Curtis v. Altria Grp., Inc., No. A10–0215.

• Decision Date: 30 May 2012
• Docket Number: No. A10–0215.
• Citation: 813 N.W.2d 891
• Parties: Gregory CURTIS, et al., individually and on behalf of all others similarly situated, Respondents, v. ALTRIA GROUP, INC., Respondent, Philip Morris, Inc., Appellant.
• Court: Minnesota Supreme Court

813 N.W.2d 891

Gregory CURTIS, et al., individually and on behalf of all others similarly situated, Respondents,

v. ALTRIA GROUP, INC., Respondent,Philip Morris, Inc., Appellant.

No. A10–0215.

Supreme Court of Minnesota.

May 30, 2012.

Syllabus by the Court

1. Under Minn.Stat. § 8.31 (2010), the Minnesota Attorney General (State AG) has the authority to bring a lawsuit under subdivision 3 on behalf of the State, and to seek not only the relief available to the State AG under subdivision 3, but also the relief available to a private litigant under subdivision 3a. It logically follows that the State AG has the authority to settle and release a private litigant's claims brought under section 8.31, subdivision 3a.

2. A private litigant pursuing a subdivision 3a claim does not have the authority to settle or release the section 8.31 claims of the State without the express consent of the State. A private litigant does have the authority to settle its own subdivision 3a claim with a responsible party, and a district court may approve a settlement of a subdivision 3a class action of all similarly situated private litigants who could bring a subdivision 3a lawsuit. But that settlement agreement and release are not binding on the State without express written consent of the State AG, approved by the court.

3. The 1998 Settlement Agreement entered into by the State AG and Philip Morris expressly released and barred respondents' consumer protection claims asserted under section 8.31, subdivision 3a, and is binding on respondents.

Kay Nord Hunt, Margie R. Bodas, Diane M. Odeen, Lommen, Abdo, Cole, King & Stageberg, P.A., Minneapolis, MN; Martha K. Wivell, Sheller, P.C., Cook, MN; Stephen A. Sheller, Sheller, P.C., Philadelphia, PA, for respondents Gregory Curtis, et al.

George W. Soule, Nathan J. Marcusen, Bowman and Brooke LLP, Minneapolis, MN; Gregory P. Stone, Randall G. Sommer, Munger, Tolles & Olson LLP, Los Angeles, CA; David F. Herr, Maslon Edelman Borman & Brand, LLP, Minneapolis, MN, for appellant Philip Morris, Inc.

Lori Swanson, Attorney General, Alan I. Gilbert, Solicitor General, Benjamin Velzen, Assistant Attorney General, St. Paul, MN, for amicus curiae State of Minnesota.

Scott A. Smith, Nilan Johnson Lewis PA, Minneapolis, MN; John H. Beisner, Jessica Davidson Miller, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, D.C.; Robin S. Conrad, National Chamber Litigation Center, Inc., Washington, D.C., for amicus curiae Chamber of Commerce of the United States of America.

Bruce Jones, Faegre & Benson LLP, Minneapolis, MN; Hugh F. Young, Jr., Product Liability Advisory Council, Inc., Reston, VA, for amicus curiae Product Liability Advisory Council, Inc.

Charles A. Bird, Bird, Jacobsen & Stevens, P.C., Rochester, MN; Gary L. Wilson, Robins, Kaplan, Miller & Ciresi L.L.P., Minneapolis, MN, for amicus curiae Minnesota Association for Justice.

Thomas H. Boyd, Kristopher D. Lee, Winthrop & Weinstine, P.A., Minneapolis, MN, for amicus curiae Minnesota Defense Lawyers Association.

Prentiss E. Cox, Minneapolis, MN; William H. Crowder, Vildan A. Teske, Marisa C. Katz, Crowder Teske, PLLP, Minneapolis, MN, for amicus curiae National Association of Consumer Advocates.

OPINION

DIETZEN, Justice.

Respondents Gregory Curtis, et al., bring this action on behalf of themselves and others similarly situated against appellant Philip Morris, Inc., ¹ and its parent company, Altria Group, Inc.,² alleging that Philip Morris's use of the words “light” and “lowered tar and nicotine” to market and sell cigarettes was false and deceptive, and violated Minnesota's consumer protection statutes. Respondents asserted claims under Minn.Stat. § 8.31, subd. 3a (2010), and for common law fraud and unjust enrichment. The district court granted, among other things, respondents' motion to certify the class. Subsequently, Philip Morris moved for partial summary judgment on the grounds that respondents' consumer protection claims asserted under section 8.31, subdivision 3a, are barred by a previous release and that respondents failed to satisfy the public benefit requirement of section 8.31. The court granted summary judgment on the consumer protection claims asserted under section 8.31, subdivision 3a, and then granted Philip Morris's motion for judgment on the pleadings on the remaining claim and dismissed the case. The court of appeals affirmed the district court's certification of the class, but reversed the grant of summary judgment and reinstated respondents' subdivision 3a consumer protection claims. We granted review. Because we conclude that respondents' consumer protectionclaims asserted under section 8.31, subdivision 3a, were previously released, we reverse.

