was reasonably likely to elicit an incriminating testimonial communication. Officers’ request required only a simple “yes” or “no,” and was not made in a threatening or accusatory manner. Their response to appellant’s question about why they sought a DNA sample was an honest and straightforward declarative description of the evidence, and police may inform an accused of the evidence marshaled against him. The act of consenting to a search, such as providing a physical DNA sample, without more, is not an incriminating testimonial communication, as it does not disclose information or speak to guilt in any way. The DNA sample may, as here, lead to incriminating evidence, but when a statement is not testimonial, it cannot become so merely because it will lead to incriminating evidence. The court of appeals is affirmed. State v. Erik John Heinonen, No. A16-0229, __ N.W.2d __, 2018 WL 1513728 (Minn. 3/28/2018).

n Sentencing: Date of offense for “continuing offense” is entire date range of offense. Appellant was required to register as a predatory offender due to a conviction in 1996 for third-degree criminal sexual conduct, which, under the sentencing guidelines, “decayed” on 9/23/2014. Appellant reported living on Larpenteur Avenue in St. Paul on 6/9/2013, but in October 2014, he failed to return an annual verification letter sent to that address. He had previously returned two similar verification forms. In May 2015, police spoke with the resident of the Larpenteur Avenue address, who said appellant merely stayed with him a few times. A few days later, police made contact with appellant, who said he was living on Douglas Street and had previously lived in Winifred Street. Appellant was subsequently charged with failing to register as a predatory offender from 6/9/2013 to 8/4/2015. 

Following a court trial, the district court concluded that appellant was required to register and knew of this requirement as well as the requirement to update his address, which he failed to do. The district court found the offense took place from 6/9/2013 to 8/4/2015. At sentencing, the district court found appellant had a criminal history score of 5, which included 1.5 points for appellant’s 1996 conviction. On appeal, appellant argues that the 1.5 points were inappropriate, because that conviction had decayed during the commission of the current continuing offense. He contends the “date of the current offense” was the last day of the offense, 8/4/2015, and, because the 1996 conviction decayed before that date, it cannot be used in calculating his criminal history score. The court of appeals affirmed the district court’s calculations, finding the date of the current offense was the first day of the offense, 6/9/2013. 

The question of whether an offense is “continuing” for purposes of the statute of limitations generally turns on whether the language of the statute imposed a “continuing obligation” on the offender, which the Supreme Court finds that the predatory offender registration statute “unquestionably” does. An offender has a duty to register and update addresses with law enforcement, which are continuing obligations. 

Under the sentencing guidelines, a prior felony sentence cannot be used in a criminal history computation if a period of 15 years has elapsed since the date of discharge from or expiration of the sentence to the date of the current offense. The guidelines do not define “the date of the current offense,” so the Supreme Court looks to dictionary definitions, which indicate a “date” can be a single date or a range of dates. Thus, the guidelines are not ambiguous, because the only reasonable interpretation is that the entire range of dates over which a continuing crime is committed constitutes “the date of the offense.” 

Fifteen years had not elapsed between the expiration of appellant’s sentence for his 1996 conviction on 9/23/1999, and the start of his current offense on 6/9/2013, so the district court did not err in including the 1996 conviction in appellant’s criminal history score. In affirming appellant’s sentence, the Supreme Court also finds that failure to submit the question of the date of his offense to a jury did not violate his right to a jury trial. Appellant waived his right to a jury trial on the question of guilt, and a part of the district court’s guilt determination was the dates on which the offense was committed. State v. W.C. Luther Washington, A16-0834, 908 N.W.2d 601 (Minn. 3/14/2018). 

• Sentencing: Sentences for offenses arising from single behavioral incident may not be Hernandized. Appellant was convicted of and sentenced for nine offenses, including racketeering, controlled substance crimes, and conspiracy to commit controlled substance crimes arising from a number of controlled drug purchases. Except for a racketeering offense, the district court Hernandized all of appellant’s sentences, imposing concurrent sentences for all offenses, for a total sentence of 189 months. 

First, the court of appeals finds there was sufficient evidence to support all of appellant’s convictions and that appellant is not entitled to a new trial based on allegedly erroneous jury instructions or the prosecutor’s comments during closing argument.

Next, the court of appeals finds that appellant is entitled to be resentenced under the Drug Sentencing Reform Act, which was signed into law before appellant was convicted, so the case is remanded for resentencing. The court of appeals does note that the district court did not abuse its discretion, as appellant argues, by ranking appellant’s racketeering conviction as a level nine offense. 

However, the court of appeals finds that the district court improperly increased appellant’s criminal history score under State v. Hernandez, 311 N.W.2d 478 (Minn. 1981). Multiple or concurrent sentences may not be imposed for multiple offenses arising from a single behavioral incident. Appellant’s offenses were part of a single behavioral incident, as his controlled substance offenses were committed with the intent of facilitating and sustaining the racketeering offense. While Minn. Stat. §609.910 provides that a racketeering sentence does not preclude sentences for additional separate criminal acts, the district court’s use of the Hernandez method when sentencing appellant for separate criminal acts unfairly exaggerated his sentence. Hernandized sentences may be applied only if Minn. Stat. §609.035 authorizes multiple sentences. Here, multiple sentences were authorized under §609.190, not §609.035. On remand, the district court may not sentence appellant under Hernandez. State v. Erick Carl Longo, No. A16-1995, 909 N.W.2d 599 (Minn. Ct. App. 3/26/2018).

• Robbery: “Personal property” is all property that is not real property. Appellant was convicted of simple robbery for taking a bottle of liquor from a liquor store without paying. He argues on appeal that the evidence was insufficient to support his conviction because a bottle of liquor is not “personal property,” and that the district court should have instructed the jury to determine whether he took “personal property,” rather than a bottle of liquor.

Minn. Stat. §609.24 makes it a crime to take “personal property from the person or in the presence of another and use[] or threaten[] the imminent use of force against any person to overcome the person’s resistance or powers of resistance to, or to compel acquiescence in, the taking or carrying away of the property.” The statute provides no definition of “personal property,” so the court of appeals looks to the common and ordinary meaning of the phrase. While some lay dictionaries define “personal” as relating to a particular person, other lay and legal dictionaries define “personal property” as property that is not real property. Because the term “personal property” in §609.24 is subject to more than one reasonable interpretation, it is ambiguous. 

The court of appeals applies two canons of interpretation, the in pari material (related-statutes) canon and imputed-common-law-meaning canon, to resolve the statute’s ambiguity, which support its holding that “personal property” in §609.24 simply means all property that is not real property, without regard to whether the property is owned by a person or a business entity. The court finds the evidence was sufficient to support the jury’s conclusion that appellant took “personal property” from the liquor store. 

As to the district court’s jury instruction that the jury needed to determine whether appellant took a “bottle of liquor” rather than “personal property,” appellant argues the instruction denied him the right to a jury trial on an essential element of the offense, whether a bottle of liquor is personal property, and violated Minn. R. Crim. P. 26.03, subd. 19, which would have required the jury to determine whether he “took personal property.” Both arguments are rejected, as the court of appeals finds (1) whether a bottle of liquor is personal property is not a question of fact for the jury to consider, because, as a matter of law, it is personal property, and (2) the instructions fairly and adequately explained the law to the jury. State v. John Lee Bowen, No. A17-0331, 910 N.W.2d 39 (Minn. Ct. App. 4/2/2018).

• 4th Amendment: Fruit-of-poisonous tree doctrine may be applied to evidence found during search resulting from unlawful detention, even if evidence was abandoned prior to detention. Police were following a car for turning without signaling when they thought a passenger, appellant, had exited the car. An officer testified he found it suspicious that appellant looked toward the officer, looked away, and then walked away. The officer approached appellant, grabbed his arm, handcuffed him, and began questioning him. Appellant stated he had just eaten marijuana he had on him and was the subject of arrest warrants. The area was searched and a handgun was found in a bush. Appellant’s fingerprints were found on the gun, and he was charged with possession of a firearm by an ineligible person. He was convicted after a jury trial. On appeal, appellant challenges the district court’s denial of his pretrial motion to suppress evidence of the handgun as the fruit of his illegal detention.

The parties and the court of appeals agree that the stop of appellant was unconstitutional, as his actions prior to his detention “support[] nothing more than a hunch, a mere whim, or a guess that [appellant] had violated or was about to violate some law.” Next, the court finds that the district court’s conclusions that officers “learned no new information” from the illegal seizure that caused them to search the area near appellant and that “the decision to search the area was made based on [appellant’s] evasive conduct prior to being stopped” are not supported by the record. Instead, the record shows that after the illegal seizure, appellant made a number of statements to law enforcement regarding active warrants and drug possession. Thus, the record supports a finding that the police decided to search the area based, at least in part, on what was learned after the illegal stop of appellant. 

Next, the court concludes that the handgun is fruit of the illegal stop of appellant, based on the temporal proximity between the illegal detention and the discovery of the gun, the absence of any circumstances intervening between the detention and the search, the “blatantly offensive” nature of the police’s conduct in this case, and the fact that the police would not have found the handgun without the illegal stop, given its location in a bush and that police decided to search the area based on appellant’s statements after his illegal detention. The handgun should have been excluded.

