Author: Hamilton

Jury Issues $6 Million Verdict To Plaintiffs in Lead Paint Case

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On May 31, a federal jury in the Eastern District of Wisconsin issued a $6 million verdict to the plaintiffs in a trial relitigating whether plaintiffs can hold companies liable for marketing and manufacturing lead paint before it became illegal in 1978. The case is the first to use Wisconsin’s unique risk contribution theory of liability to allege defendant manufacturers caused the plaintiffs’ injuries, despite their inability to specifically link defendants’ products to their injuries. In this latest case, Burton v. American Cyanamid et al., defendants presented specific evidence that they did not manufacture the paint used in plaintiffs’ homes; however, three out of four defendants were still found liable under the risk contribution theory.

In 2005, the Wisconsin Supreme Court ruled in favor of plaintiffs using risk contribution theory in a similar case (Thomas v. Mallet). The decision allowed plaintiffs to hold manufacturers liable for contributing to the overall risk of lead poisoning, whether or not their paint specifically caused the injuries in question. The burden is placed on lead paint manufacturers to prove they did not produce or market lead paint during the relevant time period or in the geographical market.

Only one of four defendants in Burton v. American Cyanamid was able to prove it was not negligent in producing or marketing lead paint in Milwaukee during the relevant time. The remaining three defendants were found liable for negligently producing and marketing lead paint without adequate warning labels, causing the plaintiffs’ injuries. Accordingly, liability for the plaintiffs’ injuries will be distributed among the remaining three defendants based on their share of the market at the relevant time. The jury awarded $2 million per plaintiff, for a total of $6 million. The jury will determine market share at a subsequent trial.

The defendants plan to appeal the verdict.

More on lead paint cases in Wisconsin.

Teske v. Wilson Mutual Insurance Co. (Claim Preclusion)

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In Teske v. Wilson Mutual Insurance Co. (2019 WI 62), the Wisconsin Supreme Court held that previous litigation related to underinsured motorist (UIM) coverage precludes a second tort claim alleging negligence in the same accident.

The litigation arose from a car accident that injured four members of the Teske family: Julie, Katherine, Elle, and Emily. Emily Teske was driving the vehicle. John Teske was not in the car.

Julie, Katherine, and Elle Teske filed the first action against the other driver and her insurer State Farm. The parties agreed on a settlement wherein State Farm tendered its $300,000 policy limit to the plaintiffs. The Teskes’ insurer Wilson Mutual paid the Teskes their UIM policy limit minus the amount provided by State Farm in accordance with the Wilson policy’s reducing clause. An appeals court determined the validity of the Wilson payment.

After the conclusion of the first action, John, Julie, Katherine, and Elle Teske filed a claim alleging Emily Teske, who was driving the vehicle, was negligent. The Teskes sued Wilson directly as Emily’s insurer. Wilson argued claim preclusion barred this second action.

The Supreme Court held 6-0 that claim preclusion did apply to Julie, Katherine, and Elle’s negligence claim, barring the second action against Wilson. The second action satisfied all three required elements of claim preclusion:

  1. Identity of parties. Julie, Katherine, and Elle Teske and Wilson were named parties in both the first and second lawsuit.
  2. Identity of causes of action. The lawsuits both arose from a single accident. The decision noted claim preclusion analyses should focus on the identity of the facts, not the identity of the legal arguments. The court held that UIM actions involve both contracts and tort law, so the Teskes’ negligence claim against Emily could have been litigated in the first lawsuit.
  3. Final judgment reached. The appeals court did reach a final judgment in the Teskes’ first action.

However, the court was evenly divided as to whether John Teske was a party in the first lawsuit. While he was not named in the first lawsuit, he participated in the settlement process and received proceeds. With an evenly divided court (3-3 with Justice Shirley Abrahamson not participating), the Supreme Court affirmed the appeals court’s decision allowing John Teske’s claims to proceed because the identity of parties element of claim preclusion was not met.

Leicht Transfer & Storage Co. v. Pallet Central Enterprises, Inc. (Crime Insurance Coverage)

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In Leicht Transfer & Storage Co. v. Pallet Central Enterprises, Inc. (2019 WI 61), the Wisconsin Supreme Court held that amounts paid in response to forged delivery tickets are not covered losses under a crime insurance policy.

