Criminal Law
JUDICIAL LAW
• Restitution: Definition of “victim” creates singular class of victims that includes the family members of a minor victim. Appellant pleaded guilty second-degree criminal sexual conduct, using a minor in a sexual performance, and possession of child pornography. After a contested restitution hearing, the district court ordered appellant to pay the victim’s mother restitution for her therapy costs and lost wages. The court of appeals affirmed. Appellant argues that, although the restitution statute includes a child victim’s family members in the definition of “victim,” it does so only for the limited purpose of exercising duties owed to the child. He also argues the victim’s mother’s losses were not incurred as a direct result of his offenses.
Minn. Stat. §611A.01(b) defines “victim” for restitution purposes as “a natural person who incurs loss or harm as a result of the crime.” This definition also specifically notes that “[t]he term ‘victim’ includes the family members… of a minor…” Minn. Stat §611A.01(b). The Supreme Court finds that this sentence including family members in the definition is subject to more than one reasonable interpretation.
The Court notes that the Legislature inserted the “family member” sentence into the definition of “victim” following a case that held that a prior version of the definition applied only to family members who stepped into the victim’s shoes. See State v. Jones, 678 N.W.2d 1 (Minn. 2004). The Legislature’s response to the case indicates an intent to expand the definition of “victim.” The Court holds that the restitution statute’s definition of “victim” “creates a singular class of victims that includes the direct victims of a crime and, if the direct victim is a minor, those family members of the minor who incur a personal loss or harm as a direct result of the crime.”
As the victim’s mother in this case sufficiently proved to the district court that her losses were a natural consequence of appellant’s offenses against her minor child, the district court did not abuse its discretion in awarding restitution for the victim’s mother. State v. Allison, A22-0793, 999 N.W.2d 835 (Minn. 1/10/2024).
• Postconviction: Where the state claims a claim is procedurally barred, the district court must make an explicit determination, with a sufficient explanation, as to whether the claim is barred. Appellant was charged with possession of a firearm by an ineligible person after a handgun was found in the trunk of his car. At trial, he argued the gun belonged to another passenger in the car. DNA analysis from a swab of the gun showed the major DNA profile on the gun matched appellant. Appellant argued his DNA was transferred via indirect contact, but a BCA agent testified that she would not expect an indirect contact DNA transfer to leave a major DNA profile. Appellant was convicted and the court of appeals affirmed. Appellant filed a postconviction petition arguing the BCA agent’s testimony was false. The state claimed his petition was procedurally barred under State v. Knaffla, 243 N.W.2d 737 (Minn. 1976), because the basis of the false testimony claim was known but not raised at the time of appellant’s direct appeal. The district court held an evidentiary hearing, after which it granted appellant a new trial. The state appealed, and the court of appeals reversed.
Knaffla held that, where a direct appeal has already been taken, all matters raised in the appeal and all claims known but not raised will not be considered in a later postconviction petition, with two exceptions: (1) a novel legal issue is presented, or (2) the interests of justice require review. In this case of first impression, the Supreme Court considers what record the district court makes in determining whether a claim is procedurally barred under Knaffla before granting postconviction relief.
The Court finds the district court’s failure to address the state’s properly raised Knaffla argument was an abuse of discretion. When such an argument is raised, the district court must make an explicit determination as to whether a claim is procedurally barred, with a sufficient explanation, before granting postconviction relief.
The Court concludes that appellant’s postconviction petition was procedurally barred, because appellant knew the substance of the BCA agent’s DNA testimony, and that it was allegedly false, at the time of his direct appeal. Gilbert v. State, A21-1560, 2024 WL 173117 (Minn. 1/17/2024).
• Juveniles: When the state moves to terminate a continuance for dismissal, the district court retains jurisdiction over the termination hearing until the defendant turns 21. Appellant assaulted his nine-year-old niece when he was 15 years old, and a delinquency petition was filed alleging two counts of criminal sexual conduct. One count was dismissed and prosecution on the second was suspended pursuant to a continuance for dismissal (CFD) under Minn. R. Juv. Delinq. P. 14. After multiple violations of the conditions of the CFD and extensions of the CFD period, just days before appellant turned 19, the state moved to terminate the CFD and resume prosecution. Three months later, the district court held a CFD termination hearing at which appellant admitted he violated the CFD agreement. During a stipulated facts trial, appellant argued the court lacked subject matter jurisdiction. The district court ultimately adjudicated appellant delinquent.
Generally, the district court’s juvenile jurisdiction ends when a juvenile turns 19. Minn. Stat. §260B.193, subd. 5(a). However, the jurisdiction is extended to “conduct a trial… if: (1) an adult is alleged to have committed an offense before the adult’s 18th birthday; and (2) a [delinquency] petition is filed… before the adult’s 21st birthday.” Id. at subd. 5(c). Appellant argues that the district court lost all jurisdiction over the pretrial proceedings when he turned 19 and, as a CFD termination hearing is not a “trial,” the court lacked jurisdiction to conduct the termination hearing after he turned 19.
The court of appeals finds that the only reasonable interpretation of section 260B.193 is that “conduct a trial” encompasses pretrial proceedings, including CFD termination hearings. This interpretation is supported by the plain language of section 260B.193 and Rule 14 and the interplay between the statute and rule. The district court is affirmed. In the Matter of M.A.B., A23-0752, 2024 WL 220371 (Minn. Ct. App. 1/22/2024).
• Firearms: “Likely” in the manner-of-use definition for “dangerous weapon” means “probable or reasonably expected.” Appellant was charged with second-degree riot for organizing two intersection “takeovers,” during which vehicles and pedestrians were used to block off urban intersections to allow drivers to spin donuts while passengers hung out the spinning vehicles’ windows. The district court granted appellant’s motion to dismiss for lack of probable cause, finding no probable cause for the dangerous weapon element of the offenses. On the state’s appeal, the Minnesota Court of Appeals reversed.
Second-degree riot is committed when, among other elements, a person is armed with a dangerous weapon during a riot or knows another participant is armed with a dangerous weapon. Minn. Stat. §609.71, subd. 2. “Dangerous weapon” is defined to include any “device or instrumentality that, in the manner it is used or intended to be used, is calculated or likely to produce death or great bodily harm…” Id. at §609.02, subd. 6.
The Supreme Court examines the statute’s use of “likely,” finding first that it has not been previously defined in statute or case law. Most dictionary definitions equate “likely” with an unqualified “probable” or “reasonably expected.” Based on these definitions, the Court holds that “likely” in the manner of use definition of a dangerous weapon means “probable or reasonably expected.”
Here, the district court concluded that the vehicles were not used in a manner calculated to produce death or great bodily harm but failed to address whether the vehicles were used in a manner likely to produce death or great bodily harm. Video evidence showed the spinning cars with passengers hanging out of the vehicles and in close proximity to spectators, with one video showing a vehicle strike and launch a spectator in the air. From this evidence, a reasonable juror could have concluded that death or great bodily harm was a probable or reasonably expected result. Thus, the district court erred when it dismissed the charges against appellant for lack of probable cause. State v. Abdus-Salam, A22-1551, 2024 WL 252951 (Minn. 1/24/2024).
• Criminal sexual conduct: Residence of a runaway child’s custodial parent determines venue for prosecuting alleged abuse of the child. After meeting a 14-year-old online, 38-year-old appellant chatted with her for two months, lying about his age and engaging her in sexual conversations. The victim ran away from her mother’s house in Stearns County to a friend’s house in Benton County. Appellant picked up the victim and her friend, brought them to a hotel in Hennepin County, and had sexual intercourse with the victim. Police found the victim at her friend’s house, and appellant was later convicted of third-degree criminal sexual conduct. Among other arguments on appeal, appellant claims the state did not offer sufficient evidence of venue in Stearns County.
Under Minn. Stat. §627.15, “[a] criminal action arising out of an incident of alleged child abuse may be prosecuted either in the county where the alleged abuse occurred or the county where the child is found.” This statute does not define “child abuse,” but the court of appeals looks to section 260C.007, subdivision 5, which does. This definition of “child abuse” includes third-degree criminal sexual conduct, as do the third-degree assault and first-degree murder statutes’ definitions of “child abuse.” See Minn. Stat. §§609.185(d); 609.223, subd 2. The court holds that third-degree criminal sexual conduct qualifies as “child abuse” for determining venue. Thus, the state was required to prove beyond a reasonable doubt that the victim was found in Stearns County.
Previous cases established that a child is “found,” among other options, where he or she resides. Case law also indicates a child’s residence is generally determined by the custodial parent(s). Here, because the victim resided with her mother in Stearns County, the state offered sufficient evidence to prove she was “found” in Stearns County. The court notes that the victim’s runaway status is irrelevant, because (1) this victim was known to run away from home but always returned to her mother’s residence, and (2) as a minor, a runaway child has no authority to legally change their residence. Appellant’s conviction is affirmed. State v. Seivers, A22-0054, 2024 Wl 315609 (Minn. Ct. App. 1/29/2024).
