author: CADY, Justice.

text:
    Brian GREEN, Jerry Vaughan, Tad Leggett, and Rodger Smith, Appellants, v. RACING ASSOCIATION OF CENTRAL IOWA, d/b/a Prairie Meadows Racetrack & Casino, Appellee.
    No. 04-0758.
    Supreme Court of Iowa.
    May 5, 2006.

      Rick L. Olson, Des Moines, for appellants.
    Thomas W. Foley and Debra L. Hulett of Nyemaster, Goode, West, Hansell & O’Brien, P.C., Des Moines, for appellee.
   CADY, Justice.

Four jockeys sued the Racing Association of Central Iowa, d/b/a Prairie Meadows (hereinafter RACI), alleging a violation of their due process rights and interference with their existing and prospective contracts when RACI excluded the jockeys from Prairie Meadows Racetrack & Casino. The district court granted RACI’s motion for summary judgment, finding RACI was not a state actor, and that the jockeys’ claim of tor-tious interference was insufficient as a matter of law. We affirm.

I. Background Facts and Proceedings

This case arose from allegations by a RACI employee, Ray Famous, that four jockeys, Brian Green, Jerry Vaughn, Tad Leggett, and Rodger Smith, racially harassed him on August 6, 2002 at Prairie Meadows. The exact nature of the allegations does not affect this appeal, but they involved extremely offensive and threatening conduct. After Famous reported the incident to RACI human resources personnel, RACI notified the jockeys that they were “denied entrance and access to the facility of Prairie Meadows pending the outcome of a stewards hearing on the incident.” Furthermore, they were informed if they attempted to enter Prairie Meadows, they would be deemed trespassers and would be subject to arrest or citation. The Board of Stewards conducted an investigation into the claim of misconduct. It interviewed Famous, the jockeys, and other witnesses. On August 19, the Board concluded “the investigation did not reveal evidence of a rule violation committed by an IRGC licensee.” Immediately following the Board decision, RACI gave the jockeys notice that they were denied entrance or access to Prairie Meadows “pending an independent investigation by Prairie Meadows of alleged harassment.”

RACI completed its investigation of the alleged incident on August 20. RACI concluded Jerry Vaughn would be allowed to re-enter Prairie Meadows with no further action taken. It decided Tad Leggett could re-enter if he apologized to Famous. However, Rodger Smith was banned from Prairie Meadows for the remainder of the season and could not return for the 2003 season unless he completed a diversity class. RACI permanently banned Brian Green from Prairie Meadows. The different actions were taken based on the different roles of thé jockeys in the incident as determined by the investigation.

The jockeys filed a petition against RACI asserting a claim of intentional interference with contractual relations. On August 30, 2002, they amended their petition to add a claim that RACI violated their due process rights under the Iowa and United States Constitutions. Following a hearing, the district court issued a temporary injunction on September 30, enjoining RACI from excluding Green and Smith from Prairie Meadows. RACI then moved for summary judgment. On April 7, 2004, the district court granted summary judgment in favor of RACI and dissolved the temporary injunction. The jockeys appeal.

II. Standard of Review

We have previously defined our standard of review from orders granting summary judgnent. Our review is for correction of errors at law. Otterberg v. Farm Bureau Mut. Ins. Co., 696 N.W.2d 24, 27 (Iowa 2005). In reviewing the record, we are mindful that

[a] motion for summary judgment should only be granted if, viewing the evidence in the light most favorable to the nonmoving party, “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

Id. (citations omitted).

III. Due Process

The jockeys claim RACI deprived them of procedural due process when it excluded them from Prairie Meadows without prior notice and a hearing. They claim this action violated their rights under the Fourteenth Amendment to the United States Constitution and article I, sections 1 and 9 of the Iowa Constitution. Both constitutions prohibit the State from depriving a person of “property, without due process of law.” U.S. Const, amend. XIV, § 1; Iowa Const, art. I, § 9. Yet, the provisions only limit state action. Jensen v. Schreck, 275 N.W.2d 374, 384 (Iowa 1979). They do not refer to individual activity. Id. Thus, RACI can only be liable under a due process claim if it was a state actor.

It is undisputed that RACI is a private, nonprofit corporation, licensed to do business in Iowa and licensed by the Iowa Racing and Gaming Commission to conduct racing and gaming activities at Prairie Meadows Racetrack & Casino in Altoona, Iowa. Nevertheless, “ ‘when it can be said that the State is responsible for the specific conduct of which the plaintiff complains,’ ” conduct of a private actor may be deemed state action and subjected to constitutional standards. Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n, 531 U.S. 288, 295, 121 S.Ct. 924, 930, 148 L.Ed.2d 807, 816-17 (2001) (quoting Blum v. Yaretsky, 457 U.S. 991, 1004, 102 S.Ct. 2777, 2786, 73 L.Ed.2d 534, 546 (1982)).

If the Fourteenth Amendment is not to be displaced, ... its ambit cannot be a simple line between States and people operating outside formally governmental organizations, and the deed of an ostensibly private organization or individual is to be treated sometimes as if a State had caused it to be performed. Thus, we say that state action may be found if, though only if, there is such a “close nexus between the State and the challenged action” that seemingly private behavior “may be fairly treated as that of the State itself.”

Id. (quoting Jackson v. Metro. Edison Co., 419 U.S. 345, 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477, 484 (1974)); accord Principal Cas. Ins. Co. v. Blair, 500 N.W.2d 67, 70 (Iowa 1993) (“Our inquiry must be whether there is a sufficiently close nexus between the state and the challenged action of the regulated entity so that the action of the latter may be fairly treated as the action of the state.” (citing Jackson, 419 U.S. at 358, 95 S.Ct. at 457, 42 L.Ed.2d at 488)).

The Supreme Court has held that a sufficiently close nexus between the State and the challenged conduct to establish state action exists when the State and a private corporation are joint participants in the challenged activity based on their interdependence. Burton v. Wilmington Parking Auth., 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961). In Burton v. Wilmington Parking Authority, an African-American man claimed his rights under the Fourteenth Amendment were violated when a coffee shop in a city parking garage denied him service. Id. at 720, 81 S.Ct. at 859, 6 L.Ed.2d at 49. The Wilmington Parking Authority, an agency of the State of Delaware, leased space in one of its parking garages to the business, a private corporation called Eagle Coffee Shoppe, Inc. Id. at 716, 81 S.Ct. at 857, 6 L.Ed.2d at 47. The Authority provided gas and heat to Eagle and provided various repairs. Id. at 719-20, 81 S.Ct. at 858, 6 L.Ed.2d at 49. In addition, improvements Eagle made to the premises were tax-exempt. Id. The Authority benefited from the lease arrangement by virtue of the $28,700 in rent it received annually from Eagle. Id. at 723, 81 S.Ct. at 861, 6 L.Ed.2d at 51. Without the rent received from commercially leased portions of the parking buildings, they would have been an “ ‘unprofitable enterprise.’ ” Id.

The Supreme Court found state action, reasoning,

The State has so far insinuated itself into a position of interdependence with Eagle that it must be recognized as a joint participant in the challenged activity, which, on that account, cannot be considered to have been so “purely private” as to fall without the scope of the Fourteenth Amendment.

Id. at 725, 81 S.Ct. at 862, 6 L.Ed.2d at 52. The Court observed that “the relationship of the restaurant to the parking facility in which it is located confers on each an incidental variety of mutual benefits.” Id. at 724, 81 S.Ct. at 861, 6 L.Ed.2d at 51. In a later case, the Court called the arrangement between the parking authority and the coffee shop in Burton a “symbiotic relationship.” Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 175, 92 S.Ct. 1965, 1972, 32 L.Ed.2d 627, 638 (1972).

It is under this “symbiotic relationship” theory that the jockeys argue RACI is a state actor to which the Constitution applies. The jockeys claim RACI has a symbiotic relationship with Polk County because: (1) Prairie Meadows operates on public property leased from Polk County; (2) some members of RACI’s board of directors are “appointed by and are intended to represent the Polk County Board of Supervisors”; (3) RACI “pays property taxes only by way of agreement with Polk County”; (4) Polk County receives lease payments in amounts the jockeys believe are excessive; (5) “The stated primary purpose of the operation of Prairie Meadows is to stimulate the economy of Polk County and the surrounding area”; and (6) Polk County depended on RACI “for revenue to pay off existing bonds that financed the purchase and building of’ Prairie Meadows, which Polk County owns as realty.

RACI submitted several exhibits along with its statement of undisputed material facts showing the relationship between RACI and Polk County. Although RACI and Polk County initially functioned under an operating agreement, it was terminated in 1998 and replaced with a lease agreement. In the lease agreement, Polk County leased the Prairie Meadows premises (real estate and improvements) to RACI in exchange for $1 million per month in rent for five years. In addition, RACI was to pay to Polk County the first $15 million of its net receipts generated in each calendar year from 1998 to 2000, the first $15.5 million of its net receipts generated in 2001, and the first $16 million of its net receipts generated in 2002. The lease further provided that Polk County had no obligation to make repairs or improvements or perform maintenance, and that RACI was responsible for paying all utilities for Prairie Meadows. Polk County would pay all real estate taxes, and RACI would pay any and all personal property taxes and special assessments. Further, the lease reserved the power for a county representative to enter Prairie Meadows and have access to RACI’s books and records “in furtherance of [Polk County’s] responsibility to the public and in protection of its property.” Finally, the lease stated: “Nothing contained in this Lease shall constitute or be construed to be or create a partnership or joint venture between [Polk County], on the one part, and [RACI], on the other part.”

