EverStar, LLC, Appellant,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-0367

EverStar, LLC,
Appellant,

vs.

Aitkin County Board of Commissioners,
Respondent.

Filed November 20, 2017
Affirmed
Bjorkman, Judge

Aitkin County District Court
File No. 01-CV-15-314

Gary A. Van Cleve, Bryan J. Huntington, Larkin Hoffman Daly & Lindgren Ltd. ,
Minneapolis, Minnesota (for appellant)

Jason J. Kuboushek, Andrew A. Wolf, Iverson Reuvers Condon, Bloomington, Minnesota
(for respondent)

Considered and decided by Bratvold, Presiding Judge; Bjorkman, Judge; and
Hooten, Judge.
U N P U B L I S H E D O P I N I O N
BJORKMAN, Judge
Appellant landowner challenges summary judgment in its combined drainage
appeal and antitrust action arising from respondent county’s denial of its petition for partial
abandonment of a drainage system. Appellant argues that it satisfied the statutory standard

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for partial abandonment, or that genuine issue s of material fact preclude summary
judgment, and that respondent is not exempt from antitrust liability. We affirm.
FACTS
Appellant EverStar, LLC owns land in Aitkin County between the Mississippi River
and the Aitkin Airport. Aitkin County Ditch 24 (CD 24) runs through the EverStar
property. In June 2014, EverStar petitioned the c ounty as the drainage authority, to
impound and divert waters from —or alternative ly, to partially abandon—the section of
CD 24 that traverses its property. EverStar explained that, in the four years it had owned
the property, it had produced little or no crops and no rent. Accordingly, EverStar sought
to convert the agricultural land to a wetland that meets state and federal standards for the
sale of wetland credits. EverStar later withdrew its petition with respect to impoundment
and diversion, electing to pursue only partial abandonment.
The county held public hearings on the petition over four days. By resolution, the
county denied the petition stating:
Based upon the [county’s] interpretation of the evidence in the
record, the [county] finds that the portion of [ CD 24] which is
sought to be abandoned does serve a substantial useful purpose
as part of the drainage system to any property remaining in the
system and is part of a substantial public benefit and utility.

EverStar initiated this action in district court, combining an appeal under Minn. Stat.
§ 103E.095 (2016) (providing for appeal to the district court from an order dismissing
drainage proceedings), with an antitrust cl aim under Minn. Stat. § 325D.52 (2016). The
district court granted the county’s motion for summary judgment on both claims,
concluding that EverStar had not presented evidence that satisfied the statutory standard

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for partial drainage-system abandonment a nd that the county is exempt from antitrust
liability under Minn. Stat. § 325D.55 (2016). EverStar appeals.
D E C I S I O N
I. The county is entitled to summary judgment with respect to EverStar’s
drainage appeal.

On appeal from summary judgment, we review de novo whether there are any
genuine issues of material fact and whether the district court erred in applying the law.
Ruiz v. 1st Fid. Loan Servicing, LLC , 829 N.W.2d 53, 56 (Minn. 2013). “We view the
evidence in the light most favorable to the party against whom summary judgment was
granted.” STAR Ctrs., Inc. v. Faegre & Benson, L.L.P. , 644 N.W.2d 72, 76 -77 (Minn.
2002). A genuine issue of material fact exists when there is sufficient evidence that could
lead a rational trier of fact to find for the nonmoving party. DLH, Inc. v. Russ, 566 N.W.2d
60, 69 (Minn. 1997). Summary judgment should be granted for the defendant “when the
record reflects a complete lack of proof on an essential element of the plaintif f’s claim.”
Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995).
EverStar appealed the county’s denial of its petition for partial abandonment of a
drainage system pursuant to Minn. Stat. § 103E.095.
[An appeal under Minn. Stat. § 103E.095] must be tried by the
court without a jury. The court shall examine the entire
drainage proceeding and related matters and receive evidence
to determine whether the findings made by the board can be
sustained. At the trial the findings made by the board are prima
facie evidence of the matters stated in the findings, and the
board’s order is prima facie reasonable. If the court finds that
the order appealed is lawful and reasonable, it shall be
affirmed. If the court finds that the order appealed is arbitrary,
unlawful, or not supported by the evidence, it shall make an

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order, justified by the court record, to take the place of the
appealed order, or remand the order to the board for further
proceedings.

