Notes & Trends – July 2023

Administrative Law

JUDICIAL LAW

• Judicial review of validity of rule; timeliness. The Minnesota Court of Appeals held that an administrative law judge (ALJ) erred in determining that an email from the Minnesota Gambling Control Board to electronic pulltab vendors was not an unpromulgated rule. The court also held that the challenge to the ALJ order was timely, despite coming more than two years afterward.

In 2012, the Legislature charged the board with authority to “adopt rules it deems necessary to ensure the integrity of electronic pull-tab devices” and examine electronic pulltabs before authorizing their lease or sale in Minnesota. In 2019, the board emailed three vendors to inform them that, going forward, the board would authorize what is known as “open-all” functionality for pull-tab devices, reversing previous board policy. The Shakopee Mdewakanton Sioux Community petitioned for an ALJ to determine whether the email was an unadopted rule, under Minnesota Statutes, section 14.381. On 5/21/2020, the ALJ dismissed the challenge to the email, finding it was not an unpromulgated rule. On 7/1/2022, the Shakopee Mdewakanton Sioux Community filed a section 14.44 petition for the court of appeals to determine whether the email pronouncement constituted a valid rule.

The court first addressed an issue of first impression: whether a time limit applies to an action under section 14.44 petitioning the court of appeals to determine whether a rule is valid, when the action challenges an ALJ order issued under section 14.381. The court determined that, because it has original jurisdiction over section 14.44 petitions, these petitions are not subject to any time limits, such as the usual 30-day or 60-day appeal period. As a result, the community’s petition was not time-barred.

The court then addressed the merits. It determined that the email was an unpromulgated rule because it announced a general policy “allowing for future approval of electronic-pull tabs with open-all functionality.” The court concluded that the board cannot use the invalid unpromulgated rule as the basis for any agency action. In re Shakopee Mdewakanton Sioux Community, 988 N.W.2d 135 (Minn. Ct. App. 2023).

Jason Marisam
Mitchell Hamline School of Law
jason.marisam@mitchellhamline.edu

Criminal Law

JUDICIAL LAW

• Riot: Person driving with passengers hanging from car, in a reckless manner, and close to onlookers is considered armed with a dangerous weapon. Respondent was charged with second-degree riot (armed with a dangerous weapon) for organizing and participating in intersection takeovers where participants spun cars in “donuts” close to onlookers while passengers hung from open windows of the cars. The district court granted respondent’s motion to dismiss for lack of probable cause, finding that the cars were not dangerous weapons.

The court of appeals reverses, finding that although the use of the cars may not have intentionally or actually caused serious injury, a jury could reasonably find that the cars were used in a manner “likely to” cause death or great bodily harm. As relevant here, a person is guilty of second-degree riot if he gathers with at least two others and disturbs the peace by intentional conduct and “is armed with a dangerous weapon or knows that any other participant is armed with a dangerous weapon.” Minn. Stat. §609.71, subd. 2. The court of appeals finds these circumstances left a fact question for the jury on the dangerous weapon element.

A “dangerous weapon” is any “device or instrumentality that, in the manner it is used… is calculated or likely to produce death or great bodily harm.” Minn. Stat. §609.02, subd. 6. The district court focused on “what was intended and what actually occurred” (the “calculated to” aspect of the dangerous weapon definition), “but did not address whether a jury might determine that the manner in which the cars were being used would likely kill or greatly injure” (the “likely to” portion of the dangerous weapon definition). Abdul-Salam, 988 N.W.2d at 498. The state presented evidence of the cars being driven in a reckless manner, with passengers hanging from and on top of the cars, and in close proximity to onlookers, as well as video evidence of an onlooker actually being struck by a car. This evidence is sufficient to present to the jury the question of whether the cars were dangerous weapons. State v. Abdus-Salam, A22-1551, A22-1552, 988 N.W.2d 493 (Minn. Ct. App. 4/3/2023).

• Probation revocation: District court is not required to follow joint recommendation to reinstate probation. Appellant pleaded guilty to introducing a controlled substance into a correctional facility. The district court granted a downward dispositional departure, staying execution of the presumptive 24-month prison sentence for five years. Appellant failed to abide by his probationary conditions when he failed to complete a long-term chemical dependency treatment program, tested positive for drugs and alcohol, and was charged with DWI and drug possession. Appellant admitted to three violations at his probation violation hearing. The state, probation department, and appellant jointly recommended continued probation and a long-term treatment program. The district court, however, revoked appellant’s probation and executed his prison sentence.

Under the Austin factors, before probation is revoked, the district court must (1) “designate the specific condition or conditions that were violated,” (2) “find that the violation was intentional or inexcusable,” and (3) “find that [the] need for confinement outweighs the policies favoring probation.” State v. Austin, 295 N.W.2d 246, 250 (Minn. 1980). Appellant disputes the district court’s conclusion as to the third Austin factor. This factor requires that the district court balance the state’s interest in ensuring rehabilitation and public safety against the probationer’s interest in freedom. Revocation and imprisonment should be ordered only if, based on the original offense and the offender’s intervening conduct, (1) “confinement is necessary to protect the public from further criminal activity by the offender,” (2) “the offender is in need of correctional treatment which can most effectively be provided if he is confined,” or (3) “it would unduly depreciate the seriousness of the violation if probation were not revoked.” State v. Modtland, 695 N.W.2d 602, 607 (Minn. 2005). Here, the district court found the second and third factors supported revocation and imprisonment.

First, the Minnesota Court of Appeals notes that the district court is not required to adopt the probation department’s recommendation as to whether probation should be revoked. Nor is the district court bound by agreements of the parties. The court here did not err simply because it did not accept the joint recommendation in this case.

Second, the court of appeals explains that the district court determined that revocation and imprisonment were appropriate because appellant needed treatment in a confined setting, as opposed to the same treatment program he failed to complete previously, and that reinstating probation would depreciate the seriousness of appellant’s violations, because he was previously granted a departure over the state’s objection and his violations were serious in nature and undercut the reasoning for the departure. The district court based its revocation decision on proper grounds and provided a detailed explanation of its reasoning. The district court’s revocation order is affirmed. State v. Fortner, A22-1459, 989 N.W.2d 368 (Minn. Ct. App. 4/10/2023).

• Criminal sexual conduct: Guilty verdicts for completed and attempted third-degree criminal sexual conduct are not legally inconsistent. After a jury trial, appellant was found guilty of completed and attempted third-degree criminal sexual conduct. He was convicted of completed third-degree criminal sexual conduct, which was affirmed on direct appeal. In his postconviction petition, he argued the sexual assault nurse and a BCA scientist testified falsely at trial, the prosecutor engaged in misconduct, and that the guilty verdicts were legally inconsistent. The postconviction court declined to hold an evidentiary hearing and denied appellant’s petition.

The court of appeals first concludes that the postconviction court erred in finding appellant’s petition was time-barred. However, the court next rejects appellant’s argument that he received ineffective assistance of counsel at trial due to his attorney’s failure to object to statements that amounted to prosecutorial misconduct and failed to raise this argument on direct appeal. Even assuming the prosecutor’s remarks were error, the court decides there is no reasonable likelihood the jury’s verdicts would have been different absent the remarks.

The court also rejects appellant’s second ineffective assistance argument based on his attorney’s failure to raise the issue of legally inconsistent guilty verdicts. Verdicts are legally inconsistent only if proof of the elements of one offense negates an element of the other. Appellant argues that case law adds an element to attempted third-degree criminal sexual conduct: that the underlying substantive crime was not completed. Obviously, proof of this element would negate the completed criminal sexual conduct offense. However, the case law appellant relies on interpreted an earlier version of the attempt statute, which explicitly required a failure to accomplish the attempted offense. This requirement was subsequently removed. There are no other elements of either the attempted or completed third-degree criminal sexual conduct offenses that require proof that negate any elements of the other offense. Therefore, the guilty verdicts were not legally inconsistent and appellant’s trial counsel did not render ineffective assistance by failing to raise the issue.