Generally, a lease between a government entity and a private corporation “is insufficient, standing alone, to show state action.” Harvey & Corky Corp. v. Erie County, 56 A.D.2d 136, 392 N.Y.S.2d 116, 118 (1977) (citing Golden v. Biscayne Bay Yacht Club, 530 F.2d 16, 33 (5th Cir.1976)); see also NBC v. Comm’ns Workers of Am., AFL-CIO, 860 F.2d 1022, 1028 (11th Cir.1988) (lease did not provide “nexus or joint action sufficient to constitute state action”); Greco v. Orange Mem’l Hosp. Corp., 513 F.2d 873, 880 (5th Cir.1975) (lease insufficient when the private lessee “is ultimately responsible for the daily maintenance, upkeep, and operation of the facility,” must “maintain and operate the hospital at its own expense and to hold the lessor harmless from any liability incurred in operating the facility,” and must “provide adequate fee, tornado, and explosion insurance and in the event of any damage to use the proceeds to repair the hospital”). Instead, it is only when there has been governmental involvement or a mutual conferring of benefits between the governmental lessor and the private lessee that courts have usually found state action. See Ludtke v. Kuhn, 461 F.Supp. 86, 93-94 (S.D.N.Y.1978) (New York Yankees found to be state actors, in equal-protection action brought by female journalist excluded from Yankee locker-room, because they leased the stadium from the City of New York, “the annual rentals to be paid to the City for use of the stadium depend directly on the drawing power of Yankee games, and the City has in turn invested substantial sums of public money to enhance that drawing power by modernizing and improving the stadium itself,” and “[advertising and massive publicity about the Yankees and individual Yankee ballplayers is essential to the profitability of the Yankee Stadium”); Niswonger v. Am. Aviation, Inc., 424 F.Supp. 1080, 1081 (E.D.Tenn.1976) (private corporation operating airport in premises leased from city and county was a state actor because “the operation of airports and air navigation facilities in Tennessee is declared to be a public purpose,” and the corporation was performing a public function).-

In this case, the only evidence of county involvement in RACI’s operations was that four of RACI’s thirteen members on the board of directors were appointed by the Polk County Board of Supervisors. Other courts have found that the appointment of some of the corporate board members by a governmental entity does not transform the action of the corporation into action of the governmental entity. See Kiracofe v. Reid Mem’l Hosp., 461 N.E.2d 1134, 1138 (Ind.Ct.App.1984) (no state action although “the hospital’s Board of Directors consisted] of twenty-one members, four of which are appointed by the Richmond City Council, the Wayne County Council, the Wayne Township Trustee, and the Wayne County Commissioners”); Renforth v. Fayette Mem’l Hosp. Ass’n, 178 Ind.App. 475, 383 N.E.2d 368, 374 (1978) (no state action when three of hospital’s board of trustees were appointed by governmental entities;' evidence was they “acted independently and did not report to the governmental bodies which elected them”); Weston v. Carolina Medicorp, Inc., 102 N.C.App. 370, 402 S.E.2d 653, 658 (1991) (“The appointment right [of county commissioners] of some but not all of the [hospital’s board of] trustees, though indicative of state action, does not alone compel the conclusion that the suspension and revocation of [hospital doctor’s] staff privileges constituted state action in this case.”); see also Crowder v. Conlan, 740 F.2d 447, 451 (6th Cir.1984) (no state action although two of hospital’s thirteen-member board of trustees were public officials); However, the Supreme Court has considered it to be a factor in determining whether the private and public entities are so entwined that the private entity may be deemed a state actor. See Brentwood Acad., 531 U.S. at 300, 121 S.Ct. at 932, 148 L.Ed.2d at 820 (considering fact that “State Board members are assigned ex officio to serve as members of the board of control and legislative council”).

With respect to the issue of whether Polk County and RACI mutually confer benefits on one another, it is obvious that Polk County benefits financially from the lease agreement with RACI, both directly, though rent and net-receipts payments, and indirectly, through stimulation of the local economy. In addition, RACI benefited from the original arrangement with Polk County .in that when the legislature amended chapter 99F to allow slot machines at racetracks, Polk County issued more then $26 million in revenue bonds to pay for remodeling of Prairie Meadows to accommodate slots, acquisition of slot machines, and other start-up costs.

However, this , mutual benefit does not mean that the state-action requirement is satisfied. Burton was the high watermark by the Supreme Court in the state-action arena, considering that the Wilmington Parking Authority was not directly involved in the Eagle Coffee Shoppe’s decision to deny service to African-American customers. See Burton, 365 U.S. at 725, 81 S..Ct. at 861, 6 L.Ed.2d at 52 (“But no State may effectively abdicate its responsibilities by either ignoring them or by merely failing to discharge them whatever the motive may be.”). In later cases, the Court has significantly tempered its Burton holding, repeatedly stating that “where the impetus for the discrimination is private, the State must have ‘significantly involved itself with invidious discrimination[ ]’ in order for the discriminatory action to fall within the ambit of the constitutional prohibition.” Moose Lodge No. 107, 407 U.S. at 173, 92 S.Ct. at 1971, 32 L.Ed.2d at 637 (quoting Reitman v. Mulkey, 387 U.S. 369, 380, 87 S.Ct. 1627, 1634, 18 L.Ed.2d 830, 838 (1967)); see Brentwood Acad., 531 U.S. at 295, 121 S.Ct. at 930, 148 L.Ed.2d at 816-17 (“[Cjonstitu-tional standards are invoked ‘when it can be said that the State is responsible for the specific conduct of which the plaintiff complains.’ ” (Citation omitted; second emphasis added.)); Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 52, 119 S.Ct. 977, 986, 143 L.Ed.2d 130, 145 (1999) (“Whether such a ‘close nexus’ exists, our cases state, depends on whether the State ‘has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State.’ Action taken by private entities with the mere approval or acquiescence of the State is not state action.” (Citations omitted.)); Nat’l Collegiate Athletic Ass’n v. Tarkanian, 488 U.S. 179, 195, 109 S.Ct. 454, 464, 102 L.Ed.2d 469, 486-87 (1988) (“Neither UNLV’s decision to adopt the NCAA’s standards nor its minor role in their formulation is a sufficient reason for concluding that the NCAA was acting under color of Nevada law when it promulgated standards governing athlete recruitment, eligibility, and academic performance.”); Blum, 457 U.S. at 1004-05, 102 S.Ct. at 2786, 73 L.Ed.2d at 546-47 (“[A] State normally can be held responsible for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State. Mere approval of or acquiescence in the initiatives of a private party is not sufficient to justify holding the State responsible for those initiatives under the terms of the Fourteenth Amendment.” (Citations omitted.)); Jackson, 419 U.S. at 357, 95 S.Ct. at 456-57, 42 L.Ed.2d at 487 (“Approval by a state utility commission of such a request from a regulated utility, where the commission has not put its own weight on the side of the proposed practice by ordering it, does not transmute a practice initiated by the utility and approved by the commission into ‘state action.’ ”). The key to Burton was that Eagle affirmatively contended that to serve African Americans “would injure its business.” Burton, 365 U.S. at 725, 81 S.Ct. at 861, 6 L.Ed.2d at 51. The Wilmington Parking Authority directly profited from Eagle’s discrimination, and those profits were “indispensable elements in[ ] the financial success of a governmental agency.” Id.

In this case, there is no indication Polk County profited at all from RACI’s exclusion of the jockeys without notice or hearing. Furthermore, there is no indication Polk County or the county-appointed directors on the RACI board of directors participated in the decision to exclude the jockeys from Prairie Meadows. Rather, the undisputed evidence was that RACI’s director of human resources made the decision to issue the trespass notices to the jockeys. This evidence is significant because there must be some connection between the government and “ ‘the specific conduct of which the plaintiff complains’ ” for the government to be held responsible for the private actor’s conduct. Brentwood Acad., 531 U.S. at 295, 121 S.Ct. at 930, 148 L.Ed.2d at 816-17 (citation omitted; emphasis added); accord Gilmore v. City of Montgomery, 417 U.S. 556, 573, 94 S.Ct. 2416, 2426, 41 L.Ed.2d 304, 319 (1974) (stating the overriding concern is “whether there is significant state involvement in the private discrimination alleged” (citations omitted)). Our role in ascertaining this connection has been described as follows:

The judicial obligation is not only to preserve an area of individual freedom by limiting the reach of federal law and avoid the imposition of responsibility on a State for conduct it could not control, but also to assure that constitutional standards are invoked when it can be said that the State is responsible for the specific conduct of which the plaintiff complains.

