April 2024

Notes & Trends – April 2024

Criminal Law


• Indecent exposure: A woman’s intentional display of breasts is exposure of private parts. Police encountered appellant, a woman, in a convenience store parking lot with her breasts fully exposed. The store was open and others were present. She was arrested and charged with indecent exposure and drug possession, after a search of her purse revealed cocaine. After a stipulated facts trial, appellant was convicted. On appeal, she argues that the evidence was insufficient to convict her of indecent exposure, because female breasts are not “private parts,” and that the indecent exposure statute violates equal protection because it penalizes the exposure of only female breasts. 

Minn. Stat. §617.24, subd. 1(1) criminalizes willful and lewd exposure of one’s body, or the private parts thereof, in a public place. The Minnesota Court of Appeals holds that a woman’s fully exposed breasts are “private parts” under this section. While the term is not defined in the statute, the court finds the Legislature must have intended it to include a woman’s fully exposed breasts, pointing to the statute’s exclusion of breasts exposed for breastfeeding purposes, an exclusion that would be unnecessary if a woman’s breasts were not considered “private parts.” Because appellant fully exposed her breasts in a public area, one where nude exhibitionism is “shockingly out of the ordinary,” the evidence was sufficient to convict her of indecent exposure. 

The court also rejects appellant’s equal protection argument, given prior case law establishing that exposure of male breasts is distinct from the exposure of female breasts. State v. Plancarte, A23-0158, 2024 WL 413442 (Minn. Ct. App. 2/5/2024). 

• Escape from custody: At trial for failing to return following a temporary leave from custody, court should instruct jury that the state must prove the failure to return was intentional and voluntary. Appellant was in custody awaiting trial on other charges when he was granted an eight-hour furlough to attend his mother’s funeral. He failed to return from the furlough and was arrested almost three weeks later. At the conclusion of his trial for the escape offense, the district court denied appellant’s request that the escape instruction include a general intent requirement, as the statute and model instructions do not include such a requirement.

As is relevant to this case, Minn. Stat. §609.485, subd. 2(1), prohibits an “escape [] while [being] held pursuant to a lawful arrest [or] in lawful custody on a charge or conviction of a crime.” “Escape” includes failing to return to custody following temporary leave. Minn. Stat. §609.485, subd. 1. While the statute does not include a general intent element, the court of appeals emphasized that
“[a]n unbroken line of precedential cases has recognized that the crime of escape includes the element of general, volitional intent.” These cases established the requirement that the escape be intentional and voluntary. 

Therefore, appellant was entitled to an instruction that the state is required to prove appellant’s failure to return from custody was intentional and voluntary. The district court’s error was not harmless and appellant is entitled to a new trial on the escape charge. State v. Garza, A23-0128, A23-A0129, 2024 WL 413436 (Minn. Ct. App. 2/5/2024). 

• Criminal sexual conduct: Infliction of bodily harm alone constitutes “force.” Appellant was convicted of first-degree criminal sexual conduct, both for using force and acting against a physically helpless victim. Appellant argues on appeal the evidence is not sufficient to sustain the convictions. 

First, the court of appeals finds there was sufficient evidence to support the jury’s conclusion that appellant was physically helpless, because the victim testified she was heavily intoxicated and went in and out of consciousness. Next, the court finds the evidence was also sufficient to support the finding that appellant knew or had reason to know the victim was physically helpless. 

As to the force charge, the state was required to prove appellant sexually penetrated the victim, caused injury to the victim, and used force or coercion to accomplish the sexual penetration. Minn. Stat. §609.342, subd. 1(e)(i). Appellant argues the state failed to prove the force element because there was no evidence showing he used the infliction or threat of infliction of bodily harm to cause the victim to submit. 

“Force” is defined as “the infliction, attempted infliction, or threatened infliction by the actor of bodily harm or commission or threat of any other crime by the actor against the complainant or another, which (a) causes the complainant to reasonably believe that the actor has the present ability to execute the threat and (b) if the actor does not have a significant relationship to the complainant, also causes the complainant to submit.” Minn. Stat. §609.341, subd. 3. The court finds that the structure of the statute indicates it is divided into two parts, separating the bodily harm portion from the remainder. The “causes the complainant to submit” requirement applies only to the second portion, or the “any other crime” portion, of the definition. Thus, the state was not required to prove that appellant’s infliction or threatened infliction of bodily harm caused the victim to submit. The evidence here was sufficient to prove appellant inflicted harm upon the victim, given her testimony that she felt pain during the assault. 

The district court erred, however, by convicting and sentencing appellant on both first-degree criminal sexual conduct offenses. Case law prohibits convicting and punishing an offender for two counts of the same crime stemming from the same conduct. State v. Williams, A23-0200, 2024 WL 413474 (Minn. Ct. App. 2/5/2024).

n Procedure: Requirement that offenses punishable by life imprisonment be prosecuted by indictment does not apply to lifetime conditional release. Appellant was charged by complaint with third- and fourth-degree criminal sexual conduct offenses relating to an incident in 2019. He was convicted and, due to a 2016 conviction for third-degree criminal sexual conduct, under Minn. Stat. §609.3455, the district court sentenced appellant to 140 months and ordered that he be placed on lifetime conditional release following his release from custody. On appeal, appellant argues Minn. R. Crim. P 17.01, subd. 1 (“An offense punishable by life imprisonment must be prosecuted by indictment”) required the state to charge him via indictment, not complaint. The court of appeals affirmed. 

Appellant advocates for overturning State v. Ronquist, 600 N.W.2d 444 (Minn. 1999), which held that a conviction for an offense which, when coupled with a conviction for a prior offense, required an enhanced sentence of life imprisonment, did not “create an offense punishable by life imprisonment which must be prosecuted by indictment.” Id. at 449. Decisions of the U.S. Supreme Court in Apprendi v. New Jersey, 530 U.S. 466 (2000), and Blakely v. Washington, 542 U.S. 296 (2004), “raised the bar for what must be put before a jury when a sentence is enhanced.” But these cases do not affect the holding in Ronquist. Apprendi and Blakely affirmed that a sentence other than the fact of a prior conviction must be put before the jury. It is such a prior conviction that triggers the lifetime conditional release. 

