STATE OF MINNESOTA
IN SUPREME COURT
A12-1555
Court of Appeals Dietzen, J.
Took no part, Page, Stras, and Lillehaug, JJ.
Meyer, Helen, Acting Justice1
Graphic Communications Local 1B
Health & Welfare Fund “A”, et al.,
Respondents/Cross-Appellants,
vs. Filed: July 2, 2014
Office of Appellate Courts
CVS Caremark Corporation, et al.,
Appellants/Cross-Respondents,
Coborn’s Incorporated,
Appellant/Cross-Respondent,
Kmart Holding Corporation, et al.,
Appellants/Cross-Respondents,
Snyder’s Drug Stores (2009), Inc., et al.,
Appellants/Cross-Respondents,
Target Corporation,
Appellant/Cross-Respondent,
1
Appointed pursuant to Minn. Const. art VI, § 2, and Minn. Stat. § 2.724, subd. 2
(2012).
1
Walgreen Co.,
Appellant/Cross-Respondent,
Wal-Mart Stores, Inc.,
Appellant/Cross-Respondent.
________________________
David L. Hashmall, Felhaber, Larson, Fenlon & Vogt, P.A., Minneapolis, Minnesota;
Perrin Rynders, Bryan R. Walters, Varnum LLP, Grand Rapids, Michigan; and
John W. Barrett, Bailey & Glasser LLP, Charleston, West Virginia, for
respondents/cross-appellants.
Lewis A. Remele, Jr., Christopher R. Morris, Bassford Remele, P.A., Minneapolis,
Minnesota; and
Robert H. Griffith, Foley & Lardner LLP, Chicago, Illinois, for appellants/cross-
respondents CVS Caremark Corporation, et al.
Kevin D. Hofman, Ronald B. Peterson, Halleland Habicht P.A., Minneapolis, Minnesota,
for appellant/cross-respondent Coborn’s Incorporated.
Tracy J. Van Steenburgh, Nilan Johnson Lewis, P.A., Minneapolis, Minnesota, for
appellants/cross-respondents Kmart Holding Corporation, et al.
James K. Langdon, Dorsey & Whitney, Minneapolis, Minnesota, for appellants/cross-
respondents Snyder’s Drug Stores (2009), Inc., et al.
Wendy J. Wildung, Craig S. Coleman, Faegre Baker Daniels LLP, Minneapolis,
Minnesota, for appellant/cross-respondent Target Corporation.
Todd A. Noteboom, Elizabeth Wiet Reutter, Leonard, Street and Deinard, PA,
Minneapolis, Minnesota, for appellant/cross-respondent Walgreen Co.
David R. Marshall, Joseph J. Cassioppi, Fredrikson & Byron, P.A., Minneapolis,
Minnesota, for appellant/cross-respondent Wal-Mart Stores, Inc.
2
Lori Swanson, Attorney General, Alan I. Gilbert, Solicitor General, Jennifer Yatskis
Dukart, Assistant Attorney General, Saint Paul, Minnesota, for amicus curiae State of
Minnesota.
Dale O. Thornsjo, Lance D. Meyer, O’Meara, Leer, Wagner & Kohl, P.A., Minneapolis,
Minnesota, for amici curiae The Insurance Federation of Minnesota, The American Tort
Reform Association, and Minnesotans for Lawsuit Reform.
William L. Davidson, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, Minnesota,
for amicus curiae Minnesota Defense Lawyers Association.
Leah Ceee O. Boomsma, Briggs and Morgan, P.A., Minneapolis, Minnesota, for amici
curiae The National Association of Chain Drug Stores, National Community Pharmacists
Association, Retail Litigation Center, Minnesota Pharmacists Association, Independent
Pharmacy Cooperative, Thrifty White Pharmacy, and the Minnesota Chamber of
Commerce.
Donald R. McNeil, Stephen F. Buterin, Heley, Duncan & Melander, PLLP, Minneapolis,
Minnesota, for amicus curiae National Labor Alliance of Health Care Coalitions.
Mark S. Olson, Mark Schneebeck, Oppenheimer, Wolff & Donnelly, L.L.P.,
Minneapolis, Minnesota; and
Hugh F. Young, Jr., Product Liability Advisory Council, Inc., Reston, Virginia, for
amicus curiae Product Liability Advisory Council, Inc.
________________________
SYLLABUS
1. Minnesota Statutes § 151.21, subd. 4 (2012) does not create a private cause
of action in favor of union-sponsored health and welfare benefit funds against pharmacies
for failing to pass on the difference between the acquisition cost of brand name drugs and
substituted generic prescription drugs.
2. An omission-based consumer fraud claim is actionable under Minn. Stat.
§ 325F.69, subd. 1 (2012) when special circumstances exist that trigger a legal or
equitable duty to disclose the omitted facts.
3
3. The amended complaint did not allege facts that would trigger a legal or
equitable duty for appellant pharmacies to disclose prescription-drug acquisition costs;
therefore, the complaint failed to state a claim upon which relief can be granted under
Minn. Stat. § 325F.69, subd. 1.
Affirmed in part, reversed in part.
OPINION
DIETZEN, Justice.
At issue in this case is (1) whether Minn. Stat. § 151.21, subd. 4 (2012) creates a
private cause of action in favor of respondents, two health and welfare funds, against
appellant pharmacies for failing to pass on the difference between the acquisition cost of
brand name drugs and substituted generic prescription drugs; and (2) whether the funds
pleaded a claim for relief under Minn. Stat. § 325F.69, subd. 1 (2012), Minnesota’s
Consumer Fraud Act (CFA), sufficient to survive a motion to dismiss under Rule 12.
In their amended complaint, the funds allege, among other things, that the
pharmacies engaged in fraudulent, misleading, or deceptive practices in connection with
the sale of merchandise by failing to pass on to the funds the entire difference between
the acquisition cost of the generic prescription drug dispensed and its brand name
equivalent as required by Minn. Stat. § 151.21, subd. 4. The district court granted the
pharmacies’ Rule 12 motion to dismiss the complaint, concluding that Minn. Stat.
