Hajiabdi v. Metropolitan Transport Network, Inc.

Background

The plaintiffs moved for permission to file a second amended complaint two weeks after the court dismissed claims for conversion, breach of fiduciary duty, fraud, and unjust enrichment. They sought to reassert fraud and unjust enrichment, add a civil-theft claim under Minnesota Statutes section 604.14, and add Said Mohamed Mohamud as a plaintiff. The defendants were Metropolitan Transport Network, Inc., doing business as MTN, and Tashitaa Tufaa.

Under Federal Rule of Civil Procedure 15(a)(2), courts generally should allow amendments when justice requires, but they may deny permission when the proposed amendment would be futile. An amendment is futile when the proposed claim could not survive a motion to dismiss for failure to state a claim under Rule 12(b)(6). The court therefore evaluated whether the proposed allegations were plausible under the applicable pleading standards.

Unjust-Enrichment Claim

The court held that the plaintiffs’ failure to allege that they personally conferred a benefit on the defendants did not by itself defeat the proposed unjust-enrichment claim. The court explained that the Minnesota Supreme Court had not required that the plaintiff be the person who conferred the benefit.

The plaintiffs alleged that Minneapolis Public Schools paid the defendants funds solely to pass them on to the plaintiffs, that the defendants had access to the funds only because they were entrusted with distributing them, and that the defendants knew the funds were intended for the plaintiffs but kept them. The court found those allegations plausibly showed that retaining the alleged benefit was inequitable. The court noted that the plaintiffs had not identified specific provisions of the Coronavirus Aid, Relief, and Economic Security Act or Minnesota law supporting their allegations, but concluded that precise legal citations were not required in the proposed pleading at this stage.

Fraud Claim

The court denied permission to reassert the fraud claim. Under Minnesota law, fraud requires a false material representation, knowledge of its falsity or uncertainty about its truth, an intent to induce reliance, actual reliance, and financial damage. Rule 9(b) also requires fraud to be pleaded with particularity.

The first category of alleged misrepresentations concerned whether the defendants had received funds intended for the plaintiffs. The court found no plausible allegation of detrimental reliance because the plaintiffs discovered the alleged misrepresentation within two to six days and identified no harm resulting from it.

The second category concerned promises to pay the plaintiffs in the future. The court explained that a promise about a future event generally is not actionable fraud unless the promisor had no intention of performing when the promise was made. The allegations did not particularly identify what the defendants promised to pay, and the plaintiffs also alleged that the defendants later made some payments. Those allegations did not plausibly show a present intent to defraud.

The third category concerned alleged misrepresentations to unidentified governmental entities about the number of MTN employees and the hours they worked. The court found that the proposed complaint did not identify who made the representations, what was said, where or when it was said, or how it was communicated. It also did not plausibly allege that the defendants intended the plaintiffs to rely on those statements or that the plaintiffs did rely on them.

Civil-Theft Claim

The court denied permission to add the civil-theft claim. Minnesota’s civil-theft statute makes a person liable to the owner of personal property when the person steals it. The court explained that “steal” requires a wrongful and secret taking of another person’s property for the purpose of keeping or using it, including an initial wrongful act in obtaining possession.

The plaintiffs alleged that the defendants lawfully received funds from Minneapolis Public Schools and failed to transfer significant portions to the plaintiffs. Because the defendants initially received the funds lawfully and the plaintiffs had never possessed the money, the court found no plausible allegation of the initial wrongful taking required for civil theft. The court also found that the plaintiffs cited no authority establishing that an alleged legal or equitable right to payment of an intangible sum could constitute a taking of personal property.

Adding Said Mohamed Mohamud

The court allowed the plaintiffs to add Said Mohamed Mohamud. The defendants argued that adding him would be futile as to claims under Title VII, the Minnesota Human Rights Act, and the Americans with Disabilities Act because, according to a general manager’s declaration, Mohamud had not filed an administrative charge and his employment had ended on July 1, 2020.

The court disregarded that evidence at the amendment stage because futility is evaluated under the Rule 12(b)(6) standard, which generally limits review to the pleadings and certain incorporated or public materials. The proposed complaint alleged that the plaintiffs had timely filed charges with the Minnesota Department of Human Rights, that those charges were cross-filed with the Equal Employment Opportunity Commission, and that the plaintiffs had obtained a right-to-sue letter. The court accepted those allegations as true for purposes of the motion.

Disposition

The court granted in part and denied in part the plaintiffs’ motion to amend. It authorized the plaintiffs to file, by November 15, 2021, a second amended complaint that included the unjust-enrichment claim and supporting allegations from the proposed complaint and added Said Mohamed Mohamud as a plaintiff. The court denied the motion in all other respects, including the requests to reassert fraud and add civil theft.