Group Health Plan, Inc. v. Philip Morris, Inc.

• Decision Date: 31 January 2002
• Docket Number: Nos. CIV 98-1036(PAM/JGL), CIV 99-1739(PAM/JGL).,s. CIV 98-1036(PAM/JGL), CIV 99-1739(PAM/JGL).
• Citation: 188 F.Supp.2d 1122
• Parties: GROUP HEALTH PLAN, INC., a nonprofit Minnesota health maintenance organization; HealthPartners, Inc., a nonprofit Minnesota health maintenance organization; Plaintiffs, v. PHILIP MORRIS INCORPORATED; R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation; British-American Tobacco Company Limited; Lorillard Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; Hill & Knowlton, Inc.; The Tobacco Institute, Inc.; and the Smokeless Tobacco Council, Inc.; Defendants. Medica, a nonprofit Minnesota health maintenance organization and subsidiary of Allina Health System, Plaintiff, v. Philip Morris Incorporated; R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation; British-American Tobacco Company Limited; Lorillard Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; Hill & Knowlton, Inc.; The Tobacco Institute, Inc.; and the Smokeless Tobacco Council, Inc.; Defendants.
• Court: U.S. District Court — District of Minnesota

188 F.Supp.2d 1122

GROUP HEALTH PLAN, INC., a nonprofit Minnesota health maintenance organization; HealthPartners, Inc., a nonprofit Minnesota health maintenance organization; Plaintiffs, v.PHILIP MORRIS INCORPORATED; R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation; British-American Tobacco Company Limited; Lorillard Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; Hill & Knowlton, Inc.; The Tobacco Institute, Inc.; and the Smokeless Tobacco Council, Inc.; Defendants.

Medica, a nonprofit Minnesota health maintenance organization and subsidiary of Allina Health System, Plaintiff, v.Philip Morris Incorporated; R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation; British-American Tobacco Company Limited; Lorillard Tobacco Company; Liggett Group, Inc.; United States Tobacco Company; Hill & Knowlton, Inc.; The Tobacco Institute, Inc.; and the Smokeless Tobacco Council, Inc.; Defendants.

Nos. CIV 98-1036(PAM/JGL), CIV 99-1739(PAM/JGL).

United States District Court, D. Minnesota.

January 31, 2002.

COPYRIGHT MATERIAL OMITTED

Lawrence Zelle, Lawrence T. Hofmann, Richard Michael Hagstrom, Eric E. Caugh, Zelle Hofmann Voelbel Mason & Gette, Minneapolis, MN, for Plaintiffs.

Peter W. Sipkins, Robert A. Schwartzbauer, Mark John Ginder, Randall R. Frykberg, Dorsey & White, Minneapolis, MN, Michael R. Geske, Murray R. Garnick, Arnold & Porter, Washington, DC, Jack L. Lipson, David Eggert, Unknown, Eric L. Dobberteen, Maurice A. Leiter, John L. Carlton, James L. Layden, Arnold & Porter, Los Angeles, CA, Charles Spicknall, Not Admitted, James Scarboro, Thomas Stoever, Alfred T. McDonnell, Arnold & Porter, Denver, CO, William Maledon, Osborn Maledon, Phoenix, AZ, James Stuart Simonson, Gray Plant Mooty Mooty & Bennett, Minneapolis, MN, Jeffrey J. Jones, Jones Day Reavis & Pogue, Columbus, OH, Jonathan M. Redgrave, Jones Day Reavis & Pogue, Washington, DC, Robert Klonoff, Unknown, Sydney B. McDole, Jill E. Tananbaum, Not Admitted, Jack Michael Fribley, Lori Ann Wagner, Faegre & Benson, Minneapolis, MN, Andrew R. McGaan, Kirkland & Ellis, Chicago, IL, Kenneth Bass, Karen DeSantis, Unknown, Richard A. Rice, Not Admitted, John Walter Getsinger, Minneapolis, MN, Amy Hendricks, Steven Vollins, Unknown, Michael Robert Docherty, Mark Allen Mitchell, Rider Bennett Egan & Arundel, Minneapolis, MN, Jeffrey S. Nelson, Susan D. Wolfe, J. Patrick Sullivan, Shook Hardy & Bacon, Kansas City, MO, Elizabeth Hoene Martin, Law Firm Unknown, Robert V. Atmore, Steven D. Kelley, Reuben A. Mjaanes, Lindquist & Vennum, Minneapolis, MN, James Stricker, Aaron H. Marks, Nancy E. Straub, Not Admitted, Joseph T. Dixon, Jr., Neil M. Kliebenstein, Henson & Efron, Minneapolis, MN, Marc Rachman, Unknown, Bruce M. Ginberg, Davis & Gilbert, New York City, Andrew D. Herz, Not Admitted, Robert Lawrence Purdy, Kirk O. Kolbo, Maslon Edelman Borman & Brand, Minneapolis, MN, Steven Klugman, Steve Michaels, Debevoise & Plimpton, New York City, Antoine Tinnion, Not Admitted, George W. Flynn, Hal A. Shillingstad, Flynn Gaskins & Bennett, Minneapolis, MN, Clifford M. Greene, Greene Espel, Minneapolis, MN, for Defendants.

MEMORANDUM AND ORDER

MAGNUSON, District Judge.