After concluding Ronquist is still good law, the court determines its holding also applies to lifetime conditional release. An indictment was not needed to charge appellant here. State v. Snyder, A22-0318, 2 N.W.3d 302 (Minn. 2/7/2024).

Samantha Foertsch
Bruno Law PLLC

Stephen Foertsch
Bruno Law PLLC


Employment & Labor Law


• Race, gender discrimination; legitimate reason to discharge. A prison employee who was fired for failing to secure an office that an inmate broke into and stole money lost her claim of race and gender discrimination. The 8th Circuit Court of Appeals affirmed a lower court ruling that the employer had a “legitimate, non-discriminatory reason” to fire her for her laxity in not securing the premises. Ingram v. Arkansas Department of Corrections, 2023 WL 5838798 (8th Cir. 2024). 

• Sick time backpay award upheld. The award of nearly $33,000 for past sick time owed to an employee under the St. Paul Earned Sick & Safe Time Ordinance was upheld. The Minnesota Court of Appeals affirmed a ruling of the city’s Department of Human Rights. St. Paul Department of Human Rights v. Caremate Home Health Care, 2024 WL 323339 (Minn. Ct. App. 1/29/2024) (unpublished).

•  Unemployment compensation; quarrelsome employee loses. An employee who swore at his manager and quarreled with a co-worker, exchanging vulgarities overheard by customers while threatening to injure him, was denied unemployment benefits. The appellate court affirmed a decision by an unemployment law judge with the Department of Employment & Economic Development ( DEED) that the employee committed disqualifying misconduct that barred him from receiving unemployment benefits. Freeman v. Kellberg Catering, 2024 WL 323451 (Minn. App. 1/29/2024) (unpublished).

• Unemployment compensation; cop’s use of force bars benefits. A Duluth police officer was denied unemployment compensation benefits for violating the department’s use of force policy. Upholding a decision by an unemployment law judge with DEED, the court of appeals held that firing two shots through an apartment door after pleas from inside to stop shooting constituted disqualifying misconduct. Leibfried v. City of Duluth, 2024 WL 160097 (Minn. App. 1/16/2024) (unpublished).

Marshall H. Tanick
Meyer, Njus & Tanick


Environmental Law


• MPCA issues implementation procedures for wild-rice sulfate standard in wastewater permits. In January 2024, the Minnesota Pollution Control Agency (MPCA) released its Procedures for Implementing the Class 4A Wild Rice Sulfate Standards in NPDES Wastewater Permits in Minnesota, available at https://www.pca.state.mn.us/sites/default/files/wq-wwprm2-109.pdf. The release of the WR implementation procedures followed MPCA’s December 2023 release of its Framework for Developing and Evaluating Site-Specific Sulfate Standards for the Protection of Wild Rice. The framework and WR implementation procedures are the agency’s latest steps in its work to fully implement the Minnesota Class 4A 10 mg/L sulfate water quality standard, adopted in 1973, “applicable to waters used for production of wild rice during periods when the rice may be susceptible to damage by high sulfate levels.” Minn. R. 7050.0224, subp. 2.

Minnesota has approximately 2,400 waters that MPCA has determined are “waters used for the production of wild rice.” And although sulfate levels across the state have not been measured as thoroughly as other pollutants, sulfate levels in surface waters generally are lower in north-central and northeastern Minnesota, and higher in the western and southwestern portions of the state. In 2021, the U.S. Environmental Protection Agency added 32 wild rice waters to Minnesota’s 2020 Impaired Waters List due to measured sulfate levels in excess of 10 mg/L, and in 2022, MPCA updated its Impaired Waters List to include three additional wild rice waters, bringing the total to 35 impaired wild rice waters.

MPCA’s WR implementation procedures document reviews MPCA’s four-step procedure for evaluating and developing surface water quality-based effluent limits for wastewater treatment facility (WWTF) National Pollution Discharge Elimination System (NPDES) permits. Notably, the Class 4A sulfate standard only applies to “waters used for production of wild rice”—a phrase whose meaning has been and continues to be debated—whereas most Class 4 water quality standards apply to almost all waters of the state. Also, of the approximately 2,400 waters that produce wild rice, only about 10% (244) are impacted by WWTFs with water discharge permits, according to MPCA, and some wild rice waters have multiple WWTFs discharging upstream (e.g. the lower Mississippi receives discharges from about 576 WWTFs). Some WWTF permittees upstream from wild rice waters have sulfate monitoring prescribed in their NPDES permit, but most have not been monitoring sulfate in their discharge.

The WR implementation procedures establish a four-step procedure that will be initiated when a facility’s NPDES permit is reissued or the facility undertakes a major modification. The first step, determining whether sulfate monitoring is required, tasks MPCA’s effluent limit (EL) staff with determining if there are any wild rice waters downstream of the WWTF’s outfall(s). If sulfate is known or suspected to be present in the facility’s discharge as a result of its operations or processes, then effluent monitoring will be required. There is no “distance cut-off” between the facility and wild rice water; if the facility is upstream from a wild rice water, the facility will be eligible for sulfate monitoring. A vast majority of the state is covered by watersheds that are upstream from wild rice waters. The sulfate effluent monitoring frequency prescribed by the WR implementation procedures will vary depending on the type of WWTF but generally will range between once per quarter and once per half-year. As more data is gathered, frequency of monitoring may change.

The WR implementation procedures’ second step is to examine the sulfate effluent data from the WWTF to determine appropriate sulfate limits. If the facility is upstream from a wild rice water and does not have sulfate effluent data, the next NPDES permit issuance will include sulfate monitoring requirements.

The third step requires EL staff to determine if the facility has the reasonable potential to cause or contribute to the exceedance of the 10 mg/L sulfate limit in any wild rice water located downstream of the facility. However, EL staff will also determine if there is any “boundary condition” between the facility outfall and wild rice waters that would separate the facility and the downstream wild rice waters. A boundary condition is established when data shows that intervening waters between the facility outfall and downstream wild rice waters are consistently at or below the 10 mg/L sulfate standard. If a boundary condition is established, the upstream WWTF will be determined not to have the reasonable potential to cause or contribute to the exceedance of sulfate standards in the downstream wild rice waters. The facility will follow NPDES wild rice sulfate monitoring guidance and will be reissued its NPDES permit.

