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4 MSBA in Action One Profession a hit in Bemidji 14 6 Professional 9 WAYS TO FAIL AS AN ENTREPRENEUR Responsibility And how to counsel clients to avoid them Ethical “of counsel” By Inti Martínez-Alemán associations By Susan Humiston 8 Law & Technology Security considerations for law firm data governance By Mark Lanterman 18 ON THE COVER MINNESOTA PARENTAGE LAW AND ASSISTED REPRODUCTIVE TECHNOLOGY It’s time to change the law By Steven H. Snyder

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2 Bench&Bar of Minnesota s April 2019 www.mnbar.org FROM Official publication of the Minnesota State Bar Association www.mnbar.org | (800) 882-6722 20,000 TO 3 Editor Nominate three of your alumni peers who Steve Perry [email protected] deserve special recognition for their professional Design & Production and community contributions. Jennifer Pickles Advertising Sales Pierre Production & Promotions, Inc. DISTINGUISHED OUTSTANDING RECENT (763) 497-1778 ALUMNI AWARD ALUMNI AWARD ALUMNI AWARD MSBA Officers President Accepting nominations through June 30: Paul W. Godfrey President-elect mitchellhamline.edu/awards Tom Nelson Treasurer Dyan J. Ebert Secretary Jennifer A. Thompson Chief Executive Officer Cheryl Dalby Publications Committee Chairperson Steven P. Aggergaard Emily K. Cooper Holly A. Fistler June Hoidal Bethany Hurd Carol K. Lee Henry D. Long Malcolm P.W. Whynott ENSURE YOUR CLIENTS HAVE A VARIETY OF PRODUCTS AND SOLUTIONS FOR THEIR HOME FINANCING NEEDS! Contact Matt to discuss ways he can join your team in providing assistance, strategies and options to best fit your client’s

© 2019 Minnesota State Bar Association circumstances. Partner with a 22 year mortgage professional and Bench & Bar of Minnesota (ISSN 02761505) is published Monthly, Wintrust Mortgage today! except Bi-Monthly May/June by the Minnesota State Bar Association, 600 Nicollet Mall STE 380, Minneapolis, MN 55402- 1641. Periodicals postage paid at St Paul, MN and additional MATT GAUDET mailing offices. Postmaster: Send address changes to Bench & Mortgage Loan Professional Bar of Minnesota, 600 Nicollet Mall STE 380, Minneapolis, MN 55402-1641. Subscription price: $25.00 for members which is NMLS# 271042 included in dues. Nonmembers $35.00 per year. Some back issues 3500 American Blvd., Ste. 450 available at $5.00 each. Editorial Policy: The opinions expressed in Bench & Bar are those of the authors and do not necessarily Bloomington, MN 55431 reflect association policy or editorial concurrence. Publication of advertisements does not constitute an endorsement. The editors DIRECT: 612.414.4224 reserve the right to accept or reject prospective advertisements in [email protected] accordance with their editorial judgment. www.MortgagesByMatt.com WE’D LIKE TO HEAR FROM YOU: To query potential articles for Bench & Bar, or to pass along your comments on matters related Wintrust Mortgage is a division of Barrington Bank & Trust Company, N.A., a Wintrust to the profession, the MSBA, or this magazine, write to editor Community Bank NMLS# 449042 ©2018 Wintrust Mortgage Steve Perry at [email protected] or at the postal address above. www.mnbar.org April 2019 s Bench&Bar of Minnesota 3 MSBAinAction One Profession a hit in Bemidji

early 100 lawyers, judges, and state and local bar leaders who agree to live and work in greater Minnesota; Kelly Asche, gathered in Bemidji (9th Judicial District) on March a researcher for the Center for Rural Policy and Development, N22 for the MSBA’s One Profession event. The day- who talked about the reasons why families move to rural long conference, hosted by the MSBA and the 14th and 15th communities; and Leann Fuith, dean of career and professional District Bar Associations, was part of a series of similar events development at Mitchell Hamline School of Law, who being held throughout greater Minnesota to discuss the issues discussed how blended legal education—part online and part and opportunities affecting legal communities across the state. on-campus—is helping communities keep their local talent. The Bemidji event, introduced by MSBA President Paul Justice G. Barry Anderson presented recent Minnesota Godfrey, featured a keynote talk by Dr. Michele Statz, an Supreme Court cases, and Judges Heidi Schellhas and Renee anthropologist of law and assistant professor at UMN Medical Worke gave updates from the court of appeals. CLE breakout School/Duluth. Statz led a spirited conversation about access sessions covered employment law, legal technology, criminal to legal services in the Northland. She was joined by Tamara law, and more. L. Yon, assistant chief judge for the 9th Judicial District, Upcoming One Profession events will be held in the 3rd who talked about the challenges of recruiting judges in her Judicial District (Rochester, April 26), the 7th (Long Prairie, district; Karin Ciano, executive director of the Collaborative May 17), and the 10th (Coon Rapids, July 11). The 1st Judicial Community Law Initiative, who discussed draft legislation that District event will be held on October 25 at a location to be she co-authored seeking to forgive student debt for attorneys determined. Visit www.mnbar.org/one-profession for details.

MSBA legislative update he MSBA is pursuing legislative initiatives to tackle The lawyers must devote at least 50 percent of their time to two scenarios in which it can be hard to get needed representing individual residents who have an income below Tlegal help. The initiatives seek (1) state funding for 400 percent of the federal poverty guidelines. student loan repayment assistance for lawyers who commit The MSBA’s second legislative initiative is targeted to to private practice in rural areas, and (2) a civil right to assist people of lower income who live in public housing. appointed counsel in public housing eviction actions alleging Research by the MSBA’s Access to Justice Committee breach of lease. demonstrates that in Minnesota public housing breach of The proposed legislation to assist new rural lawyers lease evictions in 2016, unrepresented tenants were evicted was brought forward by the Solo & Small Firm Section, 83% of the time while represented tenants settled all of their which tellingly noted, “There are many counties in rural cases. Minnesota where the entire bar could sit together around Bills seeking to guarantee a civil right to counsel in public a dinner table.” Sen. Nick Frentz (DFL-North Mankato), housing breach of lease evictions have been filed in both the a lawyer, has introduced a bill, SF2587, that would provide Minnesota House and Senate. They were authored by Rep. student loan repayment assistance to lawyers who make a Ruth Richardson (DFL-Mendota Heights), a lawyer, and five-year commitment to practice in designated rural areas. Sen. Kari Dziedzic (DFL-Minneapolis).

4 Bench&Bar of Minnesota s April 2019 www.mnbar.org MSBA to file amicus brief in family law case

n February 27, the Minnesota Supreme Court granted review in Thornton v. Bosquez (No. A18-0223) Oand invited the MSBA to participate as an amicus. The case presents significant issues regarding the impact of domestic violence on child custody determinations. Notably, Minnesota was one of the earliest states to consider the factor of domestic abuse in child custody decisions, and ongoing revisions to Minnesota’s child custody statutes have continued to incorporate domestic abuse as an important consideration in child custody matters. In Thornton, the Minnesota Supreme Court will address—for the first time—the circumstances in which a parent who has committed domestic abuse may be awarded custody in light of Minnesota’s current statutory MEET THE STAFF: Senior Director of Policy Nancy Mischel joined the presumption against granting joint custody to parents where MSBA in the fall of 2004 after working as an attorney for various legal domestic violence has occurred. aid programs in the Twin Cities for 11 years. Seven of those years In consultation with the MSBA’s Family Law Section, the included work at the state Capitol, working to pass legislation beneficial MSBA accepted the Court’s invitation to participate as amicus, to low-income Minnesotans. She’s a graduate of the University of and will argue for affirming the decisions of the district court and Minnesota Law School, and keeps a toe in the water by taking the court of appeals. Special thanks to Christopher Bowman and occasional pro bono case. Her current work at the MSBA includes Michael Boulette, who were appointed by the Appellate Practice working with committees and bar leadership to shepherd policy through and Family Law Sections, respectively, to author a brief on behalf the MSBA, resulting in amicus briefs to the court, petitions for rule of the MSBA. Briefing is ongoing, with oral argument likely to amendments, and other policy positions. Nancy loves to travel, hear live occur sometime this summer. music, try new recipes, spend time outdoors in warm weather, and read.

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Ethical “of counsel” associations

ased on several recent calls to false or misleading. As everyone knows, a client when any one of them practicing our ethics hotline, it appears the cardinal rule of lawyer advertising is alone would be prohibited from doing that many Minnesota attorneys to ensure that all communications about so by Rule 1.7 or 1.9, unless the prohibi- are interested in understanding yourself and your legal services are not tion is based on a personal interest of the theB ethics rules involved when “associat- false or misleading.1 The ABA opinion prohibited lawyer and does not present ing” with another lawyer or law firm as a provides that this type of relationship may a significant risk of materially limiting means to grow a practice or expand the be between individuals or law firms, and the representation of the client by the legal services available to clients. Some you can have associations with more than remaining lawyers in the firm.”4 use the term “of counsel” to describe one lawyer or law firm simultaneously. Please keep this in mind when you this association; others consider the are forming an association with another term old-fashioned and prefer variants Fee-sharing lawyer or law firm—your conflicts are like special counsel, associated counsel, Rule 1.5(e) regulates the division imputed to them, and their conflicts are or affiliated counsel. The term can refer of fees between lawyers who are not imputed to you. As part of forming this either to an individual with whom you in the same firm. When you have the relationship, you must think through associate or to a law firm. While the close, regular, and personal association how you are going to detect and ad- term can refer to an employee relation- described above, are you in the same dress potential conflicts. Note also that ship, I will focus on the use of the term firm for purposes of this rule? I think blanket screens and broad advance to describe non-employee relationships. so, and so do many ethics opinions that waivers generally do not solve this have addressed this subject.2 This posi- problem, because some conflicts cannot The starting point tion is consistent with the definition of be consented to, and you usually cannot Minnesota’s ethics rules do not define, law firm or firm in the rules: “a lawyer or provide sufficient generic information in or specifically mention, the term “of lawyers in a law partnership, professional advance to obtain the informed consent counsel” or its variants. The American corporation, sole proprietorship, or other needed to consent to specific conflicts. Bar Association addressed the term “of association authorized to practice law,” counsel” and the types of relationships and “if [lawyers] present themselves to Other considerations it’s meant to cover in ABA Opinion 90- the public in a way that suggests they are If you are associating with law firms or 357. Pursuant to this opinion, the term a firm or conduct themselves as a firm, lawyers not licensed in Minnesota, you is a professional designation denoting a they should be regarded as a firm for should be sure to include jurisdictional “close, regular, and purposes of the rules.”3 limitations when communicating about personal” relation- While you may choose to disclose the association or services being pro- ship that is more to clients the division of fees with the vided.5 Similarly, some states, like Iowa, than just a referral “of counsel” firm or lawyer, you are not do not allow you to form “of counsel” relationship, more required to do so under Rule 1.5(e), but relationships with attorneys not admitted than an occasional you would be if you do not have a close, in Iowa.6 Obviously, you should also not consulting rela- regular, or personal relationship with the suggest an “of counsel” or closer associa- tionship, and more entity or individual with whom you are tion if that is not in fact true (“Lawyers than an associa- sharing fees. Remember, “of counsel” re- may state or imply that they practice in SUSAN HUMISTON tion for one case. lationships should not be used to disguise a partnership or other organization only is the director of the If you have such a a referral relationship to avoid—or be- when that is in fact true”7). Office of Lawyers close, regular, and cause you cannot meet—the division of If you only associate occasionally, us- Professional Respon- personal relation- fee requirements of Rule 1.5(e). Finally, ing terms that suggest a closer relation- sibility and Client ship with another if you are sharing fees with an associated ship is false and potentially misleading, Securities Board. firm or attorney, non-Minnesota lawyer or law firm, you and, as noted, should not be used to She has more than you may ethically should check the rules of the jurisdiction avoid fee-sharing disclosure require- 20 years of litigation use the designa- where that lawyer is located, as those ments. Beyond the scope of this article, experience, as well tion “of counsel” ethics rules may differ. you should also think about how to mini- as a strong ethics or similar variants. mize your potential vicarious liability for and compliance Conversely, Conflicts those with whom you are associated, as background. Prior though, if your Perhaps the most significant ethical well as the implications of the associa- to her appointment, association is less consequence of this type of association is tion for your malpractice insurance; both Susan worked in- than close, regular the imputation of conflicts for purposes are good questions for your malpractice house at a publicly and personal, of disqualification. Because you are being carrier. Finally, if you are associating with traded company, and your use of the treated for purpose of the ethics rules a non-Minnesota law firm, you should in private practice as designation “of as a “firm,” Rule 1.10(a) provides that look at the Professional Firms Act re- a litigation attorney. counsel” or its “[w]hile lawyers are associated in a firm, garding the requirements for that foreign variants may be none of them shall knowingly represent entity to register in Minnesota.8

6 Bench&Bar of Minnesota s April 2019 www.mnbar.org PJT feb 08 1/9/08 10:16 AM Page 1

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Security considerations for law firm data governance

he legal community deals with manage an array of complicated data, the physical storing of data within an a huge amount of data. Legal delegation is critical. Data management organization’s immediate proximity strategies, client communica- should not be solely the concern of the or location. Remote servers enable tions, research, e-discovery, IT department. Upper management sup- employees to access data from anywhere. documentation,T billing, personal informa- port and involvement helps set expecta- The cloud is a cost-effective and simpler tion about clients—the list of data types tions for data governance, especially with technology for many organizations, and with which law firms are entrusted every regard to budgeting and the allocation of replaces centralized data storing with a day is continuously growing. Effective necessary resources. distributed and expanded framework. data management is critical, as immedi- Laying out this degree of communica- That said, this decentralized system ate access to data is just as important as tion within a firm about its data gover- requires a strong relationship with your keeping it protected. Data governance nance strategy requires data stewardship. provider, an understanding of what data frameworks assist in keeping in com- Data stewards are assigned to specific is being stored, who your client is, and pliance with current regulations and data assets or business processes and take what amount of risk you are willing standards. particular responsibility for how it is ac- to take. Implementing cloud security Data gov- cessed and protected. solutions is important for dealing with ernance refers data that is not completely in your to a framework More is not better control. Encryption policies and user establishing how Data governance strategies should education also balance data protection the data that an specify how long certain types of data with immediate accessibility. organization col- are to be retained and how and when lects and stores it is destroyed. Storing large amounts Strongest possible controls should be man- of inactive data (especially confidential Law firms are being pushed to imple- aged, accessed, or personally identifying information) ment the strongest possible information MARK LANTERMAN and kept private. makes law firms a prime target for governance controls and procedures. is CTO of Computer How this frame- breaches. Data architecture frameworks Clients have high expectations for data Forensic Services. work is structured are used to document what data assets security, and recent international laws A former member largely depends on are being stored and where, as well as draw attention to an increase in future of the U.S. Secret the types of data their movement within the network. cybersecurity pressures within the United Service Electronic being collected, Data inventories should be consistently States. The General Data Protection Crimes Taskforce, and it also assigns updated to make data minimization Regulation (GDPR) has a significant Mark has 28 years responsibili- easier to organize and execute. impact on U.S.-based law firms that have of security/forensic ties for invested Data frameworks are critical in clearly clients with protected EU status. Breach experience and stakeholders who communicating within the firm what notification, consent for how data is col- has testified in over are held account- types of data are being amassed, where lected and used, data minimization, and 2,000 trials. He is a able for certain it is being stored, and what technologies breach assessments are all elements of member of the MN elements of the should be used to manage it, such as what is required by the GDPR. “All cus- Lawyers Professional management cloud infrastructures. Cloud computing tomer-facing documentation will require Responsibility Board. process. Because allows for immediate access to data revision to comply with the GDPR,” law firms need to from internet-enabled devices without notes a recent article in the magazine

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www.mnbar.org April 2019 s Bench&Bar of Minnesota 9 ColleagueCorner | MEET SUMBAL MAHMUD

‘My bar group friends are always the most supportive’

Tell us a little about the humanitarian work you do. I was born in Lahore, Pakistan. My family immigrated to Minnesota when I was 18 months old. I have lived a life trying to navigate two cultures, two countries, two identities (an American in Pakistan, a Pakistani-American in America). It has taken some time, and I have made some awkward mistakes, but I think I have finally settled on being comfortable in my own in-between. Even while developing my legal career, my heart has, all the while, kept being drawn back to the street children in Pakistan. When I see my friends’ social media postings of their kids on the first day of school, I immediately think of what many school-age children in Pakistan would do for the chance to go to school. My business plan is micro-lending for education. My hope is that instead of buying your family member yet another trinket for a holiday, people might be moved to lend a family enough money to educate their child. Micro-lending has an incredible return on investment and loans are repaid or paid forward at a high rate. I am a frequent public speaker. I have given thousands of speeches, participated on panels, and been the keynote speaker for many events, but to leave a true legacy, my desire is to write a children’s book here in the U.S. and use the proceeds to fund children to attend school elsewhere in the world. I have not made this happen yet, but I believe in the power of affirmations, so if the universe is reading this—please help me!

You’ve volunteered extensively with bar groups—serving on ABA committees, serving for five years on the national board of directors of NAPABA, rising to president of the SUMBAL MAHMUD is a Human Services Judge in the Appeals Division. Minnesota chapter of NAPABA—and you recently joined the Prior to that she obtained top secret security clearance with the federal MSBA Council. What do you get from your work with government, and was trained at a Federal Law Enforcement Training Center the MSBA and other bar groups? (FLETC) for 6 weeks for certification to become an asylum officer for the Friends? Only kidding a little bit. Whether it be on LinkedIn Department of Homeland Security. She has been the executive director of a or Facebook, my bar group friends are always the most large non-profit organization in Chicago and in-house counsel for Best Buy. supportive and encouraging of all my endeavors. For example, [email protected] I posted that I would like to purchase water filters for the poor in Pakistan. Each filter cost $60 and would last about a year. It would save a family (usually the women/girls of the home) Why did you go to law school? four hours of their day in pursuit of clean water. In a matter of When I was young, I thought lawyers went around and hours, friends donated generously toward this cause. saved the world or something. I had a passion for and happened to excel in speech, debate, and mock trial. One of my most As a lawyer, you’ve worked in many settings: as a private treasured mementoes from high school is an award I received practitioner, corporate counsel, asylum officer for the Depart- from the MSBA Mock Trial program. I owe immense gratitude ment of Homeland Security, and as a Human Services judge. to the MSBA and to each and every lawyer who volunteered Which has been most memorable, or most meaningful, to you? as a mock trial judge. If you are one of my former coaches, or All of the above. Each experience has prepared me for ever gave up a Saturday to help me perfect my courtroom skills, the next. Whether conducting interviews of asylum seekers I would love to reconnect with you and thank you in person. near the U.S./Mexico border, adjudicating affirmative asylum I cannot repay you, but know that I am trying to pay your applications, or conducting hearings at DHS, my job at the investment forward. It took 20 years, but I am now fortunate end of the day is to listen (and to write). I used to think that enough to sit on the MSBA Council—the board of directors of being a lawyer was all about speaking, but I have come around the organization that played a part in setting me on my way to to believe that it is more about listening. Lawyers are listeners a legal career. who capture and tell someone else’s story. s

10 Bench&Bar of Minnesota s April 2019 www.mnbar.org FREE FOR MEMER ®

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communities at my.mnbar.org ort s

discussion groups Member-only discussion groups let you ask court opinions by email uestions and share ideas ith colleagues. Appellate opinions from Minnesota and Several communities are available, each the .S. Eighth Circuit courts to you via email dedicated to a different practice area. ithin hours after their release. my.mnbar.org mnbar.org/courtops Lawyer well-being in Lawyer addiction and wellness consultant Patrick Krill addressed the February 28 Minnesota gets a boost gathering (top left). Chief Justice Lorie M. Gildea provided opening remarks (lower right); Associate Justice David Lillehaug from the Supreme Court organized the conference (top right). By Joan Bibelhausen

ational efforts to advance serious need of self-reflection, healing, Breakout sessions well-being in the legal profes- and meaningful change. If we fail to The attendees then joined four break- sion were placed under a respond to these devastating levels of out groups focused, respectively, on large statewide spotlight at the mental and chemical health issues, we firms, solo and small firms, judges and NMinnesota Supreme Court’s Call to Ac- risk our profession’s reputation, the public lawyers, and in-house counsel. tion for Lawyer Well-Being conference public’s trust in the legal profession, and Each group discussed specific opportuni- on February 28. Nearly 250 representa- the ability to attract bright young minds ties and challenges in creating greater tives from a range of legal employers to the profession.” awareness and implementing well-being were invited to discuss the data and rec- Chief Justice Gildea then introduced options within their spheres. Attendees ommendations from The Path to Lawyer Patrick Krill, a co-author of the study were encouraged to analyze their work Well-Being: Practical Recommendations for detailing substance use and mental environments for opportunities and to Positive Change,1 a groundbreaking 2017 health issues in the legal profession and a review and adopt a well-being pledge. report issued by The National Task Force national consultant on lawyer well-being. Following the breakouts, Associate on Lawyer Well-Being.2 These efforts In his keynote address, Krill identified Justice David Lillehaug introduced the followed the 2016 release of updated reasons that the entire profession should second keynote speaker, Anne Brafford. data showing high levels of problematic be paying close attention to and acting Brafford, a member of the national substance use, mental health issues, and on this research. They included the costs task force and the author of the Path to stigma in our profession.3 to legal organizations and those who Lawyer Well-Being Toolkit,4 addressed the In introducing the conference, are personally affected by these issues; nexus between well-being and personal Minnesota Supreme Court Chief Justice the importance of reducing stigma and peak performance. She stressed that Lorie S. Gildea said, “The report makes acting quickly; and the positive path that legal organizations and their leaders play it clear that the legal profession is in can result from engaging on these issues. an enormous role in whether lawyers

12 Bench&Bar of Minnesota s April 2019 www.mnbar.org LCL can help Notes Lawyers Concerned for Lawyers 1 http://ambar.org/lawyerwellbeingreport (LCL) was delighted to be involved in 2 The National Task Force on Lawyer Well- planning this conference and is grateful Being is a coalition of entities, including the to the Supreme Court for raising the American Bar Association and representa- profile of these issues. For 42 years, tives of lawyer assistance programs. LCL has assisted individuals and 3 P. R. Krill, R. Johnson, & L. Albert, “The organizations in the legal profession to Prevalence of Substance Use and Other recognize issues of impairment and to Mental Health Concerns Among American support our colleagues as they seek the Attorneys,” 10 J. ADDICTION MED. 46 help they need. Since the publication of (2016); J. M. Organ, “What Do We Know the well-being report in August 2017, About the Satisfaction/Dissatisfaction of LCL has provided dozens of CLE and Lawyers? A Meta-Analysis of Research on feel engaged or depleted and burned out, other programs and has participated in Lawyer Satisfaction and Well-Being,” 8 U. ST. and offered science-based organizational many discussions with employers about THOMAS L. J. 225 (2011). strategies to fix problems that harm implementing these recommendations in 4 http://ambar.org/wellbeingtoolkit. lawyer well-being. their organizations. Justice Lillehaug closed the LCL can be a resource for beginning conference with a challenge. “The Court or for continuing discussions on how to JOAN BIBELHAUSEN is hopes that all participants heard our support our colleagues so we can do our the executive director of call,” he said, “and left inspired to take best thinking. Well-being efforts are not Lawyers Concerned for concrete steps to encourage wellness. optional; they are critical to retention, Lawyers (LCL). You can find We’ll be following up with them over business success, effective diversity and more information on Lawyers the next year.” As its first next step, the inclusion initiatives, reduced risk of Concerned for Lawyers at Supreme Court has created a webpage ethics and malpractice issues, client and www.mnlcl.org. LCL may be featuring conference materials and lawyer satisfaction, personal resilience, reached, confidentially, at videos of the keynotes at www.mncourts. organizational health, and the reputation 651-646-5590 or [email protected]. gov/lawyer-well-being.aspx. of our profession. s [email protected]

www.mnbar.org April 2019 s Bench&Bar of Minnesota 13 Partner disputes, competitor animosity, disgruntled employees, and government compliance woes are among the common triggers for litigation that can kill a young enterprise— litigation that, in many cases, is entirely avoidable through attention to detail.

