State by Humphrey v. Philip Morris Inc.

• Citation: 551 N.W.2d 490
• Decision Date: 25 July 1996
• Docket Number: No. C1-95-1324,C1-95-1324
• Court: Minnesota Supreme Court
• Parties: 1996-2 Trade Cases P 71,506 STATE of Minnesota, by Hubert H. HUMPHREY, III, Its Attorney General, Plaintiff, and Blue Cross and Blue Shield of Minnesota, Respondent, v. PHILIP MORRIS INCORPORATED, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, Petitioners, B.A.T. Industries, P.L.C., Defendant, Lorillard Tobacco Company, The American Tobacco Company, Liggett Group, Inc., The Council for Tobacco Research-U.S.A., Inc., The Tobacco Institute, Inc., Petitioners.

Page 490

551 N.W.2d 490

1996-2 Trade Cases P 71,506

STATE of Minnesota, by Hubert H. HUMPHREY, III, Its Attorney General, Plaintiff, and Blue Cross and Blue Shield of Minnesota, Respondent, v. PHILIP MORRIS INCORPORATED, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, Petitioners, B.A.T. Industries, P.L.C., Defendant,

Lorillard Tobacco Company, The American Tobacco Company,

Liggett Group, Inc., The Council for Tobacco

Research-U.S.A., Inc., The Tobacco

Institute, Inc., Petitioners.

No. C1-95-1324.

Supreme Court of Minnesota.

July 25, 1996.

Syllabus by the Court

Injuries to Blue Cross and Blue Shield of Minnesota are too remote to provide standing for a tort action based upon a theory of "assumed special duty" against defendant tobacco companies. However, given the broad statutory grants of standing applicable to certain consumer protection statutes, it does have standing to pursue relief for violations of deceptive trade practices, false advertising, and unlawful trade practices statutes. Also, by virtue of "associational standing," Blue Cross and Blue Shield of Minnesota has standing to pursue equitable relief.

Michael V. Ciresi, Roberta B. Walburn, Tara D. Sutton, Robins, Kaplan, Miller & Ciresi, Minneapolis, for Respondent Blue Cross and Blue Shield of Minnesota and Special Attorneys for Plaintiff the State of Minnesota.

Michael A. Lindsay, Peter W. Sipkins, Robert A. Schwartzbauer, Dorsey & Whitney, Minneapolis, for Appellant Philip Morris Incorporated.

Byron E. Starns, John W. Getsinger, Leonard, Street and Deinard, Professional Association, Minneapolis, for Appellant The American Tobacco Company.

Jack M. Fribley, Faegre & Benson, Professional Limited Liability Partnership, Minneapolis, for Appellant Brown & Williamson Tobacco Corporation.

David G. Martin, Doherty, Rumble & Butler, St. Paul, for Appellant Lorillard Tobacco Company.

James S. Simonson, Gray, Plant, Mooty, Mooty & Bennett, Minneapolis, for Appellant R.J. Reynolds Tobacco Company.

Gary J. Haugen, Maslon, Edelman, Borman & Brand, Minneapolis, for Appellant The Council for Tobacco Research--U.S.A., Inc.

George W. Flynn, Cosgrove, Flynn & Gaskins, Minneapolis, for Appellant The Tobacco Institute, Inc.

Robert V. Atmore, Lindquist & Vennum, Minneapolis, for Appellant Liggett Group, Inc.

Gerald L. Svoboda, Richard G. Jensen, Fabyanske, Svoboda, Westra, Davis & Hart, P.A., Minneapolis, for Defendant B.A.T. Industries P.L.C.

Heard, considered and decided by the court en banc.

OPINION

GARDEBRING, Justice.

In this case we are asked to determine whether Blue Cross and Blue Shield of Minnesota (Blue Cross), a Minnesota health care organization, has standing to sue a number of tobacco companies on various theories, all relating to the health of Minnesotans who have smoked cigarettes over an extended period of time. The trial court denied the motion of the tobacco companies to dismiss Blue Cross for lack of standing and the court of appeals refused to hear the request by the tobacco companies for discretionary review of this determination. Believing this to be an important legal issue, we granted review. We hold that Blue Cross has the necessary interest in this matter to pursue its statutory and common law antitrust and consumer claims as well as its equitable claims, but lacks standing on its tort theory. Therefore, we affirm in part and reverse in part the decision of the trial court.

In 1994, Blue Cross and the State of Minnesota commenced this litigation, one of a series of similar lawsuits across the country, against five tobacco companies and two tobacco trade associations. The heart of the claims, which are expressed under several legal theories, is that the tobacco companies illegally conspired to suppress research on the deleterious effects of smoking and to manipulate nicotine levels in cigarettes in order to induce nicotine addiction in smokers. The plaintiffs also allege that the tobacco industry undertook a duty to protect the public health by its assertions that it would cooperate with public health authorities and that it accepted the preservation of public health as a basic industry responsibility.

