No. A12-1555

STATE OF MINNESOTA IN SUPREME COURT

GRAPHIC COMMUNICATIONSLOCAL lB HEALTH & WELFARE FUND "A"; and THE TWIN CITIES BAKERY

DRIV ERS HEALTH A N D WELFARE F U N D individually and on behalf of all others similarly situated,

Plaintiffs-Respondents,

vs.

CVS CAREMARK CORPORATION; CVS PHARMACY, INC.; CAREMARK, LLC; CAREMARK MINNESOTA SPECIALTY PHARMACY, LLC; CAREl\tlARK MINNESOTA SPECIALTY

PHARMACY HOLDING, LLC; COBORN'S INCORPORATED; KMART HOLDING CORPORATION; SEARS, ROEBUCK AND CO.; SEARS HOLDINGS CORPORATION; SNYDER'S DRUG

STORES (2009), INC.; SNYDER'S HOLDINGS (2009), INC.; SNYDER'S HOLDINGS, INC.; TARGET CORPORATION;

WALGREEN CO.; and WAL-MART STORES, INC.,

Defendants-Appellants.

DEFENDANTS-APPELLANTS' BRIEF AND ADDENDUM

Wendy J. Wildung (#117055) Craig S. Coleman (#0325491) F AEGRE BAKER DANIELS LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Telephone: (612) 766-7000 Attorneys for Defendant-Appellant

Target Corporation

Todd A. Noteboom (#240047) Elizabeth Wiet Reutter (#316957) LEONARD, STREET AND DEINARD 150 South Fifth Street, Suite 2300 Minneapolis, MN 5 5402 Telephone: (612) 335-1500 Attorneys for Defendant-Appellant

Walgreen Co.

; J

Lewis A. Remele, Jr. (#90724) Christopher R. Morris ( #23 0613) BASSFORD REl\1ELE 33 South Sixth Street, Suite 3800 Minneapolis, MN 55402-3707 Telephone: (612) 333-3000 Attorneys for Defendants-Appellants

CVS Caremark Corporation, CVS Pharmacy, Inc., Caremark, LLC, Caremark Minnesota Specialty Pharmacy, LLC, and Caremark Minnesota Specialty Pharmacy Holding, LLC

Tracy J. Van Steenburgh (#141173) NILAN JOHNSON LEWIS, PA 600 U.S. Bank Plaza South 220 South Sixth Street Minneapolis, MN 55402 Telephone: (612) 338-1838 Attorneys for Defendants-Appellants

Kmart Holding Corporation, Sears, Roebuck & Co., and Sears Holding Corporation

David R. Marshall (#184457) Joseph J. Cassioppi (#388238) FREDRIKSON &BYRON, P.A. 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402 Telephone: (612) 492-7000 Attorneys for Defendant-Appellant

Walmart Stores, Inc.

Kevin D. Hofman (#0179978) Ronald B. Peterson (#0086344) HALLELAND HABICHT, P.A. 33 South Sixth Street, Suite 3900 Minneapolis, MN 55402 Telephone: (612) 836-5500 Attorneys for Defendant-Appellant

Co born's Incorporated

James K. Langdon (#171931) DORSEY & WHITNEY 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Telephone: (612) 340-2600 Attorneys for Defendants-Appellants

Snyder's Drug Stores (2009), Inc., Snyder's Holdings (2009), Inc., and Snyder's Holding, Inc.

Attorneys for Defendants-Appellants

David L. Hashmall (#138162) FELHABER, LARSON, FENLON

&VOGT,P.A. 220 South Sixth Street, Suite 2200 Minneapolis, MN 55402 Telephone: (612) 339-6321

John W. Barrett BAILEY & GLASSER LLP 209 Capitol Street Charleston, WV 25301 Telephone: (304) 345-6555

Perrin Rynders (admitted pro hac vice) VARNUMLLP Bridgewater Place P.O Box 352 Grand Rapids, MI 49501-0352 Telephone: (616) 336-6000

Attorneys for Plaintiffs-Respondents

The appendix to this brief is not available for online viewing as specified in the Minnesota Rules of Public Access to the Records of the Judicial Branch, Rule 8, Subd. 2(e)(2).

TABLE OF CONTENTS

Page

STATEMENT OF THE ISSUES ........................................................................................ 1

STATEMENT OF THE CASE ........................................................................................... 3

STATEMENT OF FACTS .................................................................................................. 6

STANDARD OF REVIEW .............................................................................................. 12

ARGUMENT .................................................................................................................... 13

I. ALLEGED VIOLATIONS OF SUBDIVISION 4 DO NOT AMOUNT TO VIOLATIONS OF THE MCFA ............................................................................ 15

A. Plaintiffs' Purported MCFA Claim Circumvents Legislative Intent Not To Provide A Private Right Of Action For Violation Of Subdivision 4 ............................................................................................... 15

B. The MCFA Is Not Unlimited ...................................................................... 19

C. An Alleged Violation Of Subdivision 4 Is Not A Prohibited Act Under The MCF A ....................................................................................... 20

D. Plaintiffs' Attempts To Sidestep The Plain Language Of The MCFA Should Be Rejected ..................................................................................... 22

E. The Private AG Statute Does Not Give Plaintiffs Authority To Sue For Alleged Violations Of Subdivision 4 ................................................... 26

II. AN MCF A CLAIM CANNOT BE BASED UPON AN OMISSION WITHOUT A DUTY TO DISCLOSE ................................................................... 28

A. The MCF A Does Not Encompass "Pure" Omissions ............. : ................... 28

B. A Duty To Disclose Is Required To Bring An Omission-Based MCF A Claim ............................................................................................... 31

C · Requiring A Duty To Disclose To Bring An Omission-Based MCFA Claim Is A Better Rule ................................................................................ 35

D. The FAC Does Not And Cannot Plead A Duty To Disclose ...................... 36

E. The F AC Does Not And Cannot Plead A Material Omission .................... 40

1

III. PLAINTIFFS FAILED TO PLEAD FACTS SHOWING A CAUSAL NEXUS ........................................ : .......................................................................... 41

CONCLUSION ................................................................................................................. 48

11

TABLE OF AUTHORITIES

Page(s) FEDERAL CASES

Am. Computer Trust Leasing v. Boer boom Int'l, Inc., 967 F.2d 1208 (8th Cir. 1992) ..................................................................................... 38

Bell At!. Corp. v. Twombly, 550 U.S. 544 (2007) ............................................................................................... 44, 45

Bernstein v. Extendicare Health Servs., 653 F. Supp. 2d 939 (D. Minn. 2009) .......................................................................... 42

Cashman v. Allied Prods. Corp., 761 F.2d 1250 (8th Cir. 1985) ............................................................................... 32, 33

Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005) ..................................................................................................... 46

Group Health Plan, Inc. v. Philip Morris, Inc., 86 F. Supp. 2d 912 (D. Minn. 2000) ............................................................................ 43

In re Mex. Money Transfer Litig., 267 F.3d 743 (7th Cir. 2001) ....................................................................................... 36

Khoday v. Symantec Corp., 858 F. Supp. 2d 1004 (D. Minn. 2012) .................................................................. 33, 34

Minnesota ex. rei Hatch v. Fleet Mortg. Corp., 158 F. Supp. 2d 962 (D. Minn. 2001) .................................................................... 33, 34

Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081 (8th Cir. 2012) ..................................................................................... 17

Romine v. Acxiom Corp., 296 F .3d 701 (8th Cir. 2002) ....................................................................................... 40'

Sailors v. N States Power Co., 4 F.3d 610 (8th Cir. 1993) ........................................................................................... 32

Smith v. Ford Motor Co., 462 Fed. Appx. 660 (9th Cir. 20 11) ............................................................................ 31

Taylor Inv. Corp. v. Wei!, 169 F. Supp. 2d 1046 (D. Minn. 2001) .................................................................. 38, 39

111

Willbanks v. Progressive Choice Ins. Co., No. 1:10-cv-1299 AWI SKO, 2010 WL 4861349 (E.D. Cal. Nov. 17 2010) ............. 17

STATE CASES

301 Clifton Place L.L. C. v. 301 Clifton Place Condo. Ass 'n, 783 N.W.2d 551 (Minn. App. 2010) ........................................................................... 21

Bahr v. Capella Univ., '7QQ 1\.T UT ')rl '7h. (l\tf1.-..-. ')()1 ()\ 1? 4.4. /UU J."'l. Vl' ek\..1. /V \.lY~~~ll.L. ~V.LVJ •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••"•••••••••••••••••• .... -, u 8

Baker v. Best Buy Stores, LP, 812 N.W.2d 177 (Minn. App. 2012), review denied (Minn. Apr. 25, 2012) ........ 21, 42

Beck v. Groe, 245 Minn. 28, 70 N.W.2d 886 (Minn. 1955) ............................................................... 16

Becker v. Mayo Found., 737 N.W.2d 200 (Minn. 2007) .......................................................................... 2, 16,25

Boubelik v. Liberty State Bank, 553 N.W.2d 393 (Minn. 1996), superseded by statute as stated in Ly, 615 N.W.2d ............................................................................................................. 20, 32, 37

Bruegger v. Faribault Cnty. Sheriff's Dep 't, 497 N.W.2d 260 (Minn. 1993) .................................................................................... 16

Church of the Nativity of Our Lord v. WatPro, Inc., 474 N.W.2d 605 (Minn. App. 1991), aff'd, 491 N.~.2d 1 (Minn. 1992) ................... 20

Driscoll v. Standard Hardware, Inc., 785 N.W.2d 805 (Minn. App. 2010) ........................................................................... 38

Elzie v. Commissioner of Public Safety, 298 N.W.2d 29 (Minn. 1980) ...................................................................................... 12

Ford Motor Credit Co. v. Majors, No. A04-1468, 2005 WL 1021551 (Minn. App. May 3, 2005) ...................... 33, 34,41

Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001) ................................................................................. passim

Hebert v. City of Fifty Lakes, 744 N.W.2d 226 (Minn. 2008) .................................................................................... 44

IV

Henderson v. Hertz Corp., No. L-6937-03, 2005 WL 4127090 (N.J. Super. A.D. June 22, 2006), cert. denied, 909 A.2d 724 (N.J. 2006) ................................................................................ 18

in Erickson v. Haring, No. C4-02-138, 2002 WL 31163611 (Minn. App. Oct. 1, 2002) ................................ 32

Jenson v. Touche Ross & Co., 335 N.W.2d 720 (Minn. 1983) .................................................................................... 35

Klein v. First Edina Nat'! Bank, 293 Minn. 418, 196 N.W.2d 619 (Minn. 1972) .................................................... passim

Krell v. National Mortgage Corp., 448 S.E.2d 248 (Ga. App. 1994) ................................................................................. 18

Kron Med. Corp. v. Collier Cobb & Assocs., Inc., 107 N.C. App. 331,420 S.E.2d 192 (1992) ................................................................ 31

Krueger v. Zeman Constr. Co., 781 N.W.2d 858 (Minn. 2010) ............................................................................... 12, 15

L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372 (Minn. 1989) .................................................................................... 38

Larson v. Larson, 373 N.W.2d 287 (Minn. 1985) .................................................................................... 37

Ly v. Nystrom, 615 N.W.2d 302 (Minn. 2000) ............................................................................. passim

Marsh v. Webber, 13 Minn. 109 ................................................................................................................ 37

Martens v. Minnesota Mining & Mfg. Co., 616 N.W.2d 732 (Minn. 2000) ...................................................................................... 6

Matter of Wang, 441 N.W.2d 488 (Minn. 1989) .................................................................................... 39

Miller's Fairway, Inc. v. Schoenborn, No. C9-97-796, 1997 WL 769528 (Minn. App. Dec. 16, 1997) ................................. 39

Morris v. Am. Family Mut.Ins. Co., 386 N.W.2d 233 (Minn. 1986) .................................................................................... 33

v

Newell v. Randall, 32 Minn. 171, 19 N.W. 972 (1884) ............................................................................. 37

Olson v. Accessory Controls and Equip. Corp., 254 Conn. 145, 757 A.2d 14 (Conn. 2000) ................................................................. 31

Olson v. Moorhead Country Club, 568 N.W.2d 871 (Minn. App. 1997) ........................................................................... 17

Reiter v. Kiffmeyer, 721 N. W.2d 908 (Minn. 2006) .................................................................................... 31

Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 244 N.W.2d 648 (Minn. 1976) ........................................................... 38

Royal Realty Co. v. Levin, 69 N.W.2d 667 (Minn. 1955) ...................................................................................... 44

Schermer v. State Farm & Cas. Ins. Co., 702 N.W.2d 898 (Minn. App. 2005), aff'd on other grounds, 721 N.W.2d 307 (Minn. 2006) ................................................................................................................ 17

State by Humphrey v. Alpine Air Prods., Inc., 490 N.W.2d 888 (Minn. App. 1992), aff'd, 500 N.W.2d 788 (Minn. 1993) ............... 19

State by Humphrey v. Philip Morris Inc., 551 N.W.2d 490 (Minn. 1996) .................................................................................... 19

State v. Caldwell, 803 N.W. 2d 373 (Minn. 2011) ................................................................................... 31

Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W. 2d 672 (Minn. 2004) ................................................................................... 31

Wells-Dickey Trust Co. v. Lien, 164 Minn. 307, 204 N.W. 950 (1925) ......................................................................... 37

Wiegand v. Walser Auto. Groups, Inc., 683 N.W.2d 807 (Minn. 2004) .......................................................................... 2, 42, 43

Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179 (Minn. 1999) .......................................................................... 2, 32, 38

Yost v. Millhouse, 373 N.W.2d 826 (Minn. App. 1985) ........................................................................... 40

Vl

FEDERAL STATUTES

Fair Labor Standards Act . . .. . . . .. . .. .. . .. . . . . . .. .. .. .. . . . .. . .. . . .. . .. . . .. . . .. . .. . . . . . . .. . . . . . .. .. . .. .. . . . .. . . . .. .. . .. . .. . . 17

STATE STATUTES

1970 Alaska Sess. Laws 2 ................................................................................................. 29

1967 Ariz. Sess. Laws 315 ................................................................................................ 29

1971 Ark. Acts 92 ............................................................................................................. 30

1987 Colo. Sess. Laws 357 ............................................................................................... 30

55 Del. Laws 108 (1965) ................................................................................................... 29

815 Ill. Comp. Stat. Ann ............................................................................................. 29, 34

1961 Ill. Laws 1868 ........................................................................................................... 29

1973 Kan. Sess. Laws 807 ................................................................................................ 30

1975 Md. Laws 527 ........................................................................................................... 30

1976 Mich. Pub. Acts 1165 ............................................................................................... 30

1967 Mo. Laws 607 ........................................................................................................... 29

1960 N.J. Laws 138 ........................................................................................................... 29

1987 N.M. Laws 1053 ....................................................................................................... 29

1994 Okla. Sess. Laws 759 ............................................................................................... 30

1979 Tex. Gen. Laws 603 ..... ; ........................................................................................... 30

1974 W.Va. Acts 148 ....................................................................................................... 30

Alaska Stat. Ann. § 45.50.471(b) (2013) .......................................................................... 29

Ariz. Rev. Stat. § 44-1522 ................................................................................................. 29

Ark. Code Ann.§ 4-88-108 (2013) ................................................................................... 30

Colo. Rev. Stat.§ 6-1-105(1)(u) (2013) ............................................................................ 30

Conn. Gen. Stat. § 42-110b ............................................................................................... 31

Vll

D.C. Code§ 28-3904 (1973) ............................................................................................. 30

Del. Code Ann. Title 6 § 2513(a) (2013) .................................................................... 29, 30

Kan. Stat. Ann.§ 50-626 (b) (3) (2012) ............................................................................ 30

Md. Code Ann., Com. Law§ 13-301(9) (2013) ............................................................... 30

Mich. Comp. Laws§ 445.903, § 3(1)(s) (2013) ............................................................... 30

Minn. Stat. § 8.06 .............................................................................................................. 27

Minn. Stat. § 8.31 ................................................................................................. 1; 2, 14, 26

Minn. Stat. § 72A.20 ......................................................................................................... 17

Mi11n. Stat.§ 151.06 ...................................................................................................... 7, 27

Minn. Stat. § 151.21 ................................................................................................... passim

Minn. Stat. § 151.29 ...................................................................................................... 7, 28

Minn. Stat.§ 151.30 ...................................................................................................... 7, 28

Minn. Stat. § 214.01 ................................................................................................ 8, 18, 28

Minn. Stat.§ 214.11 ...................................................................................................... 8, 28

Minn. Stat.§ 214.103 ................................................................................................ 7, 8, 28

Minn. Stat. § 325F .69 ................................................................................................. passim

Minn. Stat. § 325F.70 .................................................................................................. 30,21

Minn. Stat. § 645.16 .................................................................................................... 15, 29

Mo. Rev. Stat. § 407.020 (2012) ....................................................................................... 29

N.C. Gen. Stat. § 58-63-15(1) ........................................................................................... 31

N.J. Stat. Ann. § 56:8-2 (2013) ......................................................................................... 29

N.M. Stat. Ann. § 57-12-2 D (14) (2013) ......................................................................... 29

Okla. Stat. Ann. Title 15, § 752 (13) (2013) ..................................................................... 30

Texas Bus & Com. Code Ann. § 17 .46(b )(24) (20 11) ...................................................... 30

viii

W.Va. Code§ 46A-6-102 (7)(M) (2013) ......................................................................... 30

RULES

Minn. R. Evid. 201 .............................................................................................................. 6

Minn. R. Civ. P. 8.0l(b) ...................................................................................................... 3

Minn. R. Civ. P. 12 .................................................................................................. 3, 12, 46

REGULATIONS

Minn. R. 6800.9600 ........................................................................................................... 28

lX

STATEMENT OF THE ISSUES

Chapter 151 of the Minnesota Statutes (the "Pharmacy Statute") regulates the

practice of pharmacy in the State, and grants enforcement authority to the Board of

Pharmacy ("BOP"). Section 151.21 governs the substitution of generic drugs for

prescribed brands, and subdivision 4 of§ 151.21 ("subdivision 4") concerns pricing for

transactions that involve substituted generic prescription drugs ("GPDs"). Together,

Chapters 151 and 214 (governing examining and licensing boards) provide

comprehensive administrative and criminal remedies for an alleged violation of

subdivision 4, under the enforcement powers of the BOP, and county and city attorneys.

Chapters 325A through 325N of the Minnesota Statutes regulate certain business

practices for the protection of competitors and/or consumers. Section 325F.69, the

Minnesota Prevention of Consumer Fraud Act ("MCFA"), and § 8.31, subd. 3a (the

"Private AG Statute"), together allow private citizens to sue as "private attorneys

general" under certain limited circumstances.

Plaintiffs-Respondents attempt to use the MCFA and the Private AG Statute in

order to act as a "private BOP." This appeal challenges the Plaintiffs-Respondents'

attempt to inject themselves and the courts into an area that the legislature left to the

BOP.

Defendants-Appellants raise three issues:

1. Where the legislature has created administrative and criminal remedies for

violation of a regulatory statute, but has declined to provide a private cause of action, can

1

Plaintiffs-Respondents nevertheless maintain a private right of action by re-casting

alleged violations of the regulatory statute as violations of the MCF A?

The Court of Appeals held that the MCF A permits such a private action.

Most apposite authorities:

Becker v. Mayo Found, 737 N.W.2d 200 (Minn. 2007) Ly v. Nystrom, 615 N.W.2d 302 (Minn. 2000) Minn. Stat. § 325F.69, subd. 1 Minn. Stat. § 8.31, subd. 1 and 3a

2. Where Defendants-Appellants had no duty to disclose allegedly material

information, such as a retailer's prescription drug acquisition costs or its alleged

violations of a regulatory statute, is a failure to disclose such information actionable

under the MCFA?

The Court of Appeals held that such a failure is actionable.

Most apposite authorities:

Klein v. First Edina Nat'! Bank, 293 Minn. 418, 196 N.W.2d 619 (Minn. 1972) Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179 (Minn. 1999) Minn. Stat. § 325F.69, subd. 1

3. To state a claim under the MCFA, must Plaintiffs-Respondents plead facts

showing a causal nexus between the allegedly actionable omission, and the alleged

injury?

The Court of Appeals held that the MCF A does not require the pleading of such

facts.

Most apposite authorities:

Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001) Wiegand v. Walser Auto. Groups, Inc., 683 N.W.2d 807 (Minn. 2004)

2

STATEMENT OF THE CASE

This appeal arises from a Court of Appeals decision reversing, in part, a judgment

of the District Court dismissing all claims alleged by two Plaintiffs-Respondents on

behalf of a purported class in a "First Amended Complaint" ("FAC") (which was actually

Plaintiffs' fourth attempt to plead their claims). (See APP 1-36.) Plaintiffs are Taft-

Hartley Funds that provide health benefits to their participants under benefit plans that

include prescription drug coverage. (FAC ~~ 2-6, APP 2-3.) Defendants-Appellants,

either directly or through affiliates, operate or have operated retail pharmacies in

Minnesota. (FAC ~~ 7-21, APP 3-4.)

More than 3 5 years ago, the Minnesota legislature amended Chapter 151, which

regulates the practice of pharmacy, to encourage pharmacists to substitute less expensive

GPDs for brand-name drugs when filling prescriptions. See Minn. Stat.§ 151.21, entitled

"Substitution." Plaintiffs isolated one sentence from subdivision 4 of§ 151.21, and then

sued alleging that they have paid more for GPDs dispensed by Defendant pharmacies

than that sentence allows. Neither§ 151.21 nor its subdivision 4 contains an express

private cause of action for damages, so Plaintiffs' claims would have required the courts

to judicially create a private right of action. Plaintiffs also asserted claims for unjust

enrichment and violation of the MCF A, both predicated solely upon Defendants' alleged

violations of subdivision 4.

Defendants moved to dismiss the FAC under Rules 8.01(b), 9.02, 12.02(a), and

12.02(e) of the Minnesota Rules of Civil Procedure. By Order filed on July 11,2012,

Judge Robert A. Blaeser of the Hennepin County District Court granted the motion and

3

dismissed the F AC with prejudice. (ADD 1-18.) The District Court held that there is no

private right of action to sue for alleged violations of subdivision 4, and that the alleged

violations do not constitute unjust enrichment or violate the MCFA. (ADD 7-17.)

Judgment was entered on July 12, 2012. (ADD 18.)

Plaintiffs appealed the judgment. On May 6, 2013, the Court of Appeals issued an

opinion unanimously affirming the District Court's holding that there is no private right

of action for alleged violations of subdivision 4. (ADD 19-42.) However, the Court of

Appeals split on the MCFA claim. 1 The majority held that Plaintiffs had stated an MCF A

claim by alleging that Defendants failed to disclose information ("acquisition costs and

subsequent overcharges"), which Plaintiffs contended would show violations of

subdivision 4. Finding no controlling precedent from this Court, the majority held that

Plaintiffs were not required to allege or establish a duty to disclose the omitted

information, but may merely allege that the information was material. (ADD 32-33.)

The majority also concluded that Plaintiffs need not allege any facts linking the omitted

information to their decision-making, or to decision-making by their agents or members,

holding that the "alleged chain of causation here is[] uncomplicated" because Plaintiffs

allegedly paid inflated prices for GPDs. (ADD 34-36.)

Judge Schellhas dissented and would have affirmed the dismissal of the MCFA

claim, stating that "allowing [Plaintiffs] to proceed on their claim under the MCF A

The Court of Appeals did not address the unjust enrichment claim that the District Court had dismissed.

4

requires this court to recognize a new cause of action - a cause of action under the

MCFA based on a violation of [subdivision 4]." (ADD 39-42.)

Defendants timely requested this Court to review the Court of Appeals' decision

reversing the District Court on the MCFA claim. Plaintiffs sought cross-review of the

Court of Appeals' decision affirming the District Court's ruling that there is no private

right of action under subdivision 4. This Court granted review in an Order dated July 31,

2013. (APP 49-51.)

5

STATEMENT OF FACTS2

Industry Background

In the 1970s, when subdivision 4 was enacted, the typical retail pharmacy was

owned and operated by a pharmacist, and patients generally paid for their own

prescription drugs. See Schondelmeyer, S. W. and J. Thomas, Trends in Retail

Prescription Expenditures, Health Affairs 9, No. 3:131-145 (1990). (APP 88-102.) Most

patients were unaware that they could request a therapeutically equivalent, less expensive

GPD in place of many brand-name prescription drugs. Bureau of Consumer Protection,

Staff Report to the Federal Trade Commission: Drug Product Selection 3 (1979),

available at

http:/ /babel.hathitrust.org/ cgi/pt?id=mdp .3 90 15 00 8 51 77 92#view= 1 up ;seq= 11.

