Criminal Law
JUDICIAL LAW
• Confrontation clause: Allowing police officer to testify via Zoom due to his covid-19 exposure did not violate the defendant’s right to confrontation. Appellant was charged with third-degree sale of a controlled substance following a controlled buy of methamphetamine. Three law enforcement officers were involved in the controlled buy. One agent was exposed to covid-19 four days before trial and was advised by public health officials to quarantine. The district court permitted the agent to testify at trial via live, remote, two-way video technology (Zoom). On appeal, appellant argues her 6th Amendment right to confront the witnesses against her were violated.
The court of appeals determines that the proper analysis for this confrontation clause question is that presented by the U.S. Supreme Court in Maryland v. Craig, 497 U.S. 836 (1990). In Craig, the Court held that the confrontation clause could be satisfied absent a physical, face-to-face confrontation “only where denial of such confrontation is necessary to further an important public policy and only where the reliability of the testimony is otherwise assured.” Id. at 850. The policy involved here is protecting public health.
While the court holds that the generalized concerns surrounding covid-19 are not sufficient on their own to dispense with a defendant’s right to confront a witness face-to-face, there is a particularized showing of necessity in this case. Here, the witness was exposed to someone who tested positive for covid-19 and advised to quarantine. If he were made to testify in person, the judge, other witnesses, jurors, and other court personnel would also be exposed.
To be reliable, the witness testifying remotely must be under oath and understand the seriousness of his or her testimony, must be subject to cross-examination, and the judge, jury, and defendant must be able to properly see and hear the witness. The agent’s testimony was sufficiently reliable in this case. He was under oath, everyone was able to see and hear him testify, he was thoroughly cross-examined, and the defense was given the opportunity for re-cross. Thus, the court finds appellant’s right to confront the special agent was not violated by the agent testifying at trial via Zoom. State v. Tate, A21-0359, __ N.W.2d __, 2022 WL 16575 (Minn. Ct. App. 1/3/2022).
• Harassment: Proof of intent to have a substantial adverse effect on safety, security, or privacy is not required for HRO based on dissemination of private sexual images. Appellant sought an HRO against respondent, her ex-husband, alleging respondent sent a private sexual image of appellant to her current significant other without her consent. After a hearing, the district court declined to issue the HRO, finding respondent did not disseminate the photo with the intention of having a substantial adverse effect on appellant’s safety, security, or privacy.
An HRO may be issued if the district court finds reasonable grounds to believe the respondent has engaged in harassment. Minn. Stat. §609.748, subd. 5(b). Harassment is defined as a single incident of physical or sexual assault, a single incident of harassment under §609.749, subd. 2(8), a single incident of nonconsensual dissemination of private sexual images under §617.261, or repeated incidents of intrusive or unwanted acts, words, or gestures that have a substantial adverse effect or are intended to have a substantial adverse effect on the safety, security, or privacy of another. Minn. Stat. §609.748, subd. 1(a)(1). The question on appeal is what language the qualifying phrase, italicized above, modifies.
The Minnesota Court of Appeals finds that, per the plain language of the statute and rules of grammar, the qualifier is specific to only the final type of conduct listed in the statute—that is, repeated incidents of intrusive or unwanted acts, words, or gestures. This interpretation is supported by §609.748’s reference to §617.261, the statute criminalizing nonconsensual dissemination of private sexual images, which also does not require an intent to harass. Thus, the court holds that, when an HRO is sought based on the nonconsensual dissemination of private sexual images, the petitioner does not need to show that the dissemination was done with the intent of having a substantial adverse effect on the safety, security, or privacy of another. As the district court denied the HRO based on an erroneous interpretation of the law, the case is reversed and remanded. Borth v. Borth, A21-0571, __ N.W.2d __, 2022 WL 90612 (Minn. Ct. App. 1/10/2022).
Samantha Foertsch
Bruno Law PLLC
samantha@brunolaw.com
Stephen Foertsch
Bruno Law PLLC
stephen@brunolaw.com
Employment & Labor Law
JUDICIAL LAW
• Disability discrimination; no disability found. An applicant for a job lost his disability discrimination claim after he was not hired following a conditional employment offer. The Minnesota Court of Appeals affirmed a lower court ruling that the claimant’s alleged alcoholism did not constitute a cognizable “disability” under the state Human Rights Act. Johanning v. Summit Orthopedics, Ltd., 2021 WL 5872664 (Minn. Ct. App. 12/13/2021) (unpublished).
• Breach of warranty; claim not viable in employment law. Dismissal of an employment law claim by an employee in a diversity action prompted dismissing the balance of the lawsuit alleging breach of implied warranty of good faith. The 8th Circuit Court of Appeals affirmed summary judgment on grounds that the remaining breach claim was not recognized under state law. Mastin v. Navistar, Inc., 2022 WL 130006 (Minn. Ct. App. 01/14/2022) (unpublished).
• Unemployment compensation; three quitters lose, one gets remand, and one wins. A trio of employees who resigned their jobs near the end of last year lost their claims for unemployment compensation benefits in decisions rendered by the Minnesota Court of Appeals; one obtained a remand; and another prevailed.
An employee who quit after her medical leave of absence expired was denied benefits because she expressly said she quit and did not seek an extension of her leave. Strohmayer v. A & E Care Services, 2021 WL 5764233 (Minn. Ct. App. 12/06/2021) (unpublished).
An employee who quit after 16 days of work because of dissatisfaction with his job and lack of payment was denied benefits. A “reasonable” employee in his situation would not have quit under these circumstances. Holly v. Cedarbrook Builders, LLC, 2021 WL 5442549 (Minn. Ct. App. 11/22/2021) (unpublished).
An employee who quit because he believed the employer was not complying with covid-19 safety requirements at the workplace was denied benefits. The employee was not adversely affected by the claimed deviations because he was working remotely from home. Olson v. Schneiderman’s Furniture, Inc., 2021 WL 5872277 (Minn. Ct. App. 12/13/2021) (unpublished).
The denial of benefits to an employee who resigned without requesting an accommodation to seek treatment for chemical dependency was remanded. The appellate court remanded the decision by an unemployment law judge (ULJ) because the ULJ did not adequately assist the pro se applicant in revealing the record as to whether an accommodation was sought before the employee quit. Gates v. Advanced Web Techs., Inc., 2022 WL 90221 (Minn. Ct. App. 01/10/2022) (unpublished).
But an employee was granted benefits because he had “good reason” to resign caused by the employer when a change in his job requirements resulted in having to undergo a new 120-mile daily round trip commute, taking an additional 12-20 hours of uncompensated time. Sirek v. NW Respiratory Services, LLC, 2021 WL 5441808 (Minn. Ct. App. 11/22/2021) (unpublished).
• Unemployment compensation; misconduct bars benefits. An employee was denied unemployment compensation benefit due to numerous unauthorized absences from work. The appellate court also rejected the contention that the unemployment law judge erred in not issuing requested subpoenas. Williams v. ME Savage, Inc., 2021 WL 5872495 (Minn. Ct. App. 12/13/2021) (unpublished).