As to appellant’s false testimony claim, the court finds appellant failed to meet the requirements of the Larrison test. Gilbert v. State, 982 N.W.2d 763, 770 (Minn. Ct. App. 2022), rev. granted (Minn. 2/22/2023). Appellant failed to show the testimony was false or that the jury would have reached a different conclusion without the false testimony. The district court’s denial of appellant’s petition is affirmed. Tichich v. State, A22-1063, 989 N.W.2d 692 (Minn. Ct. App. 4/17/2023).

• Murder: Police officer may be convicted of second-degree unintentional felony murder for causing another’s death when using unreasonable force. Appellant was on-duty as a Minneapolis police officer when he arrested the victim for attempting to use counterfeit money at a local business. During the arrest, the victim resisted, necessitating the use of force by a number of police officers. Eventually, the victim was placed in a prone position on the ground and was held in place by three officers, including appellant, who placed his knees on the victim’s back and neck. The victim eventually became unresponsive and was later pronounced dead at the hospital. The state’s medical expert opined that the victim died due to a sudden loss of heart and respiratory functions during the process of law enforcement restraint.

Due to substantial pretrial publicity, the defense raised concerns of safety and a tainted jury pool, but the district court denied appellant’s motions for a change of venue, jury sequestration, continuances, and additional peremptory challenges. The jury ultimately found appellant guilty of third-degree murder and second-degree manslaughter, and the court denied appellant’s motion for a new trial. The court convicted appellant of second-degree unintentional murder based on the underlying offense of third-degree assault and imposed an upward durational departure of 270 months’ imprisonment.

First, the court of appeals finds the district court did not abuse its discretion by denying appellant’s change of venue, continuance, and sequestration motions. The court concludes that appellant failed to show the jury was actually prejudiced by the pretrial publicity and that the publicity was not so corrupting as to create a presumption of prejudice. Next, the court determines that the district court did not abuse its discretion by failing to conduct a Schwartz hearing to investigate alleged juror misconduct, as appellant had the opportunity to thoroughly question all jurors and was granted sufficient peremptory challenges. Third, the court denies appellant’s challenges to the jury instructions, holding that the district court’s instructions were not plainly erroneous and any error was harmless. Fourth, the court concludes the state did not present cumulative evidence on the use of force.

Fifth, the court finds the district court did not abuse its discretion by excluding a presentation slide from Minneapolis Police Department training materials for lack of foundation, and, sixth, that the exclusion of the out-of-court statements of the passenger in the victim’s car prior to the incident was proper under the hearsay rules. Seventh, the court affirms the district court’s denial of appellant’s motion for a new trial based on prosecutorial misconduct, finding any alleged misconduct to be harmless beyond a reasonable doubt. Eighth, the court finds appellant is not entitled to a new trial for the district court’s failure to have sidebar conferences transcribed, finding no authority for granting a new trial on these grounds. Ninth, the court holds that the cumulative effect of the district court’s alleged errors did not deprive appellant of a fair trial. Tenth, the court affirms the upward durational sentencing departure, finding support in the record for the aggravating factors cited by the district court (particular cruelty and abuse of a position of trust and authority). The court also declines to address appellant’s challenge to the third-degree murder conviction, as he was not actually convicted of or sentenced for this offense.

Finally, the court rejects appellant’s argument that a police officer cannot be convicted of felony murder based on assault. The court concludes first that second-degree felony unintentional murder based on third-degree assault does not create a strict liability offense, because, under statutory definitions and case law, assault-harm requires intent to commit the act of applying force to the victim’s body. The court also holds that a police officer can be convicted of second-degree unintentional felony murder based on using unreasonable force constituting third-degree assault. Police officers are authorized to use only reasonable force to effectuate a lawful arrest. When the force used is unreasonable, the officer can be liable for assault. If that assault results in death, the officer may be liable for second-degree unintentional felony murder. Ultimately, the court finds that the state proved every element of second-degree felony murder beyond a reasonable doubt. Appellant’s conviction and sentence are affirmed. State v. Chauvin, A21-1228, 989 N.W.2d 1 (Minn. Ct. App. 4/17/2023).

• Driver’s license revocation/suspension: Suspension for an out-of-state conviction may not be overturned because it was based on illegally obtained evidence. Appellant had a Minnesota driver’s license when he was convicted of a DWI offense in Wisconsin based on a blood test showing an alcohol concentration over 0.08. The arresting officer did not have a warrant and told appellant there would be additional penalties if he refused to submit to the blood test. As a result of the Wisconsin conviction, his Minnesota license was suspended.

The Commissioner of Public Safety may suspend a driver’s license if the driver committed an offense in another state that, if committed in Minnesota, would be grounds for suspension. One reason a license may be suspended in Minnesota is if the driver is convicted of driving a motor vehicle with an alcohol concentration of 0.08 or more. Here, the district court found that appellant was convicted of an offense that prohibits a person from driving a motor vehicle with a blood alcohol concentration of 0.08 or more. The elements of this Wisconsin offense are elements that, if proved in Minnesota, would justify a conviction for violating Minn. Stat. §169A.20, subd. 1(5) (operating a motor vehicle with an alcohol concentration of 0.08 or more). Thus, had this offense been committed in Minnesota, it would be grounds for suspension of appellant’s driver’s license. However, appellant argues that the Wisconsin conviction cannot be used to suspend his Minnesota license because his 4th Amendment and due process rights were violated in the Wisconsin case.

First, the court of appeals notes that a civil proceeding regarding driving privileges “is not concerned with ‘punishment or incarceration,’ but rather, with ‘an exercise of the police power for the protection of the public.’” Underhill, 989 N.W.2d at 917 (quoting Recker v. State, Dep. Pub. Safety, 375 N.W.2d 554, 557 (Minn. Ct. App. 1985)). Appellant does not have the same rights in this civil proceeding as he would in a criminal proceeding and is not entitled to raise the alleged constitutional violation in the Wisconsin case to challenge his suspension in Minnesota.

Next, the court also rejects appellant’s due process argument. Without deciding whether the test should be applied in these circumstances, the court finds that appellant failed to satisfy the Johnson-Morehouse test. Under this test, “[a] license revocation violates due process when: (1) the person whose license was revoked submitted to a breath, blood, or urine test; (2) the person prejudicially relied on the implied consent advisory in deciding to undergo the testing; and (3) the implied consent advisory did not accurately inform the person of the legal consequences of refusing to submit to the testing.” Johnson v. Comm’r Pub. Safety, 911 N.W.2d 506, 508-09 (Minn. 2018); see also Morehouse v. Comm’r Pub. Safety, 911 N.W.2d 503 (Minn. 2018). The court finds that appellant failed to establish the third requirement of this test. An officer may not inform a driver that refusal to submit to a warrantless blood test will result in criminal penalties. The officer did not tell appellant that he would be punished criminally, only that he could face some unspecified additional consequences, and an unclear or incomplete advisory does not violate due process. Appellant’s suspension is affirmed. Underhill v. Comm’r Pub. Safety, A22-1108, 989 N.W.2d 909 (Minn. Ct. App. 4/24/2023).

• Driver’s license revocation/suspension: Advisory is insufficient to sustain revocation if it is inaccurate, misleading, or confusing. Appellant’s driving privileges were revoked after he was arrested for DWI and submitted to a blood test, conducted pursuant to a search warrant, which revealed the presence of methadone. Prior to the test, the arresting officer told appellant, “I applied for a search warrant for a blood draw, and refusal to take a test is a crime.” The district court sustained the revocation of appellant’s driving privileges.

