Foster v. State of Minnesota et al

Filing 26

ORDER granting 8 Motion to Dismiss (Written Opinion) Signed by Senior Judge David S. Doty on 12/21/2016. (DLO)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 16-2561(DSD/KMM)
Sheila Foster,on behalf of herself
and all others similarly situated,
Plaintiff,
v.

ORDER

State of Minnesota, Lori Swanson,
in her official capacity as Minnesota
General, and Myron Frans, in his
official capacity as Commissioner of
Minnesota Management and Budget,
Defendants.
Patrick W. Michenfelder, Esq. and Throndset Michenfelder Law
Office, LLC, One Central Avenue West, Suite 203, St. Michael,
MN 55376, and Daniel C. Hedlund, Esq. and Gustafson Gluek,
PLLC, 120 South Sixth Street, Suite 2600, Minneapolis, MN
55402, counsel for plaintiff.
Oliver J. Larson, Minnesota Attorney General’s Office, 445
Minnesota Street, Suite 1800, St. Paul, MN 55101, counsel for
defendants.

This matter is before the court upon the motion to dismiss by
defendants. Based on a review of the file, record, and proceedings
herein, and for the following reasons, the motion is granted.

BACKGROUND
This

putative

class

action

arises

from

plaintiff

Sheila

Foster’s claim that she is entitled to a share of the proceeds from
the settlement between the State of Minnesota and various tobacco
companies.

In 1994, the state, through its attorney general, and

Blue Cross and Blue Shield of Minnesota, sued Philip Morris and
other

tobacco

companies,

alleging

consumer protection statutes.
parties settled.

Id. ¶ 15.

violations

of

Compl. ¶¶ 13-14.

Minnesota’s
In 1998, the

The settlement agreement, in part,

required the tobacco companies to pay the state over $100 million
each year in perpetuity.

Id.

In turn, the state agreed to release

“all claims of the State of Minnesota relating to the subject
matter of th[e] action which have been or could have been asserted
by the State of Minnesota.”1

Id. ¶ 17.

There is no indication in

the record, nor do the parties contend, that any portion of the
settlement proceeds has ever been distributed to individuals.
Rather, the settlement payments are deposited into the state’s
general fund, which is managed by Minnesota Management and Budget.
Id. ¶ 16.
In 2011, the National Cancer Institute announced that “light”
cigarettes are as unhealthy as regular cigarettes. Id. ¶ 19. Soon
thereafter,
Minnesota

Gregory

state

Curtis

court,

filed

alleging

a

putative

that

Philip

class
Morris

action

in

defrauded

consumers by falsely marketing “light” cigarettes as a safer
alternative to regular cigarettes.

Id. ¶¶ 20-22.

The district

court certified the class, but later granted summary judgment to
Philip

Morris,

concluding

that

1

the

1998

Settlement

Agreement

The court will refer to the settlement as the “1998
Settlement Agreement.”
2

released and barred the class claims.
813 N.W.2d 891, 897 (Minn. 2012).

Curtis v. Atria Grp., Inc.,

The Minnesota Court of Appeals

affirmed the class certification, but reversed the grant of summary
judgment.

Id.

The Minnesota Supreme Court then reversed the

latter determination, agreeing with the district court that the
1998 Settlement Agreement released and barred the claims.
904.

Id. at

The court dismissed the complaint in its entirety and held

that the issue of whether the district court properly certified the
class was moot.

Id.

In February 2014, Sheila Foster - named plaintiff in this case
- and Kristen Harne filed a class action complaint in Ramsey County
against

the

State,

the

Minnesota

Attorney

General,

and

the

Commissioner of Minnesota Management and Budget. Compl. Ex. B. In
that case, which the court will refer to as Harne to avoid
confusion, the plaintiffs alleged that because their claims were
released

by

the

State

in

the

1998

Settlement

Agreement,

as

determined in Curtis, the defendants owe them a portion of the
settlement proceeds.
asserted

that

the

Id. ¶¶ 27-29, 32.
defendants’

failure

The Harne plaintiffs
to

compensate

them

constituted a taking of private property without just compensation
under the Minnesota Constitution and the Fifth Amendment of the
United States Constitution.

