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ADT Security Svcs., Inc. v. Swenson: US District Court : TORT - fraud not pled with particularity; no public benefit shown; leave to amend; no negligent training

17
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
ADT SECURITY SERVICES, INC.,
Plaintiff/Counterclaim Defendant,
v.
VICKI SELIGER SWENSON, as Personal
Representative of the Estate of Teri Lynn
Lee and as Trustee for the Next-of-Kin of
Teri Lynn Lee, Decedent; T.M.L., T.B.L.,
T.J.L., and T.M.L., minors, through their
Co-Guardians and Co-Conservators, Erik
P. Swenson and Vicki Seliger Swenson;
Defendants/Counterclaimants,
and
TIMOTHY J. HAWKINSON, JR., as
Personal Representative of the Estate of
Timothy Jon Hawkinson, Sr.
Defendant.
Civil No. 07-2983 (JRT/AJB)
MEMORANDUM OPINION AND
ORDER GRANTING PLAINTIFFS
MOTION FOR JUDGMENT ON THE
PLEADINGS OF CERTAIN CLAIMS
Eric J. Magnuson and Molly M. Borg, BRIGGS & MORGAN, PA, 80
South Eighth Street, Suite 2200, Minneapolis, MN 55402-2157; Charles C.
Eblen and J. Stan Sexton, SHOOK, HARDY & BACON, LLP, 2555
Grand Boulevard, Kansas City, MO 65108-2613, for plaintiff/counterclaim
defendant.
Paul D. Peterson, Lori L. Barton, and William D. Harper, HARPER &
PETERSON, PLLC, 3040 Woodbury Drive, Woodbury, MN 55129-9617,
for defendants/counterclaimants Vicki Seliger Swenson, T.M.L., T.B.L.,
T.J.L., and T.M.L.
Alf E. Sivertson, SIVERTSON & BARRETTE, 1465 Arcade Street,
St. Paul, MN 55106-1723, for defendant Timothy J. Hawkinson, Jr.
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This case is before the Court on plaintiff and counterclaim defendant ADT
Security Services, Inc.s Amended Motion for Judgment on the Pleadings of Certain
Claims. For the reasons set forth below, plaintiffs motion is granted.
BACKGROUND
This case arises out of the tragic murders of Terri Lee and Timothy J. Hawkinson,
Sr. (Hawkinson). On July 29, 2006, Steve Van Keuren, Lees ex-boyfriend, broke into
Lees home and attacked her. On August 3, 2006, after Van Keuren had been released on
bond, plaintiff entered into a residential services contract (Agreement) to install a
security system in Lees home. On September 22, 2006, Van Keuren broke into Lees
home again and shot and killed both Lee and Hawkinson. Van Keuren allegedly carried
out the murders after cutting the phone lines to the home, breaking a sliding glass door in
the basement, and walking past two motion detectors. The alarm system installed by
plaintiff allegedly failed to go off until Lees children heard gunshots and fled through
the front door.
In June 2007, following extensive media coverage of these events, plaintiff filed
this action for declaratory judgment against the Estates of Lee and Hawkinson. In sum,
plaintiff asks the Court to declare that its liability to the defendant estates of both Lee and
Hawkinson is limited to 0.00, in accordance with a limited liability provision included
in the Agreement.
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Lees estate (estate defendant) filed an Amended Answer and Counterclaim
asserting twelve causes of action against plaintiff. The estate defendant seeks a
declaration voiding the terms of the Agreement, and also alleges various fraud
counterclaims, violations of Minnesotas consumer protection laws, and several breach of
warranty counterclaims.1 In August 2007, the parties stipulated to the addition of two
more defendants: (1) Vicki Seliger Swenson, in her capacity as trustee for Lees next-ofkin
(trustee defendant), and (2) Lees minor children, through their co-guardians and
co-conservators, Erik P. Swenson and Vicki Seliger Swenson (minor defendants). The
trustee defendant then answered plaintiffs complaint by asserting sixteen counterclaims.