Marshall H. Tanick
Meyer, Njus & Tanick
mtanick@meyernjus.com
Environmental Law
JUDICIAL LAW
• MN Court of Appeals remands PolyMet NPDES/SDS permit for Cty of Maui “functional-equivalent” analysis; affirms on all other grounds. The Minnesota Court of Appeals, in an unpublished January opinion, affirmed in part, reversed in part, and remanded the National Pollutant Discharge Elimination System/State Disposal System (NPDES/SDS) permit issued by the Minnesota Pollution Control Agency (MPCA) for a new copper mining project in St Louis County, MN, proposed by PolyMet Mining, Inc.
In January 2019, several environmental groups and the Fond du Lac Band of Lake Superior Chippewa challenged the permit to the court of appeals. Among other things, appellants alleged that MPCA had followed irregular and unlawful procedures by pursuing and entering into an agreement by which the U.S. Environmental Protection Agency (EPA) would not submit written comments on the permit during the public-comment period but would read the proposed comments to MPCA staff in a conference call. In May 2019, the court of appeals granted a motion by one of the appellants to transfer the case to the district court solely for the purpose of examining the alleged unlawful procedures. The district court determined that while MPCA had followed several procedural irregularities (related to a failure to preserve evidence), the agency’s other conduct, including MPCA’s efforts to persuade the EPA not to submit written comments during the public comment period, were not procedurally improper.
In reviewing the district court’s decision, the court of appeals determined that it did not need to decide whether the challenged procedures were unlawful because appellants had not demonstrated that the procedures prejudiced their substantial rights. For example, the court noted that MPCA’s actions did not prevent appellants from submitting comments on the permit, and even if EPA had submitted comments during the public comment period, they likely would have come toward the end of the comment period such that appellants could not have considered EPA’s comments in drafting their own comments. Plus, EPA did communicate its comments to MPCA. Even though the court rejected appellants’ procedural challenges, the court did note that “[t]he procedures employed by the PCA in this matter are contrary to some of the purposes of MAPA: ‘to increase public accountability of administrative agencies’ and ‘to increase public access to governmental information.’”
The court of appeals opinion also evaluated appellants’ other arguments challenging the permit, which included but were not limited to: (a) MPCA erred by not regulating seepage discharges to groundwater from the project’s proposed tailings basin under the NPDES portion of the permit, making the discharges subject to Clean Water Act (CWA) permitting requirements; (b) MPCA should have included water-quality-based effluent limits (WQBELs) in the permit; (c) MPCA did not follow CWA requirements to ensure the permit will not violate tribal water quality standards, see 40 CFR §122.4(d); and (d) MPCA wrongly denied one appellant’s request for a contested case hearing on the permit. The court of appeals affirmed MPCA on all issues except one: groundwater. This was because a decision of the U.S. Supreme Court issued after MPCA issued the permit, County of Maui v. Hawaii Wildlife Fund (140 S. Ct. 1462, (2020)), established a new standard for when discharges to groundwater are subject to NPDES permitting under the CWA. The high court clarified that the CWA applies to discharges of pollutants from a point source to groundwater, if the discharge “is the functional equivalent of a direct discharge” to navigable waters. Accordingly, the court of appeals reversed MPCA on this issue and remanded to the agency with instructions to conduct the “functional-equivalence” analysis required by Maui. In re Contested Case Hearing Requests & Issuance of Nat’l Pollutant Discharge Elimination Sys., Nos. A19-0112, A19-0118, A19-0124, A20-1271, A20-1380, A20-1385, 2022 Minn. App. Unpub. LEXIS 53 (1/24/2022).
• Minnesota mineral lease updates. Two recent decisions, at both the state and federal levels, have impacted the future of mining in northern Minnesota. At the federal level, the U.S. Department of Interior (DOI) announced on 1/25/2022 that it was canceling two hardrock mineral leases held by Twin Metals Minnesota. Both Twin Metals leases were adjacent to the Boundary Waters Canoe Area Wilderness (BWCAW). At the state level, a Ramsey County court judge upheld the determination by the Minnesota Department of Natural Resources (DNR) to terminate mineral leases held by Mesabi Metallics. The Mesabi Metallics leases are located near Nashwauk, Minnesota.
Twin Metals: The leases that Twin Metals sought to renew were initially issued in 1966. Although no mining production had actually ever taken place under the leases, Twin Metals sought to renew them in 2016 under the Obama administration. In December 2016, the U.S. Forest Service (USFS) withheld consent to the renewal of the leases, leading to the Bureau of Land Management (BLM) denying renewal of the leases.
In December 2017, the Trump administration Department of the Interior (DOI) concluded that the BLM had erred in its 2016 determination to deny renewal of the leases. The DOI determined that the BLM lacked the power to grant or deny the lease renewals, instead finding that Twin Metals had a non-discretionary right to renewal based on the terms of the 1966 leases. This reversal meant that the BLM and USFS would need to reconsider the lease renewal applications submitted by Twin Metals. Subsequently in 2018, the Twin Metals leases were approved for renewal, and Twin Metals was ultimately granted a 10-year extension.
On 1/25/2022, the Biden administration DOI announced it was canceling the Twin Metals leases. In canceling the leases, the DOI determined that the leases were improperly renewed in 2019 under the Trump administration. Specifically, the DOI pointed to three distinct issues with the renewal of the leases: (1) The customized lease forms utilized for Twin Metals included lease terms that departed from and altered the BLM’s standard lease form and terms; (2) the BLM did not request nor obtain consent from the USFS prior to issuing the lease renewals; and (3) the environmental analysis used to inform lease renewal decisions under the National Environmental Policy Act (NEPA) was inadequate and failed to include a no-renewal, no-action alternative.
The future of the Twin Metals leases also faces another challenge, as the Biden administration has proposed a 20-year moratorium on new mining activity in an area spanning more than 225,000 acres of federal land near the BWCAW, an area that includes the proposed location of the Twin Metals leases. Memorandum Opinion, M-37072, “Authority to Cancel Improperly Renewed Twin Metals Mineral Leases and Withdrawal of M-37049, ‘Reversal of M-37036, “Twin Metals Minnesota Application to Renew Preference Right Leases (MNES-01352 and MNES-01353)”’” (1/25/2022).
Mesabi Metallics: The Ramsey County District Court ruled in favor of the DNR in a lawsuit brought by Mesabi Metallics Co., LLC, against the DNR regarding the DNR’s termination of mineral leases held by Mesabi Metallics. Ultimately, the court found that the DNR had properly terminated leases held by Mesabi Metallics, and ordered Mesabi Metallics to compensate the state of Minnesota $17.5 million in past-due royalties associated with the leases.
The DNR had granted Mesabi Metallics certain leasing and mining rights in conjunction with the construction of a taconite ore pellet plant in Nashwauk, Minnesota. The leases originally commenced in 2004, but went through various amendments over time, including a number of “master lease amendments” referred to as the “bankruptcy amendments,” and further amendment in 2020 after Mesabi Metallics struggled with multiple legal and financial delays. Under the terms of the 2020 amendment, in order for Mesabi Metallics to continue with its project, it was required to procure and deposit, by 5/1/2021, financing in the amount of $200 million. Mesabi Metallics failed to procure the $200 million in financing; thus, the 2020 amendment did not become effective.