Under Minn. Stat. §171.177, subd. 1, “[a]t the time a blood or urine test is directed pursuant to a search warrant… the person must be informed that refusal to submit to a blood or urine test is a crime.” Case law makes “clear that a license revocation cannot be sustained based on the results of a chemical test if the driver was not provided an advisory regarding the criminal consequences of failing to submit to a test.” Nash, 989 N.W.2d at 708-09. As to advisories that are allegedly inadequate, the court of appeals applies the McCormick rule that whether an implied consent advisory complies with statutory requirements “depends on whether the given advisory, considered in its context as a whole, is misleading or confusing.” McCormick v. Comm’r Pub. Safety, 945 N.W.2d 55, 60 (Minn. Ct. App. 2020).

Under this rule, the court finds the advisory in this case was inadequate. Minn. Stat. §171.177, subd. 2, provides that “[a]ction may be taken against a person who refuses to take a blood test only if a urine test was offered…” Here, the officer never offered appellant a urine test, so appellant could not have been prosecuted for test refusal, even if he had refused the blood test. Thus, the officer’s advisory was an inaccurate statement of the law, was misleading, and cannot be the basis for the revocation of appellant’s driving privileges. Nash v. Comm’r Pub. Safety, A22-1238, 989 N.W.2d 705 (Minn. Ct. App. 5/1/2023).

• 4th Amendment: Automobile exception applies to warrantless search of a purse in a car where there is probable cause to believe drugs were in the car. Appellant was the sole passenger in a car driving on I-94 when the car was pulled over due to lane change violations. The officer smelled marijuana in the car and asked appellant and the driver to step out. Appellant took her purse out of the car with her but placed it on the trunk of the car at the officer’s direction. The officer put the purse back inside the car and searched it, finding Clonazepam, for which appellant did not have a prescription. Appellant was charged with fifth-degree possession of a controlled substances and moved to suppress evidence obtained from the purse search. The district court denied her motion and she was found guilty after a stipulated facts trial. The court of appeals affirmed.

Under the automobile exception to the 4th Amendment’s warrant requirement, police may “search a car without a warrant, including closed containers in that car, if there is probable cause to believe the search will result in a discovery of evidence or contraband.” State v. Lester, 874 N.W.2d 768, 771 (Minn. 2016). The exception does not permit police to search persons inside the car without a warrant.

In the context of a premises warrant, the Supreme Court previously held that the search of a purse carried by the defendant to the premises during the execution of the premises warrant was not within the scope of the warrant and constituted a search of the defendant’s person. State v. Wynne, 552 N.W.2d 218, 220 (Minn. 1996). The Court declines to extend this holding, finding homes and automobiles distinct. There is much less expectation of privacy in an automobile and the mobility of cars increases the risk of the loss of evidence or contraband.

The warrantless search of appellant’s purse was constitutional under the automobile exception, because the officer had probable cause to believe contraband or evidence of a crime was in the car when he smelled marijuana in the car and because the purse was a container inside the car at the time, probable cause arose. State v. Barrow, A21-0776, 989 N.W.2d 682 (Minn. 5/3/2023).

• MIERA: Petitioner fails to establish “any evidence of factual innocence” if claim of innocence turns on a legal issue. Appellant was originally convicted of second-degree manslaughter following the shooting death of one of her former boyfriends by another former boyfriend who appellant knew had conflict with the victim yet asked him to bring her to the victim’s home on the day of the shooting. The Supreme Court reversed her conviction, finding a defendant cannot be negligent unless the defendant has a duty that he or she breached and the state failed to prove appellant owed a duty to control the shooter or a duty to protect the victim. The district court and Minnesota Court of Appeals agreed that appellant was “exonerated” under the Minnesota Incarceration and Exoneration Remedies Act (MIERA) (Minn. Stat. §§611.362-611.368).

The MIERA provides a multi-step process for receiving compensation if a formerly convicted person is exonerated and meets specified criteria. The first requirement, at issue here, is that the petitioner obtain a district court order “under section 590.11 determining that the person is entitled to compensation based on exoneration.” Minn. Stat. §611.362, subd. 1. In relevant part, a person is exonerated if a court reverses their “conviction on grounds consistent with innocence,” which means the court reversed their conviction “and there is any evidence of factual innocence…”. Id. at subd. 1(c)(2).

The Court applies its interpretation of the phrase “any evidence of factual evidence” in Kingbird v. State, 973 N.W.2d 633 (Minn. 2022), and draws a distinction between actual and factual innocence. Here, as in Kingbird, appellant’s “claim of innocence is not restricted to or based on facts, and instead turns on an issue of legal significance—the meaning of the statutory term ‘culpable negligence’… and the requirement that the State prove that she had a ‘legal duty’ that made her criminally responsible for the criminal action of a third party.” Back, 2023 WL 3606283 at *4. Her conviction was not overturned because the facts changed. Without a showing of factual evidence, appellant was not “exonerated” under the MIERA and is not entitled to an order declaring she is eligible for compensation. Back v. State, A20-1098, __ N.W.2d __, 2023 WL 3606283 (Minn. 5/24/2023).

Samantha Foertsch
Bruno Law PLLC
samantha@brunolaw.com

Stephen Foertsch
Bruno Law PLLC
stephen@brunolaw.com

Employment& Labor Law

JUDICIAL LAW

• Age discrimination; constructive discharge rejected. A claim of constructive discharge due to age discrimination by a 62-year-old employee who unsuccessfully sought promotions (which were given to younger candidates who received better scores during the interview process) was rejected. The 8th Circuit Court of Appeals, affirming a lower court ruling, held that the claimant, who retired about a year after he was passed over for the promotions, could not pursue the case because the company’s policy expressly allowed hiring managers to base promotional decisions solely on the interview process and other considerations were not required to be taken into account. Because the claimant failed to show any “pretext or pattern” of age discrimination, the case was properly dismissed by the lower court on summary judgment. Bonomo v. The Boeing Company, 63 F.4th 736 (8th Cir. 3/29/2023).

• Equal Pay Act violation claimed; base salary differential insufficient. A $75,000 base salary differential between a woman and a man who were in identically titled positions did not create a viable Equal Pay Act claim. The 8th Circuit, affirming a lower court decision, pointed to the broader experience that the man had compared to the woman, who also received overtime compensation and had a more generous incentive compensation plan than her male colleague. Because the company had legitimate, non-discriminatory justifications for the disparity in base salary, the case was properly dismissed. O’Reilly v. Daugherty Systems, Inc., 63 F.4th 1193 (8th Cir. 3/29/2023).

• Disability pension benefits; no abuse of discretion. Trustees of a pension fund did not abuse their discretion in violation of the Employee Retirement Income Security Act (ERISA) when denying a claim for disability pension benefits. The board did not abuse its discretion in rejecting the claim, even if a conflict of interest was alleged. Ruessler v. Boilermaker-Blacksmith National Pension Trust Board of Trustees, 64 F.4th 951 (8th Cir. 4/3/2023).

• Negligent hiring; discriminatory immunity bars claim. Discriminatory immunity under Minn. Stat. §466.03, subd. 6, barred a negligent hiring claim against a charter school assistant regarding sexual abuse of a student by a school employee. The Minnesota Court of Appeals, affirming a ruling of the Hennepin County District Court, held that hiring decisions constitute the type of “balancing [of] policy objectives” that involve the immunity principle. Doe v. Best Academy, 2023 WL 2961825 (Minn. Ct. App. 4/17/2023) (unpublished).

• St. Cloud police; union certification allowed. The withdrawal by the Bureau of Mediation Services (BMS) of its earlier certification of a union as the exclusive bargaining representative for all supervisory employees of the St. Cloud Police Department support division was overturned. The Minnesota Court of Appeals reversed and remanded the decision because the agency did not consider whether the employees were supervisory personnel, which rendered its decision to withdraw the union’s certification lacking in substantial evidentiary support. Law Enforcement Labor Services, Inc. v. City of St. Cloud, 2023 WL 2769070 (Minn. Ct. App. 4/3/2023) (unpublished).