Brentwood Acad., 531 U.S. at .295, 121 S.Ct. at 930, 148 L.Ed.2d at 816-17 (citations, quotation marks, and brackets omitted); see also Putensen v. Hawkeye Bank, 564 N.W.2d 404, 408 (Iowa 1997) (“Constitutions were not designed to micromanage disputes between citizens, and, to resolve most lawsuits, citizens must resort to statutes and the common law. A state due process clause becomes implicated at the point where the power of the state is called upon by a private party in such a way as to deprive another of life, liberty or property.”). Here, there was no evidence that Polk County controlled RACI’s decision to exclude the jockeys. Moreover, when the connection is based on a benefit received by the county, it is not enough under Burton and its progeny to show that Polk County benefited generally from RACI’s operation of Prairie Meadows. Rather, the jockeys had to show Polk County benefited from the constitutional violation alleged. Only then could we say Polk County was responsible for the violation. There was simply insufficient involvement with Polk County, as a matter of law, to fairly attribute RACI’s action to exclude the jockeys from Prairie Meadows to Polk County. The district court correctly granted summary judgment in favor of RACI on the jockeys’ constitutional claim.

IV. Intentional Interference with Existing and Prospective Contractual Relations

The jockeys also claim RACI tor-tiously interfered with existing and prospective riding contracts the jockeys had with horse-owners and trainers. The district court granted summary judgment to RACI on both claims. On appeal, the jockeys abandoned the claim of prospective contractual relations, and we consequently only consider the claim of interference with existing contracts.

The elements of the tort of intentional interference with an existing contract are:

‘“(1) plaintiff had a contract with a third-party; (2) defendant knew of the contract; (3) defendant intentionally and improperly interfered with the contract; (4) the interference caused the third-party not to perform, or made performance more burdensome or expensive; and (5) damage to the plaintiff resulted.’ ”

Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 399 (Iowa 2001) (quoting Jones v. Lake Park Care Ctr., Inc., 569 N.W.2d 369, 377 (Iowa 1997)). RACI conceded for purposes of summary judgment that the jockeys had contractual relationships with horse-owners and trainers, and RACI did not dispute that it knew of the relationships. Rather, RACI claimed it was entitled to summary judgment because there were no facts pertaining to the claim to establish the third element: intentional and improper interference. Thus, the crux of the argument on appeal boils down to whether there are any facts associated with the jockeys’ claim from which a rational jury could find intentional and improper interference. Wilson v. Darr, 553 N.W.2d 579, 582 (Iowa 1996) (“[T]he moving party may establish a right to summary judgment by establishing the limits of the other part[y’s] proof. If those limits reveal that the resisting party has no evidence to factually support an outcome determinative element of that party’s claim, the moving party will prevail on summary judgment.” (citing Griglione v. Martin, 525 N.W.2d 810, 813-14 (Iowa 1994))); accord Mason v. Vision Iowa Bd., 700 N.W.2d 349, 353 (Iowa 2005) (stating that to generate a genuine issue of material fact, the nonmoving party must present some evidence from which a reasonable fact-finder could find in that party’s favor).

The intent to interfere with a contract does not make the interference improper. Berger v. Cas’ Feed Store, Inc., 543 N.W.2d 597, 599 (Iowa 1996) (citing Restatement (Second) of Torts § 767 cmt. d (1979)). The interference must be both intentional and improper. For purposes of a claim for intentional interference with a contract, the factors used to help determine if the challenged conduct was improper include:

1. The nature of the conduct.
2. The Defendant’s motive.
3. The interests of the party with which the conduct interferes.
4. The interest sought to be- advanced by the Defendant.
5. The social interests in protecting the freedom of action of the Defendant and the contractual interests of the other party.
6. The nearness or remoteness of the Defendant’s conduct to the interference.
7. The relations between the parties.

Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751, 767 (Iowa 1999); accord Restatement (Second) of Torts § 767, at 26-27.

In Berger, we quoted from Restatement (Second) of Torts section 767 comment d:

“[I]f there is no desire at all to accomplish the interference and it is brought ■ about only as a necessary consequence of the conduct of the actor engaged in for an entirely different purpose, his knowledge of this makes the interference intentional, but the factor or motive carries little weight towards producing any determination that the interference was improper.”

Berger, 543 N.W.2d at 599 (quoting Restatement (Second) of Contracts § 767 cmt. d). Thus, conduct is generally not improper if it was merely a consequence of actions taken for a purpose other than to interfere with a contract. See id. (“[A] party does not improperly interfere with another’s contract by exercising its own legal rights in protection of its own financial interests.” (citing Wilkin Elevator v. Bennett State Bank, 522 N.W.2d 57, 62 (Iowa 1994))).

In this case, RACI supported its motion for summary judgment with evidence that the only reason it acted to exclude the jockeys from the track was to responsibly respond to the allegations that the jockeys racially harassed the jockey room custodian. It contends this undisputed fact means that if its conduct did interfere with the jockeys’ riding contracts, the interference was not improper but only a consequence of actions taken for the purpose of satisfying its obligation under the law as an employer. See Farmland Foods, Inc. v. Dubuque Human Rights Comm’n, 672 N.W.2d 733, 744 (Iowa 2003) (noting that an employer’s failure to take proper remedial action in response to harassment by a nonsupervisory employee is an essential element of a hostile-work-environment claim under the civil rights acts); see also Taylor v. Jones, 653 F.2d 1193, 1199 (8th Cir.1981) (“[E]mployer toleration of a discriminatory atmosphere alone gives rise to a cause of action by the [employee].”).

We recognize a legitimate need of an employer to investigate the allegations of harassment in the workplace and, based upon the results of an investigation, to take responsible action against employees who harass other employees. See Taylor, 653 F.2d at 1199; Farmland Foods, Inc., 672 N.W.2d at 744. Thus, we agree with RACI that if the evidence in this case only shows it acted for the purpose of satisfying its legal obligation to protect the interests of employees and to maintain a hostility-free work environment, then there can be no viable claim for interference with a contract. The factors used to determine the existence of improper conduct support this conclusion. See Revere Transducers, Inc., 595 N.W.2d at 767 (listing factors). If the sole motive is a legitimate purpose derived from the law, then any interference is not improper as a matter of law. See Berger, 543 N.W.2d at 599 (“[A] party does not improperly interfere with another’s contract by exercising its own legal rights in protection of its own financial interests.” (Citation omitted.)). See generally Restatement (Second) of Torts § 767 cmt. b, at 28 (“The rules stated in §§ 768-774 show[ ] the results of the balancing process in some specific situations that have been the subject of judicial decision; but they do not constitute an exhaustive list of situations in which it has been determined that an intentional interference with contractual relations is not improper.”).

When a motion for summary judgment is properly supported, the nonmov-ing party is required to respond with specific facts that show a genuine issue for trial. See Hlubek v. Pelecky, 701 N.W.2d 93, 95-96 (Iowa 2005) (“[T]he nonmoving party may not rest upon the mere allegations of his pleading but must set forth specific facts showing the existence of a genuine issue for trial.” (citing Iowa R. Civ. P. 1.981(5); Hoefer v. Wis. Educ. Ass’n Ins. Trust, 470 N.W.2d 336, 338-39 (Iowa 1991))). This means the jockeys in this case were required to set forth some facts in resisting RACI’s motion for summary judgment that could support the existence of an improper motive.

The jockeys failed to point to any facts in resisting the motion for summary judgment to show RACI’s motive was improper. In fact, they offered no facts bearing'on the issue of motive in'resisting the summary judgment motion, but only made eonclusory allegations that RACI’s actions were improper. Moreover, the jockeys' did not remedy this deficiency when they provided the trial judge with a copy of the complete temporary-injunction record at the summary judgment hearing. Our rules require a nonmoving party to identify the specific facts that show the existence of a genuine issue for trial. Iowa R. Civ. P. 1.981(5). When, as in this case, a party resisting summary judgment seeks to generate a fact issue on an actor’s motive, that party must identify specific facts that reveal the alleged underlying motive. See Hoefer, 470 N.W.2d at 338-39 (“While intentional torts ... are generally poor candidates for summary judgment because of the subjective nature of motive and intent the rule is not absolute and, ... ‘there is no genuine issue of fact if there is no evidence.’ Put another way, the party resisting summary judgment ‘may not rest upon the mere allegations or denials of his pleading.’ The resistance must set forth specific facts constituting competent evidence to support a prima facie claim.” (Citations omitted.)).

Notwithstanding, the jockeys argue that an inference of an improper motive can be drawn from the undisputed facts offered by RACI in its motion for summary judgment. They claim RACI’s threat to arrest the jockeys and the severity of the RACI’s responsive action, as well as RACI’s decision to pursue an independent investigation following the stewards’ investigation, all support an inference of an improper motive.

We recognize that a nonmov-ing party is entitled to all reasonable inferences in a motion for summary judgment. See Perkins v. Wal-Mart Stores, Inc., 525 N.W.2d 817, 818 (Iowa 1994) (“[S]ummary judgment is like a directed verdict: Every legitimate inference that reasonably can be deduced from the evidence should be given to the nonmoving party.”). However, the requirement to identify specific facts in response to a summary judgment motion includes the requirement to identify those facts that support the inference sought to be drawn. The jockeys have not done so.

