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Top 10 Business Lawsuits of the Year

We recount the accusations of debt dodging, product failure, bad management, and mutant sugar beets that brought Minnesota business into court in 2011.

Top 10 Business Lawsuits of the Year
10. TECHNOLOGY TOWERS OVER A PRISTINE WILDERNESS
AT&T tries to build a humongous cell tower at the Boundary Waters’ edge.


A cell phone tower being proposed in northern Minnesota seems like a mundane issue, but this one caused a fight.

To environmentalists, the tower had a big impact on the Boundary Waters Canoe Area, a place for visitors to escape civilization in one of the rare remaining wildernesses left in America. It’s no place for a cell phone tower, they said, illuminated 24 hours a day with strobe and beacon lighting, and visible during the day from eight miles away. 

To AT&T, the tower could be a vital lifeline for BWCA visitors when they are in need of emergency assistance. And people living near the Boundary Waters want good cell phone reception like everybody else—that’s why they signed on to AT&T’s proposal to build a cell tower in the area. 

The tower that AT&T proposed, however, was no ordinary structure. While most cell phone towers in Minnesota stand less than 200 feet, this one would be built on a ridge and would stand 600 feet above the shore of nearby Pipestone Bay. By contrast, the Foshay tower stands 448 feet tall. The phone company, which had collected the necessary permits for the tower, said that height was necessary to give surrounding communities the kind of service they requested. 

The environmental group Friends of the Boundary Waters tried to convince the company to build a shorter, less obtrusive tower, but AT&T ignored their requests and broke ground for the structure. Last June, the Friends sued to stop construction, and the case ended up in the Hennepin County courtroom of Judge Philip Bush. Stephen Safranski of Robins Kaplan Miller and Ciresi handled the case pro bono for the Friends.

“It’s a big, beautiful wilderness, but this is a big tower,” says Paul Danicic, executive director of the Friends. “Our voice is for the beauty and the value of this place that is untouched by permanent human changes.” He said the Friends were not opposed to building a tower, but just wanted a smaller one that would not despoil the wilderness. The group said that AT&T’s own study shows the company could provide nearly as much coverage with a 199-foot tower, or two smaller towers. 

After a month of consideration, Judge Bush agreed with the Friends and stopped the building of the tall tower. AT&T spokesman Marty Richter says of the decision, “We’re continuing to review the ruling and consider our options.”

The problem of cell towers encroaching on wilderness areas is playing out in other Minnesota areas. According to the Star Tribune, a 350-foot cell tower that AT&T wanted to build three and a half miles from the edge of Voyageurs National Park was denied by the Koochiching County Board.

 

9. A Sweet Victory for Minnesota’s Beet Farmers
What’s bad for sugar beets is bad for the country.

The rich farmland in Minnesota’s Red River Valley has become to sugar beets what Saudi Arabia is to oil. 

Nearly half the sugar consumed in the U.S.—think soft drinks, baked goods, candy—comes from sugar beets, with Minnesota leading the way as the largest producer in the nation. So what’s bad for sugar beets is bad for the country. And last year, a series of lawsuits and counter-lawsuits seemed to portend something very bad for sugar beets. 

It began with Judge Jeffrey White of the Federal District Court in San Francisco revoking the government’s approval of genetically engineered sugar beets. Judge White determined that the U.S. Department of Agriculture had not adequately assessed the environmental consequences of the beets before approving them for commercial cultivation. An environmental impact statement, usually thousands of pages long, was ordered by the judge, but the results of such a study would have taken years to conduct and would not have been available until 2012.

This was not an academic issue for Minnesota’s sugar beet farmers. Ninety-five percent of the sugar beets grown in Minnesota are grown from genetically modified (GM) seeds provided by Monsanto and German seed company KWS. Sugar beet seeds take two years to produce, and because of the overwhelming success of GM seeds, there was a shortage of both unmodified seeds and the pesticides needed to keep them healthy. A study conducted for the sugar industry predicted that U.S. sugar production would plunge 20 percent if the judge’s ban stayed in place.

Environmentalists, on the other hand, feared the contaminating effect of GM crops on nearby organic crops, and were afraid the GM crops were producing “super-weeds.”

After a series of back-and-forth lawsuits, the U.S. Department of Agriculture (USDA) responded. The department, worried about the damage the judge’s order would bring to American business, proposed a plan for the partial deregulation of GM sugar beets, until the environmental impact statement could be completed. The USDA allowed farmers to resume growing the GM crop, but required them to agree to certain restrictions, designed to lessen any contamination possibilities.

Said U.S. Agriculture Secretary Thomas Vilsack: “We need a much better system that does not create a circumstance where a single judge essentially gets to decide whether someone can farm and not farm.” 
 

8. Gopher Golf Coach in a Hole
Charges of sexual discrimination and nepotism against the U of M land in court.


Two relatively new golf coaches at the University of Minnesota will find themselves in a Hennepin County courtroom in December, where the court will determine if one trod on the civil rights of the other—with a potential price tag exceeding $50,000.