Because the 2020 amendment did not become effective, the terms of previously agreed-to bankruptcy amendments were still in place, including, among other things, requirements that Mesabi complete the project by 12/31/2019 and make a minimum royalty payment to the state of Minnesota for the year 2020 in the amount of $18 million by 1/1/2021.
The DNR determined that Mesabi Metallics had not completed the project by 12/31/2019, nor had it made royalty payments in the amount of $18 million; accordingly, DNR determined Mesabi Metallics was in default under the bankruptcy amendments. The DNR notified Mesabi Metallics of its defaults and provided Mesabi Metallics with 20 days to cure said defaults. Mesabi Metallics failed to cure the defaults, and on 5/26/2021, the leases terminated.
The court sided with the DNR and granted its motions for judgment on the pleadings and motion for summary judgment. Specifically, the court found that the terms of the 2020 amendment were clear and undisputable, and Mesabi Metallics’ failure to comply with those terms led to the 2020 amendment being ineffective and, as a result, Mesabi Metallics being in default under the bankruptcy amendments. Due to this default, the court found that the DNR was within its right to terminate the leases. Further, the court found that because Mesabi failed to comply with the terms of the bankruptcy amendments, the DNR was entitled to a monetary judgment of $17,516,940 for unpaid minimum royalties. Mesabi Metallics Co., LLC, et. Al. v. Minnesota Dep’t of Natural Resources, 62-CV-21-3142.
ADMINISTRATIVE ACTION
• EPA announces enforcement of coal combustion residuals closure regulations. In January the U.S. Environmental Protection Agency (EPA) announced it would begin enforcing its rules regulating the disposal of coal combustion residuals (CCR), previously published in 2015 and revised in 2020. Simultaneous to its press release, EPA published several proposed decisions on requests for extensions to the current deadline for the closure of utilities with unlined CCR impoundments.
Coal combustion residuals, also referred to as coal ash, are the toxic byproducts of burning coal in coal-fired power plants, and they contain arsenic, lead, mercury, and other hazardous chemicals. Power plants largely dispose of CCR by collecting them into large surface impoundments or coal ash ponds. There are approximately 500 unlined CCR impoundments across the nation.
In 2015, EPA issued the first CCR rules, requiring that facilities with leaking and unlined coal ash impoundments must cease receiving CCR and begin to close down. In 2018, the Trump administration attempted to amend the 2015 CCR regulations, rolling back key features of the rules. However, in Utility Solid Waste Activities Group v. EPA (USWAG), the District of Columbia Circuit Court of Appeals overturned certain provisions of the 2015 regulations and remanded some provisions back to EPA, requiring it to set even higher standards of protection. 901 F.3d 414 (D.C. Cir. 2018).
On 7/29/2020, EPA finalized their revisions to the CCR rules called, “A Holistic Approach to Closure Part A.” 85 Fed. Reg. 53516 (8/28/2020). Part A, in accordance with USWAG, required utilities with unlined impoundments to retrofit or close by 4/11/2021, but allowed utilities to apply for an extension to the closure deadline. On 10/16/2020, EPA published Part B of the Holistic Approach to Closure. This part of the CCR rules established procedures to allow unlined impoundments to continue operating past the April 2021 closure deadline on a site-by-site basis.
Part A of the final rule gave until 11/30/2020 for utilities to submit demonstrations for extensions of the closure deadline. Fifty-seven applications were submitted requesting deadline extensions, and on 1/11/2022, EPA announced that it had received and reviewed those applications. Of the 52 applications that were determined to be complete, EPA proposed determinations on four applications, of which three were proposed denials and one was proposed conditional approval. The proposed conditional approval required the utility to correct groundwater monitoring requirements, and the three proposed denials hinged on “several potential deficiencies with groundwater monitoring, cleanup, and closure activities.”
The remaining determinations for closure extensions will be announced “as expeditiously as possible.” The comment period for the current proposed determinations ended on 2/23/2022.
Finally, other highlights in EPA’s announcement include the agency’s notification to utilities which may have present possible issues that could impact human health and the environment, reminding them of their compliance obligations. EPA also announced it will be finalizing a federal permitting program for future disposal of coal ash and regulations for legacy coal ash impoundments, while also continuing to review state-level CCR program applications to ensure they meet federal regulatory standards.
Press Release, EPA: EPA Takes Key Steps to Protect Groundwater from Coal Ash Contamination (1/11/2022). https://www.epa.gov/newsreleases/epa-takes-key-steps-protect-groundwater-coal-ash-contamination/ ; CCR Part A Implementation Determinations, EPA (1/25/2022), https://www.epa.gov/coalash/coal-combustion-residuals-ccr-part-implementation/.
Jeremy P. Greenhouse
The Environmental Law Group
jgreenhouse@envirolawgroup.com
Jake Beckstrom
Vermont Law School, 2015
jbmnusa@gmail.com
Erik Ordahl
Barna, Guzy & Steffen
eordahl@bgs.com
Federal Practice
JUDICIAL LAW
• Colorado River abstention; stay; appellate jurisdiction; dissent. The 8th Circuit dismissed an appeal from a stay entered by a district court pursuant to Colorado River abstention, finding that the stay was a non-appealable “wise-judicial-administration” ruling rather than a “surrender” of federal jurisdiction to a state court, and therefore was not a final order appealable under 28 U.S.C. §1291 or an appealable interlocutory collateral order.
Judge Colloton dissented, arguing that the stay was appealable because the state court could decide an “essential” part of the federal action that would be res judicata in the federal action. Window World Int’l, LLC v. O’Toole, 21 F.4th 1029 (8th Cir. 2022).
• 28 U.S.C. §1367(c); remand; appellate jurisdiction. Denying the plaintiffs’ motion to dismiss an appeal from a 28 U.S.C. §1367(c) dismissal for lack of jurisdiction, the 8th Circuit held that the remand order was a reviewable final judgment “because it effectively put [the defendant] out of federal court,” and that the appeal was not barred by 28 U.S.C. §1447(d). In Re Cotter Corp. (N.S.L.), 22 F.4th 788 (8th Cir. 2022).
• ADA; masks in schools; most of preliminary injunction affirmed. Agreeing with a district court that “mask requirements are reasonable accommodations required by federal disability law,” the 8th Circuit rejected defendants’ multiple standing-related arguments and their argument that the plaintiffs were required to exhaust their remedies under the Individuals with Disabilities Act (IDEA), and found that the plaintiffs were entitled to a preliminary injunction, but that the injunction should be limited to schools (and school districts) the plaintiffs attend.
Judge Erickson dissented, arguing that the plaintiffs had failed to exhaust their options under IDEA, meaning that the preliminary injunction was “premature.” ARC of Iowa v. Reynolds, ___ F.4th ___ (8th Cir. 2022).
• Denial of motion for leave to file third amended complaint affirmed. The 8th Circuit found that the plaintiff had “procedurally defaulted” on his request to file a third amended complaint when his initial request was a “passing mention” in his opposition to a motion to dismiss and his subsequent motion was untimely and did not include a supporting brief as the Local Rules required. Anderson v. Bank of the West, ___ F.4th ___ (8th Cir. 2022).