§ 151.21, subd. 4, does not create a private cause of action in favor of the funds, and that
the funds failed to plead a claim for relief under the CFA. The court of appeals
unanimously affirmed the dismissal of the claim brought under Minn. Stat. § 151.21,
4
subd. 4, but in a divided decision, the court of appeals reversed the dismissal of the claim
brought under the CFA, concluding that the funds pleaded a legally sufficient claim.
Because we conclude that Minn. Stat. § 151.21, subd. 4, does not create a private cause of
action, and that the funds failed to plead a legally sufficient claim under the CFA, we
affirm in part and reverse in part.
Respondents/cross-appellants, Graphic Communications Local 1B Health &
Welfare Fund “A” and The Twin Cities Bakery Drivers Health and Welfare Fund (the
Funds), are jointly administered Taft-Hartley Funds under section 302(c)(5) of the
National Labor Relations Act, 29 U.S.C. § 186(c) (2012), and are authorized to
administer employee welfare benefit plans as defined in section 3(1) of the Employee
Retirement Income Security Act, 29 U.S.C. § 1002(1) (2012).2 The Funds provide health
benefits, including prescription-drug benefits, to their approximately 2,600 active plan
participants and their spouses and dependents. Appellants/cross-respondents (the
2
The facts are taken from the Funds’ first amended complaint. See Bodah v.
Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003) (“[We] consider only
the facts alleged in the complaint, accepting those facts as true . . . .”). The Pharmacies
ask us to take judicial notice of the fact that the price the Funds paid for prescription
drugs was set by contracts between the Pharmacies and pharmacy benefit managers
acting on behalf of the Funds. Because these alleged contracts are not mentioned in the
complaint, we decline to take judicial notice of them. See State ex rel. Remick v.
Clousing, 205 Minn. 296, 301, 285 N.W. 711, 714 (1939) (“Judicial notice is to be taken
with caution and every reasonable doubt as to the propriety of its exercise in a given case
should be resolved against it.”).
5
Pharmacies)3 are a number of pharmacies that operate or have operated, either directly or
through affiliates, retail pharmacies in Minnesota during the period from 2003 to the
present.
This case involves the sale and pricing of generic prescription drugs. When a
patent on a drug developed by a pharmaceutical company expires, other drug
manufacturers may obtain government approval to manufacture and sell generic versions
of the drug.4 A generic drug is identical—or bioequivalent—to a brand name drug in
dosage, form, safety, strength, route of administration, quality, performance,
characteristics, and intended use. Although generic drugs are chemically identical to
their brand name counterparts, they are sold at substantial discounts in comparison to the
brand name price, in part because the generic manufacturer is generally not required to
engage in advertising, marketing and promotion, or significant research and development.
Minnesota law requires that when a consumer is prescribed a brand name drug, a
Minnesota-licensed pharmacist must substitute a generic equivalent unless the
prescription states “dispense as written.” Minn. Stat. § 151.21, subd. 3 (2012). Further,
the pharmacist must pass on to the purchaser of the generic prescription drug any cost
3
The Pharmacies are CVS Caremark Corporation, et al., Coborn’s Incorporated,
Kmart Holding Corporation, et al., Snyder’s Drug Stores (2009), Inc., et al., Target
Corporation, Walgreen Co., and Wal-Mart Stores, Inc.
4
This background on generic prescription drugs is taken from the Funds’ amended
complaint. Additional background can be found on the Food and Drug Administration
website, see U.S. Food and Drug Administration, Facts About Generic Drugs,
http://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/
UnderstandingGenericDrugs/ucm167991.htm (last updated Sept. 19, 2012).
6
savings realized by the lower acquisition costs of the generic drug as compared to its
brand name equivalent. Id., subd. 4 (“Any difference between acquisition cost to the
pharmacist of the drug dispensed and the brand name drug prescribed shall be passed on
to the purchaser.”).
The Funds have purchased prescription drugs and/or reimbursed their plan
participants and beneficiaries for the purchase of generic prescription drugs. According
to the Funds, they have engaged in over 200,000 prescription-drug transactions with the
Pharmacies since July 28, 2003. The Funds allege that during the relevant time period
the Pharmacies concealed from the Funds their acquisition costs for prescription drugs
and routinely overcharged the Funds for the purchases of generic prescription drugs in
violation of Minn. Stat. § 151.21, subd. 4.
The amended complaint sets forth specific examples of the alleged generic
prescription drug overcharges. For example, the Funds allege that in 2008, the
Pharmacies’ acquisition cost for a four-tablet supply of the brand name drug Fosamax
was $70.72. The Pharmacies sold the four-tablet supply for $79.46, a gross profit of
$8.74. On the other hand, the Pharmacies’ acquisition cost of the generic equivalent
Alendronate was $6.24 for a four-tablet supply. The Funds claim that to satisfy Minn.
Stat. § 151.21, subd. 4, the highest price for which the Pharmacies could sell Alendronate
would be $14.98 (the acquisition cost of $6.24 plus the gross profit of $8.74 realized by
the sale of the brand name Fosamax). The Funds claim that the Pharmacies violated
Minn. Stat. § 151.21, subd. 4, by selling Alendronate for as much as $70.83 for a four-
tablet supply, an overcharge of $55.85.
7
In July 2009, the Funds filed suit against the Pharmacies in state district court,
alleged various generic drug pricing claims based on violations of Minn. Stat. § 151.21,
subd. 4, and also requested class certification. Graphic Commc’ns Local 1B Health &
Welfare Fund “A” v. CVS Caremark Corp., Civil No. 09-2203 (MJD/JSM), 2011 WL
5826687, at *1 (D. Minn. Oct. 13, 2011). The Pharmacies removed the case to federal
court in August 2009, and the parties litigated the jurisdiction of the federal court to hear
the case. Id. at *1-3. In November 2011, the federal district court granted the Funds’
motion to remand the case to state court. Graphic Commc’ns Local 1B Health & Welfare
Fund “A” v. CVS Caremark Corp., Civil No. 09-2203 (MJD/JSM), 2011 WL 5827182,
at *1 (D. Minn. Nov. 18, 2011).