Those claims substantially mirror those alleged by the estate defendant, and also add
counterclaims for negligence.
Plaintiff now brings this motion to dismiss 18 of the counterclaims brought by the
estate defendant and the trustee defendant.2 The specific counterclaims challenged by
plaintiff are set forth in detail below. In summary, plaintiff argues: (1) defendants fraud
counterclaims were not pled with sufficient particularity under Rule 9(b) of the Federal
Rules of Civil Procedure; (2) defendants consumer protection counterclaims fail to seek
a public benefit; (3) the trustee defendants counterclaims alleging negligent training and
1 Hawkinsons estate responded by filing a motion to dismiss, arguing that Hawkinson
was not a signatory to the Agreement. This Court denied that motion in a Memorandum Opinion
and Order dated March 12, 2008.
2 Specifically, ADT moves for the dismissal of Counts II, III, IV, V, VII, VIII, IX, X, XI,
and XII of the estate defendants counterclaim, and Counts VII, IX, XI, XII, XIII, XIV, XV, and
XVI of the trustee defendants counterclaim. Plaintiff initially also moved to dismiss the trustee
defendants vicarious liability claim Count VII but withdrew this motion in its reply brief.
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negligent supervision are not viable claims under Minnesota law; and (4) defendants
failed to state a claim for a violation of the Magunson-Moss Warranty Act (MMWA).
In its response brief, defendants stipulate to the dismissal of their MMWA claims and the
trustee defendants negligent training claim. Accordingly, those claims are dismissed
without prejudice,3 and the Court turns to the remaining claims below.
ANALYSIS
I. STANDARD OF REVIEW
Rule 12(c) of the Federal Rules of Civil Procedure provides that [a]fter the
pleadings are closed . . . a party may move for judgment on the pleadings. A motion for
judgment on the pleadings is analyzed under the same standard as a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6). See Westcott v. Omaha, 901 F.2d 1486,
1488 (8th Cir. 1990). In reviewing a complaint under Rule 12(b)(6), the Court considers
all facts alleged in the complaint as true, and construes the pleadings in a light most
favorable to the non-moving party. See, e.g., Bhd. of Maint. of Way Employees v.
Burlington N. Santa Fe R.R., 270 F.3d 637, 638 (8th Cir. 2001). A motion to dismiss
should not be granted unless it appears beyond a doubt that the non-moving party can
prove no set of facts that would entitle it to relief. Coleman v. Watt, 40 F.3d 255, 258 (8th
Cir. 1994). However, the non-moving party must provide more than labels and
3 The MMWA claims are alleged in count XII of the estate defendants counterclaim and
count XVI of the trustee defendants counterclaim. The negligent training claim is alleged as
part of count VII of the trustee defendants counterclaim. Count VII of the trustee defendants
counterclaim also contains defendants negligent supervision claim, which is addressed below.
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conclusions, and a formulaic recitation of the elements of a cause of action will not do.
Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1965 (2007). A plaintiff must state a
claim to relief that is plausible on its face. Id. at 1974.
II. ESTATE DEFENDANTS CLAIMS FOR COMMON LAW FRAUD
In counts II, III, and IV of its counterclaim, the estate defendant alleges common
law fraud, misrepresentation by omission, and negligent misrepresentation. In count II,
the estate defendant points to alleged misrepresentations by plaintiffs Residential Sales
Representative Ben Crickenberger and by Plaintiff ADT, through its agents, employees,
and representatives. In the 19 paragraphs of allegations included under this count, the
estate defendant contends (1) Crickenberger falsely represented that he had done a
comprehensive analysis of Lees security needs and had made appropriate
recommendations; (2) Crickenberger falsely represented that Lees alarm system would
go off immediately if her telephone lines were cut or if someone broke into her home;
(3) plaintiffs agents falsely represented that they had completed installation of a stateof-
the-art, comprehensive, effective, and reliable alarm system; and (4) plaintiffs agents
falsely represented that the alarm system had been installed in a workmanlike manner and
in accordance with applicable industry standards and statutes. The estate defendant
alleges that these representations occurred on or about August 3, 2006 or on or about
August 7, 2006, without specifying a location. Plaintiff also alleges that the false
representations induced Lee to purchase an alarm system.
