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325F.69 Unlawful practices.

Subdivision 1. Fraud, misrepresentation, deceptive practices. 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 of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided herein.

Merchandise has been broadly defined by Minn. Stat. § 325F.68 to include loans, goods, services, commodities, real estate, and intangibles. A deceptive practice has been defined as any conduct which has a tendency to mislead or confuse the customer about some material aspect of the transaction. Restatement (Second) of contracts defines a “misrepresentation” as “an assertion which is not in accord with the facts.”

A private cause of action for damages and equitable relief for violations of Minn. Stat. § 325F.69 is provided by Minn. Stat. § 8.31 which reads, in pertinent part:

8.31 Additional duties of the attorney general

Subdivision 1. Investigative offenses against the provisions of certain designated sections; assist in enforcement. The attorney general shall investigate violations of the law of this state respecting unfair, discriminatory, and other unlawful practices in business, commerce, or trade, and specifically, but not exclusively, the Nonprofit Corporation Act (sections 317A.001 to 317A.909), the Act Against Unfair Discrimination and Competition (sections 325D.01 to 325D.07), the Unlawful Trade Practices Act (sections 325D.09 to 325D.16), the Antitrust Act (sections 325D.49 to 325D.66), section 325F.67 and other laws against false or fraudulent advertising, the antidiscrimination acts contained in section 325D.67, the act against monopolization of food products (section 325D.68), the act regulating telephone advertising services (section 325E.39), the Prevention of Consumer Fraud Act (sections 325F.68 to 325F.70), and chapter 53A regulating currency exchanges and assist in the enforcement of those laws as in this section provided.

• • •

Subd. 3. Injunctive Relief. In addition to the penalties provided by law for violation of the laws referred to in subdivision 1, specifically and generally, whether or not injunctive relief is otherwise provided by law, the courts of this state are vested with jurisdiction to prevent and restrain violations of those laws, to require the payment of civil penalties, to require payment into the general fund, and to appoint administrators as provided in subdivision 3c. • • •

Subd. 3a. Private remedies. In addition to the remedies otherwise provided by law, any person injured by a violation of any of the laws referred to in subdivision 1 may bring a civil action and recover damages, together with costs and disbursements, including costs of investigation and reasonable attorney’s fees, and receive other equitable relief as determined by the court. The court may, as appropriate, enter a consent judgment or decree without the finding of illegality. In any action brought by the attorney general pursuant to this section, the court may award any of the remedies allowable under this subdivision.

Subd. 3b. Orders and judgments prima facie evidence. Any permanent injunction, judgment or order of the court made pursuant to subdivision 3a shall be prima facie evidence in an action brought under subdivision. That the defendant used or employed an act or practice in violation of the laws referred to in subdivision 1, provided that this subdivision shall not apply to consent judgments or decrees where the court makes no finding of illegality, including assurances of discontinuance pursuant to subdivision 2b.

In recent years the Minnesota Supreme Court has decided two cases which significantly affect the question of who has standing to bring a deceptive trade practice claim under Minn. Stat. § 8.31, the extent of that standing and how a plaintiff may go about proving damages under the statutory triad. Those cases are Ly v. Nystrom, 615 N.W.2d 302 (Minn. 2000) and Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001).

II. THE EFFECT OF Ly v. Nystrom AND ITS PROGENY

Ly v. Nystrom involved the sale of a restaurant. During the negotiations the seller made misrepresentations to the buyer concerning the condition of the premises, its inventory and past profits. The buyer, after closing the sale and discovering the misrepresentations, brought suit against Ms. Nystrom alleging, in addition to committing common law fraud, that she had violated Minn. Stat. § 325F.69 and seeking damages and attorney fees pursuant to Minn. Stat. § 8.31, Subd. 3a. Nystrom defended by arguing 1) the legislature did not instead the CFA to apply to commercial transactions; and 2) § 8.31 did not apply because there was no public purpose.

At this point it is appropriate to digress for a moment to between the two statutes. Minn. Stat. § 325F.69 provides that engaging in deceptive trade practices is “may be enjoined” regardless of harm. Indeed the Court, in Love v. Amsler, 421 N.W.2d 555 (Minn. Ct. App. 1989), found that regardless of whether the plaintiff is likely to suffer future injury, the court could in appropriate circumstances enjoin future offensive conduct directed at others. The section does not, however, mention a private cause of action for damages. Although plaintiffs made argument with mixed success that a private right of action could be presumed the legislature, in 1973, set the matter to rest by adopting § 8.31, Subd. 3a allowing a private cause of action for damaged suffered as a result of deceptive trade practices plus attorney’s fees.