On remand to state district court, the Funds filed an amended complaint asserting
causes of action for (1) violations of the Pharmacy Practice Act, Minn. Stat. § 151.21,
subd. 4; (2) violations of Minnesota’s Consumer Fraud Act (CFA), Minn. Stat.
§ 325F.69, subd. 1; and (3) unjust enrichment. In July 2012, the district court dismissed
the Funds’ complaint with prejudice, concluding that no private cause of action exists
under Minn. Stat. § 151.21, subd. 4, and that the Funds failed to plead an actionable claim
under the CFA because the Pharmacies did not have a duty to disclose their prescription-
drug acquisition costs. The court also concluded that without a private cause of action
under Minn. Stat. § 151.21, subd. 4, the Funds’ unjust enrichment claim necessarily
failed.
In a divided opinion, the court of appeals affirmed in part, reversed in part, and
remanded. Graphic Commc’ns Local 1B Health & Welfare Fund “A” v. CVS Caremark
8
Corp., 833 N.W.2d 403, 414 (Minn. App. 2013). The court unanimously affirmed the
dismissal of the claim brought under Minn. Stat. § 151.21, subd. 4, concluding that the
Legislature did not intend to create a private cause of action based on a violation of the
statute. Graphic Commc’ns Local 1B Health & Welfare Fund “A”, 833 N.W.2d at 409.
But in a divided decision, the court reversed the dismissal of the claim brought under the
CFA, with the majority concluding that the Funds pleaded a legally sufficient claim that
the Pharmacies’ failure to disclose acquisition costs and subsequent overcharges were
material omissions in violation of the CFA that injured the Funds. Id. at 409-13.
Subsequently, the Pharmacies sought review of the court of appeals’ determination
that the Funds pleaded a legally sufficient claim under the CFA, and the Funds sought
review of the court of appeals’ decision that they did not have a private cause of action
under Minn. Stat. § 151.21, subd. 4. We granted review. Because we conclude that
Minn. Stat. § 151.21, subd. 4, does not create a private cause of action, and the Funds
failed to plead an actionable claim under the CFA, we affirm in part and reverse in part.
I.
On appeal the parties raise two issues. First, the Funds argue that the court of
appeals erred in concluding that Minn. Stat. § 151.21, subd. 4, does not create a private
cause of action in their favor against the Pharmacies for failing to pass on the difference
between the acquisition cost of brand name drugs and substituted generic prescription
drugs. Second, the Pharmacies argue that the court of appeals erred in concluding that
the Funds pleaded an actionable claim for relief under the CFA, Minn. Stat. § 325F.69,
subd. 1, sufficient to survive a motion to dismiss under Rule 12.
9
Statutory interpretation is a question of law that we review de novo. In re Welfare
of J.J.P., 831 N.W.2d 260, 264 (Minn. 2013). The goal of all statutory interpretation is to
ascertain and effectuate the intent of the Legislature. Minn. Stat. § 645.16 (2012). When
interpreting a statute, we give words and phrases their plain and ordinary meaning. Staab
v. Diocese of St. Cloud, 813 N.W.2d 68, 72 (Minn. 2012). Further, we read the statute as
a whole and give effect to all of its provisions. In re Welfare of J.J.P., 831 N.W.2d at
264.
We first address whether Minn. Stat. § 151.21, subd. 4, creates a private cause of
action in favor of a union-sponsored health and welfare benefit plan. To answer that
question, we will review the relevant case law regarding when a statute creates a private
cause of action, then examine the statutory framework of the Pharmacy Practice Act to
provide context, and last examine the relevant statute, Minn. Stat. § 151.21, subd. 4.
We have addressed the question of when a statute creates a private cause of action
to enforce its terms in two recent cases. Krueger v. Zeman Constr. Co., 781 N.W.2d 858,
863 (Minn. 2010); Becker v. Mayo Found., 737 N.W.2d 200, 207 (Minn. 2007). In
Becker, we considered, among other issues, whether the Child Abuse Reporting Act
(CARA), Minn. Stat. § 626.556 (2012), creates a private cause of action against a
mandatory reporter who fails to report suspected child abuse. 737 N.W.2d at 207-09.
We observed that “[a] statute does not give rise to a civil cause of action unless the
language of the statute is explicit or it can be determined by clear implication.” Id. at 207
(citing Larson v. Dunn, 460 N.W.2d 39, 47 n.4 (Minn. 1990)). We concluded that CARA
does not expressly or by clear implication create a private cause of action against a
10
mandatory reporter who fails to report suspected child abuse. Id. at 207-08. We
reasoned that the Legislature expressly created criminal, but not civil, penalties for failure
to report and also expressly created two private causes of action for violations of statutory
provisions near the section at issue, indicating that the Legislature did not intend to create
an implied private cause of action against a mandatory reporter. Id. at 208-09.
In Krueger, we considered whether the Minnesota Human Rights Act, Minn. Stat.
§ 363A.17 (2012), creates a private cause of action in favor of a person not a party to a
contract for discrimination in the performance of the contract. 781 N.W.2d at 863. We
observed that when interpreting a statute to determine if it creates a cause of action, we
“determine whether the statute actually provides a cause of action to a particular class of
persons.” Id. We also observed that we have been reluctant to recognize causes of action
under a statute where they do not clearly exist. Id.5 We concluded that section 363A.17
is unambiguous and does not provide a cause of action for a person not a party to a
contract. Id. at 863-64. We reasoned that under a plain reading of the statute, the
5
See, e.g., Bruegger v. Faribault Cnty. Sheriff’s Dep’t, 497 N.W.2d 260, 262
(Minn. 1993) (holding that the Crime Victims Reparations Act does not, either expressly
or impliedly, provide a cause of action against law enforcement agencies that fail to
inform crime victims of their rights to seek reparations); Larson v. Dunn, 460 N.W.2d 39,
47 n.4 (Minn. 1990) (concluding that a statute criminalizing child abduction by the
noncustodial parent did not explicitly or implicitly authorize a civil cause of action);
Morris v. Am. Family Mut. Ins. Co., 386 N.W.2d 233, 235 (Minn. 1986) (holding that the
plaintiff could not state a cause of action under the Unfair Claims Practices Act because
the Act said nothing about a private person having a right to sue the insurer for a
violation of the Act); Nemec v. Brown, 150 Minn. 252, 254, 184 N.W. 956, 957 (1921)
(holding that a former prisoner did not state a valid cause of action against a sheriff for
the sheriff’s violation of a statute that created a duty and provided criminal penalties for
breach of the duty but said nothing about civil liability).