The situation has changed dramatically. Today, the large majority of prescriptions

is filled with GPDs and covered under government or medical benefit plans, so very few

patients actually pay 1 00% of prescription drug costs themselves. The amounts that

pharmacies receive for many prescription drugs reflect discounts that are dictated by

contracts between pharmacies and pharmacy benefit managers ("PBMs"), which "act as

an intermediary between the payor and everyone else in the health-care system." Thomas

Gryta, What is a "Pharmacy Benefit Manager?", The Wall Street Journal, July 21, 2011

2 These facts are based upon the allegations ofthe FAC; matters of public record of which the Court may take judicial notice, see Minn. R. Evid. 20 1; and documents and statements referenced in the F AC, which a court may consider on a motion to dismiss, see Martens v. Minnesota Mining & Mfg. Co., 616 N.W.2d 732,739 n.7 (Minn. 2000). Of the documents referred to herein, "Ex. 1" was attached to the Affidavit of Wendy J. Wildung filed in the District Court on April 5, 2012, and "Ex. 20" was attached to the Second Affidavit of Wendy J. Wildung filed in the District Court on April30, 2012.

6

(Ex. 1, APP 55.). PBMs work on behalf of plan providers, such as Plaintiffs, to design

and implement drug benefit plans that afford coverage to plan participants at the lowest

practicable cost to the plan providers. See id.

Overview Of Chapter 151 And Its Enforcement

Chapter 151 regulates the practice of pharmacy by, among other things,

establishing licensure and continuing education requirements, and setting standards of

conduct in certain areas. Chapter 151 establishes a Minnesota BOP, and provides that the

BOP "shall have the power and it shall be its duty" to regulate the practice of pharmacy

and the retail sale of drugs in the State. Minn. Stat.§ 151.06, subd. 1(a).

The BOP is charged with the responsibility to enforce Chapter 151 and its

associated regulations. In doing so, the BOP may: (1) deny, suspend, revoke, or refuse to

renew any registration or license,§ 151.06, subd. 1(a)(7)(ix); (2) levy civil penalties of up

to $10,000 per separate violation of Chapter 151, with "the amount of the civil penalty to

be fixed so as to deprive a licensee or registrant of any economic advantage gained by

reason of the violation,"§ 151.06, subd. 5; (3) require that a violator pay investigative

and enforcement costs, id.; and ( 4) through the county attorney or city attorney, prosecute

any violation of Chapter 151 or its regulations as a criminal misdemeanor,§§ 151.29 and

151.30.

The BOP is supported in its enforcement efforts by a paid staff and by the attorney

general's office. Chapter 214 of the Minnesota Statutes, which applies to "Examining

and Licensing Boards," requires the BOP to "receive and resolve complaints or other

communications, whether oral or written, against regulated persons." Minn. Stat.

7

§ 214.103, subd. 2. If a complaint requires investigation, the BOP must forward it "to the

designee of the attorney general," who conducts the necessary investigation and forwards

an investigative report back to the BOP for enforcement action. I d. at subd. 4 and 5. "In

all matters pending before it relating to its lawful regulation activities," the BOP may

issue subpoenas for the attendance of witnesses and for the production of documents:

Minn. Stat. § 214.10, subd. 3. If a complaint is not dismissed by the BOP or resolved by

agreement between the BOP and a licensee, the BOP may initiate a contested case

hearing under Chapter 14 of the Minnesota Statutes. Minn. Stat.§ 214.103, subd. 7.

Through the contested case hearing process, the dispute is decided by the BOP, and the

BOP's decision can be appealed to, and reviewed by, the district court.

Chapter 214 also provides the BOP with direct recourse to the district courts to

enforce Chapter 151:

In addition to any other remedy provided by law, [the BOP] may in its own name bring an action in district court for injunctive relief to restrain any unauthorized practice or violation or threatened violation of any statute or rule which the board is empowered to regulate or enforce.

Minn. Stat.§ 214.11.

Subdivision 4

Before 1975, Minn. Stat.§ 151.21, titled "Substitution," made it unlawful for a

pharmacist to "substitute an article different from the one ordered, or deviate in any

manner from the requirements of an order or prescription." Minn. Stat.§ 151.21 (1974).

In 1975, the legislature amended§ 151.21 to permit pharmacists to substitute GPDs for

brand-name prescription drugs under certain circumstances. 1975 Minn. Laws, ch. 101,

8

§ 2. As GPDs became prevalent, that permission became mandatory with a 1993

amendment. 1993 Minn. Laws, ch. 345, art. 5, § 10.

Section 151.21 covers two categories of prescriptions: (1) those where a brand-

name drug is specified on the prescription and the prescriber has expressly directed the

pharmacist to "dispense as written," see subdivision 2; and (2) those where a brand-name

drug is specified on the prescription but the prescriber has not directed that it must be

dispensed as written, see subdivision 3. A third category of prescriptions, those that are

written for GPDs, is not addressed in or covered by § 151.21.

For subdivision 3 prescriptions (i.e., prescriptions for brand-name drugs where the

prescriber has not directed that they be dispensed as written), if

there is available in the pharmacist's stock a less expensive generically equivalent drug that, in the pharmacist's professional judgment, is safely interchangeable with the prescribed drug, then the pharmacist shall, after disclosing the substitution to the purchaser, dispense the generic drug unless the purchaser objects.

Minn. Stat. § 151.21, subd. 3.

Subdivision 4 provides for savings to the "purchaser" if the pharmacist substitutes

a GPD pursuant to subdivision 3. Subdivision 4 provides:

A pharmacist di~pensing a drug under the provisions of subdivision 3 shall not dispense a drug of a higher retail price than that of the brand name drug prescribed. If more than one safely interchangeable generic drug is available in a pharmacist's stock, then the pharmacist shall dispense the least expensive alternative. Any difference between acquisition cost to the pharmacist of the drug dispensed and the brand name drug prescribed shall be passed on to the purchaser.

Minn. Stat.§ 151.21, subd. 4.

9

Plaintiffs' Claims

In the F AC, Plaintiffs alleged generally that each Defendant dispensed some GPDs

at some time in violation of subdivision 4 because each Defendant did not pass on to

Plaintiffs "[a ]ny difference between acquisition cost to the pharmacist of the drug

dispensed and the brand name prescribed." (FAC ~~ 101-18, APP 30-33.)

The F AC presented five GPDs as "examples" of alleged overcharges (id. ~ 42,

APP 9), but the "examples" were not based upon actual or complete information about

any actual transaction with any Defendant. Rather, the alleged "overcharges" shown in

the FAC's charts were hypothetical.

For each of its five "examples," the F AC alleged, solely upon information and

belief, amounts for "Brand Acquisition Cost" and "Generic Acquisition Cost." (Jd. ~~ 46,

47, 53, 54, 60, 61, 65, 66, 70, 71, 75, 76, 80, 81, 86, 90, 91, 95, 96, APP 10-28.) This

acquisition cost information came from a "whistleblower" who was a pharmacist working

for a Kroger pharmacy in West Virginia (Ex. 20, APP 63, 65-66, 68-9), and not from any

Defendant in this case or from any Minnesota pharmacist or pharmacy. Nonetheless, the

FAC attributed Kroger's alleged acquisition costs in West Virginia at one point in time to

all Defendants in Minnesota for all relevant time periods.

For each of its five "examples," the F AC also alleged an amount for the "Brand

Sales Price" based on a small number of prescriptions filled in Minnesota by a few

different Defendants. The F AC then attributed that alleged "Brand Sales Price" to all

Defendants. (I d. ~~ 51 (acknowledging that Plaintiffs' plan participants filled

prescriptions for brand-name drug for different amounts from different Defendants), 52,

10

53, 54, 64 ("Brand Sales Price" based on prescriptions filled by "Minnesota

pharmacies"), 65, 66, 74-76, 84, 86, 94-96, APP 15-27.) And Plaintiffs identified

"Generic Sales Prices," the source of which was not identified. Based on extrapolated

Kroger West Virginia "Acquisition Costs," Plaintiffs alleged that subdivision 4 was

violated by all Defendants because they did not pass along to Plaintiffs the "entire

difference between the acquisition cost of the brand name drug and the generic drug."

(Id ~ 31, APP 6.)

The F AC never alleged that Plaintiffs had any direct communications with any

Defendant, and never identified any information provided by Defendants to Plaintiffs (or

to anyone else, for that matter) that was false or misleading. Presumably, this is because

Plaintiffs contracted with PBMs to handle Plaintiffs' prescription drug plans, and did not

deal directly with Defendants.

The FAC also never alleged that Plaintiffs paid any Defendant directly, or that

Plaintiffs actually paid anyone the amounts identified as "Brand Sales Price" and

"Generic Sales Price." Presumably, this is because Plaintiffs never actually paid retail

prices for prescription drugs, but instead paid the substantially lower prices their PBMs

negotiated on their behalf

The F AC sought damages that included "the aggregate amount of the difference

between the acquisition cost of the generic drug and the equivalent brand-name drug"

that Defendants had allegedly failed to pass on to Plaintiffs in violation of subdivision 4.

(APP 34.) Plaintiffs also asked for injunctive relief to restrain alleged future violations of

subdivision 4. (!d.)

11

STANDARD OF REVIEW

This Court conducts a de novo review of a Rule 12 dismissal. Krueger v. Zeman

Constr. Co., 781 N.W.2d 858, 861 (Minn. 2010). The court must take the specific facts

pleaded, draw any reasonable inferences from those facts in favor of Plaintiffs, and then

ask whether Plaintiffs have stated a claim upon which relief may be granted. See Elzie v.

Commissioner of Public Safety, 298 N.W.2d 29, 32 (Minn. 1980). Vague assertions or

legal conclusions do not prevent dismissal if, on the specific facts pleaded, dismissal is

warranted. See Bahr v. Capella Univ., 788 N.W.2d 76, 80 (Minn. 2010).

Statutory interpretation is a question of law that also is reviewed de novo.

Krueger, 781 N.W.2d at 861.

12

ARGUMENT

The F AC does not plead any conduct other than alleged violations of subdivision

4. In the absence of subdivision 4, a pharmacy's alleged failure to "pass on" savings in

its acquisition costs for GPDs would not even arguably implicate any law. Thus, this

appeal squarely presents the question of whether alleged violations of a regulatory statute

that lacks a private right of action can be pursued by private plaintiffs in the guise of an

MCFA claim, and under the authority of the Private AG Statute.

The Court of Appeals' majority ruling expands civil liability under the MCFA

beyond recognition. If alleged violations of subdivision 4 are deemed actionable under

the MCF A without any accompanying fraud or misstatement, then the MCF A provides a

private right of action for alleged violations of any regulatory statute - state or federal -

that involves consumer transactions. Moreover, if private plaintiffs can state an MCF A

claim merely by pointing to omitted information alleged to have been material, without

having to show a duty of disclosure and a causal nexus between the omitted information

and reliance by someone, then liability under the MCF A is akin to strict liability. It is

inconceivable that the legislature intended any of these results.

This Court should construe the applicable statutes to effectuate the legislature's

intent, as reflected in the language, history, and structure of the different statutory

schemes, and hold that the private right to sue under the MCF A does not sweep so

broadly. The MCFA and the Private AG Statute do not deputize private citizens to sue

pharmacies and pharmacists for alleged violations of the Pharmacy Statute in place of the

13

BOP. On the contrary, the comprehensive scheme of regulation and enforcement in

Chapters 151 and 214 evidences legislative intent to exclude such private enforcement.

Plaintiffs' effort to act as a private attorney general by re-casting their claim under

subdivision 4 as an MCF A claim fails for a number of reasons.

First, Defendants' alleged failure to "pass on" purported savings in their

acquisition costs are not predicate acts that are prohibited by Minn. Stat. § 325F.69, subd.

1. They also are not violations of statutes that the attorney general has primary

responsibility to enforce under§ 8.31, subd. 1, and so do not fall within the scope of the

private attorney general provision of§ 8.31, subd. 3a.

Second, by its plain language, Minn. Stat. § 325F.69, subd. 1, does not encompass

claims based upon "pure" omissions, i.e., omissions in the absence of a duty to disclose.