• Unemployment compensation; benefits denied due to bad behavior. An employee who made vulgar and inappropriate social media posts in violation of her employer’s policies was denied unemployment benefits. The court of appeals upheld an administrative determination rejecting the employee’s claim that her misconduct was due to chemical dependency on grounds that while she had “a few drinks,” she was not intoxicated when she did the postings. Langer v. Mayo Foundation for Medical Education and Research, 2023 WL 2961751 (Minn. Ct. App. 4/17/2023) (unpublished).

• Unemployment benefits; covid noncompliance. Yet another employee lost an unemployment compensation claim due to noncompliance with her company’s covid vaccination policies. The court of appeals followed prior rulings holding that unjustified noncompliance constitutes disqualifying “misconduct.” Royer v. Inventiv Health, Inc., 2023 WL 3047602 (Minn. Ct. App. 4/24/2023) (unpublished).

• Unemployment compensation; not actively seeking work. An employee who quit her job was barred from receiving unemployment benefits because she was not available for or actively seeking other employment within the scope of her limitations after she quit her job. The appellate court upheld a determination of ineligibility under the “actively seeking” clause of Minn. Stat. §268.085, subd. 1(4)(5). In re Vue, 2023 WL 3047979 (Minn. Ct. App. 4/24/2023) (unpublished).

Marshall H. Tanick
Meyer, Njus & Tanick
mtanick@meyernjus.com

Environmental Law

JUDICIAL LAW

• Supreme Court significantly contracts scope of Clean Water Act jurisdiction over wetlands. On May 25, 2023, the Supreme Court of the United States issued a decision in Sackett v. Environmental Protection Agency, significantly contracting the jurisdictional reach of the federal Clean Water Act (CWA) over wetlands. The majority decision, penned by Justice Alito and joined by Justices Roberts, Thomas, Gorsuch, and Barrett, is the most consequential CWA decision in decades, one likely to exclude millions of acres of formerly jurisdictional wetlands from federal regulation.

Since the mid-1970s, the federal agencies charged with implementing the Act, the Environmental Protection Agency (EPA) and the Army Corps of Engineers, have held that the statutory term “Waters of the United States” (WOTUS), which defines the jurisdictional reach of the CWA, extended not simply to traditional navigable waters (TNWs) such as lakes, rivers, and oceans but also to wetlands “adjacent” to such waters, and that “adjacent” wetlands included both those that were contiguous to TNWs as well as those that were simply nearby. The agencies’ most recent regulatory definition of WOTUS, for example, encompasses non-contiguous wetlands if they demonstrate a “significant nexus” to a TNW, a determination the agencies have made on a case-by-case basis by considering a wide range of hydrological and ecological factors. Land developers and other regulated parties seeking to fill or impact wetlands have typically encountered this process when seeking a “jurisdictional determination” from the Corps as to whether a federal dredge-and-fill permit is required under Section 404 of the CWA. Critics of the agencies’ “significant nexus” test argued that it was an overly broad reading of the statute and an unwarranted interference with states’ traditional authority to regulate the use of land and water.

In Sackett, the Supreme Court agreed. Based on a textual analysis of the key statutes and a review of the Court’s prior case law on CWA jurisdiction—including United States v. Riverside Bayview Homes, Inc., 474 U. S. 121 (1985), Solid Waste Agency of Northern Cook Cty. v. Army Corps of Engineers, 531 U. S. 159 (2001) (SWANCC), and Rapanos v. United States, 547 U. S. 715 (2006)—the Court held that the CWA’s use of the term “waters” in “waters of the United States” refers only to (1) “geographical features that are described in ordinary parlance as ‘streams, oceans, rivers, and lakes’” and (2) adjacent wetlands that are “indistinguishable from those bodies of water due to a continuous surface connection.” To assert jurisdiction over an “adjacent” wetland under the CWA, the Court held, a party must demonstrate two circumstances:

1. the adjacent body of water constitutes a “water of the United States” (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and

2. the wetland has a “continuous surface connection with that water, making it difficult to determine where the water ends and the wetland begins.”

The Court rejected calls by concurring Justices Kavanaugh, Kagan, Sotomayor, and Jackson for a traditional, broader reading of “adjacent” to include wetlands “nearby” TNWs, not simply those that are contiguous to TNWs. Notably, all nine justices either wrote or signed on to opinions that rejected the “significant nexus” test, and all nine agreed that the Sacketts’ wetlands were not jurisdictional.

The decision has immediate ramifications for regulated parties and prompts many questions. For starters, the case effectively invalidates much of EPA’s and the Corps’ new definition of WOTUS, which was published earlier this year and relied heavily on the “significant nexus” test. Now, only wetlands with a “continuous surface connection” to a TNW will be subject to federal jurisdiction. So, for example, if even a narrow strip of reliably dry land exists between a wetland and a TNW, that may be sufficient under Sackett to remove the wetland from federal jurisdiction, notwithstanding any “significant nexus” between the wetland and TNW. The Sackett decision will also force the agencies to revise their longstanding guidance on making jurisdictional determinations as well as the Corps’ Wetlands Delineation Manual. The decision will also have an impact on EPA’s approach to enforcing wetland-related violations of the CWA.

In the meantime, the Court’s decision raises significant practical questions, including but not limited to:

How will the Corps handle pending or past jurisdictional determinations that were based on the now invalidated “significant nexus” test?
How will the EPA handle pending enforcement actions where the alleged violations were premised on the “significant nexus” test?
Under the Court’s new “continuous connection” test, how difficult does it have to be to discern the boundary between a water and a wetland for the wetland to be covered by CWA?
How does the “continuous connection” test apply to the many kinds of wetlands that typically do not have a surface water connection to a covered water year-round—for example, wetlands and waters that are connected for much of the year but not in the summer when they dry up to some extent?
How does the test operate in areas where storms, floods, and erosion frequently shift or breach natural river berms?
Can a continuous surface connection be established by a ditch, swale, pipe, or culvert?

The agencies are likely to publish new guidance on how they will address these and other questions, which undoubtedly will be tested in the lower courts as well in the months and years ahead.

Importantly, because the Court’s decision will remove many wetlands from federal jurisdiction, state wetland-protection laws will play a larger role in determining which regulatory requirements will apply to land developers and others seeking to impact wetlands. These requirements vary significantly from state to state. For example, Minnesota has a well-developed regulatory program governing impacts to wetlands, including the state’s Wetland Conservation Act and the Minnesota Department of Natural Resources’ Public Waters Work Permit program, which together protect a broader range of wetlands than were covered even under EPA’s and the Corps’ “significant nexus” test. For developers in Minnesota, then, the Sackett decision may not change the scope of regulated wetlands, although it may remove the need to obtain an often-costly federal Section 404 wetland permit and the attendant Section 401 state certification. Conversely, in other states that have minimal state wetland regulation, the Sackett decision could substantially reduce the regulatory steps required to impact wetlands. Sackett v. Environmental Protection Agency, 598 U.S. ___ (2023).

LEGISLATIVE ACTION

• Governor signs environmental budget bill banning PFAS. On 5/24/2023, Minnesota Gov. Tim Walz signed the One Minnesota Budget into law. In doing so, Gov. Walz signed 12 separate budget bills into law, which included the $1.7 billion Environment, Natural Resources, Climate, and Energy Omnibus Bill.

As the name implies, the omnibus bill provides future budgets and funding for numerous initiatives and programs across multiple departments and agencies within the state; all with the aim of prioritizing the protection and sustainability of Minnesota’s environment, natural resources, and recreation. The bill appropriates hundreds of millions of dollars for the Minnesota Department of Natural Resources, the Minnesota Pollution Control Agency, the Board of Water and Soil Resources, the Metropolitan Council, the Conservation Corps, and other organizations.

The bill also invests hundreds of millions of dollars in specific projects to boost clean energy and decarbonization, such as investments and incentives for the installment of solar panels on schools and public buildings as well as rebates for the installation of electric heat pumps in homes and the purchase of electric vehicles. The bill also provides over $100 million for building, repairing, and maintaining the state’s parks, trails, boat ramps, and fish hatcheries, as well as planting trees, restoring wetlands, and combating the spread of aquatic invasive species and chronic wasting disease in the Whitetail deer population. The bill further invests $100 million to prepare for climate change and extreme weather events through climate resiliency grants for communities to upgrade aging infrastructure.