Returning to the Nystrom decision, the court referring to legislative history, reiterated that § 325F.69 was a remedial statute “reflecting a clear legislative policy encouraging aggressive prosecution of statutory violations and thus should be generally very broadly construed to enhance consumer protection.” 615 N.W.2d at 308. The Court went on to state:

[T]he better reasoning leads to the conclusion that the transaction involving the sale of the ... restaurant is covered by CFA ... While the CFA does not define “consumer,” the legislative history clearly indicates that the CFA was intended to protect a broad, though not limited, range of individuals from fraudulent and deceptive trade practices ... We are on established ground in holding that even though the unlawful practices respondent engaged in here were in the context of an isolated one-on-one transaction, coverage under the CFA may still be afforded.

615 N.W.2d at 310.

Unfortunately for Mr. Ly the Court did not stop here, it then went on to address Mr. Nystrom’s argument that § 8.31, Subd. 3a did not apply because there was no “public purpose.”

At this point one is compelled to note that there is no language in the statute itself which contains such a limitation nor is the statute unclear on its face. It would appear the Court was concerned about the prospect of turning garden variety torts into statutory claims for attorney’s fees and thus, as pointed out in the descending opinions, resorted to legislative history to supply restrictions not set forth in the statute. 615 N.W.2d at 315. The result, as will be discussed below, has been to introduce continuing uncertainty as to the application of the statute.

The majority of the Court, referring to statements by legislators concluded that the purpose of § 8.31, Subd. 3a was to create a species of “private attorney general,” describing the legislative purpose as to “[provide] incentives to injured private parties to enforce the unlawful business practices statutes as a substitute for the attorney general.” 615 N.W.2d at 311. The Court went on to reiterate earlier decisions holding the purpose of the act was to “eliminate financial barriers to the vindication of plaintiff’s right *** and to provide incentive for counsel to act as private attorney general.” Id. Building upon this the Court stated “[t]he duty of the attorney general’s office, and thus the purpose of any statute granting private citizens the authority to bring a law suit in lieu of the attorney general, is the protection of public rights and the preservation of the interests of the state.” 615 N.W.2d at 313. Based on this ruling the Court concluded that, apparently because it believed the attorney general could not² bring an action under § 8.31 without there being a “public interest” to protect, neither could a private party.

[T]he sweep of the statute can be no broader the source of its authority - that of the attorney general.

615 N.W.2d at 313. The Court ruled that because Mr. Nystroms misconduct, though “reprehensible,” was directed only at the plaintiff it was not subject to § 8.31, Subd. 3a because the successful prosecution would not advance public interests and enforcement would have no public benefit.

The Ly decision, as is frequently the case when one departs from plain statutory language, raised more questions than it resolved.

A. Standing to Recover Damages.

The Court recognized that the conduct in question was a deceptive trade practice under Minn. Stat. § 325F.69. Because the plaintiff had already been awarded damages for common law fraud the only issue before the Court was whether an additional award of attorney’s fees was appropriate. The Court left unanswered, nor has any subsequent court directly addressed, the question of whether another plaintiff, in similar circumstances, could recover actual damages. If Ly is read as also denying a claim for actual damages an anomalous situation is created in which an individual may engage in conduct which violates the CFA because it is unlikely to be repeated and injures only a single person, the potential plaintiff has no standing to seek relief. By the same reasoning, because no “public purpose” would be served by the litigation, the attorney general would have no standing to bring an action.³ As a result every potential defendant, so long as his conduct is directed at a single person, receives a free pass. It is unlikely this could have been the legislature’s intent.

Magistrate Judge Erickson tangentially addressed this issue in Transclean Corp. v. Bridgewood Services, 134 F. Supp.2d 1049 (D. Minn. 2001) which involved, inter alia, a claim for damages for false advertising under Minn. Stat. § 325F.67. The Court approved a jury award of damages (with little discussion) but denied the request for attorney’s fees under § 8.31.

B. Public Purpose

The question frequently raised is what constitutes a public purpose? The Ly Court did not address this issue. Courts in other states, however, have addressed the issue; most prominently in Washington State whose CFA specifically incorporates a public interest requirement. The Courts there have adopted the following tests:

• a statutory preamble may specifically refer to the public interest in which case the court will not go behind the statute, or
  
  
• a three part test: 1) has the defendant by deceptive conduct induced the plaintiff to act or refrain from acting? 2) has the plaintiff suffered damage by such action or refraining from acting, and 3) do the acts or practices have the potential for repetition? if so, the public interest is served.

See, e.g. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531 (Wash. 1986); Anhold v. Daniels, 614 P.2d 184 (Wash. 1980).

Minnesota appears to have adopted a similar test. In Collins v. Minnesota School of Business, Inc., 655 N.W.2d 320 (Minn. 2003). That suit involved a claim by seventeen (17) former students of the Minnesota School of Business who alleged, successfully, that the school had made deceptive representations regarding its sports medicine technician program. The district court awarded damages under Minn. Stat. § 325F.69, but refused to grant attorney’s fee under § 8.31 on the grounds the action did not benefit the public. The Supreme Court reversed.