11
Legislature intended to provide contracting parties with the right to make and perform
their contracts without being subject to illegal discrimination, but the Legislature did not
provide remedies to persons other than the contracting parties. Id. at 864.
We next examine the relevant portions of the Pharmacy Practice Act of 1988,
Minn. Stat. §§ 151.01-.40 (2012), to provide context. The Act establishes the State Board
of Pharmacy and gives it broad powers to regulate the practice of pharmacy, including
the licensure and discipline of pharmacists and pharmacies, and to regulate the
manufacture and wholesale and retail sale of drugs, within the state. Minn. Stat.
§§ 151.02, 151.06. Section 151.21 regulates, among other things, when a pharmacist
may substitute prescription drugs and medicines different from the one prescribed, the
pricing of prescription drugs, and signage at the pharmacy. Subdivision 3 provides:
When a pharmacist receives a [prescription] on which the prescriber has not
personally written in handwriting “dispense as written” or “D.A.W.,” . . .
and there is available in the pharmacist’s stock a less expensive generically
equivalent drug that, in the pharmacist’s professional judgment, is safely
interchangeable with the prescribed drug, then the pharmacist shall, after
disclosing the substitution to the purchaser, dispense the generic drug,
unless the purchaser objects.
Minn. Stat. § 151.21, subd. 3. Thus, when the statutory criteria are satisfied, a pharmacist
“shall, after disclosing the substitution to the purchaser, dispense the generic drug, unless
the purchaser objects.” Id.
With the relevant case law and statutory framework in mind, we turn to Minn.
Stat. § 151.21, subd. 4, which describes the pricing requirements at issue in this case. It
provides:
12
A pharmacist dispensing a drug under the provisions of subdivision 3 shall
not dispense a drug of a higher retail price than that of the brand name drug
prescribed. If more than one safely interchangeable generic drug is
available in a pharmacist’s stock, then the pharmacist shall dispense the
least expensive alternative. Any difference between acquisition cost to the
pharmacist of the drug dispensed and the brand name drug prescribed
shall be passed on to the purchaser.
Minn. Stat. § 151.21, subd. 4 (emphasis added).
The Funds concede that Minn. Stat. § 151.21, subd. 4, does not expressly set forth
a private cause of action but contend that the statute provides for a private cause of action
by clear implication.6 Specifically, they argue that a cause of action is implied because
subdivision 4 creates a direct beneficial right for purchasers of generic prescription drugs,
and a private cause of action is the only way to enforce that right. Moreover, they
contend that the Pharmacies violated their rights under subdivision 4 by failing to pass on
the difference between the acquisition costs of brand name drugs and substituted generic
drugs. It is true that even if the Legislature does not expressly create a statutory private
cause of action, it may provide one by “clear implication.” Becker, 737 N.W.2d at 207.
But we are reluctant to recognize a private cause of action where one does not clearly
exist in the statute. Krueger, 781 N.W.2d at 863. In determining whether a private cause
6
The Funds urge us to apply the three-factor test first enumerated and applied in
Counties of Blue Earth v. Minn. Dep’t of Labor & Indus., 489 N.W.2d 265, 268 (Minn.
App. 1992), to ascertain whether Minn. Stat. § 151.21, subd. 4, creates an implied cause
of action. This three-factor test is based on a similar four-factor test articulated by the
United States Supreme Court in Cort v. Ash, 422 U.S. 66, 78 (1975). The Pharmacies
argue that the factors are outdated, and legislative intent is dispositive. We conclude that
in this case, the Legislature’s intent is clear and dispositive under either party’s proposed
test. See Becker, 737 N.W.2d at 207 n.4 (declining to apply the Cort test where
legislative intent was dispositive).
13
of action is clearly implied, we look to the language of the statute in question and its
related sections. See Krueger, 781 N.W.2d at 863-64; Becker, 737 N.W.2d at 207-08.
Section 151.21, subdivision 4, does impose upon pharmacists a duty to pass on
any acquisition cost savings of generic prescription drugs, but the text does not address
the topic of a private cause of action in favor of purchasers of generic drugs. As a result,
we cannot say that such a cause of action is clearly implied. Indeed, to do so would
require us to add words to the statute that the Legislature did not supply. See Krueger,
781 N.W.2d at 864 (concluding that we “cannot read into the statute any additional
rights” beyond those expressly enumerated); Premier Bank v. Becker Dev., LLC, 785
N.W.2d 753, 760 (Minn. 2010) (“If the legislature fails to address a particular topic, our
rules of construction ‘forbid adding words or meaning to a statute’ that are purposely
omitted or inadvertently overlooked.” (quoting Genin v. 1996 Mercury Marquis, 622
N.W.2d 114, 117 (Minn. 2001))).
Other provisions of the Act and relevant statutes provide the State Board of
Pharmacy with broad authority to enforce section 151.21, subdivision 4. Specifically, the
Board has the authority to enforce Minn. Stat. § 151.21, subd. 4, by suing a pharmacist
for injunctive relief for violating the subdivision, see Minn. Stat. § 214.11 (2012);
referring complaints regarding licensed pharmacists to the Attorney General for
investigation, see Minn. Stat. § 214.103, subd. 5 (2012); taking action against the license
of a pharmacist or the registration of a pharmacy for violating subdivision 4 of section
151.21, see Minn. Stat. § 151.06, subd. 1(a)(7)(ix); and imposing a civil penalty for each
violation of subdivision 4, to “deprive a licensee or registrant of any economic advantage
14
gained by reason of the violation,” see Minn. Stat. § 151.06, subd. 5. Moreover, any
person violating any portion of the Act “shall be guilty of a misdemeanor.” Minn. Stat.