The court rejects the state’s argument that the handgun was admissible, as appellant abandoned it prior to the illegal stop. Abandonment is not a per se rule to the fruit of the poisonous tree exclusionary rule. Here, the illegal stop did not cause appellant to abandon the handgun. Instead, the illegal stop included questioning and incriminating statements that inspired police to search the area and find the abandoned handgun, so whether the handgun was abandoned before or after the unconstitutional seizure in this case is irrelevant to the question of whether the unconstitutional seizure led police to search for and find the handgun. The court of appeals ultimately concludes that the error in this case warrants reversal of appellant’s conviction. State v. Corey Davis, Jr., No. A17-0545, 910 N.W.2d 50 (Minn. Ct. App. 4/2/2018).

• 4th Amendment: Search warrant with incorrect name sufficiently particular if it includes correct person’s description. While investigating a gang-related drive-by shooting, police drove to the residence of the alleged shooter, A.B., where they saw A.B. and another male, appellant, standing in the driveway. When officers exited the squad car and identified themselves, A.B. and appellant ran. They were identified by the victim as being present in the car that shot at him. Subsequent searches of the car and area in which A.B. and appellant ran revealed a dark-colored sweatshirt, handgun, and shell casings. Appellant was charged with drive-by shooting, second-degree assault with a dangerous weapon, ineligible possession of a firearm, drive-by shooting for the benefit of a gang, and second-degree assault for the benefit of a gang. Prior to trial, police obtained a warrant to obtain appellant’s DNA to compare with DNA on the handgun. The warrant properly described appellant’s location at the Ramsey County Law Enforcement Center and twice named appellant correctly. However, in a later section, the warrant permitted law enforcement to search D.L.H., an uninvolved person. The DNA on the handgun excluded two-thirds of the population but did not exclude appellant. The DNA evidence was presented at trial, as was the testimony of a witness who saw two men, one in a dark-colored sweatshirt, whispering suspiciously in the alley behind his house and then running away. A jury found appellant guilty on all counts.

On appeal, appellant argues the warrant for his DNA failed to satisfy the 4th Amendment’s particularity requirement, and that the district court should have suppressed the DNA evidence. With respect to the location identified in a search warrant, the test for sufficient particularity is “whether the description is sufficient so that the executing officer can locate and identify the premises with reasonable effort with no reasonable probability that [other premises] might be mistakenly searched.” State v. Schnorr, 346 N.W.2d 380, 382 (Minn. Ct. App. 1984). The court of appeals applies this same test to a warrant containing both correct and incorrect information as to the person to be searched. In this case, there was no risk that the executing officers would mistake whose DNA was to be obtained, as the majority of the warrant provided appellant’s complete name, date of birth, and location. 

The court also finds the district court did not abuse its discretion in admitting evidence of a prior related gang shooting or expert testimony about gangs. Appellant’s convictions are affirmed. State v. Cicero Deshawn Taylor, No. A17-0491, 910 N.W.2d 60 (Minn. Ct. App. 4/2/2018). 

n Forfeiture: Vehicle forfeiture statute unconstitutional as applied where registered owner denied judicial review for over 18 months. Respondent-driver was arrested for felony DWI and the vehicle she was driving, a 1999 Lexus, was seized for forfeiture. Her mother, respondent-owner, is the vehicle’s registered owner. Respondents filed a demand for judicial determination of the forfeiture and a court trial was set. The trial was continued or rescheduled six times to await the outcome of the driver’s related implied consent and criminal matters. More than 18 months after the demand was initially filed, a hearing was held to address respondents’ motion to dismiss for summary judgment, and respondents’ motion was granted. On appeal, appellant challenges the district court’s conclusion that Minn. Stat. §169A.63, subd. 9(d), violates procedural due process by failing to provide for meaningful review after a prehearing vehicle seizure. 

To satisfy procedural due process, where an individual is deprived of life, liberty, or a property interest, the government must provide an individual with notice and an opportunity to be heard at a meaningful time and in a meaningful manner. Minn. Stat. §169A.63, subd. 9(d), requires that a judicial determination of a vehicle forfeiture be held “no later than 180 days” after a demand is filed, but also that a hearing not be held until the related criminal proceeding is concluded. Respondents failed to prove §169A.63, subd. 9(d), is facially invalid, because there are circumstances under which a related criminal matter may be resolved quickly and a hearing under §169A.63, subd. 9(d), timely held. 

However, as applied to the respondents’ case, §169A.63, subd. 9(d), is unconstitutional. As the vehicle’s registered owner, respondent-owner had a continued property interest in the vehicle. Because the resolution of the forfeiture action was tied to respondent-driver’s related criminal and implied consent matters, no hearing was held on the validity of the seizure of the vehicle for more than 18 months, which denied respondents prompt review of the seizure. Various forms of “hardship relief” are provided in §169A.63, subds. 4, 5a, and 7, but respondents did not seek such relief. However, even if they had, the court of appeals finds it would not have remedied the statute’s failure to provide an initial hearing or administrative procedure for immediate judicial review. The district court’s grant of summary judgment is affirmed. Megan Ashley Olson, et al., v. One 1999 Lexus, No. A17-1083, 910 N.W.2d 72 (Minn. Ct. App. 4/2/2018). 

n 1st Amendment: Stalking and harassment statutes implicate 1st Amendment, but are not unconstitutionally overbroad. Appellant, a juvenile, was adjudicated delinquent on stalking and harassment charges, under Minn. Stat. §§609.749, subd. 2(6), and 609.795, subd. 1(3). Appellant posted a number of messages on Twitter taunting a fellow high school student, M.B., who was diagnosed with ADHD and autism, with some encouraging M.B. to commit suicide. M.B. testified the messages made him want to commit suicide and made him afraid he would be attacked at school. On appeal, appellant argues the statues are unconstitutionally overbroad and that the evidence was insufficient to prove his guilt for felony stalking. 

The court of appeals first confirms that the stalking and harassment statutes do implicate the 1st Amendment, because both criminalize conduct that typically involve some expressive activity, sending letters, telegrams, messages, or packages. However, the subdivisions of the statutes at issue here do not prohibit a substantial amount of protected speech, as they refer to specific and repeated conduct done with intent, knowledge, or reason to know that the conduct will elicit a particular response. Thus, §§609.749, subd. 2(6), and 609.795, subd. 1(3) are not facially overbroad. 

These sections are also not unconstitutionally overbroad as applied to appellant’s specific conduct. First, the court determines that appellant’s actions constitute expressive activity under the 1st Amendment, because his conduct of sending messages to M.B. is inextricably intertwined with the content of the messages. The court rejects appellant’s argument that his conduct was comparable to posting an offensive message in a public forum. M.B. is not a public figure and, while tweets are generally public, tagging M.B. in appellant’s tweets posted the message on M.B.’s “wall,” increasing the likelihood it would be seen by M.B. The court agrees with the state’s argument that appellant’s tweets are unprotected speech integral to criminal conduct, which is not protected by the 1st Amendment. Thus, the statutes are not overbroad as applied to appellant.

Finally, the court of appeals concludes the state was not required to prove at trial the constitutionality of the statutes, and that the evidence was sufficient to support finding of guilt for felony stalking. The district court is affirmed. Matter of Welfare of A.J.B., No. A17-1161, __ N.W.2d __, 2018 WL 1701981 (Minn. Ct. App. 4/9/2018).

• Excessive fines clause: Fine statute for third-degree CSC not facially unconstitutional, because it does not establish a mandatory minimum fine. As part of appellant’s sentence for third-degree criminal sexual conduct, the district court imposed a $9,000 fine, under Minn. Stat. §609.101, subd. 2. The court of appeals holds that §609.101, subd. 2, is not facially unconstitutional under the excessive fines clause and that it is not unconstitutional as applied to appellant.

When a defendant is convicted of certain crimes, including third-degree criminal sexual conduct, §609.101, subd. 2, directs the district court to “impose a fine of not less than 30 percent of the maximum fine authorized by law nor more than the maximum fine authorized by law.” Subdivision 5 allows for the fine to be reduced or substituted with community work service if the defendant qualifies for a public defender. Because subdivision 5 allows for a reduction of the fine, subdivision 2 does not establish a mandatory minimum fine in violation of the excessive fines clause, and is, therefore, not facially unconstitutional.

Appellant argues the district court violated the excessive fines clause in his case specifically by imposing a $9,000 fine when he qualified for and was represented by a public defender. The court of appeals finds a $9,000 fine is not grossly disproportionate to the gravity of appellant’s offense of conviction. The fine also did not place an undue financial burden on appellant. He insisted on work release at sentencing to allow him to keep his “good job,” and he was granted work release specifically to earn money to pay off the fine. Appellant was also given until 2027 to pay the fine in full. The fine is also not grossly disproportional to fines imposed for other sex crimes in and outside of Minnesota. The district court did not abuse its discretion. State v. Garnet Frances Madden, No. A17-0755, __ N.W.2d __, 2018 WL 1702407 (Minn. Ct. App. 4/9/2018). 

