Notes & Trends – May/June 2024

Criminal Law

JUDICIAL LAW 

• Restitution: “Resources” means useful and valuable possessions. Appellant was convicted of theft by false representation and ordered to pay over $14,000 in restitution after the district court considered equity in the home appellant co-owned with his wife one of his “resources.” The court of appeals affirmed, as does the Supreme Court. When determining whether to order restitution and the amount of restitution, Minn. Stat. §611A.045, subd. 1(a)(2), requires the district court to consider, among other things, the defendant’s “resources.” “Resources” is not defined by statute, so the Court looks to dictionary definitions to conclude that the term means “useful and valuable possessions.” The Court notes that this definition is broad but not limitless when examined in the context of the restitution statute. In this context, a “useful and valuable possession” must be able to be monetized and must be in the defendant’s possession. This includes home equity, even if the defendant does not have exclusive ownership of the home, as “ownership shares may be distinctly valuable and useful to each individual owner” and the restitution statute does not restrict the district court to considering only resources a defendant may access unilaterally. Affirmed. State v. Cummings, A22-0630, 2 N.W.3d 528 (Minn. Sup. Ct. 2/14/2024). 

• Evidence: Physician-patient privilege does not apply to paramedics. When police and paramedics responded to a car crash, police suspected appellant, the driver, was impaired by controlled substances. On the way to the hospital, appellant told paramedics he had snorted “too much” heroin. His statement to paramedics was admitted at his trial for first degree DWI, at the conclusion of which he was found guilty.

Evidentiary privileges are included in Minn. Stat. §595.02, subd. 1, and include the physician-patient privilege, which appellant argued applied to his statement to paramedics. The court notes that this privilege is construed narrowly, and that the statute explicitly lists the medical professionals to whom the privilege applies. The list does not include paramedics, leading the court to conclude the privilege does not apply to communications between paramedics and patients. Affirmed. State v. Smeby, A23-0516, 4 N.W.3d 165 (Minn. Ct. App. 3/4/2024).

• 4th Amendment: Good faith exception does not apply to search conducted pursuant to a quashed warrant that appeared active due to a clerical error. Police arrested appellant on a warrant that was quashed but mistakenly appeared active in their database due to a clerical error by court administration. During a search incident to her arrest, police found controlled substances. Appellant moved to suppress the controlled substance evidence and dismiss the four controlled substance charges laid against her. The district court granted her motions, but the Minnesota Court of Appeals reversed. 

The Supreme Court first finds that the record supports the district court’s conclusion that the warrant was quashed before appellant’s arrest. As the warrant was quashed, her arrest and search violated Minn. Const. Art. I, sec. 10, and the usual remedy is the exclusion of evidence obtained as a result of the unlawful search. The rule is applied when it serves its remedial goals—that is, deterring governmental misconduct. 

One exception to the exclusionary rule is good faith. Federal 4th Amendment jurisprudence has applied the good faith exception to evidence obtained in reasonable reliance on a quashed warrant that appears active due to a clerical court error. However, the Supreme Court declines to extend that application to a violation of Minnesota’s constitution. The Court cites its discretion to grant greater rights under the state’s Constitution than are provided under the federal Constitution. 

In Minnesota, the Court has adopted the good faith exception in one limited circumstance: when law enforcement reasonably relied on binding appellate precedent that specifically authorized the police conduct that led to the seizure of evidence. The Court has specifically declined to further extend the exception. In this case, the constitutional violation was closely connected to a governmental error, the court’s clerical error. Excluding the evidence police obtained after unlawfully searching appellant serves to deter misconduct by the government, where, as here, the courts and police worked closely to maintain and manage governmental records (i.e., the arrest warrant database). Thus, the Court holds that the good faith exception does not apply to a search conducted pursuant to a quashed warrant that appeared active due to a clerical error. The district court’s order dismissing the charges against appellant is reinstated. State v. Malecha, A22-1314, 3 N.W.3d 566 (Minn. Sup. Ct. 3/6/2024).

n Evidence: Trash pull is not an unreasonable search even if local ordinance prohibits the inspection of private waste receptacles. Police obtained a search warrant for appellant’s house using evidence obtained after police removed two trash bags from a garbage can outside appellant’s house. When police executed the warrant, methamphetamine and drug paraphernalia were found in appellant’s house. She sought suppression of evidence found in her house, arguing the garbage pull evidence used to obtain the search warrant was seized in violation of her constitutional rights. The district court denied appellant’s motion and found her guilty of various drug offenses after a stipulated facts trial.

The Minnesota Court of Appeals notes that both the United States and Minnesota Supreme Courts have held that a warrantless search of garbage set out for collection does not violate constitutional protections against unreasonable searches and seizures. See California v. Greenwood, 486 U.S. 35 (1988); State v. McMurray, 860 N.W.2d 686 (Minn. 2015). The Courts emphasized that garbage set out for collection is abandoned property without 4th Amendment protection, rather than “papers and effects” that are protected. 

The Court also rejected appellant’s argument that a county ordinance governing solid waste changes the constitutional analysis. The ordinance makes it illegal to inspect or remove the contents of another person’s waste receptacle without prior authorization and provides no exception for law enforcement. Local ordinances may not enlarge constitutional protections. The district court did not err by denying appellant’s motion to suppress. State v. Hansen, A23-0428, 2024 WL 1146505 (Minn. Ct. App. 3/18/2024).

• Sentencing: District court has discretion to impose an upward departure where sexual assault of physically helpless victim occurred in the victim’s zone of privacy. Appellant was convicted of third-degree criminal sexual conduct against a physically helpless person. The jury found the offense, which took place in the victim’s bedroom, occurred in the victim’s zone of privacy. The district court imposed an upward durational departure based on the zone-of-privacy aggravating factor, and the court of appeals affirmed. 

A district court may depart from a presumptive sentence if there are “identifiable, substantial, and compelling” circumstances to support a departure. Minn. Sent. Guidelines 2.D.1. One factor that may support an upward departure is the commission of the offense in the victim’s zone of privacy. Id. at 2.D.3.b(14). The Supreme Court rejects appellant’s argument that this aggravating factor should not apply to sexual attacks against physically helpless victims because such attacks often occur in bedrooms. Case law shows that these attacks often occur outside the victim’s zone of privacy. The zone-of-privacy aggravating factor is also not limited to markedly unusual or distinctive circumstances, nor is it limited to certain types of offenses. The factor focuses solely on where the offense was committed. Thus, the Court holds that the zone-of-privacy factor applies when a sexual assault of a physically helpless victim occurs within the victim’s zone of privacy.

As appellant’s offense occurred within the victim’s bedroom, an area within her zone of privacy, the district court did not err in imposing an upward durational sentencing departure. State v. Vanengen, A22-0105, 3 N.W.3d 579 (Minn. Sup. Ct. 3/6/2024).

• Controlled substances: Circumstantial evidence proved beyond a reasonable doubt the defendant knew the victim was a child when he provided her with methamphetamine. Appellant lived next door to a mother, her three children, and one of the children’s friends, A.D., who lived with them for a period of time. Appellant often entered their home and routinely secretly gave marijuana to one of the daughters, K.F., who was A.D.’s best friend. He often commented on K.F.’s age. When K.F. and A.D. were both 14 years old, appellant supplied them with marijuana, THC wax, and methamphetamine. Appellant was subsequently charged with knowingly permitting a child to ingest methamphetamine, in violation of Minn. Stat. §152.137, subd. 2(b). He was found guilty after a jury trial and his conviction was affirmed on appeal, with the court of appeals holding that section 152.137, subd. 2(b), does not require proof that the defendant knew the child was under the age of 18.

The Supreme Court finds it unnecessary to decide whether section 152.137, subd. 2(b), requires the state to prove the defendant knew the child was under the age of 18. Even if the statute required such proof, the Court finds that the circumstantial evidence “is consistent with a reasonable hypothesis that the defendant knew the victim was a child and inconsistent with any other rational hypothesis except that of guilt.” The court of appeals is affirmed, but on different grounds. State v. Lehman, A22-0200, 3 N.W.3d 875 (Minn. Sup. Ct. 3/13/2024).

• Assault: Domestic assault is not a lesser degree of second-degree assault. Appellant was convicted of second-degree assault and felony domestic assault for hitting his girlfriend in the head with a broom handle. He argued on appeal that the broom handle was not a dangerous weapon and that his two convictions for one assaultive act were improper, because felony domestic assault is a lesser included crime of second-degree assault. The court of appeals affirmed his convictions.

First, the Supreme Court determines the evidence was sufficient to prove the broom handle was a dangerous weapon. Second-degree assault requires use of a dangerous weapon. The item used need not be designed as a weapon; it need only be used or intended to be used in a manner likely to produce death or great bodily harm. See Minn. Stat. §609.02, subd. 6. “Likely” in this context means “probable or reasonably expected.” Whether an object was used in such a manner is a question of fact. 

