STATE OF MINNESOTA IN COURT OF APPEALS A16-0241 Mobile Diagnostic Imaging, Inc., Appellant,

vs. Racheal L. Hooten f/k/a Racheal L. Jones, et al., Respondents. Filed December 19, 2016 Affirmed in part, reversed in part, and remanded Stauber, Judge Hennepin County District Court File No. 27-CV-14-7349 William R. Skolnick, Andrew H. Bardwell, Skolnick & Joyce, P.A., Minneapolis, Minnesota (for appellant) Randall Tigue, Randall Tigue Law Office, P. A., Fridley, Minnesota (for respondents) Considered and decided by Jesson, Pr esiding Judge; Stauber, Judge; and Reyes, Judge. S Y L L A B U S 1. The procedural requirements of Minne sota’s anti-SLAPP statute, Minn. Stat. § 554.02 (2014), violate the non-moving party’s constitutional right to a jury trial by requiring a court to make a pretrial factual determination that the non-moving party has produced clear and convincing ev idence to support his claim. 2. Minn. Stat. § 148.103, subd. 1 (2014), provides immunity for the act of reporting a licensee’s or a potential licens ee’s misconduct to the Minnesota Board of2 Chiropractic Examiners, but th is immunity does not apply to the act of disclosing this same information to others. 3. A person pursuing a private attorn ey-general claim under Minn. Stat. §§ 325F.69, subd. 1; 8.31, subd s. 1, 3a (2014), must demonstrate that the cause of action benefits the public. O P I N I O N STAUBER , Judge Appellant challenges the district court’s order dismissing its claims as barred by the anti-SLAPP statute, Minn. Stat. §§ 554. 01-.05 (2014), and Minn. Stat. § 148.103, subd. 1, which provides immunity to person s filing complaints with the Minnesota Board of Chiropractic Examiners. By notice of related appeal, respondent challenges the dismissal of its claim under the Minnesota Consumer Fraud Act, Minn. Stat. § 325F.69 (2014). We affirm in part, reverse in part, and remand to the district court for further proceedings. FACTS Appellant Mobile Diagnostic Imaging, Inc. (MDI) provided mobile magneticresonance-imaging (MRI) services to chiropr actors until October 2013. MDI is wholly owned by Michael Appleman, who is not a licensed chiropractor. Respondent Stand-Up MidAmerica MRI, P.A. (SUMA) also provides MR I services. It is owned by respondent Wayne Dahl, a licensed chiropractor. MDI and SUMA competed for patient referrals from chiropractors. Respondent Rachael Ho oten was formerly employed by MDI as a clinic manager, but was later hire d by SUMA for the same position.3 MDI entered into contracts with chiropractors to provid e MRI services at or near individual offices. MDI used “lease agreem ents,” which ostensibly paid a chiropractor for use of space in a parking lot, office supp lies, telephone services, internet connections, and employee services. MDI employed techni cians to operate the MRI machines and contracted with radiologists to revi ew and interpret the MRI scans. Dahl had been opposed to MDI’s busine ss practices since 2003. Appleman had approached Dahl in 2003 and offered to pay him $200 for ev ery patient Dahl referred for an MRI. Dahl rejected this offer as unethic al. Dahl opened SUMA the next year and when chiropractors continued to use MDI, Dahl concluded that they were receiving “kickbacks” from MDI. Dahl posted a copy of a sample MDI lease agreement on his website, and described it as illegal. In 2008, Dahl complained to th e Minnesota Attorney General’s Office about MDI, but the attorney general did not initiate charges. In 2010, Dahl spoke to several chiropractors, seeking to discourage them from using MDI’s services. In 2011, Hooten entered into a one-y ear employment contract with MDI; the contract included confidentia lity and non-compete provisi ons. In November 2011, Hooten resigned from the position, stating that she had accepted another job. Hooten did not disclose that her new job was with SU MA. When Hooten le ft MDI, she took her personnel file, including all the original documents, and copies of MDI’s lease agreements, customer lists, contact lists, polic ies, and procedural manuals. Hooten also may have taken copies of in formation and research about MDI’s competitors, including SUMA.4 Hooten told Dahl that she wanted to leave MDI be cause she thought it was “an unethical and possibly illegal operation.” H ooten provided Dahl w ith copies of the materials she had taken from MD I’s files. Dahl believed that these documents