The Court first addressed the trial court’s conclusion that seventeen (17) was too small a number to constitute a public benefit, ruling as follows:

Applying Nystrom, the district court found that only a relatively small group of persons were injured by MSB’s fraudulent activities; thus, respondents failed to demonstrate a public benefit. In determining whether respondents’ claims benefited the public, the court focused on the number of “persons who were injured.” In doing so, the court misapplied the holding in Nystrom by ignoring the fact that MSB misrepresented the nature of its program to the public at large ...

MSB offered its programs to the general public and as of 1998, MSB had a total enrollment of over 1,200 students in all of its programs. Moreover, as required by statute, MSB was licensed by HESO and it sought approval from HESO before changing the curriculum and name of its sports medicine program. When it launched its program, it made misrepresentations to the public at large by airing a television advertisement. MSB also made numerous sales and information presentations and provided students with a “Career Opportunities” sheet, which students interpreted as a list of jobs for which they might qualify after completing the program. All of these factors indicate that MSB presented its program to the public at large. We hold that respondents’ successful prosecution of their claims benefited the public and therefore respondents are entitled to reasonable attorney fees.

655 N.W.2d at 330.

The following appear central to the Court’s finding: 1) the conduct was, in fact, deceptive, 2) regardless of how many people were in fact induced to act to their detriment, the conduct was directed to the public at large, and 3) the plaintiffs were, in fact, mislead to their detriment.

Other courts have stated the test as whether the challenged practice significantly impacts the public as actual or potential consumers of the defendant’s goods, services or property. Hall v. Walter, 969 P.2d 224 (Col. 1998) (extensive dissemination of falsehoods). Significant factors for consideration include the number of consumers directly affected, their relative sophistication and bargaining power, evidence the practice has impacted others in the past, or potential to do so in the future. Martinez v. Lewis, 969 P.2d 213 (Colo. 1998). South Carolina courts have interpreted public interest as involving a potential for repetition. Craig v. Andrew Aaron & Assoc., Inc., 947 F. Supp. 208 (D.S.C. 1996). However other courts have held that even a single instance of deceptive conduct may support a claim if the public interest would be served thereby. Crown Ford, Inc. v. Crawford 473 S.E.2d 554 (Ga. App. Ct. 1996). New York has phrased the test as, not a need to show repetition or a pattern, but the need to show the acts or practices “have a broader impact on consumers at large.” Oswego Laborer’s Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 647 N.E.2d 741, 744 (1995); New York University v. Continental Ins. Co., 87 N.Y.2d 308, 662 N.e.2d 763 (1995); Greenspan v. Allstate Ins. Co., 937 F. Supp. 288 (S.D.N.Y. 1996).

C. May Conduct Be Covered by Minn. Stat. § 8.31, Subd. 3a Despite the Fact the Defendant Has Ceased to Engage in the Conduct?

Many courts have held that conduct which constitutes a deceptive trade remains actionable even though the defendant has ceased engaging in the conduct. See e.g., Cybal v. Atrium Palace Syndicate, 272 N.J. Super. 330, 639 A.2d 1146 (App.Div. 1994); State v. A.N.W. Seed Corp., 802 P.2d 1353 (Wash. 1991); Beneficial Corp. v. F.T.C., 529 F.2d 1398 (2nd cir. 1976) cert. denied 429 U.S. 818 (1976); Wiginton v. Pacific Credit Corp., 634, P.2d 111 (Haw. 1981).

In three cases, which may be distinguishable on their peculiar facts, federal courts have held that cessation of the conduct may defeat the public purpose requirement. The most important distinction is that none of these cases was brought as a class action thus there was no question of monetary relief to the defendants’ customers in general. As discussed below a class action is arguably the sine qua non of a public benefit. Behrens v. United Vaccine, Inc., 228 F. Supp.2d 965 (D.Minn. 2002) involved a deceptive trade practice claim against the manufacturer of a vaccine that had been pulled off the market by the department of Agriculture. The Court concluded that since the plaintiffs sought only relief for themselves, sought no injunctive relief, and could not show anyone was likely to be injured in the future § 8.31 did not apply. Pecarina v. Tokai Corporation, 2002 U.S. Dist. LEXIS 9047 (D.Minn. 5/20/02) involved a personal injury claim for a non-childproof cigarette lighter which included inter alia state deceptive trade practices claims. Plaintiffs sought only personal injury damages, could not seek injunctive relief because the lighters had not been sold or manufactured for several years, and had made no class or mass tort allegations. Here too, the court ruled § 8.31 had no application. Tuttle v. Lorillard Tobacco, 2003 U.S. Dist. LEXIS 3721 (D. Minn. 3.3.03) involved a wrongful death action alleging that prior to 1987 the defendant had concealed and/or misrepresented the harmful effects of smokeless tobacco thus leading to the deceased demise. Once again no class wide or injunctive relief was sought. In large part because Minnesota’s wrongful death statute limits an action as one to the exclusive benefit of the surviving spouse and heirs the court concluded there was no public benefit. In response to an argument that the litigation would publicize the dangers of smokeless tobacco and discourage further deception the court pointed out that since 1987 FDA regulations required such disclosures on every can of snuff, hence the public benefit was purely metaphysical.