In this case, appellant wielded a two- to three-foot long, one-inch diameter wood broom handle, hitting the victim in the head so hard that she received seven stitches and the broom handle broke. A jury could reasonably conclude that great bodily harm was probable or reasonably expected to result from using a broom handle in such a manner.

Next, the Court rejects appellant’s argument that domestic assault is a “lesser degree” of second-degree assault and, therefore, that his conviction for domestic assault was prohibited. Minn. Stat. §609.04, subd. 1, provides that a defendant “may be convicted of either the crime charged or an included offense, but not both.” An “included offense” includes “a lesser degree of the same crime.” Id. at subd. 1(1). The Court finds that section 609.04, subd. 1(1)’s reference to “degree” refers “to the ordinally numbered degrees found throughout the criminal code.” 

While domestic assault and second-degree assault are both labelled “assault,” they are not found in the same multi-tier statutory scheme. By placing domestic assault outside the multiple degree scheme of assault offenses, the Legislature intended to establish domestic assault as a separate offense from other assaults. Thus, domestic assault is not a “lesser degree” of second-degree assault and appellant’s convictions for both offenses was proper. State v. Bradley, A22-0960, 4 N.W.3d 105 (Minn. Sup. Ct. 3/20/2024).

• Postconviction: New trial granted due to medical experts’ false testimony. Respondent was convicted of two counts of second-degree felony murder following the death of his two-month-old son caused by traumatic brain injury. At trial, two medical experts testified for the state, an ophthalmologist who testified that he observed macular schisis in the child’s left eye and that “there really isn’t any other type of cause” for macular schisis other than abusive head trauma. A pathologist also testified as to the connection between macular schisis and abusive head trauma. 

Respondent requested a new trial in a postconviction petition. An evidentiary hearing was held, during which the ophthalmologist testified that there are numerous causes of macular schisis. The district court ordered a new trial, finding that the state’s medical experts had stated a false medical fact: that macular schisis is not caused by anything other than abusive head trauma. The court of appeals affirmed.

The Supreme Court analyzes whether the district court appropriately applied the Larrison test for false or recanted testimony, as opposed to the Rainer test for newly discovered evidence. See Larrison v. United States, 24 F.2d 82 (7th Cir. 1928); Rainer v. State, 566 N.W.2d 692 (Minn. 1997). The testimony at issue was demonstrably factual and false, taking the evidence within the purview of Larrison, as opposed to testimony given as opinion or that was factually accurate at the time of trial, which would require analysis of respondent’s claims under Rainer.

Given the postconviction testimony and evidence, the state’s experts’ testimony at trial—that macular schisis is only caused by abuse—could not have been true. This false testimony from two medical experts “had a powerful inculpatory effect” in a case that was proven through circumstantial evidence. Respondent also had not consulted the necessary experts to explain the causes of macular schisis and, even if he had, there would have been no reason for him to expect the state would falsely claim macular schisis was caused only by abuse. Thus, respondent satisfied his burden under the Larrison test and the district court properly granted him a new trial. Kaiser v. State, A22-0749, 4 N.W.3d 95 (Minn. Sup. Ct. 3/13/2024).

• Postconviction: Test for newly discovered evidence applies to the petitioner’s proffered expert opinion that merely offers a different view from the state’s expert. Appellant was convicted of third-degree criminal sexual conduct in 2018. He filed a petition for postconviction relief alleging that two of the state’s expert witnesses testified falsely. At trial, a nurse who examined the victim after the assault and a BCA forensic scientist testified regarding DNA evidence. To support his postconviction claim, appellant submitted an affidavit from a newly retained expert who opined that the nurse and scientist testified falsely.

The Supreme Court first finds that appellant’s postconviction claim is one of newly discovered evidence, not one of newly discovered evidence of false testimony. Appellant’s single expert merely disagreed with and impeached portions of the state’s experts. Potentially impeaching a witness’ testimony and credibility does not render the witness’ testimony false. Thus, the Court concludes that “[c]laims based on [a new expert opinion that merely offers a different view from the expert opinions presented at trial] are appropriately characterized as claims of newly discovered evidence and are properly analyzed under the Rainer test.” (See Rainer v. State, 566 N.W.2d 692 (Minn. 1997).)

Ultimately, the Court finds that, even if appellant’s newly discovered evidence could be proved by a fair preponderance of the evidence, it would not satisfy the Rainer test. Therefore, the district court did not abuse its discretion when it denied appellant an evidentiary hearing. Tichich v. State, A22-1063, 4 N.W.3d 114 (Minn. Sup. Ct. 3/20/2024).

• Implied consent: Trooper’s statement that “refusal to take a test is a crime” complied with advisory requirements. Respondent was arrested for DWI and police obtained a warrant for a sample of respondent’s blood or urine. A trooper showed the warrant to respondent, but respondent did not review it. The trooper told respondent she had applied for a warrant for a blood test and that “refusal to take a test is a crime.” Respondent complied and a blood test showed the presence of methadone, for which he had a valid prescription. His driving privileges were revoked, and the revocation was sustained by the district court. The court of appeals reversed, finding the advisory was inaccurate and misleading. 

The parties offer differing interpretations of Minn. Stat. §171.177, subd. 1, which provides that “[a]t the time a blood or urine test is directed pursuant to a search warrant…, the person must be informed that refusal to submit to a blood or urine test is a crime.” The commissioner argues that this subdivision generally requires that a driver be informed that “refusal to take a test is a crime.” Respondent argues that a driver must be informed that they can refuse a blood or urine test and that it is a crime only if they refuse both types of test, which is the substance of section 171.177, subd. 2. The Supreme Court rejects respondent’s interpretation as unreasonable, contrary to the Legislature’s failure to refer to subdivision 2 in the advisory requirement of subdivision 1, and essentially granting a driver the choice between a blood or urine test, a decision subdivision 2 gives to law enforcement.

Reversed and remanded to the Minnesota Court of Appeals for consideration of the remaining issues raised by respondent. Nash v. Comm’r of Pub. Safety, A22-1238, 2024 WL 1546460 (Minn. Sup. Ct. 4/10/2024).

Samantha Foertsch
Bruno Law PLLC
samantha@brunolaw.com

Stephen Foertsch
Bruno Law PLLC
stephen@brunolaw.com

Employment & Labor Law

JUDICIAL LAW 

• Age, race discrimination; not similarly situated. A Black man lost his lawsuit claiming racial and age discrimination after he was fired for a safety infraction when heavy equipment that was not properly secured fell from the truck he was driving. The 8th Circuit Court of Appeals upheld dismissal of the case on grounds that his employer had a “legitimate, non-discriminatory reason” to fire him and he did not show that other similarly situated employees who were not in his protected classes were treated preferentially. Whitehorn v. Maverick Tube Corp., 2024 WL 489365 (Minn. 2024) (nonprecedential).

• Race bias, retaliation; not pretextual. A discharged Black man overseeing school attendance met the same fate for the same reasons when he challenged his discharge after submitting fraudulent records. The 8th Circuit affirmed dismissal because of the “legitimate” reason to fire him, which was not a “pretext” for race discrimination, and there was no evidence that similarly situated others were treated better. Collins v. Kansas City Missouri Public School District, 92 F.4th 770 (8th Cir. 2024).

• Health insurance; firefighters coverage reinstated. The statutory obligation of a public sector employee to continue to provide health insurance coverage to a duty-disabled first responder continues until age 65 even if the individual waives participation and then later seeks to be reinstated. Affirming a ruling of the Washington County District Court, the Minnesota Court of Appeals held that reinstated coverage is mandated under Minn. Stat. §299A.465, subd. 1(c). Aldean v. City of Woodbury, 2 N.W.3d 918 (Minn. Ct. App. 2024).

• Union bargaining unit; employee “over-fragmentation” reversed. A determination of the appropriate bargaining unit for clerical and technical employees of the Anoka County Sheriff’s Office was overturned by the Supreme Court. Reversing a ruling of the Minnesota Court of Appeals that had upheld the decision of the Bureau of Mediation Services, it held that the county’s proposal to place them in a countywide clerical technical employee unit was improper and that the union’s proposal for a smaller, separate departmental unit comports with the legislative policy of allowing the employees to organize themselves as they wish without “over-fragmentation.” Anoka County v. Law Enforcement Labor Services, Inc. (LELS), 2024 WL 323339 (Minn. 2024) (nonprecedential).

