Ronald Peterson, et al., Respondents, vs. BASF Corporation, a foreign corporation, Appellant.

Ronald Peterson, et al., Respondents, vs. BASF Corporation, a foreign corporation, Appellant. A04-1553, Court of Appeals Unpublished, April 26, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-1553

 

 

Ronald Peterson, et al.,

Respondents,

 

vs.

 

BASF Corporation,

a foreign corporation,

Appellant.

 

Filed April 26, 2005

Affirmed; motion granted

Toussaint, Chief Judge

 

Norman County District Court

File No. C2-97-295

 

 

Douglas J. Nill, Douglas J. Nill, P.A., 1100 One Financial Plaza, 120 South Sixth Street, Minneapolis, MN  55402; and

 

Hugh V. Plunkett, III, Phoenician East, 4723 North 65th Street, Scottsdale, AZ  85251; and

 

J. Michael Schwartz, Lockridge Grindal Nauen, P.L.L.P., 100 Washington Avenue South, Suite 2200, Minneapolis, MN  55401 (for respondents)

 

Winthrop A. Rockwell, John P. Borger, Bruce Gregory Jones, John P. Mandler, Faegre & Benson, L.L.P., 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN  55402 (for appellant)

 

            Considered and decided by Halbrooks, Presiding Judge; Toussaint, Chief Judge; and Hudson, Judge.

U N P U B L I S H E D   O P I N I O N

TOUSSAINT, Chief Judge

            Appellant appeals from a post-judgment order determining that (a) appellant did not have standing to participate in proceedings relating to distribution of the common fund; and (b) if unclaimed funds remain after distribution, appellant will have the opportunity to argue that it has standing to object to the proposed final distribution of those funds.  Because appellant did not have standing to participate in distribution of the common fund and because the issue of final distribution of unclaimed funds is not yet ripe, we affirm.

D E C I S I O N

            In this consumer-fraud class action appeal arising from a nationwide class action in which respondents, a group of farmers (farmers), asserted that appellant BASF Corporation (BASF) violated the New Jersey Consumer Fraud Act (NJCFA), N.J. Stat. Ann. §§ 56:8-1-56:8-116 (West 2002).  On April 2, 2002, following a jury trial, the district court entered a judgment against BASF totaling over $52 million.     

            After the supreme court affirmed the judgment, the farmers notified BASF that they intended to stop serving BASF with motions addressing distribution of the common fund.  In the event that there were any unclaimed funds after distribution, the farmers indicated they would notify BASF, but noted that this was unlikely because the farmers intended to propose various methods of distribution that would completely consume the common fund.

            BASF moved the district court for an order requiring the farmers to continue to serve BASF with all papers filed with the district court, arguing that it had standing to participate in the distribution proceedings.  The farmers then moved for an order ruling that (1) the court had addressed BASF's post-judgment standing in its April 2, 2002, judgment; (2) BASF had, therefore, waived this issue by failing to raise it in its appeal from the judgment; and (3) the farmers need only notify and serve BASF with motions relating to any unclaimed funds after distribution of the common fund.

            On July 7, 2004, the district court ruled that the farmers "need only notify and serve [BASF] with common fund distribution motions . . . if there are any unclaimed funds after distribution of the common fund."  In that event, the court held that BASF may argue whether it has standing to object to the farmers' proposed final distribution of any unclaimed funds.  The court also indicated that in its April 2, 2002 judgment, it intended that BASF's post-judgment standing, relative to the distribution of any funds upheld on appeal, would be limited to the issue of those unclaimed funds remaining after final distribution of the common fund. 

I.

Standing - Ripeness

            We initially must address whether the issue of standing was ripe when BASF appealed from the April 2, 2002 judgment and whether BASF waived the issue by failing to raise it in its earlier appeal.