The underlying claim in the case arose when Pallet Central forged delivery tickets to Leicht. The companies used delivery tickets, which accompanied shipments, for inventory and billing purposes. The delivery tickets ultimately were part of an invoice package, and Leicht paid the invoices. Leicht paid $505,000 in response to the forged delivery tickets. When Leicht discovered the delivery tickets were for pallets it had never ordered or received, it filed a claim for its losses to its insurer, Hiscox Insurance Company, under its forgery coverage policy.

Hiscox denied coverage, arguing the delivery tickets were not a type of covered forged document under Leicht’s crime insurance policy. Leicht argued that the forged delivery tickets should be considered a “direction to pay” under the covered losses in the Hiscox policy.

The Supreme Court ruled in favor of Hiscox. The 6-1 decision stated that the delivery tickets were not covered “directions to pay” under the crime insurance policy because they do not reference any payment or amount due; instead, the delivery tickets simply gave details on the pallets delivered. While the companies used the delivery tickets in function as a direction to pay, the tickets are not actually a direction to pay under the policy.

In a dissent, Justice Ann Walsh Bradley sides with Leicht, arguing that, reading the policy from the perspective of a reasonable insured, the companies’ habitual practices related to the delivery tickets make them a direction to pay covered under the Hiscox policy. According to the dissent, the delivery tickets also fulfill other coverage requirements under the policy, including that they are similar to the listed covered forged documents under the policy and that the forged signatures on the delivery tickets were “purported to have been” made by Leicht employees.

Bill Lueders v. Scott Krug (Open Records Requests)

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In Lueders v. Krug (2018AP431), the Court of Appeals District II held that open records requesters have the right to receive electronic copies of email records.

Bill Lueders, editor of The Progressive magazine and president of the Wisconsin Freedom of Information Council, emailed an open records request to Wisconsin state Rep. Scott Krug (R-Nekoosa) for records on several water-related bills in the 2015-16 legislative session. Krug’s office printed out related emails, and Lueders came in person to look at the printouts. A few days later, Lueders sent Krug another email requesting the records in electronic form.

Krug argued he had already satisfied the open records request by providing the printouts of the emails, which were “substantially as readable as the original” according to Wis. Stat. s. 19.35(1)(b). However, the court noted that the full context of that statutory provision requires copies of records to be “substantially as readable” only if the requester makes the request in person. Lueders made his requests via email. The court further determined that electronic email records contain substantially different information (i.e. metadata about the sender, recipient, attachments, location of server, etc.) than printed email records. Therefore, the email printouts were not a sufficient response to Lueders’s enhanced request for electronic copies.

Wisconsin Institute for Law & Liberty, Wisconsin Freedom of Information Council, the MacIver Institute, Badger Institute, and Americans for Prosperity-Wisconsin filed an amicus brief supporting Lueders in this case.

Town of Delafield v. Central Transport Kriewaldt (Federal Preemption of Weight Limits)

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In Town of Delafield v. Central Transport Kriewaldt (2017AP2525), the Court of Appeals District II held that federal transportation law does not preempt the town’s seasonal weight restriction on certain roads.

Delafield posted signs identifying a seasonal weight restriction prohibiting vehicles over six tons from driving on designated town roads. A Central Transport delivery truck over six tons was subsequently issued a citation for driving on one of the designated roads while making a delivery to a Delafield resident.

Federal law (U.S. Code Title 49 s. 31114(a) and Title 23 s. 658.19) requires towns provide “reasonable access” between the interstate and terminals. Central Transport argued that the federal transportation law preempts the town’s weight limit because it did not allow Central Transport reasonable access between the interstate and the place of delivery in the town.

The appeals court rejected Central Transport’s argument, stating that Delafield did allow reasonable access. Although the weight limit prohibited Central Transport from reaching the delivery location, the town had set up a permit process providing exceptions to the weight limit to companies who contact the town’s highway superintendent. The court said Central Transport was not denied reasonable access because it could have used the permit process. The court said being aware of the town’s weight limit and permit process is simply a “cost of doing business” for trucking companies.

Menard, Inc. v. City of Marinette (Property Tax Assessment)

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In Menard, Inc. v. City of Marinette (2018AP533), the Court of Appeals District III considered a lawsuit challenging the City of Marinette’s property tax assessment of a Menard’s store.

