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No. A12-1555
STATE OF MINNESOTA IN SUPREME COURT
GRAPHIC COMMUNICATIONSLOCAL lB HEALTH & WELFARE FUND "A"; and THE TWIN CITIES BAKERY
DRIV ERS HEALTH A N D WELFARE F U N D individually and on behalf of all others similarly situated,
Plaintiffs-Respondents,
vs.
CVS CAREMARK CORPORATION; CVS PHARMACY, INC.; CAREMARK, LLC; CAREMARK MINNESOTA SPECIALTY PHARMACY, LLC; CAREl\tlARK MINNESOTA SPECIALTY
PHARMACY HOLDING, LLC; COBORN'S INCORPORATED; KMART HOLDING CORPORATION; SEARS, ROEBUCK AND CO.; SEARS HOLDINGS CORPORATION; SNYDER'S DRUG
STORES (2009), INC.; SNYDER'S HOLDINGS (2009), INC.; SNYDER'S HOLDINGS, INC.; TARGET CORPORATION;
WALGREEN CO.; and WAL-MART STORES, INC.,
Defendants-Appellants.
DEFENDANTS-APPELLANTS' BRIEF AND ADDENDUM
Wendy J. Wildung (#117055) Craig S. Coleman (#0325491) F AEGRE BAKER DANIELS LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Telephone: (612) 766-7000 Attorneys for Defendant-Appellant
Target Corporation
Todd A. Noteboom (#240047) Elizabeth Wiet Reutter (#316957) LEONARD, STREET AND DEINARD 150 South Fifth Street, Suite 2300 Minneapolis, MN 5 5402 Telephone: (612) 335-1500 Attorneys for Defendant-Appellant
Walgreen Co.
; J
Lewis A. Remele, Jr. (#90724) Christopher R. Morris ( #23 0613) BASSFORD REl\1ELE 33 South Sixth Street, Suite 3800 Minneapolis, MN 55402-3707 Telephone: (612) 333-3000 Attorneys for Defendants-Appellants
CVS Caremark Corporation, CVS Pharmacy, Inc., Caremark, LLC, Caremark Minnesota Specialty Pharmacy, LLC, and Caremark Minnesota Specialty Pharmacy Holding, LLC
Tracy J. Van Steenburgh (#141173) NILAN JOHNSON LEWIS, PA 600 U.S. Bank Plaza South 220 South Sixth Street Minneapolis, MN 55402 Telephone: (612) 338-1838 Attorneys for Defendants-Appellants
Kmart Holding Corporation, Sears, Roebuck & Co., and Sears Holding Corporation
David R. Marshall (#184457) Joseph J. Cassioppi (#388238) FREDRIKSON &BYRON, P.A. 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402 Telephone: (612) 492-7000 Attorneys for Defendant-Appellant
Walmart Stores, Inc.
Kevin D. Hofman (#0179978) Ronald B. Peterson (#0086344) HALLELAND HABICHT, P.A. 33 South Sixth Street, Suite 3900 Minneapolis, MN 55402 Telephone: (612) 836-5500 Attorneys for Defendant-Appellant
Co born's Incorporated
James K. Langdon (#171931) DORSEY & WHITNEY 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Telephone: (612) 340-2600 Attorneys for Defendants-Appellants
Snyder's Drug Stores (2009), Inc., Snyder's Holdings (2009), Inc., and Snyder's Holding, Inc.
Attorneys for Defendants-Appellants
David L. Hashmall (#138162) FELHABER, LARSON, FENLON
&VOGT,P.A. 220 South Sixth Street, Suite 2200 Minneapolis, MN 55402 Telephone: (612) 339-6321
John W. Barrett BAILEY & GLASSER LLP 209 Capitol Street Charleston, WV 25301 Telephone: (304) 345-6555
Perrin Rynders (admitted pro hac vice) VARNUMLLP Bridgewater Place P.O Box 352 Grand Rapids, MI 49501-0352 Telephone: (616) 336-6000
Attorneys for Plaintiffs-Respondents
The appendix to this brief is not available for online viewing as specified in the Minnesota Rules of Public Access to the Records of the Judicial Branch, Rule 8, Subd. 2(e)(2).
TABLE OF CONTENTS
Page
STATEMENT OF THE ISSUES ........................................................................................ 1
STATEMENT OF THE CASE ........................................................................................... 3
STATEMENT OF FACTS .................................................................................................. 6
STANDARD OF REVIEW .............................................................................................. 12
ARGUMENT .................................................................................................................... 13
I. ALLEGED VIOLATIONS OF SUBDIVISION 4 DO NOT AMOUNT TO VIOLATIONS OF THE MCFA ............................................................................ 15
A. Plaintiffs' Purported MCFA Claim Circumvents Legislative Intent Not To Provide A Private Right Of Action For Violation Of Subdivision 4 ............................................................................................... 15
B. The MCFA Is Not Unlimited ...................................................................... 19
C. An Alleged Violation Of Subdivision 4 Is Not A Prohibited Act Under The MCF A ....................................................................................... 20
D. Plaintiffs' Attempts To Sidestep The Plain Language Of The MCFA Should Be Rejected ..................................................................................... 22
E. The Private AG Statute Does Not Give Plaintiffs Authority To Sue For Alleged Violations Of Subdivision 4 ................................................... 26
II. AN MCF A CLAIM CANNOT BE BASED UPON AN OMISSION WITHOUT A DUTY TO DISCLOSE ................................................................... 28
A. The MCF A Does Not Encompass "Pure" Omissions ............. : ................... 28
B. A Duty To Disclose Is Required To Bring An Omission-Based MCF A Claim ............................................................................................... 31
C · Requiring A Duty To Disclose To Bring An Omission-Based MCFA Claim Is A Better Rule ................................................................................ 35
D. The FAC Does Not And Cannot Plead A Duty To Disclose ...................... 36
E. The F AC Does Not And Cannot Plead A Material Omission .................... 40
1
III. PLAINTIFFS FAILED TO PLEAD FACTS SHOWING A CAUSAL NEXUS ........................................ : .......................................................................... 41
CONCLUSION ................................................................................................................. 48
11
TABLE OF AUTHORITIES
Page(s) FEDERAL CASES
Am. Computer Trust Leasing v. Boer boom Int'l, Inc., 967 F.2d 1208 (8th Cir. 1992) ..................................................................................... 38
Bell At!. Corp. v. Twombly, 550 U.S. 544 (2007) ............................................................................................... 44, 45
Bernstein v. Extendicare Health Servs., 653 F. Supp. 2d 939 (D. Minn. 2009) .......................................................................... 42
Cashman v. Allied Prods. Corp., 761 F.2d 1250 (8th Cir. 1985) ............................................................................... 32, 33
Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005) ..................................................................................................... 46
Group Health Plan, Inc. v. Philip Morris, Inc., 86 F. Supp. 2d 912 (D. Minn. 2000) ............................................................................ 43
In re Mex. Money Transfer Litig., 267 F.3d 743 (7th Cir. 2001) ....................................................................................... 36
Khoday v. Symantec Corp., 858 F. Supp. 2d 1004 (D. Minn. 2012) .................................................................. 33, 34
Minnesota ex. rei Hatch v. Fleet Mortg. Corp., 158 F. Supp. 2d 962 (D. Minn. 2001) .................................................................... 33, 34
Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081 (8th Cir. 2012) ..................................................................................... 17
Romine v. Acxiom Corp., 296 F .3d 701 (8th Cir. 2002) ....................................................................................... 40'
Sailors v. N States Power Co., 4 F.3d 610 (8th Cir. 1993) ........................................................................................... 32
Smith v. Ford Motor Co., 462 Fed. Appx. 660 (9th Cir. 20 11) ............................................................................ 31
Taylor Inv. Corp. v. Wei!, 169 F. Supp. 2d 1046 (D. Minn. 2001) .................................................................. 38, 39
111
Willbanks v. Progressive Choice Ins. Co., No. 1:10-cv-1299 AWI SKO, 2010 WL 4861349 (E.D. Cal. Nov. 17 2010) ............. 17
STATE CASES
301 Clifton Place L.L. C. v. 301 Clifton Place Condo. Ass 'n, 783 N.W.2d 551 (Minn. App. 2010) ........................................................................... 21
Bahr v. Capella Univ., '7QQ 1\.T UT ')rl '7h. (l\tf1.-..-. ')()1 ()\ 1? 4.4. /UU J."'l. Vl' ek\..1. /V \.lY~~~ll.L. ~V.LVJ •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••"•••••••••••••••••• .... -, u 8
Baker v. Best Buy Stores, LP, 812 N.W.2d 177 (Minn. App. 2012), review denied (Minn. Apr. 25, 2012) ........ 21, 42
Beck v. Groe, 245 Minn. 28, 70 N.W.2d 886 (Minn. 1955) ............................................................... 16
Becker v. Mayo Found., 737 N.W.2d 200 (Minn. 2007) .......................................................................... 2, 16,25
Boubelik v. Liberty State Bank, 553 N.W.2d 393 (Minn. 1996), superseded by statute as stated in Ly, 615 N.W.2d ............................................................................................................. 20, 32, 37
Bruegger v. Faribault Cnty. Sheriff's Dep 't, 497 N.W.2d 260 (Minn. 1993) .................................................................................... 16
Church of the Nativity of Our Lord v. WatPro, Inc., 474 N.W.2d 605 (Minn. App. 1991), aff'd, 491 N.~.2d 1 (Minn. 1992) ................... 20
Driscoll v. Standard Hardware, Inc., 785 N.W.2d 805 (Minn. App. 2010) ........................................................................... 38
Elzie v. Commissioner of Public Safety, 298 N.W.2d 29 (Minn. 1980) ...................................................................................... 12
Ford Motor Credit Co. v. Majors, No. A04-1468, 2005 WL 1021551 (Minn. App. May 3, 2005) ...................... 33, 34,41
Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001) ................................................................................. passim
Hebert v. City of Fifty Lakes, 744 N.W.2d 226 (Minn. 2008) .................................................................................... 44
IV
Henderson v. Hertz Corp., No. L-6937-03, 2005 WL 4127090 (N.J. Super. A.D. June 22, 2006), cert. denied, 909 A.2d 724 (N.J. 2006) ................................................................................ 18
in Erickson v. Haring, No. C4-02-138, 2002 WL 31163611 (Minn. App. Oct. 1, 2002) ................................ 32
Jenson v. Touche Ross & Co., 335 N.W.2d 720 (Minn. 1983) .................................................................................... 35
Klein v. First Edina Nat'! Bank, 293 Minn. 418, 196 N.W.2d 619 (Minn. 1972) .................................................... passim
Krell v. National Mortgage Corp., 448 S.E.2d 248 (Ga. App. 1994) ................................................................................. 18
Kron Med. Corp. v. Collier Cobb & Assocs., Inc., 107 N.C. App. 331,420 S.E.2d 192 (1992) ................................................................ 31
Krueger v. Zeman Constr. Co., 781 N.W.2d 858 (Minn. 2010) ............................................................................... 12, 15
L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372 (Minn. 1989) .................................................................................... 38
Larson v. Larson, 373 N.W.2d 287 (Minn. 1985) .................................................................................... 37
Ly v. Nystrom, 615 N.W.2d 302 (Minn. 2000) ............................................................................. passim
Marsh v. Webber, 13 Minn. 109 ................................................................................................................ 37
Martens v. Minnesota Mining & Mfg. Co., 616 N.W.2d 732 (Minn. 2000) ...................................................................................... 6
Matter of Wang, 441 N.W.2d 488 (Minn. 1989) .................................................................................... 39
Miller's Fairway, Inc. v. Schoenborn, No. C9-97-796, 1997 WL 769528 (Minn. App. Dec. 16, 1997) ................................. 39
Morris v. Am. Family Mut.Ins. Co., 386 N.W.2d 233 (Minn. 1986) .................................................................................... 33
v
Newell v. Randall, 32 Minn. 171, 19 N.W. 972 (1884) ............................................................................. 37
Olson v. Accessory Controls and Equip. Corp., 254 Conn. 145, 757 A.2d 14 (Conn. 2000) ................................................................. 31
Olson v. Moorhead Country Club, 568 N.W.2d 871 (Minn. App. 1997) ........................................................................... 17
Reiter v. Kiffmeyer, 721 N. W.2d 908 (Minn. 2006) .................................................................................... 31
Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 244 N.W.2d 648 (Minn. 1976) ........................................................... 38
Royal Realty Co. v. Levin, 69 N.W.2d 667 (Minn. 1955) ...................................................................................... 44
Schermer v. State Farm & Cas. Ins. Co., 702 N.W.2d 898 (Minn. App. 2005), aff'd on other grounds, 721 N.W.2d 307 (Minn. 2006) ................................................................................................................ 17
State by Humphrey v. Alpine Air Prods., Inc., 490 N.W.2d 888 (Minn. App. 1992), aff'd, 500 N.W.2d 788 (Minn. 1993) ............... 19
State by Humphrey v. Philip Morris Inc., 551 N.W.2d 490 (Minn. 1996) .................................................................................... 19
State v. Caldwell, 803 N.W. 2d 373 (Minn. 2011) ................................................................................... 31
Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W. 2d 672 (Minn. 2004) ................................................................................... 31
Wells-Dickey Trust Co. v. Lien, 164 Minn. 307, 204 N.W. 950 (1925) ......................................................................... 37
Wiegand v. Walser Auto. Groups, Inc., 683 N.W.2d 807 (Minn. 2004) .......................................................................... 2, 42, 43
Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179 (Minn. 1999) .......................................................................... 2, 32, 38
Yost v. Millhouse, 373 N.W.2d 826 (Minn. App. 1985) ........................................................................... 40
Vl
FEDERAL STATUTES
Fair Labor Standards Act . . .. . . . .. . .. .. . .. . . . . . .. .. .. .. . . . .. . .. . . .. . .. . . .. . . .. . .. . . . . . . .. . . . . . .. .. . .. .. . . . .. . . . .. .. . .. . .. . . 17
STATE STATUTES
1970 Alaska Sess. Laws 2 ................................................................................................. 29
1967 Ariz. Sess. Laws 315 ................................................................................................ 29
1971 Ark. Acts 92 ............................................................................................................. 30
1987 Colo. Sess. Laws 357 ............................................................................................... 30
55 Del. Laws 108 (1965) ................................................................................................... 29
815 Ill. Comp. Stat. Ann ............................................................................................. 29, 34
1961 Ill. Laws 1868 ........................................................................................................... 29
1973 Kan. Sess. Laws 807 ................................................................................................ 30
1975 Md. Laws 527 ........................................................................................................... 30
1976 Mich. Pub. Acts 1165 ............................................................................................... 30
1967 Mo. Laws 607 ........................................................................................................... 29
1960 N.J. Laws 138 ........................................................................................................... 29
1987 N.M. Laws 1053 ....................................................................................................... 29
1994 Okla. Sess. Laws 759 ............................................................................................... 30
1979 Tex. Gen. Laws 603 ..... ; ........................................................................................... 30
1974 W.Va. Acts 148 ....................................................................................................... 30
Alaska Stat. Ann. § 45.50.471(b) (2013) .......................................................................... 29
Ariz. Rev. Stat. § 44-1522 ................................................................................................. 29
Ark. Code Ann.§ 4-88-108 (2013) ................................................................................... 30
Colo. Rev. Stat.§ 6-1-105(1)(u) (2013) ............................................................................ 30
Conn. Gen. Stat. § 42-110b ............................................................................................... 31
Vll
D.C. Code§ 28-3904 (1973) ............................................................................................. 30
Del. Code Ann. Title 6 § 2513(a) (2013) .................................................................... 29, 30
Kan. Stat. Ann.§ 50-626 (b) (3) (2012) ............................................................................ 30
Md. Code Ann., Com. Law§ 13-301(9) (2013) ............................................................... 30
Mich. Comp. Laws§ 445.903, § 3(1)(s) (2013) ............................................................... 30
Minn. Stat. § 8.06 .............................................................................................................. 27
Minn. Stat. § 8.31 ................................................................................................. 1; 2, 14, 26
Minn. Stat. § 72A.20 ......................................................................................................... 17
Mi11n. Stat.§ 151.06 ...................................................................................................... 7, 27
Minn. Stat. § 151.21 ................................................................................................... passim
Minn. Stat. § 151.29 ...................................................................................................... 7, 28
Minn. Stat.§ 151.30 ...................................................................................................... 7, 28
Minn. Stat. § 214.01 ................................................................................................ 8, 18, 28
Minn. Stat.§ 214.11 ...................................................................................................... 8, 28
Minn. Stat.§ 214.103 ................................................................................................ 7, 8, 28
Minn. Stat. § 325F .69 ................................................................................................. passim
Minn. Stat. § 325F.70 .................................................................................................. 30,21
Minn. Stat. § 645.16 .................................................................................................... 15, 29
Mo. Rev. Stat. § 407.020 (2012) ....................................................................................... 29
N.C. Gen. Stat. § 58-63-15(1) ........................................................................................... 31
N.J. Stat. Ann. § 56:8-2 (2013) ......................................................................................... 29
N.M. Stat. Ann. § 57-12-2 D (14) (2013) ......................................................................... 29
Okla. Stat. Ann. Title 15, § 752 (13) (2013) ..................................................................... 30
Texas Bus & Com. Code Ann. § 17 .46(b )(24) (20 11) ...................................................... 30
viii
W.Va. Code§ 46A-6-102 (7)(M) (2013) ......................................................................... 30
RULES
Minn. R. Evid. 201 .............................................................................................................. 6
Minn. R. Civ. P. 8.0l(b) ...................................................................................................... 3
Minn. R. Civ. P. 12 .................................................................................................. 3, 12, 46
REGULATIONS
Minn. R. 6800.9600 ........................................................................................................... 28
lX
STATEMENT OF THE ISSUES
Chapter 151 of the Minnesota Statutes (the "Pharmacy Statute") regulates the
practice of pharmacy in the State, and grants enforcement authority to the Board of
Pharmacy ("BOP"). Section 151.21 governs the substitution of generic drugs for
prescribed brands, and subdivision 4 of§ 151.21 ("subdivision 4") concerns pricing for
transactions that involve substituted generic prescription drugs ("GPDs"). Together,
Chapters 151 and 214 (governing examining and licensing boards) provide
comprehensive administrative and criminal remedies for an alleged violation of
subdivision 4, under the enforcement powers of the BOP, and county and city attorneys.
Chapters 325A through 325N of the Minnesota Statutes regulate certain business
practices for the protection of competitors and/or consumers. Section 325F.69, the
Minnesota Prevention of Consumer Fraud Act ("MCFA"), and § 8.31, subd. 3a (the
"Private AG Statute"), together allow private citizens to sue as "private attorneys
general" under certain limited circumstances.
Plaintiffs-Respondents attempt to use the MCFA and the Private AG Statute in
order to act as a "private BOP." This appeal challenges the Plaintiffs-Respondents'
attempt to inject themselves and the courts into an area that the legislature left to the
BOP.
Defendants-Appellants raise three issues:
1. Where the legislature has created administrative and criminal remedies for
violation of a regulatory statute, but has declined to provide a private cause of action, can
1
Plaintiffs-Respondents nevertheless maintain a private right of action by re-casting
alleged violations of the regulatory statute as violations of the MCF A?
The Court of Appeals held that the MCF A permits such a private action.
Most apposite authorities:
Becker v. Mayo Found, 737 N.W.2d 200 (Minn. 2007) Ly v. Nystrom, 615 N.W.2d 302 (Minn. 2000) Minn. Stat. § 325F.69, subd. 1 Minn. Stat. § 8.31, subd. 1 and 3a
2. Where Defendants-Appellants had no duty to disclose allegedly material
information, such as a retailer's prescription drug acquisition costs or its alleged
violations of a regulatory statute, is a failure to disclose such information actionable
under the MCFA?
The Court of Appeals held that such a failure is actionable.
Most apposite authorities:
Klein v. First Edina Nat'! Bank, 293 Minn. 418, 196 N.W.2d 619 (Minn. 1972) Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179 (Minn. 1999) Minn. Stat. § 325F.69, subd. 1
3. To state a claim under the MCFA, must Plaintiffs-Respondents plead facts
showing a causal nexus between the allegedly actionable omission, and the alleged
injury?
The Court of Appeals held that the MCF A does not require the pleading of such
facts.
Most apposite authorities:
Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001) Wiegand v. Walser Auto. Groups, Inc., 683 N.W.2d 807 (Minn. 2004)
2
STATEMENT OF THE CASE
This appeal arises from a Court of Appeals decision reversing, in part, a judgment
of the District Court dismissing all claims alleged by two Plaintiffs-Respondents on
behalf of a purported class in a "First Amended Complaint" ("FAC") (which was actually
Plaintiffs' fourth attempt to plead their claims). (See APP 1-36.) Plaintiffs are Taft-
Hartley Funds that provide health benefits to their participants under benefit plans that
include prescription drug coverage. (FAC ~~ 2-6, APP 2-3.) Defendants-Appellants,
either directly or through affiliates, operate or have operated retail pharmacies in
Minnesota. (FAC ~~ 7-21, APP 3-4.)
More than 3 5 years ago, the Minnesota legislature amended Chapter 151, which
regulates the practice of pharmacy, to encourage pharmacists to substitute less expensive
GPDs for brand-name drugs when filling prescriptions. See Minn. Stat.§ 151.21, entitled
"Substitution." Plaintiffs isolated one sentence from subdivision 4 of§ 151.21, and then
sued alleging that they have paid more for GPDs dispensed by Defendant pharmacies
than that sentence allows. Neither§ 151.21 nor its subdivision 4 contains an express
private cause of action for damages, so Plaintiffs' claims would have required the courts
to judicially create a private right of action. Plaintiffs also asserted claims for unjust
enrichment and violation of the MCF A, both predicated solely upon Defendants' alleged
violations of subdivision 4.
Defendants moved to dismiss the FAC under Rules 8.01(b), 9.02, 12.02(a), and
12.02(e) of the Minnesota Rules of Civil Procedure. By Order filed on July 11,2012,
Judge Robert A. Blaeser of the Hennepin County District Court granted the motion and
3
dismissed the F AC with prejudice. (ADD 1-18.) The District Court held that there is no
private right of action to sue for alleged violations of subdivision 4, and that the alleged
violations do not constitute unjust enrichment or violate the MCFA. (ADD 7-17.)
Judgment was entered on July 12, 2012. (ADD 18.)
Plaintiffs appealed the judgment. On May 6, 2013, the Court of Appeals issued an
opinion unanimously affirming the District Court's holding that there is no private right
of action for alleged violations of subdivision 4. (ADD 19-42.) However, the Court of
Appeals split on the MCFA claim. 1 The majority held that Plaintiffs had stated an MCF A
claim by alleging that Defendants failed to disclose information ("acquisition costs and
subsequent overcharges"), which Plaintiffs contended would show violations of
subdivision 4. Finding no controlling precedent from this Court, the majority held that
Plaintiffs were not required to allege or establish a duty to disclose the omitted
information, but may merely allege that the information was material. (ADD 32-33.)
The majority also concluded that Plaintiffs need not allege any facts linking the omitted
information to their decision-making, or to decision-making by their agents or members,
holding that the "alleged chain of causation here is[] uncomplicated" because Plaintiffs
allegedly paid inflated prices for GPDs. (ADD 34-36.)
Judge Schellhas dissented and would have affirmed the dismissal of the MCFA
claim, stating that "allowing [Plaintiffs] to proceed on their claim under the MCF A
The Court of Appeals did not address the unjust enrichment claim that the District Court had dismissed.
4
requires this court to recognize a new cause of action - a cause of action under the
MCFA based on a violation of [subdivision 4]." (ADD 39-42.)
Defendants timely requested this Court to review the Court of Appeals' decision
reversing the District Court on the MCFA claim. Plaintiffs sought cross-review of the
Court of Appeals' decision affirming the District Court's ruling that there is no private
right of action under subdivision 4. This Court granted review in an Order dated July 31,
2013. (APP 49-51.)
5
STATEMENT OF FACTS2
Industry Background
In the 1970s, when subdivision 4 was enacted, the typical retail pharmacy was
owned and operated by a pharmacist, and patients generally paid for their own
prescription drugs. See Schondelmeyer, S. W. and J. Thomas, Trends in Retail
Prescription Expenditures, Health Affairs 9, No. 3:131-145 (1990). (APP 88-102.) Most
patients were unaware that they could request a therapeutically equivalent, less expensive
GPD in place of many brand-name prescription drugs. Bureau of Consumer Protection,
Staff Report to the Federal Trade Commission: Drug Product Selection 3 (1979),
available at
http:/ /babel.hathitrust.org/ cgi/pt?id=mdp .3 90 15 00 8 51 77 92#view= 1 up ;seq= 11.