Minn. Stat. § 103E.095, subd. 2 . Under this standard, EverStar has the burden at trial to
overcome the prima facie reasonableness of the county’s decision, which is only subject to
reversal if it is arbitrary, unlawful, or not supported by the evidence.
EverStar sought partial abandonme nt of CD 24 under Minn. Stat. § 103E.806
(2016), which provides for abandonment if “part of the drainage system does not serve a
substantial useful purpose as part of the drainage system to any property remaining in the
system and is not of a substantial public ben efit and utility .” Minn. Stat. § 103E.806,
subd. 3(b). “Substantial” is not defined in the statute, and has not been interpreted in
appellate caselaw in this context. EverStar urges us to a pply The American Heritage
Dictionary’s definition of “substantial,” which is, in relevant part, “ True or real; not
imaginary” or “Considerable in importance, value, degree, amount, or extent.” The
American Heritage Dictionary 1738 (5th ed. 2011). But given the evidence and argument
presented, the definition of “substantial” does not resolve our inquiry.
In denying EverStar’s petition, the county found that “the record shows the property
will take longer to drain and the abandonment of the ditch will result in a change in the
stage and duration of flooding w hich will negatively impact prope rties remaining in the
system.” And the county interpreted computer modeling submitted by EverStar to show
that CD 24 “does serve a substantial useful purpose as part of the drainage system and that
it does have a substant ial public benefit and utility.” The district court concluded that
“there is no evidence that the existing ditch system has failed to provide drainage to the

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area. The record establishes that the existing ditch provides a drainage system to properties
in the system and continues to provide this substantial benefit.”
The district co urt reasoned that EverStar misconstrued the standard for partial
abandonment, and that the evidence relied on by EverStar did not overcome the prima facie
showing that the cou nty’s denial of the petition was reasonable. We agree. To survive
summary judgment, EverStar needed to show—or demonstrate a genuine issue of material
fact—that CD 24 does not serve a substantial useful purpose as part of the drainage system
to any property remaining in the system and does not provide a substantial public benefit
and utility. Minn. Stat. § 103E.806, subd. 3(b). Instead, EverStar submitted evidence to
support an argument that its proposed wetland would provide drainage that would be as
good, or better, than the existing CD 24.
It is undisputed that CD 24 serves a useful purpose by draining water from upstream
properties. EverStar nevertheless challenges the county’s finding that partial abandonment
would negatively impact properties remaining in the system, pointing to its experts’
conclusions that implementation of the proposed wetland bank project would not increase
the stage or duration of inundation. We are not persuaded. This evidence may have
supported a petition for impoundment or diversion, but does not squarely apply to the
standard for partial abandonment. Compare Minn. Stat. § 103E.227, subd. 3(c) (2016)
(providing for impounding, rerouting, or diverting drainage sys tem waters if the project
“will not impair the utility of the drainage system or deprive affected landowners of its
benefit”), with Minn. Stat. § 103E.806, subd. 3(b) (providing for partial abandonment if
“part of the drainage system does not serve a subst antial useful purpose as part of the

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drainage system to any property remaining in the system and is not of a substantial public
benefit and utility”).
Viewing the evidence in the light most favorable to EverStar, we conclude that
EverStar failed to show either a genuine issue of material fact, or that competent evidence
supports a finding that CD 24 does not serve a substantial useful purpose to remaining
properties and is not of substantial public benefit and utility. Because the county’s denial
of EverStar’s petition for partial abandonment is not arbitrary, unlawful, or unsupported by
the evidence, the county is entitled to summary judgment dismissing EverStar’s drainage
appeal.
II. EverStar’s antitrust claim fails as a matter of law.