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In count III, the estate defendant alleges that ADT withheld a variety of
material facts. Those facts include the availability of alternative, more effective
security systems, and vulnerabilities and hidden defects in her security system,
including a 32-second delay between any intrusion and the activation of the alarm. In
one allegation, the estate defendant broadly states that plaintiff failed to disclose the
reasonably foreseeable dangers inherent in the proper use of the ADT alarm product. In
count IV, the estate defendant generally alleges that [t]he aforementioned
representations of material fact constituted negligent misrepresentation. The estate
defendant alleges that the tortious conduct described in each of these three counts was a
proximate cause of Lees death.
Plaintiff contends that the estate defendant failed to plead these claims with the
heightened particularity required under Federal Rule of Civil Procedure 9(b). See Russo
v. NCS Pearson, Inc., 462 F. Supp. 2d 981, 1003 (D. Minn. 2006) (noting that Rule 9(b)
applies to common law fraud claims brought under Minnesota law in federal court).
Under Rule 9(b), a party must state with particularity the circumstances constituting
fraud or mistake. To meet this heightened bar, the claimant must plead such facts as
the time, place, and contents of the defendants false representations, as well as the
details of the defendants fraudulent acts, including when the acts occurred, who engaged
in them, and what was obtained as a result. United States ex. rel. Joshi v. St. Lukes
Hosp., Inc., 441 F.3d 552, 556 (8th Cir. 2006). In short, [t]he claim must identify who,
what, where, when, and how. United States ex. rel. Costner v. United States, 317 F.3d
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883, 888 (8th Cir. 2003). This heightened standard is intended to enable the defendant to
respond specifically and quickly to the potentially damaging allegations. Id.
Plaintiff argues that each of the estate defendants allegations is insufficient in
several respects. As to count II, plaintiff notes that the fraud allegations against unnamed
defendants are insufficient under Rule 9(b). See Vennittilli v. Primerica, Inc., 943
F. Supp. 793, 798-99 (E.D. Mich. 1993) (dismissing fraud allegations under Rule 9(b)
where the claimant failed to identify the particular individual responsible). While
Crickenberger is specifically identified in some instances, plaintiff argues that those
allegations are insufficient as well, because the estate defendant has failed to allege
specific facts that would demonstrate reliance. Cf. Morse v. Abbot Labs., 756 F. Supp.
1108, 1112 (N.D. Ill. 1991) (dismissing claims for common law fraud and negligent
misrepresentation where the claimant failed to allege specific facts that would
demonstrate reliance). As to count III, plaintiff argues the estate defendant has not
provided a sufficiently specific explanation of the facts it was required to disclose.
Plaintiff adds that even if the identification of these facts were sufficient, the estate
defendant has failed to allege circumstances demonstrating that plaintiff had a duty to
disclose those facts. See Richfield Bank & Trust Co. v. Sjogren, 244 N.W.2d 648, 650
(Minn. 1976) (Before nondisclosure may constitute fraud . . . there must be a
suppression of facts which one party is under a legal or equitable obligation to
communicate to the other, and which the other party is entitled to have communicated to
him.). Finally, as to count IV, plaintiff argues that the estate defendants broad
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incorporation of all of the earlier allegations in the complaint failed to provide sufficient
notice under Rule 9(b).
The estate defendant provides no meaningful response to these arguments. Rather,
it merely recites the general requirements of Rule 9(b), and broadly contends that its
allegations when viewed as a whole are sufficient. In short, despite the high bar
established by Rule 9(b) and several specific inadequacies targeted by plaintiff, the estate
defendant has declined to specifically identify any allegations that are sufficient to go
forward. The estate defendant does, however, request an opportunity to re-plead any
insufficient claims with greater particularity. Plaintiff indicates that it has no objection to
this request. In light of the failure of the estate defendant to respond to plaintiffs
arguments, the Court agrees that dismissal of these claims without prejudice is
appropriate.