• Teacher license; denial upheld. In a high-profile case involving a former St. Anthony police officer who killed a Black man during a traffic stop in 2016, the denial to the ex-officer of a teacher license by the Professional Education Licensing and Standards Board was upheld by the Minnesota Court of Appeals. Reviewing the case a second time after the board followed its remand instructions, the court held that there was insufficient evidence to reject the agency’s determination under the “immoral character of conduct” provision of Minn. Stat. §122A.20, subd. 1 (c) (1), and that it properly weighed the applicable eight factors for determining “fitness” under Morrison v. State Board of Educ., 461 P.2d 375 (Cal. 1969). In re Application of Yanez, 2023 WL 1044574 (Minn. App. 3/11/2024) (nonprecedential).

• Firefighter discharge; veteran’s preference ruling upheld. A St. Paul firefighter and military veteran lost his challenge to a discharge due to applying improper restraint to a mentally troubled individual during an emergency call. The court of appeals affirmed a Ramsey County District Court ruling upholding an arbitrator’s decision under the Veteran’s Preference Act, Minn. Stat. S. 197.46, rejecting use of a heightened evidentiary standard and deeming there to be substantial evidence to establish “just cause” to warrant the discharge based upon a video of the incident. Zepeda v City of St. Paul, 2024 WL 1044566 Minn. App. 3/11/2024) (nonprecedential).

• Reprisal claim; summary judgment upheld. The Minnesota Court of Appeals affirmed a summary judgment dismissing a reprisal claim by an employee who was fired for making sexually inappropriate remarks to a co-worker. Upholding a ruling of the Hennepin County District Court, the appellate panel reasoned that the employer had a “good faith” belief that the offending conduct violated its harassment-free workplace policy. Mitchell v. Target Corp., 2024 WL 1252119 (Minn. App. 3/25/2024) (nonprecedential).

• Age, disability claims rejected; unable to return to work. A 54-year-old heavy laborer who was unable to return to work for a long period after a non-work-related back injury failed in his charge of age and disability discrimination under the state Human Rights Act. The appellate court affirmed a summary judgment ruling of the Stearns County District Court, concurring with the trial judge that the claimant was not able to perform the “essential duties of the employment position.” Keller v. Monumental Sales, Inc. 2024 WL 1154022 (Minn. App. 3/18/2024) (nonprecedential).

• University of Minnesota; two claimants lose. A pair of employees of the University of Minnesota lost their workplace claims.

A longtime tenured assistant professor in the School of Music was unsuccessful in her gender discrimination lawsuit over not being promoted to full professor. Affirming a ruling of the Hennepin County District Court, the appellate court held that the university properly based its determination on the claimant’s failure to satisfy “research and teaching” criteria, which constituted a “legitimate non-discriminatory reason” to deny promotion and was not “pretextual.” Painter v. Board of Regents, 2024 WL 355687 (Minn. App. 4/1/2024) (nonprecedential).

An unsuccessful reprisal lawsuit was brought by a graduate student employee of the university on grounds that the school was aware that a co-worker filed a false sexual harassment complaint against her in retaliation for a similar complaint she had filed against the other employee. The court of appeals upheld a ruling of the Ramsey County District Court that her contention was properly dismissed on summary judgment because no adverse employment action occurred. Winegar-Schultz v. University of Minnesota, 2024 WL 1046994 (Minn. App. 3/11/2024) (nonprecedential).

• Unemployment compensation; “misconduct” bars benefits. A bank employee who told her manager that she wanted “to punch” a co-worker and “kick them [sic] where it counts” was denied unemployment compensation benefits. The appellate court, concurring with a determination by an unemployment law judge with the Department of Employment & Economic Development (DEED), held that the belligerent remarks constituted disqualifying “misconduct.” Koch v. Wells Fargo Bank, 2024 WL 1047361 (Minn. App. 3/11/2024) (nonprecedential).

ADMINISTRATIVE ACTION

• New federal regulations. Two federal agencies recently issued a pair of long-awaited proposed regulations affecting employers and employees in Minnesota.

The Federal Trade Commission (FTC) issued an edict banning nearly all noncompete agreements. The prohibition is broader than the proscription Minnesota adopted last year, Minn. Stat. §181.988, joining three other states, California, North Carolina, and Oklahoma, since it retroactively precludes enforcement of pre-existing noncompetes, although the FTC measure has an exception for policymaking executives earning more than $150,000 annually. 

The measure, which does not go into effect until late August, was challenged on multiple grounds in litigation brought by the business community, which may take months, indeed years, to be resolved. If it ultimately does go into effect, the measure is expected to affect about 20% of the workforce, including an estimated 300,000 in Minnesota.

The U.S. Department of Labor (DOL) concurrently issued new rules for overtime pay, increasing the minimum salary threshold for exempt employees, raising the standard salary level to the 35th percentile of the annual earnings of full-time salaried employees. The measure, which is to go into effect this month, will affect some 3.5 million workers by requiring 1.5 times pay for work in excess of 40 hours per week by most salaried employees earning less than $55,000 annually or $1,059 per week, a boost of about 60% from the current $35,568 annual/$684 weekly threshold.

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

Environmental Law

ADMINISTRATIVE ACTION 

• EPA finalizes first-time designation of widely used PFAS chemicals as CERCLA hazardous substances. On 4/19/2024, the U.S. Environmental Protection Agency (EPA) finalized a first-of-its-kind rule designating two PFAS chemicals, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), along with their salts (i.e., their solids) and structural isomers (i.e., their relevant variants), as hazardous substances under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). This action comes just weeks after the EPA announced a final rule establishing National Primary Drinking Water Regulations (NPDWR) for PFAS chemicals (see below) and issued interim guidance on destroying and disposing of certain PFAS and PFAS-containing non-consumer-product materials.

Listing PFOA and PFOS as hazardous substances under CERCLA—also known as Superfund—means that facilities will be required to report releases of PFOA or PFOS at or above the reportable quantity within a 24-hour period, and regulators will have increased authority to order cleanups and recover costs for PFAS contamination. This is EPA’s first-ever use of section 102(a) of CERCLA to add substances to the existing statutory list of hazardous substances via rulemaking. The new rule will become effective 60 days after it is published in the Federal Register.

At the same time, EPA also issued a separate CERCLA enforcement discretion policy seeking to clarify that EPA will focus its enforcement action on parties that significantly caused PFAS releases, such as manufacturers and other industrial users, and will not seek response actions or costs from farmers, municipal landfills, water utilities, municipal airports, or local fire departments. The policy aims to address concerns raised with respect to so-called “passive receivers” of PFAS—entities like community water systems, publicly owned treatment works, and publicly owned/operated municipal solid waste landfills—that, through the designation, could become subject to burdensome response costs under CERCLA’s strict, retroactive, and joint-and-several liability scheme.

CERCLA hazardous substance designation: Under the rule, EPA is designating PFOA and PFOS as CERCLA hazardous substances under CERCLA Section 102(a).

In addition to defining hazardous substances by reference to other environmental statutes—sections 311 and 307(a) of the Clean Water Act, section 112 of the Clean Air Act, and section 3001 of the Resource Conservation and Recovery Act—CERCLA section 102(a) gives EPA authority to evaluate and designate substances as hazardous if those substances “present substantial danger to public health or welfare or the environment.” As noted above, this is the first time that the EPA has exercised this authority, and the agency cited, among other justifications, its June 2022 interim updated health advisories for PFOA and PFOS pursuant to the Safe Drinking Water Act to support its decision.

EPA also went beyond the substantial-danger evaluation and performed a “totality of the circumstances” analysis that “weighed the advantages and disadvantages of designation, including quantitative and qualitative benefits and costs.” This separate, discretionary analysis (which was likely completed to ward off legal challenges relating to EPA’s consideration of costs) concluded that the advantages of designation outweighed the disadvantages because “designation best serves CERCLA’s two primary objectives—the timely cleanup of contaminated sites and holding polluters accountable for contamination they caused.”

Ramifications of the listing: Under the rule, entities will be required to report, within 24 hours, releases of PFOA and PFOS that meet or exceed the reportable quantity (RQ), which is set at one pound—much lower than the RQ for most other CERCLA hazardous substances. Release reports must be provided to the National Response Center at EPA, state and/or tribal emergency response commissions, and the local and/or tribal emergency response entity for the affected area.

EPA cites the industries potentially affected by the direct outcomes of the designation as including oil and gas extractors, metal ore mining operations, water and sewage utilities, textile and leather manufacturers, paper manufacturers and commercial printers, petroleum and chemical manufacturers, machine and electronics manufacturers, and manufacturers and users of firefighting foams.

With PFOA and PFOS now covered as hazardous substances, releases of those chemicals can be addressed by EPA response actions—without first establishing that the release may present an imminent and substantial danger—using its CERCLA enforcement authority. CERCLA affords EPA broad discretion as to whether and how to respond to a release: EPA may conduct the response itself and seek to recover its costs from the potentially responsible parties (PRPs) in a subsequent cost-recovery action; it can compel PRPs to perform the cleanup themselves through either administrative or judicial proceedings; or it can enter into a settlement with PRPs to perform all or portions of the work.