The first, John Harris, became head coach of the U’s golf teams in 2010. Harris is a legendary Twin Cities athlete who, at age 59, is nearing the end of his storied career. The second, Kathryn Brenny, was hired by Harris to be the assistant women’s golf coach in August 2010. Her golf highlights include winning the 1998 Minnesota State High School golf championship and the Minnesota State Amateur golf championship in 2007.

Unfortunately, things started falling apart almost as soon as Brenny was hired. Although the job description listed by the university included the responsibility to “assist in selection, supervision, and athletic excellence,” Brenny alleges in her suit that she was shunted aside and given menial tasks. “I was denied the opportunity to coach the team,” Brenny said. “This included my not being permitted to travel with the team to the four tournaments scheduled for the fall.” According to the Minnesota Daily, Harris kept Brenny from talking to players about golf. When Brenny asked what she could discuss, Harris replied, “Boys, life, and school,” the suit claims. Brenny says that when she scheduled a team meeting and photograph, Harris told her to cancel both, saying, “You have nothing to talk to these girls about.”

When Brenny complained to U of M athletic director Joel Maturi, he eventually offered to reassign her job and transfer her to a sales position at TCF Bank Stadium. At that point, Brenny tendered her resignation, but withdrew it shortly after she was given some new information by some of her players. They told her Harris had learned she was a homosexual and that’s why he didn’t want her traveling with the team. Brenny filed a sex discrimination suit against Harris and the U of M. Her lawyer is Donald Mark of Fafinski Mark & Johnson in Eden Prairie, who won a $1.25 million jury verdict against the U of M for former assistant Gophers men’s basketball coach Jimmy Williams.

But there’s more. Brenny’s suit also accused Harris of nepotism—saying her job was downgraded so that Harris’s son-in-law, Ernie Rose, could perform the team’s assistant coaching duties. And here she found some support inside the university athletic community, according to the Minnesota Daily: “Multiple sources, including [president of the U’s Booster Club] Phil Ebner, surmised that Harris planned to groom Rose to run the program so he could continue playing professional golf on the Champions Tour . . . where he made more than $3 million since 2002.” Even before Harris was hired, the Daily reports that Ebner e-mailed Maturi telling him he thought “Harris’ objective was to hire his son-in-law [Ernie Rose] as men’s coach and eventually have Ernie take over.” 

Harris says he never knew Brenny was gay until the suit was filed. He accuses Brenny of trying to shake down both himself and the university with her claims. According to Harris’ lawyer, Richard Ostlund of Anthony Ostlund Baer & Louwagie, “Mr. Harris was acting within the scope of his duties as a supervisor with the University of Minnesota . . . . There was nothing fraudulent in statements made by him before she came to work at the University of Minnesota.” 

Harris resigned as golf coach last July, saying the suit had nothing to do with his decision to leave the team.
 

7. Egg on their Faces
Is Glen Taylor’s company out to destroy the competition?

 

Glen Taylor knows eggs. The multi-millionaire owner of the Timberwolves and CEO of Mankato-based Taylor Corporation grew up on a farm and still raises chickens for eggs on his hobby farm. So it wasn’t too surprising when Taylor bought a controlling interest in Rembrandt Enterprises, a major national producer of eggs based in Iowa.

In January 2010, when Deb-El, another egg firm, owed Rembrandt more than $2 million and had issued Rembrandt a series of bounced checks, Taylor knew something was radically wrong. Though Deb-El subsequently paid down most of its debt, Rembrandt issued a series of tough warnings and stringent payment stipulations to Deb-El. And then the lawyers took over.

“My guy never wanted to litigate,” insists Bill Tilton, a partner at St. Paul’s Tilton & Dunn and the attorney for Deb-El. Tilton says the owners of Deb-El have had some bad breaks in the last few years, including that the bank providing them a critical credit line went out of business. He says that Deb-El had almost paid down their debt to Rembrandt, and that Deb-El’s owner came to Minneapolis to try and work out a settlement. “But instead of working it out, they sued my guy within a week,” Tilton told the Star Tribune. “That’s what happens when you’ve got a rich guy with a lot of lawyers.”

Tilton argues that the issue is not Deb-El’s failure to pay its bills—it is paying them, he says—but rather Rembrandt’s real reason for the suit: to put a competitor out of business. “Rembrandt’s motivation . . . was not to get commercially reasonable assurances of performance,” says Tilton in a 105-page filing he presented to the court last July. “Rather, Taylor Corporation/Rembrandt’s goal was to squeeze out a competitor in the dried egg business.”

Alain Baudry and his team from Maslon Edelman, in a pretrial pleading, told the court that Rembrandt seeks only to recover the more than $872,000 in unpaid invoices for eggs ordered by Deb-El. They say that’s doesn’t constitute trying to put Deb-El out of business.

Tilton accused Glen Taylor of using his “hometown advantage” in court. He also told the Star Tribune, “This is the most aggressive business lawyering I’ve seen in decades. The corporate equivalent of a strip search. I don’t blame the . . . lawyers. Somebody above their pay scale made a decision to call out the dogs.”

Rembrandt’s suit went in front of Hennepin County District Judge George McGunnigle. He arranged for a mediator to hear both parties. The suit was eventually settled in Rembrandt’s favor for $989,923.

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