• Harassment: A temporary HRO is in effect before a hearing on a harassment petition, but not after. Appellant was in a romantic relationship with C.J. that ended contentiously. C.J. was issued an ex parte temporary harassment restraining order (HRO) against appellant on 4/30/2020. Appellant requested a hearing, which was held on 8/19/2020. The record contains no evidence the district court issued an HRO on or after the hearing date. On 8/28/2020, C.J. reported appellant for violating an HRO for calling her and leaving three voicemails. The state thereafter charged appellant with stalking and three counts of violating an HRO. A jury found appellant guilty on all counts. The court of appeals considers appellant’s argument that the state failed to prove an HRO was in effect at the time of the alleged offenses.
Stalking is committed if an actor commits “two or more acts within a five-year period that violate or attempt to violate,” among other things, an HRO, the actor knows or has reason to know the acts “would cause the victim under the circumstances to feel terrorized or to fear bodily harm,” and the acts “cause this reaction” by the victim. Minn. Stat. §609.749, subd. 5(a) and (b). To prove a violation of an HRO, the state must prove an order was in effect, the actor knew of the order, and the actor violated the order. Id. at §609.748, subd. 6(b).
When a petition for an HRO is filed, the respondent may request a hearing. Id. at subd. 4(e). If a temporary HRO was ordered prior to the hearing, the temporary HRO remains “in effect until a hearing is held on the issuance of a restraining order…” Id. at subd. 4(d). The court examines the meaning of “until” as used in subdivision 4(d). The most common dictionary definition is “up to the time of.” The court notes that subdivision 4(b) provides that a temporary HRO becomes effective upon the referee’s signature, which the court finds makes it apparent that subdivision 4(d) specifies when a temporary HRO ceases to be effective. Moreover, practically speaking, an HRO hearing is to determine if a petitioner is entitled to an HRO. If a hearing is held and the petitioner does not establish reasonable grounds for an HRO, there is no reason for a temporary HRO to remain in effect.
In this case, no HRO was issued after the hearing on C.J.’s harassment petition. Thus, when appellant contacted C.J. three times after the hearing date, there was no HRO in place. As such, the evidence was insufficient to support appellant’s convictions. State v. Ickler, A22-0079, 2024 WL 315611 (Minn. Ct. App. 1/29/2024).
Samantha Foertsch & Stephen Foertsch
Bruno Law PLLC
Environmental Law
JUDICIAL LAW
• MN Court of Appeals finds no MEPA EAW needed for Duluth hotel. The Minnesota Court of Appeals recently found in favor of the Duluth City Council’s decision not to require an environmental assessment worksheet (EAW) under the Minnesota Environmental Protection Act (MEPA) for a to-be-developed hotel. In doing so, the court grappled with questions involving administrative law, MEPA requirements, and the authority of a municipality’s individual boards and commissions.
The Minnesota Legislature enacted MEPA, codified in Minn. Stat. §116D.01 et seq., in 1973 to promote environmental protection. MEPA requires an EAW for development or projects if certain conditions are met. The EAW is “a brief document which is designed to set out the basic facts necessary to determine whether an environmental impact statement is required for a proposed action.” An EAW is required upon the submission of a petition signed by at least 100 individuals, and material evidence demonstrating that “there may be potential for significant environmental effect.” The petition is submitted to the Minnesota Environmental Quality Board (EQB), which then determines the appropriate responsible government unit (RGU) for review of the petition. The RGU then has 15 days to determine whether an EAW is necessary.
On 3/14/2023, the EQB notified the City of Duluth that it received a petition for an EAW for a new hotel project. Duluth’s planning commission evaluated the petition and weighed factors prescribed under Minn. R. 4410.1700. The planning commission heard public comments, and ultimately voted in favor of requiring an EAW.
The developer, Kinseth Hospitality Companies, appealed the decision to the Duluth City Council. The crux of Kinseth’s appeal was that the decision should be reversed because the concerns in the petition—hydrology, watershed, floodplain, and thermal impacts—had already been fully considered by Duluth’s administrative process. The city council determined that the record did not support requiring an EAW and reversed the planning commission’s decision.
A petitioner then filed for a writ of certiorari with the court of appeals. The petitioner alleged three errors: (1) Duluth erred when it allowed the city council to step into the role as the RGU; (2) the city council surpassed its authority under the Duluth legislative code by hearing Kinseth’s appeal; and (3) the city council’s decision in denying the EAW petition was arbitrary and capricious.
On the petitioner’s first argument, the court concluded that the EQB properly designated the City of Duluth as the RGU, not any specific commission or department of the city. This designation was consistent with MEPA and its associated rules, thereby allowing the city council the ability to act as the RGU.
Regarding the second argument, the petitioner claimed that the Duluth code did not give the city council any review authority. The court disagreed, undertook an analysis of the Duluth code, and determined that the city council had proper authority to review the decision of the planning commission. The court also recognized that state statute and the Duluth city charter gave the city council authority to act as a board of appeal in certain administrative matters.
Finally, the petitioner’s third argument fared no better. The petitioner contended that the city council failed to comply with MEPA, and acted arbitrarily and capriciously, when it overturned the planning commission’s decision. The court found that the record demonstrated the contrary. The city council reviewed the EAW petition, provided detailed findings and evaluated each factor under the rules, held a public hearing, and adopted council staff findings before voting to reverse the planning commission. There was no evidence in the record that the city council acted arbitrarily or capriciously.
Rejecting all three of petitioner’s claims, the court of appeals affirmed the city council’s determination that an EAW was not required for Duluth’s hotel project. In re Resolution Reversing the Planning Commission’s Decision to Grant the Petition for an Environmental Assessment Worksheet (EAW) for a Hotel at Sundby Road and West Page Street, 2024 WL 321990, Case No. A23-0792 (Minn. Ct. App. 1/29/2024).
• U.S. District Court of MN denies MPCA violated farmer’s constitutional rights. In January the U.S. District Court for the District of Minnesota issued an opinion granting a motion to dismiss arising from a claim that four employees of the Minnesota Pollution Control Agency (MPCA) violated a Minnesota livestock farmer’s due-process and free-speech rights under the U.S. and Minnesota Constitutions.
The plaintiff owns a cow/calf operation, where animals are generally raised on pastures under less regulation, and a separate feedlot, which are regulated by the MPCA. Under its general statutory authority, MPCA is authorized to issue and deny permits for livestock feedlots and may pursue civil penalties in order to promote waste disposal and improve air quality. Minn. Stat. §§116.02, 116.07.
In 2015, the plaintiff applied for a National Pollutant Discharge Elimination System (NPDES) feedlot permit, and the permit was issued in 2016. Subsequently, the plaintiff requested an NPDES permit modification to make changes to some of his buildings and land. However, in 2017, MPCA conducted an inspection, determined the modifications to be “major,” and delayed issuing the modified NPDES permit, which resulted in MPCA issuing the plaintiff an alleged violation letter and monetary penalty. In 2018, the plaintiff filed suit against MPCA over the agency’s decision to delay issuing the modified NPDES permit.
In 2019, the plaintiff successfully petitioned the Legislature to change the definition of “pastures” in a way that benefited the plaintiff and his permit issues. In 2021, MPCA sued the plaintiff in Douglas County District Court over unauthorized discharges from his feedlot, seeking a civil penalty of over $150,000.
In April 2023, the plaintiff filed the current suit, asserting that the MPCA defendants violated substantive and procedural due process rights guaranteed him under the 14th Amendment to the U.S. Constitution and Article I, Section 7 of the Minnesota Constitution, and that the MPCA defendants undertook enforcement activities in retaliation to plaintiff’s 1st Amendment rights. The MPCA defendants moved to dismiss.
The plaintiff argued that the MPCA defendants violated “a constitutionally enforceable liberty interest and a fundamental right to operate his animal feedlot and to engage in farming activities on his property.” In rejecting this argument, the court held that the plaintiff had failed to allege facts showing the violation of any fundamental right, stating that the 8th Circuit has explicitly declined to recognize farming as a fundamental right. United States v. White Plume, 447 F.3d 1067, 1075 (8th Cir. 2006).
Similarly, plaintiff claimed he was deprived of property in violation of his procedural due process rights, stemming from his claim of a property interest in the modified NPDES permit for which he applied. Again, the court turned to the Supreme Court, which held that to have a property interest under the 14th Amendment, a person must have a “legitimate claim of entitlement” to the property. Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972). The court emphasized the general rule that when a state gives the issuing agency (in this case, the MPCA) discretion to approve or deny a permit, it does not create a property interest. State regulations make clear that MPCA shall issue a permit if it determines the permittee will achieve compliance with all applicable state and federal pollution control statutes and rules. Minn. R. 7001.0140. Therefore, the court held, MPCA has the discretion to determine whether the applicant will comply with statutes, rules, and conditions before issuing the permit, and thus does not convey a property right when issuing or denying the permit.