V. Conclusion

RACI was entitled to summary judgment on the jockeys’ due process claim because RACI is not a state actor. RACI was also entitled- to summary judgment on the jockeys’ tortious interference claims. We affirm the judgment of the district court.

AFFIRMED.

All justices concur except WIGGINS, J., who takes no part.

      . Famous was the jockey room custodian, a racing official under Iowa Administrative Code rule 491 — 10.4(11) (2001).

      . Stewards are “racing official[s] appointed or approved by the [Racing and Gaming C]ommission to perform the supervisory and regulatory duties relating to parimutuel racing.” Iowa Admin. Code r. 491 — 4.2(17A). The stewards are responsible for “monitor[ing], supervising], and regulating] the activities of occupational and parimutuel racetrack licensees,” including investigating possible violations of racing and gaming rules by licensees. Id. r. 491 — 4.6(2). The jockeys are licensees. See id. r. 491 — 6.2(1) ("All persons participating in any capacity at a racing or gaming facility, with the exception of certified law enforcement officers while they are working for the facility as uniformed officers, are required to be properly licensed by the commission.”).

      .Presumably, the action was meant to be brought under 42 U.S.C. § 1983, although the amended petition did not refer to that statute. See 42 U.S.C. § 1983 (2004) ("Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State ... subjects ... any citizen of the United States ... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress ....”).
      A plaintiff in a § 1983 action must establish (1) that the defendants deprived the plaintiff of a right secured by the Constitution and laws of the United States, (2) that the defendant acted under color of state law, (3) that the conduct was a proximate cause of the plaintiff’s damage, and (4) the amount of damages.

        Dickerson v. Mertz, 547 N.W.2d 208, 214 (Iowa 1996) (citations omitted).

      . The Supreme Court has repeatedly stated:
      “In cases under § 1983, 'under color’ of law has consistently been treated as the same thing as the 'state action' required under the Fourteenth Amendment." The ultimate issue in determining whether a person is subject to suit under § 1983 is the same question posed in cases arising under the Fourteenth Amendment: is the alleged infringement of federal rights “fairly attributable to the State?”

        Rendell-Baker v. Kohn, 457 U.S. 830, 838, 102 S.Ct. 2764, 2769-70, 73 L.Ed.2d 418, 426 (1982) (citations omitted); accord Lugar v. Edmondson Oil Co., 457 U.S. 922, 929, 102 S.Ct. 2744, 2749, 73 L.Ed.2d 482, 490 (1982) (“[I]n a § 1983 action brought against a state official, the statutory requirement of action ‘under color of state law' and the 'state action' requirement of the Fourteenth Amendment are identical.”).


source: Caselaw Access Project

author: PAGE, Justice. MEYER, Justice

license: Public Domain

text:
    COUNCIL OF INDEPENDENT TOBACCO MANUFACTURERS OF AMERICA, et al., Appellants, v. The STATE of Minnesota, et al., Respondents.
    No. A03-2020.
    Supreme Court of Minnesota.
    March 16, 2006.
    Rehearing Denied May 16, 2006.
   OPINION

PAGE, Justice.

We are asked to determine the constitutionality of Minn.Stat. § 297F.24 (2004), Minnesota’s Cigarette Fee Act (the Act). Appellants, Council of Independent Tobacco Manufacturers of America, Carolina Tobacco Co., and Winner Tobacco Wholesale, Inc. (collectively, appellants), challenge the constitutionality of the Act on three grounds: (1) violation of the First Amendment to the United States Constitution and Article I, Sections 3 and 8, of the Minnesota Constitution; (2) violation of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and the Uniformity Clause of the Minnesota Constitution; and (3) violation of the prohibitions against bills .of attainder in the United States and Minnesota Constitutions. The district court and court of appeals upheld the Act against these challenges. We affirm.

I.

In 1994, in State by Humphrey v. Philip Morris Inc., the state and co-plaintiff Blue Cross and Blue Shield sued certain major cigarette manufacturers and trade organizations, asserting claims for monetary, equitable, and injunctive relief. Id., No. Cl-94-8565 (Ramsey Cty. Dist. Ct.). The state alleged that the defendants were responsible for health care costs incurred by the state as a result of the defendants’ wrongful conduct in deceptively advertising cigarettes and misleading the public about known health risks of smoking cigarettes.

The state settled with one of the defendant manufacturers, Liggett, in 1997 in exchange for its cooperation. In May 1998, the state settled with the remaining defendants (collectively, the Majors). State by Humphrey v. Philip Morris Inc., No. C1-94-8565 (Ramsey Cty. Dist. Ct., consent judgment entered, May 19, 1998). The terms of the settlement require the Majors to make six one-time settlement payments to the state and to make additional “annual payments” -to the state in perpetuity based, in part, on their annual tobacco sales.

The terms of the settlement also require the Majors to restrict their advertising, lobbying, and 'litigation activities. With respect to advertising, the Majors agreed to stop transit and billboard advertising of tobacco products in Minnesota, agreed to stop paying for product placement of their cigarettes and for cigarette advertisements in movies, and agreed to stop selling branded and logoed merchandise in Minnesota. With respect to lobbying, the Majors agreed to report to the state any payments made to lobbyists in connection with tobacco products or their use. Finally, the Majors agreed to not oppose the passage of certain legislation intended to reduce tobacco use by children, agreed not to facially challenge the enforceability or constitutionality of existing Minnesota laws and rules relating to tobacco control, and agreed not to support legislation that would preempt, override, or abrogate the state’s rights under the tobacco settlement.

Under the settlement, the annual payments to be made by the Majors to the state are to be based, in part, on their annual tobacco sales. But as the Majors raised their prices, presumably to cover the cost of the settlement, predictably they lost market share to other manufacturers who were not subject to the settlement. Although the Majors and Liggett accounted for 98 percent of cigarette sales in 1997, by 2002 their national market share had fallen to about 88 percent. It is presumed that smaller manufacturers who were not parties to the settlement have been able to capture a larger share of the market because of their lower prices.

Thus, the state faced a series of problems. The state claims that health care costs associated with the use of cigarettes not subject to the 1997 tobacco settlement were likely to increase because sales of those cigarettes were increasing, and the state was receiving less from the Majors with which to pay those costs. At the same time, because cigarette consumption by underage smokers is acknowledged to be price-sensitive, the increasing availability of cheaper cigarettes was doing little to discourage underage smoking.

To address these problems, in 2003 the Minnesota legislature enacted Minn.Stat. § 297P.24 (2004), Minnesota’s Cigarette Fee Act (the Act). The Act imposes a 35$ per pack fee on cigarettes distributed in Minnesota after June 30, 2003. But some cigarettes are exempt from the 35$ payment: cigarettes covered by the settlement between the Majors and the state, and cigarettes produced by other manufacturers that since 1997 have voluntarily entered into agreements with the state. The statute refers to those cigarettes on which the fee is imposed as “nonsettlement” cigarettes. Id,., subd. 2. The statute expressly states that the purposes of the fee are to:

(1) ensure that manufacturers of nonset-tlement cigarettes pay fees to the state that are comparable to costs attributable to the use of the cigarettes;
(2) prevent manufacturers of nonsettlement cigarettes from undermining the state’s policy of discouraging underage smoking by offering nonsettlement cigarettes at prices substantially below the cigarettes of other manufacturers; and (3)fund such other purposes as the legislature determines appropriate.

Id., subd. 1(b).

Appellants are an organization of cigarette manufacturers, an individual cigarette manufacturer, and a cigarette distributor, none of which were defendants in the initial state tobacco litigation and therefore are not parties to the Minnesota tobacco settlement. To prevent enforcement of the Act, on June 26, 2003, appellants filed a summons and complaint against the state, alleging the Act is unconstitutional. Appellants moved for a temporary restraining order and injunction. The district court denied appellants’ motion because it concluded that appellants had not satisfied the Dahlberg factors for issuance of a temporary restraining order or temporary injunction. See Dahlberg Bros., Inc. v. Ford Motor Co., 272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (1965).

After the parties stipulated to certain facts, appellants moved for summary judgment. The state also sought dismissal of the case, asserting that the Act does not violate any provisions of the United States or Minnesota Constitutions. The district court granted the state’s motion and denied appellants’ motion. The district court concluded that appellants had not overcome the presumption of constitutionality that generally accompanies legislative enactments because the Act was “certainly within the purview of the legislature.” The court found that, while appellants may not have been accused of wrongdoing, the legislature could impose the fee in the Act because the sale of low-cost cigarettes contributed to underage smoking. The court went on to say that the legislature “has an absolute right and duty to do everything with [sic] the Constitution to discourage illegal smoking and to discourage people from voluntarily increasing the cost of healthcare for the population in general.” According to the court, the Act does not violate either the Equal Protection Clause or the Uniformity Clause because the statute does not create a selective classification; it simply gives tobacco companies the choice to enter into payment agreements with the state to avoid subjecting their products to the fee. The court also rejected the due process, bill of attainder, and First Amendment claims.

The court of appeals affirmed, addressing each of appellants’ claims regarding the unconstitutionality of the Act. Council of Indep. Tobacco Mfrs. of Am. v. State, 685 N.W.2d 467 (Minn.App.2004). Applying the rational basis standard, the court of appeals concluded that the Act serves a legitimate purpose within the state’s power to achieve and that the fee is not a direct attempt to regulate speech; therefore, there was no First Amendment violation. Council, 685 N.W.2d at 473.