• Commissioner of corrections: Review hearings to extend incarceration for conditional release violations are lawful. After appellant violated his conditions of release during a lifetime conditional release term following criminal sexual conduct convictions, the Department of Corrections’ (DOC) Hearings and Release Unit (HRU) ordered appellant back to prison. Appellant’s term of incarceration was thereafter extended a number of times for various reasons following HRU administrative review hearings. Eventually, appellant petitioned the district court for a writ of habeas corpus, but his petition was denied. On appeal, appellant argues the DOC’s use of review hearings to extend incarceration is not authorized under the conditional release statutes or the DOC’s administrative rules.

The court of appeals notes that the relevant administrative rules give the commissioner great discretion in determining when to release an offender following their re-incarceration for violating conditional release. The HRU’s use of review hearings gives an offender notice and an opportunity to be heard regarding his projected release date or continued incarceration. So while the relevant statutes and administrative rules do not expressly authorize review hearings in this context, such hearings are consistent with those statutes and rules. State ex rel. Steven Leino v. Tom Roy, Comm’r of Corrections, No. A17-1278, __ N.W.2d __, 2018 WL 1701919 (Minn. Ct. App. 4/9/2018).

• Confrontation clause: No confrontation clause violation to admit translated statement without testimony of translator. Appellant agreed to give a recorded statement to police during a criminal sexual conduct investigation. Appellant, an immigrant from Guatemala, does not speak English fluently, and his first and second languages are Mam and Spanish. A Spanish translator was used via telephone to translate the officer’s questions and appellant’s answers. During the interrogation, appellant admitted to having sexual intercourse with a child under 13. Appellant was charged with first-degree criminal sexual conduct. Prior to trial, he objected to the recording of his translated statement on confrontation clause and hearsay grounds because the interpreter was not present to testify. The district court admitted the video recording of the statement and the officer’s testimony regarding the statement at trial, and appellant was convicted.

As to both of appellant’s arguments, the court of appeals identifies the threshold issue as the identity of the declarant—specifically, whether the interpreter is the declarant—but notes that, when an interpreter is involved, the identity of the declarant is not always obvious. The question of whether an interpreter translating a speaker’s statement into English is a declarant is an issue of first impression in Minnesota. The court of appeals finds that the district court did not err in applying 9th Circuit’s four-factor test for determining whether an interpreter’s statements should be attributed to the defendant: (1) which party supplied the interpreter, (2) whether the interpreter had any motive to mislead or distort, (3) the interpreter’s qualifications and language skill, and (4) whether actions taken subsequent to the conversation were consistent with the statement as translated. United States v. Nazemian, 948 F.2d ___, 528 (9th Cir. ___). Under Minn. R. Evid. 104, the district court may examine various circumstances to decide whether a preliminary fact has been established by a preponderance of the evidence—that is, whether the interpreter is a declarant for the purposes of a confrontation clause or hearsay issue. 

The court holds that “when the state seeks to admit into evidence a criminal defendant’s admissions made through an interpreter, upon a Confrontation Clause or hearsay objection a district court must determine as a preliminary matter whether the interpreter’s translation can fairly be attributable to the defendant, or whether the interpreter is a separate declarant,” and that the state carries the burden to establish the preliminary fact by a preponderance of the evidence. The court directs the district court to consider, among others, the four Nazemian factors. 

In this case, after examining the Nazemian factors, the court finds that appellant was the sole declarant, so no confrontation clause violation occurred when the translator did not testify at appellant’s trial. Also, because the statements at issue were appellant’s own and were offered against him by the state, they were admissible under Minn. R. Evid. 801(d)(2)(A). The district court is affirmed. State v. Cesar Rosario Lopez-Ramos, No. A17-0609, __ N.W.2d __, 2018 WL 1788057 (Minn. Ct. App. 4/16/2018). 

Samantha Foertsch

Bruno Law

Stephen Foertsch

Bruno Law

EMPLOYMENT AND LABOR LAW
JUDICIAL LAW

• Union hiring; exclusive hall violation. The hiring practices of a labor union for employees who work at entertainment facilities violated the National Labor Elections Act. The 8th Circuit Court of Appeals denied the union’s challenge to a determination that the union’s exclusive hiring hall violated the Act. International Alliance, et al. v. National Labor Relations Board, 885 F.3d 1123 (8th Cir. 3/26/2018).

• Workers compensation; substantial contributing factor. A worker’s exposure to silica entitled him to workers compensation benefits for kidney failure. The state Supreme Court affirmed a determination that the work-related contamination was a substantial contributing factor to his renal disease. Gist v. Atlas Staffing, Inc., 2018 WL 1633338 (Minn. 4/4/2018).

• Labor arbitration; reinstatement overturned. The reinstatement by an arbitrator of a Richfield police officer, who was fired for excessive use of force with a Somali youth, was overturned. The court of appeals held that “clear public policy” warranted the extremely rare step of reversing the arbitral ruling. Richfield v. Law Enforcement Labor Services (on behalf of Nathan Kinsey), 2018 WL 1701916 (Minn. App. 4/9/2018).

• Unemployment compensation; absences bar benefits. An employee’s multiple unapproved absences barred recovery of unemployment compensation benefits. The court of appeals held that the repeated absences constituted disqualifying “misconduct.” Dietz v. Wal-Mart Associations, Inc., 2018 WL 1247199 (Minn. Ct. App. 3/12/2018) (unpublished). 

• Unemployment compensation; downtime and errors. An employee’s poor productivity due to excessive downsizing at work and errors warranted denial of unemployment benefits. The appellate court affirmed a determination of “disqualifying misconduct.” Sitarski v. Allina Health Systems, 2018 WL 1570240 (Minn. App. Ct. 4/2/2018) (unpublished).

• Age discrimination; reversal due to disparity in criteria. An age discrimination claimant obtained reversal of a dismissal on grounds that the application relied upon by the employer, the U.S. Postal Service, in rejecting the applicant for a criminal investigator job differed from the criteria listed in the job description. The 8th Circuit remanded for determination of the claimant’s lawsuit under the Federal Age Discrimination in Employment Act (ADEA). McPherson v. Brennan, ___ F.3rd ___ (8th Cir.4/30/2018).

• Race discrimination; investigative report inadmissible. An African-American woman claiming race discrimination was not able to overturn dismissal of her lawsuit because of a claimed error in not admitting an internal investigative report by her employer. The 8th Circuit held that the report was hearsay and did not fall within the business-report exemption. Parker v. Arkansas Dept. of Corrections, 888 F.3d 396 (8th Cir. 4/25/2018).

• 1st Amendment and due process; no constitutional violation. A fired director of a unit at the University of North Dakota was denied relief on his constitutional claims of 1st Amendment and due process violations. The 8th Circuit Court of Appeals affirmed a lower court holding that there was no 1st Amendment infringement because a report prepared by the director, which he claimed triggered the retaliatory discharge, arose out of his professional responsibilities and he was given sufficient pre-termination due process rights. Groenewald v. Kelley, 888 F.3d 396 (8th Cir. 4/25/2018).

• Employment discrimination; disparate treatment dismissal reversed. The dismissal of a disparate treatment discrimination claim by an African-American woman seeking a tenured faculty position at the University of Minnesota was reversed. The Minnesota Court of Appeals held that the Hennepin County District Court erred in holding that damages were too speculative because the claimant could not show that she ultimately would have been hired. Majors v. University of Minnesota, 2018 Minn. App. 1902452 (Minn. App. 4/23/2018).

• College president immune; not director. A community college president has qualified immunity barring a 1st Amendment retaliation claim by a faculty member who was placed on paid leave during an investigation of his behavior. The court of appeals upheld dismissal of the claim against the president, but reversed and remanded a tortious interference claim against the college’s director of student life, who also had immunity but was not entitled to dismissal because of an unresolved factual dispute over whether he acted with malice in overseeing the investigation. Berger v. Wynnes, 2018 Minn. App. WL 1787963 (Minn. App. 4/16/2018) (unpublished).

• Unemployment compensation; minimal theft proscribes benefitsA fast food cashier in Aitkin who was fired for undercharging herself by 72 cents for a pair of pastries was barred from receiving employment benefits. The 72-cent discrepancy constituted “misconduct” under case law allowing even a single “low value” theft to warrant ineligibility for benefits. Brush v. Holiday SuperStores, Inc. 2018 Minn. App. WL 1902465 (Minn. App. 4/16/2018) (unpublished).

• Unemployment compensation; late appeal bars claim. A claim for unemployment compensation benefits was barred by an untimely appeal. Consistent with its strict interpretation of time requirements, the appellate court held that a 10-day delay in filing an appeal after initial administrative denial of benefits was fatal. Sheikh v. Employment Solutions Management, Inc., 2018 Minn. App. WL 1787964 (Minn. Ct. App. 4/16/2018) (unpublished).

Marshall H. Tanick

Meyer, Njus & Tanick

 

ENVIRONMENTAL LAW
JUDICIAL LAW

• 4th Circuit rules discharges through groundwater to navigable waters violate Clean Water Act. On 4/12/2018, the 4th Circuit Court of Appeals held that discharges of pollutants into groundwater are subject to liability under the Clean Water Act (CWA). The 2-1 decision overturned the United States District Court for the District of South Carolina, which dismissed the case due to lack of subject matter jurisdiction and failure to state a claim for relief. 