If a boundary condition is not found, EL staff will determine if the facility has the reasonable potential to cause or contribute to downstream exceedances of the wild rice sulfate standard. Generally, if a WWTF discharges upstream from a wild rice water that exceeds the sulfate standard, and the discharge has an effluent concentration greater than the standard, the facility will be found to have the reasonable potential to cause or contribute to the downstream impairment. When there is sufficient sulfate monitoring data available, staff will estimate sulfate transport losses from facilities to downstream wild rice waters on a case-by-case basis.

If a WWTF’s discharge is determined to have reasonable potential to exceed the wild rice sulfate standard downstream, then the fourth step of the WR implementation procedures will take place, which requires EL staff to calculate a sulfate effluent limit for the facility. This limit is determined by first calculating the wasteload allocation (WLA) of the facility. However, evaluating WLAs is dependent on whether the average baseline sulfate concentration of the downstream wild rice water is greater than or less than the 10 mg/L sulfate standard. If the baseline sulfate concentration is above the standard, EL staff will calculate the WLA individually for the facility. If the baseline sulfate concentration is below the applicable standard, EL staff will evaluate WLAs through a watershed analysis, which would result in a greater sulfate load reduction at larger WWTF sulfate sources, and may allow for less restrictive limits for smaller WWTF sulfate sources, so long as the total permitted mass does not exceed the gross WLA. 

The resulting individual WLAs would be converted to individual sulfate effluent limits, calculated based on statistics in EPA guidance documents, factoring in the variability and frequency of sampling in the upcoming permit. Generally, the results will establish a calendar monthly average sulfate effluent limit, to align with standardized monthly data reporting requirements, which will result in attainment of the WLA on an annual basis. These concentration limits will be expressed in units of mg/L and mass limits will be expressed as kg/day. Although MPCA has not yet established any Total Maximum Daily Loads (TMDLs) for impaired wild rice waters, the WR implementation procedures indicate that MPCA is likely to do so in the future and that the agency’s goal in the interim is to establish WLAs and sulfate permit effluent limits that will be compatible with future TMDLs. 

During the limit-setting process, additional considerations will be reviewed, including mass freeze options (for facilities that only have reasonable potential when operating at full design flow, but typically operate below that, unless the WWTF expects actual increases in its effluent flows); sulfate limits for lakes that are wild rice waters (which will be analyzed on a case-by-case basis); TMDLs that are developed for waters that are on Minnesota’s Impaired Waters List; and requests to review new or expanded permit proposals (the WR implementation procedures indicates MPCA receives only 10 to 15 new or expanded permit proposals per year).

Jeremy P. Greenhouse, Cody Bauer, Ryan Cox, Vanessa Johnson, Molly Leisen, and Shantal Pai — Fredrikson & Byron P.A. and Jake Beckstrom — Vermont Law School 2015


Federal Practice


• Attorney’s fees; district court’s failure to calculate the lodestar. Where a district court awarded attorney’s fees without first providing a lodestar calculation, the 8th Circuit vacated the award and remanded the case to allow the district court to calculate a lodestar, and also instructed the district court to consider which portion of the more than $1.1 million in costs it had awarded were recoverable under 28 U.S.C. §1920. Jet Midwest Int’l Co. v. Jet Midwest Grp., LLC, ___ F.4th ___ (8th Cir. 2024). 

• Standing; no “imminent and substantial harm;” no “traceability.” In an action brought by parents of students with disabilities, which challenged an Iowa law prohibiting masking in public schools, the 8th Circuit followed decisions by the 1st, 5th, and 6th Circuits in finding that the plaintiffs lacked standing because the risk of harm was not “imminent and substantial,” and also agreed with the 4th Circuit that any potential injury was not “fairly traceable” to defendants’ conduct. ARC of Iowa v. Reynolds, ___ F.4th ___ (8th Cir. 2024). 

• Fed. R. Civ. P. 25(c); motions to substitute affiliate of litigation funder as plaintiff denied. Magistrate Judge Docherty denied motions to substitute an affiliate of a litigation funder, finding that the substitution would do “violence to the Federal Rules of Civil Procedure” by “allow[ing] a financier with no interest in the litigation… to override decisions made by the party that actually brought suit.” In Re: Pork Antitrust Litig. and In Re: Cattle & Beef Antitrust Litig., 2024 WL 511890 (D. Minn. 2/9/2024). 

• Fed. R. Civ. P. 12(b); effect of partial motion to dismiss. Following the prevailing view in the federal district courts nationally, Judge Menendez held that a defendant filing a partial motion to dismiss under Fed. R. Civ. P. 12(b) is not required to file an answer to the remaining claims until after the court rules on the motion. Menze v. Astera Health, f/k/a Tr-County Health Care, 2024 WL 776773 (D. Minn. 2/26/2024). 

• Removal by third-party defendant rejected; action remanded. Where a third-party defendant purported to remove a Minnesota state court action on the basis of diversity jurisdiction, Judge Magnuson rejected its argument that the Supreme Court’s decision in Home Depot (Home Depot U.S.A., Inc. v. Jackson, 139 S. Ct. 1743 (2019)) was limited to those cases where the original claims were not removable, and instead held that the “inescapable” conclusion of Home Depot is that only the defendant or defendants to the complaint can remove. U.S. Bank N.A. v. Copy Center of Topeka, Inc., 2024 WL 551292 (D. Minn. 2024). 

• Fraudulent joinder argument rejected; motion to remand granted. On a motion to remand a Texas action that had been removed to federal court on the basis of fraudulent joinder and then transferred to an MDL pending in the District of Minnesota, Judge Erickson assumed without deciding that a plaintiff’s “lack of real intention” to pursue claims against a nondiverse defendant may provide a basis to establish fraudulent joinder, but found that the defendant had not established the plaintiff’s lack of real intention, and remanded the action to the Texas court in which it was originally filed. In re: Bair Hugger Forced Air Warming Devices Prod. Liab. Litig., 2024 WL 152512 (D. Minn. 1/15/2024). 