This matter is before the Court on Defendants' Motion for Summary Judgment on Causation, Injury, and Damages and cross-Motions for Summary Judgment on the statute of limitations.For the following reasons, the Court grants Defendants' Motion for Summary Judgment based on causation, injury, and damages.It is therefore unnecessary for the Court to reach the parties' cross-Motions for Summary Judgment on the statute of limitations.

BACKGROUND

For the purposes of these Motions, it is sufficient to note that Plaintiffs are health maintenance organizations ("HMOs") attempting to recoup increased health-care costs that they claim to have incurred as a result of their members' tobacco-related illnesses.Plaintiffs contend that they were directly and indirectly injured by Defendants' alleged conspiracy to mislead the public and the health-care industry regarding the deleterious and addictive effects of tobacco use.In short, Plaintiffs allege that they were injured because they have been required to assume the health-care costs sustained by their members as a result of tobacco use.

Following Motions to Dismiss and the Minnesota Supreme Court's opinion on two questions that this Court certified to it, seeGroup Health Plan, Inc. v. Philip Morris, Inc.,621 N.W.2d 2(Minn.2001), Plaintiffs have five remaining claims for which they seek damages: three under Minnesota consumer protection statutes¹ and two under Minnesota's antitrust statutes.²Defendants have filed Motions for Summary Judgment on causation, injury, and damages as well as the expiration of the statutes of limitation.Plaintiffs have filed a cross-Motion for Summary Judgment on the statutes of limitation.

DISCUSSION

A.Standard of Review

Summary judgment is only proper if there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law.Fed. R.Civ.P. 56(c);Celotex Corp. v. Catrett,477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986);Unigroup, Inc. v. O'Rourke Storage & Transfer Co.,980 F.2d 1217, 1219-20(8th Cir.1992).The Court must view the evidence and the inferences that may be reasonably drawn from the evidence in the light most favorable to the nonmoving party.Enter. Bank v. Magna Bank,92 F.3d 743, 747(8th Cir.1996).As the Supreme Court has stated, however, "summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action."Celotex,477 U.S. at 327, 106 S.Ct. 2548.

The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.Id.The nonmoving party must demonstrate the existence of specific facts in the record that create a genuine issue for trial.Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986);Krenik v. County of Le Sueur,47 F.3d 953, 957(8th Cir.1995).A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials and must do more than simply show that there is some metaphysical doubt as to the material facts.Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538(1986).

B.Defendants' Motion on Causation, Injury and Damages

Defendants contend that Plaintiffs' claims cannot survive summary judgment because they have failed to create a genuine issue of material fact regarding whether Defendants' alleged misconduct caused Plaintiffs' damages.Defendants essentially argue that (1)Plaintiffs bear the burden of proving causation and damages on both their consumer protection and antitrust claims; (2)Plaintiffs have failed to prove causation and damages on both sets of claims because they have not adduced sufficient evidence from their participant populations; and (3)Plaintiffs have only one expert witness, Dr. Jeffrey Harris, who purports to provide the necessary causal link or nexus between Defendants' alleged misconduct and Plaintiffs' alleged damages, but Dr. Harris' testimony is inadmissible under Daubert v. Merrell Dow Pharm. Inc.,509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469(1993).For the following reasons, the Court agrees and therefore grants Defendants' Motion for Summary Judgment.³

1.Burden of Proof

a. Consumer Protection

The Minnesota Supreme Court determined that Plaintiffs in this case"must demonstrate that [D]efendants' conduct had some impact on their members' use of tobacco products that caused their damages."Group Health,621 N.W.2d at 14.Although the court in Group Health ruled that "traditional common law reliance" was not a separate element of Plaintiffs' statutory consumer protection claims, Plaintiffs retain the burden of proving a causal link or nexus between the alleged misconduct and the claimed harm.Seeid. at 15("In order to prove their claims for damages ... the [Plaintiffs] must establish a causal nexus between their alleged damages and the conduct of the [D]efendants alleged to violate the statutes.").

Plaintiffs, nevertheless, contend that causation should be presumed in this case.Arguing for what would amount to a radical sea change in Minnesota consumer protection law, Plaintiffs claim that Defendants' expenditure of "substantial funds in an effort to deceive consumers and influence their purchasing decisions" entitles them to such a presumption.U-Haul Int'l, Inc. v. Jartran, Inc.,793 F.2d 1034, 1041(9th Cir.1986).Alternatively, Plaintiffs contend that because it is self-evident that advertising influences consumers' decisions, the Court may presume that Defendants' false advertising actually deceived the public.SeeF.T.C v. Brown & Williamson Tobacco Corp.,778 F.2d 35, 41(D.C.Cir.1985)(noting that a court may rely on its own experience and understanding of human nature to "find the deception `self-evident'")(citations omitted).

The Court finds Plaintiffs' arguments unpersuasive.Plaintiffs' first argument rests on the dubious proposition that footnote 11 in Group Health, merely listing examples of a "variety of approaches" which this Court might consider when assessing whether causation exists, somehow shifts the burden of proof on causation from Plaintiffs to Defendants.SeeGroup Health,621 N.W.2d at 15 n. 11.In light of the Minnesota Supreme Court's refusal to provide in any detail "what manner of proof will be necessary to establish the necessary connection between [Plaintiffs'] claimed damages and [D]efendants' conduct,"id. at 15, this Court declines to elevate the examples in footnote 11 to a burden-shifting rule in consumer fraud cases.⁴

Indeed, to...