Kristen Harne and Sheila Foster, on behalf of themselves and all others similarly situated v. State of Minnesota

• Court: Court of Appeals of Minnesota
• Decided: June 29, 2015
• Docket: A14-1985
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA IN COURT OF APPEALS A14-1985

Kristen Harne and Sheila Foster, on behalf of themselves and all others similarly situated, Appellants,

vs.

State of Minnesota, et al., Respondents

Filed June 29, 2015 Affirmed Worke, Judge

Ramsey County District Court File No. 62-CV-14-1639

Richard M. Hagstrom, Michael R. Cashman, Zelle Hoffman Voelbel & Mason, LLP, Minneapolis, Minnesota; and

Daniel E. Gustafson, Daniel C. Hedlund, Joseph C. Bourne, Gustafson Gluek, PLLC, Minneapolis, Minnesota; and

Patrick W. Michenfelder, David J. Lenhardt, Frederick M. Young, Gries Lenhardt Michenfelder Allen, PLLP, St. Michael, Minnesota; and

Vildan A. Teske, Douglas A. Micko, Marisa C. Katz, Crowder, Teske, Katz & Micko, PLLP, Minneapolis, Minnesota (for appellants Kristen Harne and Sheila Foster)

Lori Swanson, Attorney General, Alethea M. Huyser, Assistant Attorney General, Oliver J. Larson, Assistant Attorney General, Jeffery S. Thompson, Assistant Attorney General, St. Paul, Minnesota (for respondent state)

Considered and decided by Hudson, Presiding Judge; Worke, Judge; and Smith,

Judge. UNPUBLISHED OPINION

WORKE, Judge

Appellants challenge the district court’s grant of the state’s motion to dismiss.

Because the district court properly concluded that appellants’ claims are time-barred, we

affirm.

FACTS

In 1994, respondent State of Minnesota sued several tobacco companies for, inter

alia, violations of Minnesota’s consumer-protection statutes. The state sought redress for

“economic injuries to the [s]tate.” The state’s complaint made no mention of seeking

monetary damages on behalf of private individuals or parties.

In 1998, the state settled with the tobacco companies. The settlement provided

that the tobacco companies would pay monetary damages “in satisfaction of all of the

State of Minnesota’s claims for damages incurred by the [s]tate . . . related to the subject

matter of this action.” The settlement provided for initial and subsequent annual

payments. The settlement made no mention of any money that was to be paid to private

parties for individual or particularized injuries.

In 2001, a class-action lawsuit was brought against Altria Group, the parent

company of Philip Morris, by plaintiffs alleging violations of Minnesota’s consumer

protection statutes. Curtis v. Altria Grp., Inc., 813 N.W.2d 891, 897 (Minn. 2012). The

plaintiffs asserted that Altria Group made false and misleading representations regarding

“light” cigarettes. Id. Altria Group responded (in part) that these claims were released

by the 1998 settlement agreement with the state. Id. at 898. Our supreme court held that

2 the settlement released the claims of the class-action plaintiffs brought under Minnesota’s

consumer-protection statutes. Id. at 903-04.

In 2014, the same class-action plaintiffs, appellants Kristen Harne, et al., initiated

this lawsuit, shifting focus from the tobacco companies to the state. Appellants asserted

that the state’s settlement of their claims under the consumer-fraud statute constituted the

taking of a private property interest for which they were owed compensation under the

Minnesota and federal constitutions. They argued that their ability to bring a claim under

the “private attorney general statute,” Minn. Stat. § 8.31, subd. 3a (2014), had been

extinguished. The district court granted the state’s motion to dismiss, concluding that

appellants’ claims were time-barred and also failed as a matter of law.

DECISION

Appellants argue that the district court incorrectly concluded that their claims were

barred by the statute of limitations. In Minnesota, a six-year statute of limitations applies

to takings of private property. Minn. Stat. § 541.05, subd. 1(4) (2014). Application of a

statute of limitations is reviewed de novo. Sipe v. STS Mfg., Inc., 834 N.W.2d 683, 686

(Minn. 2013).