Finally, the plaintiff claimed the MPCA defendants retaliated against him, by delaying issuance of the modified NPDES permit and seeking a civil penalty, for exercising his 1st Amendment rights of disputing MPCA’s legal authority, contesting MPCA’s enforcement activities, and petitioning the Legislature to clarify the law governing pastures, which benefited the plaintiff. Applying the three-part test from Scheffler v. Molin, 743 F.3d 619, 621 (8th Cir. 2014), the court held that while the MPCA defendants acknowledged that the plaintiff engaged in constitutionally protected activity, and while it was possible that the withholding of the modified NPDES permit and the penalty sought thereafter would “chill a person of ordinary firmness from engaging in protected activity,” the plaintiff had failed to demonstrate “that the adverse action was motivated in part by plaintiff’s exercise of his constitutional rights.”
As a result, the court granted the MPCA defendants’ motion to dismiss, and dismissed (partially with prejudice, partially without prejudice) the plaintiff’s claims as asserted in the amended complaint. Wagner v. Scheirer, D. Minn. (1/24/2024) Slip Copy 2024, WL 264660.
• 5th Circuit applies Sackett to find no federal jurisdiction over wetlands. Landowners questioning whether their wetland properties are governed by the Clean Water Act struggled for decades to get an answer to that question. On 12/18/2023, the 5th Circuit said, “Enough is enough.” In Lewis v. United States, the court held that the Supreme Court’s Sackett v. EPA decision controlled the determination of what wetlands are “waters of the United States” and therefore subject to the federal Clean Water Act’s section 404 “dredge and fill” permitting program. The Sackett Court defined “waters of the United States” as including only “wetlands [that] have ‘a continuous surface connection to bodies that are “waters of the United States” in their own right, so that there is no clear demarcation between “waters” and wetlands.’” (Quoting Sackett v. EPA, 598 U.S. 651 (2023).)
The Lewis case began in 2013, more than a decade before it was decided, when Lewis sought a United States Army Corps of Engineers’ Approved Jurisdictional Determination—a Corps document stating whether waters of the United States are present on a parcel and identifying the boundaries of waters of the United States on a parcel. See 33 C.F.R. §331.2. Lewis wanted to develop two 20-acre lots that had been used primarily as a pine timber plantation. Two years later, the Corps issued an Approved Jurisdictional Determination that effectively subjected all 40 acres to the Clean Water Act. Lewis appealed and received a second, substantially similar determination in 2017.
Litigation followed. The 5th Circuit stayed consideration of the appeal pending the Supreme Court’s determination in Sackett. The court heard oral arguments and requested renewed briefing after Sackett was released. See Lewis, 88 F.4th at 1077.
In its December 2023 opinion, the Lewis court swiftly concluded that under Sackett, Lewis’s property plainly did not include waters of the United States. The court noted that “the nearest relatively permanent body of water is removed miles away from the Lewis property by roadside ditches, a culvert, and a non-relatively permanent tributary.” The court also looked to photographs, which, the court found, revealed “no ‘continuous surface connection’ between any plausible wetlands on the Lewis tracts and a ‘relatively permanent body of water connected to traditional interstate navigable waters.’” Id. Thus, the court concluded, “There is no factual basis as a matter of law for federal Clean Water Act regulation of these tracts.”
The remainder of the court’s short decision addressed whether the case was moot because the government attempted to unilaterally withdraw the most recent Approved Jurisdictional Determination. The court concluded that the case was not moot because the voluntary cessation exception applies and because an Approved Jurisdictional Determination is a final agency order subject to appeal. A single judge concurred but would have rested on voluntary cessation and declined to address whether an Approved Jurisdictional Determination was a final agency order subject to appeal.
Although the Lewis decision reads like a straightforward application of a U.S. Supreme Court case, it may be a sign of more to come. The EPA has promulgated controversial waters of the United States rules, which in the view of critics encompass substantially more waters than the rule established in Sackett. The Lewis court did not even consider these rules in its interpretation, which suggests that courts may be willing to move away from deference to the EPA on its interpretation of its own rules. As more circuit courts apply Sackett in the coming year, the extent to which each considers EPA’s rules will be worth watching for. Lewis v. United States, 88 F.4th 1073, 1076 (5th Cir. 2023).
• SCOTUS denies certiorari, leaving Minnesota climate case to proceed in state court. In January, the U.S. Supreme Court ruled that the state of Minnesota’s lawsuit against major actors in the fossil-fuel industry may proceed in state court. Without comment, the Court denied the petition of ExxonMobil, the American Petroleum Institute, and three Koch Industries entities to review lower-court decisions that remanded the case to state court.
Minnesota is one of several states and municipalities using its consumer protection laws to sue big oil companies, alleging that their deceptive advertising and messaging practices mislead consumers about the harmful environmental effects of fossil fuel burning.
On 6/24/2020, Minnesota Attorney General Keith Ellison sued American Petroleum Institute (API), Exxon Mobil Corporation, ExxonMobil Oil Corporation, Koch Industries, Inc., Flint Hills Resources LP, and Flint Hills Resources Pine Bend in Ramsey County District Court. The state asserted five causes of action for violations of Minnesota common law and consumer protection statutes related to the companies’ alleged misinformation campaign: (1) violations of the Minnesota Consumer Fraud Act (Minn. Stat. §325F.69); (2) failure to warn under common law theories of strict liability and negligence, against all defendants except API; (3) common law fraud and misrepresentation; (4) violations of the Minnesota Deceptive Trade Practices Act (Minn. Stat. §325D.44); and (5) violations of the Minnesota False Statement in Advertising Act (Minn. Stat. §325F.67). The state seeks restitution for the harms Minnesotans have suffered and requests that that the companies be required to fund a corrective public education campaign on the issue of climate change.
On 7/27/2020, the companies removed the case to United States District Court for the District of Minnesota on seven grounds: (1) the claims arise under federal common law; (2) the action raises disputed and substantial federal issues that must be adjudicated in a federal forum (the “Grable doctrine”); (3) removal is authorized by the federal officer removal statute (28 U.S.C. §1442(a)(1)); (4) federal jurisdiction arises under the Outer Continental Shelf Lands Act 43 (U.S.C. §1349(b)); (5) the claims are based on conduct arising out of federal enclaves; (6) the action is actually a class action governed by the Class Action Fairness Act (28 U.S.C. §1332(d), 28 U.S.C. §1453(b)); and (7) the court has diversity jurisdiction under 28 U.S.C. §1332(a), on the theory that the real parties in interest are not the state, but the citizens of Minnesota.
On 8/26/2020, the state moved to remand the case to state court, arguing that the federal district court lacks subject matter jurisdiction because (a) neither federal common law nor the Grable doctrine apply; (b) no federal enclaves are implicated; (c) the Outer Continental Shelf Lands Act is not implicated; (d) the federal officer removal statute does not apply; (e) the suit is not a “class action” and therefore not subject to the Class Action Fairness Act; and (f) the suit was brought by the state, which is not a citizen for purposes of diversity jurisdiction. On 3/31/2021, the United States District Court for the District of Minnesota concluded that it lacked jurisdiction over the action and remanded the action to state court.
The companies subsequently appealed the ruling to the U.S. Court of Appeals for the 8th Circuit, and on 3/23/2023, the 8th Circuit affirmed the lower court’s decision to remand the matter to state court. In siding with the state, the court joined several other circuit courts that have arrived at similar conclusions in recent months, including the 1st, 3rd, 4th, 9th, and 10th Circuits. On 1/8/2024, the U.S. Supreme Court denied the companies’ writ of certiorari requesting review of the 8th Circuit decision. Am. Petroleum Inst. v. Minnesota, 601 U.S. ___, 23-A-168 (1/8/2024) (denying writ of certiorari).
ADMINISTRATIVE ACTION
• EPA imposes a lower health-based standard under the Clean Air Act for greater control of soot pollution. On 2/7/2024, the United States Environmental Protection Agency (EPA) issued a final rule to lower the annual health-based national ambient air quality standard (NAAQS) for fine particulate matter (PM2.5), also known as soot, from 12 micrograms per cubic meter to 9 micrograms per cubic meter. Fine particles are emitted directly from sources such as vehicles, smokestacks, and fires. Fine particles also can form from reactions in the atmosphere caused by gases emitted by power plants, industrial processes, and gasoline and diesel engines.
The EPA’s lowering of the primary NAAQS standard is expected to most benefit those for whom fine particulate matter can be dangerous and even deadly. These include children, older adults, people with health conditions like heart or lung disease, cancer, or asthma, and communities of color and low-income communities overburdened by pollution. The EPA also predicts the change will “make all people healthier.”