The CWA prohibits the discharge of a pollutant from any point source into navigable waters. 33 U.S.C §§1251. The term “navigable waters” is further defined as “waters of the United States.” Id. §1362(7). And although the argument over the legal definition of “waters of the United States” has yet to be fully resolved, the term has always referred to surface bodies of water. However, in this case, the primary issue considered was whether the discharge of pollutants through groundwater, which has a direct hydrological connection to navigable waters of the United States, could be subject to CWA jurisdiction.

In 2014, an underground pipeline in Anderson County, South Carolina, ruptured and spilled nearly 370,000 gallons of gasoline into the surrounding soil and groundwater. Although defendant implemented remediation measures following the state’s Department of Health and Environmental Control standards, at least 160,000 gallons remained unrecovered even after the pipeline was repaired. In the months and years that followed, hazardous gasoline contaminants have been detected down-gradient in creeks, wetlands, and lakes less than 1000 feet from the spill site.

Turning to the question of first impression, the court reasoned that “a point source is the starting point or cause of a discharge under the CWA, but that starting point need not also convey the discharge directly to navigable waters.” However, the court clarified that view by acknowledging that groundwater connectivity must be determined on a case-by-case basis, and that there must be a “direct hydrological connection between the groundwater and navigable waters to state a claim” under CWA.

This case is very similar to the recent 9th Circuit decision in Hawaii Wildlife Fund v. County of Maui, which held that disposal of wastewater into municipal wells, which percolated through groundwater and reached the Pacific Ocean, constituted a violation of CWA. No. 15-17447 (9th Cir. 2018). As for the test of groundwater connectivity, the 9th Circuit considered whether pollutants were “fairly traceable” through the groundwater to navigable water, compared to a “direct hydrological connection” between groundwater and navigable water required in the case at hand.

On the other end of the spectrum, the 5th Circuit and 7th Circuit have both considered whether groundwater is regulated under CWA, and both have rejected it. Rice v. Harken Exploration Co., 250 F.3d 264 (5th Cir. 2001); Village of Oconomowoc Lake v. Dayton Hudson Corp., 24 F.3d 962 (9th Cir. 1994). Furthermore, the 2nd Circuit and 6th Circuit have recently heard oral arguments for cases involving pollutant discharges into groundwater hydrologically connected to navigable waters. 26 Crown Associates, LLC v. Greater New Haven Water Pollution Control Authority, No. 17-2426 (2nd Cir. 2018); Tennessee Clean Water Network v. Tennessee Valley Authority, No. 17-6155 (6th Cir. 2018).

If either circuit issues a decision conflicting with existing appellate decisions, creating a clear circuit split, the time may be ripe for the U.S. Supreme Court to intervene. Upstate Forever v. Kinder Morgan Energy Partners, L.P., 2018 U.S. App. LEXIS 9144 (4th Cir. 2018).

ADMINISTRATIVE ACTION

• MPCA withdraws proposed wild rice rule. On April 26, 2018, the Minnesota Pollution Control Agency withdrew its embattled proposed wild rice rule from the rulemaking process, three months after an administrative law judge disapproved of all major components of the rule. The proposed rule would have repealed the Class 4A 10 mg/L sulfate water quality standard in Minn. R. 7050.0224, subp. 2, which applies to “water used for production of wild rice during periods when the rice may be susceptible to damage by high sulfate levels.” In its place, the rule would have imposed an equation-based standard and listed the water bodies in which the standard applies. In an agency press release, MPCA Commissioner John Linc Stine is quoted as saying, “We’ve heard many, many voices, including the Administrative Law Judge on this topic, and the message is clear…. Although the science is accurate, when it comes to how best to apply the science and affordably implement the rule, we still have more work to do.” Legislative efforts to address the wild rice sulfate standard resulted in a bill, HF 3280, that was passed by both chambers of the Minnesota Legislature. The proposed legislation would have nullified the 10 mg/L standard and directed the agency to protect wild rice waters through the narrative nondegradation standard for listed wild rice waters in subpart 1 of part 7050.0224. However, on May 9, 2018, Governor Dayton vetoed the bill, calling it “an extreme overreach that eliminates important protections for wild rice, attempts to exempt Minnesota from the federal Clean Water Act, and ensures ongoing litigation that will prolong, not relieve, the current regulatory uncertainties.” At time of press, legislators and the governor’s office were attempting to agree upon a compromise legislation. 

• Enbridge Line 3 receives ALJ recommendation. On 4/23/2018, Administrative Law Judge Ann C. O’Reilly issued a report recommending that the MN Public Utilities Commission (PUC) grant Enbridge Energy’s Certificate of Need Application and Route Permit for its Line 3 replacement line, subject to a finding of Enbridge’s Line 3 FEIS adequacy and other conditions.

In her 368-page Findings of Fact, Conclusions of Law, and Recommendation, ALJ O’Reilly found that Enbridge established by a preponderance of evidence a reasonable need to replace Enbridge’s current Line 3 pipeline in Minnesota. ALJ O’Reilly based this finding on the age of Line 3, the need for repairs to Line 3, and significant integrity issues involving Line 3. Additionally, ALJ O’Reilly found that Enbridge’s Certificate of Need Application for the Line 3 project was substantially complete, met all requirements under Minnesota Rules, and properly followed notice and hearing requirements.

Although ALJ O’Reilly found that Enbridge established a reasonable need to replace Line 3, she also concluded that Enbridge failed to establish that its proposed route for the replacement line was the best alternative. Instead, ALJ O’Reilly found that Route Alternative 07 (RA-07)—which involves removing the Line 3 pipe and installing new line in the same trench—was the better choice because it would minimize potential impacts to state-managed natural resources, including Minnesota’s surface and ground water resources. However, implementing RA-07 presents significant challenges, particularly since the route traverses both the Leech Lake and Fond du Lac Reservations. Both tribes oppose the project and argue it cannot be built without their approval since each is a sovereign nation with jurisdiction over portions of the route. Numerous parties, including the tribes and Enbridge, have filed exceptions to ALJ O’Reilly’s report. 

Following ALJ 0’Reilly’s report, the PUC issued an order on 5/1/2018 finding the final environmental impact statement (FEIS) for the Line 3 Project to be adequate. 

Jeremy P. Greenhouse
The Environmental Law Group, Ltd.

Jake Beckstrom Vermont Law School, 2015

Erik Ordahl Flaherty & Hood, P.A. 

 

FEDERAL PRACTICE
JUDICIAL LAW

• Fed. R. Civ. P. 42(a); judgment in consolidated case appealable separately. After first undertaking an exhaustive examination of the history of Fed. R. Civ. P. 42(a), the United States Supreme Court held that when a “final decision” is entered in one of several cases consolidated under Rule 42(a), that decision is immediately appealable even if other cases remain pending in the district court. Hall v. Hall, 138 S. Ct. 1118 (2018). 

• Noteworthy grants of certiorari. The Supreme Court will review a per curiam 9th Circuit decision that approved of class arbitration based on general language contained in an arbitration agreement. Lamps Plus, Inc. v. Varela, 701 F. App’x 670 (9th Cir. 2017), cert. granted, ___ S. Ct. ___ (2018). 

The Supreme Court will review a 9th Circuit decision that approved an $8.5 million class action settlement that provided for a cy pres award while providing absent class members with no monetary relief. In Re Google Referrer Header Privacy Lit., 869 F.3d 737 (9th Cir 2017), cert. granted, ___ S. Ct. ___ (2018). 

• Plaintiff’s failure to brief issue results in summary judgment for defendant. Where the plaintiff moved for summary judgment on a number of its claims (but not Count Three), the defendant cross-moved for summary judgment on Count Three, and the plaintiff’s reply and sur-reply failed to respond to the defendant’s request for summary judgment on that count, the 8th Circuit held that the plaintiff has waived Count Three and that the district court had properly awarded the defendant summary judgment on that count. City of Kennett v. EPA, 887 F.3d 424 (8th Cir. 2018). 

• ADA; standing; mootness; dismissal of claims. The 8th Circuit affirmed the dismissal of multiple ADA claims, finding that one claim had become moot as the result of the defendant’s remediation, and that her discovery of ADA violations in a parking lot did not give her standing to sue for alleged ADA violations inside the adjacent building that she never encountered. Davis v. Anthony, 886 F.3d 674 (8th Cir. 2018). 

Nine days before Davis, Judge Magnuson similarly found that an ADA plaintiff’s claims were either moot or did not otherwise survive the defendant’s motion to dismiss. Dalton v. NPC Int’l, Inc., 2018 WL 1401809 (D. Minn. 3/20/2018). 

• ADA; challenge to standing; difference between summary judgment and motion to dismiss. In a decision eight days before Davis, the 8th Circuit, affirming Judge Magnuson, held that one plaintiff had standing to pursue an ADA claim where he averred in opposition to the defendant’s summary judgment motion that he intended to return to an inaccessible building if and when it became accessible. 

The 8th Circuit also suggested that the result might have been different had the defendant elected to challenge standing by moving to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) rather than pursuing summary judgment based on standing. Disability Support Alliance v. Heartwood Enters., LLC, 885 F.3d 543 (8th Cir. 2018). 

• Pleading punitive damages; Fed. R. Civ. P. 15; Minn. Stat. §549.191. In January 2018, this column noted a decision by Magistrate Judge Noel questioning long-established precedent in the District of Minnesota, and finding that motions to amend for leave to seek punitive damages in diversity actions were properly considered under Fed. R. 15(a) rather than Minn. Stat. §549.191. Three subsequent decisions have further muddied the waters. 