• Motion to compel arbitration granted; no waiver found. Despite the defendants’ previous filing of a Rule 12(b)(6) motion and their participation in the drafting of a Rule 26(f) report, Judge Tostrud, acknowledging that it was a “close call,” found that defendants had not waived their right to arbitration. Maggie King, Inc. v. ABC Bus Cos., 2024 WL 323585 (D. Minn. 1/29/2024). 

• Forum non conveniens motion granted. In a tort action by a British citizen who resides in Japan against two defendants, one of which was formerly headquartered in Minnesota, Judge Doty granted the defendants’ motion to dismiss on the grounds of forum non conveniens, finding that most of the facts underlying the case occurred outside of Minnesota, and that the United Kingdom was an adequate and available forum. Dibble v. Torax Med., Inc., 2024 WL 328965 (D. Minn. 1/29/2024), appeal filed (8th Cir. 2/26/2024). 

• Fed. R. Civ. P. 12(b)(2); action dismissed for lack of personal jurisdiction. Granting the defendant’s motion to dismiss for lack of personal jurisdiction, Judge Tostrud found that the defendant’s Minnesota contacts “cannot reasonably be construed to support the exercise of personal jurisdiction” where it was a Virginia corporation with no operations in Minnesota, was not registered to do business in Minnesota, did not regularly ship products to Minnesota, and did not direct marketing efforts toward Minnesota. Elliott Auto Supply Co. v. Fisher Auto Parts, Inc., 2024 WL 555139 (D. Minn. 2/12/2024). 

• Requested attorney’s fees reduced. Finding that a request for more than $12,000 in attorney’s fees arising out of a default judgment was “somewhat overstated,” and that an already reduced hourly rate of $465 was “very high for relatively simply matters,” Judge Menendez awarded $10,000 in fees as “rough justice.” Farnam Street Fin., Inc. v. Nabati Foods, Inc., 2024 WL 261290 (D. Minn. 1/24/2024). 

• Fed. R. Civ. P. 58(a)(3); attorney’s fees; request for entry of judgment denied. Judge Menendez denied plaintiffs’ request for entry of judgment on her order granting in part their motion for attorney’s fees, finding that Fed. R. Civ. P. 58(a) does not require a separate document, and is appealable even in the absence of a judgment. Woodward v. Credit Serv. Int’l Corp., 2024 WL 733660 (D. Minn. 2/22/2024). 

• Fed. R. Civ. P. 54(d); costs awarded for necessary real time and daily trial transcripts. Rejecting the defendant’s challenge to the clerk’s award of costs for real time and daily trial transcripts, Judge Tunheim found that the transcripts were “necessarily obtained for use in the case,” and denied the defendant’s motion to review clerk’s action. Steady State Imaging, LLC v. Gen. Elec. Co., 2024 WL 453806 (D. Minn. 2/6/2024). 

• Fed. R. Civ. P. 56; sua sponte grant of summary judgment to plaintiff. Denying the defendant-insurers’ motion for summary judgment on the plaintiff’s equitable estoppel claim in a coverage dispute, Judge Tunheim granted summary judgment sua sponte to the plaintiff on that issue. Taylor Corp. v. XL Ins. Co., 2024 WL 453826 (D. Minn. 2/6/2024). 

• Request for reduction in judgment; excessive fines clause. Where judgment had been entered against qui tam defendants for more than $487 million, and defendants brought a motion arguing that statutory penalties of more than $352 million, which were roughly eight times actual damages, violated both the excessive fines clause and the due process clause, Judge Wright relied on the excessive fines clause in reducing the statutory penalties to less than $87 million, which was twice the amount of actual damages. United States ex rel. Fesenmaier v. Cameron-Ehlen Grp., Inc., ___ F. Supp. 3d ___ (D. Minn. 2024). 

• “Excessive” compensatory damages; remittitur. Where a jury awarded the estate of the decedent $10 million in compensatory damages and $1.5 million in punitive damages in an excessive force/wrongful death action, Judge Doty found that the compensatory damage award “shock[ed] the conscience,” was “patently excessive” and “highly speculative,” and offered the plaintiff the option of a remittitur to $2.5 million or a new trial on compensatory damages. Jones ex rel. Handy v. City of St. Paul, 2024 WL 489705 (D. Minn. 2/8/2024). 

• Fed. R. Civ. P. 22; interpleader; attorney’s fees. Judge Blackwell significantly reduced an insurer’s request for attorney’s fees in an interpleader action, finding that it was entitled to fees for its preparation and initiation of the action, but not for fees incurred over the next year while it failed to bring a discharge motion and instead defended a counterclaim, which “unnecessarily increased” its fees. Banner Life Ins. Co. v. Bultman, 2024 WL 689754 (D. Minn. 1/18/2024). 

Josh Jacobson
Law Office of Josh Jacobson 


Intellectual Property


•  Patents: Failure to designate United States in PCT does not trigger §102(e) priority date. Judge Tunheim recently granted plaintiff Regents of the University of Minnesota’s motion for summary judgment that the asserted patent was not invalid because the asserted reference was not prior art under pre-AIA 35 U.S.C. §102(e). Regents sued multiple cellular network companies alleging infringement of several patents related to cellular data transmission technology. Defendants argued that an international application, the Ming PCT (filed under the Patent Cooperation Treaty), invalidated two of the asserted patents. Under §102(e)(2), “an international application filed under the [Patent Cooperation Treaty] shall have the effects for the purposes of this subsection of an application filed in the United States only if the international application designated the United States and was published under Article 21(2) of such treaty in the English language.” Whether the Ming PCT invalidated the asserted patents turned on whether the Ming PCT “designated the United States” and qualified as prior art under §102(e). Regents argued that the Ming PCT application designated a number of countries but not the United States. Defendants argued that the statutory definition of “designated” is more “capacious.” Because the Ming PCT claimed priority to a United States application, defendants argued it necessarily implied that a patent is sought in the United States. The court rejected defendants’ argument and found that defendants bear the burden of proving invalidity, and a PCT application is relatively weak evidence of designation when the actual designation section of the application excludes the United States. The court further found that accepting the defendants’ argument would undermine the notice function of the designation. Accordingly, the court found defendants could not rely on the Ming PCT as prior art. Separately, the court found defendants could substitute the United States application that the Ming PCT claimed priority to in defendants’ invalidity challenges. Regents of the Univ. of Minn. v. AT&T Mobility LLC, Nos. 14-4666, 14-4669, 14-4671, 14-4672 (JRT/TNL), 2024 U.S. Dist. LEXIS 31027 (D. Minn. 2/23/2024).