14 Bench&Bar of Minnesota s April 2019 www.mnbar.org WAYS TO FAIL AS AN ENTREPRENEUR AND HOW TO COUNSEL CLIENTS TO AVOID THEM

By Inti Martínez-Alemán

onventional wisdom says tractor or an employee. The IRS, federal that 80 percent of businesses labor law, and state labor law use different fail within two years. The multi-factor tests for different purposes.4 Small Business Administra- A common thread between these varie- tion (SBA) disagrees.1 Ac- gated tests is control. How workers get cordingC to SBA statistics, from 2005 to their orders, instructions, and supervi- 2017 nearly 80 percent of new establish- sion goes a long way toward determining ments survived one year. “About half of whether a worker is an independent con- all establishments survive five years or tractor or an employee. Simply issuing a longer…. About one-third of establish- 1099 does not settle the matter. ments survive 10 years or longer.”2 So the prospects for business startups WHAT INSURANCE? are not as grim as presumed. What is grim Not all insurance is created equal. is having to shut down a business be- 2 Even within a particular class of cause of poorly managed disagreements. coverage—workers’ compensation, gen- Partner disputes, competitor animosity, eral business liability, professional liabili- disgruntled employees, and government ty, product liability, business interruption, compliance woes are among the common or personal property insurance—not all triggers for litigation that can kill a young carriers and policies are created equal. I enterprise—litigation that, in many cas- hate to see it when my clients come to es, is entirely avoidable through attention me wanting to sue their insurance carrier to detail. over a denied claim, only to find out that I started practicing law over 10 years their insurance policy explicitly excludes ago in Honduras and spent the first five the type of risk or damage a business years of my career there. Yet despite the owner suffered. many differences between the two coun- However much education there may tries and their distinct legal systems, busi- be out there about insurance coverage, ness owners in Honduras and the U.S. policies are very complex. And even when make very similar mistakes. Barring a few entrepreneurs clearly know the scope and local nuances, I have seen at least nine contents of their insurance, they often ac- recurring mistakes that entrepreneurs cept whatever is offered to them as they make in both nations.3 are rushing to open or expand their business. Some insurance agents are not eager ICs = EMPLOYEES to tell potential customers about all the We all know those people who risks of cheap insurance policies, either. 1think that issuing a 1099 tax form For example, if your company plans to their workers automatically makes to flip homes, make sure there is not a these workers independent contractors. townhome & condo exclusion in your And we all know those people who treat commercial general liability insurance their employees as if they were indepen- policy. If you plan to innovate in your hir- dent contractors. When I advise clients ing and compensation structure for your on the subject, I tend to hear stories workers, make sure to obtain an employ- about a cousin or business associate who ment-related practices endorsement, if has been misclassifying their workers for you are able. 20 years and has never had a problem. Owning a business is risky business. Perhaps those stories are true and perhaps Not having a tailored insurance policy they aren’t, but the downside is just too for your specific type of enterprise can be great to take the risk. The penalties for dangerous. Investing the time and money misclassifying workers can be severe. to know what is covered, and what is not There are several tests to determine covered, could save your business from whether a worker is an independent con- failure. www.mnbar.org April 2019 s Bench&Bar of Minnesota 15 JUST PUT IT ALL tire contract written in plain Because written operating what really happened if a dis- ON MY AMEX English. These summaries or agreements are private docu- pute arises a couple of years 3 If I am the sole owner tables help entrepreneurs un- ments, I advise my business down the road. Keeping a daily of a coffee shop, then it’s okay derstand what they are getting clients to file a statement of log or journal of business op- to use the business to sup- into—really—when signing authority before the Secretary erations, filtering your emails port my lifestyle, right? Not that contract. Do not settle of State.10 This statement will by categories, keeping digital quite. If you are running your for less. tell the public the essential copies of all physical mail, and shop under an entity offering information about company backing up your electronic limited liability, then you had “I CALL THE leadership, without the details devices on the cloud are all better steer clear from com- SHOTS.” BUT DO of the operating agreement. examples of organizing your mingling funds. Otherwise, a 5 YOU, REALLY? This filing enables third parties documents in ways that make court could find in favor of a Being a company owner to find out who is authorized it easy to retrieve them if a business creditor after piercing should involve de jure and de to sign contracts and bind the lawsuit commences. the limited liability veil. That facto ownership. Let’s discuss company, including their limi- Google Vault is a formi- means your creditor could what this means in the con- tations and restrictions. dable and low-maintenance likely snatch up your family text of limited liability compa- Note that the doctrine of product that “lets you retain, boat or cabin. nies (LLC), because that’s the apparent authority is still ap- hold, search, and export data Using your personal credit most commonly chosen entity plicable to, and intersects well to support your organization’s card to pay for business ex- these days. (Nearly 87 percent with, the LLC Act. If an as- archiving and eDiscovery penses is allowed if the busi- of Minnesota business entities sistant manager does not have needs.”13 With Vault you can ness in turn reimburses you for filed in 2018 were LLCs.)6 the power to bind the compa- seamlessly retrieve emails, that use. If there is no reim- Minnesota’s new LLC Act ny but nonetheless makes pur- chats, Google Drive files, etc. bursement or equivalent, then allows for an LLC to be gov- chases from a third party on in anticipation of litigation. you are setting yourself up for erned by an operating agree- behalf of the company, and the Legal holds and audit reports misfortune. ment that may be oral, re- company readily pays for such are a breeze! corded, or implied—or even purchases, then the assistant WHO EVEN READS a combination of these ap- manager’s apparent authority A series of emails and text THE FINE PRINT? proaches.7 This means that before the third party is valid messages can become bind- 4The haste to open your the way members of an LLC despite not having the actual ing contracts under the right doors and start making mon- run the company and treat authority to make the pur- conditions. If you are keep- ey can trip you up if you do each other may determine the chases.11 Conduct and course ing notes or journal entries not know what you are sign- actual terms of a valid operat- of dealing matter! for your business operations, ing and getting yourself into. ing agreement.8 This agree- Any real estate lawyers in chances are these would dis- More than legal advice, this is ment may bind the company, the house? Note the statute’s suade a potential plaintiff from life advice. It applies to almost too.9 Conversely, a written provisions regarding real prop- litigating against you when everything we do. operating agreement may be erty belonging to the LLC. The your documentation is up to If you do not know what deemed ineffective if the con- statement of authority may re- snuff. And if you do end up in your rental lease or your loan duct of the company members flect who in the company has court, a reasonable judge will agreement says, how will you implicitly disregards the writ- the authority, or limitations to give weight to your document- know your rights? Most lay- ten record. How you carry out this authority, to “execute an ed evidence. persons will not understand your company affairs is indica- instrument transferring real We have all met people who the terms of their lease or loan tive of the company members’ property held in the name of do not like to put anything in without actually reading the agreement, whether or not it is the company.” If a limitation writing. They only want to agreement—and even then, memorialized. on the authority to transfer talk on the phone or in person the dense legalese will be im- What’s the lesson here? real estate is recorded in the about business matters. I penetrable to anyone unfa- Written governing docu- real property records, then “all tell my clients to take extra miliar with the terminology.5 ments matter a lot. But enforc- persons are deemed to know of precautions with this type. Without proper legal counsel, ing these documents is even the limitation.”12 What a savvy business person you might be out of luck when more important. If operating should do in these situations your relations with your land- agreements are not updated NO PAPER TRAIL, is to send the interlocutor lord or lender go south. to reflect the current under- WILL SURELY FAIL a written summary of the The best contracts I have standing and conduct of the 6 Similarly, if you are not conversation immediately read contain quick and pre- partners, then why even have documenting your business afterward, giving them an cise executive summaries or written governing documents operations, chances are you opportunity to object to the a table of contents of the en- anyway? will not be able to corroborate summary within reasonable

16 Bench&Bar of Minnesota s April 2019 www.mnbar.org WRITTEN GOVERNING DOCUMENTS MATTER A LOT. BUT ENFORCING THESE DOCUMENTS IS EVEN MORE IMPORTANT.

time, lest it be deemed YOU’RE FIRED! vate network when you are out Notes accurate. For example: “Hey (EXCUSE TO of the office, and training staff 1 https://perma.cc/ESS7-RHLZ Jim, my takeaways from our FOLLOW) to be more tech-savvy. And 2 Id. 8 3 talk were ABC. I will assume When I represent employees just in case, make you sure you Actual data on the incidence these are true for you as well, in wrongful termination cases, get cybersecurity insurance to of particular kinds of litigation unless you tell me otherwise it always irks me when em- mitigate your losses. is hard to come by. The by 123.” ployers come up with phony You will find many free Minnesota Judicial Branch, The point of document- explanations for firing. It is apps or services out there for example, does not compile ing your business operations is even worse when managers promising to protect your data a practical breakdown of the primarily to prevent litigation contradict themselves or there or make your life easier. A rule types of civil cases filed. The from ever starting. If you are is documented evidence of of thumb in the tech world is current case typology is not very well documented, chances are seeking a pretext for firing. If a that you are either a customer useful: If you want to know how a third party will not want to manager fires an employee be- or a product. If you are paying, many cases involve business mess with you. But if they do, cause of her continuous poor you are a customer and hope- disputes, generic descriptions you can show the court what performance, but every perfor- fully your data is protected. like “Civil Other” or “Contract” you’ve got. mance review in her personnel If the app is free, chances are not helpful. https://perma.cc/ record is stellar, there is less are that app is using you and AV6W-KWP9 Mi IP es su IP wiggle room for an employer your data as a product offered 4 My colleague Aaron Hall has a The saying Mi casa es to come out clean. to third parties. Do not com- very good primer here: https:// su casa is a gesture of I advise my business clients promise your company’s data: perma.cc/Q8ZY-HZ4T 7 5 utmost hospitality—it invites to hire and fire for the right Stay away from the free ver- Boilerplate contracts are others to enjoy what belongs reasons. Pursuing unfairly sion and pay the extra dollars. everywhere and it’s rare that to you. But a business that discriminatory or retaliatory anybody reads them or objects produces intellectual property practices can be costly for an CONCLUSION to them. Two scholars tackle of any kind should protect it. employer. While there is no perfect the enforceability of pseudo- If a company has employment way to avoid litigation, it is in contracts and how shared- agreements with its workers, IT’S SAFE. BUT IS a business owner’s best inter- meaning analysis could help the agreements should have IT CYBERSAFE? est to keep a tight rein on their further consumer rights: https:// clauses stating that all intel- Although it varies ac- company. Putting into practice perma.cc/5A2G-QLE8 9 6 lectual property and its de- cording to industry, on aver- what I recommend here re- https://perma.cc/436R-K2P5 rivatives that were produced age, human error is at the quires work and money, but it 7 Minn. Stat. §322C.0102 subd. or improved by an employee heart of nearly one in five data will pay off. Shuttering a busi- 17. Nevertheless, I would never belong to the employer and breaches.14 Last year alone, ness over legal disputes or costs recommend an oral or implied not to the employee. The last according to the 2018 Verizon is painful—and even more so if operating agreement. thing you want is an unhappy Data Breach Investigations you could have avoided a pro- 8 Joan MacLeod Heminway, employee claiming the intel- Report, there were 53,308 re- tracted lawsuit. s The Ties That Bind: LLC lectual property they produced ported security incidents in 65 Operating Agreements as Binding belongs to them. reporting countries, of which Commitments, 68 SMU L. Rev. It is also risky to use a busi- 2,216 were confirmed data INTI MARTÍNEZ- 811 (2015) https://perma.cc/ ness logo or slogan that is not breaches.15 It means that even ALEMÁN R39L-F3FM protected with a registered if your staff makes no mistakes founded Ceiba 9 Minn. Stat. §322C.0110 subd. trademark or copyright. Pro- in how they handle sensitive Fôrte Law 1; Elf Atochem N. Am., Inc. tecting your company’s intel- data, there is a high chance Firm® in 2016. v. Jaffari, 727 A.2d 286 (Del. lectual property could prevent that an external source could The firm helps 1999) is persuasive. headaches down the road. target your business to obtain Latinos protect 10 Id. at §322C.0302 Registering your intellectual confidential data. their assets, businesses, and jobs 11 See Comment for Section 301: property can also increase your There is no guaranteed so- by litigating civil, business, and https://perma.cc/NT5W-UX76 company’s value and poten- lution to prevent data breach- employment cases. Inti is licensed 12 Id. at subd. 7. tial monetary claims against a es, but you can significantly to practice law in Minnesota, New 13 https://perma.cc/875N-KC2F third party if they infringe. improve your odds by getting York, and the Republic of Honduras. 14 https://perma.cc/WL8X-AGEL Smart business owners periodic cybersecurity assess- He is married to his high school 15 Id. grow their business by protect- ments from a trusted vendor, sweetheart, Ofelia Ponce, and ing their intellectual property. implementing rigorous data they love living in Little Canada, Anything short of that is ask- policies, encrypting your data Minnesota. ing for trouble. and storage, using a virtual pri- [email protected] www.mnbar.org April 2019 s Bench&Bar of Minnesota 17 Minnesota Parentage Law and Assisted Reproductive Technology It’s time to change the law

By Steven H. Snyder

18 Bench&Bar of Minnesota s April 2019 www.mnbar.org uman beings have been naturally reproducing A child, the child’s biological mother, or a man presumed for their entire history, but only in relatively re- to be the child’s father under section 257.55, subdivision cent history have they been able to do so without 1, paragraph (a), (b), or (c) may bring an action: sexual intercourse. The first artificial insemination of a woman with donor sperm occurred in 1884,1 (a) at any time for the purpose of declaring the Hand the practice was common enough by the 20th Century that existence of the father and child relationship specific provisions for parentage in such cases were incorporat- presumed under section 257.55, subdivision 1, ed into the Uniform Parentage Act (UPA) of 1973, adopted in paragraph (a), (b), or (c).10 Minnesota in 1980 as the Minnesota Parentage Act (MPA).2 Since 1980, however, numerous other methods of assisted re- Those presumptions are seen by the court as the complete uni- production3 have developed, specifically including egg retrieval verse of relationships that grant standing in a parentage pro- and in vitro fertilization.4 The advent of intrauterine insemina- ceeding. Without standing, an individual who wishes to assert a tion and reliable in vitro fertilization paved the way for use of legal parental relationship to a child cannot initiate an action to surrogacy5 as a means for aspiring parents to have children when do so. The courts have interpreted this authorization narrowly: they were unable to gestate their own child. The first documented surrogacy by intrauterine insemination was initiated in 1976.6 The MPA provides the exclusive bases for standing to bring Since then, surrogacy using in vitro fertilization and another an action to determine paternity. Whether and when a woman’s egg has become the norm. Unfortunately, Minnesota person may bring an action depends on which presump- parentage law has failed to keep pace with developing medical tions of paternity, if any, apply. Nine presumptions of pa- technology and the creation of families through these alterna- ternity are set forth in section 257.55, generally divided tive means. As just one example of this, I will discuss the discon- between those based on marriage... and those based on nect between the MPA and the establishment of the intended circumstances other than marriage.... Standing to bring a parentage in various surrogacy arrangements. paternity action with respect to these presumptions is also Surrogacy can be either traditional7 or gestational.8 In both based on statute.11 cases, existing Minnesota parentage law presumes the surrogate to be the legal mother at birth by virtue of giving birth and/or A presumption based on proven genetic relationship is also set bearing a genetic relationship to the child. Depending on the forth in Minn. Stat. 257.62, subject to an exclusion for donors specific circumstances of the surrogacy arrangement, the intend- of genetic material for use in assisted reproduction for the sole ed parents may or may not be genetically related to the child, benefit of the recipient parent.12 and they will not have any marital relationship to the birth mother. This creates a critical disconnect between the intended Application of the MPA to surrogacy parentage of the child and Minnesota law. The Minnesota Court of Appeals has had one opportunity How and whether the intended parents who seek to procre- to apply the MPA to a surrogacy arrangement.13 In A.L.S. v. ate by means of assisted reproduction are presumed to be, or E.A.G.,14 a gay couple in a committed relationship entered into can be made, the legal parents of the child is now governed by a traditional surrogacy arrangement with a woman who had ex- laws enacted well before this means of reproduction became vi- pressed the desire to carry their child as a surrogate only. The able and common. That law currently requires the asserted legal agreement among the parties was that the woman would be in- parent to be related to the child either by having given birth, seminated with the sperm of one of the intended legal fathers, having some marital relationship to the birth mother and/or a gestate the child, and terminate her presumptive maternal rights residential relationship to the child, or having a genetic relation- as the child’s birth/genetic parent so that the genetically un- ship to the child. related partner could then establish his parental rights in her In cases in which both heterosexual intended legal parents use place. The surrogate changed her mind after the child’s birth their own sperm and egg to create the embryos the surrogate ges- and asserted her presumptive maternal rights. The trial court tates for them, the parents may both be able to establish the neces- ruled that the surrogate was not the child’s legal mother and sary genetic presumption of parentage under existing law to have that the non-genetic partner was the child’s second legal father. standing to establish their parentage over the resulting child.9 But On appeal, the court of appeals reversed this determination by in various other surrogacy arrangements in which insemination strictly applying the provisions of the MPA. or other donor sperm or eggs are used, it is possible that none of In reaching this conclusion, the court evaluated the various the statutory presumptions will be met by either of the intended presumptions of paternity and maternity. First, it determined parents. Nevertheless, it is solely the procreative intent of the that the surrogate was the child’s legal parent by virtue of her parent(s) that initiates and results in the child who is born. two coexisting presumptions of maternity: giving birth and being This article discusses the current disconnect between the intent genetically related to the child. Second, the court determined of the parties in surrogacy arrangements and Minnesota parentage that none of the statutory presumptions or provisions of the law. It then examines the possible future evolution of surrogacy MPA applied to give the non-genetic father a basis for assert- law in Minnesota based on current trends in case law as well as ing legal parentage over the child. The court reasoned that the legislative enactments and proposals that are evolving nationally. non-genetic partner must either be the biological or adoptive parent of the child in order to receive parental rights.15 The Current Minnesota parentage law court determined that neither of those relationships existed and Minnesota establishes parentage of children under the auspic- reversed the district court order making him the child’s father. es of the 1973 Uniform Parentage Act as adopted, supplement- Essentially, because the non-genetic father could not meet any ed, and amended in Chapter 257 of the Minnesota Statutes, the of the presumptions or requirements of the express provisions of Minnesota Parentage Act (MPA). Under those provisions, cer- the MPA, he had no standing to assert any legal parental rights tain individuals with a recognized orientation to a child based on even though it was his and his partner’s specific procreative in- marriage or other circumstances are granted the right to assert tent to become parents under an express agreement into which their alleged parental relationship to a child based on limited the surrogate voluntarily entered. statutory presumptions. www.mnbar.org April 2019 s Bench&Bar of Minnesota 19 This same disconnect between the MPA and the intended sperm and with the wife’s consent. Indeed, as noted in the parentage in some surrogacy arrangements is further under- adoption context, any such provision would conflict with scored in a New Jersey Supreme Court case, In re T.J.S.16 Under the express legislative enactment affording a birth mother essentially the same provisions of the 1973 UPA as adopted in 72 hours to decide whether to relinquish the child before Minnesota, the New Jersey Supreme Court affirmed a court of a surrender of her parental rights is deemed valid. appeals decision holding that adoption was the only means available for establishing the legal parentage of a person who had no Thus, contrary to the gender-neutral interpretation plain- legal presumption of parentage under that statute. Although the tiffs ask us to adopt, the plain language of the Act pro- facts and arguments are slightly different from those in A.L.S. v. vides for a declaration of maternity only to a biologically- E.A.G., supra, the statutory interpretation of the required paren- or gestationally-related female and requires adoption to tal presumptions—and the outcome—were the same. render [the intended mother] the mother of [the child]. In T.J.S., a husband and wife entered into a gestational surro- No alternative construction is plausible and nowhere in gacy arrangement with a consenting woman. An embryo created the statutory scheme may it be implied that maternity by in vitro fertilization using the husband’s sperm and the egg of is established simply by the contractual or shared intent an anonymous donor was transferred into the surrogate’s uterus of the parties. Indeed, plaintiffs themselves acknowledge for gestation; therefore, the husband had a parental presump- that the Act, as written, cannot be extended to confer tion as the child’s genetic father, but the wife had no parental maternity on [the intended mother] at the moment of the presumption based on either giving birth or having a genetic re- child’s birth, but would have to be rewritten to allow, at lationship. The husband and wife applied for a pre-birth order of the very least, a 72-hour waiting period for [the surrogate] the trial court to list the husband and wife as the resulting child’s to waive her parental rights to the child born to her. Sim- parents on the child’s initial birth record. The trial court issued ply put, the Legislature has determined when a woman the requested order on the condition that the surrogate relin- is the legal mother of a child, and it does not include the quish her presumptive parental rights three days after the birth present circumstance.17 in keeping with the three-day post-birth waiting period required in adoptions, which the surrogate did. The surrogate cooperated This reasoning and the holding based thereon were affirmed by in the proceedings and made no objection. a split decision in the subsequent New Jersey Supreme Court Upon learning of the pre-birth order, the New Jersey Depart- opinion cited above. ment of Health moved to vacate that portion of the trial court order listing the intended, non-genetic mother on the birth record. The trial court granted the motion to vacate, holding that the statutory requirements requiring her to have a parental presumption to assert parentage did not violate the intended mother’s equal protection rights under the New Jersey Constitution, and that her sole remedy was to adopt the child. In its detailed analysis of the New Jersey Parentage Act, which is essentially equivalent to the MPA, the court reasoned:

The [New Jersey Parentage] Act defines the “parent and child relationship” as “the legal relationship existing between a child and the child’s natural or adoptive parents, incident to which the law confers or imposes rights, privileges, duties, and obligations. It includes the mother and child relationship and the father and child relationship.” There are several means by which to establish a parental relationship under the Act: (1) genetic contribution, (2) gestational primacy, i.e., giving birth, or (3) adoption. In addition, a rebuttable presumption of paternity derives from the parties’ legal relationship, i.e., marriage or its equivalent, when a child is born during the course of a marriage or within 300 days of its termination. This presumption, that a man is the father of a child born to his wife, extends to a husband who consents to his wife being inseminated with donor sperm under the supervision of a licensed physician.