In Antone v. Mirviss our supreme court determined that the “some damage” rule

governs when the statute of limitations begins to run, which is upon “the occurrence of

any compensable damage.” 720 N.W.2d 331, 336 (Minn. 2006). “Some damage” is a

phrase interpreted broadly. Id. A plaintiff must be able to bring an action that will

survive a motion to dismiss, which is a “minimal” showing. Id. The district court

3 determined that appellants had suffered some compensable damage at the time the 1998

settlement was finalized.

The 1998 settlement agreement extinguished appellants’ right to bring a private

cause of action under Minnesota’s consumer-protection statutes. Curtis, 813 N.W.2d at

903. Yet appellants assert that the settlement agreement was not the occurrence that

caused their injury. Rather, appellants argue that they had “no reasonable basis for

knowing or discovering” their claim prior to the supreme court’s decision in Curtis. This

cannot be true. The Curtis litigation lasted for many years and the question of whether

the 1998 settlement had released the plaintiffs’ claims was addressed at the district court

level. Id. at 897. Therefore, the idea that the 1998 settlement extinguished appellants’

claims had to have been asserted as a defense by the tobacco companies from the

beginning of the Curtis lawsuit, or nearly so. The Curtis lawsuit began in 2001. Curtis v.

Altria Grp., Inc., 792 N.W.2d 836, 843 (Minn. App. 2010), rev’d, 813 N.W.2d 891

(Minn. 2012). And the defense asserted by the tobacco companies was based on publicly

available information. Appellants did not credit this legal argument, but they cannot now

assert that they could not have been aware that their claims may have been extinguished

by the 1998 settlement.

Appellants’ argument is that the state had to tell them that they had a cause of

action and that they could only have received such notice when Curtis was handed down.

This despite the “broad and inclusive” language of the 1998 settlement agreement that

“unambiguously released” the tobacco companies from all past and future claims arising

4 under Minnesota’s consumer-protection statutes. Curtis, 813 N.W.2d at 903.

Appellants’ argument is unpersuasive.

The 1998 settlement agreement was the event that extinguished appellants’ ability

to pursue private claims under Minn. Stat. § 8.31 (2014) and the Minnesota consumer-

fraud statute. They sustained “some damage” at that time. Antone, 720 N.W.2d at 335-

36. The Curtis decision did not cause appellants’ injury—the decision confirmed that the

1998 settlement had extinguished their claims, and the private property interest asserted

in appellants’ complaint is the ability to bring a claim.

Appellants also argue that the periodic payments produced by the 1998 settlement

agreement constitute a continuing violation. But periodic payments are simply one of

any number of methods that could have been chosen as the mode of payment to

effectuate the 1998 settlement agreement. If the settlement had been paid in one lump

sum in 1998 appellants would have no argument. If payments were scheduled every

seven years instead of annually, then according to appellants’ own logic there would be a

one-year period when their claims would be time-barred. But the particular method of

payment of the settlement is not the purported taking; the purported taking is the

settlement itself, which extinguished appellants’ claims.

The cases cited by appellants fail to address this conceptual difficulty. For

example, appellants cite Citizens for a Safe Grant v. Lone Oak Sportsmen’s Club, Inc.,

but in that case the repeated violation was the discharge of weapons without safety

features or sound abatement. 624 N.W.2d 796, 801-02 (Minn. App. 2001). In other

words, repeated tortious conduct. For Citizens for a Safe Grant to be an appropriate

5 parallel, the periodic settlement payments would have to constitute some kind of renewal

of the original settlement agreement, rather than mere scheduled payments.

Finally, appellants argue that settlement payments received six years prior to the

inception of their lawsuit and payments to be received in the future are also not barred by

the statute of limitations. This argument fails for the same reason that appellants’

continuing-violation argument fails: it elevates periodic payments flowing from a discrete

injury to the status of repeated injuries.

“Some damage” was caused to appellants’ when their claims were extinguished by

the 1998 settlement agreement. The district court properly concluded that appellants’

claims are time-barred.

Affirmed.