Sheila Foster v. State of Minnesota ( 2018 )

United States Court of Appeals
For the Eighth Circuit
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No. 17-1177
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Sheila Foster, on behalf of herself and all others similarly situated
lllllllllllllllllllll Plaintiff - Appellant
v.
State of Minnesota, et al.
lllllllllllllllllllll Defendants - Appellees
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: December 13, 2017
Filed: April 20, 2018
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Before WOLLMAN, LOKEN, and MELLOY, Circuit Judges.
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LOKEN, Circuit Judge.
In 1998, the State of Minnesota, through its Attorney General, entered into a
court-approved Settlement Agreement in which the State “release[d] and forever
discharge[d]” tobacco companies from claims that they violated Minnesota consumer
protection statutes in exchange for substantial periodic settlement payments. In 2001,
Gregory Curtis filed a class action alleging that one of the companies had violated
several Minnesota consumer protection statutes by marketing “light” cigarettes as a
safer alternative to regular cigarettes. The Supreme Court of Minnesota eventually
dismissed the complaint, concluding (i) that the Attorney General was authorized to
sue the tobacco companies under Minn. Stat. § 8.31, subd. 3a, and to settle consumer
protection claims asserted by the State, acting as representative of Minnesota citizens;
and (ii) that the 1998 Settlement Agreement’s “broad and comprehensive” release
“expressly released and barred [the class members’] consumer protection claims.”
Curtis v. Altria Grp., Inc., 813 N.W.2d 891, 900, 902-04 (Minn. 2012).
In 2014, Kristen Harne and Sheila Foster filed a class action in Minnesota
district court against the State of Minnesota, the Attorney General, and the
Commissioner of Management and Budget (acting in their official capacities). Count
I alleged that defendants’ failure to pay class members a portion of the proceeds of
the 1998 Settlement Agreement constituted an “inverse condemnation” in violation
of Article I, § 13, of the Minnesota Constitution. Count II alleged that the same
conduct constituted a taking of private property without just compensation in
violation of the Fifth Amendment of the United States Constitution. Both Counts
sought just compensation relief. The Minnesota trial court dismissed the action,
concluding that both claims were time-barred under the applicable Minnesota six-year
statute of limitations, Minn. Stat. § 541.05, and that no taking had occurred. The
Minnesota Court of Appeals affirmed, concluding both claims were time-barred by
§ 541.05. Harne v. State, No. A14-1985, 2015 WL 4523895, at *1 (Minn. App. June
29, 2015). The Supreme Court of Minnesota denied review.
In 2016, Foster filed this federal class action complaint against the Harne
defendants under 42 U.S.C. § 1983, asserting that the State’s failure to share annual
payments under the Settlement Agreement constitutes a taking in violation of the
Fifth Amendment. The district court1 granted Defendants’ motion to dismiss,
1
The Honorable David S. Doty, United States District Judge for the District of
Minnesota.
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concluding that Foster’s Fifth Amendment claim is barred by res judicata because the
same claim was raised and rejected in Harne. Alternatively, the court ruled that this
federal claim is time-barred under Minnesota law. Foster appeals. Reviewing the
grant of a Rule 12(b)(6) motion de novo, we agree with the district court that the Fifth
Amendment claim is barred by res judicata and therefore affirm. See Laase v. Cty.
of Isanti, 638 F.3d 853, 856 (8th Cir. 2011) (standard of review).2
“Under the Full Faith and Credit Act, 28 U.S.C. § 1738, federal courts must
give the same preclusive effect to state court judgments that those judgments would
be given in the courts of the State from which the judgments emerged.” Edwards v.
City of Jonesboro, 645 F.3d 1014, 1019 (8th Cir. 2011) (quotation omitted). “[T]he
law of the forum that rendered the first judgment controls the res judicata analysis.”
Laase, 638 F.3d at 856 (quotation omitted). In Minnesota, res judicata bars a
subsequent claim when: “(1) the earlier claim involved the same claim for relief; (2)
the earlier claim involved the same parties or their privies; (3) there was a final
judgment on the merits; and (4) the estopped party had a full and fair opportunity to
litigate the matter.” State v. Joseph, 636 N.W.2d 322, 327 (Minn. 2001).
Here, all four elements are satisfied. First, Foster’s takings claim in federal
court is identical to the federal takings claim asserted in Harne -- that the State by
entering into a Settlement Agreement in which it released Foster’s claims under
Minnesota consumer protection statutes while refusing to share the monetary
proceeds of that settlement violated the Fifth Amendment by taking private property
without just compensation. Second, Harne involved the same parties defendant.
Third, under Minnesota law, the dismissal of the claims in Harne as time-barred was
a final judgment on the merits. See Sautter v. Interstate Power Co., 567 N.W.2d 755,
2
As this issue resolves the appeal, we need not address the district court’s
alternative ruling that Foster’s claim is time-barred, nor Defendants’ contention that
the claim is precluded by their Eleventh Amendment immunity. See Friends of Lake
View Sch. Dist. Incorp. No. 25 v. Beebe, 578 F.3d 753, 763 n.14 (8th Cir. 2009).