            If an issue was ripe for review in an earlier appeal but was not raised, it may be deemed waived in the later appeal.  Peterson v. BASF Corp., 675 N.W.2d 57, 66-67 (addressing issue raised in petition for review) (Minn. 2004), pet. for cert. filed, 73 U.S.L.W. 3076 (U.S. July 16, 2004) (No. 04-81).  Our review of the judgment shows that the district court did not specifically rule as to whether BASF had standing to participate in the proceedings relating to the distribution of the common fund, even if, as it indicated in its later order, it may have intended to do so.  An appellate court will not consider an issue "even though the question was raised below, if it was not passed on by the trial court."  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (quotation omitted).  Consequently, the issue was not ripe for appeal from the judgment and this court could not have considered it at that time.  BASF did not waive the issue by failing to raise it in the earlier appeal.

II.

Standing - Merits

            The district court in its July 7, 2004, order indicated that BASF did not have standing to participate in proceedings relating to the distribution of the common fund.  Standing is a question of law, which we review de novo.  Britamco Underwriters, Inc. v. A & A Liquors of St. Cloud, 649 N.W.2d 867, 870 (Minn. App. 2002). 

            BASF argues that they own the common fund until the individual claimants can prove that they established an "ascertainable loss" under the NJCFA, N.J. Stat. Ann. § 56:8-19.  Judgment was entered on the jury's award of damages to the farmers.  A judgment "means the final determination of the rights of the parties in an action or proceeding."  Minn. R. Civ. P. 54.01.  "Generally, a judgment becomes final when the appellate process is terminated or the time for appeal has expired."  Johnson v. Gray, 533 N.W.2d 57, 60 (Minn. App. 1995); see Mattson v. Underwriters at Lloyds of London, 414 N.W.2d 717, 720 (Minn. 1987) (describing finality of appellate judgments).[1]

            Despite the finality of the judgment, BASF argues that because the verdict found aggregate rather than individual damages, the complete chain of liability has not been established until the individual claimants come forward and prove the amount of their loss pursuant to the NJCFA.  See N.J. Stat. Ann. § 56:8-19.  It argues that it has a due-process right to notice and an opportunity to participate in the distribution hearings, based on its theory that it has a property interest as to any unclaimed funds after distribution is complete.  See Sisson v. Triplett, 428 N.W.2d 565, 568 (Minn. 1988) (holding that basic requirements of due process are notice and opportunity for an appropriate hearing).

            To address BASF's claims, we must review the award of damages in a class-action suit.  After there is a showing of the defendant's liability to the class, class members can seek monetary recovery either through individual proof of losses or through common proof of the defendant's aggregate damage liability to the class.  3 Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 10:17 at 517 (4th ed. 2002).  Here, the farmers sought damages at trial through common proof of BASF's aggregate damage liability to the class.  This stage of trial to establish damages is conducted "strictly in accordance with accepted evidentiary standards" for determination of damages suffered or profits unjustly awarded at the expense of class members.  Id. § 10:17 at 517.  The farmers proved, and the jury found, aggregate damages of $15 million.  "When aggregate damages for the class are awarded, the litigation is ended from the defendant's standpoint except for the payment of the judgment or appeal therefrom."  Id.

            In the next stage of litigation, the class-wide damage award must be distributed to the plaintiffs.  Id.  "This stage is a nonadversary proceeding.  The entire aggregate damages recovery may be able to be distributed to class members without undue difficulty or expense."  Id.  This may be based on information such as the defendant's records, public data, per capita distribution, or average damage distribution.  Id. § 10:12 at 505-07.  If individual proof of claims is necessary, this can be processed through the use of a special master or a court-appointed committee of counsel.  Id. § 10:12 at 507.  "[A] lesser standard of proof may be applied without jeopardizing the defendant's due-process rights, the defendant having been given full opportunity to challenge damages on a class basis at the trial."  Id.  BASF fully participated in the trial on the merits at which aggregate damages were decided by the jury, according it the process that was due.  Its claim that it has a due process right to participation in the distribution stage after judgment has been entered has no merit.