§ 151.29. These express criminal and civil penalties demonstrate that the Legislature did
not intend to provide an implied private civil cause of action against a pharmacist or
pharmacy that violates Minn. Stat. § 151.21, subd. 4. See Becker, 737 N.W.2d at 207
(“ ‘[I]t is an elemental canon of statutory construction that where a statute expressly
provides a particular remedy or remedies, a court must be chary of reading others into
it.’ ”) (quoting Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11, 19 (1979)).
Additionally, the Legislature expressly created a private cause of action to enforce
a different portion of the Act. Specifically, any person injured by unfair price
discrimination may bring a private cause of action to enforce the Act. Minn. Stat.
§ 151.061, subd. 2 (providing that “[a]ny person injured by unfair discrimination as
defined in subdivision 1 may bring a civil action and recover damages”). The presence of
an express cause of action in a related section of the statute at issue “demonstrates that
the [L]egislature expressly creates civil liability when it intends to do so.” Becker, 737
N.W.2d at 208. Because Minn. Stat. § 151.061, subd. 2, expressly creates a private cause
of action to enforce another provision of the Act, it logically follows that the Legislature
did not intend to create a private cause of action to enforce Minn. Stat. § 151.21, subd. 4.
Based on this analysis, we conclude that Minn. Stat. § 151.21, subd. 4, does not
create a private cause of action in favor of the purchaser of generic prescription drugs
against a pharmacist or pharmacy. Specifically, the language of subdivision 4 does not
expressly or by clear implication create a private cause of action. Moreover, the
15
Legislature provided broad authority to the State Board of Pharmacy, as well as the
provision of criminal penalties, to enforce the pharmacist’s duty to pass on the acquisition
cost savings of generic prescription drugs. Finally, Minn. Stat. § 151.061, subd. 2,
expressly provides a private cause of action for a violation of the unfair price
discrimination portion of the Act, which demonstrates that the Legislature did not intend
to create an implied private cause of action under Minn. Stat. § 151.21, subd. 4.
Consequently, we hold that the district court did not err when it dismissed the Funds’
claim brought under the Pharmacy Practice Act.
II.
The Pharmacies argue that the court of appeals erred in concluding that the Funds
pleaded an actionable claim for a violation of Minnesota’s Consumer Fraud Act (CFA),
Minn. Stat. § 325F.69, subd. 1, sufficient to survive a motion to dismiss under Rule 12.
When a case is dismissed pursuant to Minn. R. Civ. P. 12.02(e) for failure to state a claim
for which relief can be granted, we review the legal sufficiency of the claim de novo to
determine whether the complaint sets forth a legally sufficient claim for relief. Hebert v.
City of Fifty Lakes, 744 N.W.2d 226, 229 (Minn. 2008). Rule 8.01 provides that a
complaint must “contain a short and plain statement of the claim showing that the pleader
is entitled to relief and a demand for judgment for the relief sought.” Minn. R. Civ. P.
8.01. We consider only those facts alleged in the complaint, accepting those facts as true
and construing all reasonable inferences in favor of the nonmoving party. In re
Individual 35W Bridge Litig., 806 N.W.2d 811, 815 (Minn. 2011). A claim is sufficient
to survive a motion to dismiss “if it is possible on any evidence which might be
16
produced, consistent with the pleader’s theory, to grant the relief demanded.” N. States
Power Co. v. Franklin, 265 Minn. 391, 395, 122 N.W.2d 26, 29 (1963); accord Bahr v.
Capella Univ., 788 N.W.2d 76, 80 (Minn. 2010). But a legal conclusion in the complaint
does not bind us, and a plaintiff must provide more than mere labels and conclusions.
Bahr, 788 N.W.2d at 80.
The Funds’ consumer fraud claim is brought pursuant to Minn. Stat. § 8.31, subd.
3a (2012) (the Private AG Statute), for alleged violations of the CFA.7 Specifically, the
Funds allege that the Pharmacies failed to pass on the entire acquisition cost savings of
generic prescription drugs in violation of Minn. Stat. § 151.21, subd. 4, and unlawfully
concealed from the Funds the Pharmacies’ prescription-drug acquisition costs. The
Pharmacies argue that the district court’s dismissal of the Funds’ direct claim under the
Pharmacy Practice Act renders the Funds’ consumer fraud claim not viable. Specifically,
the Pharmacies contend that because the Funds cannot bring a direct cause of action to
enforce section 151.21, subdivision 4, it logically follows that they cannot bring a
statutory consumer fraud claim under the CFA to enforce section 151.21, subdivision 4.
Alternatively, the Pharmacies argue that the Funds’ consumer fraud claim fails as a
matter of law because the complaint does not allege that the Pharmacies affirmatively
misrepresented a material fact, or concealed a material fact that they had a duty to
disclose. We will address each argument in turn.
7
For ease of reference, we will refer to the Funds’ claim brought under the Private
AG Statute as their consumer fraud claim.
17
A.
We first address whether the Funds’ consumer fraud claim brought pursuant to the
Private AG Statute is actionable in light of our decision to affirm the dismissal of the
Funds’ claim under the Pharmacy Practice Act. The Private AG Statute provides that
“any person injured by a violation of” several enumerated statutes, including Minn. Stat.
§ 325F.69, “may bring a civil action and recover damages, together with costs and
disbursements, including costs of investigation and reasonable attorney’s fees.” Minn.
Stat. § 8.31, subd. 3a. Thus, a private party may bring a claim under the Private AG
Statute for a violation of section 325F.69, subdivision 1, which provides:
The act, use, or employment by any person of any fraud, false pretense,
false promise, misrepresentation, misleading statement or deceptive
practice, with the intent that others rely thereon in connection with the sale
of any merchandise, whether or not any person has in fact been misled,
deceived, or damaged thereby, is enjoinable as provided in section 325F.70.
Minn. Stat. § 325F.69, subd. 1.
We have previously considered the elements necessary to plead a consumer fraud
claim under the CFA. See Grp. Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2
(Minn. 2001). In Group Health Plan, we concluded that to state a claim that the CFA has
been violated, “the plaintiff need only plead that the defendant engaged in conduct
prohibited by the [CFA] and that the plaintiff was damaged thereby.” Id. at 12. To
recover damages under the Private AG Statute for a violation of the CFA, however, the
plaintiff must plead and prove a causal relationship between the alleged injury and the
wrongful conduct that violates the statute. Id. at 13.