It would seem then that there may be something of a disagreement between the Minnesota Supreme Court, as exemplified by the Collins case supra., and at lease some of the federal judiciary as to whether the public interest test requires a showing of potential for continuing conduct and a injury beyond the named plaintiff. It may well be that, had the Behrens, Pecarina, and Tuttle sought injunctive relief and/or been brought as class actions the results would have been different. As a “private attorney general,” the class representative’s legitimate interests go beyond his or her personal stake in the litigation and encompass an interest in assuring others are not subjected to the same practice.

D. Injunctive Relief Under Minnesota’s Consumer Protection Statutes.

Minnesota’s triad of deceptive trade practice statues provide for both damages and equitable relief, including injunctions. Courts have consistently held, unlike garden variety claims for injunctive relief, that a person seeking an injunction under either the UDTPA or statutes similar to the Consumer Fraud Act need only show that the conduct has a “capacity to deceive or confuse,” not actual confusion. See e.g., Clarkson v. Orkin Exterminating Co., 761 F.2d 189 (4th Cir. 1985) (South Carolina Law); Aurigemma v. Arco Petroleum Prods. Co., 734 F. Supp. 1025 (D. Conn. 1990); Comm. on Children’s Television, Inc. v. Gen. Foods Corp., 673 P.2d 660 (Cal. 1983) (actual deception unnecessary under Cal. Bus & Prof. Code § 17,200 to obtain private injunction or where restitution necessary to prevent unfair practice); Fletcher v. Sec. Pac. Nat’l Bank, 591 P.2d 51, (Cal. 1979); Chern v. Bank of America, 15 Cal. 3d 866, 544 P.2d 1310, 127 Cal. Rptr. 110 (Cal. 1976); E. Star, Inc. v. Union Bldg. Materials, 712 P.2d 1148 (Haw. Ct. App. 1985); Gennari v. Weichert Co. Realtors, 672 A.2d 1190 (N.J. Super. Ct. App. Div. 1996) (whether consumer plaintiffs were in fact misled is irrelevant); Miller v. Am. Family Publishers, 663 A.2d 643 (N.J. Super. Ct. Ch. Div. 1995); Hyland v. Zuback, 370 A.2d 20 (N.J. Super. Ct. App. Div. 1976); Pearce v. Am. Defender Life Ins. Co., 343 S.E.2d 174 (N.C. 1986); Torrance v. AS & L Motors, 459 S.E.2d 67 (N.C. Ct. App. 1995); Blackwell v. Dorosko, 383 S.E.2d 670 (N.C. Ct. App. 1989); Pekular v. Eich, 513 A.2d 427 (Pa. Super. Ct. 1986) (result the same whether “tendency or capacity” standard or “likely to deceive” standard used); Inman v. Ken Hyatt Chrysler Plymouth, Inc., 363 S.E.2d 691 (S.C. 1988); Young v. Century Lincoln-Mercury, Inc., 396 S.E.2d 105 (S.C. Ct. App. 1990); Travis v. Washington Horse Breeders Ass’n, Inc., 759 P.2d 418 (Wash. 1988); Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531 (Wash. 1986); Haner v. Quincy Farm Chems., Inc., 649 P.2d 828 (Wash. 1982).

Once a practice has been found to be deceptive it may be enjoined even in the absence of evidence of actual out of pocket damages. See e.g., Force v. ITT Hartford Life & Annuity Ins. Co., 4 F. Supp. 2d 843 (D. Minn. 1998); see also Lenscrafters Inc. v. Vision World, Inc., 943 F. Supp. 1481 (D. Minn. 1996).

Each of the misrepresentation in sales statutes at issue defines a violation primarily in terms of the conduct of the defendant that is prohibited. The limited references in the statutes to the victim/plaintiff indicate that reliance is not an element of a violation when seeking injunctive relief ... Significantly, that conduct is prohibited “whether or not any person has in fact been misled, deceived, or damaged thereby.” Id. The person could not have relied on the misconduct if they were not misled or deceived. The defendant must intend that its conduct be relied on, but reliance by the victim is not necessary for the violation to occur.

Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 at 12 (emphasis added). The Court noted that a person who has not been misled or deceived cannot have “relied” on the deceptive conduct but nonetheless has a claim for injunctive relief. Id. The issue, for purposes of injunctive relief under Minnesota’s deceptive trade practice statutes, is not whether the Plaintiff was actually misled or confused, but whether the conduct has a tendency to mislead or confuse the public in general. If so, injunctive relief is appropriate.