• Erie; preliminary injunction; no presumption of irreparable harm. In November 2021, this column noted a decision by Judge Schiltz (Moeschler v. Honkamp Krueger Fin. Servs., Inc., 2021 WL 4273481 (D. Minn. 9/21/2021)) finding that the inference of irreparable harm arising out of the breach of a restrictive covenant is a Minnesota procedural doctrine that does not apply in federal court.
More recently, denying the plaintiff’s motion for a temporary restraining order and expedited preliminary injunction, Judge Wright joined Judge Schiltz in finding that because a preliminary injunction is procedural under Erie, the presumption of irreparable harm arising from the breach of a confidentiality agreement under Minnesota law does not apply in federal court. Personal Wealth Partners, LLC v. Ryberg, 2022 WL 15425 (D. Minn. 1/18/2022).
• 28 U.S.C. §1443(1); removal; eviction; remand; 28 U.S.C. §1447(c); fees denied. Where the defendants in a Dakota County eviction action removed the case under 28 U.S.C. §1443(1) based on their federal defense and the plaintiff moved to remand, Judge Schiltz found that the defendant had “an adequate State remedy to protect their federal rights” and granted the plaintiff’s motion to remand.
In addition, while describing the question as “very close,” Judge Schiltz found that the defendants had an “objectively reasonable basis” for removal, and declined to award the plaintiff attorney’s fees pursuant to 28 U.S.C. §1447(c). Olson Prop. Invests. v. Alexander, 2022 WL 179195 (D. Minn. 1/20/2022).
• Rooker-Feldman doctrine; motion to dismiss denied. While ultimately dismissing all of the plaintiffs’ claims on other grounds, Judge Tostrud denied defendants’ motion to dismiss under Rooker-Feldman, finding that plaintiffs’ claims did not “invite or require rejection of the state courts’ judgments.” Kvalvog v. Park Christian School, Inc., 2022 WL 119010 (D. Minn. 1/12/2022).
• Diversity jurisdiction; amount in controversy. Denying a motion to dismiss a diversity action for an alleged failure to meet the $75,000 amount-in-controversy requirement, Chief Judge Tunheim treated the motion as a factual challenge to jurisdiction, considered the declarations submitted by the parties, and found that the amount in controversy was “established sufficient[ly] for diversity jurisdiction.” Young v. Arthur J. Gallagher & Co., 2022 WL 37470 (D. Minn. 1/4/2022).
• Fed. R. Evid. 702; Daubert; motion to exclude expert denied. Judge Wright denied the defendant’s motion to exclude the plaintiff’s expert in a whistleblower case, finding that the defendant’s arguments “implicated the weight and credibility” of the expert’s testimony “as opposed to the admissibility of his testimony.” Carlson v. BNSF Rwy. Co., 2022 WL 37468 (1/4/2022).
• Fed. R. Civ. P. 26(a)(2) and 37(a)(1); motion to exclude expert’s testimony denied. Denying the defendant’s motion to exclude an expert witness after considering: (1) the importance of the excluded material; (2) the party’s explanation for its failure to make a timely disclosure; (3) the potential prejudice that would arise from allowing the material to be used; and (4) the availability of a continuance to cure any prejudice, Magistrate Judge Leung found that the plaintiff’s failure to produce a timely expert report was not “substantially justified,” but that any prejudice to the defendant could be cured by plaintiff’s counsel’s payment of certain deposition costs and attorney’s fees, and an amendment to the scheduling order. Weiss v. Fed. Ins. Co., 2022 WL 35742 (D. Minn. 1/4/2022).
• Fed. R. Civ. P. 15(a)(2); L.R. 15.1(b); motion to amend complaint denied. Dismissing plaintiffs’ complaint under Fed. R. Civ. P. 12(c) for lack of standing, Judge Montgomery denied plaintiffs’ motion for leave to amend their complaint where neither a proposed amended complaint nor a redline was filed along with that motion, finding that denial of the motion to amend was “appropriate” under the circumstances. Cajune v. Indep. Sch. Dist. 194, 2022 WL 179517 (D. Minn. 1/19/2022).
• Untimely opposition to motion to dismiss rejected. Where the plaintiff’s opposition to defendants’ motions to dismiss was originally due on 5/27/2021; the plaintiff obtained multiple extensions of that deadline, the last of which extended his filing deadline to 11/29/2021; and the plaintiff ultimately filed his opposition on 12/20/2021, Judge Frank found that the plaintiff’s submission was “procedurally defective,” found no “extraordinary circumstances” or “good cause,” and “decline[d] to accept or consider the submission.” Gatlin v. Sprinkler Fitters Local 417, 2022 WL 219573 (D. Minn. 1/25/2022).
• Fed. R. Civ. P. 4; dismissal for failure to prosecute. After the plaintiff failed to serve the defendant within 120 days of filing and failed to respond to Magistrate Judge Leung’s order to show cause why her claims should not be dismissed, Magistrate Judge Leung recommended that the action be dismissed without prejudice for failure to prosecute, and only then did the plaintiff claim that her attempts at service had been “stonewalled” by the defendant and that it would be “unjust” to require her to pay a second filing fee, Judge Schiltz dismissed the action without prejudice as an “appropriate consequence” for counsel’s conduct. Wiedersum v. First Reliance Standard Life. Ins. Co., 2022 WL 102272 (D. Minn. 1/11/2022).
• 28 U.S.C. 1292(b); certification denied. While finding that the issue on which the defendant sought interlocutory appeal involved a controlling question of law and that there “may” be a substantial ground for difference of opinion, Judge Doty denied the request for certification where a trial would be required in any event, and “the litigation would be substantially the same.” Watkins Inc. v. McCormick & Co., 2022 WL 122315 (D. Minn. 1/13/2022).
• Unopposed motion to proceed anonymously granted. Applying a 10-factor test developed by the 2nd and 11th Circuits, Magistrate Judge Bowbeer granted the plaintiff’s unopposed motion to proceed anonymously in a case that alleges excessive force during her arrest while she was pregnant and subsequent delivery and labor. S.A.A. v. Geisler, 2022 WL 179198 (D. Minn. 1/20/2022).