confirmed his suspicion that MDI was paying kickback s for referrals, and he filed a series of anonymous ethics complaints with the Minne sota Board of Chiropractic Examiners, alleging that 11 chiropractors were acting unethically by contracting with MDI. At a deposition taken in conjunction with a subs equent administrative disciplinary action, Dahl admitted that Hooten ha d removed the confidential materials from MDI’s files and provided them to him. Dahl also stated that he gave the confidential information to Illinois Farmers Insurance Comp any, Allstate Mutual Auto mobile Insurance Company, and the Stempel & Doty la w firm, which represents insurance companies. As a result of the inform ation provided by Dahl, the chiropractic board entered into corrective actions with four of the 11 ch iropractors reported. The Stempel law firm, on behalf of Illinois Farmers a nd other insurers, initiated an ac tion in federal court against MDI and 46 chiropractors, alleging that MDI paid the chiropractors kickbacks for unnecessary MRIs. All of these claims were dismissed under Fed. R. Civ. P. 12(b)(6) (failure to state a claim upon which relief can be granted) by the federal district court in 2014; the federal district court concluded th at both the federal claims and various state claims were without basis. Illinois Farmers Ins. Co. v. Mo bile Diagnostic Imaging, Inc. , No. 13-CV-2820 (D. Minn . Aug. 19, 2014). In April 2014, MDI sued respondents, alleging misappropriation of trade secrets, tortious interference with contract, unfair competition, unjust enrichment, conversion,5 civil theft, breach of contract and breach of duties as to Ho oten, and civil conspiracy. Respondents filed an answer and a counterclaim alleging violation of the Minnesota Consumer Fraud Statute, corporate practice of medicine, and immunity from suit under Minn. Stat. § 554.03. MDI moved for dismissal under Minn. R. Civ. P. 12.02(e) and 9.02. Respondents moved for dismissal und er the anti-SLAPP statute and Minn. Stat. § 148.103, subd. 1. Quoting Leiendecker v. Asian Women United of Minnesota , 848 N.W.2d 224, 231 (Minn. 2014), the district court stated thatit was required to dismiss a claim under the anti-SLAPP statute, “‘even in the face of genu ine issues material fa ct, if the responding party has failed to carry its burden of persuasi on that the moving party is not immune by clear and convincing evidence.’” The district court determ ined that respondents were entitled to immunity under sections 554.03 and 148.103, subdivision 1, and dismissed MDI’s claims to the extent thatthey implicated Dahl’s reports to the chiropractic board or the federal litigation brought by the insurance companies. The district court dismissed with prejudice the interferen ce-with-contractual-relationshi ps, unfair-competition, and civil-conspiracy claims. The district court di d not dismiss the claims for violation of the Minnesota Trade Secret Act, unjust enrichme nt, conversion, civil theft, breach of contract, and breach of duties to “the extent [MDI] can establish facts distinct from the immune conduct and damages,” but dismissed any part of those cl aims that touched on immune conduct. The district court di smissed respondent SUMA ’s counterclaims, reasoning that it had not demonstrated a pub lic benefit and MDI was not engaged in the corporate practice of medicine.6 MDI requested reconsideration, arguing that the district court had not addressed its argument that the anti-SLAPP statute was unc onstitutional, but the district court made no apparent response. The parties then entered in to a stipulation in which they agreed that MDI’s complaint and the respon dents’ counterclaims would bedismissed with prejudice in order to facilitate an appeal. MDI file d a notice of appeal and of a constitutional challenge on February 11, 2016 , and respondents filed a notice of related appeal as to their consumer-fraud counter cl aim on February 25, 2016. ISSUES I. Does Minn. Stat. § 554.02 violate the non-moving party’s constitutional right to a jury trial by requiring the district court to find facts before trial to determine whether the moving party is entitled to immunity? II. Is a person reporting alleged misco nduct under Minn. Stat. §§ 148.102, subd. 2 (2014); .103, subd. 1, entitled to unlimited immunity? III. Must a person pursuing a private a ttorney-general claim under Minn. Stat. § 325F.69 