The situation has changed dramatically. Today, the large majority of prescriptions
is filled with GPDs and covered under government or medical benefit plans, so very few
patients actually pay 1 00% of prescription drug costs themselves. The amounts that
pharmacies receive for many prescription drugs reflect discounts that are dictated by
contracts between pharmacies and pharmacy benefit managers ("PBMs"), which "act as
an intermediary between the payor and everyone else in the health-care system." Thomas
Gryta, What is a "Pharmacy Benefit Manager?", The Wall Street Journal, July 21, 2011
2 These facts are based upon the allegations ofthe FAC; matters of public record of which the Court may take judicial notice, see Minn. R. Evid. 20 1; and documents and statements referenced in the F AC, which a court may consider on a motion to dismiss, see Martens v. Minnesota Mining & Mfg. Co., 616 N.W.2d 732,739 n.7 (Minn. 2000). Of the documents referred to herein, "Ex. 1" was attached to the Affidavit of Wendy J. Wildung filed in the District Court on April 5, 2012, and "Ex. 20" was attached to the Second Affidavit of Wendy J. Wildung filed in the District Court on April30, 2012.
6
(Ex. 1, APP 55.). PBMs work on behalf of plan providers, such as Plaintiffs, to design
and implement drug benefit plans that afford coverage to plan participants at the lowest
practicable cost to the plan providers. See id.
Overview Of Chapter 151 And Its Enforcement
Chapter 151 regulates the practice of pharmacy by, among other things,
establishing licensure and continuing education requirements, and setting standards of
conduct in certain areas. Chapter 151 establishes a Minnesota BOP, and provides that the
BOP "shall have the power and it shall be its duty" to regulate the practice of pharmacy
and the retail sale of drugs in the State. Minn. Stat.§ 151.06, subd. 1(a).
The BOP is charged with the responsibility to enforce Chapter 151 and its
associated regulations. In doing so, the BOP may: (1) deny, suspend, revoke, or refuse to
renew any registration or license,§ 151.06, subd. 1(a)(7)(ix); (2) levy civil penalties of up
to $10,000 per separate violation of Chapter 151, with "the amount of the civil penalty to
be fixed so as to deprive a licensee or registrant of any economic advantage gained by
reason of the violation,"§ 151.06, subd. 5; (3) require that a violator pay investigative
and enforcement costs, id.; and ( 4) through the county attorney or city attorney, prosecute
any violation of Chapter 151 or its regulations as a criminal misdemeanor,§§ 151.29 and
151.30.
The BOP is supported in its enforcement efforts by a paid staff and by the attorney
general's office. Chapter 214 of the Minnesota Statutes, which applies to "Examining
and Licensing Boards," requires the BOP to "receive and resolve complaints or other
communications, whether oral or written, against regulated persons." Minn. Stat.
7
§ 214.103, subd. 2. If a complaint requires investigation, the BOP must forward it "to the
designee of the attorney general," who conducts the necessary investigation and forwards
an investigative report back to the BOP for enforcement action. I d. at subd. 4 and 5. "In
all matters pending before it relating to its lawful regulation activities," the BOP may
issue subpoenas for the attendance of witnesses and for the production of documents:
Minn. Stat. § 214.10, subd. 3. If a complaint is not dismissed by the BOP or resolved by
agreement between the BOP and a licensee, the BOP may initiate a contested case
hearing under Chapter 14 of the Minnesota Statutes. Minn. Stat.§ 214.103, subd. 7.
Through the contested case hearing process, the dispute is decided by the BOP, and the
BOP's decision can be appealed to, and reviewed by, the district court.
Chapter 214 also provides the BOP with direct recourse to the district courts to
enforce Chapter 151:
In addition to any other remedy provided by law, [the BOP] may in its own name bring an action in district court for injunctive relief to restrain any unauthorized practice or violation or threatened violation of any statute or rule which the board is empowered to regulate or enforce.
Minn. Stat.§ 214.11.
Subdivision 4
Before 1975, Minn. Stat.§ 151.21, titled "Substitution," made it unlawful for a
pharmacist to "substitute an article different from the one ordered, or deviate in any
manner from the requirements of an order or prescription." Minn. Stat.§ 151.21 (1974).
In 1975, the legislature amended§ 151.21 to permit pharmacists to substitute GPDs for
brand-name prescription drugs under certain circumstances. 1975 Minn. Laws, ch. 101,
8
§ 2. As GPDs became prevalent, that permission became mandatory with a 1993
amendment. 1993 Minn. Laws, ch. 345, art. 5, § 10.
Section 151.21 covers two categories of prescriptions: (1) those where a brand-
name drug is specified on the prescription and the prescriber has expressly directed the
pharmacist to "dispense as written," see subdivision 2; and (2) those where a brand-name
drug is specified on the prescription but the prescriber has not directed that it must be
dispensed as written, see subdivision 3. A third category of prescriptions, those that are
written for GPDs, is not addressed in or covered by § 151.21.
For subdivision 3 prescriptions (i.e., prescriptions for brand-name drugs where the
prescriber has not directed that they be dispensed as written), if
there is available in the pharmacist's stock a less expensive generically equivalent drug that, in the pharmacist's professional judgment, is safely interchangeable with the prescribed drug, then the pharmacist shall, after disclosing the substitution to the purchaser, dispense the generic drug unless the purchaser objects.
Minn. Stat. § 151.21, subd. 3.
Subdivision 4 provides for savings to the "purchaser" if the pharmacist substitutes
a GPD pursuant to subdivision 3. Subdivision 4 provides:
A pharmacist di~pensing a drug under the provisions of subdivision 3 shall not dispense a drug of a higher retail price than that of the brand name drug prescribed. If more than one safely interchangeable generic drug is available in a pharmacist's stock, then the pharmacist shall dispense the least expensive alternative. Any difference between acquisition cost to the pharmacist of the drug dispensed and the brand name drug prescribed shall be passed on to the purchaser.
Minn. Stat.§ 151.21, subd. 4.
9
Plaintiffs' Claims
In the F AC, Plaintiffs alleged generally that each Defendant dispensed some GPDs
at some time in violation of subdivision 4 because each Defendant did not pass on to
Plaintiffs "[a ]ny difference between acquisition cost to the pharmacist of the drug
dispensed and the brand name prescribed." (FAC ~~ 101-18, APP 30-33.)
The F AC presented five GPDs as "examples" of alleged overcharges (id. ~ 42,
APP 9), but the "examples" were not based upon actual or complete information about
any actual transaction with any Defendant. Rather, the alleged "overcharges" shown in
the FAC's charts were hypothetical.
For each of its five "examples," the F AC alleged, solely upon information and
belief, amounts for "Brand Acquisition Cost" and "Generic Acquisition Cost." (Jd. ~~ 46,
47, 53, 54, 60, 61, 65, 66, 70, 71, 75, 76, 80, 81, 86, 90, 91, 95, 96, APP 10-28.) This
acquisition cost information came from a "whistleblower" who was a pharmacist working
for a Kroger pharmacy in West Virginia (Ex. 20, APP 63, 65-66, 68-9), and not from any
Defendant in this case or from any Minnesota pharmacist or pharmacy. Nonetheless, the
FAC attributed Kroger's alleged acquisition costs in West Virginia at one point in time to
all Defendants in Minnesota for all relevant time periods.
For each of its five "examples," the F AC also alleged an amount for the "Brand
Sales Price" based on a small number of prescriptions filled in Minnesota by a few
different Defendants. The F AC then attributed that alleged "Brand Sales Price" to all
Defendants. (I d. ~~ 51 (acknowledging that Plaintiffs' plan participants filled
prescriptions for brand-name drug for different amounts from different Defendants), 52,
10
53, 54, 64 ("Brand Sales Price" based on prescriptions filled by "Minnesota
pharmacies"), 65, 66, 74-76, 84, 86, 94-96, APP 15-27.) And Plaintiffs identified
"Generic Sales Prices," the source of which was not identified. Based on extrapolated
Kroger West Virginia "Acquisition Costs," Plaintiffs alleged that subdivision 4 was
violated by all Defendants because they did not pass along to Plaintiffs the "entire
difference between the acquisition cost of the brand name drug and the generic drug."
(Id ~ 31, APP 6.)
The F AC never alleged that Plaintiffs had any direct communications with any
Defendant, and never identified any information provided by Defendants to Plaintiffs (or
to anyone else, for that matter) that was false or misleading. Presumably, this is because
Plaintiffs contracted with PBMs to handle Plaintiffs' prescription drug plans, and did not
deal directly with Defendants.
The FAC also never alleged that Plaintiffs paid any Defendant directly, or that
Plaintiffs actually paid anyone the amounts identified as "Brand Sales Price" and
"Generic Sales Price." Presumably, this is because Plaintiffs never actually paid retail
prices for prescription drugs, but instead paid the substantially lower prices their PBMs
negotiated on their behalf
The F AC sought damages that included "the aggregate amount of the difference
between the acquisition cost of the generic drug and the equivalent brand-name drug"
that Defendants had allegedly failed to pass on to Plaintiffs in violation of subdivision 4.
(APP 34.) Plaintiffs also asked for injunctive relief to restrain alleged future violations of
subdivision 4. (!d.)
11
STANDARD OF REVIEW
This Court conducts a de novo review of a Rule 12 dismissal. Krueger v. Zeman
Constr. Co., 781 N.W.2d 858, 861 (Minn. 2010). The court must take the specific facts
pleaded, draw any reasonable inferences from those facts in favor of Plaintiffs, and then
ask whether Plaintiffs have stated a claim upon which relief may be granted. See Elzie v.
Commissioner of Public Safety, 298 N.W.2d 29, 32 (Minn. 1980). Vague assertions or
legal conclusions do not prevent dismissal if, on the specific facts pleaded, dismissal is
warranted. See Bahr v. Capella Univ., 788 N.W.2d 76, 80 (Minn. 2010).
Statutory interpretation is a question of law that also is reviewed de novo.
Krueger, 781 N.W.2d at 861.
12
ARGUMENT
The F AC does not plead any conduct other than alleged violations of subdivision
4. In the absence of subdivision 4, a pharmacy's alleged failure to "pass on" savings in
its acquisition costs for GPDs would not even arguably implicate any law. Thus, this
appeal squarely presents the question of whether alleged violations of a regulatory statute
that lacks a private right of action can be pursued by private plaintiffs in the guise of an
MCFA claim, and under the authority of the Private AG Statute.
The Court of Appeals' majority ruling expands civil liability under the MCFA
beyond recognition. If alleged violations of subdivision 4 are deemed actionable under
the MCF A without any accompanying fraud or misstatement, then the MCF A provides a
private right of action for alleged violations of any regulatory statute - state or federal -
that involves consumer transactions. Moreover, if private plaintiffs can state an MCF A
claim merely by pointing to omitted information alleged to have been material, without
having to show a duty of disclosure and a causal nexus between the omitted information
and reliance by someone, then liability under the MCF A is akin to strict liability. It is
inconceivable that the legislature intended any of these results.
This Court should construe the applicable statutes to effectuate the legislature's
intent, as reflected in the language, history, and structure of the different statutory
schemes, and hold that the private right to sue under the MCF A does not sweep so
broadly. The MCFA and the Private AG Statute do not deputize private citizens to sue
pharmacies and pharmacists for alleged violations of the Pharmacy Statute in place of the
13
BOP. On the contrary, the comprehensive scheme of regulation and enforcement in
Chapters 151 and 214 evidences legislative intent to exclude such private enforcement.
Plaintiffs' effort to act as a private attorney general by re-casting their claim under
subdivision 4 as an MCF A claim fails for a number of reasons.
First, Defendants' alleged failure to "pass on" purported savings in their
acquisition costs are not predicate acts that are prohibited by Minn. Stat. § 325F.69, subd.
1. They also are not violations of statutes that the attorney general has primary
responsibility to enforce under§ 8.31, subd. 1, and so do not fall within the scope of the
private attorney general provision of§ 8.31, subd. 3a.
