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Unity Healthcare, Inc. v. County of Hennepin

United States District Court, D. Minnesota

June 25, 2015

Unity Healthcare, Inc., Dr. Thomas H. Johnson Housing With Services, Inc., and Beth Balenger, Plaintiffs,
v.
County of Hennepin, a government entity incorporated under the laws of the State of Minnesota, Hennepin County Human Services and Public Health Department, Robin Rohr, John Doe 1 through John Doe 15, Jane Doe 16 through Jane Doe 30, Meridian Services, Inc., Lucy Stewart, individually, People Incorporated, Angela Reid, individually, Carrie Davies, individually, Axis Healthcare, LLC, and Mary Blegen, individually, Defendants.

ORDER

JOAN N. ERICKSEN, District Judge.

This matter is before the Court on objections to the Magistrate Judge's April 16, 2015 Report and Recommendation. The Report and Recommendation concludes that the motion to dismiss procedures established by Minnesota's anti-SLAPP law, Minn. Stat. §§ 554.01-.05, cannot be applied in federal court because they conflict with Federal Rules of Civil Procedure 12 and 56 and violate the Seventh Amendment. It therefore recommends denying Meridian Services, Inc. and Lucy Stewart's motion to dismiss brought pursuant to the anti-SLAPP law.

The applicability of state anti-SLAPP laws in federal court has become a commonly litigated issue. See, e.g., Abbas v. Foreign Policy Grp., L.L.C., 783 F.3d 1328, 1333-35 (D.C. Cir. 2015) (holding that the District of Columbia's anti-SLAPP law could not be applied in federal court because it conflicted with Rules 12 and 56); Godin v. Schencks, 629 F.3d 79, 88 (1st Cir. 2010) (holding that Maine's anti-SLAPP law did not conflict with Federal Rules 12 and 56); U.S. ex rel. Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963, 972-73 (9th Cir. 1999) (holding that California's anti-SLAPP law did not conflict with Federal Rules 12 and 56). However, the Eighth Circuit has not addressed the issue, and it appears that no federal district court has yet ruled on the applicability of Minnesota's anti-SLAPP law in federal court.

The Court, having conducted a de novo review of the record, finds that Minnesota's anti-SLAPP law is inapplicable in this case because it conflicts with Federal Rule of Civil Procedure 56. Therefore, the Court adopts the recommendation that Defendants' anti-SLAPP motion be denied. The Court expresses no opinion as to whether the anti-SLAPP law conflicts with Rule 12, whether the law is invalid under the Seventh Amendment, or whether Defendants would prevail on their anti-SLAPP motion if the law were applicable.

BACKGROUND

Plaintiffs filed an eleven-count complaint against several Defendants, including Meridian and Stewart. Meridian and Stewart filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12 and to Minnesota's anti-SLAPP law. In a December 2, 2014 Order, the Court granted in part and denied in part the Rule 12 portion of the motion, finding that Plaintiffs properly stated defamation and tortious interference with existing contracts claims against Meridian and Stewart but dismissing the remaining claims against them. The Court referred the anti-SLAPP portion of the motion to the Magistrate Judge for a Report and Recommendation.

Minnesota's anti-SLAPP law immunizes from liability "[l]awful conduct or speech that is genuinely aimed in whole or in part at procuring favorable government action" unless the speech "constitutes a tort or a violation of a person's constitutional rights." Minn. Stat. § 554.03. After a motion is filed seeking immunity under the anti-SLAPP law, the court must determine whether the party seeking dismissal has made a threshold showing that the underlying "claim materially relates to an act of the moving party that involves public participation." Minn. Stat. § 554.02, subd. 1. If the moving party has made its threshold showing, the second step is to determine whether "the responding party has produced clear and convincing evidence that the acts of the moving party are not immunized from liability." Minn. Stat. § 554.02, subd. 2(3). The Minnesota Supreme Court has held that the responding party cannot meet its burden through reliance on the allegations but must "produce evidence to defeat an anti-SLAPP motion." Leiendecker v. Asian Women United of Minnesota, 848 N.W.2d 224, 233 (Minn. 2014). The responding party bears the burden of proof, production, and persuasion. Id. at 231. In addition, the responding party must typically meet these burdens without discovery because, upon the filing of an anti-SLAPP motion, "discovery must be suspended pending the final disposition of the motion, " unless the responding party can show "good cause" for "specified and limited discovery." Minn. Stat. § 554.02, subd. 2(1). If the moving party prevails on its anti-SLAPP motion, it is entitled to attorney fees and can petition the court for damages. Id. at § 554.04.