The omnibus bill also establishes the most far-reaching per- and poly-fluoroalkyl substances (PFAS) ban across the country. PFAS substances are a family of man-made chemicals that have historically been used in the production of nonstick and waterproof manufactured goods and are very resistant to degradation, often persisting in the environment for decades, and are linked to cancer, thyroid disease, and reproductive problems in humans.

Beginning 1/1/2025, about a dozen products will be outright prohibited from sale within the state if those products contain intentionally added PFAS. Those enumerated products are: 1) carpets and rugs; 2) cleaning products; 3) cookware; 4) cosmetics; 5) dental floss; 6) fabric treatments; 7) juvenile products; 8) menstruation products; 9) textile furnishings; 10) ski wax; and 11) upholstered furniture.

Furthermore, beginning 1/1/2026, manufacturers of products sold within the state that contain intentionally added PFAS must notify the state of those products, as well as declaring the purpose for which PFAS is used in the product and the amount of PFAS within the product.

And finally, beginning 1/1/2032, all products that contain intentionally added PFAS will be prohibited from sale within Minnesota, unless the product has been deemed exempt because it is essential for the health, safety, or functioning of society, and there are no reasonable alternatives.

Jeremy P. Greenhouse
Cody Bauer
Vanessa Johnson
Fredrikson & Byron P.A.

Jake Beckstrom
Vermont Law School, 2015

Erik Ordahl
Barna, Guzy & Steffen

Federal Practice

JUDICIAL LAW

• Fed. R. Civ. P. 50; no post-trial motion required for “purely legal issues.” In March 2023, this column noted the Supreme Court’s grant of certiorari in a case that raised the question of whether a post-trial motion under Fed. R. Civ. P. 50 is required to preserve a legal issue previously resolved by the trial court on summary judgment.

A unanimous Supreme Court recently answered that question in the negative, finding that a “district court’s purely legal conclusions at summary judgment… merge into the final judgment, at which point they are reviewable on appeal.” Dupree v. Younger, ___ S. Ct. ___ (2023).

• Diversity jurisdiction; attempted “snap” removal rejected. Where a diverse defendant removed an action on the basis of diversity jurisdiction before a nondiverse defendant was served, the nondiverse defendant was subsequently served, the plaintiff’s motion to remand was denied by the district court, and the district court certified the order denying remand pursuant to 28 U.S.C. §1292(b), the 8th Circuit reversed the district court, finding that “service does not matter in evaluating the diversity of the parties,” and that a “snap removal cannot cure a lack of complete diversity.” M&B Oil, Inc. v. Federated Mut. Ins. Co., 66 F.4th 1106 (8th Cir. 2023).

• CAFA; amount in controversy. Where the defendant removed a putative class action under CAFA, and the district court granted the plaintiff’s motion to remand on the basis that the defendant had not established that the amount in controversy exceeded $5 million, the 8th Circuit reversed, holding that a declaration stating that the defendant sold more than $5 million of the disputed product was “sufficiently particular” to support removal under CAFA. Brunts v. Walmart, Inc., ___ F.4th ___ (8th Cir. 2023).

• Failure to instruct jury on punitive damages not plain error. The 8th Circuit found no “plain error” in a district court’s failure to instruct a jury on punitive damages where the district court stated its intent to defer its final ruling on punitive damages unless and until the jury found for the plaintiff, the jury awarded the plaintiff $1 in compensatory damages, and the plaintiff failed to renew his request for punitive damages before the jury was discharged. Riggs v. Gibbs, 66 F.4th 716 (8th Cir. 2023).

• Waiver of right to arbitration. Chief Judge Schiltz denied the defendants’ motion to compel arbitration, where that motion was filed more than seven months after the action was commenced, and after the defendants had agreed to consolidate related actions, filed a Rule 12 motion to dismiss, participated in the submission of a Rule 26(f) report, participated in a Rule 16 conference, and entered into a stipulated protective order without ever mentioning the potential arbitration of plaintiffs’ claims.

Chief Judge Schiltz also rejected the defendants’ argument that they did not “know” of their right to arbitrate until roughly five months after the action was commenced, when their counsel first “read and analyzed” the contracts, finding that the defendants were “presumed to know” of arbitration provisions contained in contracts they drafted. In re Pawn Am. Consumer Data Breach Litig., 2023 WL 3375712 (D. Minn. 5/11/2023), appeal filed (8th Cir. 5/26/2023).

• Fed. R. Civ. P. 62(d); requests for stays pending appeal granted and denied. Judge Menendez granted a stay pending appeal of her order granting injunctive relief in an action involving the right to carry handguns, finding that the law was “far from settled” and that defendants would be “irreparably harmed” in the absence of a stay. Worth v. Jacobson, 2023 WL 3052730 (D. Minn. 4/24/2023).

Judge Tunheim denied a stay pending appeal of his order granting preliminary injunctive relief, finding that the defendants were unlikely to succeed on appeal and that the other relevant factors all favored the plaintiff. Rud v. Johnston, 2023 WL 2760533 (D. Minn. 4/3/2023).

• Motions to amend granted; “delay alone” does not warrant denial of motion. In several recent orders granting motions to amend complaints, Magistrate Judge Docherty has found that “delay alone is insufficient justification for denying a motion to amend,” and that the party opposing the motion to amend must also establish prejudice. Security Bank & Trust Co. v. Cook Inc., 2023 WL 3276486 (D. Minn. 5/5/2023); Berry v. Hennepin Cnty., 2023 WL 3244827 (D. Minn. 5/4/2023).

• 28 U.S.C. §1292(b); certifications for interlocutory appeal denied. Despite agreeing with the plaintiff that the question on which it sought certification for interlocutory appeal under 28 U.S.C. §1292(b) involved a “controlling question of law,” Judge Tunheim found no substantial grounds for a difference of opinion, and that an interlocutory appeal would not advance the ultimate termination of the litigation. Accordingly, the motion was denied. Fed. Ins. Co. v. 3M Co., 2023 WL 3686814 (D. Minn. 5/26/2023).

Judge Frank also rejected defendants’ certification request pursuant to 28 U.S.C. §1292(b) in a patent case, finding that they met none of the elements of the controlling three-part test. Corning Inc. v. Wilson Wolf Mfg. Corp., 2023 WL 3306506 (D. Minn. 5/8/2023).

• Trial subpoena to corporation quashed. Judge Brasel granted a non-party corporation’s motion to quash a trial subpoena directed to it, finding that a corporation’s obligation to designate a witness to testify on its behalf under Fed. R. Civ. P. 30(b)(6) extends to depositions, but not to trial testimony. Ferrin v. Experian Info. Sols., Inc., 2023 WL 3588351 (D. Minn. 4/27/2023).

• Sanctions, sanctions and more sanctions. While describing the plaintiff’s complaint, amended complaint, and opposition to the defendant’s motion to dismiss as “frivolous,” Chief Judge Schiltz acknowledged that 28 U.S.C. §1927 does not reach the mere “filing” of a complaint, but awarded the defendant almost $5,000 in fess it incurred in moving to dismiss the amended complaint. Towle v. TD Bank USA, N.A., 2023 WL 3018665 (D. Minn. 4/20/2023).

Granting plaintiff’s motion for a sanctions-related default judgment against two defendants, Judge Wright found that the defendants had “repeatedly engaged in willful violations of this Court’s order,” had twice been held in contempt, and had refused to pay their contempt fines or the attorney’s fees they had been ordered to pay. Powerlift Door Consults., Inc. v. Shepard, 2023 WL 3012037 (D. Minn. 4/18/2023).