The consumer fraud statutes of other states expressly prohibit the concealment,

suppression, or failure to disclose material facts, but§ 325F.69, subd. 1, does not. Under

well-established principles of statutory construction, and of judicial deference to the

legislature, an MCFA claim may not be based upon a defendant's alleged failure to

disclose material information when it had no duty to disc los~ that information.

Moreover, "pure" omission claims would be subject to abuse, because a disgruntled party

to a transaction could easily claim with hindsight that the counterparty did not disclose

enough information. This Court should not open the courthouse doors to such abuse.

Third, this Court's precedent holds that a private plaintiff suing under the MCF A

must be able to establish a causal nexus between the allegedly actionable conduct- the

false or misleading statement or omissiqn- and his claimed damages. Plaintiffs have

14

merely linked their alleged overpayments to transactions, but not to any false or

misleading statements or omissions. The Court of Appeals majority erred in allowing

this action to proceed when there were no facts pleaded to establish, no theory articulated

to show, and no reason to believe that a causal link exists between any potentially

actionable conduct by Defendants and Plaintiffs' alleged overpayments for GPDs.

For these reasons, as explained more fully below, this Court should reverse the

Court of Appeals' decision as to Plaintiffs' MCFA claim, affirm the Court of Appeals'

decision in all other respects, and direct the entry of judgment in favor of Defendants on

all claims.

I. ALLEGED VIOLATIONS OF SUBDIVISION 4 DO NOT AMOUNT TO VIOLATIONS OF THE MCFA.

Whether alleged violations of subdivision 4 may be litigated as MCF A claims by

private plaintiffs acting under the Private AG Statute turns upon whether the legislature

intended that outcome in enacting the t\vo statutory schemes. This is because "[t]he

object of all interpretation and construction of laws is to ascertain and effectuate the

intention ofthe legislature." Minn. Stat. § 645.16.

A. Plaintiffs' Purported MCFA Claim Circumvents Legislative Intent Not To Provide A Private Right Of Action For Violation Of Subdivision 4.

This Court's jurisprudence holds that where the legislature has created a new right

or duty, it is for the legislature, not the courts, to define its parameters. See, e.g.,

Krueger, 781 N.W.2d at 863 ("When interpreting a statute to determine if it creates a

cause of action, we do not ask whether the statute imposes a limitation on an otherwise

unlimited claim, but instead determine whether the statute actually provides a cause of

15

action to a particular class of persons."). Likewise, it is for the legislature, not the courts,

to create a corresponding remedy. See, e.g., Becker v. Mayo Found., 737 N.W.2d 200,

207 (Minn. 2007) ("A statute does not give rise to a civil cause of action unless the

language of the statute is explicit or it can be determined by clear implication.");

Bruegger v. Faribault Cnty. Sheriff's Dep't, 497 N.W.2d 260,262 (Minn. 1993)

("Principles of judicial restraint preclude us from creating a new statutory cause of action

that does not exist at common law where the legislature has not either by the statute's

express terms or by implication provided for civil tort liability."); Beck v. Groe, 245

Minn. 28, 44, 70 N.W.2d 886, 897 (Minn. 1955) ("No right of action exists save that

expressly given by statute, and the remedy prescribed cannot be enlarged except by

further legislative enactment.").

The Court of Appeals followed these principles in correctly holding that

subdivision 4 does not imply a private right of action. Citing Becker, 737 N.W.2d at 209,

the Court of Appeals reasoned that the fact that subdivision 4 does not mention a private

right of action "suggests that the legislature deliberately omitted to provide for one."

(ADD 26.) The Court of Appeals further reasoned that the existence of other remedies

for a violation of subdivision 4 (namely, civil fines, criminal penalties, and administrative

actions against professional licenses), coupled with the absence of a private civil remedy,

"indicates that the legislature did not intend to create a private right of action." (ADD

26-27 (citing Becker, 737 N.W.2d at 208).)

The Court of Appeals majority ignored these principles in holding that Plaintiffs'

purported MCF A claim may proceed. As the dissent pointed out, the Court of Appeals

16

itself has previously and repeatedly held that a plaintiff may not bootstrap an alleged

violation of a regulatory statute that lacks a private right of action into a common law

claim or an MCF A claim, because doing so circumvents legislative intent to provide

remedies other than a private right of action. (ADD 40-41 (citing, among other cases,

Schermer v. State Farm & Cas. Ins. Co., 702 N.W.2d 898, 905 (Minn. App. 2005), aff'd

on other grounds, 721 N.W.2d 307 (Minn. 2006) ("[T]he law is well settled that a litigant

cannot ... use an alleged violation of [Minn. Stat. § 72A.20, subd. 13] to prove elements

of a common law claim."), and Olson v. Moorhead Country Club, 568 N.W.2d 871, 873-

75 (Minn. App. 1997) (refusing to recognize conversion claim based on Minnesota Fair

Labor Standards Act)).) The Court of Appeals majority failed to acknowledge, or even

refer to, these prior decisions, much less explain why this case should be an exception to

the rule.

The previous decisions of the Court of Appeals cited above are applicable here.

Allowing alleged violations of subdivision 4 to be pursued under the MCF A would

circumvent the legislature's carefully designed scheme for regulating pharmacists and

pharmacies. See Palmer v. Ill. Farmers Ins. Co., 666 F.3d 1081, 1086 (8th Cir. 2012)

(declining under Minnesota law to permit insureds to bring common law claims premised

upon violations of a Minnesota insurance statute that lacked a private right of action,

because, among other things, it might interfere with the comprehensive regulatory

scheme that the legislature created). 3

3 Courts elsewhere have refused to allow plaintiffs to treat violations of other statutes as claims under state consumer protection acts. See, e.g., Willbanks v.

17

The legislature has expressly stated that "it is desirable for boards composed

primarily of members of the occupations so regulated to be charged with formulating the

policies and standards governing the occupation." Minn. Stat. § 214.01, subd. 1. The

legislature also decided that compliance with the Pharmacy Statute could be secured by

administrative remedies, without subjecting pharmacists and pharmacies to private claims

for money damages. At minimum, allowing Plaintiffs to sue under the MCF A for alleged

violations of subdivision 4 allows them to 'jump the queue," in disregard of the

regulatory scheme, which requires the BOP to address and resolve issues under the

Pharmacy Statute in the first instance. A substantial danger exists that, should this case

be allowed to proceed, subdivision 4 (and other provisions of the Pharmacy Statute) will

be interpreted and applied without the benefit of input from the BOP - the most

knowledgeable body and the body expressly intended by the legislature to interpret and

enforce the statute. Further, judicial interpretation of subdivision 4 and Chapter 151

could impose standards of conduct upon pharmacists and pharmacies that differ from

what the BOP would have imposed and the legislature intended. And private claims

Progressive Choice Ins. Co., No. 1:10-cv-1299 A WI SKO, 2010 WL 4861349, at *4 (E.D. Cal. Nov. 17 2010) (dismissing unfair competition claim that was "simply [a] re-labeled" Unfair Insurance Practices Act claim for which there is no private right of action); Henderson v. Hertz Corp., No. L-6937-03, 2005 WL 4127090, at *5 (N.J. Super. A.D. June 22, 2006), cert. denied, 909 A.2d 724 (N.J. 2006) (affirming rejection of consumer fraud act claim where none of the alleged deceptive practices "falls outside the scope" of a statute providing no private cause of action); Krell v. National Mortgage Corp., 448 S.E.2d 248, 249 (Ga. App. 1994) (affirming rejection of consumer protection act claims because "[plaintiff's] action cannot be based solely on a claim that [defendant] violated the HUD regulations," where such violation does not support private cause of action).

18

under the MCF A could subject pharmacists and pharmacies to financial burdens,

including defense costs, that the legislature never intended. In all these ways, private

lawsuits premised upon alleged violations of subdivision 4 would undermine the

legislature's preferred approach to regulating the practice of pharmacy in Minnesota.

Therefore, this Court should reject Plaintiffs' attempt to circumvent legislative

intent, and hold that Plaintiffs may not pursue an MCF A claim premised solely upon an

alleged violation of subdivision 4. The Court of Appeals' decision should be reversed on

this basis.

B. The MCFA Is Not Unlimited.

The Court of Appeals took an unduly broad view of the MCFA's scope in reliance

on this Court's general statement that the MCFA should be "generally very broadly

construed to enhance consumer protection." (ADD 29 (quoting State by Humphrey v.

Philip Morris Inc., 551 N.W.2d 490, 495-96 (Minn. 1996)).) Likewise, it relied on

previous Court of Appeals authority for the proposition that consumer protection laws

were intended to be broader than common law fraud. (ADD 29-30 (citing State by

Humphrey v. Alpine Air Prods., Inc., 490 N.W.2d 888, 892 (Minn. App. 1992), a.ff'd, 500

N.W.2d 788 (Minn. 1993)).)

These generalizations do not aid in deciding the issues here. The cases on which

the Court of Appeals relied involved actions initiated by the attorney general, who has a

lesser burden than Plaintiffs. Because a private plaintiffs right to sue for an alleged

violation of the MCFA arises from the Private AG Statute, Plaintiffs (unlike the attorney

general) must satisfy both § 325F.69, subd. 1, and§ 8.31, subd. 3a, to proceed. SeeLy v.

19

Nystrom, 615 N.W.2d 302, 307 (Minn. 2000) (noting that the MCFA and the Private AG

Statute "are generally discussed and applied in concert, but they are separate and distinct

in their structure and purpose"). While a private claim under the MCF A is broader than

common law fraud in some respects, see, e.g., Church of the Nativity of Our Lord v.

WatPro, Inc., 474 N.W.2d 605, 612 (Minn. App. 1991), aff'd, 491 N.W.2d 1 (Minn.

1992) (intent to deceive not required), it is narrower than common law fraud in other

respects, see, e.g., Ly, 615 N.W.2d at 314 (plaintiff must show his claim will benefit the

public).

The Court of Appeals' general observations are no substitute for careful analysis

of the MCFA and the Private AG Statute. As this Court has noted, "it is not the role of

this court to extend the reach of consumer protection beyond what was intended by the

legislature." Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2, 11 (Minn.

2001) (citing Boubelikv. Liberty State Bank, 553 N.W.2d 393,403 (Minn. 1996),

superseded by statute as stated in Ly, 615 N.W.2d at 309). The language, history, and

structure of the MCFA and the Private AG Statute demonstrate that the legislature did not

intend alleged violations of subdivision 4 to be pursued by private plaintiffs under the

MCFA, and the Court of Appeals erred by reviving the MCFA claim.

C. An Alleged Violation Of Subdivision 4 Is Not A Prohibited Act Under TheMCFA.

The scope of the MCFA is made plain in its language:

The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale

20

of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided in section 325F.70.

Minn. Stat.§ 325E69, subd. 1. The common thread in the statute's list of prohibited

conduct is a false or misleading communication. This Court has said that the MCF A

"defines the conduct proscribed essentially as any misrepresentation made with the intent

that others rely on it in connection with the sale of any merchandise." Group Health, 621

N.W.2d at 12 (emphasis added). Not surprisingly, courts have consistently required a

false or misleading communication as an element of an MCF A claim. See, e.g., Baker v.

Best Buy Stores, LP, 812 N.W.2d 177, 182 (Minn. App. 2012), review denied (Minn.

Apr. 25, 2012) ("To prevail under the MCFA, appellants must show that respondents

intentionally made a misrepresentation .... "); 301 Clifton Place L.L. C. v. 301 Clifton

Place Condo. Ass'n, 783 N.W.2d 551, ~63 (Minn. App. 2010) ("TheMCFApenalizes

fraud or misrepresentation .... ").

or any act by Defendants that Plaintiffs claim was intended to deceive anyone. For

example, the F AC does not allege that Defendants represented one price for a GPD and

charged another. Indeed, an alleged violation of subdivision 4 does not require that

anything false be communicated or that anything deceptive be done. Instead, subdivision

4 focuses solely on pricing. Thus, allegedly violating subdivision 4 does not, standing

alone, violate the MCF A.

21

Because an alleged violation of subdivision 4 is not among the conduct prohibited

by the plain language of the MCFA, the Court of Appeals erred in allowing Plaintiffs'

MCFA claim to proceed.