The Magistrate Judge recommends denying the anti-SLAPP motion because Minnesota's anti-SLAPP law conflicts with Rules 12 and 56 and violates the Seventh Amendment right to a jury trial. Meridian and Stewart filed a timely objection to the recommendation.

DISCUSSION

To resolve a conflict between state law and a Federal Rule, a court must first determine whether the Rule is "sufficiently broad' to cause a direct collision' with the state law or, implicitly, to control the issue' before the court, thereby leaving no room for the operation of that law." Burlington N. R. Co. v. Woods, 480 U.S. 1, 4-5 (1987) (quoting Walker v. Armco Steel Corp., 446 U.S. 740, 749-50, & n.9 (1980)); see also Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393, 398 (2010). If the Rule sufficiently covers the question in dispute, a court must apply the Rule unless it violates the Rules Enabling Act or the Constitution. Hanna v. Plumer, 380 U.S. 460, 470-71 (1965).

Conflicts between the Federal Rules and state anti-SLAPP laws focus, generally speaking, on Rules 12 and 56. See, e.g., Abbas, 783 F.3d at 1334. Here, the Rule 12 motions and issues have already been decided. The remaining pre-trial issues before the Court will involve Rule 56, not Rule 12. If Defendants' anti-SLAPP motion were granted, it would interfere with the Court's ability to decide potential Rule 56 issues. Accordingly, the Court focuses on the conflict between Rule 56 and Minnesota's anti-SLAPP law and sets to the side any potential conflict with Rule 12. If Rule 56 is sufficiently broad to directly collide with the anti-SLAPP law, the Court cannot apply the anti-SLAPP law, unless Rule 56 violates the Rules Enabling Act or the Constitution.

Rule 56 collides head-on with Minnesota's anti-SLAPP law for two questions at issue. The first question concerns how much discovery must occur before the Court determines whether to dismiss Plaintiffs' properly pleaded claims before trial. Rule 56 allows a party to move for summary judgment on claims, and a court must grant the motion if the movant shows there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). But, "summary judgment [must] be refused where the nonmoving party has not had the opportunity to discover information that is essential to his opposition." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5 (1986). By contrast, upon the filing of an anti-SLAPP motion under Minnesota's law, "discovery must be suspended pending the final disposition of the motion, including any appeal; provided that the court may, on motion and after a hearing and for good cause shown, order that specified and limited discovery be conducted." Minn. Stat. § 554.02, subd. 2(1).

The restrictive standard for discovery under the anti-SLAPP law is oil to the water of Rule 56's more permissive standard. Rule 56 makes discovery the norm and "ensures that adequate discovery will occur before summary judgment is considered." Metabolife Int'l, Inc. v. Wornick, 264 F.3d 832, 846 (9th Cir. 2001) (quoting Rogers v. Home Shopping Network, Inc., 57 F.Supp.2d 973, 982 (C.D. Cal. 1999)). The anti-SLAPP law makes discovery the exception and forces a "court to test the plaintiff's evidence before the plaintiff has completed discovery." Id. (quoting Rogers, 57 F.Supp.2d at 980). While the anti-SLAPP law permits further discovery upon a showing of good cause, Rule 56 does not place that hurdle in the path of a party seeking to obtain information to avoid pre-trial dismissal of its properly pleaded claims. Because the limited discovery mandated in Minn. Stat. § 554.02 collides with Rule 56, the Court cannot apply the state law's discovery rules.

In this matter, the parties have not had the opportunity to complete discovery. Under Rule 56, it is too soon for the Court to test the sufficiency of Plaintiffs' ...


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