Group Health Plan, Inc. v. Philip Morris, Inc.
Decision Date | 29 April 1999 |
Docket Number | No. CIV.98-1036(PAM/JGL).,CIV.98-1036(PAM/JGL). |
Citation | 68 F.Supp.2d 1064 |
Court | Minnesota Supreme Court |
Parties | GROUP HEALTH PLAN, INC., a nonprofit Minnesota health maintenance organization; HealthPartners, Inc., a nonprofit Minnesota health maintenance organization; and Medica, a nonprofit Minnesota health maintenance organization and subsidiary of Allina Health System, Plaintiffs, v. PHILIP MORRIS INCORPORATED; R.J. Reynolds Tobacco Company; Brown & Williamson Tobacco Corporation; B.A.T. Industries P.L.C.; British-American Tobacco Company Limited; BAT (U.K. & Export) Limited; Lorillard Tobacco Company; Liggett Group Inc.; United States Tobacco Company; Hill & Knowlton, Inc.; The Council for Tobacco Research-U.S.A., Inc.; The Tobacco Institute, Inc.; and the Smokeless Tobacco Council, Inc., Defendants. |
Lawrence Zelle, Lawrence T. Hofmann, Richard Michael Hagstrom, Zelle Hofmann Voelbel & Gette, Lewis A. Remele, Jr., Gregory Paul Bulinski, Bassford Lockhart Truesdell & Briggs, Minneapolis, MN, for Group Health Plan, Inc., HealthPartners, Inc.
Lewis A. Remele, Jr., Gregory Paul Bulinski, Bassford Lockhart Truesdell & Briggs, Minneapolis, MN, for Medica.
Peter W. Sipkins, Robert A. Schwartzbauer, Mark John Ginder, Dorsey & Whitney, Minneapolis, MN, Michael R. Geske, Arnold & Porter, Washington, DC, Jack L. Lipson, David Eggert, Charles Spicknall, James Scarboro, Thomas Stoever, Alfred T. McDonnell, Arnold & Porter, Denver, CO, William Maledon, Osborn Maledon, Phoenix, AZ, for Phillip Morris Inc.
James Stuart Simonson, Jonathan M. Redgrave, Gray Plant Mooty Mooty & Bennett, Minneapolis, MN, Jeffrey J. Jones, Jones Day Reavis & Pogue, Columbus, OH, Robert Klonoff, for R.J. Reynolds Tobacco Co.
Jack Michael Fribley, Lori Ann Wagner, Faegre & Benson, Kenneth Bass, Karen DeSantis, Richard A. Rice, for Brown & Williamson Tobacco, Co.
Kyle E. Hart, Richard G. Jensen, Fabyanske Westra & Hart, Kathy McFarland, Mary Elizabeth McGarry, Brian Lake, Ronald M. Neumann, Joseph McLaughlin, Minneapolis, MN, Kathy McFarland, Mary Elizabeth McGarry, Brian Lake, Ronald M. Neumann, Joseph McLaughlin, Jill C. Owens, Simpson Thacher & Bartlett, New York, NY, for B.A.T. Industries.
John Walter Getsinger, Leonard Street and Deinard, Minneapolis, MN, Amy Hendricks, Steven Vollins, for British American Tobacco Co. Ltd., BAT (U.K. & Export) Ltd.
David George Martin, Rider Bennett Egan & Arundel, Minneapolis, MN, Jeffrey S. Nelson, Susan D. Wolfe, J. Patrick Sullivan, Shook Hardy & Bacon, Kansas
City, MO, Elizabeth Hoene Martin, for Lorillard Tobacco Co.
Robert V. Atmore, Steven D. Kelley, Reuben A. Mjaanes, Lindquist & Vennum, Minneapolis, MN, James Stricker, Aaron H. Marks, Nancy E. Straub, for Liggett Group, Inc.
Richard Gary Mark, Diane M. Helland, Eric J. Rucker, Briggs & Morgan, Minneapolis, MN, for U.S. Tobacco Co.
Joseph T. Dixon, Jr, Neil M. Kliebenstein, Henson & Efron, Minneapolis, MN, Marc Rachman, Bruce M. Ginsburg, Bruce M. Ginsberg, Davis & Gilbert, New York, NY, for Hill & Knowlton Inc.
Robert Lawrence Purdy, Kirk O. Kolbo, Maslon Edelman Borman & Brand, Minneapolis, MN, Steven Klugman, Steve Michaels, Debevoise & Plimpton, New York, NY, for Council for Tobacco Research USA, Inc.
George W. Flynn, Flynn & Gaskins, Minneapolis, MN, for Tobacco Institute, Inc.
Geoffrey P. Jarpe, Maun & Simon, Minneapolis, MN, Barry Schaevitz, for Smokeless Tobacco Council, Inc.
Clifford M. Greene, Greene Espel, Minneapolis, MN, pro se.
This matter is before the Court upon Defendants' Motion to Dismiss. For the following reasons, Defendants' motion is granted in part and denied in part.
Plaintiffs consist of various health maintenance organizations attempting to recoup healthcare costs they incurred for their members' tobacco-related illnesses. Plaintiffs allege that Defendants conspired to mislead and confuse the public regarding the deleterious effects of tobacco use. Because of this conspiracy, Plaintiffs allege that their enrollees suffered from tobacco-related illnesses, and Plaintiffs were required to pay the accompanying medical costs of those illnesses.