Second, the court of appeals applied the Minnesota rational basis test and concluded that the Act does not violate the Equal Protection Clause or the Uniformity Clause. Council, 685 N.W.2d at 473-74. The court concluded that a reasonable basis exists for distinguishing between settling and nonsettling manufacturers because settling manufacturers make annual payments to the state in perpetuity and nonsettling manufacturers do not. Id. at 474. The court also reasoned that the classification in the Act is relevant to the purpose of the law because “[wjithout the cigarette fee, the non-settling manufacturers avoid assuming responsibility for the hidden costs of smoking and can maintain their prices at a lower level,” making smoking more attractive to underage smokers. Id. Additionally, the court concluded that the purposes of the Act are neither invidious nor arbitrary. Id.

The court of appeals rejected appellants’ bill of attainder claim because the court concluded that the Act regulates prospective conduct, rather than punishing past conduct, and is not punitive in nature. Council, 685 N.W.2d at 474-75. Finally, the court held that the Act does not constitute special legislation in violation of art. XII, § 1, of the Minnesota Constitution. Council, 685 N.W.2d at 475-76. The court reasoned that the legislature may lawfully “create different classes and apply different rules to them so long as the classification is based on substantial distinctions.” Id. at 475. The court applied our three-part rational basis test and concluded that “the classifications in the statute between settling manufacturers, who pay annual fees that subsidize the costs to the state of smoking and act to raise cigarette prices to discourage youthful smokers, and non-settling manufacturers, who do not, create a genuine and substantial distinction tied to a legitimate state interest.” Id. at 475-76.

We address all three of appellants’ arguments, beginning with appellants’ challenge under the First Amendment, then turning to appellants’ challenge under the Uniformity Clause and on equal protection grounds, and finally appellants’ challenge to the statute as a bill of attainder. In our analysis, we are reminded of the heavy burden appellants face in seeking to invalidate a statute. We are to invoke every presumption in favor of the constitutionality of the statute, Reed v. Bjornson, 191 Minn. 254, 257, 253 N.W. 102,104 (1934), and are to declare statutes unconstitutional only when absolutely necessary and with extreme caution. Walker v. Zuehlke, 642 N.W.2d 745, 750 (Minn.2002), quoting Boutin v. LaFleur, 591 N.W.2d 711, 714 (Minn.1999).

Because appellants have failed to meet this heavy burden with respect to any of the grounds they assert, we conclude that the statute is constitutional.

II.

Appellants first challenge the Act on grounds that it unconstitutionally restricts their First Amendment rights. Appellants assert that the Act unconstitutionally burdens their right to both petition the government for redress of grievances and to advertise, because the Act effectively conditions their right to advertise and to lobby the government on the payments required by the Act.

The restrictions on advertising and lobbying to which appellants object do not appear in the Act itself. Rather, they are part of the Majors’ 1998 settlement agreement with the state and the Commissioner of Revenue has stated that, as a matter of policy, they will be incorporated in any later settlements with other tobacco manufacturers.

The parties have stipulated that, under the 1998 settlement agreement, the Majors pay the equivalent of 64$ per pack. The Act specifies that, if other manufacturers settle with the state, their cigarettes will be subject to a fee of at least 48$ per pack (75 percent of what the Majors pay) and the settling manufacturers must submit to restrictions on advertising, lobbying, and access the courts as part of the settlements. Further, under the language of the Act, nonsettlement cigarettes are subject to a fee of only 35$ per pack and nonsettling manufacturers and distributors are not subject to any restrictions on their advertising, lobbying, or ability to litigate.

The state cannot deny a benefit on a basis that infringes appellants’ constitutionally protected interests, including freedom of speech. Perry v. Sindermann, 408 U.S. 593, 597, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972); Speiser v. Randall, 357 U.S. 513, 526, 78 S.Ct. 1332, 2 L.Ed.2d 1460 (1958). But to invoke this “unconstitutional conditions” doctrine, appellants must first show the statute in question in fact denies them a benefit they could otherwise obtain by giving up their First Amendment rights. See Perry v. Sindermann, 408 U.S. at 598, 92 S.Ct. 2694 (requiring plaintiff to show on remand that the decision to not renew his contract was, in fact, made in retaliation for his exercise of free speech). Appellants have failed to make this threshold showing.

Appellants argue that, in order to obtain the exemption provided in the Act, they must surrender their rights to advertise, lobby, and access the courts. But this argument ignores the fact that the impact on settlement cigarettes that are exempt under the Act is more per pack than the fee the Act imposes on cigarettes manufactured by appellants. Under the terms of the Minnesota tobacco settlement, as appellants have stipulated, the Majors pay the equivalent of 64$ per pack. Under the terms of the Act, the cigarettes of manufacturers that voluntarily agree to terms with the state are subject to a fee of at least 48$ per pack. The statute subjects the cigarettes of appellants to a fee of only 35$ per pack — little more than half of what the Majors pay — with no restrictions on appellants’ right to advertise, lobby, or access the courts. The Act expressly conditions exemption from the 35$ per pack charge on these payments:

For purposes of this section, a “non-settlement cigarette” means a cigarette manufactured by a person other than a manufacturer that:
(1) is making annual payments to the state of Minnesota under a settlement of the lawsuit styled as State v. Philip Morris Inc., No. Cl-94-8565 (Minnesota District Court, Second Judicial District), if the style of cigarettes is included in the computation of the payments under the agreement; or
(2) has voluntarily entered into an agreement with the state of Minnesota, approved by the attorney general, agreeing to terms similar to those contained in the settlement agreement, identified in clause (1) including making annual payments to the state, with respect to its national sales of the style of cigarettes, equal to at least 75 percent of the payments that would apply if the manufacturer was one of the four original parties to the settlement agreement required to make annual payments to the state.

MinmStat. § 297F.24, subd. 2 (2004).

Appellants have not shown they are worse off under the Act if they refuse to renounce their First Amendment rights. Therefore, appellants have not shown that, as a threshold matter, the Act denies them a benefit based on their renouncement of their First Amendment rights.

Nor does the statute here fit the Speiser/Perry model. In Speiser, the United States Supreme Court addressed the effect of a California statute that required veterans to sign a loyalty oath as a condition of receiving an exemption from property taxes. Speiser, 357 U.S. at 516-17, 78 S.Ct. 1332. In contrast to the California statute, the Act does not explicitly reference speech, nor is the stated purpose of the statute to restrict speech. See MinmStat. § 297F.24, subd. 1(b) (2004) (setting forth the purposes of the fee imposed by the Act). We conclude that, while the Act provides appellants with the opportunity to resolve any possible claims for past misconduct in the sale of their cigarettes by means of a voluntary settlement with the state, it does not coerce or penalize a manufacturer that does not avail itself of that opportunity. Simply put, paying less with no restrictions on First Amendment rights is not coercive and does not constitute a penalty.

Our conclusion comports with the result reached by a federal district court that addressed a First Amendment challenge to the national tobacco settlement. S & M Brands, Inc. v. Summers, 393 F.Supp.2d 604 (M.D.Tenn.2005). Under the national tobacco settlement, as a condition of receiving full settlement payments, participating states are required to enact “Qualifying Statutes” that obligate each tobacco product manufacturer to either become a “participating manufacturer” (as defined in the national tobacco settlement agreement) or make payments to an escrow fund. Those manufacturers that elect to become “participating manufacturers” make payments to the state and voluntarily agree to the same restrictions on advertising, lobbying, and product placement as the original signatories to the settlement. Those manufacturers that choose not to become “participating manufacturers” pay a fee that for the years 2003 through 2006 is $.0167539 per cigarette sold in the state, and for the years 2007 and thereafter is $.0188482 per cigarette sold. In S & M Brands, the federal district court upheld the escrow requirement on the same grounds we employ here: the escrow payments required under the national tobacco settlement are no greater than the amounts the manufacturer would be obligated to pay by participating in the settlement.

Thus, the focus of the unconstitutional conditions doctrine is on whether a governmental entity is denying a benefit to Plaintiffs that they could obtain by giving up their freedom of speech, or is penalizing them for refusing to give up their First Amendment rights. The Court finds that no such conditions are imposed' upon Plaintiffs under Tennessee’s legislative scheme. The Escrow Act, as amended by the ASR Amendment, leaves Plaintiffs no worse off financially than they would be under. the [Master Settlement Agreement], because it expressly provides that Plaintiffs are entitled to a refund on any amounts paid into escrow that they can demonstrate is in excess of the amount they would have paid under the [Master Settlement Agreement]. Further, Plaintiffs retain all of the First Amendment and other rights that the [participating manufacturers] gave up when they signed the [Master Settlement Agreement], Because Defendant is neither denying a benefit to Plaintiffs that they could obtain by giving up their freedom of speech nor punishing Plaintiffs for refusing to give up their free speech rights, the unconstitutional conditions doctrine does not apply.

Id. at 637-38 (citations omitted).

We therefore affirm the court of appeals’ holding that the Act does not unconstitutionally infringe appellants’ First Amendment rights.