Where the plaintiff failed to respond to discovery requests and also failed to respond to defendants’ motion to compel, Magistrate Judge Leung granted the motion to compel and awarded the defendants their attorney’s fees incurred in association with that motion pursuant to Fed. R. Civ. P. 37(a). Kruse v. City of Elk River, 2023 WL 3144317 (D. Minn. 4/29/2023).

Josh Jacobson
Law Office of Josh Jacobson
joshjacobsonlaw@gmail.com

Immigration Law

JUDICIAL LAW

• No jurisdiction to review BIA discretionary decision; cancellation of removal. In March the 8th Circuit Court of Appeals held that it lacked jurisdiction to review the Board of Immigration Appeals’ (BIA) discretionary decision that the petitioner failed to establish his qualifying relatives would suffer “exceptional and extreme hardship” if he were removed to Mexico, deeming him ineligible for cancellation of removal. As in previous cases, the court noted and rejected the petitioner’s attempt to circumvent the jurisdictional bar through an argument that the agency applied an incorrect legal standard by failing to account for the cumulative effect of the hardships presented. Garcia-Pascual v. Garland, No. 20-2529, slip op. (8th Circuit, 3/14/2023). http://media.ca8.uscourts.gov/opndir/23/03/202529P.pdf

• No political opinion here, actual or imputed. In February the 8th Circuit Court of Appeals found the record supported the Board of Immigration Appeals’ (BIA) determination that the petitioner never expressed a political opinion or anti-corruption sentiment, nor did the MS-13 gang ever impute such a position to him when threatening him. The court further added that any error in the BIA’s failure to address the indictment of the brother of the president of Honduras on drug charges was harmless since that information would not cure the deficiency in the petitioner’s asylum request; i.e., the lack of evidence that his resistance to the gang had anything to do with an actual or imputed political opinion. Aguilar Montecinos v. Garland, No. 21-2333, slip op.
(8th Circuit, 2/10/2023). https://ecf.ca8.uscourts.gov/opndir/23/02/212333P.pdf

ADMINISTRATIVE ACTION

• Asylum: Additional protocols on safe third country agreement between United States and Canada. On 3/28/2023, the Department of Homeland Security and Department of Justice announced modifications to their regulations implementing the additional protocols of 2022 to the Safe Third Country Agreement (STCA) between the United States and Canada. Under STCA and its implementing regulations, a foreign national seeking asylum or other protection from persecution or torture must apply in the first country of entry (i.e., United States or Canada) unless (s)he qualifies through an exception. Thus, an asylum seeker arriving at a land border port of entry (POE) in the United States from Canada (or in transit through the United States during removal by Canada) would be barred from pursuing asylum or other protection claim relating to fear of persecution or torture in the United States. As a result, if that individual fails to qualify through an exception, (s)he would be returned to Canada to pursue the asylum claim. In like fashion, an asylum seeker from the United States arriving at a land border POE in Canada would be turned back to the United States. Under the regulations implementing the additional protocols of 2022 to the STCA, coverage is expanded to those asylum seekers who enter in areas located between POEs on the U.S.-Canada land border, including certain bodies of water as determined by the United States and Canada, and make a claim for asylum or other protection relating to fear of persecution or torture within 14 days after such crossing. 88 Fed. Reg. 18227-41 (2023). https://www.govinfo.gov/content/pkg/FR-2023-03-28/pdf/2023-06351.pdf

• TPS extension and redesignation: Somalia. On 3/13/2023, the U.S. Department of Homeland Security (DHS) announced the extension of the designation of Somalia for temporary protected status (TPS) for 18 months, from 3/18/2023 through 9/17/2024. Those wishing to extend their TPS must re-register during the 60-day period running from 3/13/2023 through 5/12/2023. The secretary also redesignated Somalia for TPS, allowing additional Somalis to apply who had continuously resided in the United States since 1/11/2023 and were continuously physically present in the United States since 3/18/2023. The registration period for these new applicants runs from 3/13/2023 through 9/17/2023. 88 Fed. Reg. 15434-43 (2023). https://www.govinfo.gov/content/pkg/FR-2023-03-13/pdf/2023-04735.pdf

• Implementation of parole process changes for Haitians and Cubans. On 4/28/2023, the Department of Homeland Security announced that Secretary Alejandro Mayorkas had authorized a change in the parole process for Haitians and Cubans. In short, those who have been interdicted at sea after 4/27/2023 will be ineligible for the parole process introduced on 1/9/2023. That process involved certain steps for certain nationals of those two countries and their immediate family members “to be considered on a case-by-case basis for parole and, if granted, lawfully enter the United States in a safe and orderly manner.” That is: (1) have a supporter in the United States who agrees to provide financial support for the duration of the beneficiary’s parole period; (2) pass national security and public safety vetting; (3) fly at their own expense to an interior POE (port of entry), rather than entering at a land POE; and (4) possess a valid, unexpired passport. Those who failed to avail themselves of this parole process, and instead enter the United States without authorization between POEs, are generally subject to return or removal. Individuals deemed ineligible for the parole process include those who were ordered removed from the United States within the previous five years; entered unauthorized into Mexico or Panama after 1/9/2023; entered the United States without authorization between POEs after 1/9/2023 (except those individuals permitted a single instance of voluntary departure or withdrawal of their application for admission in order to maintain their eligibility for the parole process); or otherwise deemed ineligible for a favorable exercise of discretion. According to DHS, this action is “intended to enhance border security by responding to and protecting against a significant increase of irregular migration… to the United States via dangerous routes that pose serious risks to migrants’ lives and safety, while also providing a process for certain such nationals to lawfully enter the United States in a safe and orderly manner.”

Haiti: 88 Fed. Reg. 26327-29 (2023) https://www.govinfo.gov/content/pkg/FR-2023-04-28/pdf/2023-09014.pdf

Cuba: 88 Fed. Reg. 26329-31 (2023) https://www.govinfo.gov/content/pkg/FR-2023-04-28/pdf/2023-09013.pdf

• FY2024 H-1B registration numbers announced by USCIS. USCIS recently announced that it received 758,994 eligible registrations for FY2024 (474,421 registrations in FY2023) and 110,791 applications were selected. https://www.uscis.gov/working-in-the-united-states/temporary-workers/h-1b-specialty-occupations-and-fashion-models/h-1b-electronic-registration-process

• DHS and DOS develop regionally focused approach to western hemisphere migration following end of Title 42. On 4/27/2023, the Department of Homeland Security (DHS) and Department of State (DOS) announced a new round of measures seeking through a more regionally based approach to reduce unlawful migration across the western hemisphere (while partnering with Mexico, Canada, Spain, Colombia, and Guatemala) by expanding lawful pathways for protection, creating stiffer consequences for failing to use those lawful pathways, and opening regional processing centers in Colombia and Guatemala—all the while facilitating “a safe, orderly, and humane processing of migrants.”

The Centers for Disease Control’s temporary Title 42 public health order expired at 11:59pm on 5/11/2023 and the U.S. government returned to U.S.C. Title 8 (Aliens and Nationality) to “expeditiously process and remove individuals who arrive at the U.S. border unlawfully.”

In sum, individuals crossing into the United States at the southwest border without authorization or using a lawful pathway—and without scheduling a time to arrive at a port of entry—are presumed ineligible for asylum under a new proposed regulation, unless an exception applies in any specific case.

Highlights of this new policy include:

expanded access to the CBPOne app to appear at a U.S. port of entry;
new family reunification parole processes;
doubling the number of refugees from the western hemisphere;
opening regional processing centers across the western hemisphere to facilitate access to lawful pathways;
launching an aggressive anti-smuggling campaign targeting criminal networks in the Darien Corridor;
increasing the removal of those without a lawful basis to stay;
combatting smuggler misinformation; and
expeditiously processing and removing individuals who arrive at the southwest border and have no legal basis to remain.