In re-pleading any fraud claims, the estate defendant must clearly set forth factual
allegations sufficient to satisfy Rule 9(b). In particular, for each distinct allegation of
fraud the estate defendant must specify the individual or individuals who allegedly
engaged in the fraudulent communications. Allegations merely referring to ADT will
be insufficient. See Trooien v. Mansour, No. 06-3197, 2007 WL 436068, at *3 (D. Minn.
Feb. 7, 2007) (noting that allegations of fraud must specify the identity of each
defendant alleged to have engaged in fraudulent activity in order to satisfy the
particularity requirement of Rule 9(b)). In addition, the estate defendant must
reasonably specify the time and place where each allegedly fraudulent act took place.
While the Court cannot broadly state that on or about dates are insufficient, such
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allegations must be supplemented with enough details to give plaintiff a reasonable
opportunity to determine which conversations (or other specific communications) are at
issue. See Joshi, 441 F.3d at 556 (requiring such facts as the time [and] place).
Also, the estate defendant must specifically set forth the content of any allegedly
false representations or fraudulently omitted facts. Id. While the Court is sympathetic to
the challenges involved in reconstructing conversations involving a deceased party, this
Court cannot allow a fraud claim to go forward without at least an allegation of specific,
fraudulent statements or omissions. For example, general allegations that plaintiff failed
to disclose reasonably foreseeable dangers of the alarm system will likely be
insufficient. Finally, the estate defendant must support each distinct reliance claim with
specific allegations concerning Lees receipt of the misrepresentation or reliance on the
omission. See Morse, 756 F. Supp. at 1112. In short, the estate defendant must satisfy
the who, what, where, when, and how for each claim. United States ex. rel. Costner,
317 F.3d at 888. While some elements of this requirement were met by estate defendant
in some instances such as when the estate defendant specifically identified
Crickenberger or when it specifically alleged a false statement concerning the 32-second
alarm delay only claims that can satisfy Rule 9(b) as a whole will be permitted to go
forward.
In sum, the estate defendants counterclaims for common law fraud counts II,
III, and IV of the estate defendants counterclaim are dismissed without prejudice.
However, the Court grants the estate defendant leave to amend those claims to bring them
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into conformity with the particularity requirements of Rule 9(b). This amended pleading
must be filed within 30 days.
III. MINNESOTAS CONSUMER PROTECTION STATUTES
Defendants both bring numerous counterclaims under Minnesotas consumer
protection statutes. Specifically, defendants bring claims under (1) Minn. Stat.
325G.06-.11, which governs home solicitation sales; (2) Minn. Stat. 325G.17-20,
which codifies Minnesotas implied warranties of merchantability and fitness for an
intended purpose, and prohibits violations of express warranties; (3) Minn. Stat.
325F.68-70, which prohibits unlawful and deceptive sales practices; (4) Minn. Stat.
325F.67, which prohibits false statements in advertising; and (5) Minn. Stat. 325D.13,
which prohibits misrepresentations about the quality of marketed merchandise.4 The
substance of these claims closely follows the substance of the fraud claims addressed
above, and includes allegations of economic losses related to payments for the security
system and arising out of Lees death.
Defendants do not allege that Minnesotas consumer protection statutes afford
them a private right of action. They argue, however, that they should be allowed to
enforce these provisions pursuant to Minnesotas Private Attorney General Statute. See
Minn. Stat. 8.31, subd. 3a. Under Minnesota law, [t]he attorney general is provided
4 These claims arise in counts IX, XI, XII, XIII, XIV, XV and XVI of the trustee
defendants counterclaim, and in counts V, VII, VIII, IX, X, XI, and XII of the estate defendants
counterclaim. In many cases, these counts reference more than one of the statutes listed above.
In the interest of clarity, when identifying defendants claims, the Court will refer to them by
statute rather than by count.
