Mobile Diagnostic Imaging, Inc. v. Racheal L. Hooten f/k/a Racheal L. Jones
889 N.W.2d 27
| Minn. Ct. App. | 2016Background
- MDI (Mobile Diagnostic Imaging) provided mobile MRI services and employed Hooten as a clinic manager; Hooten later left for competitor SUMA and took confidential MDI materials.
- Dahl (SUMA owner) received the materials from Hooten, filed anonymous complaints with the Minnesota Board of Chiropractic Examiners alleging chiropractors received kickbacks from MDI, and gave the materials to insurers and their counsel. Board took corrective action against some chiropractors; insurers later sued MDI in federal court (claims later dismissed).
- MDI sued Dahl, Hooten, and SUMA for trade-secret misappropriation, tortious interference, unfair competition, conversion, civil theft, breach of contract, breach of duties, and conspiracy. Respondents counterclaimed under the Minnesota Consumer Fraud Act and asserted immunity defenses.
- The district court granted immunity to respondents under Minnesota’s anti-SLAPP statute (Minn. Stat. §§ 554.01-.05) and Minn. Stat. § 148.103 (immunity for reporting to the chiropractic board), dismissing many of MDI’s claims; SUMA’s consumer-fraud counterclaim was dismissed for failing to plead a public benefit.
- On appeal, the Court of Appeals reviewed (1) constitutionality of the anti-SLAPP procedural provision requiring pretrial factual findings, (2) scope of chiropractic-board reporting immunity under Minn. Stat. § 148.103, and (3) whether a private attorney-general consumer-fraud plaintiff must plead a public benefit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Minn. Stat. § 554.02 (anti-SLAPP) violates the right to jury trial by requiring pretrial factfinding | MDI: statute forces judge to resolve disputed facts pretrial, usurping jury role | Respondents: statute properly protects public participation and requires clear-and-convincing proof to defeat immunity | Court: statute unconstitutional on its face because it requires pretrial weighing of evidence and factual findings that invade jury’s fact-finding role; reversed anti-SLAPP-based dismissals |
| Whether Minn. Stat. § 148.103, subd. 1, grants unlimited immunity for reporting misconduct to the chiropractic board and for subsequent disclosures | MDI: immunity should not cover reports made for anti-competitive purposes or subsequent disclosures to third parties | Respondents: statute provides broad immunity for reporting to the board; Hooten and Dahl immune for providing/filing reports | Court: immunity covers the act of reporting to the board (even if in bad faith) but does not extend to later disclosures of board reports to unrelated third parties; reversed to that extent |
| Whether SUMA’s counterclaim under Minn. Stat. § 325F.69 (consumer fraud) may proceed under the private attorney-general statute without showing public benefit | SUMA: alleging chiropractors received illegal kickbacks suffices to show public benefit | MDI: SUMA’s alleged injury is purely competitive/business loss, not public benefit | Court: private attorney-general claim requires a public benefit; SUMA alleged only competitive harm to itself and failed to plead public benefit; dismissal affirmed |
| Whether SUMA is a proper private plaintiff under the Consumer Fraud Act (standing/consumer status) | SUMA: sophisticated competitor can assert claim; standing not limited to traditional consumers | MDI: SUMA’s alleged harms are business-competition losses, not consumer injuries | Court: standing not strictly limited to consumers but SUMA failed to allege public benefit to consumers; dismissal affirmed |
Key Cases Cited
- Leiendecker v. Asian Women United of Minnesota, 848 N.W.2d 224 (Minn. 2014) (interpreting anti-SLAPP burdens and requiring clear-and-convincing proof to defeat immunity)
- Davis v. Cox, 351 P.3d 862 (Wash. 2015) (Washington Supreme Court holding anti-SLAPP procedure unconstitutional where it required pretrial factual adjudication that invaded the jury function)
- Schmitz v. U.S. Steel Corp., 852 N.W.2d 669 (Minn. 2014) (jury-trial right analysis under Minnesota Constitution)
- Kinetic Co. v. Medtronic, Inc., 672 F. Supp. 2d 933 (D. Minn. 2009) (private plaintiff plausibly alleged public benefit where concealment of product defect imposed costs on third-party payers)
- Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn. 2001) (standing and public-interest considerations under consumer-protection enforcement)