D. Plaintiffs' Attempts To Sidestep The Plain Language Of The MCFA Should Be Rejected.

In oral argument before the Court of Appeals, Plaintiffs proffered three theories as

to why they should be allowed to re-cast their subdivision 4 claim as an MCF A claim:

(1) the "failure to confess" theory; (2) the "implied representation" theory; and (3) the

"deceptive practice" theory. None of these theories has merit.

Plaintiffs' "failure to confess" theory is essentially an omission theory. Plaintiffs

argue that Defendants failed to disclose information ("acquisition costs and subsequent

overcharges") that would have revealed violations of subdivision 4. However, as

discussed further, infra at Section II, pure omissions are not actionable under the MCF A

in the absence of a duty to disclose, and the Court of LA~ppeals erred in holding otherwise.

Moreover, if accepted by this Court, Plaintiffs' "failure to confess" theory would allow

parties to transform a violation of any statute involving a merchandise transaction into an

MCF A claim by the simple expedient of alleging that the offending party failed to

disclose the statutory violation. That would, in tum, allow private parties to circumvent

the legislature's decisions as to which remedies to provide for which statutory violations.

Plaintiffs' "failure to confess" theory is both bad law and bad policy, and it should be

rejected.

22

[

I

Plaintiffs' "implied representation" theory posits that by operating a pharmacy,

Defendants impliedly represent that they comply with all Minnesota statutes governing

the practice of pharmacy. Plaintiffs argue that Defendants' supposed "implied

representations" are false because they allegedly violate subdivision 4. The "implied

renresentation" theorv fails because "implied representations" are not actionable under .A. "' ..... ......

the MCF A. The theory also suffers from the same fundamental flaw as the "failure to

confess" theory- it would indiscriminately transform violations of other statutes into

violations of the MCFA, and thus circumvent legislative intent. Finally, the mere

possession of a license cannot amount to an implied representation -much less an

actionable misrepresentation - by the licensee that he or she is in compliance with all

applicable laws.

Plaintiffs' "deceptive practice" theory overreaches. Plaintiffs point out that

"deceptive practice" is included among the conduct prohibited by§ 325F.69, subd. 1, and

then argue, without citing any authority, that violating subdivision 4 is a "deceptive

practice." The term "deceptive practice" is not defined in§ 325F.69, but it is given

meaning by the provisions of Chapter 325A through Chapter 325N as a whole. Those

provisions clearly demonstrate that when the legislature wants a violation of another

statute to constitute a "deceptive practice" under the MCFA, it has said so.

Chapters 325A through 325N contain provisions regulating trade and providing

for consumer protection in certain types of business transactions. Each section addresses

a separate topic, and mandates certain business practices and prohibits others. For

violations of each topical section, the legislature specified one or more remedies. Where

23

the legislature wanted to provide an MCF A cause of action for violation of statutory

requirements, it said so directly, as shown below:

\x']~;:-~~h$~~int~:~~,"M:~~~~ i~~~~::~\~116 c ~i~i,~s~~t~B'~ ._ § 325A.09, subd. 7 Invention services

§ 325F.18, subd. 6 Formaldehyde gases in building materials

§ 325F.63, subd. 3 Practices of repair shops

§ 325F.662, subd. 9 Practices of dealers of used motor vehicles

§ 325F.692, subd. 4 Certain communications by information service roviders

§ 325F.693, subd. 2 Slamming oflocal telephone service without customer's verified consent

§ 325F.755, subd. Prize notices and 7 (b) solicitations

§ 325F.97, subd. 2 Rental purchase agreements

§ 3250.05; subd. 3 How financial transaction card issuers must respond

24

"In addition to the penalties provided in subdivisions 1 to 6, any invention developer who is found to have violated sections 325A.O 1 to 325A.l 0 shall be deemed in violation of section 325F.69, subdivision 1, and the provisions of section 8.31 shall apply." "Any person who is found in violation of subdivisions 1 to 3 shall be deemed in violation of section 325F.69, subdivision 1, and the provisions of section 8.31 shall apply." "Any violation of sections 325F.56 to 325F.66 shall be deemed a violation of section 325F.69, subdivision 1, and the provisions of section 8.31, shall apply." "Any dealer who is found to have violated this section is subject to the penalties and remedies, including a private right of action, as provided in section 8 .31. In addition, a violation of subdivision 7 is also a violation of section 325F.69.;; Specifying that certain communications are "fraudulent misrepresentations under section 325F.69"

Deeming such slamming to be "fraud under section 325F.69"

"A violation of this section is also a violation of sections 325F.68 to 325F.71, and is subject to section 8.31." "A violation of section 325F.90, 325F.91, or 325F.93 shall be treated as a violation of section 325F.69." "A violation of this section shall be treated as a violation of section 325F.69."

§ 3250.20

to customer inquiries into disputed accounts Warranties in "A violation of sections 3250.17 to 3250.20 consumer sales shall be treated as a violation of section

325F.69." § 325N.06, subd. a Conduct of mortgage

foreclosure consultants

"A violation of sections 325N.01 to 325N.09 is considered to be a violation of section 325F.69, and all remedies of section 8.31 are available for such an action. A private cause of action under section 8.31 by a foreclosed homeowner is in the public interest."

§ 325N.18, subd. 1 Conduct of "A violation of sections 325N.1 0 to 325N.17 foreclosure purchasers is considered to be a violation of section

325F.69, and all the remedies of section 8.31 are available for such an action. A private right of action under section 8.31 by a foreclosed homeowner is in the public interest."

Had the legislature intended any violation of any statute regulating business to be

a "deceptive practice" within the meaning of§ 325F.69, it would not have specified that

violations of certain specific statutes constitute MCF A violations. That the legislature

identified the violation of only certain specific statutory provisions, but not others, as

constituting MCF A violations indicates that the legislature did not intend the MCF A to

be a catchall encompassing violations of any other statutes.

It follows that an alleged violation of subdivision 4 does not constitute a

"deceptive practice" under the MCF A because there is no evidence that the legislature

intended that to be the case. Nothing in subdivision 4, or the Pharmacy Statute,

references the MCF A, and nothing in the MCF A references the Pharmacy Statute.

Consistent with this Court's reasoning in Becker, see 737 N.W.2d at 208-09, where the

25

legislature specifies that certain prohibited business practices violate the MCF A, but is

silent as to § 151.21 and its subdivision 4, the obvious conclusion must be that the

.legislature either did not have the MCF A in mind at all when enacting subdivision 4, or

deliberately did not deem violations of subdivision 4 to be MCF A violations. Either way,

Plaintiffs' MCF A claim must fail.

E. The Private AG Statute Does Not Give Plaintiffs Authority To Sue For Alleged Violations Of Subdivision 4.

The Private AG Statute also demonstrates that the legislature did not intend

alleged violations of subdivision 4 to be actionable by private plaintiffs. It provides in

relevant part that "any person injured by a violation of any of the laws referred to in

subdivision 1 may bring a civil action and recover damages .... " Minn. Stat. § 8.31,

subd. 3a (emphasis added). Subdivision 1 of§ 8.31, in tum, grants the attorney general

authority to sue on the State's behalf to remedy violations of certain state laws. Under

the "private attorney general" provision of subdivision 3a, Plaintiffs may sue only for

violations of the statutes described in subdivision 1, i.e., those statutes for which the

attorney general has primary enforcement authority. !d.

Although subdivision 1 is admittedly broad when addressing the attorney general's

authority, see § 8.31, subd. 1 (granting the attorney general authority to enforce state laws

"respecting unfair, discriminatory, and other unlawful practices in business, commerce or

26

I l f

trade," including the MCF A), the legislature did not make the attorney general the

primary enforcer of all statutes.4

In particular, the legislature did not make the attorney general the primary enforcer

of Chapter 151. It gave that responsibility to the BOP instead. See Minn. Stat. § 151.06

(providing that the BOP "shall have the power and it shall be its duty" to regulate the

practice of pharmacy and the retail sale of drugs, and specifying the BOP's enforcement

powers as including action against licenses and civil penalties). The attorney general is

counsel to the BOP, see Minn. Stat. § 8.06, and plays a role in investigating complaints or

4 The attorney general is not even the primary enforcer of all of the provisions in Chapters 325A through 325N. Where the legislature intended to grant the attorney general primary enforcement authority over a section of those chapters, it did so in the particular topical section. See, e.g., § 325E.044, subd. 4, and§ 325E.046, subd. 3 (topical section addressing sale and labeling of plastics); § 325E.318, subd. 4 (topical section addressing wireless directories); § 325E.3891, subd. 5 (topical section addressing cadmium in children's jewelry); § 325E.42, subd. 2 (topical section addressing gambling advertising and marketing); § 325E.61, subd. 6 (topical section addressing data warehouses); § 325F.24, subd. 3 (topical section addressing advertisements for insulation);§ 325F.72, subd. 4 (topical section addressing disclosure of special care status);§ 325F.744 (topical section addressing precious metals);§ 325F.78 (topical section addressing distribution of tobacco products);§ 325F.781, subd. 10 (topical section addressing tobacco product delivery sales); § 325F.783, subd. b (topical section addressing auto glass repair or replacement); § 325F.784, subd. 2 (topical section addressing prescription drug discounts);§ 325F.81, subd. 4 (topical section addressing replica firearms); § 325G.28, subd. 1 (topical section addressing club contracts); § 325G.54, subd. 3, and§ 325G.55, subd. 4 (topical section addressing cancellation of certain contracts by military personnel). For other topical sections, the legislature expressly provided for enforcement by other state officials, in lieu of the attorney generaL See, e.g., § 325E.316, subd. 1 (topical section addressing telephone solicitation) (providing for enforcement by the commissioner of commerce); § 325E.66, subd. 3 (topical section addressing insurance claims for residential contracting) (providing for enforcement by the commissioner oflabor and industry);§ 325K.07, subd. 3 (topical section addressing electronic authentication) (providing for enforcement by the secretary of state).

27

violations of Chapter 151 at the direction of the BOP, see Minn. Stat.§ 214.01 and Minn.

R. 6800.9600. But the attorney general has no general grant of authority to enforce

Chapter 151 on her own. Rather, the procedures for enforcement are limited to: (1)

contested case proceedings brought by the BOP under the Administrative Procedure Act,

Minn. Stat. § 214.103, subd. 7; (2) injunction actions brought by the BOP "in its own

name," Minn. Stat. § 214.11; and (3) criminal prosecutions brought by county and city

attorneys, Minn. Stat.§§ 151.29 and 151.30.

Because the attorney general is not the primary enforcer of Chapter 151, and

because the Private AG Statute does not grant private plaintiffs authority that the attorney

general does not have, Plaintiffs do not have the right to pursue an MCF A claim for

alleged violations of subdivision 4. The Court of Appeals' decision that Plaintiffs may

bring an MCF A claim for alleged violations of subdivision 4 should be reversed.

II. AN MCFA CLAIM CANNOT BE BASED UPON AN OMISSION

The Court of Appeals improperly concluded that an MCF A claim may be based

upon an omission in the absence of any duty to disclose the information, i.e., a "pure"

omission. (See APP 33.) This holding conflicts with the plain language ofthe MCFA,

legislative intent, and this Court's repeated rulings that parties to transactions generally

are not required to disclose information absent a duty to disclose.

A. The MCFA Does Not Encompass "Pure" Omissions.

The Court of Appeals' holding that an omission-based MCFA claim may be

brought when there is no duty to disclose improperly broadens the MCF A to encompass

28

conduct not contemplated by the legislature. Both the plain language and the history of

the MCF A demonstrate that it is not meant to include "pure" omissions.

While the MCFA prohibits the act, use or employment of"any fraud, false

pretense, false promise, misrepresentation, misleading statement or deceptive practice," it

does not mention omissions or similar language, such as "concealment" or "failure to

disclose," in its list of prohibited conduct. Minn. Stat. § 325F.69, subd. 1. Because the

MCFA's plain language does not address omissions, the Court of Appeals erred in

holding that an MCF A claim can be based on a "pure" omission. See Minn. Stat.

§ 645.16 ("When the words of a law ... are clear and free from all ambiguity, the letter

of the law shall not be disregarded under the pretext of pursuing the spirit.").

The MCF A was originally enacted in 1963 as part of a wave of consumer

protection legislation in 'which state legislatures adopted one of a variety of model acts.