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broad statutory authority under Minn. Stat. 8.31 to investigate violations of law
regarding unlawful business practices barred by a variety of statutory prohibitions . . . and
to seek injunctive relief and civil penalties on behalf of the state. Ly v. Nystrom, 615
N.W.2d 302, 310 (Minn. 2000). In addition, any person injured by a violation of any of
the laws committed to the enforcement authority of the attorney general may bring a
civil action and recover damages, together with costs and disbursements, including costs
of investigation and reasonable attorneys fees, and receive other equitable relief as
determined by the court. Minn. Stat. 8.31, subd. 3a. Such actions are only
permissible, however, where claimants demonstrate that their cause of action benefits
the public. Ly, 615 N.W.2d at 314.
Plaintiff contends that the consumer protection claims brought by the defendants,
as presently alleged, do not seek a public benefit. In support, plaintiff relies principally
on two unpublished decisions in which this state law was interpreted in federal court:
Pecarina v. Tokai Corp., No. 01-1655, 2002 WL 1023153 (D. Minn. May 20, 2002), and
Overen v. Hasbro, Inc., No. 07-1430, 2007 WL 2695792 (D. Minn. Sept. 12, 2007). In
Pecarina, the plaintiff suffered severe burns while using a lighter. Plaintiff filed suit
against the manufacturer and retailer, seeking damages for past and future medical
expenses, pain and suffering, wage loss, and emotional distress. Though plaintiff sought
to proceed under several Minnesota consumer protection statutes, as here, the court
concluded that the essence of Plaintiffs lawsuit is personal injury, and that the private
damages sought by the plaintiff did not benefit the public.
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Similarly in Overen, another personal injury case, plaintiff merely sought money
damages. There again the court concluded that this private compensation was not
sufficient to qualify as a public benefit. In both Pecarina and Overen, the court
specifically noted that the plaintiff had either not sought meaningful injunctive relief, or
not made a plausible case for how its action would be broadly beneficial. Pecarina, 2002
WL 1023153, at *5 (noting that plaintiff had sought an injunction preventing the sale of a
product that had not been marketed in the United States for several years); Overen, 2007
WL 2695792, at *3 (Notably, Plaintiff is not seeking any sort of injunctive relief that
would alter the practices or actions of [defendant] such that it would serve a public
benefit.). Plaintiff contends that here as well, defendants merely seek compensation for
Lees estate and next-of-kin.
Moreover, plaintiff contends that under Minnesotas Wrongful Death Act, see
Minn. Stat. 573.02, the trustee defendant is prohibited from addressing this deficiency
by seeking injunctive relief. Plaintiff notes that the trustee defendants authority is
grounded in this statute, and that the Act expressly states that the recovery in such an
action shall be for the exclusive benefit of the surviving spouse and next of kin,
proportionate to the pecuniary loss severally suffered by the death. Minn. Stat.
573.02, subd. 1. Plaintiff contends that this limitation effectively restricts the trustee
defendants from seeking any relief that would satisfy the public benefit requirement.
See Tuttle v. Lorillard Tobacco Co., No. 99-1550, 2003 WL 1571584, at *6-7 (D. Minn.
Mar. 3, 2003) (suggesting this view of the Wrongful Death Act). Similarly, plaintiff
contends that any claim that the estate defendant may have had for injunctive relief
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abated at Lees death. Cf. Taylor v. Hennepin County, No. C1-93-2369, 1994 WL
175010, at *2 (noting that a prisoners claim for injunctive relief was mooted by his
death).
Finally, again in the alternative, plaintiff contends that several of defendants
consumer protection claims lack sufficient particularity under Rule 9(b). See Tuttle v.
Lorillard, 119 F. Supp. 2d 954, 963 (D. Minn. 2000) (noting that Rule 9(b) applies to
Minnesotas consumer protection statutes where the gravamen of the complaint is
fraud). As to defendants respective consumer fraud claims brought under Minn. Stat.