In 2016, Marinette assessed the Menard’s store at a value of $9 million. Menard challenged the assessment in circuit court, contending the fair market value of the property was $6 million. The parties agreed to certain deadlines, and the circuit court issued a scheduling order. Menard timely disclosed its expert witness but failed to timely file an expert report.

Meanwhile, Menard filed an essentially identical case challenging the city’s 2017 assessment of the store property. Menard moved to consolidate the two cases and modify the 2016 scheduling order. The circuit court accepted the consolidation but, not knowing Menard had missed a deadline in the 2016 case, ordered the newly consolidated cases to proceed under the 2016 scheduling order, under which Menard had failed to timely submit its expert report. The circuit court denied Menard’s motion for reconsideration of a new scheduling order and eventually granted summary judgment in favor of Marinette.

The appeals court upheld the circuit court’s initial decision to keep both cases on the 2016 scheduling order; however, the appeals court overturned the circuit court’s denial of Menard’s motion for reconsideration as to the 2017 case. The circuit court should have reconsidered the scheduling order for the 2017 case once it found out Menard had missed the 2016 deadline for its expert report. Menard had missed its opportunity to submit an expert report in the 2016 case, but the circuit court should not have prevented Menard from the opportunity to submit a timely report in the 2017 case. Accordingly, the appeals court upheld summary judgment in favor of Marinette in the 2016 case but remanded the 2017 case to proceed in circuit court.

Lead Paint Case Moving in Eastern District of Wisconsin

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This month, a federal court held a trial relitigating whether plaintiffs can hold companies liable for marketing and manufacturing lead paint before it became illegal in 1978. The plaintiffs’ case, currently in the Eastern District of Wisconsin under Milwaukee Judge Lynn Adelman, uses Wisconsin’s unique risk contribution theory of liability to allege defendant manufacturers caused their injuries, despite their inability to specifically link defendants’ products to their injuries.

 

Burton v. American Cyanamid et al.

The plaintiffs in this case allege they were injured from ingesting lead paint when they were children. They argue that, although they cannot identify the specific manufacturer of the paint that harmed them, the defendant lead paint manufacturers are liable under a risk contribution theory of liability. The risk contribution theory allows plaintiffs to hold defendants liable if they produced a harmful product that contributed to the general risk of injury to the public. Under the theory, plaintiffs no longer have to establish causation between a particular defendant and their injury.

The defendants argue the plaintiffs have not suffered actual injuries and, even if they did, they have no evidence linking them to specific manufacturers’ paints. Furthermore, the negligence of parents who failed to supervise the children who ingested lead paint chips and landlords who allowed lead paint to deteriorate were an intervening superseding cause of the plaintiffs’ injuries. Plaintiffs then failed to mitigate their damages with proper medical treatment for elevated blood poisoning levels. Even if the defendants did not properly warn of the risks of ingesting lead paint, the plaintiffs have not proved the failure to warn was a cause of their injuries.

 

Background on Lead Paint in Wisconsin

In 2005, the Wisconsin Supreme Court ruled in favor of plaintiffs using risk contribution theory in a similar case (Thomas v. Mallet). The decision allowed plaintiffs to hold manufacturers liable for contributing to the overall risk of lead poisoning, whether or not their paint specifically caused the injuries in question. The burden is placed on lead paint manufacturers to prove they did not produce or market lead paint during the relevant time period or in the geographical market.

In another case in 2010, a federal judge in the Eastern District ruled against plaintiffs, arguing it violates due process rights to hold manufacturers liable when plaintiffs cannot determine which manufacturer’s paint caused the injury. However, the 7th U.S. Circuit Court of Appeals reversed the decision in Gibson v. American Cyanamid (2014), allowing plaintiffs in Wisconsin to move forward with the overall risk contribution theory presented in this case.

Wisconsin is currently the only state to recognize risk contribution theory for lead paint poisoning. Meanwhile, some claims in other states, including Wisconsin, are going forward based on public nuisance theory.

 

Wisconsin Supreme Court Accepts New Cases

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The Wisconsin Supreme Court recently accepted several new cases. The final oral arguments of the 2018-19 term were held on May 15, so new cases will be heard in the fall. Cases of note include:

  • Town of Wilson v. City of Sheboygan (2018AP2162). The Supreme Court will review Kohler Co.’s petition to annex land from the Town of Wilson to the City of Sheboygan for the purpose of developing a golf course. The City of Sheboygan adopted the annexation ordinance, and the Town of Wilson filed the instant lawsuit.