demonstrate a public benefit? ANALYSIS I. MDI argues that the Minnesota anti-SL APP statutory procedure deprives a responding party of th e constitutional right to a jury tr ial. The Minne sota Constitution states, “The right of trial by jury shall remain inviolate, and shall extend to all cases at law without regard to the amount in co ntroversy.” Minn. Co nst. art. I, § 4; see U.S. Const. amend. VII (“[T]he right of trial by ju ry shall be preserved, and no fact tried by a7 jury, shall be otherwise re-examined in any Co urt of the United States, than according to the rules of the common law.”). “A party is . . . constitutionally entitled to a trial by jury if a party raising that same theory for re lief at the time the Minnesota Constitution was adopted also would have been entitled to a jury trial.” Schmitz v. U.S. Steel Corp. , 852 N.W.2d 669, 673 (Minn. 2014). “The jury-trial right does not protect the existence of any particular common-law cause of action, but it does ensure that in a common-law suit tried by a jury, a judge’s determination will not prev ent the jury from reso lving genuine issues of material fact.” Nexus v. Swift , 785 N.W.2d 771, 780 (Mi nn. App. 2010) (citation omitted), abrogated on other grounds by Leiendecker , 848 N.W.2d at 230-32. The legislature enacted the anti-SLAPP statute “to protect citizens and organizations from civil lawsuits for exercisi ng their rights of public participation in government.” Middle-Snake-Tamarac Rivers Wa tershed Dist. v. Stengrim , 784 N.W.2d 834, 839 (Minn. 2010) (quotatio n omitted). A party to a laws uit may raise an affirmative defense under the statute by asserting that a claim “materially relate s to an act of the moving party that involves public participation” and asking for immunity for acts that constitute public participation. Id. (quotation omitted). Unde r the statute, the party opposing the anti-SLAPP motio n must produce clear and co nvincing evidence that the lawsuit is not intended to a ffect public participation. Id. Previously, this court anal yzed anti-SLAPP motions by applying the standards for a judgment on the pleadings. See Marchant Inv. & Mgmt. Co. v. St. Anthony W. Neighborhood Org., Inc. , 694 N.W.2d 92, 95 (Minn. A pp. 2005) (applying a judgmenton-the-pleadings standard), abrogated by Leiendecker , 848 N.W.2d at 230-232; see also8 Nexus , 785 N.W.2d at 781-82 (applyi ng summary-judgment standard). See also Leiendecker v. Asian Wome n United of Minnesota , 834 N.W.2d 741, 749-50 (Minn. App. 2013) (applying judgment-on-the-pleadings standard), reversed , 848 N.W.2d 224 (Minn. 2014). But in Leiendecker , the supreme court abrogated the Marchant and Nexus decisions based on their use of these standard s. 848 N.W.2d at 231-32. Instead, the supreme court concluded that, under the unambig uous language of the statute, the party opposing an anti-SLAPP motio n has the burdens of proof, production, and persuasion, and must produce evidence in or der to defeat the motion. Id. at 231. Furthermore, a

court must dismiss an action if the opposing party fails to carry its burden of persuasion, even if there are genuine issues of material fact outstanding. Id. This requires the district court to weigh evidence and decide facts in order to determine whether a party has provided clear, convincing, and persuasive evidence to oppose the anti-SLAPP motion. Id. at 232-33. The supreme court noted the issue of whether a party is deprived of a constitutional right to a jury trial when a pre- trial determination that requires weighing of evidence and factfinding must be ma de under the anti-SLAPP statute. Id. at 232. But the court declined “to address the constitutionality of the anti-SLAPP statutes in light of Article I, Section 4 of the Minnesota Co nstitution, and accord ingly express[ed] no opinion on the subject” because the appellants had not raised the issue below or in the petition for review. Id . at 232. 1 Unlike the Leiendecker appellants, MDI squarely raised