325F.68-70 count VIII of the estate defendants counterclaim and count XII of the
trustee defendants counterclaim plaintiff argues that both defendants rely on mere
vague, conclusory assertions, without identifying the particular actors at fault, and
without specifically identifying any fraudulent acts. As to defendants respective false
advertisement claims brought under Minn. Stat. 325F.67 count IX of the estate
defendants counterclaim and count XIII of the trustee defendants counterclaim
plaintiff notes that defendants have failed to identify any specific advertisements that they
believe were false. See Russo, 462 F. Supp. 2d at 1003 (dismissing a false advertisement
claim where claimant failed to identify the allegedly false representation with
particularity). Finally, as to defendants respective misrepresentation claims brought
under Minn. Stat. 325D.13 count X of the estate defendants counterclaim and count
XIV of the trustee defendants counterclaim plaintiff argues that defendants again have
failed to identify any specific misrepresentations.
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In response, defendants first argue that they have indeed sought a sufficient public
benefit. For support, defendants point to Collins v. Minnesota School of Business, Inc.,
655 N.W.2d 320 (Minn. 2003). There, 18 former students at the Minnesota School of
Business (MSB) alleged injuries caused by false, misleading, and confusing statements
MSB had made about its sports medicine program. Neither the Minnesota Court of
Appeals nor the Minnesota Supreme Court indicated that the plaintiffs had sought
injunctive relief. Nonetheless, both courts concluded that plaintiffs had sought a
sufficient public benefit for the purposes of the Private Attorney General Statute. 655
N.W.2d at 329-30 (emphasizing that the misrepresentations at issue had been made to the
public at large); Collins v. Minnesota School of Business, Inc., 636 N.W.2d 816, 820-21
(Minn. Ct. App. 2001). The Minnesota Court of Appeals explained that the defendant
had stopped the allegedly misleading advertisements in response to the lawsuit, and that
federal courts have consistently held that the prevention of false or misleading
advertising is a public benefit. 636 N.W.2d at 820. Defendants contend that here, too,
they are seeking to stop misleading conduct and misleading advertising.
In the alternative, defendants argue that even if their damage claims are
insufficient to meet the public benefit requirement, they have sought injunctive relief.
Defendants base this argument on two specific passages included in both counterclaims:
(1) the statement that plaintiffs false advertisements constitute an enjoinable public
nuisance, and (2) the general request, in each defendants prayer for relief, for such
other and further relief as the Court may deem just and equitable, including any
injunctive relief and/or other equitable remedies the Court deems appropriate.
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(Emphasis added). Defendants argue that this relief is not foreclosed by the Wrongful
Death Act, pointing to the Eighth Circuits interpretation of that Act in Steinlage v. Mayo
Clinic Rochester, 435 F.3d 913, 915 (8th Cir. 2006). There, the Eighth Circuit considered
Minnesotas Wrongful Death Act, and noted that the exclusivity language cited by
plaintiff indicates that the wrongful death trustee is not authorized to obtain a judgment
for the benefit of general creditors who may have claims against the decedents estate.
Id. Defendants argue that this was the sole purpose of the text cited by plaintiff, and that
the Act does not otherwise restrict the range of relief available.
Finally, as to plaintiffs Rule 9(b) challenge, as with their common law fraud
claims defendants fail to provide a meaningful response. Defendants broadly contend
that their claims have been pled with sufficient particularity, and request that if those
claims are dismissed, the dismissal be without prejudice.
The Court agrees that defendants claims, as currently pled, do not seek a
sufficient public benefit under the Private Attorney General Statute. The Court begins
with the inadequacies under Rule 9(b). As plaintiff points out, defendants claims under
the Consumer Fraud Act, Minn. Stat. 325F.68-70, offer mere conclusory allegations,
and mere wholesale reference to the rest of their counterclaims. See BJC Health Sys. v.
Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007) (noting that conclusory allegations
are insufficient under Rule 9(b)). As discussed above, the earlier counterclaims alleged
by the estate defendant were deficient under Rule 9(b). In addition, the estate defendant
and trustee defendants counterclaims were 64 and 69 pages, respectively. Accordingly,
this wholesale reference did not provide the notice and particularity required under Rule
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9(b). Similarly, defendants counterclaims under the Minnesota False Advertising Act,
Minn. Stat. 325.67, fail to specify which advertisements allegedly contained false
representations. This basic information is indisputably necessary under Rule 9(b),
rendering these counterclaims insufficient as well. Finally, defendants counterclaims
under the Unlawful Trade Practices Act, Minn. Stat. 325D.13, merely refer to
misrepresentations described in detail above. Again, this method was inadequate to
provide the notice required under Rule 9(b), particularly in light of the deficiencies of the
estate defendants common law claims. Accordingly, the Court concludes that it is
appropriate to dismiss these claims counts VII, IX, and X of the estate defendants
counterclaim and counts XII, XIII, and XIV of the trustee defendants counterclaim
without prejudice.
The inadequacies in these claims and the substantial deficiencies in defendants
fraud allegations generally are also a fatal blow to any public benefit argument that
may be available to defendants under Collins. The Court first notes that, in light of
Collins, this Court is not persuaded that Minnesotas Private Attorney General Statute
incorporates the bright-line rule suggested by plaintiff, requiring that equitable relief must
be requested in order for a claimant to seek a public benefit. As discussed above, the
Minnesota Supreme Court did not indicate that the plaintiffs in Collins had sought
injunctive relief, but nonetheless determined that they had sought a public benefit. The
court simply observed that the plaintiffs had effectively ended a fraudulent marketing
campaign. This effect distinguishes the two cases relied on by plaintiff, where such an
impact was unavailable. Pecarina, 2002 WL 1023153, at *5 (noting that plaintiff had
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sought an injunction preventing the sale of a product that had not been marketed in the
United States for several years); Overen, 2007 WL 2695792, at *3 (Notably, Plaintiff is
not seeking any sort of injunctive relief that would alter the practices or actions of
[defendant] such that it would serve a public benefit.); see also Tuttle, 2003 WL
1571584, at *6 (To the extent that Plaintiff wants to warn the public of the dangers of
smokeless tobacco, the FDA-required warnings already accomplish that purpose.); Zutz
v. Case Corp., 2003 WL 22848943, at *4 (D. Minn. Nov. 21, 2003) (analyzing a public
benefit claim by considering whether a claim for private relief would have the impact
discussed in Collins). Here in a case involving a product that is marketed nationally
and whose primary purpose is protecting consumers it is at least conceivable that
defendants could seek a public benefit at least as significant as that achieved in Collins.
Thus, this Court does not treat the question of whether defendants have sought injunctive
relief as dispositive.
In light of the inadequacies detailed above, however, the Court cannot conclude
that defendants have sought such a benefit thus far. Defendants broadly contend that
their lawsuit will soon effect a change in ADTs conduct and advertising. However,
the deficiencies of defendants fraud claims have left the Court without a clear
identification of which particular acts and advertisements are at issue. That information
is clearly necessary for the Court to determine what the public benefit would be if
defendants were to prevail. Accordingly, defendants consumer protection counterclaims
that were not pled with sufficient particularity as well as defendants additional
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consumer protection claims5 must be dismissed without prejudice on this ground as
well.
In sum, defendants consumer protection claims have failed to state claims for a
public benefit pursuant to the Private Attorney General Statute. Defendants, however,
are granted leave to amend their counterclaims to satisfy the particularity requirements of
Rule 9(b) and to seek to set forth claims that seek a sufficient public benefit under
Collins.
