Styczinski v. Arnold
| Decision Date | 23 July 2021 |
| Docket Number | Case No. 20-CV-2019 (NEB/BRT) |
| Parties | Thomas John STYCZINSKI; Tom "the Coin Guy", LLC; Treasure Island Coins, Inc.; and Numismatist United Legal Defense, Plaintiffs, v. Grace ARNOLD, in her capacity as Commissioner of the Minnesota Department of Commerce, Defendant. |
| Court | U.S. District Court — District of Minnesota |
Erick G. Kaardal, Gregory M. Erickson, Mohrman, Kaardal & Erickson, P.A., Minneapolis, MN, for Plaintiffs.
Allen Barr, Christopher M. Kaisershot, Office of the Minnesota Attorney General, Saint Paul, MN, for Defendant.
ORDER ON MOTION FOR SUMMARY JUDGMENT AND MOTION TO DISMISS
Several coin dealers and an association of coin dealers1 (collectively, the "Coin Dealers") sued Grace Arnold, the Commissioner of the Minnesota Department of Commerce, alleging that Minnesota's statute regulating bullion dealers is unconstitutional or preempted by federal law. The Coin Dealers moved for summary judgment, and Commissioner Arnold moved to dismiss. For the reasons below, the Court grants and denies both motions in part.
This lawsuit challenges the Minnesota statute regulating "bullion product dealers," a classification that generally includes coin dealers.2 The statute imposes certain requirements and prohibitions on bullion product dealers and their representatives. See Minn. Stat. §§ 80G.01 –.11. The plaintiff Coin Dealers challenge the constitutionality of the law, and the dispute centers around the definition of "dealer" and the requirements imposed upon dealers by the law. These requirements apply only to those who meet dealer status under the law.
The definition of dealer is, at a minimum, less than straightforward. To begin, under the statute a "dealer" is a person or entity "who buys, sells, solicits, or markets bullion products or investments in bullion products to consumers" and who satisfies one of three requirements: (1) being "incorporated, registered, domiciled, or otherwise located in" Minnesota; (2) having a "dealer representative"3 in Minnesota; or (3) who "does business with a consumer at a location in this state, or delivers or ships a bullion product or makes a payment to a consumer at an address in this state, unless the transaction occurs when the consumer is at a business location outside of this state." Id. § 80G.01, subdiv. 3(a).
It gets more complex from there. Even if a person or entity meets the above definition under subdivision 3(a), they may still be exempted from dealer status under subdivision 3(b). Examples include wholesalers, those who sell exclusively at garage or estate sales, securities brokers, auctioneers, people who only sell at twelve or fewer Minnesota trade shows per year, and banks and other financial institutions. Id. § 80G.01, subdiv. 3(b).
The next step is determining what obligation the law imposes upon dealers. If a person or entity meets the definition of dealer, does not qualify for exemptions, and transacts $25,000 or more in bullion products in a year, they must register with the commissioner of commerce and pay a $25 registration fee. Id. § 80G.02, subdivs. 1, 5. Conducting business after failing to register is a misdemeanor. Id. § 80G.08. Additionally, a dealer must maintain a surety bond in an amount determined by its transactions with Minnesota consumers in the twelve-month period prior to registration or renewal.4 Id. § 80G.06, subdiv. 1.
And, in addition to the registration and bond requirements, the bullion dealer law regulates a dealer's sales practices. Among other things, a dealer must: provide a consumer with an invoice, investigate any consumer complaints, deliver bullion products to the consumer in the agreed-upon timeframe, refrain from misrepresenting any material aspect of a bullion product, and stop calling a consumer after the consumer requests not to be contacted. Id. § 80G.07, subdiv. 1. The commissioner of commerce has authority to enforce the bullion dealer law, and Commissioner Arnold has used this authority. Id. § 80G.10, subdivs. 1–2 ;
The Coin Dealers bringing this lawsuit would like to transact in bullion products without registering or posting a bond, and so they challenge the legality of the bullion dealer law. (Compl. ¶¶ 40–44.) First, they claim that the bullion dealer law violates the Dormant Commerce Clause in three ways: it excessively burdens interstate commerce, it discriminates against out-of-state commerce, and it regulates conducts outside of Minnesota. (Id. ¶¶ 45–123.) Second, they claim that the bullion dealer law violates the Fourteenth Amendment because it is impermissibly vague. (Id. ¶¶ 124–44.) Third, the Coin Dealers claim that the bullion dealer law is preempted because it conflicts with federal laws and policies related to coins issued by the United States Mint and Individual Retirement Accounts ("IRAs"). (Id. ¶¶ 145–86.) Both parties filed a dispositive motion: the Coin Dealers for summary judgment and Commissioner Arnold to dismiss for failure to state a claim and, for the Coin Dealers’ IRA preemption claim, for lack of subject matter jurisdiction. (ECF Nos. 19, 26.)