Although the NAAQS must be reviewed every five years per the Clean Air Act, this is the first time that the EPA has lowered the PM standard in over a decade. In this new rule, the EPA retained a 24-hour standard for PM2.5 at the current level because the available scientific evidence and information did not call into question its adequacy. The agency also decided for the same reason not to change the PM10 standards, which regulate small and coarse particles as opposed to fine particles.
Although most counties in the United States with monitors already meet the lower PM2.5 standard according to 2020-2022 air monitoring data, this new rule will make that attainment mandatory. Nonattainment areas identified by monitoring data collected between 2022 and 2024 will have to be brought into compliance. The EPA generally makes designations of attainment or nonattainment within two years after a new standard is issued. The EPA will work with the states through the designation process, and there will be opportunity for public comment. States will likely have to ensure the new standard is met by 2032 at the earliest.
In connection with this rule, the EPA plans to issue rules to reduce pollution from power plants, vehicles, and industrial facilities to support implementation of the new standard. The EPA has indicated investments under the Inflation Reduction Act and the Bipartisan Infrastructure Law will support this cause as well. The EPA also plans to revise the Air Quality Index and ambient air monitoring requirements to account for the new standard. Revised monitoring requirements will include a particular focus on communities that are subject to disproportionate air pollution risk, such as communities of color and low-income communities.
EPA is considering in a separate review whether to change the secondary NAAQS for particulate matter, as well as for oxides of nitrogen and oxides of sulfur. The secondary NAAQS is designed to address welfare-based concerns, such as haze and effects on the climate, as opposed to health-based concerns. The role of a policy assessment is to present the EPA administrator with a scientific assessment and technical analyses to help with the decision on whether to retain or revise a NAAQS. The next step is publication of a notice of proposed rulemaking that will communicate the agency’s proposed decision. Environmental Protection Agency, “Policy Assessment for the Review of the Secondary National Ambient Air Quality Standards for Oxides of Nitrogen, Oxides of Sulfur and Particulate Matter” (1/12/2024). https://www.epa.gov/system/files/documents/2024-01/noxsoxpm-final.pdf
• EPA updates soil lead guidance to protect children from lead exposure in residential areas. For many years, the Environmental Protection Agency (EPA) has prioritized reducing lead exposure from sources such as paint, water, ambient air, and soil and dust contamination. This is an especially important undertaking for protecting children, who are the people most vulnerable to the effects of lead exposure and lead poisoning.
On 1/17/2024, the EPA released an updated soil guidance aimed at reducing lead exposure at Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) sites and Resource Conservation and Recovery Act (RCRA) Corrective Action Facilities in a manner consistent with the best available science. Specifically, the new guidance lowers the recommended screening levels for lead in soil at residential properties from 400 parts per million (ppm) to 200 ppm. At residential properties with multiple sources of lead exposure such as lead in air and water, the EPA will generally use 100 ppm as the screening level.
The EPA’s previous approach for evaluating and cleaning up Superfund and RCRA Corrective Action sites with soil lead contamination was detailed in an EPA guidance issued in 1994 (i.e., the Revised Interim Soil Lead Guidance for CERCLA Sites and RCRA Corrective Action Facilities) and was based on a widely recognized scientific understanding that a blood lead level above 10 µg/dL was associated with adverse health outcomes in children. The science on this topic has since evolved and now indicates that adverse health effects occur at lower levels than previously known (i.e., <10 µg/dL) and that exposure comes from additional sources of lead other than contaminated soil and dust (e.g., lead water service lines, lead-based paint, or non-attainment areas where the air lead concentrations exceed National Ambient Air Quality Standards).
Regarding implementation, the EPA notes that the guidance’s new thresholds should apply to both existing and new sites. The agency specifically says that this guidance “should be considered for all residential lead sites subject to CERCLA response and RCRA Corrective Action authorities, including those previously addressed and/or deleted from the [National Priorities List]” and “[e]valuations of previously addressed sites could be conducted in support of a CERCLA five-year review or other technical review.”
The agency expects that this update will have the effect of inducing the evaluation and cleanup at a “significant number” of residential properties. Accordingly, the agency does not expect EPA regions to address all properties immediately, and it will prioritize areas based on risks to people and the environment, generally focusing its initial efforts in areas where children currently live and play and where the EPA hasn’t already conducted cleanup work.
The guidance provides that during this process of prioritizing residential lead sites for evaluation and potential cleanup, the EPA’s Office of Land and Emergency Management will continue to recommend early risk reduction strategies, including a combination of engineering controls (e.g., reliable barriers to mitigate risk from lead exposure) and non-engineering response actions (e.g., education and health intervention programs in conjunction with exposure reduction actions like institutional controls). As part of the overall site management strategy, the EPA recommends that EPA regions collaborate with the legal authorities in federal, local, state, and tribal agencies to address sources of lead exposure in communities.
Updating the residential soil lead guidance is a major milestone in the EPA’s Agencywide Strategy to Reduce Lead Exposures and Disparities in U.S. Communities and it aligns with the goals outlined in the Federal Action Plan to Reduce Childhood Lead Exposures and Associated Health Impacts. While the updated guidance goes into effect immediately, the public is invited to submit feedback that the EPA may consider in any future updates to the guidance. Environmental Protection Agency, “Updated Soil Lead Guidance for CERCLA Sites and RCRA Corrective Action Facilities” (1/17/2024).
Jeremy P. Greenhouse, Cody Bauer, Ryan Cox, Vanessa Johnson, Molly Leisen, and Shantal Pai — Fredrikson & Byron P.A.; Jake Beckstrom — Vermont Law School 2015
Federal Practice
JUDICIAL LAW
• Attempted second amendment of a complaint as of right denied. Where defendants brought a second motion to dismiss after the case was remanded from the 8th Circuit; the plaintiff attempted to file an amended complaint “as of right” pursuant to Fed. R. Civ. P 15(a)(1)(B), contending that each motion to dismiss triggered a new right to amend; and the defendants moved to strike the amended complaint, Judge Wright “reject[ed]” the amended complaint and granted the motion to strike, finding that “a party is entitled to a single 21-day period for amending as a matter of course.” Core & Main, LP v. McCabe, 2023 WL 7017781 (D. Minn. 10/25/2023).
• Refusal to permit filing of sur-reply on summary judgment; abuse of discretion. Where the defendant produced “highly probative” discovery several weeks after the plaintiff filed her opposition to the defendant’s summary judgment motion, and the district court denied without explanation the plaintiff’s subsequent motion for leave to file a sur-reply to present this new information to the court, the 8th Circuit found that the denial of the sur-reply motion was an abuse of discretion, “at least to the extent the denial meant the district court did not consider this highly probative evidence.” Lightner v. Catalent CTS (Kansas City) LLC, 89 F.4th 648 (8th Cir. 2023).
• 28 U.S.C. §1442(a); federal officer removal rejected; no “basic governmental task.” The 8th Circuit affirmed a district court’s remand of an action removed by a healthcare provider under 28 U.S.C. §1442(a), finding that the provider’s creation of an online patient portal was not a “basic governmental task,” and that the provider “did not function in practice as a federal instrumentality.” Doe v. BJC Health System, 89 F.4th 1037 (8th Cir. 2023).
• Awards of pre- and post-judgment interest; no abuse of discretion. Where the prevailing plaintiff failed to move for an award of pre- and post-judgment interest, the 8th Circuit found no abuse of discretion with the trial court’s award of pre-judgment interest absent a motion where prejudgment interest was requested in the complaint. Similarly, the 8th Circuit found no abuse of discretion in the trial court’s award of post-judgment interest because it is “mandatory” under 28 U.S.C. §1961. Contitech USA, Inc. v. McLaughlin Freight Servs., Inc., ___ F.4th ___ (8th Cir. 2024).
• Denial of post-judgment motion for leave to amend affirmed. Finding that the plaintiff’s proposed second amended RICO complaint was “both untimely and futile,” the 8th Circuit affirmed a district court’s denial of the plaintiff’s post-judgment motion to amend. UMB Bank, N.A. v. Guerin, 89 F.4th 1047 (8th Cir. 2024).
• Diversity jurisdiction; amount in controversy; monthly insurance payments. Where the plaintiff filed an action in the Minnesota courts seeking a declaration that disability insurers had improperly reduced his monthly benefit by $6,000; the insurers removed on the basis of diversity jurisdiction; the plaintiff moved to remand, arguing that at the time of removal he had only received reduced benefits for a single month; and the insurers argued that the amount in controversy was more than $1.2 million based on the disputed monthly payment and the plaintiff’s life expectancy, Chief Judge Schiltz determined that the amount in controversy was to be measured at the time of removal, and remanded the action because the amount in controversy fell far short of $75,000. Ziman v. Unum Group, 2023 WL 8868836 (D. Minn. 12/22/2023).