III.

Appellants also challenge the statute as unconstitutional under the Uniformity Clause and on equal protection grounds. The Uniformity Clause of the Minnesota- Constitution, art. X, § 1, requires that taxes be “uniform upon the same class of subjects” but allows taxes to differ between subject classes. The legislature has broad discretion in granting tax exemptions. Rio Vista Non-Profit Housing Corp. v. County of Ramsey, 335 N.W.2d 242, 245 (Minn.1983) (citing Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 93 S.Ct. 1001, 35 L.Ed.2d 351 (1973)). We have stated we will not disturb a tax classification unless the classification is “clearly arbitrary and has no reasonable basis.” In re Cold Spring Granite Co., 271 Minn. 460, 466, 136 .N.W.2d 782, 787 (1965). And, consistent with our deference to the legislature in this area, we have quoted with approval the United States Supreme Court’s holding that those who would challenge a tax classification must show “the legislative facts on which the classification is apparently based could not reasonably be conceived to be true by the governmental decisionmaker.” Hegenes v. State, 328 N..W.2d 719, 721 (Minn.1983) (quoting Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 464, 101 S.Ct. 715, 66 L.Ed.2d 659 (1981)).

Having decided the Act does not unconstitutionally restrict appellants’ First Amendment rights, we review their Uniformity Clause challenge under the rational basis standard. ILHC of Eagan, LLC v. County of Dakota, 693 N.W.2d 412, 421-22 (Minn.2005), quoting Westling v. County of Mille Lacs, 581 N.W.2d 815, 820 (Minn.1998) (when the challenged statute does not involve a suspect classification or a fundamental right, the appropriate standard of review is rational basis). Our rational basis test requires us to consider three elements:

(1) the distinctions which separate those included within the classification from those excluded must not be manifestly arbitrary or fanciful but must be genuine and substantial, thereby providing a natural and reasonable basis to justify legislation adapted to peculiar conditions and needs; (2) the classification must be genuine or relevant to the purpose of the law; that is, there must be an evident connection between the distinctive needs peculiar to the class and the prescribed remedy; (3) the purpose of the statute must be one the state can legitimately attempt to achieve.

Miller Brewing Co. v. State, 284 N.W.2d 353, 356 (Minn.1979). We turn now to that analysis.

A.

As we did in Erie Mining Co. v. Comm’r of Revenue, 343 N.W.2d 261, 268 (Minn.1984), when conducting a rational basis review we consider the purpose of the statute first. In enacting MinmStat. § 297F.24, the legislature gave three express purposes:

(1) ensure that manufacturers of nonset-tlement cigarettes pay fees to the state that are comparable to costs attributable to the use of the cigarettes;
(2) prevent manufacturers of nonsettlement cigarettes from undermining the state’s policy of discouraging underage smoking by offering nonsettlement cigarettes at prices substantially below the cigarettes of other manufacturers; and
(3) fund such other purposes as the legislature determines appropriate.

Minn.Stat. § 297F.24, subd. 1(b).

We have previously upheld taxes aimed at the state’s first expressed purpose, namely, shifting or internalizing the social costs of a product. For example, in Miller Breioing, we analyzed an excise tax on beer, against which in-state manufacturers received a credit. Miller Brewing, 284 N.W.2d at 355. Although a brewer with no production facilities in the state claimed the tax violated the Uniformity Clause, we upheld the tax, noting the credit reflected in part that in-state brewers paid substantially more of the “social costs” resulting from the sale of beer in the state, such as costs for law enforcement and welfare. Id. at 356-57. Similarly, in Westling v. County of Mille Laos, 581 N.W.2d at 821, we upheld against a Uniformity Clause challenge a special tax on environmentally contaminated property because, in part, contaminated property imposes a “greater burden on society” than uncontaminated property. In Hegenes, 328 N.W.2d at 721, 723, we also upheld against a Uniformity Clause challenge a state tax statute that imposed higher taxes on residential real estate of four or more rental units, because larger multi-unit properties may differ from smaller properties in their use of governmental services such as fire and police protection.

And we have previously upheld taxes aimed at the state’s second expressed purpose, namely, preserving competition. So, for example, in Lifteau v. Metropolitan Sports Facilities Comm’n, 270 N.W.2d 749, 755 (Minn.1978), we upheld the exemption of three communities from the 2 percent tax imposed on retail beer and liquor sales in the metropolitan area. Id. at 752. Because those communities were located on the outskirts of the metropolitan area, they had licensed on-sale establishments both within and outside the area subject to tax. As we observed, if the legislature had not exempted those communities from the tax, competing on-sale establishments in the same community would have borne unequal burdens. Id. at 755. In Brainerd Area Civic Ctr. v. Comm’r of Revenue, 499 N.W.2d 468, 471-72 (Minn.1993), we upheld a graduated tax on combined gambling receipts because it leveled the playing field between large and small gambling operators.

However, in analyzing the purpose of the classifications created by the statute, we are not restricted to those purposes expressly stated by the legislature. Rather, any legitimate purpose can support the classifications created by the statute. In re McCannel, 301 N.W.2d 910, 917 (Minn.1980). So, for example, in Westling we acknowledged as legitimate a tax classification because, as we independently noted, a tax on contaminated property recaptures revenues lost when property values decline due to the contamination. 581 N.W.2d at 821. Also in Westling, we upheld a tax classification designed, in part, to change the behavior of those being taxed when we noted the tax on contaminated property gives owners of contaminated property an incentive to clean it up and encourages owners of uncontaminated property to act responsibly to avoid the tax. Id.

In accordance with these precedents, Minn.Stat. § 297F.24 has many legitimate purposes: internalizing the health care costs of cigarettes; discouraging underage smoking by limiting access to cheaper cigarettes; leveling the playing field between manufacturers already paying substantial sums to the state and newcomers who have gained market share at their expense; and recapturing revenue lost as the market shares of the settling manufacturers have declined.

B.

Having established that Minn. Stat. § 297F.24 has legitimate purposes, we continue our rational basis review by looking next to the classifications established by the statute. Under Miller Brewing, we ask whether the classifications established by the statute are reasonably related to those purposes — stated and unstated — based on their “logical effect.” Miller Brewing, 284 N.W.2d at 357. Again, the answer is yes.

The law imposes a fee of 35c per pack of cigarettes. Some cigarettes are exempt: those included in the computation of payments made to the state under the 1998 tobacco settlement and those as to which the manufacturer has agreed to a separate voluntary settlement with the state.

No matter which purpose we choose, the classifications (settling versus nonsettling) are relevant and logical. For example, if the purpose of the statute is to ensure that all cigarettes sold contribute toward the costs attributable to the use of those cigarettes, it is reasonable to impose an additional charge on the cigarettes of those manufacturers who are not otherwise contributing through either the tobacco settlement or individual voluntary settlements. If the purpose of the statute is to discourage underage smoking, it is reasonable, given the correlation between the cost of cigarettes and underage smoking, to impose an additional cost on low-cost cigarettes to drive up their prices. If the purpose of the statute is to level the playing field between settling and nonsettling manufacturers, it is reasonable to impose additional costs on the cigarettes of non-settling manufacturers. If the purpose of the statute is to recapture revenue lost by the state as the major manufacturers lose market share, it is reasonable to impose additional fees on the cigarettes of those manufacturers whose market share is increasing because the logical effect will be an increase in revenues collected. Because its classification is reasonably related to its purposes, Minn.Stat. § 297F.24 satisfies the second prong of the Miller Brewing test.

C.

Finally, we ask whether the differences between the taxpayers distinguished by the statute provide a “natural and reasonable basis” for separate classifications. Miller Brewing, 284 N.W.2d at 356. As indicated by Miller Brewing, our inquiry is whether there are substantial differences between settling and nonset-tling manufacturers and, if so, whether those differences provide a “natural and reasonable basis” for treating them differently. Again, the answer to both questions is yes. There are substantial differences between settling and nonsettling manufacturers. Settling manufacturers make payments to the state to cover the social costs of smoking; nonsettling manufacturers make no such payments. Settling manufacturers have agreed to changes in their behavior and marketing practices that are designed to reduce the health effects of their products in the future; nonsettling manufacturers have agreed to no such changes and, as a result, the state can expect to incur increasing costs in the future attributable to the use of nonsettling manufacturers’ products. Settling manufacturers have agreed to discourage underage smokers from buying their cigarettes; nonsettling manufacturers have made no such agreement and, in fact, have taken advantage of the settling manufacturers’ price increases to increase their own sales. Given the purposes of the statute, it is natural and reasonable to require the buyers of nonsettling manufacturers’ cigarettes to pay something toward the future health care costs to which their use of those cigarettes will give rise.

As shown above, the purposes of Minn. Stat. § 297F.24 are legitimate, the classifications established by the statute are reasonably related to those purposes, and the differences between settling and nonset-tling manufacturers provide a natural and reasonable basis for treating them differently under the statute. Thus, under our analysis in Miller Brewing, Minn.Stat. § 297F.24 is constitutional.

D.

While appellants agree the state has a legitimate interest in curbing the health care costs associated with cigarette smoking, they deny the state can require them to make payments comparable to the payments made by the Majors because, according to appellants, there is no proof they have done anything wrong.