• Patents: Original patent rule satisfied by description incorporated by reference. Judge Tunheim recently granted plaintiff Regents of the University of Minnesota’s motion for summary judgment that the asserted patent was not invalid under the original patent rule and denied defendants’ inverse motion. Regents sued multiple cellular network companies alleging infringement of several patents related to cellular data transmission technology. Regents asserted U.S. Patent No. RE45230, which is a reissue of U.S. Patent No. 7,292,647. When a patent is defective, the patentee may apply for a reissued patent that cures the error. Under the “original patent rule,” the original specification must clearly and unequivocally disclose the newly claimed invention in the reissue. Due to the “fairly significant alterations from the claims in the ’647 patent,” defendants argued that the reissue was invalid for violation of the original patent rule. First, Regents argued that the original patent rule only applied to broadening reissues. The court rejected this argument, finding that 35 U.S.C. § 251(d), which establishes the rules for reissues, does not distinguish between broadening and narrowing reissues and that no identified cases state that the rule only applies to broadening reissues. Second, defendants argued that the original ’647 patent specification did not disclose the claims of the ’230 reissue patent in a clear enough fashion to satisfy the original patent rule. Defendants challenged the incorporation of material by reference. The court noted that neither party cited cases directly on point of whether material incorporated by reference satisfies the original patent requirement. The court found that a proper citation on the face of the reissue application satisfies the original patent rule, as the only real difference would be whether the applicant wrote a proper citation to the source material instead of copying and pasting that content into the specification. The court found the ’230 reissue patent valid. Regents of the Univ. of Minn. v. AT&T Mobility LLC, Nos. 14-4666, 14-4669, 14-4671, 14-4672 (JRT/TNL), 2024 U.S. Dist. LEXIS 31027 (D. Minn. 2/23/2024).

Joe Dubis
Merchant & Gould


Probate & Trust Law


• Attorney testimony relevant in determining omitted spouse status; spouse entitled to select exempt property. A decedent created a will in late 2020. One month later, the decedent married his long-time girlfriend. The will did not contain a provision for the decedent’s new wife, and the decedent did not revise his will after his marriage. Instead, the decedent named his new wife as the beneficiary of his retirement account and added her to the title of his Volkswagen Jetta. After the decedent passed away, his wife filed a petition asking the district court to determine that she was an omitted spouse entitled to a share of the estate and ordering the personal representative to turn over possession of a Ford F350 pickup truck as exempt property. Following testimony from the decedent’s estate planning attorney, the district court denied both requests. 

On appeal, the district court’s denial of the wife’s request to be treated as an omitted spouse was affirmed. Specifically, the Minnesota Court of Appeals credited the district court’s findings that the decedent provided for his wife outside of his will by making her the beneficiary of his retirement account and that the decedent’s estate planning attorney credibly testified that the decedent consistently stated throughout the planning process that he intended to make his wife the beneficiary of his retirement account while leaving everything else to his sister. For these reasons, the wife was not to be considered an omitted spouse pursuant to Minn. Stat. §524.2-301(a)(4).

But the court of appeals reversed the district court’s finding as it related to exempt property. Specifically, the district court found that the transfer of the Jetta on the decedent’s death satisfied the statutory provision allowing for one automobile. The court of appeals, however, found that because the wife was named on the title of the Jetta, she became the sole owner of the Jetta on the decedent’s death and the Jetta never became a part of the decedent’s estate. Moreover, the court of appeals noted that a surviving spouse is entitled to “select” property from the estate to qualify as estate property. Because the wife was already the owner of the Jetta, she did not select it for the purposes of claiming exempt property. The court went further and found: “[E]ven if the decedent’s will provided that a surviving spouse would receive an automobile, the spouse would still be entitled to select an automobile under the exempt-property statute.” In re the Estate of Joseph Andre Reis, No. A23-0413, 2024 WL 912625 (Minn. Ct. App. 3/4/2024).

Jessica L. Kometz
Bassford Remele


State Appellate Practice


• Notable petitions granted. The Supreme Court has agreed to review an individual taxpayer’s lawsuit seeking declaratory and injunctive relief to prevent the expenditure of public funds on a collective bargaining agreement that allegedly violates the Minnesota Constitution’s equal protection guarantee. The district court dismissed the lawsuit after determining that the individual taxpayer lacked standing to challenge the collective bargaining agreement and on ripeness grounds. The court of appeals reversed, finding that the individual taxpayer had standing based on specific allegations that the plaintiff paid property taxes, which comprised a significant amount of the public funds available to implement the collective bargaining agreement, and that there was a concrete risk of a violation of the equal protection clause. The court of appeals also determined that the district court improperly dismissed the declaratory relief claim on ripeness grounds because the complaint alleged “an actual future controversy” that was justiciable under the Declaratory Judgment Act. 

The Minnesota Supreme Court granted review to answer the following questions: (1) Did the court of appeals err by holding that merely alleging that a governmental entity will utilize public funds to implement the terms of a collective bargaining agreement meets the requirements of a specific and unlawful disbursement of public funds for purposes of the taxpayer-standing doctrine, as required under McKee v. Likins, 261 N.W.2d 566 (Minn. 1977) and its progeny? (2) Did the court of appeals err in concluding that there is no requirement for ripeness because the respondent sought declaratory judgment related to a contract to which respondent is not even a party? Deborah Jane Clapp vs. Rochelle Cox, in her official capacity as Interim Superintendent of Minneapolis Public Schools, et al., – A23-0360 (PFR granted 2/28/2024). 