The relevant material facts are undisputed. During the relevant time period between 1971 and the filing of the Curtis lawsuit, Philip Morris manufactured, marketed, and sold Marlboro Lights cigarettes in Minnesota. The word “lights” appeared on every package of Marlboro Lights sold during this period, as did the words “lowered tar and nicotine.”

In 1994, the Minnesota Attorney General (State AG) brought an action (State lawsuit) against Philip Morris and other tobacco companies. The purpose of the suit, as described in the second amended complaint, was “to protect the citizens and the public health” pursuant to the authority of the State AG under the common law, Minn.Stat. §§ 8.01 (2010) and 8.31 (2010), and substantive consumer protection statutes.³ The second amended complaint alleged, in relevant part, a cause of action for unjust enrichment and violations of several Minnesota consumer protection statutes, namely (1) the Minnesota Prevention of Consumer Fraud Act, Minn.Stat. § 325F.69, subd. 1 (2002); (2) the Minnesota Unlawful Trade Practices Act, Minn.Stat. § 325D.13 (2010); (3) the Minnesota Deceptive Trade Practices Act, Minn.Stat. § 325D.44, subd. 1 (2010); and (4) the Minnesota False Statement in Advertisement Act, Minn.Stat. § 325F.67 (2010). The prayer for relief included requests that the court enter judgment: declaring that Philip Morris and the other defendants engaged in consumer fraud, unlawful and deceptive trade practices, and false advertising in violation of the laws of the State of Minnesota; enjoining defendants from continuing or repeating such conduct; ordering defendants to disgorge all profits from the sale of cigarettes in Minnesota, and to pay restitution; and awarding damages for past and future harm caused by the defendants' violations of Minnesota law, as well as civil penalties for each separate violation of the substantive consumer protection statutes, pursuant to Minn.Stat. §§ 8.31, subd. 3, and 645.24 (2010).

At the trial of the State lawsuit, the State AG told jurors during the opening statement that they would see and hear evidence that Philip Morris and the other defendants

intentionally cheated smokers ... by lowering tar and nicotine in cigarettes and implying ... that those cigarettes were safer. The fact is these companies knew that smokers who were moving in droves to lower tar and nicotine cigarettes, thinking they were safer, were obtaining the same tar and subject to virtually the same risks as the higher tar cigarettes

because smokers compensate—i.e., take heavier, deeper draws—on lower tar cigarettes. The State AG also introduced expert opinion testimony at trial that defendants deceived consumers by marketing lowered tar and nicotine cigarettes as healthier even though the tobacco companies knew that, due to compensation, smokers of light cigarettes did not in fact receive lowered tar and nicotine.

Before the case was submitted to the jury, the parties settled the case and executed a settlement agreement and stipulation for entry of consent judgment (Settlement Agreement) to “settle and resolve with finality all claims of the State of Minnesota relating to the subject matter of this action which have been or could have been asserted by the State of Minnesota.” The Settlement Agreement requires the defendants to pay over $100 million to the State annually in perpetuity and imposes a number of restrictions on the defendants' conduct, including their marketing of tobacco products. Additionally, the consent judgment permanently enjoins Philip Morris from “[m]aking any material misrepresentation of fact regarding the health consequence of using any tobacco product, including any tobacco additives, filters, paper or other ingredients.” The State AG retains the authority to enforce these restrictions in court. In exchange, the State “release[d] and forever discharge[d]” Philip Morris from any and all claims asserted in the State lawsuit, or that could have been asserted therein.

In 2001, respondents Gregory Curtis, et al., brought this action (Curtis lawsuit) against Philip Morris and Altria on behalf of themselves and all persons who purchased Philip Morris's Marlboro Lights cigarettes in Minnesota for personal consumption between their date of first sale in Minnesota and the date of class certification. The crux of the Curtis lawsuit is that Philip Morris's representations regarding its “light” cigarettes' tar and nicotine content were false and misleading, and constituted unfair and deceptive practices in violation of several Minnesota consumer protection statutes. ⁴ Specifically, respondents brought claims under Minn.Stat. § 8.31, subd. 3a, for alleged violations of (1) the Minnesota Prevention of Consumer Fraud Act, Minn.Stat. §§ 325F.68–.70 (2002); (2) the Minnesota Unlawful Trade Practices Act, Minn.Stat. §§ 325D.09–.16 (2010); (3) the Minnesota Deceptive Trade Practices Act, Minn.Stat. §§ 325D.43–.48 (2010); and (4) the Minnesota False Statement in Advertisement Act, Minn.Stat. § 325F.67 (2010). The complaint sought compensatory damages, restitution, and injunctive relief. Philip Morris denied all allegations of wrongdoing and asserted various affirmative defenses, including those at issue in this appeal.

The pretrial...