Magistrate Judge Brisbois recently “disagree[d]” with Magistrate Judge Noel’s reasoning, and found that there is no conflict between Fed. R. Civ. P. 15(a) and Minn. Stat. §549.191. Inline Pkg., LLC v. Graphic Pkg. Int’l, LLC, 15-CV-3183 (ADM/LIB) (D. Minn. 3/8/2018). 

Magistrate Judge Thorson recently held that she “need not decide” whether the plaintiff’s motion to amend to add a claim for punitive damages was governed by Fed. R. Civ. P. 15 or Minn. Stat. §549.191 where the plaintiff prevailed under “either standard.” Ramirez v. AMPS Staffing, Inc., 2018 WL 1990031 (D. Minn. 4/27/2018). 

And in a decision involving a somewhat analogous issue, Magistrate Judge Rau held that it was Fed. R. Civ. P. 15(a) rather than Minn. Stat. §549.191 that governed the defendant’s motion to amend to assert a counterclaim for bad faith under Minn. Stat. §604.18. Selective Ins. Co. of S.C. v. Sela, 2018 WL 1960450 (D. Minn. 4/26/2018). 

• Multiple decisions applying Local Rule 5.6. Denying plaintiffs’ motion for further consideration of her prior order allowing continued sealing of their proposed Second Amended Complaint, Magistrate Judge Thorson found that the public’s interest in access to a proposed amended complaint was outweighed by the defendants’ confidentiality interests and was adequately addressed by the redacted version that had already been filed. Lusk v. Akradi, 2018 WL 1634408 (D. Minn. 4/5/2018). 

While granting defendants’ motion for further consideration of sealing, Magistrate Judge Rau reminded the parties that the “purpose of Rule 5.6 is to limit the amount of sealed material,” (emphasis in original) and indicated that defendants’ attempt to seal the entirety of “hundreds of pages of commercial contracts” including “‘stock’ or ‘boilerplate’ language” was “both unhelpful and inappropriate under the Local Rules,” especially where similar contracts were publicly available. Magistrate Judge Rau emphasized that “it is incumbent on the party seeking to seal documents that it provide a strong showing regarding what should be sealed and why.” Klein v. Prime Therapeutics, LLC, 2018 WL 1586038 (D. Minn. 4/2/2018). 

Magistrate Judge Menendez ordered the unsealing of an unredacted memorandum filed by the plaintiff in opposition to a motion to dismiss for lack of personal jurisdiction over the defendant’s objections, finding that the disputed content was “was not highly sensitive business information,” and that “the redacted information is likely to be of great importance [for the motion to dismiss], thus increasing the public’s interest in access.” The magistrate judge also ordered the unsealing of one exhibit to a declaration even though the parties had agreed on the need for continued sealing. Blu Dot Design & Mfg., Inc. v. Stitch Indus, Inc., 2018 WL 1370533 (D. Minn. 3/16/2018). 

• “Fiduciary exception” to attorney-client privilege; production ordered. Following in camera review of documents in an ERISA case, Magistrate Judge Menendez found that six disputed documents were protected by the attorney-client privilege, but nevertheless ordered the production of those documents pursuant to the so-called “fiduciary exception.” Christoff v. Unum Life Ins. Co., 2018 WL 1327112 (D. Minn. 3/15/2018). 

• Fed. R. Civ. P. 15(a)(1); motion to amend complaint denied. Denying plaintiffs’ motion to amend, which was filed after a remand from the 8th Circuit and defendants’ renewal of their previously filed motions to dismiss, Judge Montgomery rejected plaintiffs’ argument that they were entitled to amend their complaint as of right under Fed. R. Civ. P. 15(a)(1), finding that plaintiffs’ right to amend expired 15 days after defendants filed their initial motions to dismiss in August 2015. In Re: SuperValu, Inc. Customer Data Sec. Breach Litig., 2018 WL 1189237 (D. Minn. 3/7/2018). 

• Motion to remand granted; request for fees denied. Relying on a forum selection clause that required litigation in Minnesota’s 4th District, Judge Schiltz granted the plaintiff’s motion to remand, but denied the plaintiff’s request for fees under 28 U.S.C. §1447(c), finding that “defendants did not lack an objectively reasonable basis to seek removal.” Works Computing, Inc. v. Peterson, 2018 WL 1247391 (D. Minn. 3/9/2018). 

• Forum selection clause enforced despite lack of mutuality. Rejecting the plaintiff’s argument that a forum selection clause that required the plaintiff to file its action in Ontario was against public policy because it lacked mutuality, Judge Davis granted the defendant’s motion to dismiss the action without prejudice based on forum non conveniens. Graphic Sys., Inc. v. Avanti Computer Sys. Ltd., 2018 WL 1277007 3/12/2018). 

• Fed. R. Civ. P. 10(a); request for leave to proceed as Jane Doe denied. Where the plaintiff sought leave to proceed as a Jane Doe in an employment-related action and the defendant moved to dismiss the action due to plaintiff’s failure to include her name in the complaint, Magistrate Judge Noel found “no reason” to permit the plaintiff to use a pseudonym, and recommended the denial of the defendant’s motion to dismiss without prejudice. Magistrate Judge Noel’s report and recommendation was adopted by Judge Nelson. Doe v. Zinke, 2018 WL 1189341 (D. Minn. 2/14/2018), Report and Recommendation adopted, 2018 WL 1189239 (D. Minn. 3/7/2018). 

Josh Jacobson

Law Office of Josh Jacobson 

 

INDIAN LAW
JUDICIAL LAW

• Tribe denied federal recognition has standing to challenge Bureau decision. In 1935, the Burt Lake Band of Ottawa and Chippewa Indians petitioned the Bureau of Indian Affairs for recognition under the Indian Reorganization Act. That petition was never formally resolved, so in 1985 the band filed another petition, this time under the bureau’s newly promulgated regulations. The bureau denied the band’s petition in 2006. In 2014, the bureau considered adopting a new regulation that would allow denied petitioners an opportunity to repetition. The bureau ultimately did not revise the regulation.

The band sued the bureau under the Administrative Procedure Act for failing to adjudicate its 1935 petition and deciding not to revise the regulation to allow re-petitioning. The district court dismissed the band’s 1935 petition claims because they were barred by the APA’s statute of limitations. But the court allowed the band’s rulemaking claims to proceed, concluding that the band had standing to challenge the bureau decision because that decision blocked its ability to re-petition for federal recognition. Burt Lake Band of Ottawa and Chippewa Indians v. Zinke, ___ F. Supp. 3d ___ (D.C.D. 2018).

• ICWA authorizes tribal-court proceedings without prior initiation of state-court proceedings. The Minnesota Department of Human Services has produced a manual on the Indian Child Welfare Act that includes procedures for transferring Indian child-custody proceedings to tribal courts. The plaintiff sued the state DHHS Commissioner, a county, a tribal court, and two tribal court judges, claiming that the county erroneously transferred her child-custody proceedings to two tribal courts. She argued primarily that state courts had exclusive jurisdiction over child custody proceedings and alternatively that the county had to initiate state court proceedings before transferring them to tribal court. The district court rejected these arguments, highlighting the text of ICWA and Supreme Court precedent, which both acknowledge that tribal courts have concurrent and presumptive jurisdiction over all child custody proceedings and that tribal court jurisdiction is not predicated on prior state court proceedings. Watso v. Piper, No. 17-562 ADM/KMM, 2018 WL 1512059 (D. Minn. 3/27/2018).

• Tribal court exhaustion required in marriage dissolutions. The nonmember plaintiff sued to enjoin a tribal court from adjudicating dissolution of his marriage to a tribal member, arguing that the court lacked jurisdiction over him and over the subject matter. The district court refused to enter a preliminary injunction, concluding that the claim was unlikely to succeed because the husband failed to exhaust his tribal court remedies. The 8th Circuit requires litigants to complete all available appeals in tribal court, even if they are denied interlocutory appeals, and must wait until a final judgment is entered before challenging a ruling in federal court. The court also concluded that tribal court jurisdiction over marriage dissolutions between tribal members and nonmembers is not so clearly invalid that the district court would waive the exhaustion rule. Nguyen v. Gustafson, No. 18-522 (SRN/KMM), 2018 WL 1413463 (D. Minn. 3/21/2018).

• Final fee-to-trust decision-making authority is delegable. The Bureau of Indian Affairs administers regulations for accepting fee land into trust on behalf of Indian tribes. Under the regulations, the Secretary of the Interior or the Assistant Secretary for Indian Affairs must review and issue final decisions on fee-to-trust applications, which are final agency decisions under the Administrative Procedures Act.

A private interest group sued the bureau and various officials, arguing that a fee-to-trust determination was ultra vires because: (1) the Principal Deputy Assistant Secretary issued a final fee-to-trust decision; and (2) the Special Assistant to the Director of the Bureau accepted the land title and disposed of the group’s administrative appeal. The district court granted summary judgment against these claims. It concluded that the regulations allowed the Secretary and Assistant Secretary to delegate their fee-to-trust responsibilities, that they properly delegated their decision-making responsibility to the Principal Deputy, and that they properly delegated authority to accept title to the Special Assistant. Stand Up for California! v. U.S. Dep’t of Interior, ___ F. Supp. 3d ___ (D.D.C. 2018).