18
We conclude that an injured party may bring a consumer fraud claim and recover
damages under the Private AG Statute for conduct that violates section 151.21,
subdivision 4, of the Pharmacy Practice Act provided that the plaintiff pleads and proves
the required elements of a consumer fraud claim. The fact that the Pharmacy Practice
Act does not provide a private cause of action does not bar a plaintiff from bringing a
consumer fraud claim, provided that the alleged conduct is proscribed under the CFA.
Claims under the Pharmacy Practice Act and the CFA are not mutually exclusive.
Consequently, a person’s conduct may violate both section 151.21, subdivision 4, for
which there is no private cause of action, and the CFA, for which there is a private cause
of action. The dismissal of the Funds’ claim under the Pharmacy Practice Act, therefore,
does not automatically preclude them from bringing a consumer fraud claim based on
allegations that the Pharmacies’ conduct was fraudulent, misleading, or deceptive in
violation of the CFA.
B.
We next examine whether the Funds adequately pleaded facts showing that the
Pharmacies engaged in actionable conduct under the CFA. The Pharmacies contend that
the Funds’ omission-based consumer fraud claim is only actionable if the Pharmacies had
a duty to disclose the omitted or concealed information. They argue that the Funds’
consumer fraud claim fails as a matter of law because the amended complaint does not
allege that the Pharmacies affirmatively misrepresented a material fact or concealed a
material fact that they had a duty to disclose.
19
The Funds argue that the Pharmacies’ practice of overcharging for generic
prescription drugs, coupled with the Pharmacies’ concealment of facts that would allow
the Funds to know they were being overcharged, rendered the sales fraudulent,
misleading, and deceptive in violation of the CFA. Amicus Attorney General contends
that the CFA prohibits material omissions of fact but does not impose a common law
duty to disclose for the omission to be actionable. The Attorney General further argues
that the Legislature “clearly intended to make it easier to sue for consumer fraud than it
had been to sue for fraud at common law.” State ex rel. Humphrey v. Alpine Air Prods.,
Inc., 500 N.W.2d 788, 790 (Minn. 1993).
The court of appeals concluded, among other things, that in order for the Funds’
consumer fraud claim to survive a motion to dismiss, the Funds’ complaint need only
allege that the Pharmacies’ failure to disclose acquisition costs and subsequent
overcharges were material omissions, and that the Funds were not required to allege that
the Pharmacies had a duty to disclose the omitted information. Graphic Commc’ns Local
1B Health & Welfare Fund “A” v. CVS Caremark Corp., 833 N.W.2d 403, 411 (Minn.
App. 2013).
Because the Funds’ consumer fraud claim arises under section 325F.69,
subdivision 1, we look to the language of the statute to answer the question of whether an
omission-based claim is actionable and to determine what is required for the omission to
be actionable. Our goal in interpreting the language of the statute is to effectuate the
intent of the Legislature. Minn. Stat. § 645.16. In doing so, we give the words of the
statute their plain and ordinary meaning. Staab, 813 N.W.2d at 72.
20
The relevant portion of the statute prohibits “any fraud, false pretense, false
promise, misrepresentation, misleading statement or deceptive practice with the intent
that others rely thereon in connection with the sale of any merchandise.” Minn. Stat.
§ 325F.69, subd. 1. The conduct proscribed by the CFA is broad. The language of the
statute indicates that the target of the CFA is deceitful conduct in connection with the sale
of merchandise. 8 The statute encompasses “any fraud, false pretense, false promise,
misrepresentation, misleading statement or deceptive practice.” Id. (emphasis added).
The word “deceptive” in the term “deceptive practice” means “tending to deceive,” and
the root word “deceive” means “[t]o cause to believe what is not true; mislead.” The
American Heritage Dictionary of the English Language 469, 470 (5th ed. 2011). Thus,
the term “deceptive practice” refers to conduct that tends to deceive or mislead a person.
Many of the terms used in the CFA, including fraud and misrepresentation, have a
well-defined meaning at common law. See Hardin Cnty. Sav. Bank v. Hous. &
Redevelopment Auth. of City of Brainerd, 821 N.W.2d 184, 192 (Minn. 2012) (listing the
elements of a negligent misrepresentation claim); Specialized Tours, Inc. v. Hagen, 392
N.W.2d 520, 532 (Minn. 1986) (listing the elements of a fraud claim). We presume the
8
Previously, we have concluded that the CFA proscribes a broader range of conduct
than does the common law because the Legislature eliminated some of the elements of
common law fraud. See Alpine Air Prods., Inc., 500 N.W.2d at 790. For example, in
Group Health Plan, we concluded that the CFA does not require common law reliance.
621 N.W.2d at 12. Our conclusion that common law reliance is not required was
grounded in the language of the statute, which prohibits actionable conduct “ ‘whether or
not any person has in fact been misled, deceived, or damaged thereby.’ ” Id. (quoting
Minn. Stat. § 325F.69, subd.1). But we also observed that it is not the role of the court to
either extend or narrow the reach of consumer protection beyond the language of the
statute. Id. at 11.
21
Legislature was aware of the common law meaning of these terms when it enacted the
CFA. See U.S. Bank N.A. v. Cold Spring Granite Co., 802 N.W.2d 363, 372 (Minn.
2011). Under the common law, a party may be liable for fraud either by making an
affirmative statement that is false or by concealing or not disclosing facts under certain
circumstances. See M.H. v. Caritas Family Servs., 488 N.W.2d 282, 289 (Minn. 1992);
accord U.S. Bank N.A., 802 N.W.2d at 373. Our jurisprudence with respect to omission-
based claims reflects the common law principle that for an omission to be actionable, it
must be material to the transaction, U.S. Bank N.A., 802 N.W.2d at 373, and the party
concealing the fact must have been under a legal or equitable obligation to communicate
the fact to the other party, Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179, 190
(Minn. 1999); Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 366, 244 N.W.2d
648, 650 (1976).