See Mary Dee Pridgen, Consumer Protection and the Law,§ 2:10 (2012); Ly, 615

N.W.2d at 308. At that time, the Minnesota legislature chose not to include omissions as

conduct prohibited by the MCF A. In contrast, many other states and the District of

Columbia elected to include language that covered omissions in addition to affirmative

misrepresentations.5 For example, Delaware's consumer protection statute prohibits,

5 See, e.g., 1960 N.J. Laws 138 (current version at N.J. Stat. Ann. § 56:8-2 (2013)) ("concealment, suppression or omission of any material fact"); 1961 Ill. Laws 1868 (current version at 815 Ill. Comp. Stat. Ann. 505/2 (2013)) (same); 55 Del. Laws 108 (1965) (current version at Del. Code Ann. tit. 6 § 2513(a) (2013)) (same); 1967 Ariz. Sess. Laws 315 (current version at Ariz. Rev. Stat.§ 44-1522, subd. A (20) (2013)) (same); 1967 Mo. Laws 607 (current version at Mo. Rev. Stat.§ 407.020 (2012)) (same); 1987 N.M. Laws 1053 (current version at N.M. Stat. Ann. § 57-12-2 D (14) (2013)) ("failing to state a material fact"); 1970 Alaska Sess. Laws 2 (current version at Alaska

29

"any deception, fraud, false pretense, false promise, misrepresentation, or the

concealment, suppression or omission of any material fact with intent that others rely

upon such concealment, suppression or omission .... " Del. Code Ann., tit. 6 § 2513(a)

(emphasis added).

Since enacting the MCF A, the legislature has repeatedly revised Minn. Stat.

§ 325F.69, subd. 1, but has never added omissions as actionable conduct. In 1969, the

legislature expanded the list of conduct prohibited by the MCF A, but- unlike other states

-declined to expand that list to include omissions. Compare 1963 Minn. Sess. Law, c.

842, § 2 with 1969 Minn. Sess. Law, c. 1100, § 1 (adding "misleading statement or

deceptive practice"). The legislature amended Minn. Stat. § 325F.69, subd. 1, again in

1973 and 2004, but chose not to add to the list of prohibited conduct on either occasion.

See 1973 Minn. Sess. Law, c. 454, § 1 (substituting "merchandise" for "goods or

services"); 2004 Minn. Sess. Law, c. 228, art. 1, §56 (adding reference to Minn. Stat. §

Stat. Ann.§ 45.50.471(b) (2013)) ("knowingly concealing, suppressing, or omitting a material fact"); 1971 Ark. Acts 92 (current version at Ark. Code Ann.§ 4-88-108 (2013)) ("concealment, suppression, or omission of any material fact"); D.C. Code § 28-3904 (1973) ("fail to state a material fact"); 1973 Kan. Sess. Laws 807 (current version atKan. Stat. Ann. §50-626 (b) (3) (20 12)) ("intentional failure to state a material fact, or the intentional concealment, suppression or omission of a material fact"); 197 4 W. Va. Acts 148 (current version at W.Va. Code§ 46A-6-102 (7)(M) (2013)) ("concealment, suppression or omission of any material fact"); 197 5 Md. Laws 527 (current version at Md. Code Ann., Com. Law§ 13-301(9) (2013)) ("concealment, suppression, or omission of any material fact"); 1976 Mich. Pub. Acts 1165 (current version at Mich. Comp. Laws § 445.903, Sec. 3(1)(s) (2013)) ("failing to reveal a material fact"); 1979 Tex. Gen. Laws 603 (current version at Texas Bus & Com. Code Ann. § 17.46(b)(24) (2011)) ("failing to disclose information concerning goods or services"); 1987 Colo. Sess. Laws 357 (current version at Colo. Rev. Stat. § 6-1-105(1)(u) (2013)) ("fails to disclose material information"); S.D. Codified Laws Ann. § 37-24-6 (1967)) ("conceal, suppress, or omit"); 1994 Okla. Sess. Laws 759 (current version at Okla. Stat. Ann. tit. 15, § 752 (13) (20 13)) ("misrepresentation, omission or other practice").

30

325F.70). Despite repeatedly revisiting this particular subdivision, the legislature has

never seen fit to expand the description of prohibited practices to include omissions.

When seeking to interpret statutes and determine the will of the legislature, this

Court "will not supply words that the Legislature either purposely omitted or

inadvertently left out." State v. Caldwell, 803 N.W. 2d 373, 382 (Minn. 2011) (citing

Vlahos v. R & I Constr. of Bloomington, Inc., 676 N.W. 2d 672, 681 (Minn. 2004)); see

also Reiter v. Kiffmeyer, 721 N.W.2d 908, 911 (Minn. 2006) ("We will not read into a

statute a provision that the legislature has omitted, either purposely or inadvertently.").

Considering the lack of any reference to omissions in the MCF A, and the broader context

in which the MCF A was enacted and repeatedly revised, this Court should not read the

MCF A to encompass an omission in the absence of a duty to disclose. 6

B. A Duty To Disclose Is Required To Bring An Omission-Based MCFA Claim.

This Court has long held that "[a]s a general mle, one party to a transaction has no

duty to disclose material facts to the other." Klein v. First Edina Nat'! Bank, 293 Minn.

6 In some other states that have adopted consumer protection statutes similar to the MCF A by not containing an express reference to omissions, courts require a duty to disclose to assert a viable omission-based consumer fraud claim. See, e.g., Olson v. Accessory Controls and Equip. Corp., 254 Conn. 145, 180, 757 A.2d 14, 34 (Conn. 2000) (under Conn. Gen. Stat. § 42-110b, "[a] failure to disclose can be deceptive only if, in light of all the circumstances, there is a duty to disclose") (citation and internal quotation omitted); Smith v. Ford Motor Co., 462 Fed. Appx. 660, 662 (9th Cir. 2011) ("As plaintiffs do not allege that [defendant] made affirmative representations ... plaintiffs cannot prevail absent a duty to disclose by [defendant]" under Cal. Civ. Code§ 1770); Kron Med. Corp. v. Collier Cobb & Assocs., Inc., 107 N.C. App. 331, 339, 420 S.E.2d 192, 196-97 (1992) (recognizing that "a failure to disclose information may be tantamount to a misrepresentation and thus an unfair or deceptive practice in violation of [N.C. Gen. Stat. § 58-63-15(1)]" in circumstances "[w]here there is a duty to speak").

31

418, 421, 196 N.W.2d 619, 622 (Minn. 1972). "Where both parties are intelligent and

fully capable of taking care of themselves and dealing at arms' length, with no

confidential relations, no duty to disclose exists when information is not requested, and

mere silence is then not a fraud." Boubelik, 553 N.W.2d at 399 (citation and internal

quotation omitted), quoted in Erickson v. Horing, No. C4-02-138, 2002 WL 31163611, at

* 10 (Minn. App. Oct. 1, 2002). "For nondisclosure to constitute fraud, 'there must be a

suppression of facts which one party is under a legal or equitable obligation to

communicate to the other, and which the other party is entitled to have communicated to

him."' Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179, 190 (Minn. 1999)

(internal quotation and citation omitted). Thus, there is no liability for failing to disclose

information- even material information- in connection with a business transaction

absent a duty to disclose that information.

The issue of whether an MCF A claim can be based upon an omission in the

absence of a duty to disclose is a matter of first impression before this Court. Before the

Court of Appeals' decision, several courts (including other panels of the Court of

Appeals) had held that an omission-based MCFA claim required a duty to disclose. See

Sailors v. N States Power Co., 4 F.3d 610, 614 & n.5 (8th Cir. 1993) (MCFA claim

"requires a misrepresentation or, in the case of an omission, a duty of disclosure");

Cashman v. Allied Prods. Corp., 761 F.2d 1250, 1255 (8th Cir. 1985) (upholding jury

instruction for MCF A claim that stated, "[ s ]ilence ... may be a misrepresentation if it

relates to a material fact and there is a duty to disclose the matter."); Erickson, 2002 WL

31163611, at *10 (affirming rejection of consumer fraud claim, noting "[g]enerally, one

32

party to a transaction does not have a duty to disclose material facts known only to that

party") (citing Klein, 293 Minn. at 421, 196 N.W.2d at 622)); Ford Motor Credit Co. v.

Majors, No. A04-1468, 2005 WL 1021551, at *4 (Minn. App. May 3, 2005) ("An

omission or misrepresentation through silence is actionable under the MCF A if the

information is material and there is a duty to disclose based on a relationship of trust or

confidence or an unequal access to information.") (citing Cashman, 761 F.2d at 1255).

These courts correctly applied the common law requirement of a duty to disclose

to MCF A claims involving omissions. Courts have "long presumed that statutes are

consistent with the common law, and if a statute abrogates the common law, the

abrogation must be by express wording or necessary implication." Ly, 615 N.W.2d at

314; see Morris v. Am. Family Mut. Ins. Co., 386 N.W.2d 233,238 (Minn. 1986)

("[S]tatutes are enacted with regard to existing common law and should be construed to

harmonize with that law 'unless the intention to change or repeal it is apparent."')

(citation omitted). As explained above, nothing in the plain language or the legislative

history of the MCF A indicates that the legislature intended to allow MCF A claims based

on omissions without a duty to disclose. Therefore, the common law requirement that

there must be a duty to disclose omitted information should be applied to the MCF A.

In reversing the District Court on the MCF A claim, the Court of Appeals rejected

Minnesota's general rule that omissions are only actionable if there was a duty to

disclose, and instead wrongly relied upon two federal district court decisions: Minnesota

ex. rel Hatch v. Fleet Mortg. Corp., 158 F. Supp. 2d 962 (D. Minn. 2001), and Khoday v.

Symantec Corp., 858 F. Supp. 2d 1004 (D. Minn. 2012). (ADD 31.)

33

The federal district court in Fleet Mortgage did not address any Minnesota state

court decisions requiring a duty to disclose for an omission-based fraud claim. Rather, it

summarily rejected the cases cited by the defendant as "concem[ing] common law fraud

and not state consumer protection statutes." 159 F. Supp. 2d at 967. The Fleet Mortgage

court did not have the benefit of guidance from the Court of Appeals' subsequent

decisions regarding omission-based MCF A claims, but instead relied on First Circuit and

Illinois case law that did not require a duty to disclose for omission-based violations of

other state consumer protection statutes. 7 See 15.8 F. Supp. 2d at 967 (noting "there is no

Minnesota case authority directly on point"); cf Ford Motor Credit, 2005 WL 1021551,

at *4 (omission-based MCFA claim requires duty to disclose).

The Court of Appeals' reliance on Khoday should be similarly discounted because

Khoday 's limited discussion of the duty to disclose relied entirely on Fleet Mortgage.

See Khoday, 85 8 F. Supp. 2d at 1018 & n.17. Thus, the Court of Appeals' reliance on

these federal district court decisions - to the exclusion of the MCF A's plain language and

legislative history, this Court's directive in the common law fraud context, and the Court

of Appeals' own prior decisions requiring a duty to disclose in the MCF A context- was

misplaced and should be reversed.

7 Fleet Mortgage's reliance on Illinois case law in deciding a MCF A claim was inappropriate because, unlike the MCFA, the Illinois consumer protection statute expressly encompasses omissions. See 815 Ill. Comp. Stat. 505/2 (2013).

34

C. Requiring A Duty To Disclose To Bring An Omission-Based MCFA Claim Is A Better Rule.

Requiring that there be a duty to disclose in order for an omission to give rise to an

MCF A claim is the better rule because without it, merchants would face possible liability

even in the absence of any culpability. Merchants could be sued, and held liable, for

having failed to disclose information that they were not legally required to disclose, and

that they had no reason to think should be disclosed. That contravenes legislative intent,

because the terms used in §325F.69, subd. 1 ("fraud," "misrepresentation," promises that

are "false," statements that are "misleading," practices that are "deceptive"), "given their

plain, ordinary meaning, denote at least some degree of culpability." Jenson v. Touche

Ross & Co., 335 N.W.2d 720, 728 (Minn. 1983) (holding that it is inappropriate to

impose a strict liability standard under the MCF A).

Requiring some degree of culpability - a duty to disclose that was breached -

would both conform with legislative intent, and prevent questionable claims that could

negatively impact Minnesota merchants, courts, and regulators. Every day, Minnesota

merchants and consumers engage in transactions in which merchants do not disclose

information that consumers might find material to their purchase decisions. Until now,

merchants had no reason to do so, because parties to a transaction had no duty to disclose

material facts to each other, absent special circumstances. See Klein, 196 N.W.2d at 622.