Nowhere in the Act does the presumption of parentage under Section 43(a) extend to a wife whose husband, while married, fathers a child with another woman, or to a wife who simply acknowledges in writing her maternity of the child. On the contrary, where a husband has a child, born to another woman, while married to his wife, the wife may only establish a parental relationship with the child by adoption. Similarly, the Act contains no comparable analogue to Section 44 that renders an infertile wife, by operation of law, the natural mother of a child born to another woman artificially inseminated with the husband’s

20 Bench&Bar of Minnesota s April 2019 www.mnbar.org Decided in two different jurisdictions under the same presumption of paternity to assert under the MPA based on his statutory scheme, these cases clearly demonstrate that genetic link, but the wife does not. In order to establish parent- establishing parentage in a surrogacy process is not adequately age upon the birth, the typical procedure would be to establish supported by the current MPA. Surrogacy presents a variety of the husband’s paternity based on his genetic presumption and presumptive relationships to the resulting child, but surrogacy then have him initiate (and the surrogate consent to) a step- is procreation by intent, not necessarily biology or family parent adoption by his wife, as required by the New Jersey court relationship as required by the MPA. Under the MPA, the in T.J.S., supra. surrogate who gives birth has a presumption by virtue of giving Assume the surrogate gets pregnant with twins and calls the birth. She may also have a presumption based on her genetic intended parents with the good news immediately upon her relationship to the child in a traditional surrogacy arrangement. positive pregnancy test. After celebrating that night, the wife If the surrogate is married, her husband will carry the marital wakes up the very next morning to find her husband—her ge- presumption of paternity. netic link to the child and her necessary path to establishing her The intended parents may or may not hold any of the statu- own parentage—dead of a heart attack. If the surrogate then tory presumptions. If the intended parents are a heterosexual reconsiders her original intent because she is concerned about couple using their own sperm and egg, they will each have a the wife’s ability to raise twins as a single mother/recent widow, genetic presumption to support their claim for establishing legal she may assert her parental presumption to the twins based on parentage. Even in this case, however, their parentage will be having given birth to them. established by application of the best interests standard,18 not The wife, on the other hand, has no parental presumption necessarily the clearly expressed intent of the parties to the ar- under the MPA to provide standing to initiate a proceeding for rangement. If one or both of the intended parents uses donor parental rights. Despite the intent of all the parties at the outset, sperm or egg, the non-genetically related intended parent will the surviving wife could not even get in the courthouse door.20 have no presumption of parentage to grant them standing to Without intent as at least a factor in the establishment of par- assert their parental rights under the MPA. In such cases, the entage in cases of assisted reproduction, these kinds of unex- intended parents will only be able to establish their legal rela- pected and inequitable outcomes remain all too possible. tionship to the child through an adoption proceeding with the cooperation and consent of the surrogate. This will always be The role of intent in surrogacy the case for same-sex male couples, as one of the intended par- The proper role of intent in assisted reproduction, particu- ents will always lack a marital relationship to the birth mother larly surrogacy, is reflected in two California parentage deter- or genetic link to the resulting child. minations, Johnson v. Calvert21 and In re Marriage of Buzzanca.22 Johnson was a case in which a heterosexual married couple Hypothetical case19 entered into a surrogacy arrangement with a willing surrogate. The deficiencies of existing Minnesota parentage law become Because of conflicts between the couple and the surrogate dur- clear when one applies the MPA to a surrogacy arrangement in ing the pregnancy, the surrogate petitioned for parental rights a common situation with an uncommon twist. As noted above, to the child. Referring to the same presumptions set forth in there are many surrogacies initiated by heterosexual couples in the MPA, the court noted that the surrogate and the intended which the intended mother can neither gestate the child nor mother each held a statutory presumption—the surrogate by provide the egg to create the embryo (as was the case in T.J.S., virtue of giving birth, and the intended mother by virtue of be- supra). In such cases, the husband typically provides the sperm ing the child’s genetic mother. Confronted with the equipoise of and is thereby genetically linked to the child. The husband has a presumptions, the court determined that parentage under the California Parentage Act should be determined by a tie-breaker: the expressed intent of the parties.

We conclude that although the Act recognizes both genetic consanguinity and giving birth as means of establishing a mother and child relationship, when the two means do not coincide in one woman, she who intended to procreate the child—that is, she who intended to bring about the birth of a child that she intended to raise as her own—is the natural mother under California law.23

This reliance upon the intent of the parties to a surrogacy arrangement to determine parentage was further expanded in Buzzanca. In Buzzanca, a married couple used donor sperm and egg to create an embryo that was transferred into the genetically unrelated surrogate for gestation. The couple initiated divorce proceedings, and the intended father attempted to avoid both parentage and any child support obligation by asserting he could not be established as the child’s father because he had no genetic or marital presumption of paternity upon which such a determination could be based. As originally agreed, the surrogate did not assert any parental rights and did not want to be the child’s legal mother. The trial court initially determined that, under those circumstances, the child had no lawful parents. In reversing the trial court and finding that the intended mother and father were, indeed, the legal parents of the resulting child, the California Court of Appeals wrote: www.mnbar.org April 2019 s Bench&Bar of Minnesota 21 Even though neither Luanne nor John are biologically re- In 2008, a comprehensive statute to regulate and govern sur- lated to Jaycee, they are still her lawful parents given their rogacy was passed in bipartisan votes by both the Minnesota initiating role as the intended parents in her conception and House and the Minnesota Senate. Then-Gov. Tim Pawlenty ve- birth. And, while the absence of a biological connection toed the bill. Thus, it remains the case that intended parents is what makes this case extraordinary, this court is hardly with no statutory presumption of maternity or paternity may lack without statutory basis and legal precedent in so deciding. standing to assert their claims to parentage. Some form of legisla- Indeed, in... our Supreme Court’s Johnson v. Calvert deci- tion to improve the application of Minnesota parentage law to sion, the court looked to intent to parent as the ultimate cases involving assisted reproduction has been introduced in ev- basis of its decision. Fortunately, as the Johnson court also ery session of the Legislature since 2002; not one has become law. noted, intent to parent “’correlate[s] significantly’” with a child’s best interests... That is far more than can be said for a model of the law that renders a child a legal orphan.24

Together, these two cases establish an analysis for determining legal parentage of children born pursuant to surrogacy arrangements according to the original intent of the parties—and, as implicitly encompassed therein, the best interests of the child. Most attorneys practicing in the area of assisted reproduction and surrogacy concur that intent should be the cornerstone of establishing Most attorneys parentage in surrogacy and other forms of practicing in the assisted reproduction. area of assisted In such a regime, a woman who provides an reproduction and egg (whether hers or a donor’s) to create an surrogacy concur that embryo that is transferred to another woman intent should be the as her surrogate would be established as the cornerstone of establishing legal mother. Conversely, if a woman provides parentage in surrogacy and other an egg as an egg donor only to create an em- forms of assisted reproduction. bryo that is transferred to another woman for gestation with the intent that the woman gestating the child will become the legal parent, the woman gestating would be established as the legal mother. Various bills have been introduced during the 2019 ses- These similar, but disparate, cases involve the same medical sion that would affect establishment of parentage with respect procedure but produce opposite parentage results based on the to certain forms of assisted reproduction. One bill affirms and respective parties’ intent. Unfortunately, intent has not been ad- regulates compensated surrogacy according to well-accepted opted as a factor under the MPA either by statute or case law. national legislative trends;26 another attempts to prohibit com- So the parties to a surrogacy agreement in Minnesota continue pensated surrogacy and place other prohibitive restrictions on to face uncertainty regarding the ultimate parentage of a child the process;27 a third attempts once again to amend and expand born via surrogacy if a conflict arises among the parties. the artificial insemination statute.28 In addition, a study group has been established to evaluate the newest version of the UPA Efforts to update Minnesota parentage law as amended in 2017 for possible introduction and passage dur- in cases of assisted reproduction ing the next legislative session (or two). This version of the UPA The Uniform Parentage Act of 2000 was proposed in the would also establish predictable and equitable parentage out- Minnesota Legislature in 2001. An extensive task force was comes in all cases of assisted reproduction. The fate of all these convened to evaluate the updated version of the Act, which in- legislative efforts is unclear, at best. cluded provisions to reliably and predictably govern all assisted reproduction matters. After due consideration, the task force National trends for legislating parentage in surrogacy recommended against adopting the updated version. It was not There are three clear indicators of the direction the Minne- re-introduced or passed. sota Legislature should take. The first is a striking trend in re- Thereafter, every session of the Minnesota Legislature has in- cent legislation in a mounting number of other states to govern cluded some effort to regulate assisted reproduction and create establishment of parentage in surrogacy. The second is the UPA predictable outcomes. Amendments to the artificial insemina- as amended in 2017.29 The third is the recently amended Ameri- tion statute25 were proposed to include cases of egg donation, for can Bar Association Model Act to Govern Assisted Reproduc- the protection of recipient parents and egg donors. The amend- tive Technology.30 ments failed. Thus, egg donors retain an existing presumption In 1988, the New Jersey Supreme Court decided the case of that gives them standing to assert legal parentage based upon In re Baby M.31 Baby M was the first contested traditional sur- their genetic link to the child under the MPA should they choose rogacy case in the U.S., and it was a matter of national attention. do so. An amendment to Minn. Stat. Sec. 257.55 was proposed Based on the co-existing presumptions of maternity arising from to include intent as one of the presumptions to create standing both giving birth and having a genetic relationship to the child, for an intended parent to assert a claim to parentage in cases of the traditional surrogate was awarded legal maternity. assisted reproduction in which they had not given birth and had Immediately following that landmark traditional surrogacy no marital relationship to the birth mother or genetic link to the case, eight states moved to legislatively limit or criminalize sur- child (as in the hypothetical set forth above). It failed. rogacy in some manner. This reactionary wave was followed by

22 Bench&Bar of Minnesota s April 2019 www.mnbar.org the affirmative California decisions in Johnson and Buzzanca, su- original intent of the parties to determine the ultimate parentage pra. In the 25 years following those decisions, 16 states have, by of the child. The surrogate has no right to challenge or usurp the case law and/or legislation, expressly permitted and regulated surrogacy process and keep the child in either scenario. Under compensated surrogacy, including three of the states that origi- the UPA, however, a traditional surrogate is given a period of nally limited or prohibited surrogacy after Baby M. In addition, days following the birth in which she can unilaterally undo several other states have implicitly approved surrogacy by ex- the intended surrogacy arrangement and keep the child. The empting surrogacy from the application of their respective adop- UPA only applies the intent test imported from Johnson and tion statutes prohibiting compensation in an adoption. No pro- Buzzanca to gestational surrogacy. Nevertheless, there are still hibitive legislation was passed in any state in that same 25-year clear and consistent rules for the establishment of parentage in period. New York has recently issued an extensive task force compensated surrogacy arrangements in both, and that would report that recommends legislation to permit and regulate com- be a desirable step forward for Minnesota parentage law. pensated surrogacy, and there is a bill currently pending in that state that would overturn its criminalization of that process. Vir- Conclusion tually all of these legislative enactments establish parentage in Medical advancements have separated the process of having surrogacy and other assisted reproductive methods based upon children and forming families from the natural procreative pro- the original intent of the parties. Clearly the national trend is in cess. Minnesota’s outdated parentage laws were passed before favor of expressly addressing and permitting surrogacy and other many of the current assisted reproductive technologies existed, forms of assisted reproduction and creating reliable parentage and the laws should now be updated to contemplate these new outcomes for all the parties in those situations. ways to form families. Minnesota should be next on the exten- Both the 2017 UPA and the ABA Model Act have compre- sive and growing list of states to permit and reliably establish hensive provisions to regulate assisted reproductive technol- parentage in all surrogacy arrangements and all other forms of ogy. Both were formulated by esteemed and diverse bodies of assisted reproduction. s attorneys representing all U.S. states. Each reflects a reasonable national consensus for governing and establishing parentage in STEVEN H. SNYDER, Esq., is the founder and principal assisted reproduction. They address the parentage of both sperm partner of Steven H. Snyder & Associates, LLC, in and egg donors, as well as the intended parents in surrogacy. Maple Grove, Minnesota. Mr. Snyder is a member of Both the UPA and ABA Model Act permit and regulate parent- the American Bar Association and previous chair of age in surrogacy. They each affirm the propriety of reasonable the Assisted Reproductive Technology Committee of compensation paid to women who act as surrogates. the ABA Family Law Section. He is also past chair The main difference between the two lies in their treatment of the MSBA Family Law Section. Mr. Snyder is a of traditional surrogacy. The ABA Model Act provides for frequent national and international speaker on assisted enforcement of traditional surrogacy arrangements in the same reproductive technology topics. fashion as gestational surrogacy arrangements, allowing the [email protected]

Notes contributor. LEXIS 1091, 2010 WL 4181449, at 16 (Minn. 1 A.T. Gregoire Ph.D., Robert C. Mayer 9 Even in this “simplest” case, the surrogate will App. 10/26/2010). M.D., “The Impregnators”, 16 Fertil- still have a competing presumption of mater- 19 (Well, maybe it actually happened.) ity and Sterility, 130–4 (1965). https:// nity upon which to contest parentage based 20 Of course, the wife could present arguments www.sciencedirect.com/science/article/pii/ on her having given birth to the child. based on equal protection and other grounds S0015028216354760?via%3Dihub 10 Minn. Stat. Sec 257.57, Subd. 1. (1980). outside the MPA, but the New Jersey court in 2 Minnesota Statutes Chapter 257 (Minnesota 11 Witso v. Overby, 627 N.W. 2d 63, 65-66 T.J.S., supra, rejected those arguments based Parentage Act) (1980). (2001). (Emphasis added.) on New Jersey’s similar parentage statutes. It 3 Reproduction without sexual intercourse. 12 Minn. Stat. Sec. 257.63, Subd. 5(c). is only speculative that the wife would suc- 4 The formation of a human embryo outside the 13 In one other unpublished decision, the court ceed with such arguments against the express human body. of appeals determined that a gestational sur- terms of the MPA. 5 The process by which another woman at- rogacy arrangement was enforceable under Il- 21 Johnson v. Calvert, 851 P.2d 776 (Cal. 1993). tempts to carry and give birth to a child linois law based on the parties’ express choice 22 In re Marriage of Buzzanca, 61 Cal. App. 4th created through intrauterine insemination or of law provision in their surrogacy agreement. 1410 (Cal. App. 4th Dist. 1998). in vitro fertilization using sperm and/or eggs This case did not apply the MPA to the 23 Johnson v. Calvert, 851 P2d. 776, at 785 (Cal. provided by the intended legal parents of the surrogacy arrangement for its determination 1993). resulting child. of parentage. In re Baby Boy A., 2007 Minn. 24 Buzzanca, supra, at 1428 (Cal. App. 4th Dist. 6 Sue A. Meinke, Surrogate Motherhood: Ethical App. Unpub. LEXIS 1189, 2007 WL 4304448, 1998). and Legal Issues, The Joseph and Rose Ken- at 3-8 (Minn. App. 12/11/2007). 25 Minn. Stat. Sec. 257.56 (1980). nedy Institute of Ethics, Bioethics Research 14 A.L.S. v. E.A.G., 2010 Minn. App. Unpub. 26 H.F. 1140, 90th Leg., S.F. 1533, 90th Leg. Library, Georgetown University, Revised Jan. LEXIS 1091, 2010 WL 4181449 (Minn. App. (Minn. 2017). 1988, at 2. https://repository.library.georgetown. 10/26/2010). 27 H.F. 1000, 91st Leg., S.F. 1152, 91st Leg. edu/bitstream/handle/10822/556906/sn6.pdf 15 Id., at 10, citing Minn. Stat. Sec. 257.52 (Minn. 2019). 7 The surrogate is inseminated with the sperm (1980). 28 H.F. 724, 91st Leg., S.F. 755, 91st Leg. (Minn. of the intended legal father and is both the 16 In re T.J.S., 54 A.3d. 263 (N.J. 2012). 2019). gestational and genetic contributor. 17 In re T.J.S., 16 A3d 386, 388-389 (N.J. App. 29 Uniform Parentage Act (2017). 8 The surrogate receives and gestates an embryo Div. 2011). (Citations omitted.) 30 American Bar Association Model Act created using either the intended legal 18 Minn. Stat. Sec. 518.17 (2008); Durkin v. Governing Assisted Reproductive Technology mother’s egg or a separate egg donor’s egg Hinich, 442 N.W.2d 148, 152 (Minn. 1989); (Feb. 2017). so she is the gestational, but not the genetic, A.L.S. v. E.A.G., 2010 Minn. App. Unpub. 31 In re Baby M, 537 A.2d 1227 (N.J. 1988). www.mnbar.org April 2019 s Bench&Bar of Minnesota 23 Thank you to the attorneys & judges who volunteered for the 2019 High School Mock Trial Competitions

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Members of the Apple Valley High School Mock Trial team were presented with a scholarship check for $2,000 by JD Feriancek with ACTLM after winning their first state title. They will represent Minnesota at the National Mock Trial Championship (NHSMTC) in Athens, GA in May. The team is coached by Eric Strauss, Jeanie Zurales, and Becca Strauss.

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Consider making a tax deductible donation to the Amicus Society on behalf of the MSBA Mock Trial Program at GiveMN.org You can’t serve two masters. Unless you’re a Realtor.