Whether appellants have engaged in any wrongdoing is irrelevant to the inquiry: it is the harmful nature of their products that triggers the payment, and that their products are harmful is not disputed. The state need not, and should not be required to, allege wrongdoing against nonsettling manufacturers who admit the health effects of their products are no different from manufacturers who are already making payments to the state to cover those health costs. Nor should the state have to allege wrongdoing in the marketing or sale of a product that is acknowledged to be harmful in order to require the consumers of that product to bear at least some of the cost of rectifying that harm.

Appellants’ focus on the differences between Minn.Stat. § 297F.24 and the “qualifying statutes” required under the national tobacco settlement as proof of the Minnesota statute’s unconstitutionality is also misplaced. Approximately six months after execution of the Minnesota settlement agreement, 46 states and 6 other United States jurisdictions also settled their lawsuits against the major tobacco manufacturers by entering into a “Master Settlement Agreement.” Like Minnesota’s settlement, the Master Settlement Agreement (to which Minnesota is not a party) requires the participating tobacco manufacturers to make large settlement payments over time, to make additional annual payments in perpetuity, and to agree to certain restrictions on lobbying and advertising.

The Master Settlement Agreement anticipates that, as the participating manufacturers raise their prices to cover the costs of the master settlement, they will lose market share to nonparticipating manufacturers. Thus, as noted above, the Master Settlement Agreement requires participating states to enact “Qualifying Statutes” to neutralize the competitive advantage of nonparticipating manufacturers. Under the model “Qualifying Statute,” manufacturers of tobacco products must either join the Master Settlement Agreement or deposit a specified amount of funds into an escrow account each .year. Manufacturers that choose to deposit funds into an escrow account are entitled to receive the interest or other appreciation earned by those funds while they remain in the escrow account. Funds that are not paid out in judgments or settlement based on the manufacturer’s liability are returned to the manufacturer after 25 years.

These Qualifying Statutes have been challenged on equal protection grounds and upheld as constitutional. For example, in PTI, Inc. v. Philip Morris Inc., 100 F.Supp.2d 1179, 1207 (C.D.Cal.2000), non-settling manufacturers argued California’s Qualifying Statute was not rationally related to any legitimate government objective. But the court upheld the statute, deferring to the legislature’s determination that the statute was necessary to guarantee a source of recovery in potential future lawsuits against the nonsettling manufacturers. Id. The court also held that reducing the total quantity of inexpensive cigarettes available within the state was “a rational response to a known health threat.” Id. at 1207-08. Similarly, in Star Scientific, Inc. v. Beales, 278 F.3d 339, 351 (4th Cir.2002), the court acknowledged that Virginia’s Qualifying Statute created distinctions among manufacturers based on whether the manufacturer joined in the Master Settlement Agreement. But the court held those distinctions were rationally related to Virginia’s legitimate purpose of recovering from all manufacturers the state’s future costs related to cigarette smoking. Id. As to the nonsettling manufacturers’ complaint that they were required to pay more than the settling manufacturers, the court noted that the settling manufacturers had agreed to conduct restrictions to which the nonsettling manufacturers were not subject. Id. at 352-53. As the court observed, the nonsettling manufacturers were free to manufacture and market their products as they chose, but by paying funds into escrow they were essentially providing a surety bond against future liability for tobacco-related health care costs. Id. at 352. See also S & M Brands, 393 F.Supp.2d at 604 (stating that Tennessee’s Qualifying Statute did not violate the Equal Protection clause even if nonsettling manufacturers are treated differently because the distinctions between the nonset-tling and settling manufacturers were rational and related to a legitimate purpose).

Although the model Qualifying Statute requires nonparticipating manufacturers to make escrow payments that approximate the payments made by participating manufacturers, the amounts paid with respect to appellants’ products under Minn.Stat. § 297F.24 — 1.75c: per cigarette, 35<t per pack — are substantially less than the amounts paid by the Majors. Moreover, the payments are not intended to be available to pay any judgment or settlement for past, present, or future misconduct in the marketing or selling of appellants’ cigarettes. Their purpose is simply to reimburse the state, in part, for known future health care costs attributable to the use of the cigarettes and to discourage cigarette use by those who are under age. We will not second-guess a legislative tax classification that is not arbitrary and that has a reasonable basis in fact.

For these reasons, we hold that the Act does not violate the Uniformity Clause of the Minnesota Constitution and does not violate appellants’ equal protection rights.

rv.

Nor does Minn.Stat. § 297F.24 constitute a bill of attainder. In Reserve Mining Co. v. State, 310 N.W.2d 487, 490 (Minn.1981), we defined a bill of attainder as a statute that “specifically singles out an identifiable group or individual for the infliction of punishment by other than judicial authority.” Appellants argue the statute is a bill of attainder because it “applies only to designated entities,” presumably appellants. In Reserve Mining, we rejected the argument that a tax that applied only to taconite tailings not deposited on land in accordance with permits was a bill of attainder. Id. at 492. We did so even though the tax, in practice, affected only Reserve Mining — the only taconite producer at the time still dumping taconite tail-ings into Lake Superior. Id. at 490. Here, the statute in question, on its face, requires a payment with respect to all cigarettes, and the categories of cigarettes exempt from the tax are defined broadly. If this statute constitutes attainder, which it does not, so does every statute that requires payments with respect to some products and not others.

Nor are the payments imposed by the statute “punishment” exacted on appellants for their refusal to settle with the state. Again, at 35$ per pack, the fee imposed on appellants’ products is only about half what the Majors pay and about two-thirds of that imposed on other settling manufacturers — hardly punishment for refusing to settle.

We conclude that Minn.Stat. § 297F.24 does not violate appellants’ rights under the First Amendment, does not violate appellants’ right .to equal protection under the United States Constitution or uniformity under the Minnesota Constitution, and does not constitute a bill of attainder under either constitution.

Affirmed.

ANDERSON, RUSSELL A, C.J., and GILDEA, J., took no part in the consideration or decision of this case.

MEYER, Justice

(dissenting).

Because I would conclude that even under a rational basis standard of review the statute fails a Uniformity Clause challenge, I respectfully dissent.

I.

In my view, the Act must be viewed in light of the litigation that gave rise to it. The state’s 1994 lawsuit against the major cigarette manufacturers and their trade associations traces its origins to the formation of the Tobacco Institute and the Tobacco Industry Research Committee, later renamed the Council for Tobacco Research. In its 1994 lawsuit, the state alleged that, by forming these trade associations, the tobacco industry “undertook a special and continuing duty to protect the public health by representing that it would conduct and disclose unbiased and authenticated research on the health risks of cigarette smoking.” The state alleged that, instead of fulfilling that obligátion, the trade associations facilitated the deception of the American public about the health effects of smoking. According to the state’s complaint, there was a conspiracy among tobacco manufacturers to suppress independent research on the adverse health effects of smoking. The state also alleged that the industry knowingly and actively induced children and adolescents to smoke, in order to replace the approximately 400,000 individuals who die each year from smoking-related illnesses.

Thus, when the state sued the Majors in 1994, the state alleged that the defendants were responsible for health care costs incurred by the state as a result of the defendants’ wrongful conduct in deceptively advertising their cigarettes and misleading the public about known health risks of smoking. And, when the state settled with the Majors in 1998, the state released the Majors from all past and future tobacco-related claims the state had, or might have, against them, including “without limitation any future claims for reimbursement for health care costs allegedly associated with use of or exposure to [tjobacco [pjroducts.”

II.

Against this historical backdrop, I begin my analysis of the statute with appellants’ challenge under the Uniformity Clause. Like the majority, I apply the rational basis standard of review. See Scott v. Minneapolis Police Relief Ass’n, Inc., 615 N.W.2d 66, 74 (Minn.2000). Under that standard, the statute must satisfy three tests:

(1) the distinctions which separate those included within the classification from those excluded must not be manifestly arbitrary or fanciful but must be genuine and substantial, thereby providing a natural and reasonable basis to justify legislation adapted to peculiar conditions and needs; (2) the classification must be genuine or relevant to the purpose of the law, that is, there must be an evident connection between the distinctive needs peculiar to the class and the prescribed remedy; (3) the purpose of the statute must be one that the state can legitimately attempt to achieve.

Miller Brewing Co. v. State, 284 N.W.2d 353, 356 (Minn.1979). And, like the majority, I address the last test first, because the purpose of the statute is relevant to analysis of the first two tests.

I generally agree that the state has a legitimate interest in curbing the health care costs associated with cigarette smoking. The Minnesota Department of Health estimates that “[sjmoking costs Minnesota approximately $1.3 billion annually, the equivalent of approximately $3.36 for every pack of cigarettes sold, or $277 per Minnesota resident per year.” Minnesota Department of Health, Preventing and Reducing Tobacco Use at 1 (updated Dec. 9, 2003), http:// www.health.state.mn. us/divs/hpcd/tpc/background.html. Because smoking imposes substantial health care costs on the state, it is legitimate for the state to impose a fee on the products that generate those costs to recover some or all of those costs. Indeed, appellants do not appear to challenge the authority of the state to tax cigarettes — all cigarettes, that is — to recoup costs that result from then-use. I further agree that discouraging underage smoking is a legitimate state goal and that the state may pursue that goal by reducing the availability of low-cost cigarettes through the imposition of a fee on cigarettes. The problem is that, in the Act, the legislature stated that it was addressing these general purposes only with respect to nonsettlement cigarettes.