    The Town argues that the annexation does not satisfy statutory requirements for contiguity, certified population count, and signatures. Furthermore, the City did not show there was a need for the annexed property.

    On the other hand, the City argues they and Kohler followed all statutory requirements related to the annexation. Furthermore, the City argues it had a need for expanded residential housing and other economic benefits provided by the annexation.

  • Steven J. Piper v. Jones Dairy Farm (2018AP1681). The Supreme Court will determine whether employees’ donning and doffing activities are compensable under state law and whether such compensation is precluded by their collective bargaining agreements.

    Plaintiffs are employees of Jones Dairy Farm seeking compensation for time spent putting on and removing safety shoe covers, frocks, hairnets, etc. before and after their shifts. Compensation for donning and doffing was not included in multiple collective bargaining agreements between the employees’ union and Jones Dairy.

    Jones Dairy argues that the plaintiffs bargained away their right to compensation for donning and doffing in the collective bargaining agreements. Furthermore, Jones Dairy does not owe the employees compensation because the time spent changing before and after shifts is de minimis.

Hull v. Glewwe (Claim Preclusion)

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In Hull v. Glewwe (2017AP2485), the Court of Appeals District III held that claim preclusion does not bar a plaintiff from pursuing a new negligence lawsuit when the plaintiff’s insurer has already defended the plaintiff in a previous lawsuit arising out of the same accident, wherein the plaintiff was not a named defendant.

Plaintiff Hull and defendant Glewwe were both injured in the same accident. Glewwe sued Hull’s insurer Unitrin Auto & Home Insurance Co., and that lawsuit ended in a settlement. Hull was not a named defendant in the lawsuit and did not participate in the settlement agreement. Hull subsequently filed the instant action seeking damages from Glewwe and his insurer State Farm. Glewwe argued that claim preclusion barred Hull’s action, and Hull instead should have raised his arguments as a counterclaim in the first lawsuit.

The appeals court held that claim preclusion does not bar Hull’s negligence claims because he was not a named party in the first lawsuit; therefore, Glewwe failed to satisfy the identity of parties element of claim preclusion. While Glewwe argued Hull was in privity with his defendant insurer in the first lawsuit, the court determined that Hull’s and his insurer’s interests were materially different. In the first lawsuit, the insurer had only a duty to defend Hull, not to pursue Hull’s cause of action for his own injuries. Finally, the appeals court determined that allowing Hull’s claim to proceed after the first lawsuit was settled does not contradict the direct action statute (Wis. Stat. § 632.24), which establishes that insurers are directly liable to persons entitled to recover.

The Wisconsin Insurance Alliance wrote an amicus brief in the case, arguing that allowing Glewwe’s claim preclusion defense to proceed would pose significant issues for both insurers and insureds.

Payday Loan Resolution, LLC v. DFI (Agency Police Power Over Out-of-State Business)

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In Payday Loan Resolution, LLC v. DFI (2018AP821), the Court of Appeals District IV held that Florida debt settlement business Payday Loan Resolution is subject to Wisconsin Department of Financial Institutions (DFI) licensing requirements and enforcement.

DFI received two consumer complaints against Payday from Wisconsin residents. DFI then proceeded with enforcement actions against Payday, stating that Payday was operating as an unlicensed “adjustment service company” under Wisconsin law. In response to DFI’s enforcement actions, Payday argued that, as a Florida company, it is not subject to Wisconsin regulation. Ultimately, DFI ordered Payday to cease its business activities in Wisconsin, pay a forfeiture, and issue refunds to Wisconsin consumers. Payday sought judicial review of the order, arguing that the order violates due process rights because Wisconsin does not have personal jurisdiction over Florida-based Payday.

The appeals court determined Payday’s due process rights were not violated, and DFI could enforce regulations against Payday. The court relied on a 1953 Wisconsin Supreme Court decision Metropolitan Finance Corp. v. Matthews, which established that Wisconsin can exercise its police power to regulate an out-of-state entity which conducts activities in the state intimately related to local welfare. The court said the contractual transactions between Payday and the Wisconsin consumers were sufficient to establish that Payday “requires activities within the state” according to Metropolitan Finance. Therefore, DFI could enforce the licensing requirement against Payday.