By Doug Miller

The Minnesota Association of Realtors is lobbying for a new law that will allow brokers to conceal their dual agency status from consumers.

ogger” is the celebratory tions and obliterates the informed con- Dual agency is bad. Now throw term used by Realtors1 to sent requirements found in common law. in a double fee. “ describe a transaction in Worse, the licensing law serves to exon- Brokers love dual agency. And they which one agent or one erate Realtors from civil liability if they should, since they get paid double. As a broker “represents” both comply with those minimal and incom- result, dual agency encourages really bad theH buyer and seller—an arrangement plete disclosures.3 practices like reverse marketing. Reverse known as dual agency. When this hap- A new piece of dual agency legisla- marketing is when brokers intention- pens, agents and their brokers2 reap a tion introduced this year in Minnesota ally limit the marketing of their clients’ double fee as a sort of perverse reward for (H.F. 1112, S.F. 1020) would rename the homes. Instead of charging consumers abandoning fiduciary duty. Their clients practice designated agency and allow dual 6 percent and trying to sell their clients’ experience a fundamental degradation in agent brokers to represent themselves as homes for the highest price and in the service. It is the worst form of bait-and- exclusive agents while concealing their shortest time possible, brokers act on the switch, using pledges of undivided loyalty dual agency status and financial interest almost irresistible temptation to severely as the bait and, when dual agency arises, in the transaction. For brokers, dual agen- limit the marketing of their clients’ homes providing no such thing. Dual agency is cy transactions mean that they don’t have to try to engineer a double fee by finding illegal in every fiduciary profession where to share the commission with outside a buyer who is represented by the same competing interests are involved—except brokerage firms. In other words, brokers brokerage. Reverse marketing already is for Realtors. are incentivized to engineer dual agency rampant in our market, despite the fact Real estate licensees already enjoy spe- transactions in which they abandon their that it flies in the face of why consumers cial legislative protections written into clients. If designated agency is passed, as hire brokers in the first place. consumer protection licensing laws. The it has been in 34 other states, we will have Pocket listings are a particular kind of current licensing statute misrepresents legalized fraud in a fiduciary relationship. reverse marketing in which brokers tell dual agency conflicts and their ramifica- clients that they want to “test market”

26 Bench&Bar of Minnesota s April 2019 www.mnbar.org their homes to get feedback from agents and never the salesperson (also known as and double-fee conflicts of the broker. within a brokerage firm. They are also an “agent”). Realtors are authorized to Not only would this law be confusing for called “pre-MLS listings.” Brokers typi- represent clients only on behalf of their consumers; it would intentionally mis- cally keep the home off the MLS for a brokers. If the agent leaves the firm, the lead them about the representation that couple of weeks (the highest interest in broker gets to keep the client. It’s not the they can expect to receive. This legisla- homes just listed typically occurs in the agent’s client. All contracts are with the tion proposes to legalize undisclosed dual first two weeks) and intensely market the broker, and only the broker can handle agency. That’s legalized fraud. potential hogger to agents within the bro- the money. It is the broker who must su- Realtors love dual agency but hate kerage. These homes often hit the MLS pervise the agents. It is the broker who is explaining it to clients, because when with an accepted offer without ever ex- responsible for the acts of the agents. clients truly understand what it means, periencing the full market exposure the they won’t agree to it. It is impossible properties deserved. for Realtors to satisfy the common law Brokerages also offer financial incen- informed consent standard. That’s why tives to agents and managers who betray they changed the law. That’s why they their clients into dual agency transac- are proposing this new law. Instead of do- tions. There is a class action going on in Realtors love dual ing the proper thing and eliminating dual New York right now alleging: agency as an option, they’re finding new agency but hate ways to disguise it. “Since at least January 1, 2011, Houlihan Lawrence has operated explaining it to clients, How can supervising brokers a bait-and-switch scheme to lure be neutral? They can’t. thousands of homebuyers and sell- because when clients This new bill proposes that when a ers into dual-agent transactions…. truly understand designated (dual) agency situation arises, To induce its 1,300 agents to par- supervising brokers are to remain neu- ticipate in the scheme, Houlihan what it means, they tral. But simply stipulating that a broker Lawrence pays secret kickbacks to is neutral does not make it so. By defini- the sales agents who secure double won’t agree to it. It is tion, the broker is not neutral. And under commissions through dual-agent the terms of the designated agency law, transactions. These kickbacks en- impossible for Realtors brokers would have a statutory duty to courage Houlihan Lawrence agents review confidential negotiating informa- to put their personal interest in a to satisfy the common tion collected by their agents. With a bigger commission check ahead double commission (sometimes as high of the interests of their clients by law informed consent as six figures) riding on the deal staying incentivizing them to steer clients in-house, brokers can’t be trusted to be into dual-agent transactions.”4 standard. impartial with this information. What kind of supervision can be expected in Some years ago, Edina Realty made this situation? What will go on behind national real estate industry news by re- closed doors? moving their clients’ listings from two It is the broker who has the most con- of the most buyer-frequented websites In Minnesota, when a buyer and seller flicts and the biggest financial tempta- in the country at the time: Trulia and hire the same broker in the same transactions to access all the private confiden- Realtor.com. As reported at the time by tion, the broker is engaging in dual agency. tial negotiating information of the buyers the industry publication Inman News,5 a And because agents derive their author- and sellers and to use that information representative from Edina said that one ity from their supervising brokers, all the to ensure the transaction takes place. of the reasons that they did this was to in- agents also become dual agents. An agent’s Collecting the entire commission is not crease the search engine optimization of authority cannot exceed the authority of a minor incentive. Likewise, you cannot their firm’s website. In other words, they their broker. However, the concept of des- have multiple licensees of the same bro- wanted consumers to find properties on ignated agency changes all that. ker conducting negotiations and expect their firm’s website, which would likely that they will receive unbiased supervi- increase the chances of collecting a dou- Designated agency sion from that dual agent broker. ble fee and imposing dual agency on their Instead of restricting dual agency fur- Consider, for instance, a multiple of- clients. If there were no such thing as a ther because of its problems, the Realtors fer situation with agents from within and “hogger,” would this ever have happened? are proposing a new law that sidesteps the outside the firm. Consider agents from (In 2014, Edina Realty did an about-face stigma of dual agency by allowing agents the same team within a brokerage nego- and began sharing its listings with those from dual agency firms to pose as exclu- tiating against each other. Consider two sites and with Zillow, with which they had sive agents. The bill proposes to allow brand new agents attempting to negoti- not previously listed.6) dual agent brokers to appoint one agent ate a complex transaction without the to represent a buyer and another agent to requisite skillset to negotiate without Agents derive their agency represent the seller in the same transac- their broker. Consider the transaction in relationship from their brokers tion and promote this form of “represen- which the broker represents a developer Even though most consumers believe tation” as exclusive agency even though with hundreds of houses and simultane- that they are hiring an individual Real- the broker is a dual agent. (The business ously represents a single buyer. It’s easy tor when they engage one to buy or sell a model should be called designated dual to imagine countless situations in which house, they are really hiring the brokerage agency.) The law, if passed in its current the broker’s ability to supervise becomes firm. Consumers can only hire the broker form, would conceal the dual agency hopelessly compromised. www.mnbar.org April 2019 s Bench&Bar of Minnesota 27 Yet the bill to legalize “designated to. Attorneys are trained in the manage- or in competition with, the interests of his agency” proposes to allow salespeople to ment of conflicts of interest; if any class of principal. Buyers and sellers of real estate do exactly what their supervising broker is professionals could navigate something as are deemed by law to ‘compete’ with one prohibited from doing—negotiating price complex as a dual agency relationship, it another and to have ‘adverse’ interests…. and terms. Designated agency makes bro- would be them. But a law firm cannot le- A real estate broker who acts for both the kers privy to private negotiating informa- gally represent the buyer and seller in the buyer and the seller and does not clearly tion that they otherwise would not have negotiation of a real estate transaction. disclose his status to both parties and had. Instead of warning consumers not to The disclosures and conflicts are so great receive their informed consent is an un- divulge confidential negotiating informa- that many believe that the relationship is disclosed dual agent. Undisclosed dual tion to brokers, this new law would en- non-consentable.7 agency is universally considered to be a courage them to do so. breach of an agent’s duty of loyalty to his The proposed law would require no Designated agency gives large principal. It is also considered to be an act disclosures about the broker’s inability to brokerage firms an unfair of fraud…. The disclosures and consents supervise their agents or the broker’s ac- marketing edge necessary to make a dual agency lawful cess to confidential negotiating informa- Designated dual agency will allow are so comprehensive and specific that a tion and financial incentive to use that in- large firm agents to legally misrepresent typical real estate broker cannot under- formation against clients’ interests. These to the public that they provide the same take them as a matter of routine.” are insurmountable conflicts that fiducia- level of fiduciary oversight that small Back then, too, Minnesota licensing ries are supposed to avoid, not invite. Ad- firms provide. It’s unfair to small brokers law didn’t protect licensees from civil vocating agents are given nowhere to turn and to consumers. Small brokers have a liability. Here’s how the old law used to to seek needed negotiating advice. But huge and legitimate marketing advantage read before the Realtors changed it: “The the broker will have access, even a duty, over large firms: Small firms can com- requirements for disclosure of agency to see all the consumers’ confidential ne- pletely avoid dual agency. Small brokers relationships set forth in this chapter gotiating strategies. There are no warn- can offer pure fiduciary services in which are intended only to establish a minimum ings to consumers not to disclose their ne- neither they nor their agents engage in standard for regulatory purposes, and are gotiating information (such as how high a any form of dual agency. It is called sin- not intended to abrogate common law.” buyer or how low a seller is willing to go gle agency and is the best form of repre- (Emphasis added.) on price) to these tainted advisors. sentation available today to consumers. However, Minnesota licensing law and Conclusion Dual agency disguised the accompanying statutory disclosures Realtors have used licensing law to as exclusive agency do not provide for this type of represen- do away with common law consumer Designated agency, as noted above, tation, probably because big brokers are protections and insulate themselves from is promoted to consumers as exclusive unable to provide this level of service. market forces and liability. They have representation. Even savvy consumers Since small brokers rarely run into used licensing law to make it possible who don’t like the idea of dual agency are their own listings while representing buy- for them to subject their clients to a likely to believe that designated agency is ers, they can easily avoid dual agency catastrophic degradation in the level of a legitimate choice. If you’re an attorney and practice single agency. This is a huge service (dual agency) and charge them who understands the intricacies of broker advantage to clients who desire true fidu- double for it. It is a travesty of justice to duties and how brokers are paid, not so ciary services from their agent and broker. use a licensing law to make it easier to much. Merely writing a law that says you In the rare situation when a dual agency deceive consumers. are an exclusive buyer agent doesn’t make does arise, the broker withdraws and re- The dual agency double fee is not it so. A dual agent broker is a dual agent fers the clients to a competitor for a re- worthy of legislative protection. When broker. ferral fee. When a small firm practicing did we determine that real estate brokers Low entry standards for real estate single agency is a choice, there is no good needed government protection to collect licensing exacerbate the problem. This reason to choose a large brokerage firm. a double fee and subject clients to dual law proposes to allow agents to work The Minnesota Association of Real- agency and fiduciary abandonment? Col- completely free of the supervision of their tors is promoting “designated agency” to lecting a double fee is an unfair profit to brokers while negotiating on behalf of their membership with this tagline: “Is begin with, yet Minnesota licensing law the broker’s clients. That’s a big problem Dual Agency preventing you from fully treats it as if it were a lofty and important when you look at the lowest common representing your clients’ best interests? consumer goal. Dual agency is not neces- denominator—the green agent. Anyone If so, you are not alone!” But of course, sary to sell real estate. It just happens to can become a real estate agent. You don’t their prescribed solution amounts to be the most profitable approach. s even need a high school degree. Just take simply changing a name. Thirty-three a 90-hour class and pass the exam and years ago, in a guide released as part of DOUGLAS R. MILLER, an you become a real estate licensee. Before the NAR’s 1986 Legal Liability Series MSBA-certified real property you can start work, however, you must on agency law, Realtors sang a different law specialist, is an attorney find a broker who is willing to hold your tune: “Dual Agency is a totally inappro- at Miller Law PLLC and only license and supervise your activities. But priate Agency relationship for real estate represents residential real under the terms proposed for designated brokers to create as a matter of general estate consumers. He has agency, that supervision theoretically business practice.”8 been involved in numerous vanishes once you begin to advocate on Back then, the advice from NAR read class actions and is also behalf of your client. To whom does the like quotes taken from the Restatement the executive director of Consumer Advocates in new agent turn for advice? What hap- of Agency.9 The same document went on American Real Estate (www.caare.org), the only pens when the new agent’s qualifica- to say, “An agent’s duty of loyalty compels nonprofit charity dedicated to consumer protection tions are abysmally low? The designated him to refuse to accept any employment in the residential brokerage industry. agency bill offers no one for them to turn that would require him to act contrary to, [email protected]

28 Bench&Bar of Minnesota s April 2019 www.mnbar.org Designated dual agency will allow large firm agents to legally misrepresent to the public that they provide the same level of fiduciary oversight that small firms provide.

Notes 1 A Realtor is a member of the Realtor Association, the trade association that controls the Multiple Listing Service (MLS). If salespeople don’t join the Realtor Association, they can’t have access to the MLS. This is why nearly every licensee is also a “Realtor.” 2 Minnesota law creates a licensing hierarchy in which only brokers can contract with consumers and handle money, and brokers are further charged with supervising salespeople (agents). Agents can only work on behalf of brokers and do not have any direct contractual fee or agency relationships with consumers. 3 Minn. Stat. 82.67 Subd 2 reads, “Disclosures made in accordance with the requirements for disclosure of agency relationships set forth in this chapter are sufficient to satisfy common law disclosure requirements.” (Emphasis added.) 4 Goldstein vs Houlihan Lawrence, Supreme Court of the State of New York, County of Westchester, 60767/2018. https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?doc umentId=F6GoWWSthHIOlDuLwceGQw==&system=prod 5 Inman News, “Minnesota broker will stop sending listings to Trulia, Realtor.com” (11/21/2011). 6 Inman News, “Edina Realty does about-face, sends listings to Zillow, Trulia, Realtor. com” (9/30/2014). 7 See Minnesota Rules of Professional Conduct rule 1.7 and comments 7 and 26-33. 8 Who Is My Client? A Realtors Guide to Compliance with the Law of Agency. 1986 9 Restatement Of the Law, Second, Agency 2d.

www.mnbar.org April 2019 s Bench&Bar of Minnesota 29 A Tribal Counsel’s Guide to Corporate Compliance

By Mandi Crane

he word “compliance” sends a collective shiver down the spine of many profit-minded organizations. With revenue responsibilities top of mind, corporate leaders (and those they supervise) bemoan having to comply with complex regulatory requirements. At the same time, these leaders Tare aware of the financial and legal consequences of failing to adhere to regulatory requirements. In my experience as in-house legal counsel for a federally recognized Indian tribe, compliance work creates a healthy tension. That tension is not only necessary but good, because it fuels responsible innovation and fosters ethical corporate—for tribes, governmental—culture.

30 Bench&Bar of Minnesota s April 2019 www.mnbar.org EFFECTIVE COMPLIANCE PROGRAMS REDUCE ORGANIZATIONAL MONITORING COSTS AND CREATE INCENTIVES THAT ALIGN EMPLOYEE AND SHAREHOLDER INTERESTS.

Regardless of whether you serve corporate or governmental cli- tions are one of the most heavily regulated industries in the ents as legal counsel, there are important actions we can take United States. They must comply with myriad laws, including to position our organizations in what I refer to as “compliance federal laws and regulations such as the Indian Gaming Regu- peak position”—that generous area of the Yerkes-Dodson bell latory Act, National Indian Gaming Commission Regulations, curve where organizations minimize the risk of both corporate federal gaming tax law, and Bank Secrecy Act laws; tribal-state wrongdoing and compliance burnout. gaming compacts; and internal tribal laws and regulations. Many tribes rely on their gaming operations to provide vital Compliance beginnings funding for their communities. It is therefore essential that they Draconian command-and-control models of corporate com- maximize revenue within the legal and regulatory framework to pliance from decades past are inefficient and hard on employee which they are beholden. Maximizing profit is one important morale. The first internal compliance-oriented laws date back reason to establish an effective compliance program. to the Interstate Commerce Act of 1887, which created a federal agency, in part, to regulate the railroads.1 The concept of What does an effective compliance program look like? corporate compliance continued to evolve in the American ju- Effective compliance programs share some universal ele- dicial system in the proceeding decades. The term “compliance” ments. First, they encourage ethical awareness. Second, they as it’s now understood came into the collective consciousness hold each individual accountable not only for his or her own after a series of corporate scandals in the 1970s and 1980s. actions, but for the larger ethical wellbeing of the organiza- In response to these scandals, industry groups worked to- tion—executive leadership and front-line employees alike. gether to create standard practices for preventing and report- Third, they reward ethical conduct.5 They must also have the ing employee misconduct. Self-policing benefitted business appropriate legal infrastructure in place to maintain a culture leaders and regulators alike. The United States Sentencing of integrity. Commission took note; in 1991, it established formal sentenc- Legal counsel plays a critical role in building the compliance ing guidelines that provided incentives to corporate defendants infrastructure necessary to support an ethical culture and re- to implement voluntary compliance programs to prevent and duce regulatory risk. In-house counsel are particularly well po- remedy regulatory violations.2 sitioned to influence organizational culture because they have Organizations today must grapple with increased regulatory strong working relationships across a spectrum of operational complexity and significant compliance expense. The cost of departments and a keen understanding of the organization’s compliance missteps can be significant. Companies that rely values and objectives. In-house and outside counsel alike are exclusively on the strength of corporate policies and procedures also subject to independent ethical standards imposed by the backed by punitive consequences to deter employee misbehav- Minnesota Rules of Professional Conduct. For example, Rule ior miss a valuable opportunity to appeal to their employees’ 1.13 requires any attorney representing an organization as a values and aspirations. Values are powerful drivers of ethical client to report legal misconduct to an appropriate authority behavior.3 Effective compliance programs also identify and within the organization. Rule 1.13 also allows the attorney to prevent employee misconduct and align corporate policy and resign and make any necessary information disclosures under practice with applicable laws, rules, and regulations. In other Rule 1.6 if the organization fails to take action in response to words, they reduce organizational monitoring costs and create the report of misconduct. incentives that align employee and shareholder interests.4 In addition, Rule 2.1 acknowledges that a lawyer may consider “moral, economic, social, and political factors” in advising What do tribal governments have to do with a client. These considerations are particularly relevant where corporate compliance? the law is conflicting or ambiguous, when the question at is- Tribal governments are independent sovereign nations, not sue is highly sensitive or involves matters of public interest, or corporations. But they share many similar interests when it when the client has competing objectives. Recognizing and re- comes to effective compliance practices. Tribal gaming opera- solving ethical dilemmas is within every lawyer’s purview.

www.mnbar.org April 2019 s Bench&Bar of Minnesota 31 Moving your client into compliance peak position Serving your client well requires you to work collaboratively with organizational leaders to improve their compliance programs. Here are three ideas to consider as you work to move your organization into compliance peak position: n Conversations matter. Good relationships are the foundation of corporate compliance work. Legal counsel must be able to build bridges of credibility, trust, and familiarity between the organization’s compliance department and corporate management. Legal counsel must also establish strong relationships with industry regulators and follow through with commitments made to them. By understanding and satisfying industry regulators’ interests, legal counsel can ensure their business colleagues are free to innovate without unnecessary regulatory interference.6 n Manage materials. This point is two-fold. Legal counsel must work diligently to keep corporate policies in lockstep with business practices and regulatory requirements. Fall short on either of these fronts and you invite regulatory scrutiny. Legal counsel must also manage materials in the sense that they have command over the regulatory framework most directly influencing Disclaimer: The contents of this article do not constitute legal business operations. Start with the text of the basic underlying advice and do not necessarily reflect the opinions of my employer. statute, and move outward from there. Other good practices: Notes • Make a checklist of regulatory requirements for your 1 Robert C. Bird and Stephen Kim Park, The Domains of Corporate Counsel client’s products and services; in an Era of Compliance, 53 Am. Bus. L. J. 203, 210 (2016) citing Ch. • study the content of regulatory agency websites; 104, 24 Stat. 379 (1887) (codified as amended in scattered sections of • talk with experienced counsel to understand their 49 U.S.C.) and Clyde B. Aitchison, The Evolution of the Interstate Com- methods for navigating complex regulatory standards, merce Act: 1887-1937, 5 Geo. Wash. L. Rev. 289, 289 (1937). staying on top of publications and client updates, and 2 Hui Chen and Eugene Saltes, Why Compliance Programs Fail, Harvard studying other organizations’ compliance failures so you Business Review, March-April 2018 at 5. can help your organization avoid its own.7 3 Scott Killingsworth, Modeling the Message: Communicating Compliance Through Organizational Values and Culture, 25 Geo. J. Legal Ethics 961, n Work from values rather than rules. To meet our professional 961-962 (2012). responsibility obligations and provide value to our clients, le- 4 Bird and Park, supra, at 220. gal counsel must understand the organization’s guiding values 5 See generally Linda Klebe Treviño et al., Managing Ethics and Legal Com- and commitments and give life to them. Legal counsel occupies pliance: What Works and What Hurts, Cal. Mgmt. Rev., 131 (1999). a unique position: We can influence the development of cor- 6 Andrew S. Boutros et al., The ABA Compliance Officer’s Deskbook, 5-8 porate policy to ensure it meets legal and regulatory require- and 168 (American Bar Association 2017). ments as well as encourage our clients to engage proactively 7 Boutros, supra, at 165-170. with stickier compliance problems. These practices result in in- 8 Treviño, supra, at 133. creased ethical awareness within organizations, making it more 9 U.S. Department of Justice, Criminal Division, Fraud Section, Evaluation likely employees will ask the right questions and do the right of Corporate Compliance Programs, available at https://www.justice.gov/ things when faced with an ethical problem.8 criminal-fraud/page/file/937501/download. The Department of Justice Evaluation of Compliance Pro- gram checklist provides a series of additional considerations counsel may wish to consult in evaluating an organization’s compliance program.9

Winning at compliance Organizations can have strong compliance programs and strong performance. Legal counsel can best contribute by be- MANDI CRANE serves as ing knowledgeable about industry regulatory requirements and special staff legal counsel ensuring that their clients’ compliance programs are based on to the Shakopee values like ethical leadership, appropriate reward systems, fair Mdewakanton Sioux employment practices, and a willingness to engage in open Community, a federally conversations about compliance issues. With unemployment at recognized sovereign Indian historically low rates, every organization stands to benefit from nation located in Scott achieving compliance peak performance while also fostering a County, Minnesota. positive corporate culture and engaging employees. s [email protected]