Under the common law, one party to a transaction has no duty to disclose material
facts to the other party. Klein v. First Edina Nat’l Bank, 293 Minn. 418, 421, 196
N.W.2d 619, 622 (1972). But in Klein, we recognized that special circumstances may
trigger a duty to disclose material facts and gave three examples of such special
circumstances. First, a person who has a confidential or fiduciary relationship with the
other party to the transaction must disclose material facts. Id. at 421, 196 N.W.2d at 622.
Second, one who has special knowledge of material facts to which the other party does
not have access may have a duty to disclose those facts to the other party. Id. at 421, 196
N.W.2d at 622. Third, a person who speaks must say enough to prevent the words
communicated from misleading the other party. Id. at 421, 196 N.W.2d at 622. The
22
examples in Klein are not intended to be exclusive. See Boubelik v. Liberty State Bank,
553 N.W.2d 393, 398 (Minn. 1996).
We conclude that an omission-based consumer fraud claim is actionable under the
CFA when special circumstances exist that trigger a legal or equitable duty to disclose the
omitted facts. 9 The CFA did not eliminate the common law requirement that for an
omission-based claim to be actionable, there must be a special circumstance that triggers
a duty to disclose the omitted facts. The CFA prohibits “any fraud, false pretense, false
promise, misrepresentation, misleading statement or deceptive practice.” Minn. Stat.
§ 325F.69, subd. 1. There is nothing in the text of the statute that demonstrates an intent
9
Other courts interpreting similar consumer fraud statutes have likewise concluded
that a claim based on the omission of material facts is only actionable if there is a
corresponding duty to disclose the omitted facts. See, e.g., Hendricks v. DSW Shoe
Warehouse Inc., 444 F. Supp. 2d 775, 782 (W.D. Mich. 2006) (interpreting the Michigan
Consumer Protection Act and concluding that Michigan courts would not recognize a
claim under the act for an omission “in the absence of a duty of disclosure”); State ex rel.
Horne v. AutoZone, Inc., 258 P.3d 289, 299 (Ariz. Ct. App. 2011) (interpreting the state
consumer fraud statute and concluding “when the law imposes a duty to disclose certain
information, the failure to disclose the information can constitute an affirmative
deception under the act”), vacated in part by 275 P.3d 1278 (Ariz. 2012); Daugherty v.
Am. Honda Motor Co., 51 Cal. Rptr. 3d 118, 125 (Cal. Ct. App. 2006) (interpreting the
Consumer Legal Remedies Act and concluding that for an omission to be actionable it
“must be contrary to a representation actually made by the defendant, or an omission of a
fact the defendant was obliged to disclose”); Normand Josef Enter., Inc. v. Conn. Nat’l
Bank, 646 A.2d 1289, 1307-08 (Conn. 1994) (interpreting the Connecticut Unfair Trade
Practices Act and concluding that “[a] failure to disclose can be deceptive only if, in light
of all the circumstances, there is a duty to disclose”); Williamson v. Amrani, 152 P.3d 60,
73 (Kan. 2007) (interpreting the Kansas Consumer Protection Act and concluding that in
order for failure to disclose a material fact to constitute a deceptive act, “there must be a
duty to disclose the fact”); Judge v. Blackfin Yacht Corp., 815 A.2d 537, 542-43 (N.J.
Super. Ct. App. Div. 2003) (entering judgment notwithstanding the verdict in favor of
defendant where plaintiff’s consumer fraud claim was based on acts of omission but
defendant had no duty to disclose).
23
to abrogate the common law rule that an omission is actionable only under special
circumstances that trigger a duty to disclose. See Bloom v. Am. Express Co., 222 Minn.
249, 254, 23 N.W.2d 570, 574 (1946) (“Statutes are enacted . . . with regard to the
existing principles of the common law and of equitable jurisprudence, and should be so
construed as to harmonize with the existing body of law, unless the intention to change or
repeal it is apparent.” (alteration in original) (citation omitted) (internal quotation marks
omitted)); see also Staab, 813 N.W.2d at 73. We therefore interpret the CFA consistent
with the common law duty-to-disclose rule.
Based upon our analysis set forth above, we conclude that a plaintiff bringing an
action under the CFA must plead and prove not only an omission of material fact, but
also special circumstances that trigger a duty to disclose. It is not enough that the
plaintiff simply alleges that the defendant omitted material information in a transaction.
Unlike other state consumer fraud statutes, Minnesota’s CFA does not make material
omissions actionable.10 Consequently, we reject the court of appeals’ conclusion and the
Funds’ argument that an omission is actionable so long as the omission is material.11
10
See, e.g., Kan. Stat. Ann. § 50-626(b)(3) (Supp. 2013) (defining deceptive acts and
practices to include “the willful failure to state a material fact, or the willful concealment,
suppression or omission of a material fact”); Md. Code Ann., Commercial Law § 13-
301(9) (LexisNexis 2013) (defining “unfair or deceptive trade practices” to include,
among other things, any “[d]eception, fraud, false pretense, false promise,
misrepresentation, or knowing concealment, suppression, or omission of any material
fact”); N.J. Stat. Ann. § 56:8-2 (West 2012) (declaring “[t]he act, use or employment by
any person of any unconscionable commercial practice, deception, fraud, false pretense,
false promise, misrepresentation, or the knowing concealment, suppression or omission
of any material fact” to be an unlawful practice). Minnesota’s CFA does not contain
similar language prohibiting material omissions. When interpreting the CFA, we will not
(Footnote continued on next page.)
24
C.
Having concluded that an omission of material fact is actionable under the CFA
when there are special circumstances that trigger a legal or equitable duty to disclose the
omitted facts, we next examine the amended complaint to determine whether it sets forth
a legally sufficient claim for relief. The Funds argue that the Pharmacies had a duty to
disclose their prescription-drug acquisition costs to inform the Funds that the Pharmacies
were overcharging them and to prevent the Funds from being misled.
We conclude that the Funds’ claim fails as a matter of law. The Funds failed to
allege any facts that would trigger a duty for the Pharmacies to disclose additional facts.