E. Injunctive Relief, Class Actions, And Public Purpose.

The test in a class action seeking injunctive relief is not whether the class representative is currently confused as to the defendant’s practices but whether others, credulous and incredulous alike, can be expected to be confused. Thus courts have ruled that an injunction could be granted where other consumers are likely to be injured or where the seller could repeat the practice. David McDavid Pontiac, Inc. v. Nix, 681 S.W.2d 831, 839 (Tex. App. 1984). This approach is based on the policy that “protection of unwary consumers from being duped by unscrupulous sellers is an exigency of the utmost priority in contemporary society.” Fletcher v. Sec. Pac. Nat’l Bank, 591 P.2d 51, 57 (Cal. 1979). It is not surprising that, after consultation with their counsel, the named plaintiffs in a class action would understand the nature of the defendant’s deceptive practices. Indeed, it would be surprising, and perhaps reflect adversely on their capacity as class representatives, if they did not have at least some rudimentary understanding of the deception. However, that is not relevant to a determination of whether defendant’s conduct has a tendency to mislead.

Even though class representatives’ claims for injunctive relief may be moot as to themselves, they may nonetheless seek prospective injunctive relief for others. Degregorio v. O’Bannon, 86 F.R.D. 109 (E.D. Pa. 1980). This rule is especially applicable where the same or similar conduct may occur in the future. Jordan v. Los Angeles County, 669 F.2d 1311, 1315-18 (9th Cir. 1982) vacated on other grounds, 459 U.S. 810 (1982); Orantes-Hernandez v. Smith, 541 F. Supp. 351 (C.D. Cal. 1982). Moreover a case is not moot where voluntary cessation of the offending conduct has not yet occurred or has occurred but is not accompanied by an admission of past illegality and assurances of future reform. U.S. v. Concentrated Phosphate Export Ass’n., 393 U.S. 199 (1968); Walling v. Helmerich & Payne, Inc., 323 U.S. 37 (1944); U.S. v. Trans-Missouri Freight Ass’n., 166 U.S. 290, 308 (1897); Dionne v. Bouley, 757 F.2d 1344 (1st Cir. 1985); Yarnell v. Hillsborough Packing Co., 70 F.2d 435, 438 (5th Cir. 1934); see also State ex rel Babbitt v. Goodyear Tire & Rubber Co., 626 P.2d 1115 (Ariz. Ct. App. 1981); Wiginton v. Pac. Credit Corp., 634 P.2d 111 (Haw. Ct. App. 1981).

The purpose of the consumer protection statutes is to create a species of “private attorney generals”, not merely to protect the individual plaintiffs themselves, but to protect others who are, or may be, subjected to the same misconduct.

A determination of the scope in the private remedies provision in the Private AG Statute [Minn. Stat. § 8.31 Subd. 3a] must begin with the recognition that it was adopted by the legislature in 1973 as part of the statutory charter for the duties and responsibilities of the attorney general and provides a reward to private parties for uncovering and bringing to a halt unfair, deceptive and fraudulent business practices, functions that, to that point, had been the responsibility of the attorney general. Since the Private AG Statute grants private citizens the right to act as a “private” attorney general, the role and duties of the attorney general with respect to enforcing the fraudulent business practices laws must define the limits of the private claimant under the statute … The duty of the attorney general’s office, and thus the purpose of any statute granting private citizens authority to bring a lawsuit in lieu of the attorney general, is the protection of public rights and the preservation of the interests of the state.

Hoang Minh Ly v. Nystrom, 615 N.W.2d 302, 313 (Minn. 2000) (emphasis added, footnotes omitted). The limits of a private claimant’s standing under Minn. Stat. § 8.31 Subd. 3a. are defined by the “role and duties of the attorney general.” That role is set out in Minn. Stat. §§ 8.30, Subd. 1 and 325F.70.

Subdivision 1. Injunction. The attorney general or any county attorney may institute a civil action in the name of the state in the district court for an injunction prohibiting any violation of sections 325F.68 to 325F.70. The court, upon proper proof that defendant has engaged in a practice made enjoinable by section 325F.69, may enjoin the future commission of such practice. It shall be no defense to such an action that the state may have adequate remedies at law.

Minn. Stat. § 325F.70, Subd. 1. A deceptive practice is enjoinable even a showing of damages:

Subdivision 1. Fraud, misrepresentation, deceptive practices. 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 of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided herein.

Minn. Stat. § 325F.69, Subd. 1 (emphasis added).