• Federal decisions to adjust tribal Head Start funding require a hearing and appeal opportunity. Under the Head Start Act, the U.S. Department of Health and Human Services funds grants for tribes that implement Head Start and Early Head Start programs. If a recipient tribe experiences “chronic underenrollment” in its program, the Department may “withhold[], recaptur[e], or reduc[e]” the funding, but if it does so, it must provide an appeal and hearing. The Department notified the Navajo Nation of a $7,000,000+ funding cut with a letter that invited the nation to provide information concerning its enrollment decline but did not say anything about an appeal or hearing. The district court quickly granted summary judgment for the nation, restored the 2018 cut, and ordered the department to maintain the nation’s current funding until it afforded the nation statutory notice, hearing, and appeal rights. Navajo Nation v. Azar, ___ F. Supp. 3d ___ (D.D.C. 2018).

Jessica Intermill 

Hogen Adams PLLC

Peter J. Rademacher

Hogen Adams PLLC

REAL PROPERTY
JUDICIAL LAW

• Real Estate Settlement Procedures Act (RESPA). Borrower sent multiple qualified written requests to mortgage loan servicer requesting information about a claimed delinquency in loan account. The servicing had been transferred to the servicer in 2011. The borrower disputed a claimed delinquency alleged to have occurred prior to 2011 with the prior servicer. In its response to the qualified written request, the servicer did not provide a loan payment history and additional information, as requested, and instead simply repeated its conclusory allegations. The borrower then obtained a loan payment history from the lender, which showed that the prior servicer misapplied a payment, which erroneously caused the loan to appear in default. The borrower commenced a lawsuit against the servicer for a RESPA violation for failing to investigate its qualified written request. 

The district ruled that the servicer failed to conduct a sufficient investigation in response to the qualified written request, awarded the borrower actual damages of $80 for payment of bank records, found that the servicer’s action constituted a pattern or practice of noncompliance that justified $2,000 of statutory damages and additional damages for costs and attorney fees. 

The 8th Circuit agreed that the servicer failed to conduct a sufficient investigation, but reversed because the borrower did not sustain actual damages from the servicer’s failure to conduct a sufficient investigation. The 8th Circuit held that an investigation under 12 U.S.C. §2605(e)(2)(B)-(C) imposes a substantive obligation on mortgage loan servicers to conduct a reasonably thorough examination before responding to a borrower’s qualified written request. However, the 8th Circuit noted that the borrower incurred $80 for obtaining copies of bank records, but those records were for a different inquiry regarding a post-2011 delinquency alleged by the servicer, not the pre-2011 delinquency inquiry. While the borrower was forced to obtain a loan payment history directly from the lender as a result of the servicer’s insufficient investigation, there was nothing in the record showing that the borrower had to pay for the loan payment history. And because the borrower did not sustain any actual damages, he was not entitled to additional statutory damages or his attorney fees under RESPA. Wirtz v. Specialized Loan Servicing, LLC, 886 F.3d 713 (8th Cir. 2018).

• Cartways; state-owned property. Property owners with only water access to their property petitioned their township for the establishment of a cartway over the neighboring five parcels between their parcel and the nearest public road. One of the five parcels was owned by the Board of Regents of the University of Minnesota and was used by the university for ecological and forestry research. The township denied the petition reasoning that it had no authority to establish a cartway over state-owned land. The property owners appealed to the district court, which affirmed the township’s decision. 

On appeal, the court of appeals affirmed the district court and township. The court of appeals, in an unpublished opinion, cited precedent that a lesser subdivision of government may not exercise eminent domain over state-owned land absent authority expressly conferred by the Legislature or clearly implied from a statutory provision. The property owners argued that a cartway should be established over the state-owned property because, unlike the precedent relied upon by the district court, in this case, the cartway would not likely destroy or impair the essential value of the existing public use of the university’s parcel, and because no other alternative route could be established. The court of appeals acknowledged the distinguishing facts from precedent, but nevertheless concluded that the cartway statute does not provide a lesser subdivision of government with implied authority to establish the cartway over state-owned land that was being put to public use. In re Harri, A17-1525, 2018 WL 2090854 (Minn. Ct. App. 2018).

• Planning; zoning. A developer, Alatus, obtained a conditional-use permit and variance to build the tallest building in Minneapolis outside the downtown area. Neighbors for East Bank Livability challenged the decision to grant the CUP and variance, which the district court dismissed and the court of appeals affirmed. Alatus’s development is in the Marcy-Holmes neighborhood, and has an eclectic identity stemming from its long and historical roots. Experiencing significant growth, it adopted a small area plan (SAP) or neighborhood plan to provide for expansion while maintaining its identity. The SAP provided for three density levels included in the Minneapolis comprehensive plan—small, medium, and high—but did not include the fourth category included in the comprehensive plan for very high density.

The site of Alatus’s development is in a C2 zoning district, requiring Alatus to obtain a CUP for height and a variance for floor-area ratio. Alatus also proposed to build using the very high density category in the comprehensive plan (not included in the SAP), which was amended in 2016 to increase the density limit to 800 dwelling units per acre (du/acre). The SAP allowed for a maximum of 120 du/acre, whereas Alatus’s development would be 268 du/acre. Neighbors primarily argued that the SAP controls over the comprehensive plan.

The court of appeals affirmed the district court primarily on the grounds that comprehensive plans govern SAPs in general, and that the SAP at issue here expressly intended for the comprehensive plan to control. As to the first point, the court of appeals held that decisions in land-use planning stop at the city level, and neighborhoods play a merely advisory role. As to the second point, the court noted first that the SAP and comprehensive plan both state that the comprehensive plan controls, and that SAPs are merely used for consultation. The court held second that the term “consistent with adopted small area plans” (in relation to the density increase near “designated Growth Centers and within Activity Centers adjacent to Growth Centers”) is ambiguous but means only that SAPs help direct where increased density is appropriate. The court dismissed neighbors’ argument that the term means SAPs control, because such an argument would transform SAPs into “unyielding obstacles.”

Turning to the variance for the floor-area ratio, the court held that the city did not act in an unreasonable, arbitrary, or capricious manner. Variances are granted where there are practical difficulties in complying with a zoning ordinance, and applicants must meet three requirements in Minn. Stat. §462.357 subd. 6(2). Neighbors argued that Alatus had not met the second requirement relating to circumstances unique to the property. The city’s decision that the second requirement was met was based upon (1) the site’s location in an activity center adjacent to a growth center, and (2) permanent structures on the site’s block that prevented horizontal construction. The court of appeals held that circumstances like these, which are not purely physical characteristics of the site at issue, are sufficient grounds for a variance. State ex rel. Neighbors for East Bank Livability v. City of Minneapolis, A17-1480, ___ N.W.2d ___, 2018 WL 2090620 (Minn. Ct. App. 2018).

• Landlord-tenant. Tenants need not follow the statutory notice procedures in Minn. Stat. §504B.385 to assert a defense of breach of the covenant of habitability in an eviction case. The court of appeals held that the notice procedures in Minn. Stat. §504B.385 apply to rent escrow actions and do not constitute a constraint upon the assertion of defenses in an eviction action. A court’s jurisdiction is significantly constrained in an eviction action, stemming in part from housing courts’ history as municipal and not district courts, and is primarily limited to determining the present possessory rights to property. There are, however, allowable defenses not related to present possessory rights, including breach of the covenant of habitability. In reaching its decision, the court appears to have used these complementary bases: (1) The Supreme Court decision in Fritz v. Warthen, providing that habitability is a defense in an eviction action, was not expressly modified or abrogated by section 504B.385 so that tenants had to provide prior written notice; and (2) section 504B.385 provides a claim, which is different from a defense.

Notably, this case refines Ellis v. Thompson, No. A14-1991, 2015 WL 3823190 (Minn. Ct. App. 6/22/2015), in which the same landlord successfully overturned a rent abatement award. Here, the court upheld the rent abatement award because (1) it held that the tenants had proved a breach of the covenant of habitability (the previous tenants failed); and (2) the tenants deposited rent into the court. The court in Ellis previously relied upon the tenants’ failure to provide written notice of an uninhabitable condition. The court has now expressly abrogated that implied requirement. Ellis v. Doe, A17-1611, ___ N.W.2d ___, 2018 WL 2090573 (Minn. Ct. App. 2018).

• Eviction storage obligations. In a strange recent case, the court of appeals held that a landlord-tenant statute provides a cause of action for a person physically injured as a result of improper storage of materials following an eviction in a mortgage foreclosure case. This case did not concern landlords or tenants. The plaintiffs, husband and wife, were evicted from their home after a foreclosure. The purchaser, Wells Fargo, hired Power Movers, the defendant here, to remove and store the plaintiffs’ personal property.

The home was in a unique state when Power Movers arrived. Papers were “stacked helter skelter on tables, chairs, desks, and floors.” There was a frozen cat in the freezer and the home smelled of animal feces. The home was filled with garbage bags, deteriorated boxes, scattered refuse, and so much other material that there were only narrow pathways through which to navigate the home. While in the process of repacking the belongings, one mover suffered a puncture wound from a hypodermic needle hidden in a pile of papers. Altogether, Power Movers packed 687 boxes over six days and filled 14 storage bays.