Id. ¶¶ 44-61.

The district court

dismissed the case, concluding that the claims were time barred and
that, in any event, no taking had occurred.

3

Compl. Ex. C.

The

Minnesota Court of Appeals affirmed on the basis of the statute of
limitations and the Minnesota Supreme Court denied review.

Id.

Exs. D, E.
On July 28, 2016, Foster filed the instant case on behalf of
herself and other similarly situated against the same defendants
named in Harne.2

Foster’s allegations are nearly identical to

those she raised in Harne, but here she only brings a claim under
the Fifth Amendment.

Defendants now move to dismiss.

DISCUSSION
I.

Standard of Review
To survive a motion to dismiss for failure to state a claim,

“‘a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

“A claim

has facial plausibility when the plaintiff [has pleaded] factual
content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”

Iqbal, 556

U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
(2007)).

Although a complaint need not contain detailed factual

2

Only the name of the Commissioner of Minnesota Management
and Budget has changed. During Harne, James Schowalter was the
Commissioner, but he has since been replaced by Myron Frans. This
change has no substantive effect on the matter before the court.
4

allegations, it must raise a right to relief above the speculative
level.

Twombly, 550 U.S. at 555.

“[L]abels and conclusions or a

formulaic recitation of the elements of a cause of action” are not
sufficient to state a claim.

Iqbal, 556 U.S. at 678 (citation and

internal quotation marks omitted).
The court does not consider matters outside the pleadings
under Rule 12(b)(6).

Fed. R. Civ. P. 12(d).

The court may,

however, consider matters of public record and materials that are
“necessarily embraced by the pleadings.”

Porous Media Corp. v.

Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citation and
internal quotation marks omitted).
II.

Res Judicata
Defendants argue that Foster’s previous state court lawsuit

bars her from pursuing her claim in federal court.

The court

agrees. Res judicata “precludes the relitigation of a claim on any
grounds raised before or on any grounds which could have been
raised in the prior action.”

Poe v. John Deere Co., 695 F.2d 1103,

1105 (8th Cir. 1982). The preclusive effect of a prior state court
judgment is determined by state law.

Egge v. Healthspan Servs.

Co., 115 F. Supp. 2d 1126, 1129 (D. Minn. 2000).

“Under Minnesota

law, the disposition of an earlier claim constitutes a res judicata
bar against the litigation of a subsequent claim where (1) the
earlier claim involved the same set of factual circumstances; (2)
the earlier claim involved the same parties or their privies; (3)

5

there was a final judgment on the merits; and (4) the estopped
party had a full and fair opportunity to litigate the matter.”
Laase v. Cty. of Isanti, 638 F.3d 853, 856 (8th Cir. 2011)
(internal quotation and citation omitted).
All of the elements of res judicata are present here.
involved identical issues and parties.

Harne

Foster also acknowledges

that the state court’s determination that her claim was time barred
constitutes a final judgment on the merits.

Nor is there any

credible

a

argument

that

Foster

did

not

opportunity to litigate the state case.

have

full

and

fair

She now contends that

Harne only involved her state-law inverse condemnation claim and
that her present claim under the Fifth Amendment did not become
ripe until Harne concluded. But she raised a Fifth Amendment claim
in Harne, and the state court dismissed that claim as untimely
along with her other claims.
C; id. Ex. D.

See Compl. Ex. B ¶¶ 6, 53-61; id. Ex.

As a result, res judicata bars Foster’s claim.

III. Statute of Limitations
Even
untimely.
§ 1983.

if

not

barred

by

res

judicata,

Foster’s

claim

is

Foster brings her Fifth Amendment claim under 28 U.S.C.

Because § 1983 does not include a limitations period, the

court must apply “the most appropriate or analogous state statute
of limitations.” Egerdahl v. Hibbing Cmty. Coll., 72 F.3d 615, 617
(8th Cir. 1995) (quoting Goodman v. Lukens Steel Co., 482 U.S. 656,
660 (1987)).