32 Bench&Bar of Minnesota s April 2019 www.mnbar.org THE ABCs OF TI Understanding tortious interference with contract

By Joseph Pull

he time-honored commercial In Qwest Comms. Co., LLC v. Free Confer- money it received from Qwest. litigation claim of tortious encing Corp.,3 the plaintiff persuaded the Of course, the profits FC received interference with contract trial court that it had proved all five ele- came at Qwest’s expense. Qwest chal- (TI) gives legal teeth to the ments of TI, then successfully defended lenged FC’s business model, citing federal intuitionT that if you and I have a contract, its victory on appeal against attacks on telecommunication regulations. Eventu- an outsider shouldn’t be allowed to profit four of the five elements. ally the Federal Communication Com- by persuading one of us to break it. But The facts in Qwest were complicated. mission ruled that free conferencing com- a perusal of Minnesota case law shows The plaintiff, Qwest, was a long distance panies like FC were not “end users” for that TI is a claim frequently made and telephone carrier that paid fees to Tek- the free conference calls—which meant infrequently won. star, a local telephone carrier that com- that the agreement between Tekstar and Why? Well, commercial competition pleted calls within a particular geographic Qwest did not allow Tekstar to bill Qwest is a good thing. We don’t want market region. The fees that Qwest paid, called for completing the calls. competition chilled by fear of overbearing “tariffs,” were stated in a contract be- Qwest then sued FC under Minne- courts imposing tort liability, and business tween Qwest and Tekstar. sota law for tortiously interfering with competitors sometimes use TI lawsuits to The defendant was Free Conferencing the contract between Qwest and Tekstar. stifle their rivals in court when the rivals Corp. (FC), an internet free conferencing After trial, the U.S. District Court for the pull ahead in the marketplace. To prevent company. FC sought to profit by exploit- District of Minnesota agreed with Qwest the use of courts as weapons against fair ing the relationship between Qwest and that the elements of TI had been met: competition, the law provides that a TI Tekstar. The tariffs Qwest paid Tekstar claim can be defeated if the defendant were higher than typical tariffs for other 1. FC knew that Qwest and Tekstar shows the complained-of conduct was local telephone carriers because Tekstar had a contract; reasonable commercial behavior—which served a rural area, which was more ex- 2. FC knew that its free conference TI defendants often are able to do. pensive to serve because the carrier in- call business caused Tekstar to The basics of TI in Minnesota can be frastructure covered a large area with a breach its contract with Qwest seen in a recent instance of a party pre- sparse population of paying customers. In by billing Qwest for calls which vailing on a TI claim, contextualized with essence, FC sought to artificially increase should not have been billed a sampling of garden-variety unsuccessful telephone traffic into Tekstar’s network, under the contract; TI claims. then get paid a portion of the high fees 3. FC induced Tekstar to breach received by Tekstar from Qwest for the the contract by entering into its Analysis increase in traffic. relationship with Tekstar, which In Minnesota, tortious interference FC carried out its plan by entering required Tekstar to wrongly bill with contract1 has five elements: into an agreement with Tekstar in which Qwest; Tekstar agreed to pay FC for setting up 4. FC had no justification for its 1. Existence of a contract. conference calls using telephone numbers actions; 2. Defendant knew of the contract. served by Tekstar. FC marketed free con- 5. Qwest suffered damages as a result. 3. Defendant intentionally procured ference calls over the internet, customers a breach of the contract. used the free conference call service, FC The court awarded Qwest nearly $1 4. Without justification. routed the resulting conference calls to million in consequential damages, based 5. Plaintiff sustained damages as a Tekstar numbers, and Tekstar charged on expenses incurred by Qwest routing result.2 Qwest for its services in completing the FC’s calls through other long-distance calls. Tekstar then paid FC part of the carriers to reduce Qwest’s cost. www.mnbar.org April 2019 s Bench&Bar of Minnesota 33 FC appealed the decision, challenging defendant as the cause of the breach, or Notes Qwest’s proof of four of the elements of where the plaintiff attempted to rely on 1 Also called “wrongful interference with a TI (procurement, breach of the contract, a coincidence of events to prove causa- contractual relationship.” justification, and damages). The 8th Cir- tion.6 In Sysdyne Corp. v. Rousslang,7 the 2 Sysdyne Corp. v. Rousslang, 860 N.W.2d 347, cuit Court of Appeals affirmed, disposing sole element at issue was justification. 351 (Minn. 2015). of FC’s arguments concerning procure- On this element, the Minnesota Supreme 3 Qwest Comms. Co., LLC v. Free Conferencing ment, breach, and justification with little Court emphasized that the appropriate Corp., 905 F.3d 1068 (8th Cir. 2018). trouble. First, the court equated “pro- test is “what is reasonable conduct under 4 Id. at 1074-76. curement” with generic tort law causa- the circumstances,” which is “normally a 5 “Justification is the most common affirmative tion and concluded FC caused Tekstar question of fact.”8 A defendant may show defense to an action for interference.” Johnson to breach Tekstar’s contract with Qwest justification by showing she had a “legally v. Radde, 293 Minn. 409, 196 N.W.2d 478, 480 with respect to the billing of FC’s calls. protected interest that would be impaired (1972). Second, the court affirmed that Tekstar’s or destroyed by performance of the con- 6 E.g. Auto Servs. Fin., LLC v. Frugal Indus., Inc., breach of its contract with Qwest was a tract,” but there are other ways to show No. C7-01-6811, 2003 WL 23816530, at *6 material breach, since proper billing was justification also.9 The Sysdyne defendant (Minn. Dist. Ct. 8/13/2003) (no procurement a primary purpose of the Tekstar-Qwest successfully argued that its reliance on of breach because the party to the contract, contract. Third, the court agreed that FC the advice of counsel justified its conduct. not the outsider, was the driving force behind had notice, prior to contracting with Tek- A “legitimate economic interest,” the allegedly tortious events); Community Ins. star, that FC was not an “end user” under such as the defendant’s own contractual Agency, Inc. v. Kemper, 426 N.W.2d 471, 474 federal telecommunication regulations; relationships, can justify interference in (Minn. Ct. App. 1988) (no evidence that therefore the court concluded Tekstar another person’s contract, so long as “im- buyers who entered into contracts for deed could not bill Qwest for FC’s conference proper means”—such as another tort or without consent of senior mortgage lender had calls and FC lacked justification for its ar- illegal action—are not used.10 An earlier intentionally interfered with junior lender’s rangement with Tekstar.4 case in which the Minnesota Supreme contract rights); Norwest Lighting, Inc. v. The appellate court’s discussion of the Court addressed TI, Kjesbo v. Ricks,11 Viking Elec. Supply, Inc., No. C5-01-851, 2002 damages issue, too, was not extensive, but turned on the justification element, but WL 77072 *2 (Minn. Ct. App. 1/22/2002) that issue in Qwest highlights an interest- there the plaintiff succeeded in arguing (plaintiff distributor failed to show that ing aspect of TI. The 8th Circuit conclud- that no justification existed for the defen- defendant supplier caused the termination of ed that the damages claimed by Qwest dants’ scheme, which used a strawman plaintiff’s contract with a different supplier; were foreseeable and flowed naturally transaction to exploit a statutory right of coincident timing of termination was not from Tekstar’s breach of its contract with first refusal to defeat the plaintiff’s con- evidence of procurement). Qwest; therefore the damages were prop- tract to purchase a plot of land. 7 Supra note 2. erly awarded against FC. This conclusion Perhaps surprisingly, there is a fair num- 8 Sysdyne, 860 N.W.2d at 351. illustrates how TI claims have a flavor of ber of Minnesota TI cases in which the 9 Id. at 352. melding tort and contract liability. TI is plaintiffs failed to show that any contract 10 Harman v. Heartland Food Co., 614 N.W.2d a tort claim, but Qwest’s damages were was breached at all as a result of the defen- 236, 241-42 (Minn. Ct. App. 2000). measured by the foreseeable consequen- dants’ alleged wrongful conduct. Without 11 Kjesbo v. Ricks, 517 N.W.2d 585 (Minn. 1994). tial damages caused by Tekstar’s breach of a breach of contract, a TI claim fails be- 12 See First Union Mgmt., Inc. v. Kmart Corp., the tariff agreement with Qwest. fore the court even reaches the point of No. C3-93-2258, 1994 WL 385645, at *2 In essence, the TI claim allowed Qwest considering intentional procurement or (Minn. Ct. App. July 26, 1994); Cunningham to hold FC vicariously liable for Tekstar’s justification. TI plaintiffs have sometimes Implement Co. v. Deere & Co., No. C7-95- breach of contract. Why didn’t Qwest overlooked the fact that if the contract 1148, 1995 WL 697555, at *3 (Minn. Ct. simply sue Tekstar, the party that breached at issue contained a condition precedent App. 11/28/1995). the contract with Qwest? The 8th Circuit that was never fulfilled, then the con- 13 Bouten v. Richard Miller Homes, Inc., 321 opinion provides no explanation. One tract’s other obligations never came into N.W.2d 895, 901 (Minn. 1982). might speculate that Qwest sought to send existence, so there are no contractual ob- a deterrent message that it would aggres- ligations that could be interfered with.12 A sively pursue and punish companies that similar elementary pitfall for TI plaintiffs sought to profit from Qwest’s relationships is alleging TI based on the defendant’s with local telephone exchange carriers, breach of a contract to which the defen- without damaging Qwest’s relationship dant itself was a party; by law a party may with the local carriers themselves. not tortiously interfere with its own con- In any event, Qwest was slightly un- tract. TI only applies to a situation where usual as a Minnesota TI case because the someone else, not a party to the contract, defendant challenged Qwest’s proof on disrupts a contractual relationship.13 four separate elements of TI. More typically, Minnesota cases involving TI claims Conclusion JOSEPH PULL represents tend to revolve around just one or two of Tortious interference with contract is a clients involved in the elements—frequently the intentional useful commercial tort claim under Min- commercial and financial procurement and justification elements.5 nesota law, but TI plaintiffs must be care- litigation, at Briol & Benson, Cases turning on the question of ful to ascertain that all elements are met PLLC. He occasionally whether the defendant intentionally pro- when they bring their claims, and they comments on related cured a breach of contract show a vari- must particularly be prepared to show the statutes, court decisions, ety of ways plaintiffs have failed to prove defendant intentionally procured a breach and claims – like tortious this element, such as where the evidence of contract through conduct that was un- interference – at briollaw.com/briol-law-blog. pointed to an individual other than the reasonable under the circumstances. s [email protected]

34 Bench&Bar of Minnesota s April 2019 www.mnbar.org Notes&Trends

Landmarks in the Law Current developments in judicial law, legislation, and administrative action together with a foretaste of emergent trends in law and the legal profession for the complete Minnesota lawyer.

CIVIL PROCEDURE ance policy. The plaintiff and defendant reached a Miller-Shugart settlement 35 JUDICIAL LAW agreement and sought approval and CIVIL PROCEDURE n Minn. R. Civ. P. 12.02(e); affirming judgment by the court. American Family by Maya Digre dismissal of defamation case due to sought to intervene in the approval and absolute privilege and immunity. Plain- judgment hearing under Minn. R. Civ. 36 tiff Keane brought a defamation action P. 24.01. The district court denied the COMMERCIAL & CONSUMER LAW against defendant attorney Groth for insurer’s motion to intervene, and did by Fred Miller statements regarding the relationship of not allow it to argue on the merits. The the parties made in an answer during a insurer appealed. 37 prior breach of contract action. Defen- The Minnesota Court of Appeals CRIMINAL LAW dant brought a motion to dismiss under affirmed, finding that the insurer did by Samantha Foertsch Minn. R. Civ. P. 12.02(e) for failure to not meet the four-factor test laid out in & Stephen Foertsch state a claim upon which relief can be Minn. R. Civ. P. 24.01. Daberkow, at *2 granted, arguing that the statements (“a non-party seeking to intervene… 40 were barred by absolute privilege and must show (1) timely application for EMPLOYMENT absolute immunity. The district court intervention, (2) an interest relating to & LABOR LAW* granted defendant’s motion. the property or transaction that is the by Marshall H. Tanick The general rule is that “defamatory subject of the action; (3) circumstances statements published during a judicial demonstrating that the disposition of the 40 proceeding are absolutely privileged.” On action may as a practical matter impair FEDERAL PRACTICE* appeal, Keane argued that the district or impede the applicant’s ability to pro- by Josh Jacobson court’s dismissal was improper because tect that interest; and (4) that the appli- the defendant had not explicitly cited cant is not adequately represented by the 41 privilege as an affirmative defense. More- existing parties.”). The court found that IMMIGRATION LAW* over, the plaintiff asserted that the state- the insurer’s motion failed on the third by R. Mark Frey ments were not privileged because they prong because an insurer may challenge were not relevant to the legal dispute an approved Miller-Shugart settlement in 42 under Matthis v. Kennedy, 67 N.W.2d a garnishment or declaratory judgment INTELLECTUAL PROPERTY 413 (Minn. 1954) (enumerating test for action. The court also found that the by Tony Zeuli, Joe Dubis & whether a statement is “relevant” to a district court properly denied the insurer Ryan Borelo legal dispute, and therefore privileged). the opportunity to participate in oral The court of appeals disagreed with the argument. Daberkow by and Through 42 plaintiff, finding that the allegedly de- Daberkow v. Remer, A18-0472, 2019 REAL PROPERTY* famatory statements were “relevant” to WL 664505 (Minn. Ct. App. 2/19/2019) by Michael Kreun the previous legal dispute, and therefore (unpublished). privileged. As a result, the statements 43 could not form the basis of a defamation n Minn. R. Civ. P. 60.02; affirming denial TAX LAW* action. The court of appeals affirmed the of motion to reopen commitment pro- by Morgan Holcomb district court’s dismissal under Minn. R. ceedings. In 2014 plaintiff Dooley was Matthew Wildes Civ. P. 12.02(e). Keane v. Groth, A18- civilly committed as a sexually dangerous & Jessica Dahlberg 0614, 2019 WL 907498 (Minn. Ct. App. person (SDP) due in part to a stipulation 2/15/2019) (unpublished). whereby he agreed to be civilly commit- MORE ONLINE* ted. Four years later, Dooley sought to n The online version of this Minn. R. Civ. P. 24.01; affirming denial reopen his civil commitment proceeding of motion to intervene by insurer in under Minn. R. Civ. P. 60.02, arguing section contains additional motion to approve Miller-Shugart that his counsel in the 2014 action was case note content: settlement. Plaintiff’s child was injured ineffective, and the stipulation should www.mnbenchbar.com by a dog at an in-home daycare run by be withdrawn. The district court denied the defendant. The defendant’s home Dooley’s Rule 60.02 motion, and Dooley insurer, American Family, denied cover- appealed. age due to an exclusion in the insur- The court of appeals found that www.mnbar.org April 2019 s Bench&Bar of Minnesota 35 Notes&Trends | CIVIL PROCEDURE | COMMERCIAL AND CONSUMER LAW

Dooley’s interpretation of the stipulation in this case sought judicial review of a tion of judgment.” The court of appeals was incorrect. The stipulation, according township’s zoning variance decision. held that this provision did not apply. to the court, was not that Dooley agreed The plaintiffs served the township, but The court found that Rule 60.02 was to be committed as a SDP, but rather failed to timely serve the landowners intended to strike a balance between the that he agreed to submit the case based who received the variance. The district need for finality of judgments and the on a stipulated record. Moreover, the court found that the landowners were need for relief in certain circumstances, court found that even if the motion to necessary and indispensable parties and that Rule 60.02(f) should only reopen was timely, it failed on the merits. under Minn. R. Civ. P. 19, and therefore, be used in “extraordinary situations.” The court held that Dooley’s counsel in because they had not been joined, the Since this was not an “extraordinary the 2014 proceeding was not ineffective case must be dismissed. The court of circumstance,” the court found that the despite that counsel’s drug convictions appeals affirmed, finding that the zoning district court correctly determined that more than four years later. Additionally, variance was related to the landowner’s a 60.02(f) motion could not be granted the court held that the stipulation was property, and therefore that they “obvi- in this case. Lougee v. Pehrson, A18- a “knowing, voluntary, and intelligent ously have an interest in the township’s 0026, 2019 WL 418516 (Minn. Ct. App. decision” and therefore that the motion zoning-variance decision.” The court was 2/4/2019) (unpublished). to reopen the commitment proceeding persuaded by the fact that the landown- was not warranted under Rule 60.02. ers had already expended over $75,000 MAYA DIGRE Matter of Civil Commitment of Dooley, in construction costs in reliance on the HKM, PA A18-0944, 2019 WL 661662 (Minn. Ct. variance decision. Further, the court [email protected] App. 2/19/2019) (unpublished). found that disposition of the case could impair or impede the landowner’s ability n Minn. R. Civ. P. 37; attorneys’ fees as- to protect their property interests, and COMMERCIAL AND sessed against non-parties. This dispute thus that the landowners were neces- centered on whether trust assets are part sary and indispensable parties. Schulz v. CONSUMER LAW of the marital estate subject to distribu- Town of Duluth, ___ N.W.2d ___, 2019 tion upon dissolution of a marriage. WL 510023 (Minn. Ct. App. 2019). JUDICIAL LAW Though many of the issues in this case n When do some requirements of UCC were unrelated to civil procedure, one n Minn. R. Civ. P. 60.02; seeking relief Article 9 arise? Uniform Commercial Rule 37 issue arose—namely, whether at- from prospective order based on an Code (UCC) §9-610(b) requires every torneys’ fees as sanctions under Minn. R. unconstitutional statute. Plaintiff Lougee disposition of collateral to be commer- Civ. P. 37 may be assessed against non- sued the defendant for defamation cially reasonable. The Official Com- parties. The husband, the corporation and other related torts arising out of ments to §9-610 are of some assistance he worked for, and the husband’s father, statements the defendant made to the on the question of what is commercially who owned that corporation, failed to police concerning Lougee. The suit was reasonable, as is §9-627, but ultimately comply with discovery orders and were dismissed under the Minnesota anti- a comprehensive definition of the term placed in contempt. The district court SLAPP statute, which was later found is not possible and the resolution of found that the husband, the corporation to be unconstitutional as applied to tort whether a disposition qualifies depends he worked for, and the husband’s father claims. Based on the finding that the on the facts in a particular case. Given owed the wife over $89,000 in attorneys’ anti-SLAPP statute was unconstitutional that the sanctions for a misstep can be fees resulting from contempt-related in certain circumstances, Lougee moved severe (see §9-625), this issue of what litigation. for relief from the dismissal of his suit is commercially reasonable has caused The husband’s father argued that under Minn. R. Civ. P. 60.02(e)-(f). The trouble for many a secured party. because he was not a party to the dis- district court denied Lougee’s motion. Recently the Minnesota Court of Ap- solution, Rule 37 sanctions in the form Rule 60.02(e) permits a court to peals, in Bremer Bank, N.A. v. Matejcek, of attorneys’ fees could not be assessed relieve a party from a final judgment, was faced with the question of when the against him. The court of appeals found order, proceeding, etc. if “it is no longer commercially reasonable requirement that the father “misconstrued the limita- equitable that the judgment should arises. A married couple had obtained a tion of the rule.” The court compared have prospective application.” The issue secured loan to purchase a motor home. the case to Bowman v. Bowman, 493 was whether an order for dismissal is The debtors divorced and the loan went N.W.2d 141 (Minn. Ct. App. 1992), “prospective” and therefore whether it into default. The wife then requested wherein attorneys’ fees were affirmed falls within the purview of Rule 60.02(e). permission from the lender to sell the against a non-party business partner of Lougee argued that dismissal is prospec- motor home after which the proceeds one of the parties because he was “an of- tive in nature, and therefore covered would be turned over to the lender, ficer of the partnership.” Similarly, in this by 60.02(e), because it has the effect who agreed to release its lien so the sale case, the court found that the father was of prohibiting him from bringing a law could be accomplished. The wife also an officer of the business and therefore suit in the future. The court of appeals got a court order transferring sole title that assessing attorneys’ fees against disagreed, finding that because an order to the motor home to her. After the sale, him was appropriate under Rule 37. for dismissal does not require a court to which did not entirely satisfy the debt, Kazeminy v. Kazeminy, A18-0029, 2019 supervise changing conduct or condi- the lender sought a deficiency from both WL 664893 (Minn. Ct. App. 2/19/2019) tions, it is not prospective in nature, and debtors, got judgments against both (unpublished). therefore not covered by the rule. debtors, and the husband appealed as- Rule 60.02(f) permits a court to serting he was given no notice of the sale n Minn. R. Civ. P. 19; landowners as relieve a party from a final judgment, and it was not a commercially reasonable necessary and indispensable parties order, proceeding, etc. for “[a]ny other one as required by UCC Article 9. The in ordinance dispute. The plaintiffs reason justifying relief from the opera- court said because the lender had taken