As a result of the Court of Appeals' decision, merchants who allegedly fail to

disclose all arguably material information in connection with each and every consumer

transaction could face MCFA claims. While the MCFA is to be construed liberally, it is

35

not limitless. SeeLy, 615 N.W.2d at 310 (MCFA "was intended to protect a broad,

though not limitless, range of individuals from fraudulent and deceptive trade practices").

Common sense dictates that not all omissions of allegedly material facts in connection

with transactions amount to consumer fraud. See In re Mex. Money Transfer Litig., 267

F.3d 743, 749 (7th Cir. 2001) ("[S]ince when is failure to disclose the precise difference

between wholesale and retail prices for any commodity 'fraud'? ... Neiman Marcus

does not tell customers what it paid for the clothes they buy, nor need an auto dealer

reveal rebates and incentives it receives to sell cars."). If not reversed, the Court of

Appeals' decision invites consumers to assert these types ofMCFA claims against

Minnesota merchants in connection with innumerable types of consumer transactions.

Further, the Court of Appeals' decision allows judges and juries to decide MCF A

claims based on the failure to disclose any number of arguably material facts, including

alleged violations of regulatory statutes for which there is no private right of action.

Doing so usurps the role of the regulators, and potentially conflicts with both the

legislature's intent in designating the regulator as the overseer of those laws, and the

regulator's interpretation of those laws. See supra at Section LA. Finally, the Court of

Appeals' decision creates enormous challenges in ascertaining causation (explained in

section III below) and damages for MCF A claims.

For these reasons, the Court should hold that omissions are actionable under the

MCF A only if there is a duty to disclose the omitted information.

D. The FAC Does Not And Cannot Plead A Duty To Disclose.

If this Court holds that a duty to disclose is required to state an actionable MCFA

36

claim, the F AC should be dismissed because Piaintiffs have not pleaded any facts that

would trigger a duty to disclose. 8

One party to a transaction may have a duty to disclose material facts to the other

only in the following "special circumstances":

(a) One who speaks must say enough to prevent his words from misleading the other party. Newell v. Randall, 32 Minn. 171, 19 N.W. 972 (1884).

(b) One who has special knowledge of material facts to which the other party does not have access may have a duty to disclose these facts to the other party. Marsh v. Webber, 13 Minn. 109, 13 Gil. 99 (1868).

(c) One who stands in a confidential or fiduciary relation to the other party to a transaction must disclose material facts. See, e.g., Wells-Dickey Trust Co. v. Lien, 164 Minn. 307, 204 N.W. 950 (1925).

Klein, 293 Minn. at 421, 196 N.W.2d at 622 (emphasis added). Here, the FAC does not

allege a duty to disclose under any of these "special circumstances." It does not allege

any statement by Defendants requiring them to say enough to prevent the statement from

being misleading. Nor does it allege a confidential or fiduciary relationship between the

parties.

Only one paragraph in the entire F AC arguably touches on disclosure: Paragraph

41 states that "Defendants keep secret from the public their acquisition costs for

prescription drugs." (APP 9.) But Plaintiffs do not allege- because they cannot allege-

that Defendants had any duty to disclose their acquisition costs.

Plaintiffs argued below that Defendants' alleged "special knowledge" of their

8 The existence of a legal duty is a question oflaw. See Boubelik, 553 N.W.2d at 397 (citing Larson v. Larson, 373 N.W.2d 287, 289 (Minn. 1985)).

37

I

acquisition costs, without more, triggered a duty of disclosure. This Court has "rarely

addressed" the theory of"special knowledge of material facts," L & H Airco, Inc. v.

Rapistan Corp., 446 N.W.2d 372, 380 (Minn. 1989), but has limited the concept to

"unique and narrow 'special circumstances'" where the defendant had "actual

knowledge" of a fraudulent scheme. See Richfield Bank & Trust Co. v. Sjogren, 309

Minn. 362, 368, 244 N.W.2d 648, 652 (Minn. 1976) (holding that a bank had a duty to

disclose to borrower that depositor with whom borrower was dealing was irretrievably

insolvent and was engaging in fraudulent business practices when bank had "[a]ctual

knowledge of the fraudulent activities"); cf Witzman, 601 N.W.2d at 191 (noting that

"actual knowledge" was the "linchpin" in Richfield Bank).

In the context of ordinary business transactions like those here, courts interpreting

Minnesota law have been reluctant to find a duty to disclose based on a party's "special

knowledge of material facts." See, e.g., Am. Computer Trust Leasing v. Boerboom Int'l,

Inc., 967 F.2d 1208, 1212 (8th Cir. 1992) (plaintiffs failed to show duty to disclose based

on "special knowledge" where "these were ordinary business transactions conducted at

arm's length"); Driscoll v. Standard Hardware, Inc., 785 N.W.2d 805, 814 (Minn. App.

201 0) (affirming summary judgment of misrepresentation-by-omission claim because

"[r]espondents [sellers] had no duty as a matter oflaw to inform appellant [buyer] of

facts allegedly material to the sale" regarding safety concerns about drill sold to appellant

where respondents had little knowledge of safety concern before sale); Taylor Inv. Corp.

v. Wei!, 169 F. Supp. 2d 1046, 1065 (D. Minn. 2001) (upholding summary judgment on

fraud claims by business computer system buyer against system provider, because when

38

I I I l

I I I I I f I

I I f I I

I

parties were engaged in arm's-length bargaining transaction, no duty existed to supply

omitted information); Miller's Fairway, Inc. v. Schoenborn, No. C9-97-796, 1997 WL

769528, at *2 (Minn. App. Dec. 16, 1997) (affirming dismissal of fraudulent

misrepresentation by omission claim where defendants had no duty to disclose identity of

buyers of building). These decisions are well-reasoned, as parties to a transaction often

have unequal access to business information - such as information about negotiation

strategies, goals, pricing objectives, costs, etc. See, e.g., Taylor, 169 F. Supp. 2d at 1065

f

I (noting that "[i]t is inappropriate for the Court to burden [defendant] with the duty to

disclose personal concerns and legitimate business information").

Here, the F AC does not claim that failing to disclose acquisition costs, in itself,

violates any law. Nor can it, as nothing in the Pharmacy Statute requires disclosure of

acquisition costs. While the Pharmacy Statute requires pharmacists to disclose the

substitution of a generic drug for a brand name drug, it does not require pharmacists to

disclose the acquisition costs of the drugs. See Minn. Stat.§ 151.21, subd. 3 & 4. The

legislature knows how to mandate disclosure if it wants to require it. The fact that the

legislature mandated certain disclosures in the Pharmacy Statute, but not disclosure of

acquisition costs, compels the conclusion that pharmacists and pharmacies do not have

that duty. See Matter ofWang, 441 N.W.2d 488, 496 (Minn. 1989) ("[p]lainly, the

legislature knows how to specifically authorize the recovery of attorney fees and

investigation costs when it intends such recovery" because it had done so in other

statutes).

Nor does the F AC allege that Defendants have a duty to publicly disclose the

39

alleged violations of subdivision 4 to any person supposedly entitled to the information.

As explained above, the language of subdivision 4 does not mandate disclosure of

information about a pharmacist's acquisition costs or profit margin, and Defendants have

no duty to self-report alleged violations of the law to Plaintiffs. See, e.g., Romine v.

Acxiom Corp., 296 F.3d 701, 708 (8th Cir. 2002) (an obligation to provide factual

information does not encompass the duty to disparage oneself). Any assertion that

Defendants had a duty to disclose alleged statutory violations is particularly misplaced

here, where the F AC does not allege that Defendants knew of any alleged violation at the

time of the transactions at issue. Nor does it allege that the BOP- which is composed of

pharmacists and charged with enforcing subdivision 4 -ever gave Defendants any reason

to believe that they have been acting in any way that conflicts with the statute.

Because there is no duty to disclose the allegedly omitted information, the Court

of Appeals erred in reversing dismissal ofPlaintiffs' MCFA claim.

E. The FAC Does Not And Cannot Plead A Material Omission.

Even if a duty to disclose is not required to state an actionable MCF A claim, the

F AC should be dismissed because the alleged omissions are not materiaL While the

Court of Appeals held that the FAC "need only allege that [Defendants'] failure to

disclose acquisition costs and subsequent overcharges were material omissions," (APP

32 (emphasis added)), the FAC contains no such allegations. The FAC nowhere alleges

that the acquisition costs or alleged overcharges were in any way material, i.e., that

disclosure of that information would have affected any purchase decision. See Yost v.

40

Millhouse, 373 N.W.2d 826, 830 (Minn. App. 1985) (statement is material "if it would

naturally affect the conduct of the party addressed").

Further, where an underlying statute that regulates the transaction does not require

the disclosure of omitted information, the information should be considered immaterial

for purposes oftheMCFA. See, e.g., Ford Motor Credit, 2005 WL 1021551, at *6

("TILA suggests that the discount or markup a dealer imposes on a credit transaction is

not a material aspect of the transaction and, therefore, that the failure to disclose the

markup is not deceptive or misleading"). Subdivision 4 requires pharmacies to pass

along to the purchaser "any difference between acquisition cost to the pharmacist of the

drug dispensed and the brand name prescribed," nothing more. It does not require the

pharmacist to disclose the acquisition cost of either drug. The legislature or the BOP

could have required such disclosure, but did not. Where both the legislature and the

regulatory agency have refrained from requiring pharmacists to disclose their acquisition

costs, it would be improper for the judiciary, through the vehicle of an MCF A claim, to

create such a requirement.

For all of the above reasons, the FAC fails to state an MCFA claim.

III. PLAINTIFFS FAILED TO PLEAD FACTS SHOWING A CAUSAL NEXUS.

The Court of Appeals' holding that the F AC sufficiently pleads the causation

element of an MCF A claim misapplies prior Supreme Court decisions, and should be

reversed.

41

This Court has held that (1) causation is a necessary element in a damages claim

under the MCFA, (2) reliance is a component of the causal nexus requirement, but (3) a

plaintiff need not plead individual consumer reliance. See Group Health, 621 N. W.2d at

13-15; Wiegandv. Walser Auto. Groups, Inc., 683 N.W.2d 807, 811-12 (Minn. 2004).

An MCF A claim must allege that the defendant engaged in conduct prohibited by the

MCFA "and that the plaintiff was damaged thereby." Group Health, 621 N.W.2d at 12.

That is, the plaintiff must allege that it suffered damages caused by the misrepresentation.

See Baker, 812 N.W.2d at 182 (for MCFA claim, plaintiffs must show "that they suffered

damages caused by [defendants'] misrepresentation"); Bernstein v. Extendicare Health

Servs., 653 F. Supp. 2d 939, 944 (D. Minn. 2009) (affirming dismissal ofMCFA claims

"because [plaintiff] did not plead an injury with a causal nexus to an alleged

misstatement").

Here, even assuming that Plaintiffs had alleged (or could allege) that Defendants

had engaged in conduct prohibited by the MCFA, Plaintiffs' claims must nevertheless fail

because they have not alleged (and cannot allege) a causal connection between

Defendants' alleged conduct and Plaintiffs' alleged injury.

This Court has held that a plaintiff need not have relied upon the alleged

misrepresentation himself, but that, at the very least, his injury must flow, either directly

or indirectly, from the reliance of someone else who was misled. See Group Health, 621

N.W.2d at 13-14. For example, in Wiegand, the Court found that the complaint "alleges

that misrepresentations were made and consumers were damaged thereby" where it

alleged:

42

a Walser representative falsely told [Wiegand] and potentially at least 100 other consumers that he was required to purchase a $1,500 service contract in order to obtain financing, and that he did so. Wiegand also alleges that a Walser representative falsely told him and potentially others that they had to purchase a credit insurance policy in order to obtain financing, and that he did so. Wiegand alleges that he agreed to purchase the service contract and credit insurance based on the misrepresentations of Walser's representative.

683 N.W.2d at 812 (emphasis added). The causal nexus between the alleged

misrepresentations and the alleged injury in Wiegand is clear.