There appears to be no dispute that Minnesota’s six-

6

year general statute of limitations, which applies to state takings
claims, is the most analogous limitations period.

See Minn. Stat.

§ 541.05, subdiv. 1(4) (“[T]he following actions shall be commenced
within six years ... [actions] for taking, detaining, or injuring
personal property, including actions for the specific recovery
thereof....”); see also Beer v. Minn. Power & Light Co., 400 N.W.2d
732, 736 (Minn. 1987) (applying § 541.05 to takings claim). Foster
urges the court to hold that the limitations period did not
commence until the Minnesota Supreme Court denied review in Harne.
Foster argues that her federal takings claim was not ripe, and
therefore did not begin to run, until she was denied relief by the
state courts. The court disagrees. Even assuming Foster could not
have brought her Fifth Amendment claim in federal court until her
state court case concluded unsuccessfully, the limitations period
still expired in 2004, six years after the settlement and twelve
years before she brought this suit.
In Harne, the Minnesota Court of Appeals held that the sixyear limitations period began to run in 1998, when the state
settled with the tobacco companies and “extinguished [Foster’s]
right

to

bring

a

private

cause

consumer-protection statutes.”

of

action

under

Compl. Ex. D at 4.

Minnesota’s
The court

rejected the argument that the claimants were unaware - and could
not have been aware - of their takings claim until the Minnesota
Supreme Court’s 2012 decision in Curtis.

7

The court will not

revisit that determination and is, in fact, collaterally estopped
from doing so.
Under the doctrine of collateral estoppel, “[w]hen an issue of
fact or law is actually litigated and determined by a valid and
final judgment, and the determination is essential to the judgment,
the determination is conclusive in a subsequent action between the
parties, whether on the same or a different claim.”

Twin City Pipe

Trades Serv. Ass’n, Inc. v. Wenner Quality Servs., Inc., No. 14292, 2015 WL 5165350, at *3 (D. Minn. Sept. 3, 2015).
of collateral estoppel are satisfied here.

The elements

This case involves the

same parties and issues as Harne, which proceeded to final judgment
on the very issue before the court.

Although the Harne court did

not undertake a separate analysis with respect to the timeliness of
the state and federal claims, its failure to do so does not
undermine the preclusive effect of its determination because, as
noted, the limitations period is the same for the state and federal
claims.
stale

As defendants aptly state, Foster “cannot resurrect a

federal-law

claim

by

filing

a

stale

state-law

claim.”3

Defs.’ Reply Mem. at 5; see also Saathoff v. Whelan, 81 F.3d 169,
1996 WL 131710, at *2 (9th Cir. Mar. 21, 1996) (refusing to create

3

It may well be that if Foster had brought a timely statelaw claim, her federal takings claim would have been tolled pending
the outcome of the state case. Here, however, Foster’s state-law
claim was untimely.
She cites to no authority to support her
theory that her federal claim can be resurrected under these
circumstances.
8

a rule that would allow a plaintiff to wait to bring an inverse
condemnation

proceeding

in

state

court,

lose

on

statute

of

limitations grounds, and restart the limitations period for federal
constitutional claims).
Foster also argues that the limitations period has not yet
expired because there are future payments due under the 1998
Settlement
nature.

Agreement,

which

renders

her

injury

continuing

in

This argument was also rejected in Harne by the Minnesota

Court of Appeals, which concluded that “the particular method of
payment

of

the

settlement

is

not

the

purported

taking;

the

purported taking is the settlement itself, which extinguished
appellants’ claims.”

Id. at 5.

revisiting the issue.

Again, the court is estopped from

As a result, dismissal of Foster’s claim is

warranted as untimely.4

CONCLUSION
Accordingly, based on above, IT IS HEREBY ORDERED that:
1.

The motion to dismiss [ECF No. 8] is granted; and

2.

The case is dismissed with prejudice.

LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: December 21, 2016

s/David S. Doty
David S. Doty, Judge
United States District Court

4

The court declines to consider the remaining issues raised
by defendants given the disposition of the case.
9