The sweep of Minn. Stat. § 8.31, Subd. 3a, the subdivision authorizing “private attorneys general”, is as broad as the source of its authority. Hoang Minh Ly, 615 N.W.2d at 313 (discussing the broad statutory authority given to the attorney general under Minn. Stat. § 8.31). Since the attorney general may seek injunctive relief under Minn. Stat. § 325F.69, Subd. 1 without a showing of actual damage it follows that same authority is invested in a “private attorney general” under Minn. Stat. § 8.31, Subd. 3a, especially where, the relief benefits more than a single claimant.

Our Supreme Court has previously affirmed injunctive relief for violations of Minn. Stat. § 325F.69 without the showing of future damages to the named plaintiff. In Love v. Amsler, 441 N.W.2d 555, 556 (Minn. Ct. App. 1989) the plaintiff alleged the defendant has engaged in deceptive trade practices by routinely filing false claims in conciliation court. Ultimately the trial court ruled Love owed no money to Amsler, nonetheless, it granted injunctive relief requiring Amsler to obtain court approval before filing future complaints. Amsler argued there were no damages and, therefore injunctive relief was improper. The Court disagreed, stating:

The trial court, with evidentiary support, determined that Amsler engaged in deceptive practices. The effect of these practices and having to defend against them satisfies the requirement of “injury” under § 8.31.

Love, 441 N.W.2d at 560. In reaching its conclusion the Love Court relied heavily on Minn. Stat. § 8.31, Subd. 3 which states, in pertinent part, “whether or not injunctive relief is otherwise provided by law, the courts of this state are vested with jurisdiction to prevent and restrain violations of [§ 325F.69].” It is also instructive to note that Love was not brought as a class action, the Supreme Court apparently concluding, once a deceptive practice is found, the trial court had the inherent right to enjoin it.

Courts from other jurisdictions have generally held that a class representative, even one who is no longer likely to suffer injury, can seek injunctive relief on behalf of the class. Minn. Stat. § 325F.69 specifically states that deceptive trade practices may be enjoined whether or not any person has suffered actual damages. Minn. Stat. § 325F.69, Subd. 1. Moreover, in the context of a class action, where the conduct is capable of repetition, mere voluntary cessation or assurances by the defendant that the conduct will cease without an admission of wrongdoing will not moot the claim for injunctive relief. In such cases a class representative, even though his or her personal claim for injunctive relief under such circumstances may be moot, may nonetheless seek prospective injunctive relief. United States v. Concentrated Phosphate Export Ass’n., 393 U.S. 199, 203 (1968); Walling v. Helmerich & Payne, 323 U.S. 37, 43 (1944); United States v. Trans‑Missouri Freight Ass’n., 166 U.S. 290, 308 (1897); Dionne v. Bouley, 757 F.2d 1344, 1356 (1st Cir. 1985); Yarnell v. Hillsborough Packing Co., 70 F.2d 435, 438 (5th Cir. 1934); United States v. Concentrated Phosphate Export Ass’n., 393 U.S. 199, 203 (1968); see also State ex rel. Babbit v. Goodyear Tire & Rubber Co., 626 P.2d 1115, 1118 (Ariz.Ct.App. 1981); Wiginton v. Pacific Credit Corp., 634 P.2d 111 (Haw.Ct.App. 1981); Degregorio v. O’Bannon, 86 F.R.D. 109, 113-114 (E.D. Pa. 1980). This rule is especially applicable where the same or similar conduct may occur in the future. Jordan v. County of Los Angeles, 669 F.2d 1311, 1315-18 (9th Cir. 1982) vacated on other grounds, 459 U.S. 810 (1982); Orantes-Hernandez v. Smith, 541 F. Supp. 351, 367 (C.D. Cal. 1982). See also Adkinson v. Harpeth Ford-Mercury, Inc., 1991 Tenn.App. LEXIS 114, a *20 (Tenn. Ct. App. 1991); Eshaghi v. Hanley Dawson Cadillac Co., 574 N.E.2d 760, 766 (Ill. App. Ct. 1991). Moreover, judicial economy and the public interest in stopping deceptive trade practices without having to resort to a multiplicity of actions and before additional victims accrue damages outweighs any arguments concerning lack of future harm to the named plaintiff. Wiginton v. Pac. Credit Corp., 634 P.2d at 111; David McDavid Pontiac, 681 S.W.2d 831; Hockley v. Hargitt, 510 P.2d 1123 (Wash. 1973); Connelly v. Puget Sound Collections, Inc., 553 P.2d 1354 (Wash.Ct.App. 1976).