In addition to direct EPA enforcement actions and the industries cited as potentially directly affected by the designation, the rule is also expected to affect other PRPs via private party litigation and claims for natural resource damages (NRDs). PRPs can seek cost recovery or contribution from other PRPs for response actions, and the designation also has the potential to result in NRD claims with respect to PFOA and PFOS.

The CERCLA enforcement discretion policy announced by EPA may help to mitigate (but not eliminate) concerns from certain passive receivers, such as publicly owned and operated water and sewage utilities and landfills. Although bipartisan legislative relief for some of these entities is being considered in Congress, the ultimate enactment of proposed legislation remains far from certain.

Practical considerations: Once effective, the designating of PFOS and PFOA as CERCLA hazardous substances will have significant additional effects beyond the rule itself that should be evaluated by affected parties:

• Real estate and transactional due diligence: PFOS and PFOA—now hazardous substances—must be considered as part of Phase I Environmental Site Assessments to meet the “All Appropriate Inquiries” standard in connection with establishing certain CERCLA liability defenses.
• State-level CERCLA analogs: Parties with operations in states with statutory schemes modeled after CERCLA—such as Minnesota’s Environmental Response and Liability Act (MERLA) and Wisconsin’s Spills Law—will need to consider the state-level implications of the PFOA and PFOS designations at the federal level.
• Superfund site impacts: The designation of PFOA and PFOS could result in new Superfund sites, disrupt and add complexity to ongoing Superfund site cleanups (as well as their existing cost allocations), and result in the reopening of previously closed Superfund sites.
• Waste disposal limitations: Landfills and other waste disposal facilities may enact policies designed to limit their liability for potentially PFAS-contaminated waste, which could further limit the field of available disposal facilities for such wastes.
• Future Section 102(a) designations: Finally, EPA may use this designation as a model for future section 102(a) review and designation of emerging contaminants—both additional PFAS as well as non-PFAS substances. 

EPA, Final Rule, “Designation of Perfluorooctanoic Acid (PFOA) and Perfluorooctanesulfonic Acid (PFOS) as CERCLA Hazardous Substances,” Pre-Publication Version (4/17/2024).

• EPA releases new PFAS maximum contaminant levels. On 4/10/2024, the U.S. Environmental Protection Agency (EPA) issued a final rule establishing National Primary Drinking Water Regulations (NPDWR) for per- and polyfluoroalkyl (PFAS) chemicals. The new regulations establish the agency’s first drinking water standards addressing PFAS chemicals, a group of several thousand synthetic chemicals that persist in the environment and have adverse impacts upon human health and the environment. The new standards—which become effective 60 days after publication in the Federal Register—will have significant ramifications for drinking-water providers and other regulated parties.

EPA’s PFAS drinking water standards: The final rule establishes legally enforceable levels, called maximum contaminant levels, or MCLs, for the maximum amount of five individual PFAS in drinking water. The rule also sets a Hazard Index MCL for a mixture of two or more of four PFAS chemicals. A “hazard index” is a sum of fractions that compares the level of each PFAS to the highest level below which there is no health effect; it is designed to account for the additive health impacts of exposure to mixtures of chemicals. The rule also sets an unenforceable Maximum contaminant level goal (MCLG) for the same six categories.

The EPA enacted this rule under the Safe Drinking Water Act (SDWA), 42 U.S.C. §300f et seq., which authorizes the agency to set drinking water standards that must be met by any “public water system,” i.e., “a system for the provision to the public of water for human consumption through pipes or other constructed conveyances, if such system has at least fifteen service connections or regularly serves an average of at least twenty-five individuals.” 42 U.S.C. §300f(4). “Public water systems” include not only municipal drinking water plants that supply tap water, but also more localized facilities that may have their own drinking water systems, such as some schools, factories, office buildings, campgrounds, or hospitals. In Minnesota, the SDWA is implemented by the Department of Health.

MCLGs represent the maximum level of a contaminant in drinking water at which no known or anticipated adverse effect on human health would occur, factoring in an adequate margin of safety. MCLGs are established based solely on public health, and do not consider the limits of detection or treatment technologies. By contrast, the enforceable MCLs represents the “maximum permissible level of a contaminant in water which is delivered to any user of a public water system.” 42 U.S.C. §300f(3). Under the SDWA, the MCL must be set at a level that is as close as possible to the MCLG, while factoring in the types of treatment technology that may be available as well as evaluating the costs and benefits. See 42 U.S.C. §300g-1. EPA’s MCLs and MCLGs in the new regulations are as follows: (1) For PFOA and PFOS, the MCLGs are 0 and the MCLs are 4 ppt; (2) for PFNA, PFHxS, and HFPO-DA (or GenX chemicals), the MCLGs and MCLs are 10 ppt; and (3) for a mixture of two or more of PFNA, PFHxS, HFPO-DA, and PFBS, the MCGL and MCL is a hazard index of 1.

Public water systems have five years to comply with the MCLs. In addition to establishing these standards, EPA’s final rule imposes other requirements on public water system operators, including (a) PFAS monitoring requirements, (b) a requirement to notify the public if monitoring detects PFAS levels that exceed the MCLs after 2029, and (c) a requirement for public water systems to install PFAS treatment systems or take other actions to reduce the levels of these PFAS if they exceed the MCLs.

Notably, the standards set by the EPA in the final rule go beyond the proposed rule by establishing individual MCLs for PFNA, PFHxS and HFPO-DA; the proposed rule only included them in the Hazard Index standard for a mixture of these PFAS. To support implementation of the new rule, the EPA also announced $1 billion in new funding for implementing PFAS testing and treatment at public water systems, and to help owners of private wells in addressing PFAS contamination.

Ramifications of the New PFAS MCLs: The impact of the new PFAS MCLs will be felt most keenly by municipal and other operators of public water systems. Municipalities have long argued that existing and proposed funding for infrastructure improvements will not be sufficient to cover the extreme costs of PFAS-removal treatment to meet the proposed PFAS standards. 

In addition, the new MCLs are likely to have ramifications beyond public water systems. For example, in Minnesota, the state’s Class 1 water quality standards in Minn. R. 7050.0221 incorporate the federal MCLs by reference; that is, the federal MCLs, with minor exceptions, are Minnesota’s Class 1 water quality standards. The language of part 7050.0221 suggests that the new PFAS MCLs, once they become effective, will constitute Class 1 water quality standards in Minnesota, meaning they could be enforced in waters that have the Class 1 designation (including groundwater) and potentially translated into water discharge permit limits.

A second example is that the remediation goals set in CERCLA remedial action plans are often based on “Applicable or Relevant and Appropriate Requirements” (ARARs). MCLs are often used as ARARs for impacted groundwater or surface waters, meaning that at least some CERCLA cleanups could be required to attain the PFAS MCLs. Additionally, many states, including Minnesota, consider MCLs when determining groundwater cleanup levels at contaminated sites. See EPA, Final Rule, “PFAS National Primary Drinking Water Regulation Rulemaking” (pre-publication version, 4/8/2024).

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

Federal Practice

JUDICIAL LAW 

• Fed. R. Evid. 609(b); admission of evidence of old fraud-related convictions. Reviewing the district court’s “interpretation and application of the rules of evidence” de novo, and “factual findings supporting its evidentiary ruling” for abuse of discretion, the 8th Circuit found no abuse of discretion in Judge Tostrud’s admission of evidence of a witness’s fraud-related convictions more than 10 years earlier, agreeing with Judge Tostrud that “exceptional circumstances” justified admission of evidence of the convictions. Reach Cos. v. Newsert, LLC, 94 F.4th 712 (8th Cir. 2024). 

• Denial of motion to amend pleading affirmed; no changed circumstances. The 8th Circuit affirmed Judge Ericksen’s denial of the defendant’s motion to amend to reinstate counterclaims that it had voluntarily dismissed, agreeing that the defendant had failed to establish “changed circumstances” that might justify amending pleadings after the deadlines set forth in the scheduling order. Midwest Med. Sols., LLC v. Exactech U.S., Inc., 95 F.4th 604 (8th Cir. 2024). 

• Standing; dismissal of action seeking access to search warrant materials affirmed. In December 2022, this column noted Chief Judge Schiltz’s dismissal of an action by the Reporters Committee for Freedom of the Press, which sought access to certain search warrant materials, for lack of standing. 

The 8th Circuit recently affirmed the dismissal of that action, finding the lack of an adverse defendant, agreeing with Chief Judge Schiltz that there was no “concrete” or “particularized” injury, and determining that an alternative standing argument raised for the first time in an appellate reply brief had been waived. Reporters Cmte. for Freedom of the Press v. United States, 94 F.4th 746 (8th Cir. 2024). 

