Styczinski v. Arnold

46 F.4th 907

Thomas John STYCZINSKI; Tom "The Coin Guy", LLC; Treasure Island Coins, Inc.; Numismatist United Legal Defense, Plaintiffs - Appellants

v.Grace ARNOLD, in her official capacity as Commissioner of the Minnesota Department of Commerce, Defendant - Appellee

No. 21-2936

United States Court of Appeals, Eighth Circuit.

Submitted: July 8, 2022

Filed: August 31, 2022

Counsel who presented argument on behalf of the appellant was Erick G. Kaardal, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellee was Allen Cook Barr, AAG, of Saint Paul, MN. The following attorney(s) appeared on the appellee brief; Christopher M. Kaisershot, AAG, of Saint Paul, MN.

Before SHEPHERD, GRASZ, and KOBES, Circuit Judges.

GRASZ, Circuit Judge.

Appellants (the "Bullion Traders") are a collection of in-state and out-of-state precious metal traders or representatives thereof challenging the constitutionality of Minnesota Statutes Chapter 80G, which regulates bullion transactions. The Bullion Traders argue the statute violates the dormant Commerce Clause. We agree.

I. Background

The Bullion Traders sued the Minnesota Commissioner of Commerce (the "Commissioner") under 42 U.S.C. § 1983, seeking both declaratory and injunctive relief, claiming (among other things) that Chapter 80G is unconstitutional under the dormant Commerce Clause because it has an extraterritorial effect and excessively burdens interstate commerce. The Bullion Traders moved for summary judgment, and the Commissioner moved to dismiss. The district court partially granted and partially denied the Bullion Traders’ motion for summary judgment and partially granted and partially denied the Commissioner's motion to dismiss. The district court concluded part of Chapter 80G violated the dormant Commerce Clause but held the remainder of Chapter 80G withstood the Bullion Traders’ constitutional challenges. The district court determined the unconstitutional sections of Chapter 80G were severable from the valid provisions and thus upheld those valid provisions.

The Bullion Traders appeal, arguing the district court should have found the entirety of Chapter 80G unconstitutional. Particularly, the Bullion Traders argue Chapter 80G's registration scheme and surety bond requirement are extraterritorial and excessively burden interstate commerce and that those provisions are inseverable from the remainder of Chapter 80G.

After the parties briefed and argued this appeal, the Governor of Minnesota signed 2022 Minn. Sess. Law Serv. ch. 75 (H.F. 4030) into law, which took effect on August 1, 2022, and substantially amended Chapter 80G. We requested and received supplemental briefing from the parties regarding the impact of H.F. 4030 on this appeal. The Bullion Traders maintain their argument that Chapter 80G is extraterritorial and excessively burdens interstate commerce, and the Commissioner maintains her defense that Chapter 80G only regulates conduct connected to Minnesota and does not excessively burden interstate commerce.

Chapter 80G as amended by H.F. 4030 regulates "dealers" and their "Minnesota transactions." A "dealer" is "any person who buys, sells, solicits, or markets bullion products or investments in bullion products to consumers and conducts Minnesota transactions."¹ Minn. Stat. § 80G.01, subd. 3(a). A "Minnesota transaction" is a "bullion product transaction" made:

(1) by a dealer that is incorporated, registered, domiciled, or otherwise located in Minnesota;

(2) by a dealer representative at a location in Minnesota;

(3) between a dealer and a consumer who lives in Minnesota; or

(4) between a dealer and a Minnesota consumer when the transaction involves:

(i) delivering or shipping a bullion product to an address in Minnesota;

(ii) delivering to or shipping from a precious metal depository on behalf of a Minnesota resident; or

(iii) making payment to a consumer or receiving a payment from a consumer at an address in Minnesota, unless the transaction occurs when the consumer is at a business location outside of Minnesota.

Id. § 80G.01, subd. 5a.

"It is unlawful for a dealer or dealer representative to conduct a Minnesota transaction without being registered by the [C]ommissioner[.]" Minn. Stat. § 80G.02, subd. 1. A dealer must apply to register within forty-five days after conducting at least $25,000 in Minnesota transactions between July 1 and the following June 30 of any one-year period. Id. Dealers must annually renew their registration. Id. § 80G.02, subds. 1, 2. A dealer who conducts bullion transactions without being properly registered is guilty of a misdemeanor. Id. § 80G.08.

A dealer must also maintain a surety bond. Id. § 80G.06, subd. 1. The amount of the surety bond required is based on the amount of Minnesota transactions the dealer conducted twelve months before registration or renewal. Id. The minimum amount of the surety bond is $25,000 and is triggered after a dealer conducts $25,000 worth of Minnesota transactions. See id. The statute also prohibits dealers from employing certain sales practices while conducting a Minnesota transaction. See id. § 80G.07.