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759 (Minn. App. 1997); see generally Semtek Int’l Inc. v. Lockheed Martin Corp.,
531 U.S. 497, 504 (2001). Fourth, Foster and Harne actually litigated their federal
claims in Harne.
Foster argues that applying res judicata to bar her federal claim based on the
prior Harne litigation violates the rule that “[c]laims are not considered the same
cause of action if the right to assert the second claim did not arise at the same time as
the right to assert the first claim.” Mach v. Wells Concrete Prods. Co., 866 N.W.2d
921, 925 (Minn. 2015) (quotation omitted). We disagree. Foster argues her Fifth
Amendment claim did not arise until she was denied just compensation in Harne
because “a property owner has not suffered a violation of the [Fifth Amendment’s]
Just Compensation Clause until the owner has unsuccessfully attempted to obtain just
compensation through the procedures provided by the State for obtaining such
compensation.” Williamson Cty. Reg’l Planning Comm’n v. Hamilton Bank of
Johnson City, 473 U.S. 172, 195 (1985); see Dakota, Minn. & E. R.R. v. South
Dakota, 362 F.3d 512, 520 (8th Cir. 2004). However, the alleged taking occurred
when the State entered into the Settlement Agreement in 1998. The state law inverse
condemnation claim arose at that time, and Williamson County did not preclude
Foster from also challenging the constitutionality of that taking under the Fifth
Amendment in state court. As the Supreme Court explained in San Remo Hotel, L.P.
v. City of San Francisco, 545 U.S. 323, 346 (2005):
The requirement that aggrieved property owners must seek
compensation through the procedures the State has provided for doing
so does not preclude state courts from hearing simultaneously a
plaintiff’s request for compensation under state law and the claim that,
in the alternative, the denial of compensation would violate the Fifth
Amendment of the Federal Constitution.
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When a property owner has unsuccessfully asserted a Fifth Amendment takings
claim in state court, as Foster did in the Harne litigation, her later assertion of the
same claim in federal court is precluded under Minnesota law. See Edwards, 645
F.3d at 1020; Knutson v. City of Fargo, 600 F.3d 992, 997-98 (8th Cir.), cert. denied,
562 U.S. 897 (2010); Torromeo v. Town of Fremont, N.H., 438 F.3d 113, 116-17 (1st
Cir.), cert. denied, 549 U.S. 886 (2006). Foster’s reliance on R & J Holding Co. v.
Redev. Auth. of Montgomery, 670 F.3d 420 (3d Cir. 2011), cert. denied, 567 U.S. 924(2012), is misplaced. There, applying claim-splitting principles of Pennsylvania
preclusion law, the court held that a prior state court judgment rejecting plaintiffs’
state law inverse condemnation claim did not preclude a Fifth Amendment claim in
federal court because plaintiffs expressed their intent to preserve the federal claims
in the state litigation, and defendants failed to object. Id. at 426-28. Here, by
contrast, Foster expressly pleaded and litigated her Fifth Amendment claim in the
state court in Harne.
Foster further argues that she lacked full and fair opportunity to litigate her
federal takings claim because the Minnesota Court of Appeals dismissed the claim
as untimely under what Foster argues was an inapplicable state statute-of-limitations.
There can be no doubt that Foster’s Fifth Amendment claim was subject to the same
six-year statute of limitations as her inverse condemnation claim under the Minnesota
Constitution. See, e.g., Egerdahl v. Hibbing Cmty. Coll., 72 F.3d 615, 618 (8th Cir.
1995). The Minnesota Court of Appeals expressly dismissed both claims on the
merits as time-barred. If Foster believed the Minnesota appellate courts committed
an error of federal law, her remedy was to petition the Supreme Court of the United
States for a writ of certiorari. See San Remo, 545 U.S. at 347 (“most of the cases in
our takings jurisprudence . . . came to us on writs of certiorari from state courts of last
resort”). Foster cites no “significant procedural limitations” in the prior proceeding
that denied a full and fair opportunity to litigate the federal takings claim she asserted.
Joseph, 636 N.W.2d at 328. “[A] litigant’s disagreement with a legal ruling does not
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necessarily mean that the court denied the litigant a full and fair opportunity to
litigate a matter.” Id. at 329.
Finally, invoking the principle that res judicata is a flexible doctrine that should
not be applied to “work an injustice,” Hauschildt v. Beckingham, 686 N.W.2d 829,
837 (Minn. 2004), Foster argues that applying claim preclusion here works an
injustice because it would “effectively strip federal courts of jurisdiction over claims
involving the U.S. Constitution’s Takings Clause.” We reject the contention that
litigating a federal takings claim that is based on state government action in state
court works an injustice. As the Supreme Court observed in San Remo, “[i]t is hardly
a radical notion to recognize that, as a practical matter, a significant number of
plaintiffs will necessarily litigate their federal takings claims in state courts.” 545
U.S. at 346.
The judgment of the district court is affirmed.
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