• Fed. R. Civ. P. 3; statute of limitations; timing of ECF filing. Where plaintiff’s counsel started an ECF new case filing and obtained a docket number before midnight on the last day of the limitations period, but did not upload the complaint until shortly after midnight, Judge Magnuson, relying on Fed. R. Civ. P. 3, determined that the action was not commenced until the complaint was filed, meaning that the action was untimely, and further found that equitable tolling of the statute of limitations was “not appropriate.” Jackson v. Hennepin Healthcare Sys., Inc., 2024 WL 841271 (D. Minn. 2/28/2024), appeal filed (8th Cir. 3/21/2024). 

• Fed. R. Civ. P. 12(b)(2); motion to dismiss for lack of personal jurisdiction granted. Applying a “prima facie” standard, Chief Judge Schiltz granted multiple related corporate defendants’ motion to dismiss for lack of personal jurisdiction, finding that plaintiff’s argument for general jurisdiction “border[ed] on frivolous,” rejecting plaintiff’s veil-piercing argument, and finding no evidence that these defendants did “anything other than place their products into the nationwide stream of commerce.” Sec. Bank & Trust Co v. Cook Grp., Inc., 2024 WL 777257 (D. Minn. 2/26/2024). 

• Insurance coverage; summary judgment; spoliation argument rejected. Granting in part and denying in part the parties’ cross-motions for summary judgment in an insurance coverage dispute premised on diversity jurisdiction, Judge Nelson found that the issue of spoliation was governed by federal law rather than Minnesota law, and rejected the insurer’s argument that the plaintiff should be sanctioned for its alleged spoliation of evidence. Maplebrook Estates Homeowner’s Ass’n, Inc. v. Hartford Fire Ins. Co., 2024 WL 869069 (D. Minn. 2/29/2024). 

• Fed. R. Evid. 702; Daubert; “high bar” for striking expert. Where the parties in a patent dispute submitted expert reports on damages and moved to exclude the opposing expert, Judge Tunheim denied both motions, finding that the parties had not met the “high bar” to exclude the experts, and that any issues with the expert reports could be addressed on cross-examination. Regents of the Univ. of Minn. v. AT&T Mobility LLC, 2024 WL 844579 (D. Minn. 2/28/2024). 

• Appeal of denial of motion to strike expert reports denied; waiver of arguments. In another decision in the same case, Judge Tunheim affirmed Magistrate Judge Leung’s denial of defendants’ motions to strike all or part of several expert reports, rejecting defendants’ attempt to “bootstrap” arguments they had raised in another motion that they did not initially raise in support of their motion to strike. Regents of the Univ. of Minn. v. AT&T Mobility LLC, 2024 WL 733499 (D. Minn. 2/22/2024). 

• Personal jurisdiction; jurisdictional discovery. Where a California-based defendant moved to dismiss for lack of personal jurisdiction, Judge Menendez exercised her “considerable discretion,” ordering jurisdictional discovery after finding that the plaintiff had made a “sufficient showing to show that jurisdictional discovery is warranted.” Adcock v. Skyhawk Aviation, 2024 WL 991363 (D. Minn. 3/7/2024). 

• Motion to stay discovery pending resolution of motion to dismiss denied. Magistrate Judge Brisbois denied the defendant’s motion to stay discovery pending resolution of its motion to dismiss, acknowledging a “presumption favoring the party opposing a stay,” and finding that the defendant had failed to meet its burden on any part of the prevailing three-part test. Christopherson v. Cinema Ent. Corp., 2024 WL 1120925 (D. Minn. 3/6/2024). 

• 28 U.S.C. §1292(b); motion to certify questions for interlocutory appeal denied. Finding the absence of a controlling question of “pure law,” no “substantial ground for difference of opinion,” and “minimal efficiency” in an interlocutory appeal, Judge Menendez denied the defendant’s motion to certify questions for interlocutory appeal. Williams v. BHI Energy I Power Servs. LLC, 2024 WL 986678 (D. Minn. 3/7/2024). 

• Fed. R. Civ. P. 12(b)(2); personal jurisdiction; closely related doctrine. Rejecting the plaintiff’s argument that a corporate defendant was subject to personal jurisdiction in Minnesota only because it was “closely related” to individual defendants who had consented to venue in Minnesota, Judge Frank expressed “serious concerns” about extending the closely related doctrine on these facts, and found that the corporate defendant was not subject to personal jurisdiction in Minnesota. Toro Co. v. Sutterlin, 2024 WL 965238 (D. Minn. 3/5/2024). 

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

Immigration Law

JUDICIAL LAW 

• SCOTUS: Courts have jurisdiction to review hardship determinations in cancellation-of-removal cases. On 3/19/2024, the U.S. Supreme Court held, for purposes of cancellation of removal, that application of the “exceptional and extremely unusual” hardship standard to an established set of facts is a mixed question of law and fact and reviewable as a question of law under INA §242(a)(2)(D), pursuant to Guerrero-Lasprilla v. Barr, 589 U.S. 221 (2020). The Court further found that the hardship determination was not discretionary and that the 3rd Circuit erred when it held that it lacked jurisdiction to review the immigration judge’s (IJ) determination. The Court reversed the 3rd Circuit’s jurisdictional decision, vacated its judgment, and remanded the case for further proceedings. The Court also observed that the facts underlying any determination on cancellation of removal remain unreviewable. Wilkinson v. Garland, 601 U.S. ___, No. 22-666, slip op. (2024). https://www.supremecourt.gov/opinions/23pdf/22-666_bq7c.pdf

• No error by BIA in vacating immigration judge’s CAT grant. In March the 8th Circuit Court of Appeals held that the Board of Immigration Appeals (BIA) did not commit error when it rejected the petitioner’s claim for deferral of removal to South Sudan under the Convention Against Torture (CAT). According to the court, the BIA properly determined that the record was legally insufficient to establish a likelihood of torture. It noted, furthermore, that the possibility of detention or imprisonment on its own does not amount to torture, and an indeterminate chance of future upheaval or ethnic cleansing is inadequate to meet the legal standard of “more likely than not” under the regulations implementing the Convention Against Torture. Yar v. Garland, No. 23-1001, slip op. (8th Circuit, 3/8/2024). https://ecf.ca8.uscourts.gov/opndir/24/03/231001P.pdf

• Transporting guns and drugs for MS-13 gang is a serious nonpolitical crime. In March the 8th Circuit Court of Appeals upheld the Board of Immigration Appeals’ (BIA) conclusion that the Honduran petitioner committed a serious nonpolitical crime and was thus ineligible for withholding of removal, given his admission that he knowingly transported guns and drugs for the MS-13 gang on several occasions. The court rejected the petitioner’s argument that the immigration judge (IJ) failed to put together an adequate record addressing whether his criminal conduct should be considered serious given his young age, the limited nature of his involvement in the gang’s operations, his fear of being killed if he failed or refused to cooperate, and the trauma he suffered as a result of his sexual orientation. The court further determined the BIA did not err when it dismissed the petitioner’s vague and unsupported duress argument. Herrera-Elias v. Garland, No. 22-3565, slip op. (8th Circuit, 3/4/2024). https://ecf.ca8.uscourts.gov/opndir/24/03/223565P.pdf

•  No BIA error in denial of motion to reopen based on defective notice to appear. In February the 8th Circuit Court of Appeals dismissed the petitioner’s arguments that the Board of Immigration Appeals (BIA) erred when it denied his motion to reopen and ruled his objection to the Notice to Appear (NTA) was untimely. In its review of the case, the court first held the BIA properly declared that its decision in Matter of Fernandes was not an intervening change in the law that would excuse the petitioner’s forfeiture of an objection to the Notice to Appear (NTA). The court then rejected the petitioner’s arguments that the BIA should have granted his motion to reopen, erred in ruling that his objection to the Notice to Appear (NTA) was untimely, and misconstrued his motion as asking it to compel the Department of Homeland Security (DHS) to exercise prosecutorial discretion. The court concluded that the petitioner, through counsel, had admitted DHS’s allegations and conceded removability, and there were no egregious circumstances to prevent application of the general rule that the admission bound the petitioner. Finally, because the petitioner could still pursue prosecutorial discretion, the court found the BIA had not abused its discretion when it denied a remand. Amador-Morales v. Garland, No. 22-3653, slip op. (8th Circuit, 2/27/2024). https://ecf.ca8.uscourts.gov/opndir/24/02/223653P.pdf