• Notable precedential decision: The Minnesota Court of Appeals applied Minn. Stat. §65A.10, subd. 1 to reform a policy to provide coverage for the cost of bringing undamaged portions of a roof into compliance with applicable building codes during repairs occasioned by a covered loss. A hailstorm damaged the insured’s roof in May 2022. The homeowners’ insurance policy provided replacement cost coverage for loss or damage to “the outer most layer of roof material,” and the insurer accordingly approved removal and replacement of shingles damaged during the hailstorm. During the repair, however, the contractor discovered certain portions of the underlying roof decking—which was not damaged by the storm—to be noncompliant with state building codes. The contractor proceeded to bring the decking into compliance with applicable codes as part of the repair. The insurer later disclaimed coverage for the building-code-related repair costs, and brought an action seeking a declaration that the insured was not entitled to coverage for such costs. The court of appeals affirmed the district court’s award of summary judgment to the insured in favor of coverage. The court relied upon Minn. Stat. §65A.10, subd. 1—which, it determined, “requires replacement cost insurance to cover the cost of repairing any loss or damaged property in accordance with the minimum state or local codes.” Because the repairs to the roof decking were mandated by the state building code, the damaged shingles could not be repaired without first bringing the roof decking into compliance with the code. As a result, the court of appeals concluded that the “cost of repairing the damaged shingles in accordance with the state building code included the cost of repairs” to the roof decking. Great Nw. Ins. Co. v. Campbell, No. A23-0519 (Minn. Ct. App. 2/5/2024).

• Notable precedential decision: The court of appeals rejected the invitation to adopt provisions of the Restatement (Third) of Property, which would have afforded greater discretion to property owners to make “reasonable changes” to easements affecting their property. Certain property owners in a Plymouth subdivision challenged a real estate developer’s proposal to “relocate, widen, and extend” a private roadway easement affecting their parcels. The relevant easement was created through a declaration, recorded in 1981, which expressly stated that “nothing shall be planted, altered, constructed upon, or removed by an owner from the roadway easement.” Nevertheless, the developer sought to relocate the roadway easement and prevailed following a trial in the district court. The district court applied Section 4.8 of the Restatement (Third) of Property: Servitudes (2000) to permit a property owner affected by the easement—in this case, the developer—to “make reasonable changes to an easement… including by reasonably relocating it.” The court of appeals reversed, holding that the district court’s reliance upon the Restatement was in error. In doing so, the court reaffirmed longstanding Minnesota case law stating that where an easement is created by a written instrument, the “specific width, length, and location” of the easement is controlled entirely by the terms of such instrument. Under this precedent, a court may not intervene to “create any reasonable easement” unless the written instrument “is sufficiently vague to permit the inference that any reasonable easement was intended.” The court of appeals determined that the 1981 declaration was not “sufficiently vague” to permit the district court to relocate the roadway easement under Minnesota law, relying primarily upon the declaration’s language expressly prohibiting any alterations to the easement. Ultimately, the court of appeals concluded that “given the plain language of the easements declaration, the location and scope of the… roadway easement may not be changed without the unanimous agreement of the property owners who are bound by the easements declaration.” Willenberg v. Frye, No. A23-0441 (Minn. Ct. App. 2/5/2024).

• Notable special term order: The court of appeals reaffirmed that the 60-day appeal period for an order “relating to registered land” begins to run when the order is filed by the district court. The court of appeals determined that it lacked jurisdiction to hear an appeal from a district court order determining boundary lines of registered Torrens land because of the appellant’s untimely notice of appeal. Minn. Stat. §508.671, which governs appeals from orders affecting registered land, provides that an appeal may be taken from such an order within 60 days from the date the order was filed. The district court filed the underlying order on 11/30/2023, and the court of appeals determined that the 60-day appeal period expired on 1/29/2024. Because the appellant did not file the notice of appeal until 1/30/2024, the court of appeals dismissed the appeal as untimely. In doing so, the court rejected the argument that the December 4 “notice of filing of the order” issued by the court administrator controlled the beginning of the 60-day appeal period under Section 508.671 over the filing of the order itself. In re Petition of Larry Sampson & Lisa Sampson, No. A24-0160 (Minn. Ct. App. 2/20/2024).

• Notable special term order: The Minnesota Court of Appeals rejected the Lower Sioux Indian Community’s petition for a writ of certiorari to prevent a tribal employee from being compelled to testify via subpoena in a state criminal proceeding. The state of Minnesota subpoenaed a social worker employed by the Lower Sioux Indian Community to testify in their official capacity at a state criminal trial. After the district court rejected a motion to quash the subpoena, the Lower Sioux sought a writ of prohibition. The court of appeals declined to issue the writ, noting that a writ of prohibition may only issue to prevent the exercise of judicial power threatening an injury “for which there is no adequate remedy.” Because the order denying the motion to quash the subpoena constitutes a final appealable order from a “special proceeding,” the order is appealable pursuant to Minn. R. Civ. App. P. 103.03. In addition, the court of appeals observed that the order was subject to appeal under the collateral-order doctrine adopted by the Minnesota Supreme Court in Kastner v. Star Trails Ass’n, 646 N.W.2d 253. Accordingly, the Lower Sioux was not entitled to a writ of prohibition preventing enforcement of the subpoena because the Lower Sioux retained an “adequate remedy” through the regular processes of appeal. In re Lower Sioux Indian Community of Minnesota, No. A24-0211 (Minn. Ct. App. 2/16/2024).

Pat O’Neill
Larson King, LLP

Sam Schultz
Larson King, LLP

Tax Law


• Sales tax, covid, and insurance. The City of Richmond Heights, in St. Louis County, Missouri, purchased commercial property insurance to protect against losses of sales tax revenue. When St. Louis County closed “all non-essential businesses” in 2020 due to the spread of covid-19, there were sales tax losses and the city submitted a claim. Arguing the language of the policy required “direct physical loss of or damage to property,” the insurer sued for declaratory judgment that it was not required to pay. The city counterclaimed. The district court dismissed the counterclaims and granted declaratory judgment to the insurer, and the city appealed. 

