of Appeals Office of Appellate Courts.
Ellison, Attorney General, Liz Kramer, Solicitor General,
Jason Pleggenkuhle, Adam Welle, Assistant Attorneys General,
Saint Paul, Minnesota, for appellant/cross-respondent.
W. Anthony, Brooke D. Anthony, Mary L. Knoblauch, Anthony
Ostlund Baer & Louwagie P.A., Minneapolis, Minnesota, for
R. Bradford, Christine E. Hinrichs, Bassford Remele, P.A.,
Minneapolis, Minnesota, for amicus curiae Minnesota Chamber
1. In a
case brought by the Attorney General under Minn. Stat. §
8.31, subd. 3a (2018), and his parens patriae power,
a causal nexus under the Minnesota Consumer Fraud Act between
fraudulent and misleading statements and harm caused to
consumers may be established without proof of direct evidence
of reliance by each consumer. Evidence showing longstanding,
pervasive, and widespread false statements about the nature
of a product, that those statements were made with an intent
to induce reliance, and that the fraudulent statements are of
the kind a consumer would be expected to rely upon under the
circumstances are relevant to show that a causal nexus has
district court did not abuse its discretion by ordering
restitution and fashioning a restitutionary remedy and claims
in part, reversed in part.
Attorney General, on behalf of the State of Minnesota, sued
two for-profit universities, the Minnesota School of
Business, Inc. and Globe University, Inc. (the Schools),
alleging that the Schools misled prospective students about
the value of criminal justice degrees offered by the schools.
The Attorney General invoked his parens patriae
power and statutory authority under Minn. Stat. § 8.31,
subd. 3a (2018), to pursue violations of the Minnesota
Consumer Fraud Act (MCFA), Minn. Stat. § 325F.69 (2018),
and the Uniform Deceptive Trade Practices Act (DTPA), Minn.
Stat. § 325D.44 (2018).
parties agree that, to prevail, the Attorney General must
establish a "causal nexus" between the Schools'
uncontested violations of the MCFA and the harm suffered by
the students who entered the Schools' criminal justice
program seeking to become police and probation officers. But
the parties disagree about the showing required to prove a
causal nexus. The court of appeals held that the evidence in
the record supported the district court's finding that
the Attorney General established a causal nexus between the
Schools' wrongful conduct and the harm identified by
testifying students but failed to establish a causal nexus as
to nontestifying students. State v. Minn. Sch. of
Bus., 915 N.W.2d 903, 910-13 (Minn.App. 2018).
Accordingly, we must decide what the Attorney General must
show to establish a causal nexus and whether the Attorney
General met that burden in this case. In addition, we must
address whether the equitable restitution process ordered by
the district court is proper.
conclude that the Attorney General proved that a causal nexus
was established between the Schools' fraudulent
statements and the harm suffered by the students. We also
hold that the district court did not abuse its discretion
when it ordered the equitable restitution process.
Accordingly, we affirm in part and reverse in part the
decision of the court of appeals.
Schools are for-profit, postsecondary educational
institutions that offer certificates and associates',
bachelors', masters', and doctoral degrees in several
different fields including criminal justice. This case focuses
on the Schools' criminal justice program.
prospective students who signed up for the criminal justice
program wanted to be either a police officer or a probation
officer. As described to prospective students and put into
practice, the criminal justice curriculum focused on police
work like crime scene investigations and many classes were
taught by former or current police officers. In marketing
materials and through admissions practices, the Schools made
statements to prospective students that graduates of their
criminal justice program were qualified to become a police
officer, or at least qualified to enter programs providing
the additional training required to become a police officer.
Some advertisements referenced mandated additional skills
training and stated that the Schools would help the student
find a program to complete the training. The Schools also
advertised that an associate's degree from their criminal
justice program qualified a student for a career as a
probation or parole officer.
the relevant time period, the Schools spent approximately
$120 million on marketing all of their programs to the public
through online advertising, other mass marketing, and sales
interactions between prospective students and admission
representatives. The Schools disseminated the information on
their website and by using media platforms to target people
interested in a career in policing. The Schools placed
advertisements for, or otherwise recruited potential students
to, their criminal justice program on sites like
PoliceLink.com, military.com, policemag.com, policeone.com,
Schools also placed advertisements for their criminal justice
program on Google and other search engines. The ads would
appear as results to search inquiries that included "law
enforcement schools" and "police schools."