That brings into issue the other two rational basis factors. The first element of the rational basis test asks whether the distinctions between those required to pay the fee and those exempt from paying the fee are genuine and substantial, rather than arbitrary and fanciful. The court of appeals described the two classes created by the Act simply as settling manufacturers, on the one hand, “[who] are making annual payments,” and nonsettling manufacturers, on the other hand, “[who] are not.” Council of Indep. Tobacco Mfrs. of America v. State, 685 N.W.2d 467, 474 (Minn.App.2004). Similarly, the state argues that, absent the fees imposed by the Act, nonsettlement manufacturers are not required to pay for the health care costs created by their products, whereas the Majors have internalized those costs in the form of their required settlement payments. While true, these descriptions do not fully describe the distinctions between the two classes. It is more complete to say that the class exempt from the fee is cigarette manufacturers who were sued by the state for fraud and deceptive trade practices, whose unlawful actions were alleged to be the cause of increased health care expenditures incurred by the state, and whose payments to the state are based on their settlement of those allegations of unlawful conduct. In contrast, the class subject to the cigarette fee is manufacturers who were not sued by the state and as to whom no allegations of unlawful conduct have been either made or settled by the state.

Thus, because nonsettling manufacturers such as appellants were not sued for increasing health care costs by engaging in illegal conduct, they can charge less for cigarettes but must pay the fee, whereas settling manufacturers like the Majors are exempted from the fee because they are making payments under a settlement by which they avoided potential liability for increased health care costs caused by their alleged wrongful conduct. In essence, the legislature has attempted to treat those disparate situations similarly under the Act by imposing a fee on nonsettling manufacturers’ products that is intended to put their cigarettes in a financial posture comparable to those of settling manufacturers. In this sense, the question is whether the similarities between the two classes, rather than the distinctions, are genuine and substantial. Cf Jenness v. Fortson, 403 U.S. 431, 442, 91 S.Ct. 1970, 29 L.Ed.2d 554 (1971) (“Sometimes the grossest discrimination can lie in treating things that are different as though they were exactly alike ⅝ * *.”). I conclude they are not.

The contrast between this Act and the model qualifying statute created in the Master Settlement Agreement is illuminating. Six months after the Minnesota settlement agreement, 46 states and 6 U.S. territories also settled their lawsuits against the major tobacco manufacturers by entering into the “Master Settlement Agreement.” Like the Minnesota settlement, the Master Settlement Agreement requires the major tobacco manufacturers to make large settlement payments over time, to make additional annual payments in perpetuity, and to agree to certain restrictions on lobbying and advertising activities. In exchange, each participating state agreed to release the participating tobacco manufacturers from present and future claims.

The Master Settlement Agreement anticipates that, as the major tobacco manufacturers raise their prices to cover the costs of the national settlement, other tobacco manufacturers will gain market share. Therefore, the Master Settlement Agreement encourages all participating states to enact a “qualifying statute,” the purpose of which is to neutralize the competitive advantages that a nonparticipating tobacco manufacturer would otherwise enjoy as a result of the increased costs incurred by the participating tobacco manufacturers in the form of settlement ■ payments. A model qualifying statute was included as an exhibit to the Master Settlement Agreement. Subsection (f) of the Findings and Purposes section of the model qualifying statute provides that:

It would be contrary to the policy of the State if tobacco product manufacturers who determine not to enter into such a settlement could use a resulting cost advantage to derive large, short-term profits in the years before liability may arise without ensuring that the State will have an eventual source of recovery from them if they are proven to have acted culpably. It is thus in the interest of the State to require that such manufacturers establish a reserve fund to guarantee a source of compensation and to prevent such manufacturers from deriving large, short-term profits and then becoming judgment-proof before liability may arise.

All manufacturers of tobacco products are required under the model qualifying statute either to become a participating manufacturer (by agreeing to perform the obligations of the Master Settlement Agreement) or to place a specified amount of funds into a qualified escrow account each year. Those manufacturers that choose to deposit funds into an escrow account are entitled to receive the interest or other appreciation of those funds while they remain in the escrow account. The model qualifying statute provides three circumstances under which the funds in the escrow account may be released: (1) to pay a judgment or settlement won by the state against the manufacturer; (2) to reimburse the manufacturer for deposits in excess of what it would have paid had it been party to the Master Settlement Agreement; or (3) if there has been no judgment or settlement based on the manufacturer’s liability, the funds are returned to the manufacturer after 25 years. As noted, the Master Settlement Agreement encourages participating states to pass the model qualifying statute; if a state does not pass such a statute, its continuing settlement payments are reduced.

The goal of the model qualifying statute is similar to that of Minnesota’s Act: to put settling and nonsettling manufacturers in a comparable competitive position in pricing their cigarettes. But the payments required of nonsettling manufacturers under the model qualifying statute are premised on potential liability of those manufacturers for wrongdoing, and the escrowed funds are returned to the manufacturer if it is not found liable or does not settle a suit against it within 25 years. Indeed, because of this significant distinction between the Act and the model qualifying statute, the cases cited by the majority that uphold state-enacted model qualifying statutes provide no guidance on this issue.

Here, the classification seeks to use the cigarette fee as a means of compelling cigarette manufacturers that were not sued by the state to bear, one way or another, financial burdens comparable to those borne by manufacturers that were sued by the state. Put another way, the state is imposing a new fee on certain cigarette manufacturers’ products in order to reduce the differential between the sale price of cigarettes manufactured by settling manufacturers and the sale price of cigarettes manufactured by companies that have not settled with the state.

Allegations of wrongdoing underlie the entire tobacco lawsuit and its settlement. In contrast, the statute at hand alleges no wrongdoing against appellants but, nevertheless, seeks to compel them to make payments comparable to those made by the settling manufacturers. This statute exempts from taxation one segment of the industry that settled a lawsuit alleging illegal activity, while imposing a tax that is comparable to settlement payments upon a separate segment of the industry that was not sued by the state. Such a classification creates a distinction that is not a genuine and substantial basis for disparate treatment of settling and nonsettling manufacturers within the tobacco industry.

Despite the strong presumption in favor of the constitutionality of statutes and the low hurdle imposed by the rational basis standard, where that standard has not been met both the Supreme Court and this court have struck down taxes as violative of the Equal Protection and Uniformity Clauses. See Allegheny Pittsburgh Coal Co. v. County Commission, 488 U.S. 336, 109 S.Ct. 633, 102 L.Ed.2d 688 (1989) (recognizing that the imposition of differing tax burdens upon similarly situated parties must be reasonable); Nat’l Tea Co. v. State, 205 Minn. 443, 286 N.W. 360 (1939) (taxing “different persons” at “different rates” for the “privilege of doing the same act,” id. at 446, 286 N.W. at 361, violates the Uniformity Clause). The Act’s attempt to equate payments that emanate from settlement of litigation alleging illegal conduct with a fee that has no connection with wrongful conduct fails the rational basis test, and therefore I would hold that the Act violates the Uniformity Clause.

I therefore respectfully dissent.

      . The named defendants in the tobacco lawsuit were: Philip Morris Inc.; R.J. Reynolds Tobacco Co.; Brown & Williamson Tobacco Co.; B.A.T. Industries PLC, British-American Tobacco Co. Ltd.; BAT (U.K. & Export) Ltd.; Lorillard Tobacco Co.; The American Tobacco Co.; Liggett Group, Inc.; The Council for Tobacco Research-U.S.A., Inc.; and The Tobacco Institute, Inc.

      . Over the course of a six-year period (1998— 2003), the Majors agreed to make payments to the state pro rata to their market share in the following amounts: $240 million' — 1998; $220.8 million — 1999; $242.55 million per year in 2000, 2001, 2002; and $121.55 million in 2003. The Majors also agreed to make annual payments to the state pro rata to their market share on December 31, 1998, and each year thereafter totaling 2.55 percent of $4 billion in 1998; 2.55 percent of $4.5 billion in 1999; 2.55 percent of $5 billion in 2000; 2.55 percent of $6.5 billion in 2001 and 2002; and 2.55 percent of $8 billion in 2003 and thereafter in perpetuity.

      . We use the terminology given by the legislature to the payments required by the statute, and take no position on whether the payments are "fees” or "taxes.”

      . Although the statute refers to payments by manufacturers, as we indicated above, under Minnesota's Unfair Cigarette Sales Act, the fee is added to the minimum price of cigarettes and therefore is paid by smokers.

      . Like the majority, I use the terminology adopted by the statute, and take no position on whether the payments required by either the Act or the tobacco settlement are "fees” or “taxes.”

      . The state agreed at oral argument that the state does not have the authority to compel tobacco manufacturers, through litigation, to make payments for health care costs. Indeed, each count of the complaint linked the liability of the Majors not to the health care costs incurred by the state as a result of tobacco use generally, but to increased health care costs caused by their illegal conduct.