Second, by its plain language, Minn. Stat. § 325F.69, subd. 1, does not encompass
claims based upon "pure" omissions, i.e., omissions in the absence of a duty to disclose.
The consumer fraud statutes of other states expressly prohibit the concealment,
suppression, or failure to disclose material facts, but§ 325F.69, subd. 1, does not. Under
well-established principles of statutory construction, and of judicial deference to the
legislature, an MCFA claim may not be based upon a defendant's alleged failure to
disclose material information when it had no duty to disc los~ that information.
Moreover, "pure" omission claims would be subject to abuse, because a disgruntled party
to a transaction could easily claim with hindsight that the counterparty did not disclose
enough information. This Court should not open the courthouse doors to such abuse.
Third, this Court's precedent holds that a private plaintiff suing under the MCF A
must be able to establish a causal nexus between the allegedly actionable conduct- the
false or misleading statement or omissiqn- and his claimed damages. Plaintiffs have
14
merely linked their alleged overpayments to transactions, but not to any false or
misleading statements or omissions. The Court of Appeals majority erred in allowing
this action to proceed when there were no facts pleaded to establish, no theory articulated
to show, and no reason to believe that a causal link exists between any potentially
actionable conduct by Defendants and Plaintiffs' alleged overpayments for GPDs.
For these reasons, as explained more fully below, this Court should reverse the
Court of Appeals' decision as to Plaintiffs' MCFA claim, affirm the Court of Appeals'
decision in all other respects, and direct the entry of judgment in favor of Defendants on
all claims.
I. ALLEGED VIOLATIONS OF SUBDIVISION 4 DO NOT AMOUNT TO VIOLATIONS OF THE MCFA.
Whether alleged violations of subdivision 4 may be litigated as MCF A claims by
private plaintiffs acting under the Private AG Statute turns upon whether the legislature
intended that outcome in enacting the t\vo statutory schemes. This is because "[t]he
object of all interpretation and construction of laws is to ascertain and effectuate the
intention ofthe legislature." Minn. Stat. § 645.16.
A. Plaintiffs' Purported MCFA Claim Circumvents Legislative Intent Not To Provide A Private Right Of Action For Violation Of Subdivision 4.
This Court's jurisprudence holds that where the legislature has created a new right
or duty, it is for the legislature, not the courts, to define its parameters. See, e.g.,
Krueger, 781 N.W.2d at 863 ("When interpreting a statute to determine if it creates a
cause of action, we do not ask whether the statute imposes a limitation on an otherwise
unlimited claim, but instead determine whether the statute actually provides a cause of
15
action to a particular class of persons."). Likewise, it is for the legislature, not the courts,
to create a corresponding remedy. See, e.g., Becker v. Mayo Found., 737 N.W.2d 200,
207 (Minn. 2007) ("A statute does not give rise to a civil cause of action unless the
language of the statute is explicit or it can be determined by clear implication.");
Bruegger v. Faribault Cnty. Sheriff's Dep't, 497 N.W.2d 260,262 (Minn. 1993)
("Principles of judicial restraint preclude us from creating a new statutory cause of action
that does not exist at common law where the legislature has not either by the statute's
express terms or by implication provided for civil tort liability."); Beck v. Groe, 245
Minn. 28, 44, 70 N.W.2d 886, 897 (Minn. 1955) ("No right of action exists save that
expressly given by statute, and the remedy prescribed cannot be enlarged except by
further legislative enactment.").
The Court of Appeals followed these principles in correctly holding that
subdivision 4 does not imply a private right of action. Citing Becker, 737 N.W.2d at 209,
the Court of Appeals reasoned that the fact that subdivision 4 does not mention a private
right of action "suggests that the legislature deliberately omitted to provide for one."
(ADD 26.) The Court of Appeals further reasoned that the existence of other remedies
for a violation of subdivision 4 (namely, civil fines, criminal penalties, and administrative
actions against professional licenses), coupled with the absence of a private civil remedy,
"indicates that the legislature did not intend to create a private right of action." (ADD
26-27 (citing Becker, 737 N.W.2d at 208).)
The Court of Appeals majority ignored these principles in holding that Plaintiffs'
purported MCF A claim may proceed. As the dissent pointed out, the Court of Appeals
16
itself has previously and repeatedly held that a plaintiff may not bootstrap an alleged
violation of a regulatory statute that lacks a private right of action into a common law
claim or an MCF A claim, because doing so circumvents legislative intent to provide
remedies other than a private right of action. (ADD 40-41 (citing, among other cases,
Schermer v. State Farm & Cas. Ins. Co., 702 N.W.2d 898, 905 (Minn. App. 2005), aff'd
on other grounds, 721 N.W.2d 307 (Minn. 2006) ("[T]he law is well settled that a litigant
cannot ... use an alleged violation of [Minn. Stat. § 72A.20, subd. 13] to prove elements
of a common law claim."), and Olson v. Moorhead Country Club, 568 N.W.2d 871, 873-
75 (Minn. App. 1997) (refusing to recognize conversion claim based on Minnesota Fair
Labor Standards Act)).) The Court of Appeals majority failed to acknowledge, or even
refer to, these prior decisions, much less explain why this case should be an exception to
the rule.
The previous decisions of the Court of Appeals cited above are applicable here.
Allowing alleged violations of subdivision 4 to be pursued under the MCF A would
circumvent the legislature's carefully designed scheme for regulating pharmacists and
pharmacies. See Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081, 1086 (8th Cir. 2012)
(declining under Minnesota law to permit insureds to bring common law claims premised
upon violations of a Minnesota insurance statute that lacked a private right of action,
because, among other things, it might interfere with the comprehensive regulatory
scheme that the legislature created). 3
3 Courts elsewhere have refused to allow plaintiffs to treat violations of other statutes as claims under state consumer protection acts. See, e.g., Willbanks v.
17
The legislature has expressly stated that "it is desirable for boards composed
primarily of members of the occupations so regulated to be charged with formulating the
policies and standards governing the occupation." Minn. Stat. § 214.01, subd. 1. The
legislature also decided that compliance with the Pharmacy Statute could be secured by
administrative remedies, without subjecting pharmacists and pharmacies to private claims
for money damages. At minimum, allowing Plaintiffs to sue under the MCF A for alleged
violations of subdivision 4 allows them to 'jump the queue," in disregard of the
regulatory scheme, which requires the BOP to address and resolve issues under the
Pharmacy Statute in the first instance. A substantial danger exists that, should this case
be allowed to proceed, subdivision 4 (and other provisions of the Pharmacy Statute) will
be interpreted and applied without the benefit of input from the BOP - the most
knowledgeable body and the body expressly intended by the legislature to interpret and
enforce the statute. Further, judicial interpretation of subdivision 4 and Chapter 151
could impose standards of conduct upon pharmacists and pharmacies that differ from
what the BOP would have imposed and the legislature intended. And private claims
Progressive Choice Ins. Co., No. 1:10-cv-1299 A WI SKO, 2010 WL 4861349, at *4 (E.D. Cal. Nov. 17 2010) (dismissing unfair competition claim that was "simply [a] re-labeled" Unfair Insurance Practices Act claim for which there is no private right of action); Henderson v. Hertz Corp., No. L-6937-03, 2005 WL 4127090, at *5 (N.J. Super. A.D. June 22, 2006), cert. denied, 909 A.2d 724 (N.J. 2006) (affirming rejection of consumer fraud act claim where none of the alleged deceptive practices "falls outside the scope" of a statute providing no private cause of action); Krell v. National Mortgage Corp., 448 S.E.2d 248, 249 (Ga. App. 1994) (affirming rejection of consumer protection act claims because "[plaintiff's] action cannot be based solely on a claim that [defendant] violated the HUD regulations," where such violation does not support private cause of action).
18
under the MCF A could subject pharmacists and pharmacies to financial burdens,
including defense costs, that the legislature never intended. In all these ways, private
lawsuits premised upon alleged violations of subdivision 4 would undermine the
legislature's preferred approach to regulating the practice of pharmacy in Minnesota.
Therefore, this Court should reject Plaintiffs' attempt to circumvent legislative
intent, and hold that Plaintiffs may not pursue an MCF A claim premised solely upon an
alleged violation of subdivision 4. The Court of Appeals' decision should be reversed on
this basis.
B. The MCFA Is Not Unlimited.
The Court of Appeals took an unduly broad view of the MCFA's scope in reliance
on this Court's general statement that the MCFA should be "generally very broadly
construed to enhance consumer protection." (ADD 29 (quoting State by Humphrey v.
Philip Morris Inc., 551 N.W.2d 490, 495-96 (Minn. 1996)).) Likewise, it relied on
previous Court of Appeals authority for the proposition that consumer protection laws
were intended to be broader than common law fraud. (ADD 29-30 (citing State by
Humphrey v. Alpine Air Prods., Inc., 490 N.W.2d 888, 892 (Minn. App. 1992), a.ff'd, 500
N.W.2d 788 (Minn. 1993)).)
These generalizations do not aid in deciding the issues here. The cases on which
the Court of Appeals relied involved actions initiated by the attorney general, who has a
lesser burden than Plaintiffs. Because a private plaintiffs right to sue for an alleged
violation of the MCFA arises from the Private AG Statute, Plaintiffs (unlike the attorney
general) must satisfy both § 325F.69, subd. 1, and§ 8.31, subd. 3a, to proceed. SeeLy v.
19
Nystrom, 615 N.W.2d 302, 307 (Minn. 2000) (noting that the MCFA and the Private AG
Statute "are generally discussed and applied in concert, but they are separate and distinct
in their structure and purpose"). While a private claim under the MCF A is broader than
common law fraud in some respects, see, e.g., Church of the Nativity of Our Lord v.
WatPro, Inc., 474 N.W.2d 605, 612 (Minn. App. 1991), aff'd, 491 N.W.2d 1 (Minn.
1992) (intent to deceive not required), it is narrower than common law fraud in other
respects, see, e.g., Ly, 615 N.W.2d at 314 (plaintiff must show his claim will benefit the
public).
The Court of Appeals' general observations are no substitute for careful analysis
of the MCFA and the Private AG Statute. As this Court has noted, "it is not the role of
this court to extend the reach of consumer protection beyond what was intended by the
legislature." Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2, 11 (Minn.
2001) (citing Boubelikv. Liberty State Bank, 553 N.W.2d 393,403 (Minn. 1996),
superseded by statute as stated in Ly, 615 N.W.2d at 309). The language, history, and
structure of the MCFA and the Private AG Statute demonstrate that the legislature did not
intend alleged violations of subdivision 4 to be pursued by private plaintiffs under the
MCFA, and the Court of Appeals erred by reviving the MCFA claim.
C. An Alleged Violation Of Subdivision 4 Is Not A Prohibited Act Under TheMCFA.
The scope of the MCFA is made plain in its language:
The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale
20
of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided in section 325F.70.
Minn. Stat.§ 325E69, subd. 1. The common thread in the statute's list of prohibited
conduct is a false or misleading communication. This Court has said that the MCF A
"defines the conduct proscribed essentially as any misrepresentation made with the intent
that others rely on it in connection with the sale of any merchandise." Group Health, 621
N.W.2d at 12 (emphasis added). Not surprisingly, courts have consistently required a
false or misleading communication as an element of an MCF A claim. See, e.g., Baker v.
Best Buy Stores, LP, 812 N.W.2d 177, 182 (Minn. App. 2012), review denied (Minn.
Apr. 25, 2012) ("To prevail under the MCFA, appellants must show that respondents
intentionally made a misrepresentation .... "); 301 Clifton Place L.L. C. v. 301 Clifton
Place Condo. Ass'n, 783 N.W.2d 551, ~63 (Minn. App. 2010) ("TheMCFApenalizes
fraud or misrepresentation .... ").
or any act by Defendants that Plaintiffs claim was intended to deceive anyone. For
example, the F AC does not allege that Defendants represented one price for a GPD and
charged another. Indeed, an alleged violation of subdivision 4 does not require that
anything false be communicated or that anything deceptive be done. Instead, subdivision
4 focuses solely on pricing. Thus, allegedly violating subdivision 4 does not, standing
alone, violate the MCF A.
21
Because an alleged violation of subdivision 4 is not among the conduct prohibited
by the plain language of the MCFA, the Court of Appeals erred in allowing Plaintiffs'
MCFA claim to proceed.