Blue Cross is a non-profit Minnesota corporation, incorporated under the Minnesota Nonprofit Health Service Plan Corporations Act, Minn.Stat. ch. 62C. The Act provides that nonprofit health service corporations were created:

to promote a wider, more economical and timely availability of * * * health services for the people of Minnesota, through nonprofit, prepaid health service plans, and thereby advance public health * * *.

Minn.Stat. § 62C.01, subd. 2 (1994). It and its corporate affiliates comprise the only nonprofit health service plan incorporated pursuant to this Act. Blue Cross therefore sees itself as having a broader responsibility for the preservation of public health than an ordinary health insurance entity.

According to its complaint, Blue Cross contracts with numerous health care service providers in the State of Minnesota, including 12,000 doctors and clinics, 135 hospitals and 6000 allied health care providers. It also contracts with private employers and political subdivisions to provide prepaid health care services for employees and dependents, smokers and nonsmokers alike, and charges a fixed premium for this service. By virtue of these contractual relationships, Blue Cross is a direct purchaser of health care.

In their joint complaint, the State of Minnesota and Blue Cross pled nine causes of action: one count of breach of an assumed special duty to render services aimed towards the protection of health and the study of the deleterious effects of tobacco; two counts of violating Minnesota's antitrust statute; four counts of deceptive and unfair trade practices in violation of Minnesota statutory and common law; and two equitable claims, restitution and unjust enrichment. Blue Cross alleges damages resulting from the fact that it has paid and will pay substantially higher amounts to its contracted health care providers due to the increased cost of health care services for treatment of smoking-related illnesses in its nicotine-addicted consumer/patients.

The defendant tobacco companies moved the trial court to dismiss Blue Cross from the suit for lack of standing because Blue Cross had passed through its increased expenditures for health care to its subscriber groups as premium increases and therefore had suffered no compensable injury. Furthermore, as the tobacco companies alleged Blue Cross had suffered no injury, they also moved the trial court to dismiss counts 1, 2, and 3--the tort and two antitrust claims--for failure to state a claim. Blue Cross opposed the motion and moved for judgment on the pleadings.

The trial court denied both motions. With regard to Blue Cross's motion, the trial court held it to be premature. It advanced the following reasons for its denial of the tobacco companies' motion to remove Blue Cross for lack of standing: 1) Blue Cross is the natural plaintiff for this suit and best able to pursue the claim because it has direct knowledge of the matter at issue and because any recovery will benefit Blue Cross subscribers directly; 2) whether or not Blue Cross actually recouped all its costs is a fact question to be answered after full discovery; 3) Blue Cross is not too remote a plaintiff to complain of harm allegedly caused by defendant tobacco companies; 4) as a health organization, Blue Cross has and will suffer a direct negative impact as a result of any conspiracy among the tobacco companies; 5) Blue Cross seeks relief independent from that available to smokers, such as pain and suffering. Finally, regarding the motion to dismiss the tort and antitrust claims, the trial court held that in the instance of the tort claim, it would not rule on the soundness of Blue Cross's tort theory that the tobacco companies had breached a duty independent of any it might owe its smoking customers. On the antitrust claims, the trial court noted that Minnesota has a broad antitrust standing statute and denied the motion.

On appeal of the standing determinations, the court of appeals held that the tobacco companies had not established that reversal of the trial court's order would obviate further proceedings and therefore denied review. Moreover, the tobacco companies did not appeal the trial court's denial of their motion to dismiss the tort and antitrust claims. Thus, the only issue before this court is the question of whether Blue Cross has standing to bring a cause of action under any of the four theories upon which it relies.

Standing is the requirement that a party has a sufficient stake in a justiciable controversy to seek relief from a court. Sierra Club v. Morton, 405 U.S. 727, 731-32, 92 S.Ct. 1361, 1364-65, 31 L.Ed.2d 636 (1972). If a plaintiff lacks standing to bring a suit, the attempt to do so fails. Standing is acquired in two ways: either the plaintiff has suffered some "injury-in-fact" or the plaintiff is the beneficiary of some legislative enactment granting standing. Snyder's Drug Stores, Inc. v. Minnesota State Bd. of Pharmacy, 301 Minn. 28, 31-32, 221 N.W.2d 162, 165 (1974). The goal of the standing requirement is to ensure that issues before the courts will be "vigorously and adequately presented." Channel 10, Inc. v. Independent Sch. Dist. No. 709, St. Louis County, 298 Minn. 306, 314, 215 N.W.2d 814, 821 (Minn.1974); Twin Ports Convalescent, Inc. v. Minnesota State Bd. of Health, 257 N.W.2d 343, 346 (Minn.1977).

Because our analysis of standing turns on the specific statutory or common law requirements of each type of claim advanced by Blue Cross, we analyze each of the four categories of claims separately.

Tort

The requirements of a tort claim are, of course, familiar: "(1) duty; (2) breach of that duty; (3) that the breach of duty be the proximate cause of plaintiff's injury; and (4) that plaintiff did in fact suffer injury."...