Plaintiffs note that their Complaint is almost identical to the complaint filed in State of Minnesota v. Philip Morris Inc., 551 N.W.2d 490 (Minn.1996). Plaintiffs allege violations of Minnesota's antitrust statutes, violations of Minnesota's consumer protection statutes, conspiracy, a tort theory of special duty, and an equitable theory of unjust enrichment/restitution. Defendants now move to dismiss the First Amended Complaint. Plaintiffs assert that the motion should be denied based on the Minnesota Supreme Court's ruling regarding standing. The Court now turns to address the issues raised in this motion.
For the purposes of Defendants' Motion to Dismiss, the Court takes all facts alleged in Plaintiffs' Complaint as true. See Westcott v. Omaha, 901 F.2d 1486, 1488 (8th Cir.1990). Further, the Court must construe the allegations in the Complaint and reasonable inferences arising from the Complaint favorably to Plaintiffs. See Morton v. Becker, 793 F.2d 185, 187 (8th Cir.1986). A motion to dismiss will be granted only if "it appears beyond doubt that the Plaintiff can prove no set of facts which would entitle him to relief." Id.; see Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). The Court applies these standards in the following discussion.
Initially, Plaintiffs assert that Defendants are collaterally estopped from litigating the issues raised in their motion because all of the issues were fully decided by the Minnesota Supreme Court in State of Minnesota v. Philip Morris Inc., 551 N.W.2d 490 (Minn.1996) (hereinafter "State of Minn."). The Court disagrees. A court may not apply collateral estoppel unless there is a final judgment on the merits. See Bublitz v. Commissioner of Revenue, 545 N.W.2d 382, 385 (Minn.1996); John Morrell & Co. v. Local Union 304A, 913 F.2d 544, 562 n. 16 (8th Cir.1990). Here, no final judgment exists. The Minnesota case to which Plaintiffs refer was an interlocutory appeal for a motion to dismiss. An interlocutory appeal is not a final judgment on the merits. See Carlson v. County of Hennepin, 428 N.W.2d 453, 457 (Minn.Ct.App.1988). Additionally, in State of Minn., judgment was entered upon settlement and before a verdict was rendered. Accordingly, this Court finds that collateral estoppel does not apply to the motion now before it.
Defendants assert that Plaintiffs cannot bring a claim for common law breach of special duty. In State of Minn., the Minnesota Supreme Court held that any injury experienced by Blue Cross & Blue Shield ("BCBS") was too remote from any alleged breach of duty by tobacco companies. See id. at 495; see also Northern States Contracting Co. v. Oakes, 191 Minn. 88, 253 N.W. 371, 371-72 (1934). Because the injury to BCBS derived from injuries to its members who smoked, these smokers were deemed to have a more direct interest in the matter. See id. Plaintiffs now concede that this claim should be dismissed. Thus, the Court dismisses Count VIII from the First Amended Complaint.
Despite finding that BCBS's tort injuries were too remote to allow standing, the State of Minn. court found adequate standing on the antitrust claims. See 551 N.W.2d at 497. A central issue in the present motion is whether the State of Minn. decision requires this Court to allow Plaintiffs to proceed with their state statutory claims. Because the jurisdictional basis for the present suit is diversity, see 28 U.S.C. § 1332, Erie Railroad Co. v. Tompkins dictates that this Court apply federal procedural law and state substantive law. See 304 U.S. 64, 78-79, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Defendants argue that, regardless of the Erie doctrine, State of Minn. is inapplicable because it only addressed the limited issue of standing, and not the issues of antitrust injury and proximate cause presently raised by Defendants.
Plaintiffs assert that because injury is a basic element of standing, State of Minn. already addressed Defendants' present arguments of remoteness and lack of antitrust injury. In State of Minn., the Minnesota Supreme Court noted that the "only issue before [it was] the question of whether Blue Cross [had] standing to bring a cause of action under any of the four theories upon which it relie[d]." State of Minn., 551 N.W.2d at 493. The court noted that the test for standing in Minnesota is whether the plaintiff has suffered an "injury in fact." See id. (citing Snyder's Drug Stores, Inc. v. Minnesota State Bd. of Pharmacy, 301 Minn. 28, 221 N.W.2d 162, 165 (1974)). According to the court, the state legislature intended to broadly confer standing when it enacted the antitrust statute. See id. The state antitrust statute states that "Any person ... injured directly or indirectly ... may file suit." Minn.Stat. § 325D.57. Rather than analyze this wording in the statute, the court merely concluded: "It is clear that this expansive grant of standing reaches the injuries suffered by Blue Cross." State of Minn., 551 N.W.2d at 496.
The court rejected BCBS's "pass through" defense, which asserted that any increased costs suffered by BCBS were passed through to customers and consumers. Additionally, the court opined that the broad statutory grant of standing was a direct response by the Minnesota legislature to the United States Supreme Court's ruling in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). There, the Court held that indirect purchaser plaintiffs could not use the pass-through theory to establish injury. See id. at 745-46, 97 S.Ct. 2061. According to the Minnesota Supreme Court, the legislature's intent to allow standing for indirect purchasers necessarily meant that BCBS had...
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