D. Plaintiffs' Attempts To Sidestep The Plain Language Of The MCFA Should Be Rejected.
In oral argument before the Court of Appeals, Plaintiffs proffered three theories as
to why they should be allowed to re-cast their subdivision 4 claim as an MCF A claim:
(1) the "failure to confess" theory; (2) the "implied representation" theory; and (3) the
"deceptive practice" theory. None of these theories has merit.
Plaintiffs' "failure to confess" theory is essentially an omission theory. Plaintiffs
argue that Defendants failed to disclose information ("acquisition costs and subsequent
overcharges") that would have revealed violations of subdivision 4. However, as
discussed further, infra at Section II, pure omissions are not actionable under the MCF A
in the absence of a duty to disclose, and the Court of LA~ppeals erred in holding otherwise.
Moreover, if accepted by this Court, Plaintiffs' "failure to confess" theory would allow
parties to transform a violation of any statute involving a merchandise transaction into an
MCF A claim by the simple expedient of alleging that the offending party failed to
disclose the statutory violation. That would, in tum, allow private parties to circumvent
the legislature's decisions as to which remedies to provide for which statutory violations.
Plaintiffs' "failure to confess" theory is both bad law and bad policy, and it should be
rejected.
22
[
I
Plaintiffs' "implied representation" theory posits that by operating a pharmacy,
Defendants impliedly represent that they comply with all Minnesota statutes governing
the practice of pharmacy. Plaintiffs argue that Defendants' supposed "implied
representations" are false because they allegedly violate subdivision 4. The "implied
renresentation" theorv fails because "implied representations" are not actionable under .A. "' ..... ......
the MCF A. The theory also suffers from the same fundamental flaw as the "failure to
confess" theory- it would indiscriminately transform violations of other statutes into
violations of the MCFA, and thus circumvent legislative intent. Finally, the mere
possession of a license cannot amount to an implied representation -much less an
actionable misrepresentation - by the licensee that he or she is in compliance with all
applicable laws.
Plaintiffs' "deceptive practice" theory overreaches. Plaintiffs point out that
"deceptive practice" is included among the conduct prohibited by§ 325F.69, subd. 1, and
then argue, without citing any authority, that violating subdivision 4 is a "deceptive
practice." The term "deceptive practice" is not defined in§ 325F.69, but it is given
meaning by the provisions of Chapter 325A through Chapter 325N as a whole. Those
provisions clearly demonstrate that when the legislature wants a violation of another
statute to constitute a "deceptive practice" under the MCFA, it has said so.
Chapters 325A through 325N contain provisions regulating trade and providing
for consumer protection in certain types of business transactions. Each section addresses
a separate topic, and mandates certain business practices and prohibits others. For
violations of each topical section, the legislature specified one or more remedies. Where
23
the legislature wanted to provide an MCF A cause of action for violation of statutory
requirements, it said so directly, as shown below:
\x']~;:-~~h$~~int~:~~,"M:~~~~ i~~~~::~\~116 c ~i~i,~s~~t~B'~ ._ § 325A.09, subd. 7 Invention services
§ 325F.18, subd. 6 Formaldehyde gases in building materials
§ 325F.63, subd. 3 Practices of repair shops
§ 325F.662, subd. 9 Practices of dealers of used motor vehicles
§ 325F.692, subd. 4 Certain communications by information service roviders
§ 325F.693, subd. 2 Slamming oflocal telephone service without customer's verified consent
§ 325F.755, subd. Prize notices and 7 (b) solicitations
§ 325F.97, subd. 2 Rental purchase agreements
§ 3250.05; subd. 3 How financial transaction card issuers must respond
24
"In addition to the penalties provided in subdivisions 1 to 6, any invention developer who is found to have violated sections 325A.O 1 to 325A.l 0 shall be deemed in violation of section 325F.69, subdivision 1, and the provisions of section 8.31 shall apply." "Any person who is found in violation of subdivisions 1 to 3 shall be deemed in violation of section 325F.69, subdivision 1, and the provisions of section 8.31 shall apply." "Any violation of sections 325F.56 to 325F.66 shall be deemed a violation of section 325F.69, subdivision 1, and the provisions of section 8.31, shall apply." "Any dealer who is found to have violated this section is subject to the penalties and remedies, including a private right of action, as provided in section 8 .31. In addition, a violation of subdivision 7 is also a violation of section 325F.69.;; Specifying that certain communications are "fraudulent misrepresentations under section 325F.69"
Deeming such slamming to be "fraud under section 325F.69"
"A violation of this section is also a violation of sections 325F.68 to 325F.71, and is subject to section 8.31." "A violation of section 325F.90, 325F.91, or 325F.93 shall be treated as a violation of section 325F.69." "A violation of this section shall be treated as a violation of section 325F.69."
§ 3250.20
to customer inquiries into disputed accounts Warranties in "A violation of sections 3250.17 to 3250.20 consumer sales shall be treated as a violation of section
325F.69." § 325N.06, subd. a Conduct of mortgage
foreclosure consultants
"A violation of sections 325N.01 to 325N.09 is considered to be a violation of section 325F.69, and all remedies of section 8.31 are available for such an action. A private cause of action under section 8.31 by a foreclosed homeowner is in the public interest."
§ 325N.18, subd. 1 Conduct of "A violation of sections 325N.1 0 to 325N.17 foreclosure purchasers is considered to be a violation of section
325F.69, and all the remedies of section 8.31 are available for such an action. A private right of action under section 8.31 by a foreclosed homeowner is in the public interest."
Had the legislature intended any violation of any statute regulating business to be
a "deceptive practice" within the meaning of§ 325F.69, it would not have specified that
violations of certain specific statutes constitute MCF A violations. That the legislature
identified the violation of only certain specific statutory provisions, but not others, as
constituting MCF A violations indicates that the legislature did not intend the MCF A to
be a catchall encompassing violations of any other statutes.
It follows that an alleged violation of subdivision 4 does not constitute a
"deceptive practice" under the MCF A because there is no evidence that the legislature
intended that to be the case. Nothing in subdivision 4, or the Pharmacy Statute,
references the MCF A, and nothing in the MCF A references the Pharmacy Statute.
Consistent with this Court's reasoning in Becker, see 737 N.W.2d at 208-09, where the
25
legislature specifies that certain prohibited business practices violate the MCF A, but is
silent as to § 151.21 and its subdivision 4, the obvious conclusion must be that the
.legislature either did not have the MCF A in mind at all when enacting subdivision 4, or
deliberately did not deem violations of subdivision 4 to be MCF A violations. Either way,
Plaintiffs' MCF A claim must fail.
E. The Private AG Statute Does Not Give Plaintiffs Authority To Sue For Alleged Violations Of Subdivision 4.
The Private AG Statute also demonstrates that the legislature did not intend
alleged violations of subdivision 4 to be actionable by private plaintiffs. It provides in
relevant part that "any person injured by a violation of any of the laws referred to in
subdivision 1 may bring a civil action and recover damages .... " Minn. Stat. § 8.31,
subd. 3a (emphasis added). Subdivision 1 of§ 8.31, in tum, grants the attorney general
authority to sue on the State's behalf to remedy violations of certain state laws. Under
the "private attorney general" provision of subdivision 3a, Plaintiffs may sue only for
violations of the statutes described in subdivision 1, i.e., those statutes for which the
attorney general has primary enforcement authority. !d.
Although subdivision 1 is admittedly broad when addressing the attorney general's
authority, see § 8.31, subd. 1 (granting the attorney general authority to enforce state laws
"respecting unfair, discriminatory, and other unlawful practices in business, commerce or
26
I l f
trade," including the MCF A), the legislature did not make the attorney general the
primary enforcer of all statutes.4
In particular, the legislature did not make the attorney general the primary enforcer
of Chapter 151. It gave that responsibility to the BOP instead. See Minn. Stat. § 151.06
(providing that the BOP "shall have the power and it shall be its duty" to regulate the
practice of pharmacy and the retail sale of drugs, and specifying the BOP's enforcement
powers as including action against licenses and civil penalties). The attorney general is
counsel to the BOP, see Minn. Stat. § 8.06, and plays a role in investigating complaints or
4 The attorney general is not even the primary enforcer of all of the provisions in Chapters 325A through 325N. Where the legislature intended to grant the attorney general primary enforcement authority over a section of those chapters, it did so in the particular topical section. See, e.g., § 325E.044, subd. 4, and§ 325E.046, subd. 3 (topical section addressing sale and labeling of plastics); § 325E.318, subd. 4 (topical section addressing wireless directories); § 325E.3891, subd. 5 (topical section addressing cadmium in children's jewelry); § 325E.42, subd. 2 (topical section addressing gambling advertising and marketing); § 325E.61, subd. 6 (topical section addressing data warehouses); § 325F.24, subd. 3 (topical section addressing advertisements for insulation);§ 325F.72, subd. 4 (topical section addressing disclosure of special care status);§ 325F.744 (topical section addressing precious metals);§ 325F.78 (topical section addressing distribution of tobacco products);§ 325F.781, subd. 10 (topical section addressing tobacco product delivery sales); § 325F.783, subd. b (topical section addressing auto glass repair or replacement); § 325F.784, subd. 2 (topical section addressing prescription drug discounts);§ 325F.81, subd. 4 (topical section addressing replica firearms); § 325G.28, subd. 1 (topical section addressing club contracts); § 325G.54, subd. 3, and§ 325G.55, subd. 4 (topical section addressing cancellation of certain contracts by military personnel). For other topical sections, the legislature expressly provided for enforcement by other state officials, in lieu of the attorney generaL See, e.g., § 325E.316, subd. 1 (topical section addressing telephone solicitation) (providing for enforcement by the commissioner of commerce); § 325E.66, subd. 3 (topical section addressing insurance claims for residential contracting) (providing for enforcement by the commissioner oflabor and industry);§ 325K.07, subd. 3 (topical section addressing electronic authentication) (providing for enforcement by the secretary of state).
27
violations of Chapter 151 at the direction of the BOP, see Minn. Stat.§ 214.01 and Minn.
R. 6800.9600. But the attorney general has no general grant of authority to enforce
Chapter 151 on her own. Rather, the procedures for enforcement are limited to: (1)
contested case proceedings brought by the BOP under the Administrative Procedure Act,
Minn. Stat. § 214.103, subd. 7; (2) injunction actions brought by the BOP "in its own
name," Minn. Stat. § 214.11; and (3) criminal prosecutions brought by county and city
attorneys, Minn. Stat.§§ 151.29 and 151.30.
Because the attorney general is not the primary enforcer of Chapter 151, and
because the Private AG Statute does not grant private plaintiffs authority that the attorney
general does not have, Plaintiffs do not have the right to pursue an MCF A claim for
alleged violations of subdivision 4. The Court of Appeals' decision that Plaintiffs may
bring an MCF A claim for alleged violations of subdivision 4 should be reversed.
II. AN MCFA CLAIM CANNOT BE BASED UPON AN OMISSION
The Court of Appeals improperly concluded that an MCF A claim may be based
upon an omission in the absence of any duty to disclose the information, i.e., a "pure"
omission. (See APP 33.) This holding conflicts with the plain language ofthe MCFA,
legislative intent, and this Court's repeated rulings that parties to transactions generally
are not required to disclose information absent a duty to disclose.
A. The MCFA Does Not Encompass "Pure" Omissions.
The Court of Appeals' holding that an omission-based MCFA claim may be
brought when there is no duty to disclose improperly broadens the MCF A to encompass
28
conduct not contemplated by the legislature. Both the plain language and the history of
the MCF A demonstrate that it is not meant to include "pure" omissions.
While the MCFA prohibits the act, use or employment of"any fraud, false
pretense, false promise, misrepresentation, misleading statement or deceptive practice," it
does not mention omissions or similar language, such as "concealment" or "failure to
disclose," in its list of prohibited conduct. Minn. Stat. § 325F.69, subd. 1. Because the
MCFA's plain language does not address omissions, the Court of Appeals erred in
holding that an MCF A claim can be based on a "pure" omission. See Minn. Stat.
§ 645.16 ("When the words of a law ... are clear and free from all ambiguity, the letter
of the law shall not be disregarded under the pretext of pursuing the spirit.").
The MCF A was originally enacted in 1963 as part of a wave of consumer
protection legislation in 'which state legislatures adopted one of a variety of model acts.