• Fed. R. Civ. P. 26(a)(2) and 37(c)(1); untimely supplemental expert report excluded. Judge Tostrud excluded an expert’s untimely supplemental report, finding no justification for the late report, and noting that “Fixing flaws exposed at a deposition is not a valid justification for late supplemental report.” Keller Indus., Inc. v. Eng’g & Constr. Innovations, Inc., 2024 WL 198999 (D. Minn. 1/18/2024).
• Late disclosures; motion to compel and for sanctions; sanctions imposed. Where several plaintiffs in a series of related employment discrimination actions made late supplemental disclosures, the defendant moved to compel additional information and to reopen depositions, and the plaintiffs failed to oppose the motion, Magistrate Judge Docherty granted most of the motion to compel, granted the defendant’s request for sanctions in an amount to be determined, and warned plaintiffs that their failure to comply with the order “will result in sanctions, specifically a recommendation that this case be dismissed with prejudice.” (Emphasis in original.) Wingo v. 3M Co., 2023 WL 8714499 (D. Minn. 12/18/2023).
• 28 U.S.C. §1292(b); motion to certify questions for interlocutory appeal denied. Judge Tunheim denied the defendants’ motion to certify pursuant to 28 U.S.C. §1292(b), finding that not all controlling questions were issues of law, defendants failed to establish a substantial ground for difference of opinion on most of the claims, and that certification “would not materially advance the ultimate termination of litigation.” State of Minnesota v. Fleet Farm LLC, 2024 WL 22102 (D. Minn. 1/2/2024).
• Request for post-judgment certification to Minnesota Supreme Court denied. Judge Tostrud denied the plaintiff’s post-judgment request to certify a question of Minnesota law to the Minnesota Supreme Court, finding that it was not the “rare case where post-judgment certification is warranted.” Kuklenski v. Medtronic USA, Inc., 2024 WL 165248 (D. Minn. 1/16/2024).
• Fed. R. Civ. P. 8(a)(2); “kitchen sink” or “shotgun” pleading. Dismissing all the plaintiff’s federal claims with prejudice for multiple reasons, Judge Frank criticized the pro se plaintiff’s complaint, which ran 525 paragraphs and included almost 500 pages of exhibits, as not meeting the “short and plain statement” requirement of Fed. R. Civ. P. 8(a)(2). Nygard v. City of Orono, 2024 WL 69927 (D. Minn. 1/5/2024).
• Fed. R. Civ. P. 22; interpleader; attorney’s fees. Resolving a dispute over the proceeds of a life insurance policy in an interpleader action, Judge Blackwell awarded the insurer only a “modest” portion of its requested attorney’s fees, finding that most of its fees could have been avoided had it brought a discharge motion instead of waiting for the case to be decided on summary judgment. Banner Life Ins. Co. v. Bultman, 2024 WL 86313 (D. Minn. 1/8/2024).
• Service on registered agent; timing of removal; equitable estoppel rejected. Where the plaintiff attempted to serve the defendant by mail via its registered agent but the registered agent had moved and the mailing was returned, the plaintiff then served the defendant via Commissioner of Commerce and the defendant removed the action more than 30 days after the commissioner was served but within 30 days of when it received the service, Judge Wright rejected the plaintiff’s argument that the defendant was equitably estopped from arguing that its removal was timely as a result of its failure to update the correct address of its registered agent with the commissioner, and denied the plaintiff’s motion to remand. Broadhead, LLC v. AXIS Ins. Co., 2024 WL 111137 (D. Minn. 1/10/2024).
• Fed. R. Civ. P. 68; FDCPA; request for attorney’s fees reduced. Finding that time spent in connection with state court matters was not compensable, that time spent after acceptance of a Rule 68 offer of judgment was excessive, and reducing the attorney’s hourly rate from $450 to $350 an hour, Judge Menendez reduced an attorney’s fee requested from more than $29,000 to just over $12,000. Woodward v. Credit Serv. Int’l Corp., 2024 WL 228454 (1/22/2024).
Josh Jacobson
Law Office of Josh Jacobson
Immigration Law
JUDICIAL LAW
• BIA failed to meet requirements for reasoned decision-making when it issued a single sentence explanation. On 2/1/2024, the 8th Circuit Court of Appeals reversed the Board of Immigration Appeals’ (BIA) denial of the petitioner’s appeal to reopen his case. The petitioner, a Liberian citizen, was admitted as an asylee to the United States in 2008. Following several criminal convictions, USCIS issued a Notice of Intent to Terminate Asylum Status and placed him in removal proceedings. The petitioner conceded removability but requested a waiver of inadmissibility for humanitarian purposes, which was denied by the immigration judge (IJ). His appeal to the BIA was also unsuccessful, but the case was remanded to the IJ for the sole purpose of determining if his asylum status should be terminated since the IJ failed to explicitly decide that question.
While on remand to the IJ, the petitioner began to consistently take psychiatric medications for his mental health symptoms—depression, bipolar disorder, schizophrenia, and post-traumatic stress disorder. With an improvement in his condition, the petitioner shared new information with his attorney about his mental health struggles and trauma suffered in Liberia. His attorney followed up with a motion to reopen his case before the IJ. The IJ denied the motion, finding the BIA’s remand was restricted solely to the issue of termination of asylum because that body retained jurisdiction. The IJ also formally terminated the petitioner’s asylum and ordered his removal to Liberia. The BIA, following an appeal, held that the IJ did indeed have jurisdiction over the new claims and additional evidence. It noted, however, that the petitioner failed to meet the motion to reopen standard requiring him to show “evidence of his mental health issues and of his past and feared harm if returned to Liberia are new, previously unavailable, or would likely change the result in his case.”
On appeal to the 8th Circuit Court of Appeals, the petitioner argued the BIA failed to provide a reasoned explanation for its application of the motion-to-reopen standard. The court agreed, noting the BIA’s single-sentence explanation did not meet the requirements for reasoned decision-making without spelling out how the elements of a motion to reopen applied to the petitioner’s case. The court held the BIA’s decision was an abuse of discretion, without rational explanation, and failed to consider all factors presented by the petitioner. The court granted the petitioner’s petition for review and remanded the case to the BIA for further proceedings. Davis v. Garland, Nos. 22-3262 and 23-1229, slip op. (8th Circuit, 2/1/2024). https://ecf.ca8.uscourts.gov/opndir/24/02/223262P.pdf
• Guatemalan petitioner denied asylum based on a claim of threats received for father’s unpaid debt. On 1/30/2024, the 8th Circuit Court of Appeals held that the petitioner neither demonstrated that he suffered past persecution on account of a protected factor, nor provided credible, specific evidence that a reasonable person in his position would fear persecution if returned to Guatemala. Gaspar-Felipe v. Garland, No. 22-3372, slip op. (8th Circuit, 1/30/2024). https://ecf.ca8.uscourts.gov/opndir/24/01/223372P.pdf
• BIA did not exceed permissible scope of review of immigration judge’s decision by engaging in its own fact-finding. On remand from the Supreme Court following its 2023 decision in Santos-Zacaria v. Garland, 598 U.S. 411 (2023) (noncitizen need not request discretionary forms of administrative review, like reconsideration of an unfavorable Board of Immigration Appeals (BIA) determination, to satisfy §242(d)(1)’s exhaustion requirement), the 8th Circuit Court of Appeals held that the BIA, while denying discretionary special rule cancellation of removal, permissibly weighed the evidence of nonphysical harm that the petitioner caused to his ex-girlfriend and her daughter differently than the immigration judge – all without impermissibly finding facts or disregarding the immigration judge’s factual findings. The court found, furthermore, that it lacked jurisdiction to review the immigration judge’s decision denying cancellation of removal as a matter of agency discretion. Nor, for that matter, did the petitioner’s claim that the BIA’s decision was internally inconsistent and unreasoned prove sufficient to establish jurisdiction. Mencia-Medina v. Garland, No. 20-1724, slip op. (8th Circuit, 1/23/2024). https://ecf.ca8.uscourts.gov/opndir/24/01/201724P.pdf
• Court lacks jurisdiction to review BIA refusal to grant sua sponte relief. In December, the 8th Circuit Court of Appeals held that it lacked jurisdiction to review the Board of Immigration Appeals’ refusal to grant sua sponte relief to the petitioner while also denying his request for equitable tolling, finding that he attempted to raise new arguments for the first time in his petition for review. “Simply put, [he] petitions us to review issues on which the Board did not rule. Thus, he fails to comply with 8 U.S.C. §1252(d)(1)’s requirement to exhaust all administrative remedies…Whatever the merits, [he] should have articulated these arguments to the Board in either of his two motions, but he did not.” Essel v. Garland, No. 22-2615, slip op. (8th Circuit, 12/28/2023). https://ecf.ca8.uscourts.gov/opndir/23/12/222615P.pdf