36 Bench&Bar of Minnesota s April 2019 www.mnbar.org | COMMERCIAL AND CONSUMER LAW | CRIMINAL LAW no part in the sale, the UCC require- a preponderance of the evidence. The The district court’s denial of appel- ments did not apply to it, and the fact court of appeals does not reach the sec- lant’s petition is affirmed. Jonathan Ed- the lender had released its lien was not ond part of this test, as it concludes that ward Buhl v. State, No. A18-0245, 2019 sufficient to trigger those requirements. the district court correctly concluded WL 114172 (Minn. Ct. App. 1/7/2019). The decision seems absolutely correct that the reversal of appellant’s convic- and does not seem to create a loophole tion was not on “grounds consistent with n Implied consent: Police permitted to in the Article 9 requirements because innocence.” execute search warrant for blood test the selling debtor has every incentive to A person is exonerated under the over driver’s objection when police did maximize the sale price. Indeed, Com- MIERA of a Minnesota court “ordered not read implied consent advisory. After ment 2 to UCC §9-610 states the section a new trial on grounds consistent with appellant’s arrest for an unrelated matter, encourages private dispositions. In innocence and the prosecutor dismissed police suspected he had been driving short, this procedure seems an attractive the charges or the petitioner was found while under the influence of metham- alternative to secured party foreclosure not guilty at the new trial,” and that phetamine. Police did not read appellant if the debtor is informed and willing. decision becomes final. Minn. Stat. the implied consent advisory, but instead It is something to consider because at §590.11, subds. 1(1)(ii), 1(2). The court obtained a search warrant. Over ap- least it is cheaper than judicial action for rejects appellant’s argument that the pellant’s objection, police executed the both parties and perhaps less risky for a earlier reversal of his conviction was warrant to obtain a sample of appellant’s secured party that is not accomplished based on improper Spreigl evidence as blood, which tested positive for con- or wise enough to employ a person who well as alibi evidence that exonerated trolled substances. Prior to trial, the dis- is experienced in conducting foreclosure him, clarifying that the court’s decision trict court denied appellant’s motion to sales. Bremer Bank, N.A. v. Matejcek, made only fleeting references to the alibi suppress, and appellant was subsequently 916 N.W.2d 688 (Minn. App. 2018). evidence in its consideration of whether found guilty after a jury trial. The issue the admission of the improper Spreigl on appeal is whether police were permit- FRED MILLER evidence was harmless error. ted to execute the search warrant after Ballard Spahr The court then finds that reversal for appellant’s DWI arrest (in 2016), even [email protected] erroneously admitted Spreigl evidence though appellant did not consent and is not a reversal “on grounds consistent objected to the test. Although noncon- with innocence.” The court notes that sensual blood draws are constitutionally CRIMINAL LAW there are two reasonable interpreta- permissible if performed pursuant to a tions of “on grounds consistent with valid search warrant, appellant argues JUDICIAL LAW innocence”: “does not contradict in- that a test may not be given if a person n Minnesota Imprisonment and Ex- nocence” and “agrees with innocence.” refuses under the 2014 version of Minn. oneration Remedies Act: “Consistent The prohibition on introducing Spreigl Stat. §169A.52, subd. 1 (in effect at the with innocence” means “agrees with evidence is a procedural safeguard, time of the offense). The question is innocence.” Appellant was arrested and which is irrelevant to the defendant’s whether that statutory provision applies tried for a 1993 robbery of a convenience actual guilt or innocence, and thus does if law enforcement did not read the store, with charges including aggravated not “agree with innocence,” but “does implied consent advisory to a driver after robbery, kidnapping, second-degree not contradict innocence.” However, the arresting him or her for DWI. assault, and attempted second-degree court finds that the Legislature intended Section 169A.52, subd. 1, falls within criminal sexual conduct. A jury con- for “consistent with innocence” to mean the portion of Minnesota’s “Driving victed him, but the court of appeals later “agrees with innocence,” both to avoid While Impaired” chapter, chapter 169A, reversed, finding the district court erred absurd results and because any other that lays out the “Implied Consent in introducing Spreigl evidence. At his interpretation would render the term in- Laws.” Section 169A.52, specifically, second trial, appellant was found not effectual and superfluous, as the statute establishes civil consequences for test guilty. The district court subsequently already contemplates a conviction that refusal or failure. In contrast, another denied appellant’s petition for certifica- has been reversed or remanded. portion of chapter 169A, titled “Crimi- tion of eligibility for compensation based on exoneration under the Minnesota Imprisonment and Exoneration Rem- edies Act (MIERA), concluding that a reversal and remand for a new trial based on erroneously admitted Spreigl evidence SOCIAL SECURITY DISABILITY was not “on grounds consistent with InITIAL AppLICATIOn ThROUgh hEARIng innocence” and that appellant did not establish his innocence by a preponderance of the evidence. A claim for compensation under the MIERA may be filed only if a person first petitions a court for and receives an order certifying they are eligible for compensation based on exoneration, which requires the person to (1) meet 612-825-7777 | www.livgard.com the statutory definition of “exonerated,” paul Successfully pursuing benefits since 1993 and (2) either have the prosecutor join Livgard the petition or prove their innocence by www.mnbar.org April 2019 s Bench&Bar of Minnesota 37 Notes&Trends | CRIMINAL LAW nal Provisions,” sets criminal offenses ship has terminated, length of time since as it has acquired a clear and specialized and penalties for driving while impaired, the termination.” The Supreme Court meaning: any property that is not real and yet another portion, titled “Proce- confirms that these factors in section property. This meaning is the only rea- dural Provisions,” contains provisions 518B.01, subd. 2(b), are incorporated in sonable interpretation of the phrase in that may apply in a criminal DWI the criminal statute, section 609.2242, the context of the robbery statute. State prosecution. “The implied-consent law subd. 4, by explicit reference and must v. John Lee Bowen, No. A17-0331, 921 provides a means by which a person who be considered to determine whether a N.W.2d 763 (Minn. 1/16/2019). has been arrested for DWI may be tested “significant romantic or sexual relation- (or not tested) and thereafter denied ship” existed. The Supreme Court also n Sentencing: If felony conviction driving privileges in an administrative finds that the phrase “significant roman- received misdemeanor or gross misde- process, with an opportunity for judicial tic or sexual relationship” is not ambigu- meanor sentence, count conviction in review of a license revocation in a civil ous, as its plain meaning is understood by criminal history score as misdemeanor proceeding.” Other provisions in chapter reference to the list of statutory factors or gross misdemeanor. After a jury trial, 169A govern criminal DWI prosecu- in section 518B.01, subd. 2(b). appellant was convicted of first-degree tions, one of which permits evidence Appellant and C.P. met in March assault for causing great bodily harm of breath, urine, or blood test at trial, 2016 at a homeless shelter, where C.P. to his live-in girlfriend’s 23-month-old without regard to whether the sample was employed. They began dating, al- child, B.G.D. After appellant alone put was obtained pursuant to the implied- though C.P. had been living with another a protesting B.G.D. down for a nap, consent law. The court also notes that man for 12 years, whom C.P. claimed B.G.D. started seizing and vomiting, and the implied consent law does not require was just a roommate but whom she lied was rushed to the hospital for a severe an officer to invoke the implied consent to in order to spend time with appel- brain injury. Testing revealed significant law, nor does anything in the law prevent lant. In June and July 2016, appellant trauma to B.G.D.’s brain. Dr. Swenson, an officer from obtaining and executing a and C.P. stayed in hotel rooms together the child abuse pediatrician who evalu- search warrant for a sample. for a number of days, during which time ated B.G.D. in the hospital, testified as The court holds that section C.P. relapsed after 14 years of sobriety. an expert for the state at trial, testifying 169A.52, subd. 1, applies only if the C.P.’s family reported her missing after regarding “abusive head trauma” (for- implied consent law is invoked by an she did not communicate with them merly called “shaken baby syndrome”) officer’s reading of the implied consent for 24 hours and missed several shifts at as well as her examination of B.G.D., advisory to a driver arrested for DWI. work. When C.P. was located at a hotel concluding with an opinion that B.G.D.’s The court finds, therefore, that section with appellant, where she had been injuries were caused by abusive head 169A.52, subd. 1, unambiguously did for five days, intoxicated and without trauma. Appellant argues the evidence not prevent police from executing the food, and with bruises and lacerations was insufficient to prove he caused search warrant authorizing the taking of on her face. C.P. described appellant B.G.D.’s injuries, the district court erred a sample of appellant’s blood. to police as a “friend,” but admitted to by admitting Dr. Swenson’s testimony Finally, the court notes it would reach having sexual intercourse with him on about the cause of B.G.D.’s injuries, and the same result even if it had found sec- a number of occasions and that she was the district court erred in calculating his tion 169A.52, subd. 1, to be ambiguous. “failing in love with him.” The court of criminal history score. The district court’s denial of appellant’s appeals affirmed appellant’s conviction, The court of appeals first finds the motion to suppress evidence of the result as does the Supreme Court, finding this evidence was sufficient to prove appel- of the blood test is affirmed. State v. evidence sufficient to support the jury’s lant caused B.G.D.’s injuries. Next, the Brett Michael Wood, No. A17-1853, 922 finding that appellant and C.P. were in a court finds that Dr. Swenson’s testimony N.W.2d 209 (Minn. Ct. App. 1/7/2019). “significant romantic or sexual relation- had foundational reliability, because the ship” when the assault occurred. State record establishes it is based on a reliable n Domestic assault: Case-by-case v. Gerald Robinson, No. A17-0525, 921 scientific theory. Here, other theories or analysis of factors in Section 518b.01, N.W.2d 755 (Minn. 1/9/2019). evidence were introduced, through the subd. 2(b), required to determine if testimony of defense experts, that tended “significant romantic or sexual relation- n Robbery: “Personal property” is all to contradict Dr. Swenson’s opinion. ship” exists. Appellant was convicted property that is not real property. Ap- However, that does not justify exclud- of felony domestic assault under Minn. pellant was convicted of simple rob- ing Dr. Swenson’s testimony. Assessing Stat. §609.2242, subd. 4, for “intention- bery for taking a bottle of liquor from a the weight and credibility of the experts’ ally inflict[ing]… bodily harm” “against a liquor store without paying. He argued opinions is the province of the fact family member or household member as on appeal that the evidence was insuf- finder. The court also rejects appellant’s defined in Minn. Stat. § 518B.01, subd. ficient to support his conviction because argument that Dr. Swenson improperly 2.” On appeal, he argues the evidence at a bottle of liquor owned by a business is offered an opinion as to appellant’s in- trial was insufficient to prove the victim, not “personal property.” The court of ap- tent. Instead, the court finds Dr. Swenson C.P., fit the definition of “household or peals affirmed his conviction, as does the testified as to an opinion that “embraces family member.” This definition includes Supreme Court. the ultimate issue.” She gave her opin- someone with whom the defendant has a Under the simple robbery statute, ion—based on her professional experi- “significant romantic or sexual relation- Minn. Stat. § 609.24, it is a crime when ence, the nature, extent, and timing of ship.” Minn. Stat. §518B.01, subd. 2(b) someone “having knowledge of not being B.G.D.’s injuries, B.G.D.’s medical history, (7). “Significant” is not defined, but the entitled thereto, takes personal property and B.G.D.’s test results—that his injuries statute directs courts to “consider the from the person or in the presence of an- were not accidental. Her testimony did length of time of the relationship; type other…” The Supreme Court notes that not decide the question of appellant’s of relationship; frequency of interaction it must look beyond the common and intent, but provided a medical context for between the parties; and, if the relation- ordinary meaning of “personal property,” the jury to make its own determination.

38 Bench&Bar of Minnesota s April 2019 www.mnbar.org | CRIMINAL LAW

Finally, the court rules that appellant’s Court finds no ambiguity in subdivision argues hold that some physical contact, criminal history score was incorrectly 9 and finds that the single plain mean- words delivered in person, or an at- calculated. The district court assigned ing of its provisions are as follows: “[A] tack are required for acts to constitute two criminal history points for Appel- person convicted under section 617.247 a “substantial step” toward committing lant’s 2014 theft conviction (property must be sentenced to either a 5-year third-degree criminal sexual conduct. exceeding $5,000)—one felony point and term of conditional release or, if the per- However, the court of appeals notes that one custody status point, as appellant son has an earlier qualifying conviction, social media has changed how sexual was on probation at the time. Appellant a 10-year term of conditional release.” encounters occur and how sexual crimes initially received a stay of imposition and The Court further holds that the time are perpetrated. “Actions that histori- was placed on probation for the theft for determining whether the “earlier cally demonstrated a substantial step conviction. In 2016, the court amended qualifying conviction” condition is satis- toward commission of a sex crime, such his sentence and executed a sentence fied is, as the statute explicitly states, as preliminary physical contact, may no of 342 days, which is within the gross “when a court commits a person to the longer apply when social media is used to misdemeanor sentencing limits. Thus, custody of the commissioner of correc- initiate the sexual encounter.” The court for purposes of the sentencing guidelines, tions for violating” section 617.247. holds that appellant’s actions here were appellant received a gross misdemeanor Appellant’s second-degree criminal not remote in time or location from the sentence, not a felony sentence. Based on sexual conduct conviction is a qualifying intended criminal sexual conduct and di- the language of the guidelines, the sen- conviction listed in section 617.247 and rectly tended in some substantial degree tencing commission’s comments, and his- the conviction occurred in August 2011. to accomplish the crime. State v. Brian torical application of the guidelines, the His warrant of commitment for violating James Wilkie, No. A18-0288, 2019 WL court conclude that a felony conviction section 617.247 was signed by the dis- 333483 (Minn. Ct. App. 1/28/2019). that results in a gross misdemeanor or trict court in October 2012. Appellant misdemeanor sentence should be treated plainly qualified for the enhanced condi- n 4th Amendment: No reasonable as a gross misdemeanor or misdemeanor tional release term. State of Minnesota expectation of privacy in identifying for purposes of calculating a defendant’s v. Everett Overweg, No. A17-1978, 922 information given to hotel to rent room. criminal history score. Thus, appellant N.W.2d 179 (Minn. 1/23/2019). Police obtained a hotel guest list from should not have received a felony point the hotel’s clerk and learned appellant for a theft conviction that received a n Criminal sexual conduct: Substantial had rented a room for six hours using non-felony sentence. State v. Matthew step made toward committing third-de- a Pennsylvania identification card and Scott Stewart, No. A17-2039, 2019 WL gree criminal sexual conduct. Appellant paid with cash. This prompted police to 272858 (Minn. Ct. App. 1/22/2019). was convicted of attempted third-degree check appellant’s criminal history, where criminal sexual conduct, electronic solici- they discovered numerous drug, firearms, n Criminal sexual conduct: Minn. Stat. tation of a child, and electronic distribu- and fraud arrests. Appellant allowed §617.247’S 10-year conditional release tion of material describing sexual conduct police to enter his room, and police term required if, at time of commitment to a child for making contact online with observed a large amount of cash, two for violation of § 617.247, defendant has a BCA agent posing as a young male. printers, and several envelopes. After an earlier qualifying conviction. Appel- Appellant initiated the conversation, obtaining a search warrant, police found lant committed child pornography and asked the decoy if he wanted to meet up, several fake paychecks from various first- and second-degree criminal sexual requested nude pictures from the decoy, hotels to “Spencer Alan Hill” at vari- conduct offenses. In August 2009, he and sent the decoy explicit photographs. ous addresses, a large amount of cash, committed criminal sexual conduct, and Even after being told the decoy was 14 and check-printing paper that had been entered a plea to second-degree criminal years old, appellant continued to ask for loaded into a printer. The district court sexual conduct in January 2010. Adju- nude pictures, asked about the decoy’s denied appellant’s motion to suppress dication on the criminal sexual conduct sexual experience, told the decoy he evidence obtained from his hotel room charge was stayed in April 2010, but a wanted to engage in sexual acts with and convicted appellant of check forgery sentence was executed in January 2012 him, and made arrangements to meet the and offering a forged check after a stipu- after two probation violations. In March decoy at the decoy’s “home” while the lated evidence trial. 2010, child pornography was found decoy’s “mother” was at work the next Minn. Stat. §327.12 requires ho- on a computer to which appellant had day. Appellant went to the address given tel operators to maintain registration access, and he was charged with child by the decoy the next day and was ar- records and make them “open to the pornography possession in April 2010, rested when he knocked on the door. On inspection of all law enforcement.” The to which he pleaded guilty in October appeal, appellant argues he did not take a question on appeal is whether appellant 2012. As part of his child pornography substantial step toward committing third- had a reasonable expectation of privacy sentence, the court imposed a 10-year degree criminal sexual conduct. in the identifying information the hotel conditional release term, under Minn. What constitutes a “substantial step” collected and was required to share with Stat. §617.247, subd. 9. is defined in case law. There must be an police under this statute. The court of Subdivision 9 of section 617.247 intent to commit the crime, followed by appeals holds that appellant had no such addresses the conditional release term an overt act or acts tending, but failing, reasonable expectation of privacy. Appel- to be imposed on a person who violates to accomplish it, and which amount to lant voluntarily turned over his identify- that section. Under subdivision 9, an more than mere preparation, remote ing information to the hotel, and prior enhanced conditional release term of 10 from the time and place of the intended cases have held that, even though appel- years is imposed if the person has previ- crime. State v. Dumas, 136 N.W. 311, lant may have assumed his information ously been convicted of a violation of 314 (Minn. 1912). Appellant argues would only be used for a limited purpose, section 617.247 or other listed statutes his acts were nothing more than mere he assumed the risk that the hotel would related to criminal sexual conduct. The preparation. He points to cases that he reveal it to police. Thus, the warrantless www.mnbar.org April 2019 s Bench&Bar of Minnesota 39 Notes&Trends | CRIMINAL LAW | EMPLOYMENT & LABOR LAW | FEDERAL PRACTICE search of the hotel’s registration records, working from home was a reasonable Duluth, who quit her job because she had through which police obtained appel- accommodation. He did not establish a conflict with her manager, was denied lant’s identifying information, did not that his position was eliminated and he unemployment compensation. Upholding implicate appellant’s 4th Amendment was terminated because of a disability, or a decision of the Department of Employ- rights. State v. John Thomas Leonard, that the city failed to participate in the ment & Economic Development (DEED), No. A17-2061, 2019 WL 418508 (Minn. required “interactive process” under the the court of appeals held that while the Ct. App. 2/4/2019). ADA. Brunckhorst v. City of Oak Park circumstances may have bothered the Heights, 914 F.3d 1177 (8th Cir. 2/4/19). claimant, giving her a good “personal” n Indecent exposure: Indecent exposure reason to quit, the conditions were not a general intent offense. Appellant was n Public policy; not grounds to overrule so extreme that an average, reasonable convicted of indecent exposure. The arbitrator. In a much-anticipated ruling, worker would have quit and, therefore, arresting officer testified at trial that the Minnesota Supreme Court held that warranted denial of unemployment com- appellant appeared to be intoxicated, the doctrine of “public policy” cannot pensation benefits. Giernot v. Lake Aire but no chemical tests were administered. be invoked to overturn an arbitration Bottle Shoppe, 2019 WL 418619 (Minn. Appellant testified he smoked what he decision reinstating a police officer dis- Ct. App. 2/4/2019) (unpublished). believed to be shisha, flavored tobacco in charged for police brutality and failure to a hookah, at the home of an unidentified properly report the encounter. The Court LEGISLATIVE ACTION acquaintance, but that he had an intense held that the arbitrator’s determination n Withholding wages. A bill that would reaction, causing him to vomit and black that the officer did not use “excessive make it a gross misdemeanor for employ- out prior to the incident. The district force” and that the reporting require- ers to wrongfully withhold wages from court found appellant was not entitled to ments were ambiguous established lack employees is pending in the state House instructions on voluntary or involuntary of “just cause” for discharge and would of Representatives. H.F. 6 would impose intoxication, because indecent exposure not be set aside on appellate review. City criminal punishment for unpaid aggre- is a general intent offense, and the court of Richfield v. Law Enforcement Labor gate wages of $10,000, or more, and also of appeals affirmed appellant’s conviction. Services, 2019 WL 575866 (Minn. Ct. would empower the Department of La- The Supreme Court rejects appellant’s App. 2/13/2019) (unpublished). bor and Industry to issues fines of up to argument that previous interpretations $1,000, along with other administrative of the indecent exposure statute added n Sex discrimination; ‘similarly situ- remedies. The proposal would supple- a specific intent requirement. The Court ated’ claim denied. A woman who sued ment existing civil penalties for unpaid notes that these cases merely draw a for pregnancy and disability discrimi- wages. It is likely to pass the DFL- distinction between volitional and ac- nation after she was denied reinstate- dominated House but faces uncertainty cidental acts, requiring the state to prove ment following a leave of absence had in the Senate, where Republicans hold a that a lewd exposure was volitional. her claim dismissed. The lower court three-member majority. Furthermore, the court holds that the dismissed the case on grounds that it was plain and unambiguous language of the time barred, and the 8th Circuit affirmed MARSHALL H. TANICK indecent exposure statute creates a gen- on other grounds, including the failure Meyer, Njus & Tanick eral intent crime, as it merely prohibits a to plead that a competing candidate for [email protected] person from intentionally engaging in the the same situation was “similarly situ- prohibited conduct (an openly lewd act). ated” and went through the reinstate- The court of appeals is affirmed. State v. ment process, which negated the alleged FEDERAL PRACTICE Mohamed Musa Jama, No. A17-0481, disparate treatment sex discrimination 2019 WL 944371 (Minn. 2/27/2019). claim. Jones v. Douglas County Sheriff’s JUDICIAL LAW Dept., 915 F.3d 498 (8th Cir. 2/6/2019). n Fed. R. Civ. P. 23(f); equitable toll- SAMANTHA FOERTSCH ing not available. In August 2018, this Bruno Law PLLC n Age discrimination; position elimina- column noted the Supreme Court’s grant [email protected] tion upheld. An employee whose position of certiorari in a case presenting the issue STEPHEN FOERTSCH was eliminated after she had discussed of whether the 14-day appeal deadline Bruno Law PLLC retiring within the next year was unsuc- found in Fed. R. Civ. P. 23(f) is subject [email protected] cessful in her age discrimination claim to equitable tolling. Reversing the 9th under the Minnesota Human Rights Circuit, the Supreme Court recently Act. The Minnesota Court of Appeals, unanimously held that Rule 23(f), while EMPLOYMENT & LABOR LAW affirming a decision of the Blue Earth a nonjurisdictional claim-processing rule, County District Court, held that there is not subject to equitable tolling because JUDICIAL LAW were no genuine issues of material facts the plain language of the rule precludes n Disability discrimination; reasonable regarding whether the claimant’s age equitable tolling. accommodations rejected. A municipal motivated the employer’s decision to The case was remanded to the 9th accountant’s disability discrimination eliminate the position, pointing out that Circuit to allow it to consider alternative claim was dismissed under the Ameri- there was no direct evidence of discrimi- grounds for relief advanced by the plain- cans with Disabilities Act (ADA) for nation or a prima facie case established tiff that it did not consider in its prior several reasons. The 8th Circuit Court by her. Apel v. Mankato Rehabilitation ruling. Nutraceutical Corp. v. Lambert, of Appeals, affirming a ruling of U.S. Center, Inc., 2019 WL 418537 (Minn. ___ S. Ct. ___ (2019). District Court Judge Donovan Frank in Ct. App. 2/4/2019) (unpublished). Minnesota, held that the employee did n 28 U.S.C. §§1821 and 1920; 17 U.S.C. not show that returning to his original n Conflict with boss; quitting employee §505; costs. Reversing the 9th Circuit’s position after a leave of absence while loses. A bookkeeper for a liquor store in award of $12.8 million in litigation ex-