See Mary Dee Pridgen, Consumer Protection and the Law,§ 2:10 (2012); Ly, 615
N.W.2d at 308. At that time, the Minnesota legislature chose not to include omissions as
conduct prohibited by the MCF A. In contrast, many other states and the District of
Columbia elected to include language that covered omissions in addition to affirmative
misrepresentations.5 For example, Delaware's consumer protection statute prohibits,
5 See, e.g., 1960 N.J. Laws 138 (current version at N.J. Stat. Ann. § 56:8-2 (2013)) ("concealment, suppression or omission of any material fact"); 1961 Ill. Laws 1868 (current version at 815 Ill. Comp. Stat. Ann. 505/2 (2013)) (same); 55 Del. Laws 108 (1965) (current version at Del. Code Ann. tit. 6 § 2513(a) (2013)) (same); 1967 Ariz. Sess. Laws 315 (current version at Ariz. Rev. Stat.§ 44-1522, subd. A (20) (2013)) (same); 1967 Mo. Laws 607 (current version at Mo. Rev. Stat.§ 407.020 (2012)) (same); 1987 N.M. Laws 1053 (current version at N.M. Stat. Ann. § 57-12-2 D (14) (2013)) ("failing to state a material fact"); 1970 Alaska Sess. Laws 2 (current version at Alaska
29
"any deception, fraud, false pretense, false promise, misrepresentation, or the
concealment, suppression or omission of any material fact with intent that others rely
upon such concealment, suppression or omission .... " Del. Code Ann., tit. 6 § 2513(a)
(emphasis added).
Since enacting the MCF A, the legislature has repeatedly revised Minn. Stat.
§ 325F.69, subd. 1, but has never added omissions as actionable conduct. In 1969, the
legislature expanded the list of conduct prohibited by the MCF A, but- unlike other states
-declined to expand that list to include omissions. Compare 1963 Minn. Sess. Law, c.
842, § 2 with 1969 Minn. Sess. Law, c. 1100, § 1 (adding "misleading statement or
deceptive practice"). The legislature amended Minn. Stat. § 325F.69, subd. 1, again in
1973 and 2004, but chose not to add to the list of prohibited conduct on either occasion.
See 1973 Minn. Sess. Law, c. 454, § 1 (substituting "merchandise" for "goods or
services"); 2004 Minn. Sess. Law, c. 228, art. 1, §56 (adding reference to Minn. Stat. §
Stat. Ann.§ 45.50.471(b) (2013)) ("knowingly concealing, suppressing, or omitting a material fact"); 1971 Ark. Acts 92 (current version at Ark. Code Ann.§ 4-88-108 (2013)) ("concealment, suppression, or omission of any material fact"); D.C. Code § 28-3904 (1973) ("fail to state a material fact"); 1973 Kan. Sess. Laws 807 (current version atKan. Stat. Ann. §50-626 (b) (3) (20 12)) ("intentional failure to state a material fact, or the intentional concealment, suppression or omission of a material fact"); 197 4 W. Va. Acts 148 (current version at W.Va. Code§ 46A-6-102 (7)(M) (2013)) ("concealment, suppression or omission of any material fact"); 197 5 Md. Laws 527 (current version at Md. Code Ann., Com. Law§ 13-301(9) (2013)) ("concealment, suppression, or omission of any material fact"); 1976 Mich. Pub. Acts 1165 (current version at Mich. Comp. Laws § 445.903, Sec. 3(1)(s) (2013)) ("failing to reveal a material fact"); 1979 Tex. Gen. Laws 603 (current version at Texas Bus & Com. Code Ann. § 17.46(b)(24) (2011)) ("failing to disclose information concerning goods or services"); 1987 Colo. Sess. Laws 357 (current version at Colo. Rev. Stat. § 6-1-105(1)(u) (2013)) ("fails to disclose material information"); S.D. Codified Laws Ann. § 37-24-6 (1967)) ("conceal, suppress, or omit"); 1994 Okla. Sess. Laws 759 (current version at Okla. Stat. Ann. tit. 15, § 752 (13) (20 13)) ("misrepresentation, omission or other practice").
30
325F.70). Despite repeatedly revisiting this particular subdivision, the legislature has
never seen fit to expand the description of prohibited practices to include omissions.
When seeking to interpret statutes and determine the will of the legislature, this
Court "will not supply words that the Legislature either purposely omitted or
inadvertently left out." State v. Caldwell, 803 N.W. 2d 373, 382 (Minn. 2011) (citing
Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W. 2d 672, 681 (Minn. 2004)); see
also Reiter v. Kiffmeyer, 721 N.W.2d 908, 911 (Minn. 2006) ("We will not read into a
statute a provision that the legislature has omitted, either purposely or inadvertently.").
Considering the lack of any reference to omissions in the MCF A, and the broader context
in which the MCF A was enacted and repeatedly revised, this Court should not read the
MCF A to encompass an omission in the absence of a duty to disclose. 6
B. A Duty To Disclose Is Required To Bring An Omission-Based MCFA Claim.
This Court has long held that "[a]s a general mle, one party to a transaction has no
duty to disclose material facts to the other." Klein v. First Edina Nat'! Bank, 293 Minn.
6 In some other states that have adopted consumer protection statutes similar to the MCF A by not containing an express reference to omissions, courts require a duty to disclose to assert a viable omission-based consumer fraud claim. See, e.g., Olson v. Accessory Controls and Equip. Corp., 254 Conn. 145, 180, 757 A.2d 14, 34 (Conn. 2000) (under Conn. Gen. Stat. § 42-110b, "[a] failure to disclose can be deceptive only if, in light of all the circumstances, there is a duty to disclose") (citation and internal quotation omitted); Smith v. Ford Motor Co., 462 Fed. Appx. 660, 662 (9th Cir. 2011) ("As plaintiffs do not allege that [defendant] made affirmative representations ... plaintiffs cannot prevail absent a duty to disclose by [defendant]" under Cal. Civ. Code§ 1770); Kron Med. Corp. v. Collier Cobb & Assocs., Inc., 107 N.C. App. 331, 339, 420 S.E.2d 192, 196-97 (1992) (recognizing that "a failure to disclose information may be tantamount to a misrepresentation and thus an unfair or deceptive practice in violation of [N.C. Gen. Stat. § 58-63-15(1)]" in circumstances "[w]here there is a duty to speak").
31
418, 421, 196 N.W.2d 619, 622 (Minn. 1972). "Where both parties are intelligent and
fully capable of taking care of themselves and dealing at arms' length, with no
confidential relations, no duty to disclose exists when information is not requested, and
mere silence is then not a fraud." Boubelik, 553 N.W.2d at 399 (citation and internal
quotation omitted), quoted in Erickson v. Horing, No. C4-02-138, 2002 WL 31163611, at
* 10 (Minn. App. Oct. 1, 2002). "For nondisclosure to constitute fraud, 'there must be a
suppression of facts which one party is under a legal or equitable obligation to
communicate to the other, and which the other party is entitled to have communicated to
him."' Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179, 190 (Minn. 1999)
(internal quotation and citation omitted). Thus, there is no liability for failing to disclose
information- even material information- in connection with a business transaction
absent a duty to disclose that information.
The issue of whether an MCF A claim can be based upon an omission in the
absence of a duty to disclose is a matter of first impression before this Court. Before the
Court of Appeals' decision, several courts (including other panels of the Court of
Appeals) had held that an omission-based MCFA claim required a duty to disclose. See
Sailors v. N States Power Co., 4 F.3d 610, 614 & n.5 (8th Cir. 1993) (MCFA claim
"requires a misrepresentation or, in the case of an omission, a duty of disclosure");
Cashman v. Allied Prods. Corp., 761 F.2d 1250, 1255 (8th Cir. 1985) (upholding jury
instruction for MCF A claim that stated, "[ s ]ilence ... may be a misrepresentation if it
relates to a material fact and there is a duty to disclose the matter."); Erickson, 2002 WL
31163611, at *10 (affirming rejection of consumer fraud claim, noting "[g]enerally, one
32
party to a transaction does not have a duty to disclose material facts known only to that
party") (citing Klein, 293 Minn. at 421, 196 N.W.2d at 622)); Ford Motor Credit Co. v.
Majors, No. A04-1468, 2005 WL 1021551, at *4 (Minn. App. May 3, 2005) ("An
omission or misrepresentation through silence is actionable under the MCF A if the
information is material and there is a duty to disclose based on a relationship of trust or
confidence or an unequal access to information.") (citing Cashman, 761 F.2d at 1255).
These courts correctly applied the common law requirement of a duty to disclose
to MCF A claims involving omissions. Courts have "long presumed that statutes are
consistent with the common law, and if a statute abrogates the common law, the
abrogation must be by express wording or necessary implication." Ly, 615 N.W.2d at
314; see Morris v. Am. Family Mut. Ins. Co., 386 N.W.2d 233,238 (Minn. 1986)
("[S]tatutes are enacted with regard to existing common law and should be construed to
harmonize with that law 'unless the intention to change or repeal it is apparent."')
(citation omitted). As explained above, nothing in the plain language or the legislative
history of the MCF A indicates that the legislature intended to allow MCF A claims based
on omissions without a duty to disclose. Therefore, the common law requirement that
there must be a duty to disclose omitted information should be applied to the MCF A.
In reversing the District Court on the MCF A claim, the Court of Appeals rejected
Minnesota's general rule that omissions are only actionable if there was a duty to
disclose, and instead wrongly relied upon two federal district court decisions: Minnesota
ex. rel Hatch v. Fleet Mortg. Corp., 158 F. Supp. 2d 962 (D. Minn. 2001), and Khoday v.
Symantec Corp., 858 F. Supp. 2d 1004 (D. Minn. 2012). (ADD 31.)
33
The federal district court in Fleet Mortgage did not address any Minnesota state
court decisions requiring a duty to disclose for an omission-based fraud claim. Rather, it
summarily rejected the cases cited by the defendant as "concem[ing] common law fraud
and not state consumer protection statutes." 159 F. Supp. 2d at 967. The Fleet Mortgage
court did not have the benefit of guidance from the Court of Appeals' subsequent
decisions regarding omission-based MCF A claims, but instead relied on First Circuit and
Illinois case law that did not require a duty to disclose for omission-based violations of
other state consumer protection statutes. 7 See 15.8 F. Supp. 2d at 967 (noting "there is no
Minnesota case authority directly on point"); cf Ford Motor Credit, 2005 WL 1021551,
at *4 (omission-based MCFA claim requires duty to disclose).
The Court of Appeals' reliance on Khoday should be similarly discounted because
Khoday 's limited discussion of the duty to disclose relied entirely on Fleet Mortgage.
See Khoday, 85 8 F. Supp. 2d at 1018 & n.17. Thus, the Court of Appeals' reliance on
these federal district court decisions - to the exclusion of the MCF A's plain language and
legislative history, this Court's directive in the common law fraud context, and the Court
of Appeals' own prior decisions requiring a duty to disclose in the MCF A context- was
misplaced and should be reversed.
7 Fleet Mortgage's reliance on Illinois case law in deciding a MCF A claim was inappropriate because, unlike the MCFA, the Illinois consumer protection statute expressly encompasses omissions. See 815 Ill. Comp. Stat. 505/2 (2013).
34
C. Requiring A Duty To Disclose To Bring An Omission-Based MCFA Claim Is A Better Rule.
Requiring that there be a duty to disclose in order for an omission to give rise to an
MCF A claim is the better rule because without it, merchants would face possible liability
even in the absence of any culpability. Merchants could be sued, and held liable, for
having failed to disclose information that they were not legally required to disclose, and
that they had no reason to think should be disclosed. That contravenes legislative intent,
because the terms used in §325F.69, subd. 1 ("fraud," "misrepresentation," promises that
are "false," statements that are "misleading," practices that are "deceptive"), "given their
plain, ordinary meaning, denote at least some degree of culpability." Jenson v. Touche
Ross & Co., 335 N.W.2d 720, 728 (Minn. 1983) (holding that it is inappropriate to
impose a strict liability standard under the MCF A).
Requiring some degree of culpability - a duty to disclose that was breached -
would both conform with legislative intent, and prevent questionable claims that could
negatively impact Minnesota merchants, courts, and regulators. Every day, Minnesota
merchants and consumers engage in transactions in which merchants do not disclose
information that consumers might find material to their purchase decisions. Until now,
merchants had no reason to do so, because parties to a transaction had no duty to disclose
material facts to each other, absent special circumstances. See Klein, 196 N.W.2d at 622.