The plaintiffs visited the storage facility once accompanied by a Wells Fargo agent and another time unaccompanied. While unaccompanied, the plaintiffs allege that they realized heavy items were stacked upon light items. Hours later, some items buckled under the weight, knocked the wife to the ground, and she suffered a serious shoulder injury.

The plaintiffs sued, alleging that the defendants breached Minn. Stat. §504B.365. The district court granted summary judgment to the defendants on the grounds that the statute applies only to rental-property disputes and not disputes arising out of a mortgage foreclosure. The court of appeals reversed and held that the statute does apply to disputes arising out of mortgage foreclosures. The court focused first upon whether the heading of the chapter “Landlord and Tenant” restricts the provisions to landlord-tenant relationships. The court held that headings are not controlling. Second, the court turned to a reading of section 504B.365 regarding the use of party terms. Elsewhere within Chapter 504B, the statutes refer to landlords and tenants. In section 504B.365, they instead refer to plaintiffs and defendants, evincing the Legislature’s intent to apply the sections to a broader cross-section of society and relationships.

However, the only portion of the statute relating to claims for damages refers only to “personal property”: “The plaintiff is responsible for the proper removal, storage, and care of the defendant’s personal property and is liable for damages for loss of or injury to it….” Minn. Stat. §504B.365 subd. 3(f). The statute never refers to personal injury. In a passage that might explain the court of appeals’ analysis, it stated an initial assumption that the statute creates a private cause of action against a mover. Practitioners should therefore not place substantial reliance on this case in future advising or litigation concerning the storage of property after an eviction. Schulz v. Power Movers of Minnesota, Inc., A17-0691, 2018 WL 1787671 (Minn. Ct. App. 4/16/2018).

• MCIOA. In a significant (though unpublished) decision, the court of appeals affirmed the longstanding practice and understanding—and the plain language of the applicable statute—that homeowners’ associations do not need to actually file or record a lien statement to preserve an association lien for unpaid assessments. In particular, the court of appeals held that the Minnesota Common Interest Ownership Act preempts the rights of good-faith purchasers under the Minnesota Recording Act because a recorded declaration is sufficient notice. The court of appeals further affirmed practitioners’ understanding that it is the obligation of a unit seller, and not the HOA, to provide resale disclosures. Finally, the court of appeals acknowledged that HOAs have no obligation under MCIOA to provide monthly billing statements for ongoing monthly assessments, which the respondent argued was necessary to give notice of the HOA’s lien. Bridge Investments, LLC v. Lowry Ridge Townhomes Association, LLP, A17-1221, 2018 WL 1902455 (Minn. Ct. App. 4/23/2018).

Michael Kreun

Beisel & Dunlevy PA

Joseph P. Bottrell

Meagher & Geer, PLLP

 

TAX LAW
JUDICIAL LAW

• Weight and credibility of factors test for external obsolescence. The Minnesota Supreme Court affirmed the tax court in a long-running dispute over the valuation of a natural gas pipeline distribution system. In affirming, the high court held that the taxpayer bears the burden of proof to show the presence of external obsolescence, and the Court further held that sufficient evidence supported tax court’s finding on remand that the taxpayer failed to demonstrate that the distribution system suffered external obsolescence. This was the second time the Minnesota Supreme Court addressed this dispute. In the instant appeal, the taxpayer, Minnesota Energy Resource Corporation (MERC), argued that the tax court’s decision following the previous remand had failed to follow the Supreme Court’s instructions and had failed to properly apply the clarified standard to the taxpayer’s claim of external obsolescence. (The Court’s first opinion in this dispute is reported at Minn. Energy Res. Corp. v. Comm’r 886 N.W.2d 786, 791–92 (Minn. 2016)). 

In the Court’s first remand, the Court held that the tax court used an erroneous legal standard that played a decisive role in its decision (the Eurofresh standard). When the matter returned to the tax court, the lower court held that the taxpayer failed to demonstrate by a preponderance of the evidence that the subject property suffered external obsolescence. In the instant appeal, MERC argued that the tax court failed to follow the Supreme Court’s instructions that “evidence was at least sufficient to make out a prima facie case of external obsolescence.” MERC argued that this instruction placed the burden on the commissioner. However, the Supreme Court in MERC I noted that “[we do not suggest that the tax court, on remand, is required to find the existence of external obsolescence or accept the testimony of MERC’s witnesses.” MERC still had the burden and the tax court did not err by holding that MERC did not meet its burden. Secondly, MERC argued that the tax court, contrary to remand instructions, continued to apply the Eurofresh standard for external obsolescence. The reviewing court noted, however, that the tax court had undertaken on remand a detailed evaluation of the credibility, reliability, and relevance of the evidence offered by MERC in support of its external obsolescence claim, considering multiple factors. The Supreme Court held using this weight and credibility of factors test was not the same as the Eurofresh standard and therefore affirmed the tax court. Minnesota Energy Res. Corp. v. Comm’r, 909 N.W.2d 569 (Minn. 2018).

• Failure to remit sales tax. Appellant Miles was the owner and chief executive officer of a landscaping company, Green Guardian Corporation. The Minnesota Department of Revenue issued Green Guardian a sales-tax permit in 2006. Appellant failed to pay sales taxes over a period of years, and eventually the Minnesota Department of Revenue revoked Green Guardian’s sales-tax permit. In 2017, the state charged appellant with making retail sales after revocation of a sales-tax permit and with willfully failing to pay sales taxes. Appellant was convicted following a bench trial, and raised several arguments on appeal. The Minnesota Court of Appeals rejected the appellant’s claims regarding sufficiency of the evidence and two constitutional claims. The court also rejected the appellant’s argument that the district court erred in sentencing. The appellant was successful, however, in challenging one of the probationary conditions. Although the district court has broad discretion in setting the terms and conditions of probation (State v. Franklin, 604 N.W.2d 79, 82 (Minn. 2000)), probationary conditions “must be reasonably related to the purposes of sentencing and must not be unduly restrictive of the probationer’s liberty or autonomy.” Id. The condition that appellant refrain from engaging in any sales during probation was sufficiently related, but the condition that he refrain from using alcohol during probation was not. The state did not object to a modification of the sentence to remove “no alcohol” as a probationary condition. The court reversed that portion of the sentence and remanded with instructions to the district court to vacate the no-alcohol-use condition of appellant’s probation. State v. Miles, No. A17-0726, 2018 WL 1569694 (Minn. Ct. App. 4/2/2018).

• Household income for property taxes. A married taxpaying couple received a Homestead Credit Refund for property taxes payable in 2014 in the amount of about $1,500. In 2016, the commissioner determined that the couple failed to include in their household income $4,263 in scholarships and grants awarded and $2,115 for contributions to a deferred compensation plan at Allina Health Systems. The commissioner assessed $232 in taxes and interest. The couple claimed that these sources should not be included in household income because the grants were PELL grants and the deferred compensation was not received. The tax court rejected the taxpayers’ argument and granted summary judgment to the commissioner. In the context of property tax refunds, Minn. Stat. §290A.04 defines the measure of income to be used in determining the claimant’s refund as “household income” which is “all income received by all persons of a household in a calendar year while members of the household, other than income of a dependent.” In general, the “income” included in “household income” is the sum of (1) federal AGI; and (2) many items otherwise excluded or deducted in the calculation of federal AGI. Minn. Stat. §290A.03, subd. 3(a). The definition of “income” includes both “nontaxable scholarship or fellowship grants” and “deferred compensation plan.” Minn. Stat. §290A.03, subd. 3(a)(xiii), (xi). The couple argued that PELL grants are not included in household income because the definition of “nontaxable scholarships” and “fellowship grants” does not include PELL grants. The tax court disagreed. The court interpreted the statute as “nontaxable scholarship… grants” and “nontaxable… fellowship grants,” to include a PELL grant. The court then addressed the disputed contributions to the deferred compensation plan. The court explained that the taxpayers had erred by reducing their household income by the amount of Mrs. Waters’ 401(k) contributions, rather than simply excluding those contributions from the calculation. Emphasizing that Mrs. Waters’ retirement contributions and the scholarships and grants awarded to both of the Waters are included in “household income” only for purposes of the property tax refund calculation, the court reasoned that the commissioner was entitled to summary judgment and affirmed the commissioner’s order. Waters v. Comm’r, No. 9034-R, 2018 WL 1475976 (Minn. Tax 3/12/2018). 