40 Bench&Bar of Minnesota s April 2019 www.mnbar.org | FEDERAL PRACTICE | IMMIGRATION LAW penses including expert witness fees, e- had experienced health issues, was un- tion Against Torture (CAT). Njong v. discovery expenses, and jury consulting able to recall a number of details during Whitaker, 2018 WL 6815724 (8th Cir. costs, and agreeing with the 8th Circuit his deposition, and the plaintiffs agreed 12/28/2018). https://ecf.ca8.uscourts.gov/ decision in Pinkham v. Camex, Inc. (84 that it was “no longer feasible” to call opndir/18/12/173460P.pdf F.3d 292 (8th Cir. 1996)), the Supreme him as a trial witness. G.C. ex rel. Tsiang Court held that the Copyright Act’s al- v. S. Washington Cty. School Dist. 833, n Credible fear, expedited removal lowance of “full costs” means only those 2019 WL 586676 (D. Minn. 2/13/2019). orders, and the suspension clause. In costs specified in 28 U.S.C. §§1821 and a case involving credible fear review of 1920. Rimini Street, Inc. v. Oracle USA, JOSH JACOBSON an expressed fear of persecution in the Inc., ___ S. Ct. ___ (2019). Law Office of Josh Jacobson asylum context, the 9th Circuit Court [email protected] of Appeals reversed the district court’s n En banc majority; death of judge. dismissal of the petitioner’s habeas Where the 9th Circuit appeared to split petition challenging procedures lead- 6-5 in a case decided en banc, and one IMMIGRATION LAW ing to his expedited removal order for judge in the majority died before the lack of subject matter jurisdiction. It decision was filed, the United States JUDICIAL LAW held that 8 U.S.C. §1252(e)(2) violates Supreme Court unanimously held that n Harm suffered by petitioner does the suspension clause as applied to the the deceased judge’s vote could not be not rise to level of past persecution, petitioner and remanded the case for counted as part of the en banc majority, nor does he show well-founded fear the district court to exercise jurisdic- noting that “federal judges are appointed of future persecution. The 8th Circuit tion to consider his legal challenges to for life, not for eternity.” Yovino v. Rizo, Court of Appeals held that the harm a the procedures leading to the expedited ___ S. Ct. ___ (2019). Cameroonian asylum applicant suffered removal order. Under the suspension in the past (one detention for four days clause, the petitioner must be given a n Motion to stay discovery pending res- and a subsequent detention for three “meaningful opportunity to demonstrate olution of motions to dismiss granted in days that entailed “members of the that he is being held pursuant to ‘the er- part. Where the parties to putative class gendarmerie beat[ing] him with sticks, roneous application or interpretation’ of actions were able to agree on the scope of step[ping] on him, and smash[ing] him relevant law.” Thuraissigiam v. USDHS, some—but not all—discovery while mo- with their military boots”) did not rise 2019 WL 1065027 (9th Cir. 3/7/2019). tions to dismiss were pending, Magistrate to the level of past persecution. Fur- http://cdn.ca9.uscourts.gov/datastore/opin- Judge Bowbeer acknowledged the factors thermore, the general and overly broad ions/2019/03/07/18-55313.pdf governing the resolution of motions to statements and reports submitted by But, see Castro, et al. v. USDHS, 835 stay discovery while a motion to dismiss the applicant, acknowledging that “the F.3d 422, 450 (3rd Cir. 2016). The 3rd is pending, but declined to “take a peak” Cameroonian government represses, Circuit affirmed dismissal of the ha- and consider the merits of the motion to monitors, and even detains political beas petitions, finding the district court dismiss. In re Pork Antitrust Litig., 2019 dissidents and activists,” failed to show lacked subject matter jurisdiction under WL 480518 (D. Minn. 2/7/2019). that he, himself, or other ordinary 8 U.S.C. §1252, which restricts judicial members of the Southern Cameroon review for expedited removal orders n Fed. R. Civ. P. 26(b)(4)(E); motion for National Council (SCNC) are or issued under section 1225(b)(1). The payment of expert fees denied. Magis- would be specifically targeted for future court also rejected an argument under trate Judge Wright denied the defendant’s persecution. Consequently, Njong failed the suspension clause of the U.S. Consti- motion to compel the plaintiff to pay the to meet the more stringent standard of tution: “we cannot say that this limited defendant’s expert’s travel costs, finding either “clear probability” for the relief of scope of review is unconstitutional under that it was the defendant or its counsel withholding of removal or showing that the Suspension Clause.” http://www2. who were responsible for the decision to it was more likely than not he would be ca3.uscourts.gov/opinarch/161339p.pdf have the East Coast-based expert deposed tortured upon a return to Cameroon Petition for Writ of Certiorari filed on in Minneapolis, and that the parties had for the relief afforded by the Conven- 12/22/2016. Petition denied on 4/17/2017. not discussed the payment of the expert’s travel expenses prior to the deposition. Wing Enters. v. Tricam Indus., Inc., 2019 WL 522162 (D. Minn. 2/11/2019). n Fed. R. Civ. P. 26(b)(4)(E); payment of expert fees. In a decision involving multiple disputes over costs relating to expert depositions, Magistrate Judge Leung ordered the plaintiffs and their counsel to compensate the defendants’ experts for the “few hours” they spent preparing for their depositions and the “relatively short” amount of time one expert spent reviewing his transcript. Magistrate Judge Leung also found that it would be a “manifest injustice” to require defendants to compensate one of the plaintiffs’ experts where that expert www.mnbar.org April 2019 s Bench&Bar of Minnesota 41 Notes&Trends | IMMIGRATION LAW | INTELLECTUAL PROPERTY | REAL PROPERTY https://www.supremecourt.gov/search. when the copyright claimant’s applica- source code available, the court granted aspx?filename=/docketfiles/16-812.htm tion for registration is received by the NCT’s summary judgment motion and Stay tuned. Copyright Office. The Supreme Court dismissed Haddley’s copyright infringe- heard the case to resolve this circuit split ment claim. Haddley v. Next Chapter ADMINISTRATIVE ACTION and to determine the meaning of when Tech., Inc., No. CV 16-1960 (DWF/LIB), n Continuation of documentation for “registration of the copyright claim has 2019 WL 979151 (D. Minn. 2/28/2019). beneficiaries of temporary protected been made” for the purpose of bringing a status—Sudan, Nicaragua, Haiti, and El copyright infringement claim. The Court TONY ZEULI Salvador. The Department of Homeland held that a copyright owner can only Merchant & Gould Security announced that beneficiaries un- sue for infringement “when the Copy- [email protected] der the temporary protected status (TPS) right Office registers a copyright.” In its JOE DUBIS designations for Sudan, Nicaragua, Haiti, decision, the Court noted the statutory Merchant & Gould and El Salvador will retain their TPS. language clearly stated that no infringe- [email protected] This will be the case as long as the pre- ment action should be instituted until RYAN BORELO, Merchant & Gould liminary injunction issued on 10/3/2018 the copyright registration was complete. [email protected] by the Northern District of California in The statute also provides an exception Ramos v. Nielsen, No. 18-cv-01554 (N.D. for a suit to proceed where registration is Cal. 10/3/2018) enjoining the Depart- refused, and it was unreasonable for the REAL PROPERTY ment of Homeland Security (DHS) from registration requirement to be based only implementing and enforcing its deci- on an application for copyright protec- JUDICIAL LAW sions to terminate TPS for those four tion since the exception would be super- n Zoning; Legal Nonconforming Use. nations remains in effect. Furthermore, fluous. Although registration processing Landowner owned and operated a paper TPS-related employment authorization is times have increased, the Court refused mill and a landfill, on adjoining parcels. automatically extended through 1/2/2020. to change Congress’s statutory mandate. The landfill permit was granted by the And, DHS TPS-related documentation Fourth Estate Pub. Benefit Corp. v. city in 1984 and was a permitted use (employment authorization documents, Wall-Street.com, LLC, No. 17-571, 2019 under the city’s zoning ordinance at that approval notices for those applications WL 1005829 (U.S. 3/4/2019). time. In 1989, the city amended the zon- for employment authorization, and Forms ing ordinance so that the landowner’s use I-94 (Arrival/Departure Record) is auto- n Copyright: Failure to produce original of the landfill was a legal nonconforming matically extended through 1/2/2020. 84 copyrighted work fatal to infringement use. From 1989 to 2012, the landowner Fed. Reg. 7103-09 (3/1/2019). https://www. claim. Judge Frank recently granted a operated the landfill with the narrow govinfo.gov/content/pkg/FR-2019-03-01/ defendant’s summary judgment mo- purpose of accepting its paper mill waste. pdf/2019-03783.pdf tion for a copyright infringement claim The landfill did not accept any other because the plaintiff could not produce waste. The landowner’s permit applica- R. MARK FREY an original copy of the software code tions to the MPCA, and the permits Frey Law Office that was allegedly infringed. Plaintiff Neil issued by the MPCA, from 1992 to 2012 [email protected] Haddley owns the copyright registration specifically listed the use of the landfill of a software program for scanning paper as being limited to disposing of its paper documents into electronic form. Next mill waste. The paper mill ceased opera- INTELLECTUAL PROPERTY Chapter Technology (NCT) licensed tions in 2012 and the property was sold Haddley’s software for use in an NCT in 2013. The new owner applied for, and JUDICIAL LAW product licensed to several Minnesota received, a transfer of the MPCA permit n Copyright: SCOTUS holds registra- counties. Haddley sued NCT for alleg- in 2013 solely to reflect the change in tion required for bringing infringement edly creating an infringing derivative ownership. In 2014, the new owner sub- claim. The U.S. Supreme Court unani- work based on Haddley’s software. NCT mitted an application to MPCA seeking mously held that a party suing for copy- brought a partial summary judgment authority to deposit waste generated from right infringement must have a federal motion arguing that its new scanning operations other than the paper mill. copyright registration prior to bring- software, NCT SCAN, was not derivative The city objected to the application ing such a claim. Fourth Estate Public of the Haddley software source code. The that the new owner did not receive local Benefit Corporation licensed journalism court first noted that Haddley submitted permits for operation of the landfill, and content to Wall-Street.com, LLC. Wall- only portions of the software source code that the proposed use of the landfill was Street canceled the license and contin- for copyright protection. Furthermore, a dramatic change to the nature and ued to display Fourth Estate’s articles Haddley also admitted that he made sub- source of the landfill. The MPCA indi- following the license termination. Fourth sequent changes to the registered source cated it would deny the permit based on Estate sued Wall-Street for copyright code and that his claim relied on NCT’s the city’s objection. The new owner sued infringement, even though Fourth Estate creation of a derivative from the original the city seeking a declaration that it was had only filed applications to register the source code. Haddley, however, could not entitled to deposit waste generated from articles for copyright protection and had produce a complete copy of the protected operations other than the paper mill into not yet received federal copyright regis- source code. Without such a copy, the the landfill, consistent with what would trations. The Southern District of Florida court could not analyze whether NCT have been allowed under the ordinance dismissed the complaint because Fourth SCAN was substantially similar to the as it existed in 1984. The district court Estate’s copyright was unregistered, and copyrighted software and determine ruled in favor of the city, finding that the the 11th Circuit affirmed. The 5th and whether NCT SCAN was an infringing legal nonconforming use of the landfill is 9th Circuits, however, have held that reg- derivative work. Because there was no limited to waste generated by the paper istration is made under 17 USC §411(a) complete copy of Haddley’s registered mill operation. The new owner appealed

42 Bench&Bar of Minnesota s April 2019 www.mnbar.org | REAL PROPERTY | TAX LAW and the court of appeals affirmed. The a successful inventor and business person. tax court agreed. Although settlements issue was whether the new owner may After joining a new company, he became on account of personal injury need not accept waste from outside sources that concerned about potentially anticompeti- be included in income, amounts attribut- were outside the terms of the land-use tive and even possibly illegal activity at able for emotional distress have no such permit that was transferred to the new his workplace. He consulted an attorney, tax advantage. Payments on account of owner when it purchased the property in and then he approached the company emotional distress must be included in 2013, but that may have been permitted with his concerns. He was promptly fired. income, and the payment cannot then in the original 1984 permit. The court The termination caused the taxpayer to be offset through a deduction. The court of appeals held that the nonconforming suffer significant stress, and the result- candidly acknowledged that, “[i]n the use may not be expanded beyond what ing physical manifestations included end, it may indeed be imprecise to label was present at the time the use became insomnia, trouble digesting food, chronic any psychological ailment nonphysi- nonconforming. The actual use at the headaches, trouble concentrating, and cal—and we do find [the taxpayer] to time of the transfer must be the criteria. neck, shoulder, and back pain. be entirely credible in his description of Therefore, the court of appeals held that The tax court found that the physical the distress he suffered. But the Code the proposal to accept waste from other ailments were a result of the emotional says what it says... [t]hose payments are sources constituted an impermissible ex- distress caused by the termination. The therefore not excludable from income pansion of the prior nonconforming use. taxpayer had received no severance under that section, and any unusual de- AIM Development (USA), LLC v. City pay when he was fired. Eventually, the ductions… to offset them are disallowed.” of Sartell, A18-0443, 2019 WL 1006800 taxpayer sued the former employer Doyle v. Comm’r of Internal Revenue, (Minn. Ct. App. 2019). alleging five different causes of action: T.C.M. (RIA) 2019-008 (T.C. 2019). breach of contract, antitrust violations, n Landlord-tenant; eviction; rent civil conspiracy, failure to pay wages, and n Tax court refuses to consider new abatement. Tenant notified landlord of wrongful discharge. The parties reached issues in a Rule 155 proceeding. Rule habitability claims, but landlord did not a settlement. A portion of the settlement 155 permits the tax court to withhold fix the issues. Tenant stopped paying rent was attributable to unpaid wages, and a entry of its decision for the purpose of and landlord commenced an eviction portion attributable to “alleged emotion- “permitting the parties to submit com- action. The housing court and district al distress.” The tax controversy arose putations... showing the correct amount court held that tenant had submitted a when the taxpayer used two deductions to be included in the decision.” Rule proper abatement defense to the eviction to offset the settlement portion attribut- 155(a). Rule 155 computations allow action. The court of appeals affirmed able to the “alleged emotional distress.” the parties to “do the math” so that they and held that tenants need not follow The taxpayer, working with an expe- have an opportunity to be heard on the the statutory procedures in Minn. Stat. rienced CPA, timely filed the return and “bottom-line tax effect of the determi- §504B.385 to assert a defense of breach attached to it a Schedule C, Profit or Loss nations made in the Court’s opinion.” of the covenant of habitability in an evic- From Business, which included the settle- (Vento v. Comm’r of Internal Revenue, full tion case. The court of appeals held that ment payment of $125,000. The taxpayer citation below.) In an earlier opinion the procedures in Minn. Stat. §504B.385 reported on the Schedule C that the involving these taxpayers, the tax court apply to rent escrow actions and do not trade or business was an “[u]nclassified determined that the taxpayers were not constitute a constraint upon the asser- establishment[ ],” and deducted $23,584 entitled to foreign tax credits for certain tion of defenses in an eviction action. for “[l]egal and professional services” and amounts paid to the U.S. Virgin Islands The Supreme Court granted review and $101,416 for “personal injury.” The tax- because the taxpayers were and always affirmed. The Supreme Court based its payer also deducted another $33,000 for had been citizens of the United States. decision on Fritz v. Warthen, 298 Minn. legal fees for that year on the Schedule The payment of taxes in the U.S. Virgin 54 (1973), providing that habitability is A, Itemized Deductions. (The settlement Islands was an attempt to reduce taxa- a defense in an eviction action and held was paid over two years, and the taxpay- tion of their U.S.-source income. In their that Fritz not expressly modified or abro- er’s approach was similar in the second computations, the taxpayers took the gated by section 504B.385, which is an year.) The commissioner disallowed the novel position that the amounts at issue affirmative action by a tenant. The Su- deduction of “personal injury” and the were deductible as state or local taxes. preme Court also refused to clarify Fritz as requiring the tenant to provide written notification of its rent abatement in order to invoke a habitability defense to an eviction. Ellis v. Doe, A17-1611, 2019 WL 1051400 (Minn. Ct. App. 2019).

MICHAEL KREUN Beisel & Dunlevy PA [email protected]

TAX LAW JUDICIAL LAW n “Weird” deductions not permitted to offset amounts received as settlement for emotional distress. The taxpayer was www.mnbar.org April 2019 s Bench&Bar of Minnesota 43 Notes&Trends | TAX LAW

The taxpayers also moved for leave to the meaning of I.R.C. sec. 6751(b)(2) v. Cnty of Washington, No: 82-CV-17- amend their petitions under Tax Court (B) and thus are exempt from the writ- 1776 (Minn. T.C. 2/21/2019); Wal-Mart Rule 41(b)(1), setting forth another new ten supervisory approval requirement. Real Estate Business Trust (Oak Park legal argument and asserting that both Walquist v. Comm’r, No. 25257-17, Heights/Stillwater #1861) v. Cnty of new issues had been tried by consent. 2019 WL 962901 (T.C. 2/25/2019). Washington, No: 82-CV-17-1781 (Minn. Finally, the taxpayers filed a motion to T.C. 2/21/2019); Wal-Mart Real Estate reopen the record to permit the intro- n Property tax: Reduction in pipeline Business Trust (Woodbury #2643) v. duction of new evidence relating to operating system value. Northern Cnty of Washington, No. 82-CV-17- their second new legal theory. Remind- Natural Gas Company (NNG) appealed 1777 (Minn. T.C. 2/21/2019). ing the taxpayers that “Rule 155 is not the commissioner’s determination on the an ‘open sesame’ for either party to get value of their pipeline operating system LOOKING AHEAD adjustments for issues not raised in the for property tax purposes. The tax court n Supreme Court poised to answer deficiency notice, in the pleadings, in agreed with NNG that the commissioner whether due process prohibits states the pre-trial memoranda, or at trial,” the had overvalued the property. In reach- from taxing trusts based on the trust court rejected the taxpayers’ attempt ing this conclusion, the court disagreed beneficiaries’ in-state residency. The to raise new issues in the Rule 155 with the commissioner on several Supreme Court granted North Carolina’s proceeding and adopted the commis- aspects. First, the tax court increased petition for certiorari after North Caro- sioner’s computations. Vento v. Comm’r the capitalization rate utilized by the lina’s Supreme Court affirmed a lower of Internal Revenue, No. 1168-06, 2019 commissioner in her income approach. court holding that the state could not WL 453762 (T.C. 2/4/2019) (quoting The commissioner argued for a lower justify taxation of a trust on the basis of Litzenberg v. Commissioner, T.C. Memo. capitalization rate because NNG had the residency of a beneficiary. The state 1988-482, 56 T.C.M. (CCH) 413, 417.). an above-average debt rating. The tax argued in support of its petition: “Eleven court disagreed, stating that the debt states, including North Carolina, tax n Written approval not required for rating needs to be for a hypothetical trust income when a trust’s beneficiaries substantial understatement penalty. A buyer and not the company holding the are state residents.… There is now a di- taxpaying couple failed to file a return property at issue. Next, the tax court rect split spanning nine states. Four state and throughout their interactions with disagreed with the commissioner for fail- courts have held that the Due Process the commissioner and the court, the ing to apply external obsolescence due Clause allows states to tax trusts based couple persistently advanced frivolous to regulations under the cost approach. on trust beneficiaries’ in-state residency. arguments. Eventually, the commissioner The commissioner argued that any loss Five state courts… have concluded that imposed a penalty. One of several issues from the regulation was due to internal the Due Process Clause forbids these in this dispute was whether written factors and not a result of any external taxes…. The question presented… [d] approval is required when the penalty factors. The tax court said it would be oes the Due Process Clause prohibit imposed is one for substantial underpay- contrary to appraisal theory to hold as states from taxing trusts based on trust ment. The court held that it is not. The the commissioner suggests. Thus, the beneficiaries’ in-state residency?” North Code provides that “the Secretary shall tax court held that the assessed value of Carolina Dept. of Revenue v. The have the burden of production in any the pipeline operating system should be Kimberly Rice Kaestner 1992 Fam- court proceeding with respect to the lowered. Northern Natural Gas Co. v. ily Trust, 2018 WL 4942045 (U.S.) at liability of any individual for any pen- Comm’r of Rev., Nos. 8864-R & 8976-R 1. The decision below is reported at alty.” IRC Sec. 7491(c). The Code also (Minn. T.C. 1/30/2019). Kimberley Rice Kaestner 1992 Family Tr. v. requires that penalties be “personally N. Carolina Dep’t of Revenue, 814 S.E.2d approved (in writing) by the immediate n Failure to disclose leads to dismissal. 43 (N.C. 2018), cert. granted sub nom. N. supervisor of the individual making such In 2017 and 2018, Wal-Mart timely Carolina Dep’t of Revenue v. Kimberly Rice determination” except in two instances. served and filed petitions under Minn. Kaestner 1992 Family Tr., No. 18-457, Supervisory approval is not required for Stat. Ch. 278 (2018) challenging the 2019 WL 166876 (U.S. 1/11/2019). Note “any addition to tax under section 6651, 1/2/2016 and 1/2/2017 assessed value that Minnesota is one of the states in 6654, or 6655.” Sec. 6751(b)(2)(A). of four store locations for property tax the “split.” In Fielding v. Commissioner And supervisory approval is not required purposes. However, Wal-Mart failed to of Revenue, 916 N.W.2d 323 (Minn. for “any other penalty automatically disclose income and expense informa- 2018), the Minnesota Supreme Court calculated through electronic means.” tion to the respective counties. When a held that “the Minnesota residency of Sec. 6751(b)(2)(B). property tax petition has been filed with [the] beneficiary... does not establish the In this case, the tax court addressed respect to income-producing property, necessary minimum connection to justify the novel issue of “whether an accuracy- Minn. Stat. §278.05, subd. 6(a) (2018) taxing the trust’s income” and therefore related penalty determined by an IRS requires the petitioner to provide certain a beneficiary’s in-state residency is an computer program is a ‘penalty auto- information to the respondent county insufficient basis for taxation. matically calculated through electronic assessor by August 1 in the year taxes means’” such that it does not require are due. Failure to comply results in MORGAN HOLCOMB written approval. Relying on a plain dismissal of the petition. Id., subd. 6(b) Mitchell Hamline School of Law language analysis, and bolstered by the (2018). Therefore, the Minnesota Tax [email protected] IRS’s interpretation of its own obliga- Court dismissed all four of Wal-Mart’s MATTHEW WILDES tions, the court held that penalties petitions. Wal-Mart Real Estate Busi- Mitchell Hamline School of Law determined under Sec. 6662(a) and (b) ness Trust v. Cnty of Mille Lacs, Nos. [email protected] (2) by an IRS computer program without 48-CV-17-886 & 48-CV-18-854 (Minn. JESSICA DAHLBERG human review are “automatically calcu- T.C. 2/21/2019); Wal-Mart Real Estate Grant Thornton lated through electronic means” within Business Trust (Cottage Grove #2448) [email protected]