As a result of the Court of Appeals' decision, merchants who allegedly fail to
disclose all arguably material information in connection with each and every consumer
transaction could face MCFA claims. While the MCFA is to be construed liberally, it is
35
not limitless. SeeLy, 615 N.W.2d at 310 (MCFA "was intended to protect a broad,
though not limitless, range of individuals from fraudulent and deceptive trade practices").
Common sense dictates that not all omissions of allegedly material facts in connection
with transactions amount to consumer fraud. See In re Mex. Money Transfer Litig., 267
F.3d 743, 749 (7th Cir. 2001) ("[S]ince when is failure to disclose the precise difference
between wholesale and retail prices for any commodity 'fraud'? ... Neiman Marcus
does not tell customers what it paid for the clothes they buy, nor need an auto dealer
reveal rebates and incentives it receives to sell cars."). If not reversed, the Court of
Appeals' decision invites consumers to assert these types ofMCFA claims against
Minnesota merchants in connection with innumerable types of consumer transactions.
Further, the Court of Appeals' decision allows judges and juries to decide MCF A
claims based on the failure to disclose any number of arguably material facts, including
alleged violations of regulatory statutes for which there is no private right of action.
Doing so usurps the role of the regulators, and potentially conflicts with both the
legislature's intent in designating the regulator as the overseer of those laws, and the
regulator's interpretation of those laws. See supra at Section LA. Finally, the Court of
Appeals' decision creates enormous challenges in ascertaining causation (explained in
section III below) and damages for MCF A claims.
For these reasons, the Court should hold that omissions are actionable under the
MCF A only if there is a duty to disclose the omitted information.
D. The FAC Does Not And Cannot Plead A Duty To Disclose.
If this Court holds that a duty to disclose is required to state an actionable MCFA
36
claim, the F AC should be dismissed because Piaintiffs have not pleaded any facts that
would trigger a duty to disclose. 8
One party to a transaction may have a duty to disclose material facts to the other
only in the following "special circumstances":
(a) One who speaks must say enough to prevent his words from misleading the other party. Newell v. Randall, 32 Minn. 171, 19 N.W. 972 (1884).
(b) One who has special knowledge of material facts to which the other party does not have access may have a duty to disclose these facts to the other party. Marsh v. Webber, 13 Minn. 109, 13 Gil. 99 (1868).
(c) One who stands in a confidential or fiduciary relation to the other party to a transaction must disclose material facts. See, e.g., Wells-Dickey Trust Co. v. Lien, 164 Minn. 307, 204 N.W. 950 (1925).
Klein, 293 Minn. at 421, 196 N.W.2d at 622 (emphasis added). Here, the FAC does not
allege a duty to disclose under any of these "special circumstances." It does not allege
any statement by Defendants requiring them to say enough to prevent the statement from
being misleading. Nor does it allege a confidential or fiduciary relationship between the
parties.
Only one paragraph in the entire F AC arguably touches on disclosure: Paragraph
41 states that "Defendants keep secret from the public their acquisition costs for
prescription drugs." (APP 9.) But Plaintiffs do not allege- because they cannot allege-
that Defendants had any duty to disclose their acquisition costs.
Plaintiffs argued below that Defendants' alleged "special knowledge" of their
8 The existence of a legal duty is a question oflaw. See Boubelik, 553 N.W.2d at 397 (citing Larson v. Larson, 373 N.W.2d 287, 289 (Minn. 1985)).
37
I
acquisition costs, without more, triggered a duty of disclosure. This Court has "rarely
addressed" the theory of"special knowledge of material facts," L & H Airco, Inc. v.
Rapistan Corp., 446 N.W.2d 372, 380 (Minn. 1989), but has limited the concept to
"unique and narrow 'special circumstances'" where the defendant had "actual
knowledge" of a fraudulent scheme. See Richfield Bank & Trust Co. v. Sjogren, 309
Minn. 362, 368, 244 N.W.2d 648, 652 (Minn. 1976) (holding that a bank had a duty to
disclose to borrower that depositor with whom borrower was dealing was irretrievably
insolvent and was engaging in fraudulent business practices when bank had "[a]ctual
knowledge of the fraudulent activities"); cf Witzman, 601 N.W.2d at 191 (noting that
"actual knowledge" was the "linchpin" in Richfield Bank).
In the context of ordinary business transactions like those here, courts interpreting
Minnesota law have been reluctant to find a duty to disclose based on a party's "special
knowledge of material facts." See, e.g., Am. Computer Trust Leasing v. Boerboom Int'l,
Inc., 967 F.2d 1208, 1212 (8th Cir. 1992) (plaintiffs failed to show duty to disclose based
on "special knowledge" where "these were ordinary business transactions conducted at
arm's length"); Driscoll v. Standard Hardware, Inc., 785 N.W.2d 805, 814 (Minn. App.
201 0) (affirming summary judgment of misrepresentation-by-omission claim because
"[r]espondents [sellers] had no duty as a matter oflaw to inform appellant [buyer] of
facts allegedly material to the sale" regarding safety concerns about drill sold to appellant
where respondents had little knowledge of safety concern before sale); Taylor Inv. Corp.
v. Wei!, 169 F. Supp. 2d 1046, 1065 (D. Minn. 2001) (upholding summary judgment on
fraud claims by business computer system buyer against system provider, because when
38
I I I l
I I I I I f I
I I f I I
I
parties were engaged in arm's-length bargaining transaction, no duty existed to supply
omitted information); Miller's Fairway, Inc. v. Schoenborn, No. C9-97-796, 1997 WL
769528, at *2 (Minn. App. Dec. 16, 1997) (affirming dismissal of fraudulent
misrepresentation by omission claim where defendants had no duty to disclose identity of
buyers of building). These decisions are well-reasoned, as parties to a transaction often
have unequal access to business information - such as information about negotiation
strategies, goals, pricing objectives, costs, etc. See, e.g., Taylor, 169 F. Supp. 2d at 1065
f
I (noting that "[i]t is inappropriate for the Court to burden [defendant] with the duty to
disclose personal concerns and legitimate business information").
Here, the F AC does not claim that failing to disclose acquisition costs, in itself,
violates any law. Nor can it, as nothing in the Pharmacy Statute requires disclosure of
acquisition costs. While the Pharmacy Statute requires pharmacists to disclose the
substitution of a generic drug for a brand name drug, it does not require pharmacists to
disclose the acquisition costs of the drugs. See Minn. Stat.§ 151.21, subd. 3 & 4. The
legislature knows how to mandate disclosure if it wants to require it. The fact that the
legislature mandated certain disclosures in the Pharmacy Statute, but not disclosure of
acquisition costs, compels the conclusion that pharmacists and pharmacies do not have
that duty. See Matter ofWang, 441 N.W.2d 488, 496 (Minn. 1989) ("[p]lainly, the
legislature knows how to specifically authorize the recovery of attorney fees and
investigation costs when it intends such recovery" because it had done so in other
statutes).
Nor does the F AC allege that Defendants have a duty to publicly disclose the
39
alleged violations of subdivision 4 to any person supposedly entitled to the information.
As explained above, the language of subdivision 4 does not mandate disclosure of
information about a pharmacist's acquisition costs or profit margin, and Defendants have
no duty to self-report alleged violations of the law to Plaintiffs. See, e.g., Romine v.
Acxiom Corp., 296 F.3d 701, 708 (8th Cir. 2002) (an obligation to provide factual
information does not encompass the duty to disparage oneself). Any assertion that
Defendants had a duty to disclose alleged statutory violations is particularly misplaced
here, where the F AC does not allege that Defendants knew of any alleged violation at the
time of the transactions at issue. Nor does it allege that the BOP- which is composed of
pharmacists and charged with enforcing subdivision 4 -ever gave Defendants any reason
to believe that they have been acting in any way that conflicts with the statute.
Because there is no duty to disclose the allegedly omitted information, the Court
of Appeals erred in reversing dismissal ofPlaintiffs' MCFA claim.
E. The FAC Does Not And Cannot Plead A Material Omission.
Even if a duty to disclose is not required to state an actionable MCF A claim, the
F AC should be dismissed because the alleged omissions are not materiaL While the
Court of Appeals held that the FAC "need only allege that [Defendants'] failure to
disclose acquisition costs and subsequent overcharges were material omissions," (APP
32 (emphasis added)), the FAC contains no such allegations. The FAC nowhere alleges
that the acquisition costs or alleged overcharges were in any way material, i.e., that
disclosure of that information would have affected any purchase decision. See Yost v.
40
Millhouse, 373 N.W.2d 826, 830 (Minn. App. 1985) (statement is material "if it would
naturally affect the conduct of the party addressed").
Further, where an underlying statute that regulates the transaction does not require
the disclosure of omitted information, the information should be considered immaterial
for purposes oftheMCFA. See, e.g., Ford Motor Credit, 2005 WL 1021551, at *6
("TILA suggests that the discount or markup a dealer imposes on a credit transaction is
not a material aspect of the transaction and, therefore, that the failure to disclose the
markup is not deceptive or misleading"). Subdivision 4 requires pharmacies to pass
along to the purchaser "any difference between acquisition cost to the pharmacist of the
drug dispensed and the brand name prescribed," nothing more. It does not require the
pharmacist to disclose the acquisition cost of either drug. The legislature or the BOP
could have required such disclosure, but did not. Where both the legislature and the
regulatory agency have refrained from requiring pharmacists to disclose their acquisition
costs, it would be improper for the judiciary, through the vehicle of an MCF A claim, to
create such a requirement.
For all of the above reasons, the FAC fails to state an MCFA claim.
III. PLAINTIFFS FAILED TO PLEAD FACTS SHOWING A CAUSAL NEXUS.
The Court of Appeals' holding that the F AC sufficiently pleads the causation
element of an MCF A claim misapplies prior Supreme Court decisions, and should be
reversed.
41
This Court has held that (1) causation is a necessary element in a damages claim
under the MCFA, (2) reliance is a component of the causal nexus requirement, but (3) a
plaintiff need not plead individual consumer reliance. See Group Health, 621 N. W.2d at
13-15; Wiegandv. Walser Auto. Groups, Inc., 683 N.W.2d 807, 811-12 (Minn. 2004).
An MCF A claim must allege that the defendant engaged in conduct prohibited by the
MCFA "and that the plaintiff was damaged thereby." Group Health, 621 N.W.2d at 12.
That is, the plaintiff must allege that it suffered damages caused by the misrepresentation.
See Baker, 812 N.W.2d at 182 (for MCFA claim, plaintiffs must show "that they suffered
damages caused by [defendants'] misrepresentation"); Bernstein v. Extendicare Health
Servs., 653 F. Supp. 2d 939, 944 (D. Minn. 2009) (affirming dismissal ofMCFA claims
"because [plaintiff] did not plead an injury with a causal nexus to an alleged
misstatement").
Here, even assuming that Plaintiffs had alleged (or could allege) that Defendants
had engaged in conduct prohibited by the MCFA, Plaintiffs' claims must nevertheless fail
because they have not alleged (and cannot allege) a causal connection between
Defendants' alleged conduct and Plaintiffs' alleged injury.
This Court has held that a plaintiff need not have relied upon the alleged
misrepresentation himself, but that, at the very least, his injury must flow, either directly
or indirectly, from the reliance of someone else who was misled. See Group Health, 621
N.W.2d at 13-14. For example, in Wiegand, the Court found that the complaint "alleges
that misrepresentations were made and consumers were damaged thereby" where it
alleged:
42
a Walser representative falsely told [Wiegand] and potentially at least 100 other consumers that he was required to purchase a $1,500 service contract in order to obtain financing, and that he did so. Wiegand also alleges that a Walser representative falsely told him and potentially others that they had to purchase a credit insurance policy in order to obtain financing, and that he did so. Wiegand alleges that he agreed to purchase the service contract and credit insurance based on the misrepresentations of Walser's representative.
683 N.W.2d at 812 (emphasis added). The causal nexus between the alleged
misrepresentations and the alleged injury in Wiegand is clear.