• Intervention to protect trade secrets. InterPark, owner and manager of several downtown Minneapolis parking ramps, intervened in property tax litigation between Macy’s Retail Holdings, Inc. and Hennepin County. InterPark then moved to redact or seal InterPark’s nonpublic data contained in the parties’ expert appraisal reports. InterPark claims that data on the parties’ appraisal reports should be protected from disclosure because the data constitutes trade secret information that InterPark ordinarily keeps secret from competitors that could otherwise obtain economic value from the data’s disclosure. InterPark, in compliance with Minn. Stat. §278.05, subd. 6 (2016), annually provides to the Minneapolis City Assessor’s Office detailed income and expense data regarding its parking ramp operations in downtown Minneapolis. Such information is defined as nonpublic data under Minnesota law. Minn. Stat. §13.51, subd. 2. There is “a presumption in favor of access” to court records under the common law. Minneapolis Star & Tribune Co. v. Schumacher, 392 N.W.2d 197, 205 (Minn. 1986). However, access is not absolute and the tax court may seal or otherwise restrict access to court records to protect confidential information submitted as evidence. See In re Rahr Malting Co., 632 N.W.2d 572, 575-77 (Minn. 2001). To overcome the presumption of access, “a party must show strong countervailing reasons why access should be restricted.” Minneapolis Star & Tribune Co., 392 N.W.2d at 205-06. Access may be limited to protect information that is a trade secret or otherwise merits protection. In re Rahr Malting Co., at 577. Trade secrets are defined as something that derives independent economic value from not being generally known to other persons who can obtain economic value from its disclosure or use and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Minn. Stat. §325C.01, subd. 5. InterPark asserts that if this data becomes public, competitors will be able to undercut them and take away customers. The tax court agreed that this data is a trade secret and ordered a redaction of the information related to InterPark ramps. Macy’s Retail Holdings, Inc. v. Hennepin Co., Nos. 27-CV-13-6683 & 27-CV-14-6579 (Minn. T.C. 3/13/2018) (lnterPark Holdings, LLC, Intervening).

• Procedure; personal hardship cannot excuse jurisdictional statutory filing deadline. On 6/19/2017, the commissioner issued a Notice of Determination on Appeal (order) assessing a taxpayer for unpaid income tax, interest, and penalties. The taxpayer appealed this decision to the tax court and subsequently, received a 30-day extension to appeal the order. The extension was granted on 8/17/2017 and provided a filing deadline of 9/21/2017. The taxpayer did not file his notice of appeal until 10/23/2017. Minnesota Statutes §271.06, subd. 2, states that a taxpayer has 60 days to appeal an order of the Commissioner of Revenue and that the tax court may grant an extension not exceeding an additional 30 days. Because the statutory time limits for such appeals are strictly construed and are jurisdictional in nature, the tax court was unable to grant the taxpayer’s requested relief, despite the taxpayer’s personal hardship. Yoko v. Comm’r of Rev., No. 9126-R (Minn. T.C. 3/27/2018).

• Sales tax: Commissioner’s assessment affirmed following trial. Following trial, the tax court upheld the commissioner’s Notice of Change in Sales and Use Tax assessing Paris Handbag additional tax, penalty, and interest for the at-issue tax periods. The appellant in this dispute operated retail kiosks in local shopping malls and a storefront in one mall. Appellant sold various goods, including clothing items; sunglasses; toy helicopters and associated parts; as well as knives and other bladed items. Appellant contended that in addition to sales, it performed non-taxable service work. The principal issue at trial was whether the taxpayer could meet its burden of establishing that the difference between its gross receipts and its reported taxable sales was attributable to nontaxable transactions such as sales of exempt goods and/or services. The taxpayer was unable to do so. The court held that the evidence the taxpayer presented at trial failed to prove the existence of, and/or amount attributable to, nontaxable sales of various sorts. The court therefore affirmed the commissioner’s assessment. Paris Handbag LLC, v. Comm’r, No. 8934-R, 2018 WL 2106427 (Minn. Tax 5/2/2018).

• Property tax: Assessed value reduced. A pro se petitioner challenged the valuation of her legal nonconforming duplex in St. Paul. The petitioner’s evidence consisted largely of her personal opinion that the value of her property, as of 1/2/2014, was $36,600. Her opinion was based largely on the assessed value of the property from a 2011 valuation when the subject property was assessed at $36,600. Since no improvements had been made in the interim, the petitioner believed the January 2, 2014 market value of the subject property should remain unchanged from the 2011 assessed value of $36,600. The petitioner also pointed to the assessed value of the property in 2007 and she produced a portion of an undated MLS listing for a nonhomestead property as evidence of the subject property’s overvaluation. The court was not persuaded by the petitioner’s evidence and relied on its analysis of the report submitted by the county’s expert in adjusting the value. The court was unable to address various claims sounding in tort that the petitioner raised before and during trial, including claims of systematic discrimination, retaliation for initiating a court proceeding, and intentional infliction of emotional distress. Maynard v. Ramsey Co., No. 62-CV-15-2856, 2018 WL 1997741 (Minn. Tax 4/10/2018).

• Discovery: Fees and costs awarded, hourly rate not per se unreasonable. In a property tax case, the petitioner failed to respond to discovery requests. After repeated requests by the County Assessor’s Office and repeated unfulfilled promises from the petitioner’s counsel that the discovery would be produced, the county filed a motion to compel discovery under Minn. R. Civ. P. 33.01 and 34 and a request under Minn. R. Civ. P. 37.01(d)(1) for an award of costs and expenses, including attorney fees, incurred in connection with the motion. The petitioner opposed the motion on several grounds, arguing that the $400 per hour rate for the attorney handling the matter was per se unreasonable and similarly that the amount of time spent on the discovery requests was per se unreasonable. 

In addition, the petitioner argued that a movant must “meet and confer” to establish that the movant has made a good faith effort to obtain the sought-after discovery before filing a motion for an award of costs and expenses. The court rejected the petitioner’s arguments. Nothing in the statute or the court’s previous case law caps the amount of time or the hourly rate the court will award in connection with a motion to compel discovery. Further there is no implicit “meet and confer” requirement in the statute; the court had no trouble determining that the county met its obligation to make a good faith attempt to resolve the dispute without court intervention. The court reduced the award, however, to assure that the costs were proportionate to the amount in controversy. T.S. Real Estate, LLC, v. Dakota Co., No. 19HA-CV-16-735, 2018 WL 2106449 (Minn. Tax 4/30/2018).

Morgan Holcomb
& Matthew Wildes 

Mitchell Hamline School of Law

TORTS & INSURANCE
JUDICIAL LAW

• Contractual indemnity provisions. Defendant restaurant rented picnic tables from defendant rental company pursuant to a contact that contained an indemnification clause. The indemnification clause required the restaurant to “indemnify, defend and hold harmless the rental company from and against, any and all liabilities, claims, damages… resulting from or arising in connection with such possession, use… regardless of the cause… except to the extent directly resulting from our intentional misconduct.” Plaintiff suffered injuries when one of the tables unexpectedly collapsed and filed suit against the restaurant and rental company. The district court granted the rental company’s summary judgment motion, concluding that although the indemnity clause did not expressly include the rental company’s own negligence, the clause’s broad language necessarily included coverage for the rental company’s negligence. The court of appeals affirmed.

The Minnesota Supreme Court reversed. Initially, the Court noted its precedent narrowly construing indemnification agreements, stating, “[a]lthough we may uphold the enforceability of a contractual indemnity clause, we disfavor agreements ‘seeking to indemnify the indemnitee for losses occasioned by its own negligence.’” The court emphasized that for an “indemnity clause to pass strict construction, the contract must include an ‘express provision’ that ‘indemnif[ies] the indemnitee for liability occasioned by its own negligence’ and that “such an obligation will not be found by implication.” As a result, the Court held that the indemnification clause at issue was unenforceable because it did not expressly require indemnification for the rental company’s own negligence. Dewitt v. London Road Rental Center, Inc., No. A16-1794 (Minn. 4/18/2018). https://mn.gov/law-library-stat/archive/supct/2018/OPA161794-041818.pdf

• Products liability; post-sale duty to warn. Appellant product manufacturer manufactured the motor in a home’s heat-recovery ventilator. Sixteen years after the ventilator was installed, a fire started in the ventilator, causing property damage to the home. After paying its insured’s losses, plaintiff insurance company filed suit against the product manufacturer and others, asserting various tort, negligence, and warranty claims, including a claim for breach of a post-sale duty to warn. The district court granted summary judgment to the product manufacturer, concluding that the 10-year statute of repose for improvements to real property barred every claim except the claim alleging a post-sale duty to warn. That claim was also dismissed upon summary judgment because the court concluded that the product manufacturer did not have such a duty. The court of appeals reversed and remanded.

The Minnesota Supreme Court affirmed in part, reversed in part, and remanded. The Court first held that under the plain language of section 541.051, the ventilator containing the product manufacturer’s motor is “machinery installed upon real property.” As a result, the 10-year statute of repose for improvements to real property was inapplicable, and plaintiff’s breach of warranty, negligence, and product-liability claims were remanded for trial. The Court then addressed the post-sale duty to warn. The Court adopted the test found in the Restatement (Third) of Torts, which requires a post-sale warning where: (1) the seller knows or reasonably should know that the product poses a substantial risk of harm to persons or property; (2) those to whom a warning might be provided can be identified and can reasonably be assumed to be unaware of the risk of harm; (3) a warning can be effectively communicated to and acted on by those to whom a warning might be provided; and (4) the risk of harm is sufficiently great to justify the burden of providing a warning. In this case, the Court held that the product manufacturer had no post-sale duty to warn because it “could not identify ‘those to whom a warning might be provided,’ nor could it effectively communicate a warning to consumers using the ventilators containing [its] motors.” Dewitt v. London Road Rental Center, Inc., No. A16-1794 (Minn. 4/18/2018). https://mn.gov/law-library-stat/archive/supct/2018/OPA161794-041818.pdf

Jeff Mulder

Bassford Remele

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