The purposes of class actions and the purposes of the private attorney general statute are closely related. The purpose of a class action is to promote judicial efficiency and justice by allowing claims that might otherwise be impractical to litigate independently to be combined in a single action. The private attorney general statute is based on two propositions: 1) that the Minnesota Attorney General does not have sufficient resources to address all deceptive trade practices that occur; and 2) that the public interest in comprehensive enforcement of those statutes is best served by allowing private parties to participate in that enforcement as “private” attorneys general. The class action is the epitome of the private attorney general concept in that it allows a private attorney general to act, not only to protect his or her own interests, but also the interests of a broad section of the public. The class representative seeks declaratory and injunctive relief, not merely on his or her own behalf, but also on behalf of a class of similarly situated persons. His or her standing to seek such relief cannot be viewed in isolation from the fact that he/she seeks relief on behalf of a class of all similarly situated persons. Each of those similarly situated persons is entitled to receive appropriate protection. By bringing the action on their behalf, the class representative is stepping into the shoes of the attorney general and seeking to enforce the public interest.

For purposes of certifying a class for injunctive relief the use of a class action interjects the entire represented class into the balancing process. Newburg on Class Actions (3d. Ed.), 5.10; Watson v. Branch County Bank, 380 F. Supp. 945, 957 (W.D. Mich. 1974), rev’d on other grounds 516 F.2d 902 (6th Cir. 1975) (a class suit will focus the court’s attention on basic substantive issues, providing adjudication with greater comprehension of public policies and less significance of individual factual idiosyncrasies). The standard for certifying a class under Rule 23.02(b) is not whether class relief is necessary, but whether such relief is appropriate. Califano v. Yamasaki, 442 U.S. 682, 700 (1979); Olson v. Reagen, 631 F. Supp. 154, 157 (S.D. Iowa 1986) rev’d on other grounds, 830 F.2d 811 (8th Cir. 1987).

The class action has been described as “a necessary vehicle for the vindication of small claims, particularly when those claims involve complex litigation.” In re Workers’ Compensation, 130 F.R.D. 99, 103 (D. Minn. 1990). See also DeBoer v. Mellon Mortgage Co., 64 F.3d 1171 (8th Cir. 1995), cert. denied, Crehan v. DeBoer, 517 U.S. 1156 (1996). Class actions are most often needed in consumer protection cases. Streich v. Am. Family Mut. Ins. Co., 399 N.W.2d 210, 218 (Minn. Ct. App. 1987).

Certainly a class action which protects numerous consumers, may result in equitable relief as well as damages, is a more effective deterrent to deceptive trade practices than sending thousands of consumers, unrepresented and ill-advised, to Conciliation Court. The central purpose of a class action is to “protect the little guy” who could not possibly prosecute their cases on their own.

The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor.

Amchem Prods. v. Windsor, 521 U.S. 591, 117 Sup. Ct. 2231, 138 L. Ed. 2d 689, 709 (1997), quoting from Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997). A class action, because it aggregates small claims to a level sufficient to pose a serious deterrent to large corporations who might not otherwise pay attention to small claimants increases the likelihood that the Defendant will modify its behavior and thus protects not only consumers in the present tense but also future consumers.

In a large and impersonal society, class actions are often the last barricade of consumer protection . . . “To consumerists, the consumer class action is an inviting procedural device to cope with frauds causing small damages to large groups. The slight loss to the individual, when aggregated in the coffers of the wrongdoer, results in gains which are both handsome and tempting. The alternatives to the class action - private suits or governmental actions - have been so often found wanting in controlling consumer frauds that not even the ardent critics of class actions serious contends that they are truly effective. The consumer class action, when brought by those who have no other avenue of legal regress, provides restitution to the injured, and deterrence to the wrongdoer.

Eshaghi v. Hanley Dawson Cadillac Co., 574 N.E.2d 760, 766 (Ill.App.Ct. 1991). (quoting from Hoover v. May Dep’t Stores Co., 378 N.E.2d 762 (Ill.App.Ct. 1978). Moreover, to the extent that such actions attract publicity it is likely that other companies engaging in the same or similar conduct will also refrain from those practices.

III. GROUP HEALTH PLAN, INC. V. PHILIP MORRIS, INC.: A SHOT IN THE ARM FOR DECEPTIVE TRADE PRACTICE CLAIMS?

In Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001) the Court addressed issues of standing, pleading, and proof. Group Health commenced this litigation alleging that Philip Morris and the other tobacco manufacturers had concealed the harmful effects of tobacco and mislead smokers as to the injurious health effects of smoking thereby inducing Group Health’s insured to smoke, become addicted, and injure their health which in turn caused Group Health to incur additional costs treating smoke-related illnesses. Defendants countered that Group Health, who obviously had not purchased or used tobacco or relied on the purported deception, was not an injured party had no standing, that any injury was not “caused” by the purported deception, and had failed to plead causation and injury with sufficient specificity.

The Court first ruled that “Minn. Stat. § 8.31 does not limit potential plaintiffs to purchasers of the defendant’s goods.” 621 N.W.2d at 8. The Court went on to state:

[T]hese statutes authorize “a private cause of action for any party injured directly or indirectly by a violation of the statute. These provisions reflect a clear legislative policy encouraging aggressive prosecution of statutory violations.”