            BASF asserts, however, that the Supreme Court has recognized that a defendant in a litigated class action has standing to object to a proposed common fund distribution because that distribution would reduce the defendants' potential reversionary interest in unclaimed portions of that fund.  See Boeing Co. v. Van Gemert, 444 U.S. 472, 100 S. Ct. 745 (1980).  BASF notes that after Boeing was remanded, the district court ultimately directed that the undisbursed balance of the common fund be returned to the defendant.  See Van Gemert v. Boeing Co., 739 F.2d 730, 733 (2d Cir. 1984).

            In Boeing, the issue was "whether a proportionate share of the fees awarded to lawyers who represented the successful class may be assessed against the unclaimed portion of the fund created by a judgment."  Boeing, 444 U.S. at 473, 100 S. Ct. at 747.  The Supreme Court ultimately held that "[s]ince there was no appeal from the judgment that quantified Boeing's liability Boeing presently has no interest in any part of the fund."  Id. at 481, 100 S. Ct. at 751.  It explained in a footnote:

                        The judgment on the merits stripped Boeing of any present interest in the fund.  Thus, Boeing had no cognizable interest in further litigation between the class and its lawyers over the amount of fees ultimately awarded from money belonging to the class.  But Boeing did have an interest, arising from its colorable claim for the return of excess money, in whether attorneys' fees could be assessed against the entire fund rather than against the portion actually claimed.  Since the District Court's order assessed attorney's fees against the entire fund, it was a final judgment on the only issue in which Boeing still had an interest.  In the peculiar circumstances of this case, Boeing could secure review of the allocation of fees only by appealing from this adverse judgment.

 

Id. at 482 n.7, 100 S. Ct. at 751 n.7.

            Here, in contrast, there was no such judgment entered.  Instead, the district court ruled that if there were any unclaimed funds, BASF could at that time argue that it has standing to address the issue.  We conclude that the "peculiar circumstances" in Boeing are not present here, or that it stands for the proposition that BASF has standing to participate in the distribution of the common fund.  Similarly, the additional cases cited by BASF also fail to support its claim.[2]

            We further conclude that BASF has not demonstrated that it has standing to participate in the distribution of the aggregate damages to the individual class members.  It was accorded due process at trial when, subject to evidentiary standards, the issue of damages was fully litigated.  No further process is due.

            BASF also claims that it has standing to participate in distribution of any unclaimed balance that may exist after distribution of the common fund.  The district court reserved the issue of whether BASF has standing to argue this issue.  This court cannot give an advisory opinion or rule on an issue not considered by the district court.  In re Schmidt, 443 N.W.2d 824, 826 (Minn. 1989); Thiele, 425 N.W.2d at 582.  Consequently, the issue is not yet ripe for review. 

            BASF also contends that it is entitled to notice of the motions on the distribution of funds.  Under Minn. R. Civ. P. 5.01, all parties must be served with notice of motions.  But BASF's argument that it is entitled to notice is based on its belief that it has standing to participate in proceedings on that issue.  Because BASF does not have standing or a due-process interest in the proceedings, it is not entitled to notice.

            Finally, BASF moves to strike portions of the farmers' appendix as well as text in their brief referring to those materials.  Because that material contains documents that were filed after the date of the order being appealed, we do not consider them in this appeal.  BASF's motion to strike is, therefore, granted.

            The decision of the district court holding that BASF does not have standing to address distribution of the common fund and deferring decision of whether it will have standing to address distribution of any unclaimed portion of the common fund is affirmed.

            Affirmed; motion granted.

[1] Here, although the judgment is not yet "final" because BASF's petition for certiorari to the United States Supreme Court is pending, this does not form the basis for BASF's claim that the common funds belong to BASF until they are distributed.

 

[2] A case cited by the farmers, however, is persuasive.  In Sampson v. Eastman Kodak Co., 552 N.E.2d 1194 (Ill. App. 1990), the district court held that "in a class action suit, where a lump sum settlement has been negotiated and attorney fees have been awarded from the fund, the defendant ordinarily has no standing to object to the fee award because it no longer has an interest in the fund."  Id. at 1198.  The court ruled that the defendant did not have even a "colorable claim" for the return of excess funds under Boeing.  Id.