These online ads made statements such as: "A degree in
criminal justice is useful in a wide variety of positions
including . . . police officer. [. . .] A degree in criminal
justice provides the industry knowledge and credentials
potential employers seek," and "When designing our
criminal justice degrees . . . we called on seasoned
professionals in . . . law enforcement. . . . And you can be
sure, as a graduate of a Globe University/Minnesota School of
Business criminal justice program, you will have those
qualifications." Other advertisements by the Schools
were accompanied by images of police officers.
Schools' claims about the value of a criminal justice
degree were false. The Schools do not contest that to become
a police officer in Minnesota, one must have either a
criminal justice degree from a program approved by the Police
Officer Standards and Training (P.O.S.T.) Board or a
bachelor's degree in any field and complete a certified
professional peace officer education (P.P.O.E.) program
offered by a college. The Schools were not P.O.S.T. Board
approved, and the Schools' credits did not transfer to
any college that offered certified P.P.O.E. programs.
Schools' statements that an associates' degree in
criminal justice would qualify a student to be a probation or
parole officer were also misleading. The Schools do not
contest that while the qualifications to become a probation
or parole officer in Minnesota vary by county, every county
requires probation officers to hold at least a bachelor's
degree as a prerequisite to employment. Many counties
(including the state's large metropolitan counties) also
require in-field experience. The Schools' criminal
justice associate's degree program did not meet these
district court conducted a 17-day bench trial on the Attorney
General's claims against the Schools. Over 60 witnesses
testified, including 15 students who had enrolled in the
criminal justice program. For example, one student testified
that he transferred into the criminal justice program because
the school "assured him that the program would allow him
to become a Minnesota police officer" and that he would
not have pursued that program had he known the school was not
P.O.S.T. certified. Another student enrolled in the criminal
justice program after being told that he could attend
training after graduating and thereafter become a Minnesota
police officer. After graduation, when he attempted to enroll
in a skills training as recommended by the Schools, he
learned that he was not eligible to attend because the School
was not P.O.S.T. certified. The 15 students' testimony
had some variations, but they all testified that, based on
statements made by the Schools (or their agents), they
enrolled in the program to become a police officer or
reviewing the evidence and testimony, the district court
found the Schools' false advertising pervasive and
characterized the Schools' practices as "a trap for
the unwary." It determined that the "evidence
[presented at trial] is sufficient to establish fraud and/or
deception in the marketing of [the Schools'] Criminal
Justice program." The district court ruled:
16. The Court concludes that [the Schools] violated the CFA .
. . by advertising and marketing their criminal justice
program as providing all or some portion of the education and
training necessary to become a Minnesota police officer. [The
Schools'] program was not in fact certified by the POST
board to permit a graduate to become a police officer, nor
was it a regionally-accredited program that permitted its
graduates to attend a PPOE or "skills training"
course to become a licensed Minnesota police officer. Yet,
[the Schools] targeted their criminal justice program to
students interested in careers as Minnesota police officers;
advertised that their program could make graduates eligible
to become police officers or participate in additional
training to do so; had recruiters recommend the program to
students who expressed an interest in becoming police
officers in Minnesota; and told prospective students that
they could become police officers or would only need
"additional training" to become police officers.
These representations were false and misleading and in
violation of the CFA . . . . In addition, [the Schools]
failed to disclose material facts.
19. The Court concludes that [the Schools] violated the CFA .
. . by marketing their criminal-justice associate's
degree program as a means for becoming a probation officer in
Minnesota . . . . [P]robation officer jobs in Minnesota at a
minimum require a bachelor's degree, and [the Schools]
knew this. Yet, [the Schools] advertised and recommended
their criminal justice associate's degree program as a
means for students to become probation officers and failed to
disclose to students material facts.
the Schools do not challenge any of these findings of fact or
conclusions of law on appeal.
district court found that the student witnesses produced by
the Attorney General "credibly testified to being
injured by these false and misleading practices." The
district court concluded that the Schools violated the MCFA
regarding students who wanted to be police officers and those
who wanted to become probation or parole officers.
the district court found that the students were harmed by
paying tuition for degrees that would not allow them to
become police or probation officers and that such economic
harm "is an inevitable and foreseeable consequence of
the misrepresentations and obfuscations in [the Schools']
marketing of the program." Consequently, the court
stated that the Attorney General proved a causal nexus
between the Schools' misrepresentations and the harm
suffered by the criminal justice program students required
under the MCFA. In its Order for Restitution, the district
court explained its reasoning:
Thus, [the Schools] argue, there is no evidence of widespread
public injury. [The Schools'] argument ignores the
Court's finding that the harm suffered by those students
was foreseeable and inevitable. [The Schools'] attempt to
understate the breadth of that finding cherry-picks the
Court's Order and misreads its intent. There can be no
question that [the Schools'] fraudulent practices caused
significant public injury to any students . . . who enrolled
in the criminal justice program with the goal of becoming a
Minnesota police or probation officer.
