919 N.W.2d 315
Minn.2018Background
- Phone Recovery Services (relator) brought a qui tam reverse-False-Claims Act action under the Minnesota False Claims Act (MFCA), alleging telecom carriers under-collected and under-remitted statutorily imposed 911, TAM, and TAP surcharges to the State.
- The contested charges are statutory surcharges/fees: the 911 fee (Minn. Stat. § 403.11), the TAM charge (Minn. Stat. § 237.52), and the TAP surcharge (Minn. Stat. § 237.70); carriers collect them from customers and remit to the Commissioner of Public Safety per Minn. Stat. § 237.49.
- Relator alleged reverse-false-claims liability under Minn. Stat. § 15C.02(a)(4),(7) for knowingly delivering less than all money due, making false records material to an obligation to pay, or concealing/avoiding payment obligations.
- Respondents moved to dismiss under Rule 12.02(e), asserting MFCA’s tax bar (Minn. Stat. § 15C.03) precludes qui tam suits based on statutes "relating to taxation." The district court granted dismissal; the court of appeals affirmed.
- The Minnesota Supreme Court granted review to decide whether the MFCA tax bar applies to these statutorily imposed surcharges.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the MFCA tax-bar phrase "portions of Minnesota Statutes relating to taxation" is ambiguous and how it should be read | "Relating to" should be read narrowly (e.g., "about") so the tax bar does not sweep in ordinary statutory fees and leave many obligations actionable under MFCA | Broad plain-meaning reading: "relating to" covers statutes that pertain, refer, or stand in some relation to levying, assessing, or collecting taxes | Court: Phrase is unambiguous; reads "relating to taxation" to mean statutes that pertain, refer, or stand in some relation to levying, imposition, assessment, or collection of taxes. |
| Whether the statutory surcharges (911, TAM, TAP) qualify as "taxes" for purposes of the MFCA tax bar | Surrogates argue these are fees/surcharges distinct from taxes; MFCA should allow claims about statutory fees and obligations to pay | Respondents: Under Minn. Stat. § 645.44, subd. 19, "tax" includes fees/charges imposed by government; these surcharges are therefore taxes and excluded from MFCA | Court: Under Minn. Stat. § 645.44(19), fees/charges that functionally are imposed by government and are not voluntary payments are taxes; thus the surcharges are taxes and covered by the MFCA tax bar. |
| Whether the statutory definition in Minn. Stat. § 645.44 should be displaced by MFCA’s remedial purpose or an intent-based narrower reading | Relator urges remedial purpose of MFCA and legislative distinctions between fees and taxes support a narrow reading of § 15C.03 | Respondents: Definitions in § 645.44 apply across statutes unless another intent appears; MFCA language is broad and unambiguous | Court: Apply § 645.44 definitions; remedial canon not invoked because statute is unambiguous; if Legislature wanted a narrower bar it should amend the statute. |
Key Cases Cited
- Cocchiarella v. Driggs, 884 N.W.2d 621 (Minn. 2016) (statutory interpretation reviewed de novo)
- 500, LLC v. City of Minneapolis, 837 N.W.2d 287 (Minn. 2013) (construction of "relating to" and use of plain meaning)
- First Baptist Church of St. Paul v. City of St. Paul, 884 N.W.2d 355 (Minn. 2016) (distinguishing taxes from other assessments)
- In re Petition of S.R.A., Inc., 7 N.W.2d 484 (Minn. 1942) (historical definition of taxes as pecuniary charges imposed by legislative power)