R. Mark Frey
Frey Law Office
rmfrey@cs.com

Intellectual Property

JUDICIAL LAW

• Patent: Rejection of infringement claims absent a showing of “enablement.” The Supreme Court unanimously affirmed a Federal Circuit decision invalidating patent claims for lack of enablement. Amgen produces and holds patents for antibodies that help reduce forms of cholesterol that lead to cardiovascular disease, heart attack, and stroke. Amgen was subsequently granted additional patents that purported to claim “the entire genus” of such antibodies. Accompanying the patents was the disclosure of amino acid sequences for 26 different antibodies and two methods of making undisclosed antibodies— “roadmap” and “conservative substitution” methods. Soon after receiving these patents, Amgen sued Sanofi, a direct competitor, for infringement. Sanofi counterclaimed that the asserted claims were invalid under the Patent’s Act’s enablement requirement. Patents must describe the claimed invention “in such full, clear, concise, and exact terms as to enable any person skilled in the art… to make and use the [invention].” 35 U. S. C. §112(a). The Supreme Court held that Amgen’s claims for making the undisclosed antibodies were not sufficiently enabled. Neither party disputed that the 26 disclosed antibodies were enabled. The Supreme Court, however, held that the roadmap and conservative substitution methods did not enable the full scope of the claimed genus. Even accepting the allowance for a reasonable degree of experimentation, Amgen’s claims exceeded the Court’s most broad precedent involving patent claims. The Court analogized the methods to mere “research assignments” and upheld the Federal Circuit’s invalidation of Amgen’s patent claims. Amgen Inc. v. Sanofi, No. 21-757 (U.S. 5/18/2023).

• Copyright: Narrowing of the first factor of fair use. The Supreme Court in a 7-2 decision affirmed the 2nd Circuit’s ruling reversing summary judgment against defendant Lynn Goldsmith. Goldsmith was originally commissioned by Newsweek magazine to take a photo of Prince, the musician, for an article. Years later, Goldsmith granted a one-time limited license of the photograph to Vanity Fair for artist illustration. Andy Warhol used the photo for his reference, resulting in a series of derivative Prince illustrations. After Prince’s death, Vanity Fair’s parent company contacted the Andy Warhol Foundation for the Visual Arts, Inc., resulting in the use of a photo. Goldsmith saw the photo on the cover of a magazine and notified Warhol of potential copyright infringement. In response, Warhol sued Goldsmith for declaratory judgment of noninfringement and alternatively fair use. Warhol sought this judgment to continue commercial licensing of the photo of Prince. The district court granted summary judgment in favor of Warhol but was reversed by the 2nd Circuit, which held that the fair use factors favored Goldsmith. Warhol petitioned the Court seeking reversal on the first fair use factor, as the Warhol foundation believed his work was sufficiently transformative. The Supreme Court held that the “purpose and character” of the original work and Warhol’s rendition substantially share the same commercial purpose—which weighs against fair use. While the commercial purpose of Warhol’s work was not dispositive, the Court weighed this against Warhol’s claims of transformation. The Court reasoned that reading §107(1) so broadly as to include mere additions of subjective expression would interfere with the original creator’s bundle of rights, which includes the rights to reproduce and to prepare derivative works. Thus, given that the pictures would be used for the same purposes commercially (depiction of Prince on a magazine cover), the Court affirmed the 2nd Circuit and rejected the claim of fair use. Chief Justice Roberts and Justice Kagan dissented, stating that this doctrinal shift does not serve copyright’s core purposes of fostering creativity, and that this overly stringent regime “stifle[s] creativity by preventing artists from building on the work of others.” Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, No. 21–869 (U.S. 5/18/2023).

Joe Dubis
Merchant & Gould
jdubis@merchantgould.com

Henry Adebisi
Merchant & Gould
hadebisi@merchantgould.com

Probate & Trust

JUDICIAL LAW

• Civil lawsuit properly dismissed when probate court first obtains jurisdiction. The personal representative of an estate initiated a probate proceeding and filed an inventory that included firearms and ammunition. The decedent’s son notified the personal representative’s attorney that he owned the firearms listed on the inventory. Two days later, the personal representative transferred the firearms to Pheasants Forever. The next year, the decedent’s son initiated a civil lawsuit against the personal representative and alleged that the transfer of the firearms constituted fraud and conversion. The district court dismissed the son’s complaint. The district court found that the probate court and district court had concurrent jurisdiction over the firearms at issue and, because the probate court was the first to obtain jurisdiction, all claims relating to the firearms were required to be decided in the probate proceeding. The Minnesota Court of Appeals affirmed, finding that the civil action and the probate proceeding involved the same parties, concerned the same subject, and tested the same rights. The court of appeals further found that the ownership of the firearms could be addressed in the probate proceeding because the district court in a probate proceeding has the power to hear and dispose of all matters relevant to the determination of the extent of the decedent’s estate and the claims against it. Randy Hook v. Brenda Hook, et al., A22-1140, 2023 WL 2467808 (Minn. Ct. App. 3/13/2023).

• Attorney-in-fact has no affirmative duty to act. The decedent amended her estate plan to exclude her grandson. The decedent informed her attorney that her plan was to deposit $30,000 into a payable-on-death account and to make her grandson the beneficiary. The decedent’s attorney-in-fact knew of the decedent’s intention but took no action to set up the account. There was no evidence that the decedent instructed her attorney-in-fact to open the account. The grandson filed suit and, among other things, alleged that the attorney-in-fact breached his fiduciary duty by failing to establish the payable-on-death account. The district court determined that the attorney-in-fact owed the decedent a fiduciary duty and that he breached that fiduciary duty by failing to administer an account for the decedent’s “payable-on-death gift” of $30,000 to her grandson. The court of appeals reversed. The court quoted Minn. Stat. §523.21, which provides: “The attorney-in-fact has no affirmative duty to exercise any power conferred upon the attorney-in-fact under the power of attorney.” Therefore, while the attorney-in-fact had the power to open an account for the benefit of the decedent’s grandson, he had no duty to exercise that power without a directive from the decedent. In re Estate of Maryetta Louis Andrews, A22-0996, 2023 WL 2639588 (Minn. Ct. App. 3/27/2023).

• A district court may sua sponte raise the issue of venue. The decedent died in the state of Georgia. One of the decedent’s alleged creditors filed a petition and sought the appointment of a personal representative in Hennepin County. The decedent’s surviving spouse objected to the petition and argued that the decedent did not reside or own property in Minnesota on his death. The district court sua sponte raised the issue of improper venue and scheduled a hearing. After the hearing, the district court dismissed the petition without prejudice for lack of proper venue. The court of appeals affirmed, as the alleged creditor had presented no evidence that the decedent held any beneficiary interest in any trusts administered in Minnesota or that the decedent owed debt in Hennepin County. Because the decedent was not domiciled in Minnesota at the time of his death, once the district court determined that the decedent did not own property in Minnesota, it had no option but to dismiss the case. In re Estate of Stephen D. King, A22-1262, ___N.W.2d___, 2023 WL 3574230 (Minn. Ct. App. 2023).

Jessica L. Kometz
Bassford Remele
jkometz@bassford.com

Tax Law

JUDICIAL LAW

• Supreme Court affirms discovery and valuation of Minneapolis Hyatt Regency. The owners of the downtown Minneapolis Hyatt Regency challenged several tax years of the county’s assessment. The parties brought the dispute to the Minnesota Tax Court, where, prior to trial, the property owner sought discovery of, inter alia, income and expense information and assessor’s data for 10 other Minneapolis hotels. The tax court permitted discovery of information related to four of those properties–specifically, it required production of information about the four hotel properties that the county gave its assessor, and that the county’s assessor relied on in his appraisal. Following trial, the tax court issued extensive findings of fact, conclusions of law, and a memorandum in which the court adopted neither the county’s nor the property owner’s suggested value. Although not adopting his valuation, the court adopted much of the property owner’s expert’s analysis and then made significant adjustments to the appraiser’s calculations in several areas.