• No ineffective assistance of counsel: Petitioner failed to show evidence of persecutory motive behind burning of his home in Guatemala. In December, the 8th Circuit Court of Appeals found the immigration judge’s denial of withholding of removal and Convention Against Torture (CAT) protection was supported by substantial evidence. The court concluded that the Board of Immigration Appeals (BIA) properly denied the petitioner’s first motion to reopen based on ineffective assistance of counsel, reasoning that the petitioner’s failure to know who was responsible for burning down his home in Guatemala foreclosed any reasonable likelihood of a persecutory motive. “Thus any failure of the IJ to further develop the record is immaterial.” He was, consequently, not prejudiced by his counsel’s presumptively deficient performance. The court held the BIA properly denied the petitioner’s second motion to reopen based on Mendez Rojas class membership given his failure to qualify for class membership and lack of prejudice. Pascual-Miguel v. Garland, Nos. 20-2397 and 23-1072, slip op. (8th Circuit, 12/27/2023). https://ecf.ca8.uscourts.gov/opndir/23/12/202397P.pdf
• Conviction for sexual abuse of a minor is an aggravated felony. In December, the 8th Circuit Court of Appeals held the Board of Immigration Appeals (BIA) did not err when it adopted the generic federal definition of sexual abuse of a minor contained within the criminal procedure statute, 18 USC §3509(a)(8)—as opposed to 18 U.S.C. §2243(a)—to determine that the petitioner’s Minnesota conviction for sexual abuse of a minor under Minn. Rev. Stat. Sec. 609.324 properly qualified as an aggravated felony. As such, “he is deportable.” The court denied the petition for review. Aguilar-Sanchez v. Garland, No. 22-3598, slip op. (8th Circuit, 12/4/2023). https://ecf.ca8.uscourts.gov/opndir/23/12/223598P.pdf
ADMINISTRATIVE ACTION
• USCIS issues initial instructions for FY2025 H-1B cap season. In late January, U.S. Citizenship and Immigration Services (USCIS) announced updates for the FY2025 H-1B cap season, including, among other things, measures “to strengthen the integrity and reduce potential for fraud in the H-1B registration process.” The initial registration period for the FY2025 H-1B cap will open at noon (ET) on 3/6/2024 and run through noon (ET) on 3/22/2024. News Release: “USCIS Announces Strengthened Integrity Measures for H-1B Program.” (1/30/2024). https://www.uscis.gov/newsroom/news-releases/uscis-announces-strengthened-integrity-measures-for-h-1b-program 89 Fed. Reg. 7456 (2024). https://www.govinfo.gov/content/pkg/FR-2024-02-02/pdf/2024-01770.pdf For more information about the H-1B process, see USCIS’ H-1B Cap Season webpage: https://www.uscis.gov/working-in-the-united-states/temporary-workers/h-1b-specialty-occupations-and-fashion-models/h-1b-cap-season
• DHS notices extending and/or redesignating TPS.
Syria: On 1/29/2024, the U.S. Department of Homeland Security announced the extension of the designation of Syria for temporary protected status (TPS) for 18 months from 4/1/2024 through 9/30/2025. Those wishing to extend their TPS must re-register during the 60-day period running from 1/29/2024 through 3/29/2024. The secretary also redesignated Syria for TPS for an 18-month period, allowing Syrians to apply who have continuously resided in the United States since 1/25/2024 and been continuously physically present in the United States since 4/1/2024. The registration period for these new applicants, under the redesignation, runs from 1/29/2024 through 9/30/2025. 89 Fed. Reg. 5562 (2024). https://www.govinfo.gov/content/pkg/FR-2024-01-29/pdf/2024-01764.pdf
El Salvador, Haiti, Honduras, Nepal, Nicaragua, and Sudan: On 12/14/2023, the U.S. Department of Homeland Security (DHS) announced the lengthening of the re-registration periods for the extension of TPS designations for El Salvador, Haiti, Honduras, Nepal, Nicaragua, and Sudan for Temporary Protected Status (TPS) from 60 days to the full 18-month designation extension period of each country. According to DHS Secretary Alejandro N. Mayorkas, “DHS is extending the re-registration periods for a number of reasons, including that certain beneficiaries have not been required to re-register for TPS for several years due to pending litigation and related continuation of their documentation, confusion within the beneficiary population, and operational considerations for USCIS.” TPS re-registration periods are as follows: El Salvador: 7/12/2023 through 3/9/2025; Haiti: 1/26/2023 through 8/3/2024; Honduras: 11/6/2023 through 7/5/2025; Nepal: 10/24/2023 through 6/24/2025; Nicaragua: 11/6/2023 through 7/5/2025; Sudan: 8/21/2023 through 4/19/2025; 88 Fed. Reg. 86665 (2023). https://www.govinfo.gov/content/pkg/FR-2023-12-14/pdf/2023-27342.pdf
R. Mark Frey
Frey Law Office
Intellectual Property
JUDICIAL LAW
• Copyright: Lack of sufficient creativity not protectable. A panel of the United States Court of Appeals for the 8th Circuit recently affirmed a decision from United States District Court for the Western District of Missouri holding that copyright holder’s asserted work lacked a sufficient degree of creativity to be protectable. Ronald Ragan developed a “guest sheet” intake form for use with prospective automotive customers and received a copyright registration in 1999. Circa 2000, Ragan claimed that a first auto dealership infringed his work. The lawsuit was later dismissed. In 2015, Berkshire Hathaway Automotive Inc. (BHA) acquired the other auto dealer and continued to use the form. Ragan sued BHA, alleging that BHA copied the single-page car dealership customer intake form. BHA moved for judgment on the pleadings, asserting the guest sheet was not copyrightable. The district court granted BHA’s motion and entered judgment against Ragan. Ragan appealed, arguing the district court erred. To meet the Copyright Act’s originality requirement, a work must possess at least some minimal degree of creativity. Ragan argued that his guest sheet was elegant and distilled from years of experience. The panel held the guest sheet contained fewer than 100 words seeking basic information. The selection and arrangement of the words used as section headings and question prompts did not make the guest sheet copyrightable. The guest sheet does not tell a car salesperson how to do his or her job and is a form designed to record, not convey, information. For these reasons, the panel affirmed the district court’s judgement in favor of BHA. Ragan v. Berkshire Hathaway Auto., Inc., No. 22-3355, 2024 U.S. App. LEXIS 2307 (8th Cir. 2/2/2024).
• Copyright: Court used 5x-fair-market-value multiplier to calculate statutory damages in default judgment. Judge Brasel recently awarded plaintiff Steven Markos $15,000 in statutory damages in granting his motion for default judgment. In August 2023, Markos, a photographer, sued Downtown Resource Group, LLC (DRG), for use of Markos’s copyrighted photograph of poet Henry Longfellow’s house in Cambridge, Massachusetts. DRG removed the photograph from the website but did not answer or otherwise respond to the complaint. The clerk of court entered default. Markos moved for default judgment and sought statutory damages. The Copyright Act allows plaintiffs to choose between actual or statutory damages where statutory damages may be a substitute for unproven or unprovable actual damages. Statutory damages for a work range between $750 and $30,000. 17 U.S.C. §504(c)(1). If the copyright owner proves the infringement was willful, the maximum available amount is $150,000. Markos’s complaint alleged allegations and facts sufficient to establish willful infringement, which in default must be taken as true. Markos sought $30,000 in statutory damages. In setting the award amount, the court found that courts generally multiply the fair market value of the copyrighted work to arrive at an award that properly compensates the plaintiff for the infringement and deters the defendant from committing future infringements. The court used a 5x multiplier and awarded Markos $15,000, which was five times the annual license fee for using the photographs for two years. Markos v. Downtown Res. Grp., LLC, No. 23-CV-2459 (NEB/ECW), 2024 U.S. Dist. LEXIS 10415 (D. Minn. 1/22/2024).
Joe Dubis
Merchant & Gould
Probate & Trust Law
JUDICIAL LAW
• Trustee removal: Trustee may be removed for a series of small breaches. On 1/17/2023, the Minnesota Court of Appeals issued its decision in In the Matter of the Otto Bremer Trust. The Minnesota Supreme Court recently affirmed. The Supreme Court relied upon the official comments to the Uniform Trust Code in determining: “Under Minnesota Statutes section 501C.0706(b)(1) (2022), a district court may remove a trustee for a ‘serious breach of trust,’ which may involve a series of smaller breaches, none of which alone would justify removal, but which do justify removal when considered together.” The court went further and noted that the intent of the settlor does not prevent a court from removing a trustee for breaching its fiduciary duties. In re the Matter of the Otto Bremer Trust, __ N.W.3d __, 2024 WL 462587 (Minn. 2/7/2024).