• No BIA error in denying motion to reopen based on alleged material changes in country conditions. In February the 8th Circuit Court of Appeals agreed with the Board of Immigration Appeals (BIA) that recent events forming the basis of the petitioner’s claim for fleeing persecution (at the hands of the ruling party in India) were not material changes in country conditions and thus could not support an untimely motion to reopen and remand. The court reasoned the events would not have changed the outcome of his earlier removal proceedings, resulting in a final removal order based on abandonment of his asylum application. Furthermore, the court found the petitioner’s claim that the immigration judge (IJ) violated his right to procedural due process by denying a continuance of his removal merits hearing did not warrant an untimely reopening since the BIA had already addressed the claim when it denied the petitioner’s initial appeal. Singh v. Garland, No. 23-2289, slip op. (8th Circuit, 2/23/2024). https://ecf.ca8.uscourts.gov/opndir/24/02/232289P.pdf

ADMINISTRATIVE ACTION 

• Cap for additional returning H-2B visas for early second half of (FY) 2024 reached. On 4/18/2024, U.S. Citizenship and Immigration Services (USCIS) announced that it had received a sufficient number of petitions to reach the cap for the additional 19,000 H-2B visas made available for returning workers for the early second half of (FY) 2024 with start dates from 4/1/2024 to 5/14/2024. The agency noted that it will still accept petitions for H-2B nonimmigrant workers for the additional 20,000 visas allocated for nationals of El Salvador, Guatemala, Honduras, Haiti, Colombia, Ecuador, and Costa Rica (country-specific allocation) who are exempt from the returning worker requirement, as well as those exempt from the congressionally mandated cap. 

Additionally, on 4/22/2024, USCIS began accepting petitions for workers for the late second half of (FY) 2024, seeking employment start dates from 5/15/2024 to 9/30/2024. The 5,000 visas made available under this allocation are limited to returning workers issued H-2B visas or held H-2B status in fiscal years 2021, 2022, or 2023, regardless of country of nationality. U.S. Citizenship and Immigration Services, News Release (4/18/2024). https://www.uscis.gov/newsroom/alerts/cap-reached-for-additional-returning-worker-h-2b-visas-for-the-early-second-half-of-fy-2024

• DHS notices extending and/or redesignating TPS.

Ethiopia: On 4/15/2024, the U.S. Department of Homeland Security (DHS) announced the extension of the designation of Ethiopia for temporary protected status (TPS) for 18 months, beginning on 6/13/2024 and ending on 12/12/2025. Those wishing to extend their TPS must re-register during the 60-day period running from 4/15/2024 through 6/14/2024. The secretary also redesignated Ethiopia for TPS for an 18-month period, allowing Ethiopians to apply who have continuously resided in the United States since 4/11/2024 and been continuously physically present in the United States since 6/13/2024. The registration period for these new applicants, under the redesignation, begins on 6/13/2024 and ends on 12/12/2025. 89 Fed. Reg. 26172 (2024). https://www.govinfo.gov/content/pkg/FR-2024-04-15/pdf/2024-07643.pdf

Burma (Myanmar): On 3/25/2024, the U.S. Department of Homeland Security (DHS) announced the extension of the designation of Burma (Myanmar) for temporary protected status (TPS) for 18 months, beginning on 5/26/2024 and ending on 11/25/2025. Those wishing to extend their TPS must re-register during the 60-day period running from 3/25/2024 through 5/24/2024. The secretary also redesignated Burma (Myanmar) for TPS for an 18-month period, allowing individuals to apply who have continuously resided in the United States since 3/21/2024 and been continuously physically present in the United States since 5/26/2024. The registration period for these new applicants, under the redesignation, begins on 3/25/2024 and ends on 11/25/2025. 89 Fed. Reg. 20682 (2024). https://www.govinfo.gov/content/pkg/FR-2024-03-25/pdf/2024-06104.pdf

• USCIS announces eligible Ukrainians may now apply for re-parole. On 2/27/2024, U.S. Citizenship and Immigration Services (USCIS) announced that eligible Ukrainian citizens and their immediate family members who are physically present in the United States may apply for re-parole so they may continue to remain in the United States. According to USCIS, “The extraordinary circumstances in Ukraine that supported the prior exercise of discretionary parole authority continue to exist. Russia’s invasion of Ukraine has continued and has resulted in tremendous civilian casualties.” Those individuals paroled into the United States under section 212(d)(5)(A) of the Immigration and Nationality Act. on or after 2/11/2022, may apply for re-parole under this process.

Eligibility requirements for applicants include the following:

(1) Be a Ukrainian citizen or immediate family member who was paroled into the United States on or after 2/11/2022;

(2) There are continued urgent humanitarian reasons or significant public benefit for grant of a new period of parole;

(3) Warrant a favorable exercise of discretion;

(4) Physically present in the United States as a parolee;

(5) Complied with the conditions of the initial parole; and

(6) Clear biographical and biometric background checks.

U.S. Citizenship and Immigration Services, News Release (2/27/2024). https://www.uscis.gov/newsroom/alerts/eligible-ukrainians-can-now-apply-for-re-parole

• Deferred enforced departure for certain Palestinians. On 2/14/2024, President Biden issued a memorandum announcing the United States will defer removal, for a period of 18 months, of any Palestinian present in the United States on that date, subject to certain conditions and exceptions as outlined below:

(1) Voluntarily returned to the Palestinian territories after the date of the memorandum; 

(2) Has not continuously resided in the United States since the date of the memorandum; 

(3) Is inadmissible under section 212(a)(3) of the Immigration and Nationality Act (INA) (8 U.S.C. 1182(a)(3)) or deportable under section 237(a)(4) of the INA (8 U.S.C. 1227(a)(4)); 

(4) Was convicted of a felony or two or more misdemeanors in the United States, or meets any of the criteria set forth in section 208(b)(2)(A) of the INA (8 U.S.C. 1158(b)(2)(A)); 

(5) Is subject to extradition; 

(6) Presence in the United States is determined by the Secretary of the Department of Homeland Security (DHS) to not be in the interest of the United States or presents a danger to public safety; or

 (7) Presence in the United States, the Secretary of State has reasonable grounds to believe, would have potentially serious adverse foreign policy consequences for the United States. 

89 Fed. Reg. 12743 (2024). https://www.govinfo.gov/content/pkg/FR-2024-02-20/pdf/2024-03514.pdf

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

Indian Law

JUDICIAL LAW 

• The Indian Self-Determination and Education Assistance Act does not require the Indian Health Service to pay for both depreciation on a covered facility and principal and loan interest covered by a USDA loan for that same facility under a facility lease agreement. Following the construction of a chemical-health treatment center, the Red Lake Band of Chippewa Indians and the Indian Health Service disputed the amount of compensation owed to the tribe in the accompanying annual cost funding agreement under by the Indian Self-Determination and Education Assistance Act. The United States District Court for the District of Columbia held that to the extent the tribe was requesting compensation for both the “principal and interest on the… loan used to build the Treatment Center” and the “depreciation based on an amount that includes the portion of the acquisition cost funded by that loan,” that compensation was duplicative in violation of the relevant implementing regulation, 25 C.F.R. §900.70. Red Lake Band of Chippewa Indians v. Dep’t of Health and Human Servs., __ F. Supp. 3d __, 2024 WL 774857 (D.D.C. 2024).

Leah K. Jurss
Hogen Adams PLLC
ljurss@hogenadams.com

Intellectual Property

JUDICIAL LAW 

• Patent: Scope of subject-matter waiver. Judge Foster recently granted in part defendant Digi International, Inc.’s motion to compel and ordered plaintiff NimbeLink Corporation to direct its patent counsel to produce withheld documents and communications regarding a continuation application and related potential applications. NimbeLink sued Digi International, asserting claims of breach of a non-disclosure agreement, unjust enrichment, and patent infringement related to patents for cellular modems. Digi International asserted a counterclaim of inequitable conduct. Following a hearing on NimbeLink’s motion to dismiss Digi’s inequitable conduct counterclaim, NimbeLink waived privilege and produced documents in support of its defense to the inequitable conduct counterclaim. NimbeLink directed its patent counsel to produce certain documents and audio recordings. 

Digi International sought additional production of documents that NimbeLink did not produce. Digi International argued that such documents were included in NimbeLink’s subject-matter waiver. Digi International moved to compel. The court found that NimbeLink’s discussions with its counsel about whether to disclose prior art to the United States Patent Office in a continuation application, even if abandoned, could potentially support a finding of inequitable conduct and thus was within the subject matter of the waiver. NimbeLink could not fairly disclose parts of its conversations with its attorney about the prosecution of its continuation application and related potential applications as a defense to Digi International’s inequitable conduct counterclaim but then assert privilege as a shield to prevent Digi International from discovering other privileged communications related to those same applications. The court, however, limited the scope of the production due to proportionality concerns. NimbeLink was ordered to direct its patent counsel to produce any withheld documents or communications concerning the continuation application and related potential applications to the extent they might potentially relate or refer in any way to inequitable conduct, prior art or possible prior art, or any decision to omit or disclose such prior art or possible prior art to the Patent Office. NimbeLink Corp. v. Digi Int’l Inc., No. 22-cv-2345 (NEB/DJF), 2024 U.S. Dist. LEXIS 67067 (D. Minn. 4/12/2024).