It stands to reason that if the Court adopts [the
Schools'] interpretation of the relevant case law, then
only consumers that are perfectly similarly-situated are
entitled to restitution even though there has been a finding
of fraud under the CFA . . . related to a specific class of
persons. Here, the [Attorney General] has proven that [the
Schools] violated the CFA . . . with respect to the marketing
of its criminal justice program. A restitutionary process, as
requested by the [Attorney General], is necessary in this
case to determine the appropriate amount of restitution for
each affected student while giving [the Schools] an
opportunity to respond to claims for restitution.
court issued an injunction and imposed other civil penalties.
The district court also ordered equitable restitution
requiring the Schools to disgorge the tuition collected from
the criminal justice program students. To assess the
proper scope of the equitable restitution remedy, the
district court established a process for determining how many
students entered the Schools' criminal justice program
with the goal of becoming a police or probation officer
because they relied on the Schools' fraudulent statements
and the amount each student paid in tuition and other fees
the Order for Restitution, students who were enrolled in the
criminal justice program during the relevant time period are
to be notified and given the opportunity to submit a claim
for restitution within 50 days. This process was put in place
for both the testifying and nontestifying students and
included the appointment of a special master under Minn.
Stat. § 8.31 and Minn. R. Civ. P. 53.07 to resolve
disputes. The process includes:
5. Substantive Guidelines. For any eligible
claimant who files a claim form representing that they
enrolled in [the Schools'] criminal justice program based
on an understanding they could become (a) a police officer in
Minnesota or (b) a parole or probation officer in Minnesota
with an associate's degree, there shall be a rebuttable
presumption of injury and causal nexus. . . . The restitution
amount for such claimants shall include (a) the amount of
tuition paid to [the Schools] by or on behalf of the
claimant, (b) payments to [the Schools] by or on behalf of
the claimant for books, enrollment or student expenses or
fees, and (c) any interest or finance charges incurred by the
claimant for student loans taken out to pay for such tuition,
expenses, or fees.
6. Process. The parties shall oversee the
claims review process and mutually agree on whether a
claimant should receive restitution and in what amount
consistent with this Order. The parties may provide or make
reasonable requests for documents regarding a claim, and
shall act promptly in conferring and determining claims. Upon
written agreement of any restitution sum, [the Schools] shall
make payment to the claimant within 7 days of the written
agreement. If the parties cannot resolve a dispute, the
matter shall be submitted to the Special Master pursuant to
the Special Master's instructions. The parties may agree
that the Special Master's decisions on disputed claims is
binding. The Special Master shall review each disputed claim
and issue a written decision to the parties determining the
amount of restitution for that student.
8. Judgment. The Attorney General's
Office may request that judgment be entered as to any unpaid
claim that has been agreed to, determined by the Special
Master and not objected to, or determined by the Court.
Schools appealed, arguing among other things that the
Attorney General "failed to prove the necessary elements
of a MCFA violation" and "the restitution order
violated Minnesota law." State v. Minn. School of
Bus., 915 N.W.2d 903, 905 (Minn.App. 2018).
court of appeals upheld the district court's restitution
order for the students who testified at trial because there
was direct evidence that those students relied on fraudulent
statements and were harmed by paying for "a degree that
did not serve its purpose-to enable them to become police or
probation officers." Id. at 909. But the court
of appeals reversed the district court's decision that
the Attorney General could recover restitution on behalf of
the nontestifying students. The court of appeals described
the district court's "rebuttable presumption"
to be employed in the restitution process as
"problematic." Id. at 910. Further, it
held that the restitution process "does not satisfy the
[S]tate's burden to prove a causal nexus" and that
it "cannot presume this element is met."
Id. at 911.
Attorney General sought review, asking us to reverse the
court of appeals' decision that the evidence failed to
show a causal nexus between the Schools' false and
misleading statements and the harm suffered by nontestifying
students. The Schools requested conditional review, arguing
that the court of appeals erred in affirming the restitution
for the testifying students because the causal nexus standard
used by the district court-the "foreseeable and
inevitable" analysis-was improper. The Schools ...