In its ame nded complaint, EverStar asserts that the county violated Minn. Stat.
§ 325D.52, which prohibits the actual or attempted “establishment, maintenance, or use of
. . . monopoly power over any part of trade or commerce by any person or persons for the
purpose of affecting competition or controlling, fixing, or maintaining prices .” EverStar
alleged that the county
established, maintained, or used monopoly power over the
price of its own wetland credits by using its land use powers to
arbitrarily and unreasonably deny EverStar’s petition for partial
ditch abandonment, with the purpose and effect of preventing
EverStar from creating a wetland bank that would compete
with the County’s existing wetland bank as well as from
County-owned banks to be established in the future.

EverStar challenges the district court ’s conclusion that the county is exempt from
antitrust liab ility under Minn. Stat. § 325D .55, subd. 2(a), which provides, “ Nothing
contained in sections 325D.49 to 325D.66, shall apply to actions or arrangements otherwise

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permitted, or regulated by any regulatory body or officer acting under statutory authority
of this state or the United States.” Accordingly, the relevant inquiry is whether the county’s
actions were specifically permitted by state law. See Minn.-Iowa Television Co. v.
Watonwan T.V. Improvement Ass’n, 294 N.W.2d 297, 306 (Minn. 1980) (“[T]he exemption
from antitrust laws for government approved activities has generally been limited to
activities either required or specifically permitted by the government.”). We conclude that
they were because the county is both (1) the drainage autho rity charged by statute with
deciding petitions for partial abandonment of a drainage system, see Minn. Stat.
§§ 103E.005, subd. 9, .806, subds. 1, 3 (2016); and (2) the local government unit charged
by agency rule with approving applications for wetland b anking credits, see Minn. R.
8420.0705, subp. 1 (2015).
EverStar does not challenge these two sources of legal authority but contends that
the county’s authority to decide ditch -abandonment petitions and wetland -credits
applications does not confer on it the authority to engage in anticompetitive conduct. But
this argument collapses the exemption inquiry into the merits of the antitrust claim. The
proper focus in applying the exemption is on whether the county’s actions were permitted
by state law, not on whether the manner in which the county conducted both authorized
actions might violate antitrust laws.
EverStar next asserts that the district court erred by failing to construe the statutory
exemption in a manner consistent with the judicially create d state-action doctrine, which
is applied to determine whether municipal conduct is immune from liability under the
federal antitrust statutes. See, e.g., N.C. State Bd. of Dental Exam’rs v. F.T.C., 135 S. Ct.

8
1101, 1109-10 (2015) (explaining doctrine). EverStar cites no authority for applying this
federal doctrine rather than the plain language of section 325D.55, subdivision 2(a). Even
if the state-action doctrine applies, which we need not and do not decide, the Supreme
Court has specifically rejected EverStar’s argument that a municipality must show that its
allegedly anticompetitive conduct was compelled by—or even intended by—the state. See
Town of Hallie v. City of Eau Claire, 471 U.S. 34, 45, 105 S. Ct. 1713, 1720 (1985) (“None
of our cases invol ving the application of the state action exemption to a municipality has
required that compulsion be shown.”); see also City of Columbia v. Omni Outdoor Advert.,
Inc., 499 U.S. 3 65, 377, 111 S. Ct. 1344, 1352 (1991) (stating that state-action doctrine
applies regardless of a municipality’s motives for engaging in the challenged conduct ).
Instead, the state-action doctrine applies if state statutes authorize municipal action with
foreseeable anticompetitive effects. Town of Hallie , 471 U.S. at 4 2, 105 S. Ct. at 1718.
Although the Supreme Court has intimated that a market -participant exception might be
warranted in municipal cases, it has never adopted such an exception. See Rectrix
Aerodome Ctrs., Inc. v. Barnstable Mun. Airport Comm’n, 534 F. Supp. 2 d 201, 206 (D.
Mass. 2008) (summarizing Supreme Court intimations but noting lack of authority for
market-participant exception).
In sum, the county is exempt from antitrust liability under Minn. Stat. § 325D.55,
subd. 2(a), because the county’s actio ns were specifically permitted by state law.
EverStar’s antitrust claim fails as a matter of law.
Affirmed.