The tort of “unfair competition” under Minnesota law is the answer to a riddle: What claim has no elements, cannot exist on its own, but cannot be duplicative, yet is a recognized cause of action?
The Origin of the Claim
In 1987, the Minnesota Court of Appeals stated, “[u]nfair competition is not a tort with specific elements; it describes a general category of torts which courts recognize for the protection of commercial interests.” Rehab. Specialists, Inc. v. Koering, 404 N.W.2d 301, 305 (Minn. Ct. App. 1987 (citing W. Prosser and W. Keeton, The Law of Torts § 130, at 1015 (5th ed. 1984) (emphasis added) That court noted that unfair competition can include tortious interference with contract, improper use of trade secrets, or an employee’s breach of a duty of loyalty to his or her employer. Id. at 306. Those are all other torts. It seems like the Court in Koering was describing a group of tort claims, each independently recognized, under the category of “unfair competition.” But unfair competition was “count two” in the complaint and the court declined to dismiss it as an independent claim. The Koering decision gave birth to a new cause of action that has been bounced around ever since.
Federal Court Decisions
In Zimmerman Group v. Fairmont Foods of Minnesota, 882 F. Supp. 892 (D. Minn.1994) a federal court reiterated the concept that unfair competition was a category of torts: “Under Minnesota law, “[u]nfair competition is not a tort with specific elements,” but rather, “it describes a general category of torts which courts recognize for the protection of commercial interests.” Id. at 995, quoting Rehabilitation Specialists, Inc. v. Koering, 404 N.W.2d 301, 305–06 (Minn. Ct. App.1987).” But that court also held that in order to assert a claim of unfair competition, there must be another tort claim to support it. Like a remora or a lamprey, it cannot survive on its own. (“In order for such a claim to stand, [the Plaintiff] must identify the underlying tort which is the basis for the unfair competition claim.” and, “to remain viable, a common law unfair competition claim “must identify the underlying tort which is the basis for [the claim].”) Id. at 895.
Another federal court definitively stated that unfair competition is not merely a category of torts, it is its own cause of action. “Defendant’s claim that Minnesota does not recognize a cause of action for unfair competition is clearly wrong. Minnesota recognizes unfair competition as an independent cause of action.” Radisson Hotels Int’l, Inc. v. Westin Hotel Co., 931 F. Supp. 638, 643–44 (D. Minn. 1996) (citing Dalco Corp. v. Dixon, 338 N.W.2d 437, 441 (Minn. 1983) and Rehabilitation Specialists) (emphasis added). In Radisson, the Court stated that it did “not find Radisson’s unfair competition claim is necessarily based on precisely the same conduct as the trade secret and breach of contract claims alleged in Counts II and IV, or that the legal elements of Radisson’s unfair competition claim are necessarily subsumed within the requirements for trade secret misappropriation and breach of contract. As a result, Count III will not be dismissed.” Id.
But if the underlying tort is duplicative of another Count in the complaint, the claim for unfair competition should be dismissed. Zimmerman, 882 F. Supp. at 895 (dismissing the claim to the extent that it was duplicative of, or was preempted by, other claims in the Complaint); LensCrafters, Inc. v. Vision World, Inc., 943 F. Supp. 1481, 1490–91 (D. Minn. 1996). (“if the underlying tort is duplicative of another Count of the Complaint, the claim for unfair competition cannot stand.”) See also Goddard, Inc. v. Henry’s Foods, 291 F. Supp. 2d 1021, 1034 (D. Minn. 2003) (stating, “if we find that the underlying tort is duplicative of another Count of the Complaint, the claim for unfair competition must be dismissed.”)
Conclusion
In order to assert a claim of unfair competition, it must be based on another underlying tort, but the claim should not be identical or redundant. It should be close to another claim but not too close. So what benefit does a count of unfair competition add if a plaintiff attorney is deciding which counts to include in her complaint? The answer is potentially something, but maybe not much.
Clarification
Note that “unfair competition” can also be used to describe behavior that might be a violation of anti-trust laws or be actionable under the Minnesota Deceptive Practices Act. This article refers to a cause of action, not a description of behavior.
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About the Author:
Trepanier MacGillis Battina P.A. is a business law firm located in Minneapolis with attorneys practicing in the area of unfair competition law. They can be reached at 612.455.0500.