Bolstering enforcement of state laws through private actions

By Bob Moilanen and Harry Sieben - MinnPost.com

In 2009, the Minnesota Department of Commerce brought 438 enforcement actions. Consistent with their mandate, other state departments also brought numerous enforcement actions. These actions were designed to protect Minnesota citizens and resources from various sharp practices ranging from financial fraud to adulteration of food to poaching. These enforcement activities involved criminal and civil actions, cease and desist orders, and license revocations.

In the area of consumer protection, this government-led approach to enforcement is complemented by private-sector attorneys advocating on behalf of the public interest. Known as the "private attorney general" statute, Minnesota law permits private attorneys to bring claims against those who engage in deceptive trade practices. For example, successful actions have been brought enjoining the fleecing of consumers by those who engage in false advertising or illegal bait-and-switch activities. Under the private attorney general statute, these "private" actions must confer a public benefit.

The importance of this statute is only underscored by the state's current fiscal situation. Minnesota is now facing a $6 billion budget deficit. Gov. Mark Dayton has described his efforts to prepare a budget as "miserable." Certain Republican legislators have proposed a 15 percent across-the-board cut in state spending. Against this fiscal backdrop — with spending cuts surely looming on the horizon — the ability of state agencies to effectively enforce the laws is likely to be hampered. In such an environment, leaving enforcement to a state government facing depleted resources will not work and in "reinventing" government, the critical mission of enforcement of state laws cannot be lost. Unfortunately, legislation introduced recently would do just that.

Legislation would derail courts' interpretation
In December, the Minnesota Court of Appeals issued a decision in an action involving false advertising claims against cigarette manufacturers who were pushing "light" cigarettes. This case followed another tobacco-related decision years earlier which found that "any person" could bring claims to enforce certain consumer rights under the statute and direct reliance on the wrongful conduct was not necessary. Legislation has now been introduced in the Minnesota House of Representatives and Senate to derail the courts' interpretation of the private attorney general statute and to impede the ability to bring actions on behalf of classes of consumers. This is exactly the wrong policy response at a time when cutbacks in public resources could impair the effective enforcement of laws.

Expansion — not contraction — of the private attorney general statute to include areas beyond consumer protection would be a prudent and tax-free way to protect the public in the face of government spending cuts. Each state department where reductions in enforcement personnel may occur should determine if the mission of the department would be enhanced if the private bar had the power to file lawsuits under the private attorney general statute.

For example, while the Commissioner of Commerce is tasked with the responsibility to protect against unscrupulous debt-collection practices, expanding the private attorney general statute to specifically include such claims could only enhance that department's overall mission. Similarly, allowing actions for violations of labor laws could dovetail with the work already being done by the Department of Labor and Industry. While the Agriculture Department has established rules to ensure distribution of safe food, why not permit private attorney general actions so that individual citizens could seek to enjoin the wrongful distribution of adulterated food products?

Millions of dollars recaptured for state
Further, the California Supreme Court recently ruled that government entities could enter into contingency fee arrangements with private attorneys as long as government attorneys continued to monitor and oversee the work. While infrequently used, private attorneys have recaptured millions of dollars for the State of Minnesota through securities and unfair labor practice actions. State agencies whose enforcement activities may suffer could look to that approach to help ensure that citizens in Minnesota are protected and as a means to recapture state money wrongfully taken.

Despite our representation of private claimants, enforcement of our state's statutes and rules through the employment of public employees is, of course, the best way to ensure the fair and uniform enforcement of our state's laws. However, the budget crisis may make that impossible. While no panacea, allowing the private bar to deter wrongful conduct at no expense to Minnesota taxpayers is better than having no enforcement occur at all.