Jessica L. Kometz
Bassford Remele
State Appellate Practice
MN SUPREME COURT
• Notable decisions: A district court does not abuse its discretion by certifying an order as a final partial judgment under Minn. R. Civ. P. 54.02 when the certification order details the reasons for certification, demonstrates that the district court considered the totality of the circumstances, and the claims certified as final were distinct from the remaining claims. The Supreme Court considered whether the district court abused its discretion by certifying its order dismissing third-party claims pursuant to Rule 12 as a final partial judgment for purposes of appeal. The third-party claims arose when Bolton & Menk, Inc.—having itself been sued by the City of Elk River for breach of contract and professional negligence—brought a third-party complaint for contribution, indemnity, and negligence against other parties involved in the underlying construction dispute. The district court granted the Rule 12 motion brought by the third-party defendants, and Bolton moved to certify the order as immediately appealable under Minn. R. Civ. P. 54.02. The district court did so certify the order as a final partial judgment, but the Minnesota Court of Appeals dismissed the resulting appeal for lack of jurisdiction. The court of appeals reasoned that the district court abused its discretion in certifying the order for appeal because it conflicted with the general policy against piecemeal appeals. The Supreme Court, although recognizing that the “thrust” of the appellate rules is “that appeals should not be brought or considered piecemeal,” reversed the court of appeals. The Supreme Court determined that the third-party claims arising in equity were clearly separable from the underlying claims for breach of contract and negligence. And because in certifying the order as immediately appealable, the district court also “documented its reasons for granting certification in a 6-page order,” the Supreme Court could not question the district court’s exercise of discretion. Nevertheless, the third-party defendants argued the district court abused its discretion, noting that 1) a district court must expressly consider the risk of mootness and (2) because the claims arose out of the same set of facts, the third-party claims could not be considered “distinct” so as to permit a piecemeal appeal. The Supreme Court rejected both arguments. City of Elk River v. Bolton & Menk, Inc., A22-1771 (Minn. 1/31/2024).
• Notable petitions granted: The Minnesota Supreme Court will consider the level of due process that must be afforded to institutions under investigation by the Minnesota Department of Education for alleged criminal wrongdoing. The Minnesota Supreme Court accepted review of a case arising out of an audit and investigation conducted by the Minnesota Department of Education (MDE) that resulted in a clawback of over $1.3 million from a charter school organization. That organization—Minnesota Internship Center (MNIC)—came under investigation for allegedly manipulating attendance records. MNIC appealed the MDE’s findings and sought to introduce additional evidence. The MDE commissioner rejected MNIC’s appeal and refused to consider the additional evidence. MNIC contends that MDE’s actions violated the minimum due process to be afforded to institutions investigated for criminal wrongdoing under Minn. Stat. §127A.42. The Minnesota Court of Appeals rejected MNIC’s appeal from the MDE commissioner’s decision. The Supreme Court accepted review of the following issue: whether respondent/appellee Minnesota Department of Education (MDE) was required to conduct its investigation of petitioner/appellant Minnesota Internship Center’s (MNIC) alleged criminal wrongdoing and resulting clawback from MNIC of more than $1.3 million pursuant to and with the corresponding minimum due process protections of Minn. Stat. §127A.42. Minn. Internship Ctr. v. Minn. Dep’t of Educ., A23-0064 (Minn. Ct. App. 11/20/2023), rev. granted (Minn. 1/31/2024).
MN COURT OF APPEALS
• Notable precedential decision: District court abused its discretion in dismissing wrongful death claim for failure to serve expert-review affidavit within the three-year statute of limitations for a wrongful-death action. The Minnesota Court of Appeals reversed a Rule 12 dismissal of a medical malpractice related wrongful-death claim, finding that, as a matter of first impression, compliance with Minn. Stat. §145.682’s expert review requirements was not a jurisdictional prerequisite to commence a wrongful death action. The district court dismissed the action after the plaintiff failed to serve an expert-review affidavit before the statute of limitations expired, despite the fact that the plaintiff submitted an expert-review affidavit within the 60-day safe harbor period. The court of appeals determined that Minn. Stat. §573.02, subd. 1, does not require that an expert-review affidavit under Minn. Stat. §145.682, subd. 2, be served before the expiration of the three-year-limitations period and that, because the plaintiff complied with the expert-review statute within the safe-harbor period, the district court abused its discretion in dismissing the complaint. Daulton v. TMS Treatment Center, Inc., A23-0483 (Minn. Ct. App. 1/16/2024).
• Notable nonprecedential decision: District court abused its discretion in issuing discovery sanction that mandated summary judgment. In an appeal involving insurance coverage, the court of appeals reversed and remanded a grant of summary judgment in favor of the insurer based on a discovery sanction against the insured for a failure to provide information related to the claimed losses. The court found that the district court’s imposition of a discovery sanction under Minn. R. Civ. P. 37.02 was an abuse of discretion because there was no evidence of prejudice that would warrant the severe sanction of dismissal. The court of appeals questioned, but did not reach, the issue of whether the district court had authority to issue a discovery sanction where no formal discovery requests had been made. Maple Ridge Homeowners Ass’n v. Hiscox Ins. Co., Inc., A23-0478 (Minn. Ct. App. 2/5/2024).
• Notable special term order: Appeal dismissed as premature due to pending Rule 60 motion, compliance with general rules of practice not required. The Minnesota Court of Appeals clarified the requirements of a post-decision tolling motion in dismissing an appeal as premature in light of a pending Rule 60 motion. Respondents sought to dismiss an appeal from a final judgment to allow the district court to issue a decision on its Rule 60 motion. Appellant challenged the sufficiency of the Rule 60 motion as filed, among other issues. The court of appeals explained that a “notice of appeal filed before the disposition of a post-decision tolling motion listed in Minn. R. Civ. App. P. 104.01, subd. 2, is premature and of no effect, and does not divest the district court of jurisdiction to dispose of the motion” and that while there were some procedural defects in the Rule 60 motion, “compliance with the rules of general practice is not a requirement for a proper postdecision tolling motion.” Magnuson v. Bone et al., A23-1818 (Minn. Ct. App. 12/19/2023).
• Notable special term order: Request for writ of prohibition denied, order compelling deposition of out-of-state resident proper. The Minnesota Court of Appeals denied a petition seeking a writ of prohibition that would prevent enforcement of an order compelling an out-of-state resident to sit for a deposition. The petitioner sought a writ on the grounds that the district court exceeded its authority in granting a motion to compel her compliance with a third-party subpoena for two reasons: (1) The district court lacked jurisdiction over her to enforce the subpoena, and (2) she was exempt from service of process while in Minnesota for the purposes of attending an independent medical exam in a separate case. The court of appeals rejected both arguments, finding that existing precedent authorized the district court to exercise “transient jurisdiction” over the petitioner and that she was not exempt from service while attending the IME because she had in fact been compelled to attend the IME by court order and was not voluntarily in the state to participate in the legal proceeding such that she was entitled to immunity from service. In re Gracelyn Trimble, A24-0094 (Minn. Ct. App. 1/30/2024).
Pat O’Neill & Sam Schultz
Larson King, LLP
Tax Law
JUDICIAL LAW
• Outpatient substance abuse facility properly classified commercial property. The parties disputed the proper classification and tax valuation of a developed parcel with an outpatient substance abuse treatment facility in Mora. Kanabec County’s expert’s value consideration was approximately two and a half times that of the petitioner’s expert, and the county’s assessed value was nearly double the petitioner’s expert. First, the plaintiffs argued that the outpatient facilities should have been classified as residential, not commercial. The court disagreed, since the facility did not offer the property to residents “for rent” nor require residents to stay 30 days or more like a typical rental, so the outpatient facilities were properly classified as commercial. Second, after a thorough walk-through, examining the three traditional approaches to value, and weighing each expert’s opinions and methods, the court independently determined the assessed value for the property should be decreased from $3,681,600 to $3,150,00 for 2020 and decreased from $3,787,200 to $3,085,000 for 2021. RHTC LLC v. Cnty. of Kanabec, No. 33-CV-21-86, 2023 WL 8817661 (Minn. Tax 12/20/2023).