The Commissioner has various civil enforcement powers under Chapter 80G. If the Commissioner determines a dealer has violated the statute, the Commissioner may institute a civil action; issue an order directing the dealer to comply with the statute; or issue an order denying, suspending, revoking, or conditioning the registration of the dealer. Id. § 80G.10, subds. 1, 4(a). If the Commissioner prevails in a civil action against a dealer, the court may issue several different forms of relief including a permanent injunction, an asset freeze, an order for the Commissioner to take charge of the dealer's property, or a civil penalty up to $10,000 for each violation. Id. § 80G.10, subd. 2.

The Bullion Dealers argue Chapter 80G as amended by H.F. 4030 suffers the same constitutional ill as its predecessor—it violates the dormant Commerce Clause. We agree Chapter 80G, even as amended, is unconstitutional.

II. Analysis

The Bullion Traders appeal the district court's partial grant of the Commissioner's motion to dismiss and the district court's partial denial of the Bullion Traders’ motion for summary judgment. We review both rulings de novo. See Wheeler v. City of Searcy , 14 F.4th 843, 851 (8th Cir. 2021) (summary judgment); Onyiah v. St. Cloud State Univ. , 5 F.4th 926, 929 (8th Cir. 2021) (motion to dismiss).

A. Jurisdiction

Before we address the merits of the Bullion Traders’ appeal, we must ensure we have jurisdiction over this appeal. "We must consider our own jurisdiction ‘even if the parties concede the issue,’ " United States v. O'Laughlin , 31 F.4th 1042, 1043 (8th Cir. 2022) (quoting Thomas v. United Steelworkers Loc. 1938 , 743 F.3d 1134, 1139 (8th Cir. 2014) ), as they do here.²

Article III of the Constitution limits our jurisdiction to "Cases" and "Controversies." See U.S. Const. art. III, § 2, cl. 1. This means that for jurisdiction to continue through an appeal, "an ongoing dispute capable of judicial resolution must endure throughout all stages of federal judicial proceedings, trial and appellate." Cardiovascular Sys., Inc. v. Cardio Flow, Inc. , 37 F.4th 1357, 1361 (8th Cir. 2022) (cleaned up). A question of whether a dispute is moot, depriving a court of jurisdiction, "is raised by the revision of [a law] that bec[omes] effective while the case [i]s pending in the Court of Appeals." City of Mesquite v. Aladdin's Castle, Inc. , 455 U.S. 283, 288, 102 S.Ct. 1070, 71 L.Ed.2d 152 (1982). We therefore must determine whether H.F. 4030 has left this appeal without an "ongoing dispute capable of judicial resolution." Cardiovascular Sys. , 37 F.4th at 1361 (cleaned up).

The Supreme Court has previously dismissed appeals for mootness where, like here, "a challenged statute ... is ... significantly amended pending review, and the only relief sought is prospective[.]" Northeastern Fla. Chapter of the Associated Gen. Contractors of Am. v. City of Jacksonville , 508 U.S. 656, 669, 113 S.Ct. 2297, 124 L.Ed.2d 586 (1993) (O'Connor, J., dissenting); see, e.g. , Princeton Univ. v. Schmid , 455 U.S. 100, 103, 102 S.Ct. 867, 70 L.Ed.2d 855 (1982) (dismissing as moot a challenge to a university's regulations where "the University substantially amended [the] regulations"). The Court has indicated, however, that an amended statute does not render an appeal moot where the amended statute "is sufficiently similar" to the original statute so "that it is permissible to say that the challenged conduct continues." Northeastern Fla. , 508 U.S. at 662 n.3, 113 S.Ct. 2297 ; accord Rosenstiel v. Rodriguez , 101 F.3d 1544, 1548 (8th Cir. 1996).

Here, while some of the language in Chapter 80G on which the district court based its analysis was altered by H.F. 4030, the conduct which the Bullion Traders originally challenged continues. The Bullion Traders make the same general argument now as they did before H.F. 4030: Chapter 80G unconstitutionally prohibits dealers from engaging in transactions wholly outside of Minnesota without registering with the Commissioner and complying with Minnesota regulations. Thus, while H.F. 4030 changed much about Chapter 80G, it did not materially change the conduct about which the Bullion Traders complain. Accordingly, we conclude H.F. 4030 does not deprive us of jurisdiction to decide this appeal.

B. Dormant Commerce Clause

The Commerce Clause grants Congress the power "[t]o regulate Commerce ... among the several States[.]" U.S. Const. art. I, § 8, cl. 3. The Supreme Court has held the Commerce Clause gives Congress exclusive legislative jurisdiction over interstate commerce, meaning states may not enact laws that "unduly restrict interstate commerce." Tenn. Wine & Spirits Retailers Ass'n v. Thomas , ––– U.S. ––––, 139 S. Ct. 2449, 2459, 204 L.Ed.2d 801 (2019) ; accord Gibbons v. Ogden , 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824). This restriction on the states is commonly referred to as...