Court Opinion

ID: 8246935
Source: CourtListenerOpinion
Date Created: 2022-10-16 09:37:09.64127+00
Date Added: 2024-06-11T16:42:47.199135
License: Public Domain

SCHELLHAS, Judge
(concurring in part, dissenting in part).
I concur with the majority’s opinion that Minnesota’s generic prescription drug substitution statute, Minn.Stat. § 151.21, subd. 4 (2012), does not give rise to a private right of action for the pharmacists’ failure to pass on their entire cost savings when dispensing generic prescription drugs in place of brand-name prescription drugs. But I respectfully dissent from the majority’s opinion that appellants pleaded a legally sufficient claim under the Minnesota Consumer Fraud Act (MCFA), Minn. Stat. § 325F.69, subd. 1 (2012), and the private attorney-general statute, Minn. Stat. § 8.31, subd. 3a (2012), to survive respondents’ rule 12 motion. I do not agree that the district court erred by dismissing that claim.
In a well-reasoned order, the district court concluded that appellants failed to plead a sufficient claim under the MCFA and private attorney-general statute. In analyzing the sufficiency of appellants’ claim, the district court noted that “[t]he MCFA defines the conduct proscribed essentially as any misrepresentation made with the intent that others rely on it in connection with the sale of any merchan*415dise,” citing Grp. Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2, 12 (Minn.2001). (Quotations omitted.) Here, appellants base their claim of omission on the fact that respondents did not publicly disclose their acquisition costs, failed to pass on the difference between their cost of acquisition of generic drugs and brand-name drugs, and therefore concealed alleged overcharges from purchasers. As the district court aptly noted, appellants’ claim of omission is dependent on the materiality of the information omitted and a duty to disclose the information. As the court noted, appellants’ amended complaint “is devoid of allegations demonstrating the materiality of the alleged omissions” and appellants did not allege the existence of such a duty to disclose. Stating that, “[e]ven if appellants had alleged a duty to disclose, whether [respondents owed [appellants such a duty is for this Court to decide,” the court found “nothing in the language of Subdivision 4, Section 151.21, or Chapter 151 mandating disclosure of [respondents’ acquisition costs.” And, noting that “[appellants assert that the parties had ‘unequal access to information’ about acquisition costs,” the court concluded that the “assertion is an insufficient basis to create a legal duty of disclosure.” I agree. See Baker v. Best Buy Stores, LP, 812 N.W.2d 177, 182 (Minn.App.2012) (noting that, “when a party pleads a fraud claim, ‘the circumstances constituting fraud ... shall be stated with particularity”’ (quoting Minn. R. Civ. P. 9.02)).
Moreover, allowing appellants to proceed on their claim under the MCFA requires this court to recognize a new cause of action — a cause of action under the MCFA based on a violation of Minn.Stat. § 151.21, subd. 4. Recognizing new causes of action is something that we have generally declined to do. Dukowitz v. Hannon Sec. Servs., 815 N.W.2d 848, 851 (Minn. App.2012) (declining to recognize new wrongful-discharge claim), review granted (Minn. Sept. 25, 2012). I would conclude that appellants may not bring their fraud claims premised on violations of section 151.21 or chapter 151. See Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081, 1086 (8th Cir.2012) (declining under Minnesota law to permit insureds to bring breach-of-contract claims premised on violations of Minn.Stat. § 65B.285, in case in which insureds did not challenge district court’s conclusion that statute did not create private right of action); see also Morris v. Am. Family Mut. Ins. Co., 386 N.W.2d 233, 233, 238 (Minn.1986) (holding that no private cause of action exists for claims premised on alleged violation of Minnesota Unfair Claims Practices Act, Minn.Stat. § 72A.17.325 (1984)); Schermer v. State Farm & Cas. Ins. Co., 702 N.W.2d 898, 905 (Minn.App.2005) (expressly rejecting breach-of-contract claim based on violation of insurance statute), aff'd on other grounds, 721 N.W.2d 307 (Minn.2006); Olson v. Moorhead Country Club, 568 N.W.2d 871, 873-75 (Minn.App.1997) (concluding that employee could not bring common-law claim for conversion based on violation of Minnesota Fair Labor Standards Act for which no private right of action existed), review denied (Minn. Oct. 31, 1997); cf. Bernstein v. Extendicare Health Servs., 653 F.Supp.2d 939, 944 (D.Minn.2009) (concluding that plaintiff’s consumer-protection argument was inadequately alleged in part because accepting it “would allow litigation to supplant the extensive regulatory scheme imposed on nursing homes”); Bernstein v. Extendicare Health Serv., 607 F.Supp.2d 1027, 1032-33 (D.Minn.2009) (concluding that “consumer protection class action does not lie, even though defendants were possibly violating Minnesota state law”).
*416In Sehermer, this court rejected the class’s argument that Minn.Stat. § 72A.20, subd. 13, authorized it to bring a breach-of-contract claim against State Farm, noting that, although the department of commerce could bring an action against State Farm, the class could not bring a private cause of action. 702 N.W.2d at 905. This court stated that “the law is well settled that a litigant cannot ... use an alleged violation of [the unfair claims practices act] to prove elements of a common law claim.” Id. In Palmer, the Eighth Circuit stated that plaintiffs’ claims for breach were an attempt “to circumvent Minnesota’s administrative remedies and create a private right of action when the legislature has not. Similar attempts have been rejected by Minnesota’s courts in other cases.” 666 F.3d at 1086.
In this case, the sale of generic prescription drugs is subject to a detailed regulatory scheme created by the legislature, like “[i]nsurance companies operating within Minnesota [which] are subject to a detailed regulatory scheme created by the legislature.” Id. at 1083. Appellants are attempting to circumvent Minnesota’s administrative remedies and create a private right of action when the legislature has not.
I would affirm the district court’s dismissal of appellants’ claim under the MCFA and therefore do not address appellants’ argument that they are entitled to proceed under the private attorney-general statute.