• Trademark: Sale of product did not trigger supplier’s trademarks. Judge Tostrud recently denied plaintiff InterRad Medical, Inc.’s motion for preliminary injunction. InterRad sued defendant Aquilant Limited, claiming that Aquilant violated its post-termination contractual obligations by selling its remaining inventory of InterRad product. InterRad is the sole supplier of SecurAcath, a device that holds percutaneous catheters securely in place without sutures or adhesives. Aquilant was InterRad’s exclusive distributor in England, Scotland, and Wales. After InterRad terminated the distributor agreement, Aquilant attempted to sell its remaining inventory. InterRad sought a preliminary injunction to enforce the asserted post-termination obligations, namely, that Aquilant will return all product and discontinue use of all trade names, trademarks, etc. But the court found that none of the post-termination provisions explicitly prohibited Aquilant from selling SecurAcath post-termination or expressly dictated what Aquilant must do with its remaining inventory of SecurAcath. InterRad argued that Aquilant’s obligation to cease using InterRad’s trademarks was inconsistent with Aquilant being allowed to continue selling SecurAcath. But courts are reluctant to read terms into a contract to effectuate the parties’ unexpressed intent. Additionally, the court found sale of SecurAcath did not trigger use of InterRad’s trademarks. A trademark is a name, symbol, or other device identifying a product or service. The product—SecurAcath—is distinct from the marks used to identify that product. The court found that InterRad had not met its burden to show it was likely to prevail on the merits of that breach-of-contract theory. Because InterRad’s chief complaint was lost business compensable with money damages, the court did not find irreparable harm. Accordingly, the motion for preliminary injunction was denied. InterRad Med., Inc. v. Aquilant Ltd., No. 23-cv-3709 (ECT/DTS), 2024 U.S. Dist. LEXIS 36928 (D. Minn. 3/4/2024).

Joe Dubis
Merchant & Gould
jdubis@merchantgould.com

Probate & Trust Law

JUDICIAL LAW 

• Wrongful death claim, if any, must be pursued against personal representative. The plaintiff was appointed as trustee to pursue a wrongful death claim for the benefit of the next of kin of the passenger of a vehicle involved in a deadly accident. Once appointed, the plaintiff sued a person who was appointed as trustee to pursue a wrongful death claim for the benefit of the next of kin of the driver of the vehicle. The district court dismissed the case, finding that the plaintiff did not serve the personal representative of the estate of the driver. On appeal, the plaintiff argued that a trustee with the authority to commence a wrongful death action is the “functional equivalent” of the personal representative of that person’s estate. The Minnesota Court of Appeals disagreed, concluding that “a personal injury claim based on the allegedly tortious conduct of a deceased person must be brought against the personal representative of the deceased person’s estate.” Mattingly v. American Family Insurance, __ N.W.3d __, No. A23-1080, 2024 WL 1709765 (Minn. Ct. App. 4/22/2024).

• Assets conveyed to heirs through a living trust subject to MA recovery. A husband and wife conveyed real property to an irrevocable trust. Upon the death of the husband and wife, the trust instrument required distribution of the remaining trust assets to the couple’s descendants per stirpes, subject to the couple’s ability to modify the distribution scheme in their wills. The husband died without receiving MA. The wife died after receiving more than $200,000 in MA. DHS then recorded notices of potential claims against the real property in the trust to recover the MA paid on the wife’s behalf. After a DHS fair hearing, the commissioner affirmed DHS’s determination that the property in the trust was subject to MA recovery. After an appeal of the determination to the district court, the district court reversed. The court of appeals found that “Minnesota defines a person’s estate for the purposes of MA recovery to include ‘assets conveyed to a[n]… heir… through… [a] living trust.” Because the trust instrument provided that, on the couple’s death, the assets would be distributed to the couple’s heirs, the court of appeals reversed the district court and found that the commissioner correctly determined that the real property held in the trust was subject to MA recovery. Brad Hammerberg, as trustee for the Leonard J. and Margaret T. Schubert Irrevocable Trust, dated June 23, 2005 v. MN Dept. of Human Services, et al., No. A23-0901, 2024 WL 1712748 (Minn. Ct. App. 4/22/2024).

LEGISLATIVE ACTION 

• In rem v. in personam jurisdiction. On 4/17/2024, Gov. Tim Walz approved legislation intended to clarify questions raised by the Minnesota Supreme Court’s decision in Swanson v. Wolf, 986 N.W.2d 217 (Minn. Ct. App. 2023). Specifically, Minn. Stat. §501C.0202 has been amended to make clear that judicial proceedings involving trusts can relate to numerous specified matters, “whether filed by petition under the court’s in rem or in personam jurisdiction.” Moreover, Minn. Stat. §501C.0204, subd. 1, the statute relating to in rem judicial proceedings, has been amended to be clear that orders issued pursuant to the court’s in rem jurisdiction are binding upon the trust estate and “all interested persons.” The changes to these statutes are retroactive to 1/1/2016. 

Jessica L. Kometz
Bassford Remele
jkometz@bassford.com

State Appellate Practice

MN Supreme Court

• Notable Supreme Court decision: Failure to raise juridical-link doctrine at district court results in forfeiture. The Minnesota Supreme Court determined that a putative class action plaintiff’s failure to raise the juridical-link doctrine as a basis for class standing at the district court resulted in forfeiture of the argument and expressly declined to offer any opinion on the juridical-link doctrine, leaving “analysis of the status of the doctrine in Minnesota” for another day. Stone v. Invitation Homes, Inc., A22-0928 (Minn. 4/3/2024). 

MN Court of Appeals

• Notable precedential decision: Incorrect service of process on estate representative warrants dismissal of wrongful-death claim. The court of appeals affirmed the dismissal of a wrongful-death claim due to the plaintiff’s failure to identify and serve the correct representative of the defendant’s estate within the appropriate statute of limitations. Plaintiff initiated a wrongful-death action under Minn. Stat. §573.01 arising out of a motorcycle crash, serving a person who was appointed trustee to pursue a wrongful-death claim for the benefit of the surviving spouse and next of kin of the driver of the automobile, not the estate’s personal representative. The court of appeals rejected the argument that “trustee” and “personal representative” can be used interchangeably, finding that “section 573.02 authorizes a wrongful-death trustee to assert claims for the benefit of a deceased person’s surviving spouse and next of kin but does not authorize the wrongful-death trustee to defend against claims against the deceased person’s estate.” Mattingly v. Plasch, A23-1080 (Minn. Ct. App. 4/22/2024). 

• Notable precedential decision: Minnesota does not recognize cause of action for breach of illusory contract. In a dispute arising out of business negotiations between school transportation providers, the Minnesota Court of Appeals affirmed the district court’s dismissal of a complaint alleging 13 causes of action, including a claim for “breach of illusory” contract. The plaintiff alleged a breach of contractual obligations, including a failure to “establish contractual requisites including, but not limited to, consideration…” The court of appeals affirmed the dismissal of this claim, finding that “Minnesota does not recognize a claim for breach of contract when the alleged breach is a failure to form the contract due to lack of consideration” and that there is no “Minnesota authority standing for the proposition that the absence of consideration is independently actionable as a breach of contract.” Metropolitan Transportation Network, Inc., et al., vs. Collaborative Student Transportation of Minnesota, LLC, et al., A23-0644 (Minn. Ct. App. 4/15/2024). 

n Notable nonprecedential decision: Court of appeals clarifies distinction between gift and contract, reviving charity’s claims for breach of contract, unjust enrichment, and promissory estoppel claims arising out of disputed donations. The court of appeals reversed the dismissal of a charity’s claims against a trust and successor trustees, arising out of disputed donations made by the settlor/former trustee prior to his death. The settlor/former trustee signed two agreements, pledging $841,519.45 of trust funds to the charity, and issued two checks totaling that amount to the charity from the trust’s accounts. The following day, the settlor/former trustee died. The charity attempted to deposit the checks but was later informed that the account had been closed due to the death of the settlor. The charity commenced suit against the estate, alleging claims for breach of contract, unjust enrichment, promissory estoppel, breach of fiduciary duty, and civil theft. The district court dismissed the claims at the Rule 12 stage. The court of appeals reversed, clarifying what constitutes a “gift” under Minnesota law as opposed to a “charitable subscription contract.” A gift requires “(1) delivery, (2) intention to make a gift on the part of the donor, and (3) absolute disposition by [the donor] of the thing which he intends to give to another.” The court of appeals determined that the two checks issued by the settlor/former trustee did not satisfy the third element and did not constitute a “absolute disposition” of the funds. But the court further determined that the allegations were sufficient to establish a breach of contract claim on a “charitable subscription” theory, finding that the agreements between the settlor/former trustee and charity formed a contract supported by sufficient consideration because the charity “relied on the promised funds and either incurred liabilities to further the promises or became responsible for performing the conditions imposed” by the trust’s donation. Minnesota Citizens Concerned for Life, Inc., vs. Joint Revocable Trust Agreement of John N. Charais and Sveindis Charais, et al., A23-0960 (Minn. Ct. App. 4/22/2024). 