... its goal is broad: to enable individuals injured by the prohibited conduct to sue for damages and in doing so compliment the limited enforcement resources of the attorney general. There is no indication that this goal is restricted to purchasers, and it is apparently that it can be effectuated as well by enforcement actions brought by non-purchasers.

621 N.W.2d at 10. (Emphasis in Original).

The second question addressed by the Court was whether a plaintiff need plead or prove reliance on the alleged misrepresentation. The Court broke this issue down into three parts: 1) must the plaintiff plead reliance; 2) must the plaintiff prove reliance and; 3) how could the plaintiff prove causation.

With regard to the first part the Court ruled:

The language of the statutes ... establishes substantive statutes have been violated, the plaintiff need only plead that the defendant engaged in the conduct prohibited by the statutes and that the plaintiff was damaged thereby. Allegations that the plaintiff relied on the defendant’s conduct are not required to plead a violation.

...

[E]limination of reliance as a distinct element of a statutory misrepresentation claim is consistent with the legislature’s intent to broaden the availability of redress.

621 N.W.2d at 12.

Although the Court concluded that the plaintiff need not plead reliance, and by implication causation, to withstand a Rule 12 motion, the Court went on to address reliance in the context of proving the claim. Once again the Court concluded that it was not necessary to make a strict showing of direct causation, but rather some legal or “causal” nexus between the conduct complained of and the injury alleged. 621 N.W.2d at 14. In other words the conduct need not have induced the plaintiff to act or refrain from acting to his detriment but someone must have acted or refrained from acting in reliance on the conduct and that third party’s action or failure to act must have caused harm to the plaintiff.

Finally the Court addressed the question of what evidence is required to establish reliance by the third party, rejecting under certain circumstances the need for direct testimony by individuals.

More to the point, in cases such as this, where the plaintiffs’ damages are alleged to be caused by a lengthy course of prohibited conduct that affected a large number of consumers, the showing of reliance that must be made to prove a causal nexus need not include direct evidence of reliance by individual consumers of defendants’ products. Rather, the causal nexus and its reliance component may be established by other direct or circumstantial evidence that the district court determines is relevant and probative as to the relationship between the claimed damages and the alleged prohibited conduct. Further, in the context of the certified question, we reject the view expressed in two federal court decisions that our misrepresentation in sales laws require proof of individual reliance in all actions seeking damages. See Thompson v. American Tobacco Co., 189 F.R.D. 544, 553 (D.Minn.1999); Parkhill v. Minnesota Mut. Life Ins. Co., 188 F.R.D. 332, 345 (D.Minn.1999). To impose a requirement of proof of individual reliance in the guise of causation would reinstate the strict common law reliance standard that we have concluded the legislature meant to lower for these statutory actions. Moreover, we are confident that the legislature would not have authorized private damages actions such as this, where the alleged misrepresentations are claimed to have affected a large number of consumers, while retaining a strict burden of proof that depends on evidence of individual consumer reliance.

621 N.W.2d at 14-15. In a footnote the Court suggested that approaches similar to those used with the Lanham Act claims could be used suggesting that consumer confusion and reliance could be established by consumer testimony, consumer surveys or reaction tests and that, where the conduct is sufficiently egregious, burden shifting. 621 N.W.2d at 15 n. 11.

Group Health has been cited and followed by subsequent cases. See In re St. Jude Med., Inc. Silzone Heart Valves Prods. Liab. Litig., No. 01-1396, 2003 U.S. Dist. LEXIS 5188 (D. Minn. Mar. 27, 2003); In re Lutheran Bhd. Variable Ins. Pr0ds. Co. Sales Practices Litig., 201 F.R.D. 456 (D. Minn. 2001). Indeed, in the St. Jude case Judge Tunheim, citing to prior decisions, concludes that for purposes of obtaining injunctive relief plaintiffs need not even establish reliance. 2003 U.S. Dist. LEXIS 5188 at *63.

This does not mean that plaintiff’s counsel may throw all caution to the winds. In the Group Health Plan case, upon remand, the plaintiff tried to prove its case using expert statistical evidence and ultimately foundered on the shoals of a Daubert analysis.⁴ Group Health Plan, Inc. v. Philip Morris, Inc., 188 F.Supp.2d 1122 (D.Minn.2002); In Flynn v. American Home Products Corp., 627 N.W.2d 342 (Minn. App. 2001) plaintiff argued that she had been injured as a result of the defendant’s suppression of facts concerning fen-phen thus leading doctors and other medical professionals, including advertisers, to believe the drug was safe, but, failed to respond to defendant’s summary judgment motion with any evidence her injuries had resulted from the ingestion of fen-phen. Nonetheless the Group Health Plan case greatly eases the pleading burden and expands the scope of indirect evidence admissible to prove a deceptive trade practice.

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