• Increased assessment. Following a one-day trial, the court increased the assessed value of the Burnsville Medical Building located near the 35E and 35W merge point. The petitioner submitted an expert appraisal report, while Dakota County chose not to introduce any evidence at trial and instead relied on the prima facie validity of the assessor’s original estimated market value. In a thorough opinion, the court first held that the property owner overcame the prima facie validity of the assessment by presenting a qualified appraisal. Although the court did not adopt all of the appraisal methodology, it held that the “appraisal contained substantial and credible evidence showing the original assessment was incorrect.” The court then turned to the valuation, and agreed with Burnsville Medical’s argument that the cost method would not provide credible conclusions, so the court considered only the sales comparison and income approaches. The court generally agreed with the petitioner’s expert’s sales approach, but the court agreed with the county on the county’s occupancy adjustment argument. The court removed the occupancy adjustment, which resulted in a small change. The court made a more significant adjustment after its analysis of the income approach, because it declined to adopt petitioner’s reduction for future tenant improvements. Following its final reconciliation and disposition of the county’s remaining arguments, the court reached its assessed value of $9.3 million. Burnsville Med. Bldg., LLC, v. Cnty. of Dakota, No. 19HA-CV-21-1303, 2023 WL 8533688 (Minn. Tax 12/8/2023).
• Limitations period: No special justification to warrant reversal. Section 6501 governs the limitations on assessments and collections. Subpart (c)(1) governs exceptions on limitations in cases of false returns and specifically provides that “[i]n the case of a false or fraudulent return with the intent to evade tax, the tax may be assessed… at any time.” 26 USCA §6501(c)(1). In a case submitted to the tax court for a decision without trial, Murrin v. Comm’r of Internal Revenue, the court was asked to determine whether the limitations period for fraudulent returns varies depending on whether it was the taxpayer or the preparer who had the intent to evade tax.
This was not a novel question. The court previously held that the “limitation period[s] for assessment[s] [are] extended under section 6501(c)(1) if the return is fraudulent, even though it was the preparer rather than the petitioner who had the intent to evade tax.” Allen v. Comm’r of Internal Revenue, 128 T.C. No. 3, at *42 (U.S. Tax Ct., 2007). The petitioner here urged the court to reconsider Allen and asked the court to interpret section 6501(c) as extending the limitation periods for cases where the taxpayer herself (not the preparer) intended to evade taxes. Such an interpretation would prevent the government from extending assessment and collection periods when it was the authorized agent, rather than the taxpayer, who acted with intent to evade taxes.
While the court acknowledged issues of imprecise language, it hung its hat on stare decisis, which “generally obviates [its] need to revisit or repeat the statutory analysis that led... to a prior decision, absent special justification.” In this case, the special justification the petitioner argued had already been rejected. Although the court determined that stare decisis weighed in favor of not reconsidering its decision in Allen, the court continued its analysis. The court discussed congressional intent and the precise language of section 6501(c)(1). The provision’s language lacked any requirement that the taxpayer themselves must have had the intent to evade taxes, only that the intent to evade be present in the filing of a return. The congressional intent also supported the government’s interpretation of the provision. The court entered a decision for the respondent. Murrin v. Comm’r of Internal Revenue, T.C. Memo. 2024-10 (U.S. Tax Ct., 2024).
• Section 4973(a), tax or penalty? In a motion for summary judgment, the commissioner asked the court to decide that section 4973 imposes a tax, not a penalty. The IRS issued a notice of deficiency to the petitioner for several tax years for excise tax deficiencies totaling roughly $8,500,000. The deficiencies were assessed under section 4973. The deficiencies occurred when the petitioner incorrectly characterized a $26,000,000 corporate buyout as a nontaxable “rollover contribution” to his IRA. The buyout was not eligible for a tax-free rollover, instead constituting an “excessive contribution” to the petitioner’s IRA under section 4973(a)(1).
The court was tasked with determining whether exactions under section 4973 impose a tax or a penalty. Through a swift reading of Section 4973, captioned “Tax on excess contributions to certain tax-favored accounts and annuities,” the court reasoned that a textual analysis resolved the question. 26 USCA §4973(a). Within section 4973(a), the word “tax” appears nine times and the word “penalty” does not appear at all. Although the textual analysis was compelling, the court considered other factors for the sake of completeness. The court next weighed the similarity between taxes imposed under section 4973 and extractions that have previously been established to be taxes and not penalties. For this comparison, the court looked to taxes imposed on excessive lobbying expenditures by public charities. This factor supported considering the tax a tax. The congressional history of section 4973 taxes also supported the “tax” determination: “Congress’s uninterrupted use of the term ‘tax’ to describe the exaction[s]” imposed under section 4973 further supported a determination that section 4973 exactions are “taxes.”
Finally, the court addressed the petitioner’s functional analysis of section 4973. The court was unpersuaded that the taxes were functionally penalties instead of taxes because of the punitive nature of section 4973 and their design as deterrents. Instead, the court recognized the basic economic theory that taxes can and are used simultaneously as incentives and deterrents. The court’s findings, weighing heavily in favor of the respondent, concluded with granting the respondent’s motion for partial summary judgment and a conclusion that the excise taxes within section 4973, were in fact, taxes. Couturier v. Comm’r of Internal Revenue, T.C. Memo 2024-6, (U.S. Tax Ct., 2024).
• This should have been an email. Randall Lake and Colleen Keough v. County of Lake concerned the property valuation of two parcels of land: one along the shore of Lake Superior and the other an adjacent former campground. In 1998 and 2008 respectively, property owners Lake and Keough granted conservation easements over all of the Lake Superior property and 95% of the campground property to the Minnesota Land Trust. Both conservation easements restricted future use and development and caused a decrease in the market value of both properties. In 2021, the assessed value on their properties increased, so Lake and Keough contacted the Lake County Assessor’s Office to understand how their property was being valued.
The answers they received were, in the words of the court, “contradictory.” In one response, the appraiser supervisor claimed the county valued the properties as “unencumbered fee-simple ownership” properties. In other emails, the supervisor claimed to be valuing the properties based on two comparable local sales of properties also “encumbered by a conservation easement.” Both parties asked the tax court for summary judgment to resolve the dispute. The court determined that whether the county’s property valuation properly considered the impact of the easements was a material fact of the case and required more “credibility determinations and factfinding, tasks not appropriately undertaken on summary judgment.” Summary judgment was denied for both parties. Lake and Keough v. Cnty. of Lake, No. 38-CV-22-153, 2024 WL 315194 (Minn. Tax 1/25/2024).
Morgan Holcomb, Adam Trebesch, Leah Olm
Mitchell Hamline School of Law
Torts & Insurance
JUDICIAL LAW
• Entitlement to prejudgment interest under Minn. Stat. §60A.0811. After part of a commercial building owned by plaintiff collapsed, plaintiff opened a claim with defendant, its insurer. Defendant acknowledged receipt of plaintiff’s insurance claim the next day. Two months later, defendant paid plaintiff $97,285.31 for the actual cash value (ACV) of the property damage and lost rental income. Nearly a year later, plaintiff commenced suit against defendant for breach of contract, alleging defendant had failed to fully compensate it for its losses. But prior to filing the complaint, plaintiff demanded an appraisal under the insurance policy. The appraisal panel awarded plaintiff a total of $319,342.50 for the ACV of the damage to the building and for lost rental income. Within days, defendant paid the difference between its original payment and the appraisal award to plaintiff. Defendant then paid plaintiff interest on the appraisal award pursuant to Minn. Stat. §549.09. However, plaintiff responded that it was entitled to additional interest pursuant to Minn. Stat. § 60A.0811.The district court determined that plaintiff was not entitled to interest under section 60A.0811 and declined to enter judgment in favor of plaintiff.
The Minnesota Court of Appeals affirmed. The court began by noting that it “is well settled that an insured, such as [plaintiff], who obtains an appraisal award pursuant to an insurance policy is entitled to preaward interest under section 549.09, even without a determination of breach of contract or actionable wrongdoing by the insurer.” The question before the court was whether the district court erred when it concluded that plaintiff was not entitled to additional interest from defendant calculated under § 60A.0811, subd. 2, which provides: “An insured who prevails in any claim against an insurer based on the insurer’s breach or repudiation of, or failure to fulfill, a duty to provide services or make payments is entitled to recover ten percent per annum interest on monetary amounts due under the insurance policy, calculated from the date the request for payment of those benefits was made to the insurer.” The court held that that “for an insured to ‘prevail[] in any claim’ in ‘a court action or arbitration proceeding’ under section 60A.0811, an insured must obtain a favorable determination in a court action or arbitration proceeding on a claim (or assertion of rights) ‘based on the insurer’s breach or repudiation of, or failure to fulfill, a duty to provide services or make payments… due under the insurance policy.’” The court went on to hold that “an insured who obtains an appraisal award, without more, has not ‘prevail[ed]’ on a claim against an insurer within the meaning of section 60A.0811 because an appraisal does not determine a claim in a court action or arbitration proceeding.” Because the district court did not find in favor of plaintiff on its breach of contract claim in this case, it was not entitled to additional prejudgment interest under §60A.0811. PSS Properties, LLC v. North Star Mut. Ins. Co., No. A22-0738 (Minn. Ct. App. 12/18/2023).
Jeff Mulder
Bassford Remele