Pat O’Neill
Larson King, LLP
phoneill@larsonking.com

Sam Schultz
Larson King, LLP
sschultz@larsonking.com

Tax Law

JUDICIAL LAW 

• Low-income housing properly tax-exempt. Alliance Housing Incorporated is a nonprofit organization with a mission “to create, own, and operate affordable housing for low and very low-income people.” Under this nonprofit designation, Alliance applied for a tax exemption for all its properties, which had a mix of tax-exempt and taxable classifications. The tax court found the properties tax-exempt, and the county appealed. 

To receive a property tax exemption, the taxpayer must prove that “its use of the property is in furtherance of the tax-exempt charitable purpose of the organization.” Living Word Bible Camp v. County of Itasca, 829 N.W.2d 404, 409 (Minn. 2013). The Minnesota Supreme Court unanimously found that renting residential property for private residence to low-income individuals was in furtherance of the charitable purpose of Alliance and affirmed the tax court’s ruling.  Alliance Housing Inc. v. Cnty. of Hennepin, No. A23-0737, 2024 WL 1289653 (Minn. 3/27/2024).

• Florida man fails to file for nearly a decade. Joseph and Kaylyn Belcik failed to file taxes from 2008 through 2018. The Service determined deficiencies totaling approximately $2.7 million and various additions to tax for fraudulent failure to file, failure to pay tax, and failure to pay estimated tax. The tax court found that the couple had unreported income and held that Mr. Belcik was liable for self-employment tax. The court further held that Mr. Belcik, but not Mrs. Belcik, was liable for additions to tax. Belcik v. Comm’r of Internal Revenue, T.C.M. (RIA) 2024-049 (T.C. 2024).

• Filing deadline jurisdictional in innocent spouse case. Taxpayers denied innocent spouse relief have 90 days to ask the tax court to review the commissioner’s final determination denying required innocent spouse relief. In Pollock v. Commissioner, 132 T.C. 21 (2009), the tax court determined that the 90-day filing deadline was jurisdictional. The Supreme Court’s decision in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022), however, called Pollock into question. In this case, the tax court revisited its determination that the 90-day filing deadline was jurisdictional. The tax court applied the clear statement rule and examined “the text, context, and relevant historical treatment” of section 6015(e)(1)(A) to again conclude that the 90-day filing deadline of the section is jurisdictional. As such, the court was without authority to hear the taxpayer’s claim. Frutiger v. Comm’r, No. 31153-21, 2024 WL 1046873 (T.C. 3/11/2024).

• Regulations relating to filing deadlines invalid. In a dispute involving covid disruptions and filing deadlines, the court interpreted “for the first time section 7508A(d), which provides for the mandatory 60-day extension of certain tax-related deadlines by reason of a federally declared disaster.” The tax court found that the section unambiguously provides a self-executing postponement period for the filing of a petition with the court for a redetermination of a deficiency. Therefore, Reg. 301.7508A-1(g)(1) and Reg. 301.7508A-1(g)(2) were invalid to the extent the regulations limit time-sensitive acts that are postponed for the mandatory 60-day postponement period (pension-related postponements might be subject to a different analysis). Since the petitioners were entitled to an automatic, mandatory 60-day postponement period, their petition was timely filed and the tax court had jurisdiction to review the deficiency notice.

The reviewed opinion drew two concurrences. Judge Buch agreed that the regulation is invalid to the extent it limits the acts subject to the mandatory postponement period of section 7508A(d). The concurrence went on the note “that the continued viability of Chevron is under review” but that the court could reach the same conclusion without reliance on Chevron.  Judge Jones wrote “separately to underscore the consistency of the Court’s analysis in Hallmark Research Collective v. Commissioner, 159 T.C. 126 (2022), and Sanders v. Commissioner, No. 15143-22, 161 T.C. (11/2/2023), with our holding here as well as the overall statutory scheme, particularly the Anti-Injunction Act (AIA).” Abdo v. Comm’r, No. 5514-20, 2024 WL 1406440 (T.C. 4/2/2024).

• Property tax: Presumption of validity overcome. The owner of an apartment building in north Minneapolis argued that civil unrest caused a high vacancy rate at his property and a resulting overvaluation. The court found that the property owner’s testimony overcame the prima facie validity of the assessment, and that the assessment overstated the property’s value. The court, however, rejected the property owner’s request to reduce his tax bill by 50% to account for an alleged lack of city services. Horner-Carlson Fam. P’ship LLC, v. Cnty. of Hennepin, No. 27-CV-21-10872, 2024 WL 1627869 (Minn. T.C. 4/15/2024).

• Deductions disallowed: Sewing, cutting, buying textiles for 289 hours not sufficiently related to rental property management. Two Minnesota taxpayers challenged Revenue’s finding that they had overstated their deductible losses related to a residential property they owned in Washington State in 2019 and 2020. Claiming they operated the property as a rental, they argued that Ms. Brozovich did enough ongoing work maintaining and operating the rental property to be a “real estate professional,” which would render the activities related to the property nonpassive and therefore the losses deductible from regular income. The Department of Revenue disputed the claim on the grounds that the property was passive income and therefore deductions were allowed only to offset other passive income. To be considered a “real estate professional,” the taxpayer must perform over 750 hours of qualifying services per year. 

The court’s finding indicated that the property was rented only four times in two years. The rentals were to family and friends, and the taxpayers did not advertise the property for rent or use rental agreements. The hours the taxpayer spent on the rental business included 289 hours “purchasing, cutting and sewing various textiles (curtains, tablecloth, etc.) for the property,” 19 hours reading the Wall Street Journal, 90 hours reading about 1031 exchanges, and 101 hours researching the real estate market. The court found these activities insufficiently related to the property rental business for the taxpayer to meet the 750-hour threshold required to be considered a “real estate professional.” As such, the court found the operation of the Washington property to be passive, and therefore the deductions disallowed. Brozovich v. Comm’r of Revenue, No. 9545-R, 2024 WL 1149366 (Minn. T.C. 3/8/2024).

• Property tax: Future development plans do not support change in classification. The tax court rejected an argument that plans to develop a parking lot into multifamily housing should result in a change in classification. This dispute focused on whether the taxpayer’s commercial surface parking lot in downtown Minneapolis should have received a split classification: one classification for its surface, and one classification for its undeveloped air rights. ODC-HV Ritz argued that the air rights should be classified as multi-family residential due to its plans to develop the parking lot into a 370-unit multifamily development. Ritz argued the commercial portion of the assessment should be less than 10% of the interest, and the air rights just over 90%.

The court rejected the argument. According to Minnesota Statute section 273.13, subd. 33(a), “All real property that is not improved with a structure must be classified according to its current use.” Here the court found that the air rights were not a real property interest that could be separately assessed, since the owner did not first convey them. Since Ritz did not have the air rights, the air rights could not have been part of a split classification. The court granted the county’s motion for summary judgment that the parcel was properly classified. ODC-HV Ritz Block II LLC v. Cnty. of Hennepin, No. 27-CV-21-5356, 2024 WL 972080 (Minn. T.C. 3/6/2024).

• Owner disputing property valuation needed evidence. Minnesota taxpayer William Bradley contested the county’s assessment of the market value of his property. The county assessed the property to have a market value of $984,000 and taxpayer contended the market value was $700,000. The tax court dismissed the petition. 

To successfully contest an assessment, a taxpayer must offer “substantial evidence” that the assessment was incorrect. Harmon v. Comm’r of Revenue, 894 N.W.2d 155, 159 (Minn. 2017). Here, the taxpayer did not offer any evidence to ground his beliefs about his property’s worth. He claimed that a separate litigious dispute about an appurtenant easement on the property decreased the property’s value, but he did not offer evidence to support that claim. He also based his valuation belief on “just my knowledge of property values” while claiming no specific knowledge of nearby comparable properties. Since the taxpayer provided no substantial evidence that the assessment was incorrect, the court granted the county’s motion to dismiss the petition. Bradley v. Cnty. of Hennepin, No. 27-CV-21-5224, 2024 WL 926421 (Minn. Tax 3/4/2024).

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