1 Following the supreme court’s remand to the c ourt of appeals, this court held that the parties moving for anti-SLAPP immunity madea threshold showing that the claims9 the issue of whether it has been deprived of its constitutional right to a jury trial both before the district court and in this appeal. Even as Leiendecker abrogated Nexus as to the proper standard of review for an anti-SLAPP case, the supreme court comment ed, “Despite misinterpreting the antiSLAPP statutes, Nexus identified a potential legal i ssue implicated by the unique procedural framework of the anti-SLAPP statutes” . . . whether “requiring the district court to make [pre-trial] findings . . . viol ated Article I, Section 4 of the Minnesota Constitution.” Leiendecker , 848 N.W.2d at 231-32. The Washington Supreme Court considered this issue in Davis v. Cox , 351 P.3d 862 (Wash. 2015). Washington’s anti-SLAPP st atute is nearly identical to Minnesota’s statute, and requires a court to decide “wheth er the party bringing the claim can prove by clear and convincing evidence a probab ility of prevailing on the claim.” Id. at 864 (quotation omitted). The Wa shington Suprem e Court concluded that the statute established “a preliminary procedure for factua l adjudication of claims without a trial, [without using] a summary judgment procedure.” Id. at 867. The court contrasted

asserted against them related to acts involving public participation. Leiendecker v. Asian Women United of Minnesota , A12-1978, 2014 WL 7011061, at *3 (Minn. App. Dec. 15, 2014), review denied (Minn. Feb. 25, 2015). This court remanded the matter to the district court to determine whether the movi ng parties met their burden of showing by clear and convincing evidence that the oppos ing parties were not entitled to immunity under the standard articulated by the supreme court. Id. at *1. On remand, the district court held that Minn. Stat. § 554.02 (se tting forth the anti-SLAPP procedure) is unconstitutional. Leiendecker v. Asian Women United of Minnesota , No. 27-CV-12- 7021, 2015 WL 9704951 (Minn. Dist. Ct. Feb. 25, 2016 ). This decision is on appeal before the supreme court. Leiendecker v. Asian Women United , No. A16-0360 (Minn. May 31, 2016) (order granting accelerated review).10 Washington’s anti-SLAPP statute with that of California, and concluded that California law directed a court to consider the “probab ility that a plaintiff w ill prevail on a claim” rather than “requiring the plaintiff to establish by clear and convincing evidence a probability of prevailin g on the claim.” Id. at 869 (emphasis omitted). The court also considered similar statutes in Louisiana and Washington D.C., and concluded that those laws employed a summary-judgment standard. Id. at 870. But the Washington Supreme Court determined that Minnesot a’s statute, as interpreted by Leiendecker , most closely resembled Washington’s law. Id. at 870-871. The Washington Supreme Court stated that because “[s]uch a procedur e invades the jury’s essential role of deciding debatable questions of fact,” the Washington anti-SLAPP law violates the right of trial by jury and is unconstitutional. Id. at 874. The Washington Suprem e Court followed this reasoning in Akrie v. Grant , 355 P.3d 1087, 1088 (Wash. 2015 ), reversing a lower court decision granting an anti-SLAPP motion. Given the strict statutory interpretation in Leiendecker , 848 N.W.2d at 231-32, which this court is bound to follow, Minnes ota’s anti-SLAPP statute cannot be applied in a manner consistent with the constitutiona l right to a jury trial. Under the Leiendecker standard, a court is required to ignore genuine i ssues of material fact and to step into the jury’s role of deciding disputed facts and weighing evidence. We therefore conclude that the statute is unconstitutional on its face. We reverse the district court’s order insofar as it grants immunity based on th e anti-SLAPP statute, and remand this matter to the district court. On remand, the district court is dir ected to consider the effect of the parties’ stipulation of December 2, 2 015, on further proceedings.11 II. MDI also challenges the district court’ s decision that Dahl is immune from liability under Minn. Stat. § 148.103, su bd. 1, for submitting information to the chiropractic board and that Hooten is immune from liability for giving Dahl the information he used to file complaints with the board. Statutory construction is a question of law reviewed de novo by an appellate court. Lee v. Lee , 775 N.W.2d 631, 637 (Minn. 2009). Minn. Stat. § 148.102, subd. 2, states th at a licensed chiropractor “shall report to the board personal knowledge of any conduct ” that he “reasonabl y believes constitutes grounds for disciplinary action under section 148.10.” Minn. Stat. § 148.10, subd. 1(a) (2014), sets forth the grounds for revoking, suspending, limiting, restricting, qualifying, or refusing to grant a license to practice ch iropractic, and applies to licensed chiropractors or persons seeking a license. Id . “Any person, health car e facility, business, or organization is immune from civil liability or criminal prosecution for submitting a report to the board under section 148. 