44 Bench&Bar of Minnesota s April 2019 www.mnbar.org People&Practice | MEMBER ANNOUNCEMENTS

Shamus O’Meara, a part- Fredrikson COMMISSION ON ner with O’Meara Leer & Byron JUDICIAL SELECTION Wagner & Kohl and CEO PA has of O&D Group, LLC, opened Gov. Tim Walz announced the along with DLR Group, a new appointments to the Commission has launched a new office in on Judicial Selection. The 26 O’MEARA project design providing BUCHERT JACOBS Mankato, appointees include six at-large residential, employment, Minnesota. members and 20 district members, and life experiences benefitting people Joining the two from each of the 10 judicial with developmental disabilities and oth- firm are districts. The governor a previously ers within local communities. Current trans- announced Lola Velazquez-Aguilu plans involve a $100 million project with actional as the chair of the Commission, and 400 residences combined with local em- business all 49 members will serve terms that ployment, recreation, health, wellness, attorneys expire on January 2, 2023. and education services. NAPLES ZELLMER Jessica A. Buchert, Michael P. Jacobs, David M. SHEREE CURRY Gordon Conn has joined Naples, and Randy J. Zellmer. At-Large Member, Non-Attorney Lapp, Libra, Stoebner NATHAN LACOURSIERE & Pusch, Chartered, in At-Large Member, Attorney PATRICK MADER an of counsel capacity. IN MEMORIAM At-Large Member, Non-Attorney Gordon brings a wealth KEIKO SUGISAKA of experience and knowl- Robert C. Kucera, of Bloomington, At-Large Member, Attorney edge in business litigation MN died on January 30, 2019 at the JOSHUA TUCHSCHERER CONN and bankruptcy litigation. age of 93. Kucera was a graduate of At-Large Member, Attorney KATHERINE BARRETT WIIK the College of St. Thomas after his At-Large Member, Attorney Jane M. Hill has joined service in the U.S. Air Force during DAVID METZEN Eckberg Lammers, PC. WWII. He was a 1952 graduate of the First Judicial District Member, Non-Attorney Hill brings with her over St. Paul College of Law. Bob practiced SARAH WHEELOCK 25 years of experience. law in Northfield, and in his later life, First Judicial District Member, Attorney Her practice includes in Bloomington, MN. He served in the ADRIANNA ALEJANDRO-OSORIO civil, business & com- MN House of Representatives from Second Judicial District Member, Non-Attorney MAYA SALAH mercial, and municipal 1959-1966. He later served as legal HILL Second Judicial District Member, Attorney litigation. counsel for the Minnesota Bankers’ DR. ADENUGA ATEWOLOGUN Association and as the president of the Third Judicial District Member, Non-Attorney Keiko Sugisaka has been Insurance Federation of Minnesota. ROBERT GILBERTSON elected to the board of Third Judicial District Member, Attorney ERICK GARCIA LUNA directors of Twin Cities Michael “Q” Michaux died on Fourth Judicial District Member, Non-Attorney Habitat for Human- February 20, 2019 at the age of 54 after MELISSA MURO LAMERE ity. Sugisaka is a partner a 15-month battle with cancer. He Fourth Judicial District Member, Attorney at Maslon LLP, practicing graduated from the University of Notre JAMES HEPWORTH in the litigation group, Dame and the University of Minnesota Fifth Judicial District Member, Non-Attorney SUGISAKA and is a member of the Law School. In 2002, he joined United LYNN JOHNSON firm’s governance committee. Health Care in Minneapolis, rising Fifth Judicial District Member, Attorney PHILLIP DROBNICK through various positions to become Sixth Judicial District Member, Non-Attorney Letty M-S Van Ert has president of Optum Payment Integrity. DANIEL LEW become a shareholder Sixth Judicial District Member, Attorney at Tuft, Lach, Jerabek & LeRoy Mitchell Rice died on Febru- LISA BORGEN O’Connell, PLLC. Letty ary 26, 2019, at the age of 96. He Seventh Judicial District Member, Attorney HUDDA IBRAHIM started as a law clerk served in the U.S. Army during WWII. Seventh Judicial District Member, Non-Attorney with the firm in 2007. He graduated from William Mitchell TIMOTHY LINDBERG She focuses her practice College of Law and was admitted to Eighth Judicial District Member, Non-Attorney VAN ERT in the areas of family law, the bar in 1956. LeRoy was employed BRIANNA ZUBER estate planning, and probate. for 33 years as trademark counsel at Eighth Judicial District Member, Attorney Honeywell, retiring in 1986. He served SUSAN BECK Ninth Judicial District Member, Non-Attorney Thomas M. Hart has joined Beisel & on the board of the U.S. Trademark MICHAEL GARBOW Dunlevy, PA as an of counsel. He earned Association and was a grateful member Ninth Judicial District Member, Attorney his JD from the University of California of Alcoholics Anonymous for 31 years. SHARON VAN LEER Hastings College of Law in 1977. Hart Memorials may be offered to Lawyers Tenth Judicial District Member, Non-Attorney has practiced commercial real estate law Concerned for Lawyers. VIET-HANH WINCHELL in Minnesota for nearly 40 years. Tenth Judicial District Member, Attorney www.mnbar.org April 2019 s Bench&Bar of Minnesota 45 OpportunityMarket

Classified Ads For more information about placing classified ads visit: www.mnbenchbar.com/classifieds

compensation and benefits package. We based on original research. First-hand ATTORNEY WANTED conduct criminal background checks of all experience with challenging research individuals offered employment. and analysis is a must. Please submit a MALKERSON GUNN Martin LLP seeks sssss cover letter describing your qualifications experienced, partner-level attorneys and interest in this work, a resume, and specializing in a transactional or litiga- ASSOCIATE ATTORNEY – Workers’ a writing sample to: Blackstock Walters, tion real estate practice. We enjoy low Compensation. Arthur, Chapman, Ketter- LLC, Attention: Lynn Walters, lwalters@ overhead, almost no law firm “bureau- ing, Smetak & Pikala, PA is a mid-sized blackstockwalters.com cracy,” downtown Minneapolis offices, law firm seeking an associate to join our sssss sophisticated practitioners and a col- workers’ compensation practice group. legial atmosphere. Please contact: Stu We are a team-oriented firm committed DUNLAP & SEEGER, PA, a 25-attorney Alger ([email protected]). to providing our clients with superior le- full-service law firm located in Roch- sssss gal services. Candidates must have three ester, Minnesota, is seeking associ- plus years of experience handling Min- ates. Candidates should have strong EMPLOYEE BENEFITS (ERISA) Associ- nesota workers’ compensation matters. academic credentials, excellent writing ate, Minneapolis, MN. Stinson Leonard Candidates must also possess a strong skills and the ability to build client rela- Street LLP is seeking an Associate with work ethic with excellent communication tionships. Please send your resume and two or more years of experience to join and writing skills. Our firm offers a com- cover letter to Dunlap & Seeger, PA, P.O. the Labor, Employment and Employee petitive compensation/benefits package Box 549, Rochester, Minnesota 55903, Benefits Division in our Minneapolis of- and is dedicated to creating a collegial, di- or email to: [email protected]. fice. SLS is a national law firm with one verse workplace. Salary is commensurate sssss of the largest Employee Benefit prac- with experience. If you are interested in tices in the Midwest. The position of- joining our team, please send your cover GROWING LAW FIRM with offices in fers the ability to join a well-established, letter, resume, transcript, writing sample, Minnesota and North Dakota is seeking growing and highly sophisticated em- and salary expectations in confidence to: applications for an associate attorney ployee benefits practice with attorneys Attn: Human Resources, recruiting@ar- position with a focus on personal injury who represent clients in a wide range of thurchapman.com, www.arthurchapman. at its St. Paul, MN office. Applicants industries. The position offers substan- com, Equal Opportunity Employer. must be licensed attorneys in the State tial opportunities to work with the firm’s sssss of Minnesota and in good standing. This corporate finance, financial institutions position also requires the applicant ap- and general business practice groups CONTRACT LITIGATION Attorney. ply for a North Dakota law license upon and play a key role in merger and acqui- Blackstock Walters LLC is seeking hiring. Light travel to North Dakota may sitions and Employee Stock Ownership experienced litigation attorneys to add be required. Competitive benefits of- Plans (ESOPs). The ideal candidate will to its roster of approved contractors for fered. Compensation depends on ex- have the following attributes: excellent litigation drafting projects. We maintain perience. Please submit a cover letter, legal research, writing, and analytical an active roster of contract attorneys who resume, and writing sample to Sarah at skills; a background in one or more of we notify of available projects consistent [email protected]. qualified and non-qualified retirement with their skill sets. Blackstock Walters sssss plans, ESOPs, or health and welfare LLC is a litigation support company based plans, including ERISA, ACA, HIPAA, in Minneapolis, MN, that provides project- IN-HOUSE COUNSEL. Outstanding op- and IRC Section 409A experience; and based support for civil litigation attorneys, portunity to assume a career position in outstanding academic credentials. Pay nationwide and internationally, in all an established legal department within is competitive for the region. Reloca- phases of litigation. This position will focus the rapidly changing and expanding se- tion assistance available. Apply online on legal research and motion drafting. Our nior care industry. Benedictine Health at: https://recruiting.stinson.com. For ideal candidate has at least five years of System is a faith-based nonprofit organi- questions, contact Jaclyn Steiner, At- experience with litigation work, including zation seeking an attorney who is called torney Recruiting Manager, recruiting@ research and motion practice; exceptional to our mission of providing compassion- stinson.com. Stinson Leonard Street is writing skills; a high attention to detail; ate, quality care with special concern an EEO employer. We encourage minor- and a problem-solving approach. This for the underserved and those in need. ity, female, veteran and disabled can- candidate will be expected to work with Reporting to the SVP General Counsel, didates to apply to be considered for unique and complicated fact patterns this position will provide legal advice open positions. We offer a competitive and provide sophisticated legal analysis to system managers and help manage

46 Bench&Bar of Minnesota s April 2019 www.mnbar.org OpportunityMarket | ATTORNEY WANTED

the system’s compliance program. We MINNESOTA LAW specifies that an transcript, writing sample, and salary will consider recent graduates, judicial Assistant County Attorney has the same expectations in confidence to: Attn: clerks, and individuals with relevant ex- duties as the County Attorney. This Russell Nicolet, [email protected], perience. Excellent writing and research position may entail any and/or all of the www.nicoletlaw.com. skills are essential, and Minnesota licen- statutory duties of the County Attorney’s sssss sure is required within six months of Office as assigned. The primary area hire. The position is based in Cambridge, of practice initially concentrated SLEEPY EYE, MN law office seeks an but some opportunities to work out of on will be misdemeanor and gross associate attorney with zero to five plus our Shoreview office may be available. misdemeanor criminal prosecution at years’ experience to join our practice. Compensation and title will be com- the city attorney level. The secondary Practice areas include estate planning, mensurate with experience. Preferred area of practice will concentrate on real estate, elder law, business, and es- experience includes: zero to four years general criminal prosecution and/or tate and trust settlement. We also serve in-house, clerkship, law firm, or other human services/juvenile delinquency. as the city attorney’s office for Sleepy experience handling a variety of legal If you are interested in applying for Eye. Please submit a cover letter, re- matters. Experience in health care, cor- this position, click on the following link: sume and writing sample to: alissa@ porate, and/or employment law. Famil- http://agency.governmentjobs.com/ alissafischerlaw.com iarity with health care compliance and blueearthcountymn/default.cfm?action= sssss senior care regulatory requirements We viewJob&jobID=2346906 offer a competitive benefits package, sssss SR. ATTORNEY (Job Code 5600). including paid time off, health & dental Location – Bremer Service Center, Lake insurance, 401(k), and more. To learn MEAGHER & GEER, PLLP has an imme- Elmo, MN. Bremer Bank, National Asso- more about Benedictine Health System, diate opening in its Minneapolis office for ciation is seeking a senior-level attorney please visit us at bhshealth.org. To ap- an associate attorney. Candidates should to primarily support the organization’s ply for this position please visit: https:// have one to four years of experience, be deposits, payments, electronic services careers-bhshealth.icims.com/jobs/3202/ admitted to the Minnesota Bar, possess and treasury management areas. This assistant-general-counsel/job. Please excellent client service, writing, critical includes a focus on the support and upload your cover letter with your re- thinking and persuasive speaking skills. maintenance of existing products and sume. EEO/AA/Vet Friendly Litigation experience or judicial clerkship services as well as activities related to sssss preferred. For immediate consideration, product development strategy and ini- send resume, cover letter and writing tiatives. In addition, this role supports LITIGATION ASSOCIATE: Mid-sized sample to: [email protected]. Privacy related legal and compliance firm with national practice in the Min- sssss issues, strategies and documentation. neapolis metro area has an opening Required Qualifications: A combination for an experienced litigation associate. MEAGHER & GEER, PLLP is expanding its of education and experience attained Three to seven years of experience pre- family law practice and has an immediate through a juris doctorate degree and ferred. This is a fast-paced, sophisticated opening in its Minneapolis office for an ten or more years of the following ex- practice that involves general and com- associate attorney. Candidates should perience, preferably in-house at a bank; mercial litigation matters. Looking for a have two to five years of experience with Strong substantive background with motivated, hard-working attorney with family law litigation. Qualified candidates federal and state financial services laws superior oral and written advocacy skills must be admitted to the Minnesota Bar, and regulations regarding deposits, pay- who is interested in trial experience. possess excellent academic credentials ments and cash management; Strong Salary commensurate with experience. and exceptional writing, persuasive substantive experience with federal and Please email resume to employment@ speaking and analytical skills, and have state privacy laws and regulations ap- fmjlaw.com or by mail to 775 Prairie a drive for excellence. For immediate plicable to financial institutions; Ability Center Drive, Suite 400, Eden Prairie, consideration, send resume, cover letter to identify, evaluate and escalate legal MN 55344. FMJ is an EEO/AA employer. and writing sample to: recruitment@ risk issues; Ability to understand and sssss meagher.com. integrate details of business and opera- sssss tional policies, guidelines, procedures SJOBERG & TEBELIUS, PA a six-attor- and systems in applying legal and policy ney law firm in Woodbury, Minnesota, NICOLET LAW Office, SC is seeking requirements; Ability to handle multiple is seeking a lateral associate with at an associate attorney to join our team tasks, prioritize work in a deadline-in- least five years’ experience in an area handling workers’ compensation and tensive environment; Exceptional writ- that would enhance the firm’s already social security disability working out ten and verbal communications skills; well-established estate planning, busi- of our Duluth, Hibbing, & Superior ability to effectively communicate at ness planning, probate, family law, em- office working hard for our Minnesota all levels of the organization, including ployment, real estate, tax and personal clients. We are a client forward law senior business leaders, as well as with injury practice. This ideal candidate will firm with a focus on excellent client external constituencies, including ex- have a strong academic/professional service and outstanding results. Our ternal counsel and regulatory officials; background and a demonstrated abil- firm offers a competitive compensation/ Active license to practice law in Min- ity to build client relationships. Please benefits package and is dedicated to nesota. Those interested should apply submit a cover letter, resume, and refer- creating a healthy work/life balance. If at: https://www.bremer.com/careers. ences to: [email protected]. All ap- you are interested in joining our team, Bremer is an Equal Employment Oppor- plications kept confidential. please send your cover letter, resume, tunity Employer M/F/Disability/Veteran.

www.mnbar.org April 2019 s Bench&Bar of Minnesota 47 OpportunityMarket | ATTORNEY WANTED | OFFICE SPACE | PROFESSIONAL SERVICES | WANTED

THE OPPEGARD Law Firm, an AV-rated industries) or a tax background are law firm specializing in civil litigation, preferred. We offer excellent benefits, a PROFESSIONAL SERVICES is looking for associate candidates. salary commensurate with experience, Individuals with five to twenty plus performance-based bonuses and an VALUESOLVE ADR Efficient. Effective. years of experience who have excellent opportunity for professional growth. Affordable. Experienced mediators and academic credentials, outstanding This position is a great opportunity for a arbitrators working with you to fit the research and writing skills, and a candidate interested in being an integral procedure to the problem - flat fee me- desire to live in the Fargo-Moorhead part of an internationally recognized diation to full arbitration hearings. (612) community would be an ideal prospect. transportation practice. Please email 877-6400 www.ValueSolveADR.org Please send resume and cover letter resume and cover letter with salary sssss to: Oppegard Law Firm, Attn: Erica requirements to employment@fmjlaw. Usselman, P.O. Box 657, Moorhead MN com or mail to FMJ-HR, 775 Prairie PARLIAMENTARIAN, meeting facilitator. 56561 or [email protected] Center Drive, Ste. 400, Eden Prairie, MN “We go where angels fear to tread.TM” sssss 55344. FMJ is an EEO/AA employer. Thomas Gmeinder, PRP, CPP-T: (651) sssss 291-2685. [email protected]. SMALL SUBURBAN law firm is seeking sssss associate attorney with one to three WE CURRENTLY HAVE an opportunity years’ experience in the areas of probate for an assistant counsel to join our EXPERT WITNESS Real Estate. Agent law, guardianship & conservatorship, corporate legal team located at our standards of care, fiduciary duties, estate planning, or tax. The candidate corporate headquarters in Plymouth, disclosure, damages/lost profit analysis, should primarily be interested in MN. This position is responsible for forensic case analysis, and zoning/land- transactional work, but there will be the support of routine and complex use issues. Analysis and distillation some litigation aspects involved in the non-claim legal issues, including policy of complex real estate matters. position. Please submit a cover letter, drafting as well as providing legal support Excellent credentials and experience. resume, writing sample, and law school to legal and underwriting commercial [email protected] (612) 207-7895 transcript to Teresa Molinaro at: teresa@ property and casualty product line sssss molinarodavis.com. leads. Bar admission required and a sssss minimum of three plus years of legal ATTORNEY COACH/consultant Roy S. experience with three or more years Ginsburg provides marketing, practice SOMSEN, MUELLER & Franta is now specializing in the analysis of commercial management and strategic/succession accepting applications for experienced property or casualty insurance products. planning services to individual lawyers attorneys in the areas of estate Experience in drafting property and and firms. www.royginsburg.com, roy@ planning, probate & trust administration, casualty insurance coverage forms royginsburg.com, (612) 812-4500. real estate, business & commercial, preferred. Private practice experience sssss agriculture, and elder law for office with coverage litigation preferred. For a locations in New Ulm, MN. Send resume complete job description and to apply: NAPLES, Florida-based probate, real and three references in confidence to: www.onebeacon.com/careers - Refer to estate and estate planning attorney [email protected] Job #909BR licensed in Minnesota and Florida. or mail to: 106 ½ North Minnesota St, Robert W. Groth, PA (239) 593-1444; New Ulm MN 56073. [email protected] sssss OFFICE SPACE sssss TRANSPORTATION Group Attorney RULE 114 Mediation Training, 40 – Contract & Transactional Associate. SOUTHEAST METRO (494 & Hwy 52) – CLE’s for Family Course, 30 for Civil, Fafinski Mark & Johnson was chosen One or two offices each 208 square feet Family June, Civil July. See: http:// as one of the best companies to work in town office building with established transformativemediation.com/events. for by Minnesota Business Magazine attorneys. Includes broadband internet, Call (612) 824-8988. and has an open full-time position for a Wi-Fi, copier, PDF scanner, kitchenette, sssss contract and transactional attorney in our conference room, and free parking. Call: Transportation & Logistics Group. FMJ (612) 275-5969. MEDIATION TRAINING in St. Paul. Rule seeks a junior to mid-level associate sssss 114 Approved. 30-hour civil course or with two to four years of experience in 40-hour family. http://transformative- general corporate or corporate finance WANT TO HAVE your practice in a place mediation.com experience and a strong academic for grown-ups? Upgrade from the usual background. The candidate should have shared office space that looks trendy strong drafting and communication but lacks privacy and professionalism. WANTED skills, the ability to work in a fast- Our space is beautiful and designed just paced, challenging environment and for lawyers, including sound insulated WANTED TO PURCHASE: Apartment business experience or inclination, if conference rooms with lots of windows. buildings 10-100 units, experienced possible. Candidates with experience We are a community where practices owner/investor, quiet-confidential sale, in transportation-related transactions grow, and lawyers thrive. MoreLaw no commissions. Stuart Simek: (651) (aviation, aerospace, railroad, marine Minneapolis - call Sara at: (612) 206-3700. 289-1552 or [email protected]

48 Bench&Bar of Minnesota s April 2019 www.mnbar.org INNOVATION COMES STANDARD

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