Group Health Plan, Inc. v. Philip Morris, Inc., No. Civ. 98-1036 (PAM/JGL).
| Citation | 86 F.Supp.2d 912 |
| Decision Date | 25 January 2000 |
| Docket Number | No. 99-1739 (PAM/JGL).,No. Civ. 98-1036 (PAM/JGL). |
| 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 | Supreme Court of Minnesota (US) |
Lawrence Zelle, Lawrence T. Hofmann, Richard Michael Hagstrom, Zelle Hofmann Voelbel & Gette, Minneapolis, MN, 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, Michael P. Carlton, VonBriesen & Purtell, Milwaukee, WI, Jack L. Lipson, David Eggert, Arnold and Porter, Washington, DC, Eric L. Dobberteen, Maurice A. Leiter, James L. Layden, Arnold & Porter, Los Angeles, CA, James Scarboro, Thomas Stoever, Alfred T. McDonnell, Arnold & Porter, Denver, CO, William Maledon, Osborn Maledon, Phoenix, AZ, for Philip 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, Jones Day Reavis & Pogue, Washington, DC, for R. J. Reynolds Tobacco Co.
Jack Michael Fribley, Lori Ann Wagner, Faegre & Benson, Minneapolis, MN, Kenneth Bass, Karen DeSantis, Richard A. Rice, Kirkland & Ellis, Brown & Williamson Tobacco Corp., Washington, DC, for Brown & Williamson Tobacco Co.
Kyle E. Hart, Richard G. Jensen, Fabyanske Westra & Hart, 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, P.L.C.
John Walter Getsinger, Leonard Street and Deinard, Minneapolis, MN, Amy Hendricks, Greenville, SC, Steven Vollins, New York, NY, 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, Stillwater, MN, for Lorillard Tobacco Co. Robert V. Atmore, Steven D. Kelley, Reuben A. Mjaanes, Lindquist & Vennum, Minneapolis, MN, 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, 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, Parker Chapin Flattau & Klimpl, New York, NY, for Smokeless Tobacco Council, Inc.
Clifford M. Greene, Greene Espel, Minneapolis, MN, for Clifford Greene.
This matter is before the Court upon Defendants' Motion to Dismiss. For the following reasons, the Court grants Defendants' Motion in part and partially reserves Defendants' Motion for later determination.
Plaintiffs are health maintenance organizations ("HMO's") attempting to recoup health care costs they have incurred as a result of their members' tobacco-related illnesses. Plaintiffs allege that Defendants conspired to mislead the public and the health care industry regarding the deleterious and addictive effects of tobacco use. Plaintiffs contend that they were directly and indirectly injured by this allegedly fraudulent course of conduct. In particular, Plaintiffs allege that they were directly injured by Defendants' fraudulent statements urging them not to engage in tobacco education programs. Plaintiffs argue that such programs could have prevented or decreased the occurrence of tobacco-related illnesses among their members. Plaintiffs allege that they were indirectly injured because they have been required to assume the medical costs sustained by their members as a result of tobacco use.
In their First Amended Complaint, Plaintiffs asserted nine counts including: violations of Minnesota's antitrust statutes, violations of Minnesota's consumer protection statutes, conspiracy, breach of a special duty, and the equitable theory of unjust enrichment. On April 29, 1999, this Court dismissed certain portions of Plaintiffs' First Amended Complaint. The Court dismissed without prejudice Plaintiffs' Minnesota consumer protection counts for failure to plead the necessary elements of the claim and dismissed with prejudice Plaintiffs' special duty count. Plaintiffs thereafter filed separate Second Amended Complaints in which they re-alleged violations of Minnesota's antitrust statutes, violations of Minnesota's consumer protection statutes, conspiracy, and unjust enrichment. Plaintiffs also added two Racketeer Influenced and Corrupt Organizations Act ("RICO") counts to the Complaints. Defendants now move to dismiss Plaintiffs' consumer protection, unjust enrichment, and RICO counts, arguing that Plaintiffs fail to state a claim upon which relief can be granted and that Plaintiffs have failed to join indispensable parties. See Fed.R.Civ.P. 12(b)(6) and 12(b)(7).
For the purposes of Defendants' Motion to Dismiss, the Court takes all facts alleged in Plaintiffs' Complaints as true. See Westcott v. Omaha, 901 F.2d 1486, 1488 (8th Cir.1990). Further, the Court must construe the allegations in the Complaints and reasonable inferences arising from the Complaints 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).
Plaintiffs re-allege their claim under the Minnesota consumer protection statutes in Counts III-VI of their Second Amended Complaints. Defendants argue that Plaintiffs' consumer protection allegations contain new and residual defects that require dismissal as a matter of law. In particular, Defendants argue that Plaintiffs cannot properly plead a claim under Minnesota's consumer protection statutes because they are not "purchasers" of Defendants' products. (See Defs.' Mem. at 24-28.) Plaintiffs have moved to certify this question to the Minnesota Supreme Court. In a separate Order, the Court will grant Plaintiffs' certification motion. Therefore, Defendants' Motion to Dismiss Plaintiffs' consumer protection counts cannot be decided at this time. Accordingly, the Court reserves Defendants' Motion to Dismiss Counts III-VI of Plaintiffs' Second Amended Complaints pending the conclusion of the certification process.
In their Second Amended Complaints, Plaintiffs re-allege unjust enrichment as a basis of liability. Unjust enrichment claims are based upon the theory that "a person receiving a benefit, which it is unjust for him to retain, ought to make restitution or pay the value of the benefit to the party entitled thereto." Mehl v. Norton, 201 Minn. 203, 275 N.W. 843, 844 (1937). A party may only seek such equitable relief, however, when there is no adequate remedy at law. See Michael-Curry Cos. v. Knutson Shareholders Liquidating Trust, 423 N.W.2d 407, 410 (Minn. Ct.App.1988). Here, Plaintiffs allege that Defendants were unjustly enriched in two distinct ways. First, Plaintiffs maintain that Defendants were unjustly enriched by Plaintiffs' assumption of medical costs that should have been borne by Defendants. Second, Plaintiffs allege that Defendants were unjustly enriched by Plaintiffs' members, who purchased Defendants' cigarettes under a blanket of fraud.
Plaintiffs' original unjust enrichment claim was dismissed because this Court found that they had an adequate remedy at law: a claim for subrogation. See Group Health Plan, Inc. v. Philip Morris, Inc., 68 F.Supp.2d 1064, 1070-71 (D.Minn. 1999). Because Plaintiffs may still may sue in subrogation, they may not assert an unjust enrichment claim on their own behalf. See Michael-Curry, 423 N.W.2d at 410. Plaintiffs alternatively argue, however, that they may sue on behalf of their members under the doctrine of associational standing, which permits an organization to sue to redress the injuries of its members.1 See Warth v. Seldin, 422 U.S. 490, 511, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).
In order to properly plead associational standing, an organization must,
allege that its members, or any one of them, are suffering immediate or threatened injury as a result of the challenged action of the sort that...
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