Josh Jacobson
Law Office of Josh Jacobson
joshjacobsonlaw@gmail.com
Immigration Law
JUDICIAL LAW
• Migrant protection protocols (MPP) (“Remain in Mexico”): The beat goes on. As previously reported in the December issue of Bench & Bar, DHS Secretary Mayorkas issued a second memorandum on 10/29/2021 terminating MPP and addressing, at the same time, issues raised by U.S. District Court Judge Matthew Kacsmaryk, Northern District of Texas, with the Secretary’s earlier 6/1/2021 memorandum terminating MPP. In the 10/29/2021 memorandum, Secretary Mayorkas announced termination of MPP after finding the benefits were outweighed by the costs of the program, while noting that DHS would continue to comply with the district court’s injunction until such time as is practicable, after a final judicial decision to vacate the injunction had been made. https://www.dhs.gov/sites/default/files/publications/21_1029_mpp-termination-memo.pdf
On 11/2/2021, in view of Secretary Mayorkas’ 10/29/2021 memorandum terminating MPP, the administration asked the 5th Circuit Court of Appeals to vacate the injunction requiring reimplementation of MPP. https://www.courthousenews.com/biden-administration-makes-case-for-end-of-trump-immigration-program/
On 12/13/2021, the 5th Circuit denied the request to vacate the injunction. While noting that the administration had indeed issued a second termination memorandum with an enhanced rationale for terminating MPP, it declared that it had not eliminated the issue of whether the first memorandum terminating MPP was in compliance with the Administrative Procedure Act. In view of that, the 5th Circuit argued, the injunction requiring MPP would stay in place. Texas, et al. v. Biden, et al., No. 21-10806, slip op. (5th Circuit, 12/13/2021). https://www.ca5.uscourts.gov/opinions/pub/21/21-10806-CV1.pdf
On 12/29/2021, the Biden administration filed a writ of certiorari seeking Supreme Court review of the 5th Circuit’s decision and requesting a decision this term. Key issues raised in this latest salvo are: 1) whether 8 U.S.C. §1225 requires DHS to continue implementing MPP when it states that the secretary of DHS “may” return noncitizens to Mexico to await their immigration proceedings; and 2) whether the 5th Circuit erred by concluding the DHS secretary’s second memorandum terminating MPP had no legal effect. Biden, et al. v. Texas, et al., No. 21-954 (2021). https://www.supremecourt.gov/DocketPDF/21/21-954/206810 /20211229162636127_Biden%20v.%20Texas%20-%20Cert%20Petition.pdf
Per the terms of the injunction, the Biden administration continues its return of people to Mexico to await their immigration proceedings.
• Board of Immigration Appeals employed proper legal standard while undertaking “exceptional and extremely unusual hardship” analysis. The 8th Circuit Court of Appeals affirmed the Board of Immigration Appeals’ denial of the petitioner’s application for cancellation of removal, holding that the board conducted an “exceptional and extremely unusual hardship” analysis that was future-oriented, not focused solely on the current conditions of the petitioner’s daughter. “While we sympathize with the respondent’s children and we understand that the respondent’s family will likely encounter difficulties in the respondent’s absence, the Immigration Judge addressed these hardships and properly concluded that, considered in the aggregate, the hardships that the respondent’s United States citizen children will face upon his removal to Mexico are not substantially beyond that which would ordinarily be expected from the removal of a family member.” Garcia-Ortiz v. Garland, No. 20-3446, slip op. (8th Circuit, 12/17/2021). https://ecf.ca8.uscourts.gov/opndir/21/12/203446P.pdf
ADMINISTRATIVE ACTION
• In the name of public health: Title 42 expulsions at the border. On 8/2/2021, the Centers for Disease Control (CDC) issued its third order continuing the policy of President Biden’s predecessor, authorizing the expulsion of migrants from entry into the United States from Canada or Mexico, if they had arrived at or near the U.S. land and adjacent coastal borders. This could include those noncitizens not having proper travel documents, noncitizens whose entry is otherwise contrary to law, and noncitizens who are apprehended at or near the border seeking to unlawfully enter the United States between ports of entry (POE).
In one point of divergence from the previous administration, however, the 8/2/2021 order made provision for exemption of unaccompanied noncitizen children. Nor does the order apply to the following: 1) U.S. citizens, U.S. nationals, and lawful permanent residents; 2) members of the armed forces of the United States and associated personnel, U.S. government employees or contractors on orders abroad, or their accompanying family members who are on their orders or are members of their household, subject to required assurances; 3) noncitizens who hold valid travel documents and arrive at a POE; 4) noncitizens in the visa waiver program who are not otherwise subject to travel restrictions and arrive at a POE; 5) noncitizens otherwise subject to this order who are permitted to enter the U.S. as part of a Department of Homeland Security (DHS)-approved process, where the process approved by DHS has been documented and shared with CDC, and includes appropriate covid-19 mitigation protocols, per CDC guidance; and 6) persons whom customs officers determine, with approval from a supervisor, should be excepted from this order based on the totality of the circumstances, including consideration of significant law enforcement, officer and public safety, humanitarian, and public health interests. DHS will consult with CDC regarding the standards for such exceptions to help ensure consistency with current CDC guidance and public health recommendations. 86 Fed. Register, 42828-41 (8/5/2021). https://www.govinfo.gov/content/pkg/FR-2021-08-05/pdf/2021-16856.pdf
On 2/3/2022, following a review, the CDC extended the order for an additional 60 days. https://www.lexisnexis.com/LegalNewsRoom/immigration/b/insidenews/posts/cdc-keeps-title-42-expulsions-in-place
• H-1B cap initial registration period commences on March 1. U.S. Citizenship and Immigration Services (USCIS) announced on 1/28/2022 that the initial registration period for the fiscal year 2023 H-1B cap will commence at noon Eastern on 3/1/2022 and run through noon Eastern on 3/18/0222. Prospective petitioners and representatives will have the opportunity to complete and submit their registrations through the USCIS H-1B registration system. If enough registrations are received by 3/18/2022, USCIS will randomly select registrations and then send select notifications through users’ myUSCIS online accounts. Those selected through this process should expect to be notified by 3/31/2022. News Release. https://www.uscis.gov/newsroom/alerts/fy-2023-h-1b-cap-initial-registration-period-opens-on-march-1
R. Mark Frey
Frey Law Office
rmfrey@cs.com
Indian Law
JUDICIAL LAW
• Public Law 280 distinguishes Minnesota state criminal jurisdiction from that addressed in the McGirt v. Oklahoma Supreme Court case. In a second postconviction petition following the appellant’s conviction for first-degree premeditated murder, the appellant argued that the state court lacked subject matter jurisdiction because he is an enrolled member of the Fond du Lac Band of Lake Superior Chippewa and the murder took place on the Fond du Lac Reservation. The Minnesota Supreme Court rejected the appellant’s argument that the recent ruling in McGirt v. Oklahoma, 140 S. Ct. 2452 (2020) applied, explaining that Public Law 280 granted Minnesota criminal jurisdiction within Indian country—exclusive of the Red Lake Reservation—a law that distinguishes criminal jurisdiction in Minnesota from that in Oklahoma. Martin v. State, __ N.W.2d __, 2022 WL 164345 (Minn. 2022).
• Tribal police officers acting under color of tribal law not subject to §1983 action in state court. An enrolled member of the White Earth Band of Ojibwe sued two White Earth Tribal Police Department Officers under 42 U.S.C. §1983 for damages stemming from a traffic stop that occurred on-reservation. The plaintiff argued that the cross-deputization of the officers created a doubt as to whether they were acting under color of state law, as required for the §1983 claim. The district court held that the officers’ actions in wearing tribal police uniforms, driving marked tribal police department vehicles, issuing a citation for violation of tribal law, and verbally informing the plaintiff that they were tribal officers and the citation was for tribal court was enough to establish they were acting under the color of tribal, not state, law. Howard v. Weidemann, No. 20-cv-1004, 2021 WL 6063630 (D. Minn. 12/22/2021).