Similarly, in Group Health, the plaintiffHMOs asserted that they were injured due

to their members' reliance on allegedly misleading statements by the defendant tobacco

companies regarding the effects of tobacco use. See 621 N.W.2d at 4-5 (HMOs alleged

they were "directly injured by the tobacco companies' deceptive statem~nts urging them

not to engage in tobacco education programs that could have prevented or decreased the

occurrence of tobacco-related illnesses among their members," and "indirectly injured by

the tobacco companies' deceptive conduct because of the costs for increased medical

services incurred by their members that the HMOs were contractually obligated to

assume"); see also Group Health Plan, Inc. v. Philip Morris, Inc., 86 F. Supp. 2d 912,

915 (D. Minn. 2000) (noting HMOs "allege that they were directly injured by

Defendants' fraudulent statements urging them not to engage in tobacco education

programs," that "such programs could have prevented or decreased the occurrence of

tobacco-related illnesses among their members," and that "they have been required to

assume the medical costs sustained by their members as a result of tobacco use" in

context of motion to dismiss).

43

Unlike the allegations in Wiegand and Group Health, the FAC does not contain

any facts indicating that a causal link exists between Defendants' allegedly actionable

conduct and any injury allegedly suffered by Plaintiffs. It is devoid of any allegation of

how allegedly misrepresented or omitted information might have impacted Plaintiffs'

alleged payment for GPDs obtained by plan participants. For example, the F AC does not

claim that Plaintiffs or their plan participants would have demanded a lower price, or

purchased drugs from different pharmacies, if they had known Defendants' acquisition

costs. Plaintiffs do not make such allegations because they cannot. Many individual plan

participants with insurance pay the same co-payment regardless of the price of the drug.

Furthermore, individual plan participants select a pharmacy based upon a variety of

factors (such as familiarity, convenience, and comfort), not just price.

The Court of Appeals erred when it held that Plaintiffs had adequately pled

causation "by specifically alleging instances in which [Defendants] violated the CF A and

damaged [Plaintiffs]." (ADD 36.) "A plaintiff must provide more than labels and

conclusions" to plead a cause of action. Bahr, 788 N.W.2d at 80 (citing Hebert v. City of

Fifty Lakes, 744 N.W.2d 226,235 (Minn. 2008), and Bell Atl. Corp. v. Twombly, 550

U.S. 544, 555 (2007)). And, as this Court has held, "it is not possible that the damages

could be caused by a violation without reliance on the statements or conduct alleged to

violate the statutes." Group Health, 621 N.W.2d at 13. A plaintiff must be able to allege

that someone relied upon an alleged misstatement or omission in some way to the

detriment of the plaintiff in order to state a causal nexus. See Royal Realty Co. v. Levin,

244 Minn. 288, 291, 69 N.W.2d 667, 670-71 (Minn. 1955) (fraud claim properly

44

dismissed where complaint "contains no allegations to the effect that the defendants made

false representations to [the sellers] upon which they relied in taking the action which

they did").

Here, Plaintiffs' allegations of specific transactions are legally insufficient to plead

an MCFA claim because they merely link Plaintiffs' hypothetical damages to the

transactions. As explained above, the casual link that must be pleaded under the MCF A

is between the claimed damages and the allegedly actionable conduct. Nothing in the

F AC alleges a connection between any alleged misstatement or omissions by Defendants

and Plaintiffs' claimed injury. As a result, the FAC fails to plead a causal nexus.

Defendants' unanswered questions go to the heart of identifying the casual link, if

any exists. For example, how would Plaintiffs have acted differently if they had known

Defendants' acquisition costs? To whom do Plaintiffs think Defendants should have

disclosed these costs? What difference do Plaintiffs think this information would have

made to anyone -patients, doctors, PBMs, Plaintiffs, or their plan participants - given

that all aspects of the pricing for the transactions were covered by pre-existing contracts,

negotiated on Plaintiffs' behalf by their PBMs? What facts link Defendants' acquisition

costs to Plaintiffs' payments for GPDs? None of these questions is addressed in the FAC,

and their answers are not self-evident.

This Court should require a plaintiff who seeks damages for an alleged MCF A

violation to plead facts indicating his theory of causation. Doing so would permit courts

to review at an early stage whether a plaintiffs theory of causation is viable under the

MCF A. An early stage review would be beneficial for both the parties and the courts,

45

and would serve the interests of justice. See Twombly, 550 U.S. at 558 ("[W]hen the

allegations in a complaint, however true, could not raise a claim of entitlement to relief,

'this basic deficiency should ... be exposed at the point of minimum expenditure of time

and money by the parties and the court."' (quoting 5 Charles Wright & Arthur Miller,

Federal Practice and Procedure,§ 1216 (3d ed. 2004))). Such a review would help the

parties and the courts avoid the heavy burden and expense of discovery and motion

practice, in cases where it is clear from the outset that a plaintiff cannot establish the

requisite causallinl<. See Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005)

(explaining that something beyond mere possibility of loss causation must be alleged, lest

plaintiff with "a largely groundless claim" "take up the time of a number of other people,

with the right to do so representing an in terrorem increment of the settlement value"

(internal quotations omitted)).

Here, the FAC alleges that 50 million retail prescriptions were filled by Minnesota

pharmacies in 20 10 alone, and that 79% of prescriptions were written for brand name

drugs. (See FAC ,-r,-r 32, 34, APP 6.) Plaintiffs seek to represent "all purchasers or

payment sources for generically equivalent prescription drugs dispensed by Defendants"

in Minnesota since July 28, 2003. (F AC ,-r 110, APP 31.) Assuming for the purposes of a

Rule 12 motion that these allegations are true, discovery in this case would be incredibly

burdensome and expensive, encompassing evidence of hundreds of millions of

prescriptions dispensed in Minnesota over the past 10 years. Because Plaintiffs cannot

articulate a colorable causal link between Defendants' alleged misstatements or

46

I I I I

I I

omissions and their claimed damages (even after four versions of the complaint), they do

not have a viable MCF A claim and should not be allowed to proceed with this action.

47

CONCLUSION

The Court of Appeals' decision should be reversed as to Plaintiffs'-Respondents'

MCF A claim and affirmed in all other respects. Judgment should be entered in favor of

Defendants-Appellants on all claims.

Date: August 30,2013.

Respectfully submitted,

:~LLP Wendy J. Wildung (#117055) Craig S. Coleman (#0325491) 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 Telephone: (612) 766-7000

Attorneys for Defendant-Appellant Target Corporation

And

I ,EO NARD, STREET AND DEINARD Professional Association

Todd A. Noteboom ( #24004 7) Elizabeth Wiet Reutter (#316957) 150 South Fifth Street, Suite 2300 Minneapolis, MN 55402 Telephone: (612) 335-1500

Attorneys for Defendant-Appellant Walgreen Co.

BASSFORD REMELE, P.A. Lewis A. Remele, Jr. (#90724) Christopher R. Morris (#230613) 33 South Sixth Street, Suite 3800 Minneapolis, MN 55402-3707 Telephone: (612) 333-3000

48

Of Counsel: FOLEY & LARDNER LLP Robert H. Griffith 321 N. Clark Street, Suite 2800 Chicago, IL 60654 Telephone: (312) 832-4500

Attorneys for Defendants-Appellants CVS Caremark Corporation, CVS Pharmacy, Inc., Carernark, LLC, Caremark Minnesota Specialty Pharmacy, LLC, and Caremark Minnesota Specialty Pharmacy Holding, LLC

DORSEY & WHITNEY James K. Langdon (#171931) 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Telephone: (612) 340-2600

Attorneys for Defendants-Appellants Snyder's Drug Stores (2009), Inc., Snyder's Holdings (2009), Inc., and Snyder's Holding, Inc.

P..ALLEL}·~~D !LAB!CHT P.A. Kevin D. Hofman (#0179978) Ronald B. Peterson (#0086344) 33 South 6th Street, Suite 3900 Minneapolis, MN 5 5402 Telephone: (612) 836-5500

Attorneys for Defendant-Appellant Coborn's Incorporated

NILAN JOHNSON LEWIS, P.A. Tracy J. Van Steenburgh (#141173) 600 U.S. Bank Plaza South 220 South Sixth Street Minneapolis, MN 55402 Telephone: (612) 338-1838

-and-

49

DYKEMA GOSSETT PLLC Todd Grant Gattoni (P47843) Jill M. Wheaton (P49921) Lisa A. Brown (P67208) 2723 S. State Street, Suite 400 Ann Arbor, MI 48104 Telephone: (734) 214-7629

Attorneys for Defendants-Appellants Kmart Holding Corporation, Sears, Roebuck & Co., and Sears Holding Corporation

FREDRIKSON & BYRON, P.A. David R. Marshall (#184457) Joseph J. Cassioppi (#388238) 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402 Telephone: (612) 492-7000

Of Counsel: JONES DAY Tina M. Tabacchi (admitted pro hac vice) Adam W. Wiers (admitted pro hac vice) Erin Shencopp (admitted pro hac vice) 77 \Vest \Vacker Chicago, IL 6060 1-1692 Telephone: (312) 782-3939

Attorneys for Defendant-Appellant Wal-Mart Stores, Inc.

50

CERTIFICATE OF COMPLIANCE

I hereby certify that this brief conforms to the requirements of Minn. R. Civ. App. P. 132.01, subds. 1 and 3, for a brief produced with a proportional font. The length of this brief is 12,788 words. This briefwas prepared using Microsoft Word 2010 software.

Date: August 30, 2013.

F~~SLLP By __________________________ ___

51

Wendy J. Wildung (#117055) Craig S. Coleman (#0325491) 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3901 Telephone: (612) 766-7000

Attorneys for Defendant-Appellant Target Corporation

-and-

LEONARD, STREET AND DEINARD Professional Association

Todd A. Noteboom (#240047) Elizabeth Wiet Reutter (#316957) 1 J::{\ C'~n-1-h 1:'~-A-l. C'-1-.. aai- c;:.,;1-,. ")"l(l(l ~JV I.JVUL.ll .L'.LHJ..l IJL.l'-''-'L, UU.lL'-' .<....JVV

Minneapolis, MN 55402 Telephone: (612) 335-1500

Attorneys for Defendant-Appellant Walgreen Co.

BASSFORD REMELE, P.A. Lewis A. Remele, Jr. (#90724) Christopher R. Morris ( #23 0613) 33 South Sixth Street, Suite 3800 Minneapolis, MN 55402-3707 Telephone: (612) 333-3000

Of Counsel: FOLEY & LARDNER LLP Robert H. Griffith 321 N. Clark Street, Suite 2800 Chicago, IL 60654 Telephone: (312) 832-4500

Attorneys for Defendants-Appellants CVS Caremark Corporation, CVS Pharmacy, Inc., Caremark, LLC, Caremark Minnesota Specialty Pharmacy, LLC, and Caremark Minnesota Specialty Pharmacy Holding, LLC

DORSEY & WHITNEY James K. Langdon (#171931) 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402-1498 Telephone: (612) 340-2600

Attorneys for Defendants-Appellants Snyder's Drug Stores (2009), Inc., Snyder's Holdings (2009), Inc., and Snyder's Holding, Inc.

HALLELAND H;\,.BICHT P.A. Kevin D. Hofman (#0179978) Ronald B. Peterson (#0086344) 33 South 6th Street, Suite 3900 Minneapolis, MN 55402 Telephone: (612) 836-5500

Attorneys for Defendant-Appellant Cobom's Incorporated

NILAN JOHNSON LEWIS, P.A. Tracy J. Vim Steenburgh (#141173) 600 U.S. Bank Plaza South 220 South Sixth Street Minneapolis, MN 5 5402 Telephone: (612) 338-1838

-and-

52

dms.us.52552527.06

DYKEMA GOSSETT PLLC Todd Grant Gattoni (P47843) Jill M. Wheaton (P49921) Lisa A. Brown (P67208) 2723 S. State Street, Suite 400 Ann Arbor, MI 48104 Telephone: (734) 214-7629

Attorneys for Defendants-Appellants Kmart Holding Corporation, Sears, Roebuck & Co., and Sears Holding Corporation

FREDRIKSON & BYRON, P.A. David R. Marshall (#184457) Joseph J. Cassioppi (#388238) 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402 Telephone: (612) 492-7000

Of Counsel: JONES DAY Tina M. Tabacchi (admitted pro hac vice) Adam W. Wiers (admitted pro hac vice) Erin Shencopp (admitted pro hac vice) 77 West Wacker Chicago, IL 6060 1-1692 Telephone: (312) 782-3939

Attorneys for Defendant-Appellant Wal-Mart Stores, Inc.

ATTORNEYS FOR DEFENDANTS-APPELLANTS

53