Similarly, in Group Health, the plaintiffHMOs asserted that they were injured due
to their members' reliance on allegedly misleading statements by the defendant tobacco
companies regarding the effects of tobacco use. See 621 N.W.2d at 4-5 (HMOs alleged
they were "directly injured by the tobacco companies' deceptive statem~nts urging them
not to engage in tobacco education programs that could have prevented or decreased the
occurrence of tobacco-related illnesses among their members," and "indirectly injured by
the tobacco companies' deceptive conduct because of the costs for increased medical
services incurred by their members that the HMOs were contractually obligated to
assume"); see also Group Health Plan, Inc. v. Philip Morris, Inc., 86 F. Supp. 2d 912,
915 (D. Minn. 2000) (noting HMOs "allege that they were directly injured by
Defendants' fraudulent statements urging them not to engage in tobacco education
programs," that "such programs could have prevented or decreased the occurrence of
tobacco-related illnesses among their members," and that "they have been required to
assume the medical costs sustained by their members as a result of tobacco use" in
context of motion to dismiss).
43
Unlike the allegations in Wiegand and Group Health, the FAC does not contain
any facts indicating that a causal link exists between Defendants' allegedly actionable
conduct and any injury allegedly suffered by Plaintiffs. It is devoid of any allegation of
how allegedly misrepresented or omitted information might have impacted Plaintiffs'
alleged payment for GPDs obtained by plan participants. For example, the F AC does not
claim that Plaintiffs or their plan participants would have demanded a lower price, or
purchased drugs from different pharmacies, if they had known Defendants' acquisition
costs. Plaintiffs do not make such allegations because they cannot. Many individual plan
participants with insurance pay the same co-payment regardless of the price of the drug.
Furthermore, individual plan participants select a pharmacy based upon a variety of
factors (such as familiarity, convenience, and comfort), not just price.
The Court of Appeals erred when it held that Plaintiffs had adequately pled
causation "by specifically alleging instances in which [Defendants] violated the CF A and
damaged [Plaintiffs]." (ADD 36.) "A plaintiff must provide more than labels and
conclusions" to plead a cause of action. Bahr, 788 N.W.2d at 80 (citing Hebert v. City of
Fifty Lakes, 744 N.W.2d 226,235 (Minn. 2008), and Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007)). And, as this Court has held, "it is not possible that the damages
could be caused by a violation without reliance on the statements or conduct alleged to
violate the statutes." Group Health, 621 N.W.2d at 13. A plaintiff must be able to allege
that someone relied upon an alleged misstatement or omission in some way to the
detriment of the plaintiff in order to state a causal nexus. See Royal Realty Co. v. Levin,
244 Minn. 288, 291, 69 N.W.2d 667, 670-71 (Minn. 1955) (fraud claim properly
44
dismissed where complaint "contains no allegations to the effect that the defendants made
false representations to [the sellers] upon which they relied in taking the action which
they did").
Here, Plaintiffs' allegations of specific transactions are legally insufficient to plead
an MCFA claim because they merely link Plaintiffs' hypothetical damages to the
transactions. As explained above, the casual link that must be pleaded under the MCF A
is between the claimed damages and the allegedly actionable conduct. Nothing in the
F AC alleges a connection between any alleged misstatement or omissions by Defendants
and Plaintiffs' claimed injury. As a result, the FAC fails to plead a causal nexus.
Defendants' unanswered questions go to the heart of identifying the casual link, if
any exists. For example, how would Plaintiffs have acted differently if they had known
Defendants' acquisition costs? To whom do Plaintiffs think Defendants should have
disclosed these costs? What difference do Plaintiffs think this information would have
made to anyone -patients, doctors, PBMs, Plaintiffs, or their plan participants - given
that all aspects of the pricing for the transactions were covered by pre-existing contracts,
negotiated on Plaintiffs' behalf by their PBMs? What facts link Defendants' acquisition
costs to Plaintiffs' payments for GPDs? None of these questions is addressed in the FAC,
and their answers are not self-evident.
This Court should require a plaintiff who seeks damages for an alleged MCF A
violation to plead facts indicating his theory of causation. Doing so would permit courts
to review at an early stage whether a plaintiffs theory of causation is viable under the
MCF A. An early stage review would be beneficial for both the parties and the courts,
45
and would serve the interests of justice. See Twombly, 550 U.S. at 558 ("[W]hen the
allegations in a complaint, however true, could not raise a claim of entitlement to relief,
'this basic deficiency should ... be exposed at the point of minimum expenditure of time
and money by the parties and the court."' (quoting 5 Charles Wright & Arthur Miller,
Federal Practice and Procedure,§ 1216 (3d ed. 2004))). Such a review would help the
parties and the courts avoid the heavy burden and expense of discovery and motion
practice, in cases where it is clear from the outset that a plaintiff cannot establish the
requisite causallinl<. See Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005)
(explaining that something beyond mere possibility of loss causation must be alleged, lest
plaintiff with "a largely groundless claim" "take up the time of a number of other people,
with the right to do so representing an in terrorem increment of the settlement value"
(internal quotations omitted)).
Here, the FAC alleges that 50 million retail prescriptions were filled by Minnesota
pharmacies in 20 10 alone, and that 79% of prescriptions were written for brand name
drugs. (See FAC ,-r,-r 32, 34, APP 6.) Plaintiffs seek to represent "all purchasers or
payment sources for generically equivalent prescription drugs dispensed by Defendants"
in Minnesota since July 28, 2003. (F AC ,-r 110, APP 31.) Assuming for the purposes of a
Rule 12 motion that these allegations are true, discovery in this case would be incredibly
burdensome and expensive, encompassing evidence of hundreds of millions of
prescriptions dispensed in Minnesota over the past 10 years. Because Plaintiffs cannot
articulate a colorable causal link between Defendants' alleged misstatements or
46
I I I I
I I
omissions and their claimed damages (even after four versions of the complaint), they do
not have a viable MCF A claim and should not be allowed to proceed with this action.
47
CONCLUSION
The Court of Appeals' decision should be reversed as to Plaintiffs'-Respondents'
MCF A claim and affirmed in all other respects. Judgment should be entered in favor of
Defendants-Appellants on all claims.
Date: August 30,2013.
Respectfully submitted,
:~LLP Wendy J. Wildung (#117055) Craig S. Coleman (#0325491) 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 Telephone: (612) 766-7000
Attorneys for Defendant-Appellant Target Corporation
And
I ,EO NARD, STREET AND DEINARD Professional Association
Todd A. Noteboom ( #24004 7) Elizabeth Wiet Reutter (#316957) 150 South Fifth Street, Suite 2300 Minneapolis, MN 55402 Telephone: (612) 335-1500
Attorneys for Defendant-Appellant Walgreen Co.
BASSFORD REMELE, P.A. Lewis A. Remele, Jr. (#90724) Christopher R. Morris (#230613) 33 South Sixth Street, Suite 3800 Minneapolis, MN 55402-3707 Telephone: (612) 333-3000
48
Of Counsel: FOLEY & LARDNER LLP Robert H. Griffith 321 N. Clark Street, Suite 2800 Chicago, IL 60654 Telephone: (312) 832-4500
Attorneys for Defendants-Appellants CVS Caremark Corporation, CVS Pharmacy, Inc., Carernark, LLC, Caremark Minnesota Specialty Pharmacy, LLC, and Caremark Minnesota Specialty Pharmacy Holding, LLC
DORSEY & WHITNEY James K. Langdon (#171931) 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Telephone: (612) 340-2600
Attorneys for Defendants-Appellants Snyder's Drug Stores (2009), Inc., Snyder's Holdings (2009), Inc., and Snyder's Holding, Inc.
P..ALLEL}·~~D !LAB!CHT P.A. Kevin D. Hofman (#0179978) Ronald B. Peterson (#0086344) 33 South 6th Street, Suite 3900 Minneapolis, MN 5 5402 Telephone: (612) 836-5500
Attorneys for Defendant-Appellant Coborn's Incorporated
NILAN JOHNSON LEWIS, P.A. Tracy J. Van Steenburgh (#141173) 600 U.S. Bank Plaza South 220 South Sixth Street Minneapolis, MN 55402 Telephone: (612) 338-1838
-and-
49
DYKEMA GOSSETT PLLC Todd Grant Gattoni (P47843) Jill M. Wheaton (P49921) Lisa A. Brown (P67208) 2723 S. State Street, Suite 400 Ann Arbor, MI 48104 Telephone: (734) 214-7629
Attorneys for Defendants-Appellants Kmart Holding Corporation, Sears, Roebuck & Co., and Sears Holding Corporation
FREDRIKSON & BYRON, P.A. David R. Marshall (#184457) Joseph J. Cassioppi (#388238) 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402 Telephone: (612) 492-7000
Of Counsel: JONES DAY Tina M. Tabacchi (admitted pro hac vice) Adam W. Wiers (admitted pro hac vice) Erin Shencopp (admitted pro hac vice) 77 \Vest \Vacker Chicago, IL 6060 1-1692 Telephone: (312) 782-3939
Attorneys for Defendant-Appellant Wal-Mart Stores, Inc.
50
CERTIFICATE OF COMPLIANCE
I hereby certify that this brief conforms to the requirements of Minn. R. Civ. App. P. 132.01, subds. 1 and 3, for a brief produced with a proportional font. The length of this brief is 12,788 words. This briefwas prepared using Microsoft Word 2010 software.
Date: August 30, 2013.
F~~SLLP By __________________________ ___
51
Wendy J. Wildung (#117055) Craig S. Coleman (#0325491) 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 Telephone: (612) 766-7000
Attorneys for Defendant-Appellant Target Corporation
-and-
LEONARD, STREET AND DEINARD Professional Association
Todd A. Noteboom (#240047) Elizabeth Wiet Reutter (#316957) 1 J::{\ C'~n-1-h 1:'~-A-l. C'-1-.. aai- c;:.,;1-,. ")"l(l(l ~JV I.JVUL.ll .L'.LHJ..l IJL.l'-''-'L, UU.lL'-' .<....JVV
Minneapolis, MN 55402 Telephone: (612) 335-1500
Attorneys for Defendant-Appellant Walgreen Co.
BASSFORD REMELE, P.A. Lewis A. Remele, Jr. (#90724) Christopher R. Morris ( #23 0613) 33 South Sixth Street, Suite 3800 Minneapolis, MN 55402-3707 Telephone: (612) 333-3000
Of Counsel: FOLEY & LARDNER LLP Robert H. Griffith 321 N. Clark Street, Suite 2800 Chicago, IL 60654 Telephone: (312) 832-4500
Attorneys for Defendants-Appellants CVS Caremark Corporation, CVS Pharmacy, Inc., Caremark, LLC, Caremark Minnesota Specialty Pharmacy, LLC, and Caremark Minnesota Specialty Pharmacy Holding, LLC
DORSEY & WHITNEY James K. Langdon (#171931) 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Telephone: (612) 340-2600
Attorneys for Defendants-Appellants Snyder's Drug Stores (2009), Inc., Snyder's Holdings (2009), Inc., and Snyder's Holding, Inc.
HALLELAND H;\,.BICHT P.A. Kevin D. Hofman (#0179978) Ronald B. Peterson (#0086344) 33 South 6th Street, Suite 3900 Minneapolis, MN 55402 Telephone: (612) 836-5500
Attorneys for Defendant-Appellant Cobom's Incorporated
NILAN JOHNSON LEWIS, P.A. Tracy J. Vim Steenburgh (#141173) 600 U.S. Bank Plaza South 220 South Sixth Street Minneapolis, MN 5 5402 Telephone: (612) 338-1838
-and-
52
dms.us.52552527.06
DYKEMA GOSSETT PLLC Todd Grant Gattoni (P47843) Jill M. Wheaton (P49921) Lisa A. Brown (P67208) 2723 S. State Street, Suite 400 Ann Arbor, MI 48104 Telephone: (734) 214-7629
Attorneys for Defendants-Appellants Kmart Holding Corporation, Sears, Roebuck & Co., and Sears Holding Corporation
FREDRIKSON & BYRON, P.A. David R. Marshall (#184457) Joseph J. Cassioppi (#388238) 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402 Telephone: (612) 492-7000
Of Counsel: JONES DAY Tina M. Tabacchi (admitted pro hac vice) Adam W. Wiers (admitted pro hac vice) Erin Shencopp (admitted pro hac vice) 77 West Wacker Chicago, IL 6060 1-1692 Telephone: (312) 782-3939
Attorneys for Defendant-Appellant Wal-Mart Stores, Inc.
ATTORNEYS FOR DEFENDANTS-APPELLANTS
53