102 or for otherwise reporting to the board violations or alleged violations of section 148.10.” Minn . Stat. § 148.103, subd. 1 (2014). Reports made to the board are private. Id. The district court described this immunity as “broad” and “not limited.” Accordingly, under the statute, Dahl wo uld be immune from liability for making a report to the board of condu ct that he reasonably be lieved constitutes grounds for disciplinary action. Likewise, Hooten would ha ve the same immunity by virtue of Minn.12 Stat. § 148.103, subd. 1, for providing Dahl with the information he used in making a report to the board. The statute does not lim it immunity to reports made in good faith. “If the meaning of a statute is unambiguous, [an appellate court] interpret[s] the statute’s text according to its plain language.” Brua v. Minn. Joint Underwriting Ass’n , 778 N.W.2d 294, 300 (Minn. 2010). And, ingeneral, we narrowly construe statutory grants of immunity “in derogation of a common law right.” See J.E.B. v. Danks , 785 N.W.2d 741, 752 (Minn. 2010) (discussing i mmunity under Minn. St at. § 626.556, subd. 4, for good faith reports of child abuse). MDI alleged that the reports to the chiropractic board were made for anticompetitive purposes rather than for disciplinary action. Th e grant of immunity under section 148.103, subdivision 1, is not limited in any way: a person making a report to the board, even with an ulterior purpose or in bad faith, enjoys immunity from civil and criminal prosecution for the act of making the report. The district court concluded that “[t]he taking of information unrelated to the documentation of the alleged unethical conduc t and Board Reports and actions unrelated to the Board reports are not subject to the statutory immunity created by Minn. Stat. § 148.03.” While we agree with the district c ourt that the act of making a report to the board, regardless of purpose, is subject to immunity, we cannot agree that a person who then discloses the same reports to other pe rsons or entities enjoys immunity for that conduct. Reports made to the board are privat e, a fact that confirms our conclusion that the act of reporting, even for an unworthy purpose, is i mmune from liability. But if a person compromises the private nature of th e report by distributing it to others not13 associated with the board, he or she does not enjoy immunity from liability for those actions. We therefore affirm the district court’s decision that a person is immune from civil liability or criminal prosecution for the act of making a report to the board regardless of the person’s motivation, but re verse insofar as the district court determined that the immunity extends to subsequent disclosures of the same reports to others, such as to the insurance companies or their counsel. III. SUMA argues that the district court erred in dismissing its counterclaim under the Consumer Fraud Act, Minn. Stat. §§ 325F.69, s ubd. 1; 8.31, subd. 3a. The district court dismissed this claim under Minn. R. Civ. P. 12.02(e), for fa ilure to state a claim upon which relief can be granted. Minn. Stat. § 325F.69, subd. 1, states that“[t]he act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, wi th the intent that others re ly thereon in connection with the sale of any merchandise, whether or not a ny person has in fact been misled, deceived, or damaged thereby, is enjoinable as pr ovided in section 325F.70.” Generally, the attorney general or a county attorney enforces such claims by bringing a civil action. Minn. Stat. § 325F.70, subd. 1 (2014). But Minn. Stat. § 8.31, subds. 