The 8th Circuit rejected the city’s three arguments. First, the city argued that while both parties acknowledged that the losses due to covid-19 were not “physical” losses, the “additional covered property endorsement” catch-all in the policy effectively removed the “physical damage or loss” requirement. The court disagreed, since under that interpretation the catch-all would then directly conflict with other coverage provisions. Second, the city asserted that there was fraud in the inducement and fraudulent misrepresentation, but the court affirmed the district court’s dismissal of these claims, pointing out that these claims were not “independent from the City’s breach of contract claim.” Finally, the city argued that it should have been allowed to amend its complaint to argue that the covid-19 virus was “present on the premises” and that the virus’s presence itself was “physical damage.” The court, citing other cases that rejected this argument, affirmed the district court’s decision to deny leave to amend. Mt. Hawley Ins. Co. v. City of Richmond Heights, Missouri, 92 F.4th 763 (8th Cir. 2024).

• Calling it “insurance” doesn’t make it so: Taxpayer not entitled to 831(b) election for microcaptive arrangement. Like other businesses, insurance companies must pay tax on income from premiums and investments. Section 831(b), however, permits some small insurance companies to pay tax only on investment income, and not premiums. This section was enacted in 1986, and one goal was to extend the benefits of self-insurance to small insurance companies. A lot rides on the 831(b) election, because insurance is deductible, but amounts set aside by businesses in a loss reserve as a form of self-insurance are not. The Service explains in a news release that tax law generally allows businesses to create “captive” insurance companies to protect against insurance risks and provides that certain small non-life-insurance companies can choose to pay tax only on their investment income under Internal Revenue Code section 831(b) (microcaptives). The Service considers microcaptive structures that lack many of the attributes of genuine insurance to be abusive.

Despite the importance of defining insurance for 831(b) purposes, the IRS Code does not define the term, and, as the tax court remarked in this dispute between a taxpayer claiming deductions of just shy of $10 million, “[w]hen the insurer and the insured are related (including in the case of captive or microcaptive insurers), the line between insurance and self-insurance blurs.” Here, the court agreed with the commissioner and held that the microcaptive arrangement was not insurance because it did not involve risk distribution and did not fall within “commonly accepted notions of insurance.” 

Captive insurance arrangements such as this one made the IRS’s annual “dirty dozen” list of tax scams in 2015, and in Notice 2016-66, the Service advised that microcaptive insurance transactions have the potential for tax avoidance or evasion. The tax court in this case notes that although it is possible for a captive insurer to establish risk distribution solely by insuring commonly owned brother-sister entities, most “[m]icrocaptive insurers have not fared as well with respect to showing risk distribution” and in fact in “all of our previous cases have found compliance with this requirement lacking.” Swift v. Comm’r, T.C.M. (RIA) 2024-013 (T.C. 2024). 

•  Deduction for conservation easement disallowed; gross valuation penalty upheld. In 2015, as part of a syndicated conservation easement, Oconee Landing Property, LLC claimed a $20.67 million charitable deduction for donating a conservation easement over land in Greene County, GA. The IRS disallowed the deduction and this case followed. The IRS made three arguments for disallowing the deduction: that the charitable gift was not made with charitable intent; that the syndicate failed to attach a “qualified appraisal” as required by law; and that the property donated was “ordinary income property” and therefore the deduction was restricted to the property’s basis. The court rejected the first argument and upheld the other two.

First, the IRS argued Oconee was not entitled to a charitable deduction because the exchange was not motivated by charitable intent but was, instead, a “quid pro quo exchange.” While not disagreeing with the IRS’s characterization of the motivations of the syndicate, the court rejected this argument. Case law thus far only disallows deductions when the “quid pro quo” is between the two exchanging entities—the donee and the donor. Because the actual transfer of property was between Oconee and a valid 501(c)(3) organization not involved in the broader syndicate, the exchange had proper charitable intent under the law. The court pointed out that there currently are not any cases where the “tax benefits associated with a charitable contribution deduction have been deemed a ‘quid pro quo’ that negates the donor’s charitable intent.” 

Second, the court found that Oconee failed to attach a “qualified appraisal” as required by section 170(f)(11)(D). A “qualified appraisal” is an appraisal done within “generally accepted appraisal standards.” §170(f)(E)(i)(II). There’s an important exception: A person is not considered a qualified appraiser “if the donor had knowledge of facts that would cause a reasonable person to expect the appraiser falsely to overstate the value of the donated property.” §1.170A-13(c)(5)(ii). There was significant evidence in this case that there was a “meeting of the minds” between the appraisers and Oconee, and that the property would be valued at $50.4 million despite the owners of Oconee knowing the property was worth less than $10 million.

Third, the court found the property at issue was “ordinary income property,” so any charitable deduction was limited to the property’s basis. “Ordinary income property” is property “held for sale to customers in the ordinary course of business.” §170(e)(1). Oconee was controlled by real estate developers who held the property at issue for sale to customers. And since Oconee provided no evidence to suggest that the basis of that property was higher than zero, the law set the charitable deduction to zero dollars for 2015. 

Finally, the court found that the FMV of the easement was “less than $5 million,” making the charitable deduction Oconee claimed more than 400% over FMV. As such, Oconee was liable for the 40% “gross valuation misstatement penalty” under section 6662(a). Oconee Landing Prop., LLC v. Comm’r, T.C.M. (RIA) 2024-025 (T.C. 2024).

• Trustee removal affirmed. The Minnesota Supreme Court affirmed the district court’s removal of Brian Lipschultz from his role of trustee for the Otto Bremer Trust. Lipschultz was removed for actions that the district court found “collectively constitute[d] a serious breach of trust” under Minn. Stat. §501c.0706(b)(1).” After an extensive 20-day bench trial, the district court found a pattern of Lipschultz “placing his personal priorities over the duties he owed to the Trust.” The Supreme Court affirmed.

The Court here found the district court did not abuse its discretion in removing Lipschultz. Under Minn. Stat. §501C.0706(b)(1), “The court may remove a trustee if… the trustee has committed a serious breach of trust.” A “serious breach of trust” can be one single act of immense harm or a “series of smaller breaches, none of which individually justify removal when considered alone, but which do when considered together.” Unif. Tr. Code §706 cmt. The Supreme Court found the actions of Lipschultz fell well within the range of what would qualify under the second clause.

