Dakota County District Court File No. C3-02-10572
Considered and decided by Hudson, Presiding Judge, Randall, Judge, and
A claim is not barred by res judicata or collateral estoppel when claims and the parties in the previous and present litigations are not identical.
The opinion of the court was delivered by: Randall, Judge
In this appeal from a dismissal of their complaint for failure to state a claim on which relief can be granted, appellants argue that the district court improperly: (1) held that collateral estoppel barred their action; (2) held that there could be no fiduciary relationship as a matter of law; and (3) determined that class certification was improper. Because the district court based its dismissal on defensive collateral estoppel, the rule 12 dismissal is reversed and the complaint reinstated.
Appellants were members of West's Publishing Employees Preferred Stock Association (WPSA) who filed suit against the current WPSA board members (respondents). In a previous case, another group of WPSA depositors alleged that WPSA breached duties owed them by improperly distributing funds from WPSA's investments to all West employees and not just depositors. Davies v. West Publishing, 622 N.W.2d 836 (Minn. App. 2001), review denied (Minn. May 29, 2001). There, the depositors attacked the propriety of these distributions (dating from 1967-1996) and the distribution made following the decision to terminate WPSA after West was bought by The Thomson Corporation. Id. at 839.
This court answered questions certified by the district court and held that the statute of limitations applied to the claims that the distributions were improper and that the 16 distributions were separate occurrences, so the continuing violation doctrine could not apply. Id. at 841-42. We also held that the employees had no claim of misrepresentation regarding the nature or source of the distributions and, therefore, the doctrine of equitable estoppel did not apply to defeat West and WPSA's statute-of-limitations defense. Id. at 842.
Based upon our answers to the certified questions, the district court granted partial summary judgment in favor of the WPSA board members as to the distributions. That matter is still in litigation.
The present case is brought by a slightly different class of West employees (and former employees) against the members of the board of directors of WPSA instead, of WPSA itself and West. This class is composed of:
All WPSA depositors who had funds on deposit on December 18, 1992 in an amount sufficient to be entitled to receive a distribution in excess of $150 if the distribution paid on that date had been calculated and paid pro rata, based upon the amount on the depositors' accounts balances.
The complaint alleges that distributions were made in 1992 and 1996 that were not in accordance with state or federal regulations. Because of WPSA's noncompliance with securities laws, litigation counsel for West and WPSA suggested termination of WPSA rather than trying to bring it into accordance with state and federal securities regulations. (It is not clear whether it was West or WPSA that realized the problem and brought in the law firm that they both use.) "No action" letters were sent to both the state and federal regulators explaining the situation and proposing that WPSA distribute its surplus to depositors on a pro rata basis "as nearly in accordance with applicable law as can be done at this time." The complaint alleges that in October 1998, WPSA's board took actions including consultations with counsel and no-action letters. Further, it alleges that the board members failed to act prior to December 17, 1998, and allowed the statute of limitations to run out on any claim relating to the 1992 distribution before giving notice of the legal problems to WPSA members. (This is why the class now is composed of those who had something at stake at the time of the 1992 distribution). ...