Leah K. Jurss
Hogen Adams PLLC
ljurss@hogenadams.com
Intellectual Property
JUDICIAL LAW
• Patents: Allegations insufficient to change inventorship. Judge Wright recently granted defendant LiquidCool Solutions, Inc.’s motion to dismiss plaintiff Iceotope Group Limited’s claims that the inventorship on two United States patents owned by LiquidCool were incorrect and needed to be corrected. Iceotope sued LiquidCool in December 2020 alleging that the inventions claimed in LiquidCool’s patents were invented by Iceotope and described in Iceotope’s patents, patent applications, and whitepapers. Iceotope sought complete substitution of inventors on LiquidCool’s patents under 35 U.S.C. §256. Section 256 permits “complete substitution of inventors” where a patent erroneously names an individual as an inventor who is not an inventor (misjoinder) and erroneously omits an inventor (nonjoinder). To allege a claim under §256, a plaintiff must allege facts sufficient to plausibly show that (1) the erroneously omitted inventor conceived the invention claimed in the patent and (2) the named inventor on the patent did not conceive the invention. With respect to Iceotope as inventor, the court found Iceotope alleged the inventions claimed in the LiquidCool Patents were conceived by five Iceotope employees but failed to allege facts sufficient to support the conclusory allegation. With respect to LiquidCool as not the inventor, the court found Iceotope alleged that the inventions claimed in the LiquidCool Patents were actually invented by Iceotope, not by LiquidCool, but failed to allege facts sufficient to support the conclusory allegation. Iceotope’s claims for complete substitution failed. In the alternative, Iceotope sought to have its five employees added as joint inventors arguing that they were erroneously omitted. To be added as a joint inventor, the alleged joint inventor must demonstrate that his or her labors were conjoined with the efforts of the named inventors. The court found Iceotope’s complaint lacked any allegations related to collaboration. Accordingly, the court dismissed Iceotope’s complaint without prejudice. Iceotope Grp. Ltd. v. LiquidCool Sols., Inc., No. 20-cv-2644 (WMW/JFD), 2022 U.S. Dist. LEXIS 12426 (D. Minn. 1/24/2022).
• Trademark: Preliminary injunction denied. Judge Brasel recently denied Plaintiff WRB, Inc.’s (WRB) motion for preliminary injunction against DAMM, LLC and its owners. The dispute arose over a German drinking game involving striking nails with a hammer into a stump of wood. WRB trademarked its version under the name “Hammer-Schlagen.” WRB also registered the trade dress. WRB offers a service for use at Oktoberfest festivals while DAMM sells an at-home version of the game called “Minneschlagen.” WRB sued DAMM for trademark and trade dress infringement and moved for a preliminary injunction to enjoin DAMM and its owners from using the mark “Hammer-Schlagen” and the trade dress “Hammer-Schlagen” stump, cross-peen hammer, and nails, or similar marks that may confuse consumers under federal trademark infringement law.
To succeed on its claims, WRB had to show a property interest in the marks and a likelihood of consumer confusion. Because WRB registered marks for “Hammer-Schlagen” and the stump, cross-peen hammer, and nails, it established prima facie evidence that it owned protectable marks for each. DAMM, however, presented sufficient evidence that consumers use the marks generically to rebut the prima facie case. WRB’s contention that its mark is incontestable does not insulate it from potentially being cancelled if the mark is later found to be generic. The court also found that WRB failed to show DAMM’s use of the marks was likely to cause confusion in the marketplace. DAMM presented evidence sufficient to raise a question of fact about whether consumers used “Hammer-Schlagen” or the stump for a secondary meaning. WRB failed to show “Minneschlagen” and “Hammer-Schlagen” are confusingly similar. The Court found WRB and DAMM operate in distinct markets, a lack of evidence that DAMM intended to confuse consumers, and a lack of evidence of actual confusion. Because WRB failed to show a likelihood of success on the merits, it was not entitled to the rebuttable presumption of irreparable harm, which was amended into the Lanham Act in 2020. Accordingly, the court denied the motion for preliminary injunction. WRB, Inc. v. DAMM, LLC, No. 21-CV-1899 (NEB/TNL), 2022 U.S. Dist. LEXIS 7879 (D. Minn. 1/14/2022).
Joe Dubis
Merchant & Gould
jdubis@merchantgould.com
Real Property
JUDICIAL LAW
• Accord and satisfaction met when contractor cashed check marked “final payment,” thus barring contractor’s breach of contract claim against homeowner. Homeowners hired a contractor to perform various work on their property, paying 50% down. After receiving an invoice from the contractor for the completed work, the homeowners wrote a letter to the contractor outlining their issues with incomplete, unacceptable work and detailing water damage caused to the property during the course of the contractor’s work. The homeowners subtracted various amounts from the invoice, indicating a “final payment” amount in the letter and enclosing a check with a memo line containing the words “final payment.” The contractor did not object to the letter, cashed the check, and eventually sued the homeowners for the difference. The district court granted the homeowners’ summary judgment motion, finding that the contractor’s claims were barred by the doctrine of satisfaction of accord. The court of appeals affirmed, holding that the homeowners’ letter contained a conspicuous statement that the tendered check was full satisfaction of the debt. The appellate court also confirmed that accord and satisfaction is not a contract modification, but a new contract discharging all rights and duties under a previous contract, thus rejecting the contractor’s argument that the underlying contract required modifications be in a writing approved by both parties. Detailed by Design LLC v. Langer, A21-0879 (Minn. Ct. App. 1/10/2022) (unpublished).
• Interpretation of a common interest community’s restrictive covenants. Property owners within a common interest community (CIC) constructed a 1600-square-foot garage after the CIC rejected the property owner’s plans for the garage, asserting that the garage violated the CIC’s restrictive covenants. The relevant restrictive covenants of the CIC included (1) “[a]ll such outbuildings shall have a maximum size of 1200 square feet (as per Wabasha County zoning restriction),” and (2) that no construction can begin unless the property owner first submits building “plans to Declarants and obtain[s] prior written approval of the plans from Declarants.” The zoning restriction referred to in the first restrictive covenant had been repealed by the county. The first covenant was affirmed to be ambiguous because the provision could mean that no garage could be built on a property that exceeded 1200 square feet, or it could mean that the maximum size of an outbuilding could not exceed the applicable limit set by the county’s zoning ordinance.
The appellate court reversed the district court’s grant of summary judgment in favor of the property owner on whether they violated this covenant because the extrinsic evidence in the record did not “conclusively” demonstrate the drafter’s intent. The second restrictive covenant was unambiguous because the term “declarant” was expressly defined as the original developer and there was no language making the CIC the “declarant” for purposes of the restrictive covenants. And because the property owners obtained the original developer’s permission for the garage, they did not violate that covenant. Thus, the court of appeals remanded the case for additional proceedings to determine the proper interpretation of the first covenant as a matter for the fact finder. Windcliffe Ass’n, Inc. v. Breyfogle, A21-0700 (Minn. Ct. App. 1/18/2022) (unpublished).