First, the Court held that Lipschultz engaged in self-dealing by using the trust’s resources for personal purposes, breaching a duty of loyalty and violating the Charitable Trust Act. His assistant, employed by the trust, spent one to two hours per day “performing non-Trust tasks for him” and he used the trust’s address for his own personal business. Second, Lipschultz displayed a pattern of behavior that the district court found “had no place in the charitable world” during a conflict between Bremer Bank board members and the three trust trustees around a potential sale or merger of the bank. The district court found this constituted a breach of loyalty by “putting his own frustration, aggression, and personal interest in revenge ahead of the important interests of the Trust.” Third, Lipschultz made two phone calls to the CEO of a trust grantee that made the CEO feel “disrespected and bullied.” The district court found the content of these calls to be a “serious breach of the duty of loyalty” and “egregious misconduct.” Fourth and finally, Lipschultz breached the duty of information by naming his first cousin as his successor but repeatedly telling the Attorney General’s Office that he did not have a successor. Matter of Otto Bremer Tr., No. A22-0906, 2024 WL 462587 (Minn. 2/7/2024).

• Retroactive track maintenance deductions permitted. The Minnesota Commissioner of Revenue ordered Soo Line Railroad Company to adjust its corporate franchise tax for tax years 2013 and 2015-2017. At the federal level, Soo Line Railroad claimed the federal Railroad Track Maintenance Credit, a provision that permits credits for “qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year.” 26 U.S.C. §45G(a). In determining state tax liability, Minnesota allows a subtraction from federal taxable income for “the amount of expenses not allowed for federal tax purposes due to claiming the railroad track maintenance credit… effective for taxable years beginning after December 31, 2012.” The issue in this case was whether, for the purposes of establishing their Minnesota tax liability, Soo Line Railroad was allowed to subtract from federal taxable income the amount of depreciation expenses on assets purchased before 2013. The MN Commissioner of Revenue only allowed the subtraction on assets purchased on or after 1/1/2013. Both parties moved for summary judgment. 

The court granted Soo Line Railroad’s motion for summary judgment, since the statute did not specify when expenses had to have been incurred, and the court observed that if the Legislature wanted to exclude pre-2013 expenses, the statute would have been explicit. Soo Line R.R. Co. v. Comm’r, No. 9557-R, 2024 WL 481289 (Minn. T.C. 2/7/2024).

• Property tax; classifications upheld. A taxpayer raised two challenges to an assessment of his land in the city of Carver (just south of Chaska). First, the taxpayer argued that the land was not class 2b rural vacant land but was agricultural land. That challenge failed. The taxpayer also argued that the subject land was eligible for a homestead classification. In this argument, the taxpayer succeeded in overcoming the presumptive validity of the assessor’s conclusion that the subject was nonhomestead. He did not, however, present sufficient credible evidence to show the elements to qualify for the homestead designation—whether agricultural or residential—were met. Brad Janssen v. Carver County, No. 10-CV-20-143, 2024 WL 697119 (Minn. T.C. 2/20/2024).

• Property tax; appraisal method for unique property. The taxpayer owns a unique, waterfront parcel on the Whitefish Chain of Lakes in Crow Wing County. The parcel is small and triangular, with no improvements. The taxpayers also own a nearby parcel that is improved. Bisecting the parcels is undeveloped public land owned by the Army Corp of Engineers. The taxpayer and the county have disputed the valuation of the parcel in previous litigation. In this round, the court settled the parties’ principal dispute: which appraisal method to use when valuing the subject property. In particular, the parties disputed whether to appraise the property as a stand-alone parcel, or whether the parcel should be appraised in conjunction with the adjoining developed parcel (the “house parcel” in the opinion). The court held that appraisal in conjunction with the developed parcel was appropriate under Minnesota law and appraisal theory. Lindholm-Nelson v. Crow Wing County, No. 18-CV-21-1458, 2024 WL 481476 (Minn. T.C. 2/5/2024).

Morgan Holcomb, Adam Trebesch, Leah Olm
Mitchell Hamline School of Law


Torts & Insurance


• First party insurance; replacement cost. Plaintiff owned a home that was insured by defendant. The insurance policy covered direct physical loss or damage to “the outer most layer of roof material.” During a May 2022 storm, hail damaged the shingles on plaintiff’s roof. After plaintiff reported the damage to defendant, it confirmed the damage and approved removal and replacement of the shingles. But when plaintiff’s contractor removed the shingles, the contractor discovered that the roof decking had gaps exceeding one-fourth of an inch in some places. To comply with the state building code, the contractor was required to repair the gaps before installing the shingles. After the contractor issued an invoice to defendant for the roof repairs, including charges to resolve the decking issues that were not caused by the hail damages as well as the contractor’s overhead and profit, defendant disclaimed coverage for the additional repairs and the contractor’s overhead and profit. Defendant then brought a declaratory judgment action concerning its coverage obligations. The district court determined that defendant was required to cover the cost of the repairs in addition to the work related to the shingles but not the contractor’s overhead or profit.

The Minnesota Court of Appeals affirmed. The court first acknowledged that a roof damage limitation endorsement contained in the policy “plainly excludes coverage” for the additional work required to remedy the decking issue because the decking was not damaged by hail. But the court held that the endorsement to the policy violated Minn. Stat. §65A.10, which provides: “Subject to any applicable policy limits, where an insurer offers replacement cost insurance… the insurance must cover the cost of replacing, rebuilding, or repairing any loss or damaged property in accordance with the minimum code as required by state or local authorities….” The court reasoned that coverage must be provided because “to replace the damaged shingles in accordance with the state building code, the decking had to be repaired.” 

The court went on to affirm the district court’s second holding—that plaintiff could not recover the contractor’s overhead and profit—because coverage for such costs was excluded under an “overhead and profit” exclusion in the policy, and that exclusion did not violate Minn. Stat. §65A.10. Great Nw. Ins. Co. v. Campbell, No. A23-0519 (Minn. Ct. App. 2/5/2024). https://mn.gov/law-library-stat/archive/ctappub/2024/OPa230519-020524.pdf

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