On appeal to the Minnesota Supreme Court, the property owner challenged the tax court’s discovery and evidentiary rulings, as well as the adjustments the tax court made to the property owner’s expert valuation. The reviewing court affirmed. The Supreme Court focused first on the discovery dispute. The Court was tasked with divining the statutory intent of what Justice Thissen in his concurrence termed a “puzzle” created by the “amalgam [of] rules governing discovery of income property assessment data in the context of tax litigation.” Both the majority and concurring opinions focus heavily on the discovery dispute. The opinions provide a cogent explanation of the various rules at issue and the challenge of reconciling those rules. The Court concluded that the tax court followed a reasonable process for reconciling these puzzling rules and did not abuse its discretion in the discovery dispute. The concurring opinion concluded by “highlight[ing] the problematic and potentially unfair practical outcomes—one noted by the tax court—of the statutory scheme created by the Legislature.” The scheme gives the parties asymmetrical information, which potentially favors the taxing authority. It also raises privacy concerns for nonlitigant property owners. Justice Thissen wrote, “Perhaps this is the balance the Legislature intended to strike through the operation of four different statutes agglomerated over the course of 20 years. If not, it is up to the Legislature to engage with the stakeholders and devise a different solution.” 1300 Nicollet, LLC v. Hennepin Cnty., ___ N.W.2d ___ (2023).

• Discovery orders following 1300 Nicollet. Following the Minnesota Supreme Court’s 1300 Nicollet, LLC v. Hennepin Cnty., ___ N.W.2d ___ (Minn 2023) decision, the tax court addressed several similar requests for discovery of information about non-party taxpayers. In two cases, the tax court clarified the meaning of the important term “assessor’s records.” In Ameriprise Financial, Inc. v. Hennepin County, 2023 WL 385660 (Minn. Tax, 6/6/2023) the court ordered the county to produce an unredacted copy of the assessor’s files, denied portions of the taxpayer’s motion to compel, and ordered each party to bear its own expenses in relation to the motion. In IRC Cliff Lake, LLC v. Dakota County, 2023 WL 3856405 (Minn. Tax, 6/6/2023), the court denied without prejudice the taxpayer’s motion to compel. In both cases, the tax court adopted a definition of the term “assessor’s records” as follows: “‘[a]ssessor’s records’ refers to all materials in an assessor’s possession pertaining to the subject property, inclusive of any information about separate properties even if qualifying as ‘income property assessment data.’” The court continued, “‘Assessor’s records’ does not extend to information about separate properties unless that information is contained with ‘assessor’s records’ for the subject property.”

In G&I VIII WF Plaza, LLC. v. Hennepin County, 2023 WL 3768077 (Minn. Tax, 6/1/2023), the tax court applied the balancing test as endorsed by 1300 Nicollet and ordered disclosure of income property assessment data for non-party properties. Hennepin County ultimately did not oppose the disclosure, but some of the non-party property owners opposed disclosure of their data. The court observed that the “unopposed and strict protective order we file today will mitigate the harm to owners of separate properties by preventing public dissemination and limited data access to Well’s counsel and expert appraiser.”

• SCOTUS deems Hennepin County’s tax sale a “classic taking.” A Hennepin County resident sued the county, alleging a 5th Amendment violation after the county sold her condominium in a tax sale and retained all the proceeds, which included more than the amount the homeowner owed in unpaid property taxes and fees.

Hennepin County imposes annual taxes on real property, and, if after three years of delinquency, the property owner has not redeemed their property, title vests to the State of Minnesota and any excess proceeds remain with the county. Minn. Stat. §273.01, 281.17(a), 281.18 (2022). In 2010 the resident, an elderly woman, moved out of her condo and into a senior community. She did not pay property taxes after she moved out, and subsequently accrued approximately $15,000 in delinquent taxes. Hennepin County, acting under Minnesota’s forfeiture procedures, seized the condo and sold it for $40,000, which extinguished the resident’s existing $15,000 debts. The county retained the remaining $25,000. It was this $25,000 that the resident asserted as an unconstitutional taking.

The Court first rejected the county’s argument that the taxpayer lacked standing; the plausibility of financial harm is sufficient to establish standing, it ruled. The substantive question that remained was whether the “remaining value is property under the Takings Clause, protected from uncompensated appropriation by the State.” Tyler v. Hennepin Cnty, Minn., No. 22-166, 2023 WL 3632754, 4–7 (U.S. 5/25/2023). Minnesota had historically recognized that its homeowners have property interest in excess of proceeds from tax sales, but in 1935 the state enacted a new law providing that homeowners forfeit interest in their homes when they fall behind on taxes. The resident, according to the county, therefore, had no property interests protected by the takings clause.

The Supreme Court rejected the county’s argument and held unanimously that history and precedent favored the resident. While the county had the power to recover unpaid property taxes through a tax sale, the “[County] could not use the toehold of the tax debt to confiscate more property than was due.” Tyler, No. 22-166, at 4. The county’s confiscation of excess proceeds affected a “classic taking in which the government directly appropriates private property for its own use.” Id. (quoting Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg’l Plan. Agency, 535 U.S. 302, 324 (2002)). The Court reasoned the resident “has stated a claim under the Takings Clause and is entitled to just compensation.” Tyler, No. 22-166, at 4.

Looking more broadly at the concept and origins of a taking, the Court recognized the doctrine of takings, and traced the limitation of takings up to the value of debts to the Magna Carta. Following the doctrine across the ocean, the Court found “consensus that a government could not take more property than it was owed held true.” Id. at 6.

“The Takings Clause was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.’” Tyler, No. 22-166, at 8 (quoting Armstrong v. United States, 364 U.S. 40, 49 (1960)). Finding that the resident has plausibly alleged a taking under the 5th Amendment, and noting that the resident agrees that relief under the Takings Clause would fully remedy her harm, the Court reversed the judgment, quipping, “The Taxpayer must render unto Caesar what is Caesar’s, but no more.” Tyler, No. 22-166 at 9. Tyler v. Hennepin Cnty, Minn., No. 22-166, 2023 WL 3632754, 4–7 (U.S. 5/25/2023).

n Federal income tax: Minnesota Chippewa member’s income not exempt under 1837 treaty. Members of the Chippewa tribe have the right to “hunt, fish and gather the wild rice” on traditional Chippewa land according to an 1837 treaty with the United States. Petitioner, an enrolled member of the federally recognized Chippewa tribe, argued that this right ought to be interpreted to mean that the income he earned as an attorney specializing in Indian law was exempt from self-employment tax. The tax court, speaking through Senior Tax Court Judge Mark Holmes, disagreed.

Income tax exemptions are construed strictly in favor of the United States (see McCamant v. Commissioner, 32 T.C. 824, 834 (1959)) and “to be valid, exemptions to tax laws should be clearly expressed.” Squire v. Capoeman, 351 U.S. 1, 6 (1956). When it comes to interpreting doubtful expressions in treaties with Indian tribes, however, issues are to be resolved in the tribe’s favor. Choate v. Trapp, 224 U.S. 665, 675 (1912).

Petitioner’s argument hinged upon a 2015 8th Circuit case, United States v. Brown, in which the circuit court concluded that “Chippewa Indians’ exercise of their usufructuary rights included selling what they hunted, fished, or gathered in order to make a modest living.” 777 F.3d 1025, 1031 (8th Cir. 2015). The petitioner analogized his practice of law to hunting, fishing, and gathering wild rice as exempted by Brown. Petitioner pressed for an interpretation of the 1837 treaty that preserved the Chippewa’s right to make a modest living regardless of how that income was earned.

The tax court was not persuaded. While “[t]he right to hunt, fish, and gather may be the means to a ‘modest living,’” there is no clear expression within the 1837 Treaty, as required under Squire, that those means be tax-free. Bibeau, 2023 WL 3619588 at 2. Bibeau v. Comm’r of Internal Revenue, T.C.M. (RIA) 2023-066 (T.C. 2023).

Morgan Holcomb
Brandy Johnson
Adam Trebesch
Mitchell Hamline School of Law