Specifically, there is nothing in the Pharmacy Practice Act that required the Pharmacies
to disclose their prescription-drug acquisition costs. Indeed, section 151.21, subdivision
4, merely provides that whenever a pharmacist dispenses a generic prescription drug in
lieu of a prescribed brand name drug, “[a]ny difference between acquisition cost to the
pharmacist of the drug dispensed and the brand name drug prescribed shall be passed on
(Footnote continued from previous page.)
add words to the statute that the Legislature did not supply. See Grp. Health Plan, Inc.,
621 N.W.2d at 11; accord Johnson v. Cook Cnty., 786 N.W.2d 291, 295 (Minn. 2010).
11
We acknowledge that federal courts applying Minnesota law and interpreting the
CFA have suggested that an omission-based consumer fraud claim is actionable even
absent a duty to disclose, so long as the omission is material. See Minn. ex rel. Hatch v.
Fleet Mortg. Corp., 158 F. Supp. 2d 962, 967 (D. Minn. 2001) (stating that for an
omission to be actionable under the CFA, “the omission must be material,” meaning that
the omission “must naturally affect the person’s decision or conduct” (citations omitted));
see also Khoday v. Symantec Corp., 858 F. Supp. 2d 1004, 1018 n.17 (D. Minn. 2012)
(same). To the extent that these decisions suggest that a CFA claim may be based on a
material omission, without more, we disagree. Instead, the omission must be material
and there must have been special circumstances that triggered a duty to disclose.
25
to the purchaser.” The Pharmacy Practice Act imposes upon pharmacists or pharmacies a
duty to disclose information in other instances, but does not require disclosure of
prescription-drug acquisition cost data. 12 Therefore, the Pharmacies did not violate a
statutory duty to disclose.
Moreover, the complaint does not allege facts that would trigger a common law
duty to disclose additional facts under any of the special circumstances set forth in Klein.
The Funds do not allege that they have a confidential or fiduciary relationship with the
Pharmacies, and therefore this special circumstance is not applicable. See Klein, 293
Minn. at 421, 196 N.W.2d at 622. The Funds argue, however, that the Pharmacies had
special knowledge of their prescription-drug acquisition costs, and therefore had a duty to
disclose these costs to the Funds. See id. at 421, 196 N.W.2d at 622. But the example
regarding special knowledge of material facts is a fraud theory that we have rarely
addressed. L & H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 380 (Minn. 1989).
Indeed, we have only applied the special-knowledge theory in one case, and that case is
factually distinguishable. See Richfield Bank & Trust Co., 309 Minn. at 367-69, 244
N.W.2d at 651-52 (concluding that a bank that had actual knowledge that one of its
12
Specifically, a pharmacist must notify the purchaser if the pharmacist is dispensing
a drug other than the brand name drug prescribed, Minn. Stat. § 151.21, subd. 3; a
pharmacy must post a sign that states the pharmacy will substitute a less expensive
generic drug product whenever possible, Minn. Stat. § 151.21, subd. 4a; a pharmacist
dispensing a brand name drug must disclose to a purchaser whenever there is a less
expensive, generically equivalent drug available, Minn. Stat. § 151.21, subd. 6; and a
pharmacist must, in certain circumstances, disclose to a patient the patient’s co-payment
amount and the pharmacy’s own customary price or amount the pharmacy will be paid
for the drug by a plan, Minn. Stat. § 151.214.
26
depositors was irretrievably insolvent and thus engaging in fraud by entering into a
contract with the plaintiff had a duty to disclose the depositor’s insolvency to the
plaintiff). Unlike the bank in Richfield Bank, there is no allegation that the Pharmacies
had actual knowledge of fraudulent conduct.
Finally, we consider the third example in Klein, which is that a person who speaks
must say enough to prevent the words spoken from misleading the other party. 293
Minn. at 421, 196 N.W.2d at 622. The Funds contend that this example is met here,
pointing to the allegations in their amended complaint that the Pharmacies overcharged
for generic prescription drugs. Notably, there is no allegation that the Pharmacies made
any representation to the Funds other than to state the price of the dispensed generic
prescription drug. But merely stating the purchase price of a product does not constitute
a violation of the CFA unless the defendant omits material facts that render the words
spoken false, deceptive, or misleading. Put differently, merely stating the purchase price
is not deceptive and does not trigger a duty to disclose. At bottom, the Funds are
attempting to recast their claim under the Pharmacy Practice Act as a CFA claim. But a
violation of the Pharmacy Practice Act, without more, does not constitute a violation of
the CFA.13 Instead, a plaintiff must allege facts that constitute a violation of the CFA.
13
It is true that the Legislature has expressly provided that violations of certain
statutes regulating certain industries constitute a violation of the CFA. See, e.g., Minn.
Stat. § 325A.09, subd. 7 (2012) (“[A]ny invention developer who is found to have
violated sections 325A.01 to 325A.10 shall be deemed in violation of [the CFA], and the
provisions of [the Private AG Statute] shall apply.”); Minn. Stat. § 325F.63, subd. 3
(2012) (providing that a violation of sections 325F.56 to 325F.66, statutes regulating
motor vehicle repair shops, “shall be deemed a violation of [the CFA]”). But there is not
(Footnote continued on next page.)
27
Specifically, a plaintiff must allege an omission of material fact involving special
circumstances that trigger a legal or equitable duty to disclose the omitted facts.
We conclude that the Funds’ amended complaint fails to state a claim under the
Consumer Fraud Act, Minn. Stat. § 325F.69, subd. 1. An actionable omission occurs
under the CFA when special circumstances exist that trigger a legal or equitable duty for
the defendant to disclose the omitted facts. The Funds’ complaint does not allege facts
that would trigger a duty to disclose. Consequently, the Funds’ complaint fails as a
matter of law to state a claim for relief under the CFA, and we therefore reverse the court
of appeals and reinstate the decision of the district court dismissing the Funds’
complaint.14
Affirmed in part, reversed in part.
PAGE, STRAS, and LILLEHAUG, JJ., took no part in the consideration or
decision of this case.
(Footnote continued from previous page.)
a similar provision providing that a violation of the Pharmacy Practice Act constitutes a
violation of the CFA.
14
In light of our decision in this case, we need not, and do not, address the
Pharmacies’ additional argument that the Funds failed to plead a causal nexus between
the Pharmacies’ alleged wrongful conduct and the Funds’ alleged injury.
28