Zachary Armstrong
DeWitt LLP
zpa@dewittllp.com
Tax Law
JUDICIAL LAW
• Tax court lacks jurisdiction to hear appeals if whistleblower’s petition is rejected. Mandy Mobley Li filed an application to receive a monetary whistleblower award for supplying the IRS with actionable tax violation information. The Whistleblower Office reviewed the application, and it concluded that Li’s allegations were “speculative and/or did not provide specific or credible information regarding tax underpayments or violations of internal revenue laws,” making Li ineligible for an award. The Whistleblower Office informed Li of its decision via a letter, which also informed Ms. Li that she could appeal the decision to the United States Tax Court. Ms. Li appealed to the tax court, which found that the Whistleblower Office adequately performed its evaluative function in reviewing Li’s application and did not abuse its discretion by rejecting her application for an award.
After the tax court denied Ms. Li’s motion for reconsideration, she appealed to the D.C. Circuit Court of Appeals. The D.C. Circuit did not reach the merits of the dispute; instead, noting that “federal courts have an independent obligation to ensure that they do not exceed the scope of their jurisdiction,” the court determined that the tax court lacked jurisdiction to hear Li’s appeal. The court explained that the whistleblower statute gives the tax court exclusive jurisdiction over only a “determination regarding an award” under certain statutory subsections. A threshold rejection of a whistleblower award, such as the rejection Ms. Li received, does not constitute such an award determination. In fact, the court continued, “there is no determination as to an award under [these] subsections… whatsoever…. [A]n award determination by the IRS arises only when the IRS proceeds with any administrative or judicial action… A threshold rejection… means the IRS is not proceeding with an action against the target taxpayer. Therefore, there is no award determination, negative or otherwise, and no jurisdiction for the Tax Court.” The reviewing court had jurisdiction only to correct the jurisdiction defect, and after doing so, the court dismissed the appeal for lack of subject matter jurisdiction and remanded to the tax court with instructions to do the same. Li v. Comm’r, 22 F.4th 1014, 1015 (D.C. Cir. 2022) (abrogating Cooper v. Comm’r, 135 T.C. 70 (2010) and Lacey v. Comm’r, 153 T.C. 146 (2019).
• Individual income tax: Filing status clarified and various Schedule C deductions denied. The taxpayer, an emergency room physician and would-be medical staffing entrepreneur, claimed numerous deductions for items such as a home office, commuting, continuing education, and other Schedule C expenses related to both his emergency medical practice and his staffing business. Nearly all the deductions were denied, though some were permitted in part. At trial, the Service raised a new issue and challenged the taxpayer’s filing status. Since the commissioner raised the filing status issue for the first time at trial (and it was not raised in the original deficiency determination), the commissioner had the burden of proof as to that matter. The court first addressed the filing status issue. For tax year 2008 the taxpayer claimed single filing status, and for tax year 2009 he claimed head of household filing status. The taxpayer was married in 2008, but he argued that since his wife was living abroad, he should be entitled to single status. The court disagreed. However, the taxpayer’s status as a head of household for 2009 was deemed appropriate. Although the taxpayer was married at the close of the taxable year, for purposes of the head of household filing status, a taxpayer is not considered married if that person’s spouse is a nonresident alien. The taxpayer testified that at the end of 2009 he was married but his wife, an alien, was not present in the United States. Because the commissioner provided no evidence to refute petitioner’s testimony, the taxpayer prevailed on that issue. The court then turned to the Schedule C deductions. The claimed deductions were largely denied for failure to substantiate, though the court noted that many of the expenses would have been disallowed even if substantiated. For example, the taxpayer claimed a deduction for cost of goods sold, but the taxpayer’s planned medical staffing business had not yet begun, so the expenses would have been denied since they were start-up expenses. The taxpayer’s claimed home office deduction was denied in full. Penalties were upheld. Elbasha v. Comm’r, 123 T.C.M. (CCH) 1001 (T.C. 2022).
• Court clarifies meaning of “unavailable” in mandatory disclosure rules. Petitioners CWI, Inc. and Camping World RV Sales, LLC filed property tax petitions alleging that the estimated market value of four subject properties for taxes payable in 2020 and 2021 exceeded their actual market value, and that the subject properties were unequally assessed. All four petitions describe the respective subject properties as income-producing.
Anoka County filed motions to dismiss the petitions, alleging petitioners failed to comply with the requirements of the mandatory disclosure rule relating to income-producing property. See Minn. Stat. §278.05, subd. 6 (2021). Petitioners contend their disclosures comply with requirements of the mandatory disclosure rule because they do not possess or maintain documents that are responsive to the mandatory disclosure rules.
A petitioner may avoid dismissal for failure to provide mandatory disclosures if the failure was due to the unavailability of the information at the time the information was due. Minn. Stat. §278.05, subd. 6(b)(1). The sole question in this case was whether petitioners complied with the requirements of the mandatory disclosure rule or may avoid dismissal because the failure to provide the information was due to its unavailability.
The parties disagreed over the meaning of the word “unavailability” for purposes of the mandatory disclosure rule. The county argued that the information required was not unavailable because petitioners are the sole tenants with respect to the subject properties and by necessity possess the information required to comply with the mandatory disclosure rule. Further, the county contends that because petitioners are the sole tenants, they cannot in good faith “lack information regarding the name of the tenant operating the subject properties, the start and end dates of their own leases or their base rents under those leases, as well as the expenses incurred by the subject properties under those leases.”
Petitioners argue, however, that the information is unavailable for two reasons. First, petitioners assert “they are only obliged to provide information they ‘actually possess,’” and because “they d[id] not ‘actually possess’ the information,” they did not violate the mandatory disclosure rule. Petitioners also argued that they did not have access to the information. That argument was supported by affidavits from the senior real estate asset manager for their parent entity, stating that petitioners do not “keep, maintain, or have access to the documents that are responsive to the mandatory disclosure requirements.” The affiant further states that petitioners “do not ‘keep any record of expenses directly associated with the operation of any real estate wherein the business operates as a tenant.’” Second, petitioners argue they are not required to create documents that are not kept in the ordinary course of business.
The court turned to the definition of unavailable, as well as the Supreme Court’s interpretation of unavailable in Wal-Mart Real Estate Bus. Tr. v. Cnty. of Anoka (931 N.W.2d 382, 389 (Minn. 2019)), where the court rejected a petitioner’s argument that information is unavailable “simply because a petitioner does not actually possess it.” “Rather, a petitioner must demonstrate a lack of access to the required information.”
Concerning petitioners’ obligation to create documents, the court interpreted the statute according to its plain meaning. Subdivision 6(b)(1) states that “[f]ailure to provide the information required in paragraph (a) shall result in the dismissal of the petition, unless (1) the failure to provide it was due to the unavailability of the information at the time the information was due.” The court points out that the plain language of subdivision 6 does not refer to “documents.” Rather, it requires a petitioner to provide information that it does have, regardless of the format. Accordingly, the court granted the county’s motions to dismiss for all subject properties. CWI, Inc v. Anoka Co., 2022 WL 287438, (MN Tax Court 1/27/2022).