The Court must grant the Coin Dealers’ summary judgment motion if they show "that there is no genuine dispute as to any material fact and the[y are] entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Neither party disputes any material facts, making this a purely legal issue. As for Commissioner Arnold's motion to dismiss, the Court accepts the facts as alleged in the Coin Dealers’ Complaint and asks only whether the facts they pled would entitle the Coin Dealers to relief. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Cnty. of St. Charles v. Mo. Fam. Health Council , 107 F.3d 682, 684–85 (8th Cir. 1997) ().
The Coin Dealers’ first three challenges to the law are under the Dormant Commerce Clause. The Commerce Clause grants Congress the power to "regulate Commerce ... among the several States." U.S. Const. art. I, § 8, cl. 3. The negative implication of this power, the Dormant Commerce Clause, is that states may not enact laws that "unduly restrict interstate commerce." Tenn. Wine & Spirits Retailers Ass'n v. Thomas , ––– U.S. ––––, 139 S. Ct. 2449, 2459, 204 L.Ed.2d 801 (2019). The Coin Dealers claim that the bullion dealer law violates the Dormant Commerce Clause in three ways: it unduly burdens interstate commerce, it discriminates against out-of-state commerce, and it is impermissibly extraterritorial in its scope. (Compl. ¶¶ 45–123; ECF No. 21 at 16–30; ECF No. 31 at 2–20.)
The parties’ Dormant Commerce Clause arguments depend on the scope of the bullion dealer law. (E.g. , ECF No. 29 at 6–8; ECF No. 31 at 4–7.) Determining the scope of the law is crucial to these claims because the parties’ contrasting interpretations impact the degree to which the law burdens interstate commerce. Most notably, the Coin Dealers claim that purely out-of-state transactions count toward the $25,000 threshold that triggers the registration requirement; Commissioner Arnold argues that they do not. Thus, the Court must engage in statutory interpretation.
The parties have not cited, and the Court cannot find, any Minnesota Supreme Court case interpreting the bullion dealer law.5 Because the Minnesota Supreme Court has not interpreted the bullion dealer law, the Court must " ‘predict, as best [it] can, how [the Minnesota Supreme Court] would decide the issue’ " of the law's scope. Qwest Comms. Co., LLC v. Free Conferencing Corp. , 905 F.3d 1068, 1074 (8th Cir. 2018) (internal quotation and citation omitted); see also Progressive N. Ins. Co. v. McDonough , 608 F.3d 388, 390 (8th Cir. 2010) ().
When interpreting a statute, the Minnesota Supreme Court first asks whether the statute is ambiguous on its face. Wilbur v. State Farm Mut. Auto. Ins. Co. , 892 N.W.2d 521, 523 (Minn. 2017) (citation omitted). A statute is ambiguous only when "the language therein is subject to more than one reasonable interpretation." Id. (citation omitted). If the statute is not ambiguous, the Court stops there. Roberts v. State , 933 N.W.2d 418, 423 (Minn. Ct. App. 2019) (citing State v. Peck , 773 N.W.2d 768, 772 (Minn. 2009) ).
As noted above, the critical issue in this case is determining which transactions count toward the $25,000 threshold that triggers the registration requirement. The plain language of Section 80G.02 unambiguously counts out-of-state transactions toward this threshold, especially in light of the amendments made to the law.6 There is no support in the text of the statute for Commissioner Arnold's argument to the contrary, and when the text of the statute is unambiguous, the Court cannot read words into the statute that are not in the text. In re Matter of Dahlgren Twp. , 906 N.W.2d 512, 518 (Minn. Ct. App. 2017) (citing Reiter v. Kiffmeyer , 721 N.W.2d 908, 911 (Minn. 2006) ). The registration requirement counts transactions "in the aggregate" and lacks a geographic limit regarding which transactions count. Minn. Stat. § 80G.02, subdiv. 1. Nor is the definition of "dealer" geographically limited. Id. § 80G.01, subdiv. 3. Aside from the surety bond requirement, the law does not state that only transactions in Minnesota count, and the Court cannot read that limitation into the law. See Premier Bank v. Becker Dev., LLC , 785 N.W.2d 753, 760 (Minn. 2010) ().
An example illustrates: an Iowa coin dealer sells $25,000 worth of bullion products in Iowa and a...
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