1, 3a (2014), permits “any person injured by a violation of [the consumer fraud act to] bring a civil action and recover damages, together with cost s and disbursements.” In order to use this “private attorney general” statute, however, a claimant must demonstrate that the cause of14 action benefits the public. Ly v. Nystrom , 615 N.W.2d 302, 314 (M inn. 2000). An action that is limited to harm caused to the person prosecuting the claim does not advance state interests and has no public benefit. Id. Under Minn. R. Civ. P. 12.02(e), a court re views a complaint de novo to determine whether the facts alleged in th e complaint, or, in this case, the counterclaim, set forth a legally sufficient claim for relief. Hebert v. City of Fifty Lakes , 744 N.W.2d 226, 229 (Minn. 2008) The cour t must accept the facts alleged in the complaint as true and construe all reasonable inferences in favor of the nonmoving party. Id. SUMA alleged in its consumer-fraud coun terclaim that MDI’s fraudulent practices induced chiropractors to select MDI, ratherthan SUMA, and that SUMA lost money because of it. But SUMA do es not allege that consumer s of MRI services would be harmed by MDI’s actions. Relying on Kinetic Co. v. Medtronic, Inc. , 672 F. Supp. 2d 933 (D. Minn. 2009), SUMA argues that pleading of a public benef it requirement is not “onerous,” and that its reference to chiropractors receiving illegal ki ckback payments was sufficient to show a public benefit. Kinetic involved a claim by a self-insured employer who paid for the implantation of a Medtroni c cardiac defibrillator in one of its employees. Id. at 939. The Medtronic device failed and a new device had to be implanted; although Medtronic did not charge for the new defibrillator, it did not cover the employee’s surgical costs, which were paid by the employer. Id. at 938-39. Kinetic sued on its behalf and on behalf of others, alleging that Medtronic had continue d to offer the defective defibrillators after learning of the defect, with 87,000 implants occurring after that time. Id. at 946. This15 concealment imposed a burden on third-party payers like Kinetic, who attempt to predict their costs, but were unable to do so because of Medtronic’s fraudulent concealment. Id. The court concluded that Kinetic’s “effort to place this cost where . . . it ought to be borne may well provide a public benefit.” Id. SUMA argues that “numerous chiropractor s were deceived into violating federal and state anti-kickback laws by virtue of [M DI’s] wrongful conduct.” But this is not analogous to Kinetic ; other chiropractors, like Dahl, shoul d be able to recognize an illegal offer. Nor does SUMA allege that the ultim ate consumer, the patie nts who had MRIs at MDI, suffered harm because of the scheme. Th e sole damage alleged is that SUMA lost business to a competitor. This is not a public benefit and is not sufficient to state a claim upon which relief can be granted un der the consumer fraud statute. SUMA argues that the district court erred by determining that it was not a consumer under the consumer-fraud statute because it was a sophisticated competitor to MDI. Citing Group Health Plan, Inc. v. Philip Morris, Inc. , 621 N.W.2d 2 (Minn. 2001), SUMA asserts that other decisions of the Minnesota Supreme Court make clear that standing under the act is not limited to purcha sers or consumers. But the district court “decline[d] to read a standi ng requirement precluding claims by competitive businesses, where no limitation is imposed by statute.” Instead, the distri ct court stated that it “will look to SUMA’s claims and the relief s ought to determine whether it has properly asserted a public interest to pursue the MCFA claims under the private AG statute.” The district court concluded that SUMA is a “s ophisticated competitor,” but the consumer of MDI’s services were patients and that SUMA ’s counterclaim failed to provide a public16 benefit to those consumers. The distri ct court did not err by dismissing SUMA’s counterclaim. D E C I S I O N The procedural provisions of Minn. St at. § 554.02 deprive the non-moving party of the right to a jury trial by requiring a court to make pretrial factual findings to determine whether the moving pa rty is immune from liability. The statute, therefore, is unconstitutional. Minn. Stat. §§ 148.102, subd. 2, .103, subd . 1, extends immunity to a person reporting misconduct of licensed chirop ractors or those seeking a license to the board of chiropractic, but a person is not i mmune from civil or criminal liability for disclosing the same information to others. Finally, a party making a private attorneygeneral claim under Minn. Stat. §§ 325F.69; 8. 31, subds. 1, 3a, must demonstrate a public benefit in order to sustain a cause of action. Affirmed in part, reversed in part, and remanded.