• “Head of household” status requires qualifying children. This matter involves two motions: Petitioner Kidane Shulbe moved to have the presiding judge removed for cause, citing procedural bias. Respondent Commissioner of Revenue moved for summary judgment on the merits of Mr. Shulbe’s appeal of his individual income tax return for 2019, arguing that Mr. Shulbe is not entitled to claim: “(1) ‘head of household’ status; (2) the Minnesota Working Family Credit; or (3) the Minnesota Education Credit, as his two minor children were not ‘qualifying children’ under I.R.C. §32 (2018), and Minn. Stat. §§290.0671 and 290.0674 (2019).”
“A judge or judicial officer who has presided at a motion or other proceeding... may not be removed except upon an affirmative showing that the judge or judicial officer is disqualified under the Code of Judicial Conduct.” Minn. R. Civ. P. 63.03. “Although Rule 63.03 requires an ‘affirmative showing’ of bias,… case law advises that a ‘judge should not try a case, even in the absence of bias, if circumstances have arisen which give a bona fide appearance of bias.’” Olson v. Olson (392 N.W.2d 338, 341 (Minn. App. 1986)).
Mr. Shulbe alleged that the presiding judge was biased and prejudiced based on three factors. First, Mr. Shulbe observed that the “court permitted the Commissioner to schedule motions prior to the court-ordered trial-ready date, thereby depriving him of a merit hearing on certain claims.” But governing procedural rules allow parties to file motions to dismiss and motions for summary judgment prior to trial. See Minn R. Civ. P. 12.
Second, Mr. Shulbe alleged that the commissioner and the tax court colluded to have a prior hearing cancelled under the guise that the commissioner was experiencing technical difficulties. But Mr. Shulbe showed no evidence of collusion, and the court found that the commissioner’s failure to connect to the previously scheduled Zoom hearing did not support any allegation of bias. Finally, Mr. Shulbe alleged that the court was biased because it previously ruled against him. Prior adverse rulings, however, do not amount to bias. Olson, 392 N.W.2d at 341. Further, Mr. Shulbe had no “evidence rising to the level of an affirmative showing of bias, nor do the circumstances amount to ‘a bona fide appearance of bias.’” As such, the court denied Mr. Shulbe’s motion to remove.
Mr. Shulbe shared joint legal custody of his two minor children pursuant to a district court order for judgment. The custody order indicates that Mr. Shulbe’s parenting time is 10 nights per month, which totals to less than half the nights per year. Mr. Shulbe’s children reside with their mother for more than half the year.
On 8/11/2020, the commissioner sent a notice to Mr. Shulbe that changed his filing status from “head of household” to “single” for standard deduction purposes. The order further disallowed the working family credit and the education credit that Mr. Shulbe claimed.
The commissioner argued that Mr. Shulbe incorrectly filed as “head of household.” In 2019, the requirements to file as head of household included, “(1) that the taxpayer be unmarried (or considered unmarried) on the last day of the year; (2) that the taxpayer paid more than half of the cost of maintaining a home for the tax year; and (3) that a ‘qualifying child’ lived with the taxpayer for more than half of the tax year.” See Minn. Stat. §290.06, subd. 2c(c) (2019); see also I.R.C. §2(b) (2018) definition of “qualifying child.” Although Mr. Shulbe shared joint custody of his children with their mother, the children are not qualifying children for head of household status because the children reside with their mother for more than half the year.
Next, the commissioner argued that Mr. Shulbe was not allowed to claim either the Minnesota Working Family Credit or the Minnesota Education Credit because the child must be a qualifying child. The definition of qualifying child for the working family credit and the education credit is defined in I.R.C. §32(c)(3)(A) and also imposes the requirement that any such child must live with the parent for more than half of the year.
Mr. Shulbe did not dispute that his children lived with their mother for more than half the year. Accordingly, Mr. Shulbe did not qualify as a head of household filer for tax year 2019, nor did he qualify for the Minnesota Working Family Credit, or the Minnesota Education Credit, and the court granted the commissioner’s summary judgment motion. Shulbe v. Comm’r of Revenue, 2022 WL 164548, (MN Tax Court 1/13/2022).
Looking Ahead
• Circuit split on equitable tolling likely to be resolved. The Supreme Court heard argument in January to determine “[w]hether the 30-day time limit to file a petition for review in the Tax Court of a notice of determination from the commissioner of internal revenue in 26 U.S.C. §6330(d)(1) is a jurisdictional requirement or a claim-processing rule subject to equitable tolling.” Whether the statute bars a taxpayer who missed the deadline from asserting equitable tolling has split the circuits. In the case now at the Supreme Court, the 8th Circuit held that §6330(d)(1) is jurisdictional. Boechler, P.C. v. Comm’r, 967 F.3d 760, 764 (8th Cir. 2020), certiorari granted 142 S. Ct. 55 (2021). In so holding, the 8th Circuit agreed with a 2018 9th Circuit decision, Duggan v. Comm’r, 879 F.3d 1029 (9th Cir. 2018). The DC Circuit, in contrast, permitted equitable tolling in a case from 2019: Myers v. Comm’r, 928 F.3d 1025 (D.C. Cir. 2019).
Morgan Holcomb
Mitchell Hamline School of Law
morgan.holcomb@mitchellhamline.edu
Sheena Denny
Mitchell Hamline School of Law
sheena.denny@mitchellhamline.edu
Torts & Insurance
JUDICIAL LAW
• Legal malpractice; expert affidavit requirements apply to breach of fiduciary duty claims. Plaintiff claimed that defendant, his alleged attorney, breached his fiduciary duties by failing to disclose his participation in a lease agreement involving plaintiff’s home and place of business. The district court dismissed plaintiff’s breach-of-fiduciary-duty claim on summary judgment, finding plaintiff failed to show that defendant took unfair advantage of their professional relationship or that the terms of their dealings were unfair. The court of appeals affirmed on different grounds, concluding that summary judgment was appropriate because plaintiff did not provide the expert-disclosure affidavits required by section 544.42.
The Minnesota Supreme Court reversed and remanded. The Court held that section 544.42, which requires that plaintiffs provide two expert-disclosure affidavits “in an action against a professional alleging negligence or malpractice in rendering a professional service where expert testimony is to be used by a party to establish a prima facie case,” “can apply to breach-of-fiduciary-duty claims against attorneys if the statute’s other requirements are met.” The Court interpreted the statute’s phrase involving actions for “negligence or malpractice” against an attorney to encompass claims for breach of fiduciary duty in addition to claims for negligence and breach of contract. The Court went on to state: “Generally, the ‘duty and breach elements of malpractice… must be established by expert testimony… [but] [a]n exception applies… ‘where the conduct can be evaluated adequately by a jury in the absence of expert testimony.’” Because the district court did not reach this issue in the first instance, the case was remanded to the court of appeals for further consideration. Mittelstaedt v. Henney, A20-0573 (Minn. 2/2/2022). https://mn.gov/law-library-stat/archive/supct/2022/OPA200573-020222.pdf
Jeff Mulder
Bassford Remele
jmulder@bassford.com