IV. NEGLIGENT SUPERVISION
Plaintiff seeks the dismissal of the trustee defendants claim for negligent
supervision.6 Plaintiff argues that this tort requires an allegation that one of plaintiffs
agents directly inflicted a physical injury, and that plaintiff knew or should have known
that the offending employee was violent or aggressive. See Johnson v. Peterson, 734
N.W.2d 275, 278 (Minn. Ct. App. 2007). Plaintiff notes the actual physical injury
involved in this case was inflicted by Van Keuren, and that no violence or aggression
5 Plaintiff did not move for all of defendants consumer protection claims to be dismissed
for lack of particularity. Specifically, plaintiff failed to address counts V, VII, XI, and XII of the
estate counterclaim and counts IX, XI, XV, and XVI of the trustee counterclaim. However,
defendants have not contended that these claims or any other specific claims would seek the
requisite public benefit alone in the absence of defendants core fraud allegations. The Court
agrees that without the claims addressed above, the Court cannot conclude that defendants have
sought a sufficient public benefit. Accordingly, these additional claims are dismissed without
prejudice as well, and leave is granted for defendants to re-plead them in its amended
counterclaim. As to injunctive relief, this Court does not agree that the boilerplate language
cited to by defendants is sufficient to rescue these claims. Thus, it is not necessary for the Court
to reach the question of whether such relief would be permissible in light of Minnesotas
Wrongful Death Statute.
6 This claim is alleged as part of count VII of the trustee defendants counterclaim.
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on the part of its employees is at issue. The trustee defendant disagrees with this
characterization of Minnesota law, noting that this tort is premised on an employers
duty to control employees and prevent them from intentionally or negligently inflicting
personal injury. Id. at 277. While Van Keuren of course carried out Lees murder, the
trustee defendant alleges that a proximate cause of her death was the negligence of
plaintiffs employees.
The Court agrees that the trustee defendants allegations are insufficient to state a
claim for negligent supervision under Minnesota law. The Johnson case cited by the
plaintiff was handed down by the Minnesota Court of Appeals less than one year ago, and
plainly stated that this state law claim requires that the employer knew or should have
known that the employee was violent or aggressive and might engage in injurious
conduct. 734 N.W.2d at 278 (emphasis added). There is no such allegation here.
Accordingly, the trustee defendants claim for negligent supervision is dismissed with
prejudice.7
7 This is not to say that there is no cause of action available against plaintiff if one of its
employees negligently installed the security system. The trustee defendant also alleges that
plaintiff is liable under the doctrine of respondeat superior. Under this doctrine, an employer is
vicariously liable for the torts of an employee committed within the course of employment.
Fahrendorff ex. rel. Fahrendorff v. North Homes, Inc., 597 N.W.2d 905, 910 (Minn. 1999).
While plaintiff initially moved to dismiss this claim as well, this motion was later withdrawn.
-20-
V. LEAVE FOR THE MINOR DEFENDANTS TO AMEND
Finally, defendants request that the minor defendants be granted leave to amend
their counterclaim to assert causes of action against ADT. Plaintiff does not oppose this
request. Accordingly, defendants request is granted.
ORDER
Based on the foregoing, all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that plaintiffs Amended Motion for Judgment on the Pleadings
of Certain Claims [Docket No. 31] is GRANTED as follows:
1. Estate Counterclaim counts V, VII, VIII, IX, X, XI, and XII and Trustee
Counterclaim counts IX, XI, XII, XIII, XIV, XV, and XVI defendants counterclaims
brought under Minnesotas consumer protection statutes are DISMISSED WITHOUT
PREJUDICE.
2. Trustee Counterclaim count VII defendants claims for negligent training
and negligent supervision is DISMISSED WITH PREJUDICE.
3. Estate Counterclaim count XII and Trustee Counterclaim count XVI
defendants' counterclaims brought under the Magnuson-Moss Warranty Act are
DISMISSED WITHOUT PREJUDICE.
4. Estate Counterclaim counts II, III, and IV estate defendants common law
fraud claims are DISMISSED WITHOUT PREJUDICE.
-21-
IT IS FURTHER ORDERED that:
1. Defendants request for leave to amend their respective counterclaims is
GRANTED. Any amended counterclaims must be filed within 30 days from date of this
order.
2. Defendants request for leave for the minor defendants to assert causes of
action against plaintiff is GRANTED. Such causes of action must be filed within 30
days from date of this order.
DATED: July 21, 2008 s/ John R. Tunheim _
at Minneapolis, Minnesota. JOHN R. TUNHEIM
United States District Judge
 

 
 
 

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