Author: Hamilton

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.

Wisconsin Supreme Court Hears Oral Arguments in First Extraordinary Session Challenge

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In its last oral arguments of the 2018-19 term, the Wisconsin Supreme Court heard a case that will decide whether the Legislature constitutionally convened the December 2018 extraordinary session. The issue in League of Women Voters v. Evers is whether extraordinary sessions are “provided by law” as required by Wisconsin Constitution Art. IV § 11.

Counsel for the defendant Legislature Misha Tseytlin argued that the Legislature did not violate the Wisconsin Constitution by meeting in December. Citing State ex rel. Sullivan v. Damman (1936) and State ex rel. Thompson v. Gibson (1964), the Legislature said that while each chamber recessed in March 2018 the legislature did not finally dissolve itself and end the biennial session until January 2019. The biennial session continued after March 2018 as a committee period, and in December 2018 the Legislature converted the committee period to a floor period pursuant to 2017 Senate Joint Resolution 1. Wis. Stat. § 13.02(3) authorizes the legislature to develop a work schedule such as SJR 1.

Justice Kelly seemed to agree with the Legislature’s argument, emphasizing the logic that Wis. Const. Art. IV § 11 requires the Legislature to meet “as provided by law” and that law is Wis. Stat. § 13.02(3), which then allows the Legislature to create its own work schedule by joint resolution. If the court finds the Legislature met according to SJR 1, the Legislature met constitutionally.

Justices Dallet and Walsh Bradley voiced concerns with the Legislature’s argument, questioning how an “extraordinary session” can be part of a “regular session.” Tseytlin responded that the December 2018 floor period was constitutional whether the Legislature called it an “extraordinary session” or simply a non-prescheduled floor period within the regular session.

(Defendants’ brief)

The plaintiffs’ arguments began with Justice R. Bradley questioning how the decades-old practice of the Legislature holding extraordinary sessions can just now be found unconstitutional. Counsel for the plaintiff League of Women Voters Jeffery Mandell argued that no Wisconsin law provides for extraordinary sessions. Justice Kelly questioned whether regularly scheduled floor periods would also be unconstitutional since they are not found explicitly in the statutes. Overall, the plaintiffs seek to invalidate the extraordinary session laws because § 13.02 did not “provide by law” for the December 2018 extraordinary session in accordance with Wis. Const. Art. IV § 11.

(Plaintiffs’ brief)

While it can be difficult to predict how the court will decide based on the line of questioning by the justices, it is likely the court will narrowly rule in favor of the Legislature.

League of Women Voters is the first of several cases challenging the extraordinary session to be heard by the Wisconsin Supreme Court. Read about other extraordinary session litigation here.

JFC Removes Qui Tam Provision from Gov. Evers Budget

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In its first executive session on the 2019-21 state budget on May 9, the Wisconsin Legislature’s Joint Finance Committee voted to remove a provision of Gov. Tony Evers’s budget that would have restored a private individual’s ability to bring a qui tam claim against a person who makes a false claim against the state.

Gov. Evers’ budget bill would have reinstated the qui tam law, not just for alleged Medicaid fraud, but for all state agencies. This policy provides an incentive for plaintiff attorneys to sue medical providers, pharmaceutical companies, and any other business contracting with the state, for alleged fraud. The proposal would allow the whistleblower and his or her plaintiff attorney to seek up to 30 percent of all of the damages, along with attorney’s fees and costs.

WCJC actively lobbied against the qui tam provision and were successful in convincing the Joint Finance Committee to remove the provision. WCJC met with key committee members and submitted a memo explaining why the law is unnecessary and would only benefit plaintiff attorneys.

At the May 9 executive session, the Joint Finance Committee also removed Gov. Evers’s proposal to repeal of provisions of extraordinary session legislation 2017 Act 369 including:

  • The requirement that the legislature approve certain settlements and legal actions by the attorney general.
  • The ability of the legislature to intervene in lawsuits involving the state.
  • The ability of the legislature to obtain outside legal counsel.
  • The definition and public transparency requirements for agency guidance documents.
  • The requirement that agencies cite statutes supporting any interpretation of law they publicly provide.
  • The ability of the Joint Committee for Review on Administrative Rules to suspend rules multiple times.

Altogether, the Joint Finance Committee removed a total of 131 policy items that had been proposed by the governor.

The Joint Finance Committee will continue voting on various agency budgets throughout May before sending their amended budget to the full legislature for approval.

 

Wagner v. Allstate Property and Casualty Insurance Co. (Judicial Estoppel)

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In Wagner v. Allstate Property and Casualty Insurance Co. (2018AP162), the Court of Appeals District IV declined to dismiss a personal injury case based on the doctrine of judicial estoppel. The court said it was unclear whether the plaintiff intentionally contradicted her claim in a previous bankruptcy case.

In April 2015 plaintiff Melinda Wagner was injured in a car accident. Wagner later filed the instant lawsuit against the other driver’s insurer Allstate and her own insurer Acuity. The insurers sought to dismiss the action based on the doctrine of judicial estoppel. The insurers argued Wagner failed to disclose her claims against the insurers as required in her previous filing for bankruptcy.

Under Wisconsin case law, the doctrine of judicial estoppel, which states that a party cannot take a position contrary to a position taken in a separate case, requires an intentional misrepresentation by the party. The appeals court agreed that Wagner did present a position in the personal injury case against the insurers inconsistent with her position in the bankruptcy case by failing to disclose the case against the insurers during the bankruptcy proceedings. However, the court found there were genuine issues of material fact as to whether Wagner’s failure to disclose the information was intentional and remanded the case to circuit court.

Moustakis v. DOJ (Public Records)

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In Moustakis v. DOJ (2018AP373), the Court of Appeals District III held that the public records law is constitutional as applied to elected officials.

Former district attorney Albert Moustakis was the subject of a public records request. The Department of Justice (DOJ) compiled records, which contained unsubstantiated complaints about Moustakis, and performed a weighing of interests, ultimately determining disclosure of the records was in the public’s interest.

Moustakis received a copy of the records prior to their release, then filed the instant lawsuit seeking to enjoin DOJ from releasing the records. Moustakis argued that 1) DOJ’s records custodian made an arbitrary determination and should redo the public interest balancing test, and 2) the public records law (Wis. Stat. § 19.356) is unconstitutional as applied to him in his capacity as an elected official.

The appeals court rejected both Moustakis’s arguments. First, the court determined Moustakis did not show he had a clear legal right to a writ of mandamus requiring a new balancing test. Statutes favor disclosure of records even when they contain unsubstantiated complaints, and the law does not require the records custodian to consult with the records subject before making a disclosure determination. Therefore, the DOJ records custodian was acting within his discretionary power and did not make an arbitrary determination to release the records.

Second, the court determined that the public records law is constitutional as applied to Moustakis in his capacity as an elected official. Wis. Stat. § 19.356 provides that authorities need not notify record subjects before release; however, the statute does have an exception for public employees. Moustakis argued this exception offered to public employees and not elected officials violates his constitutional equal protection rights. The court determined that the statute did not violate Moustakis’s fundamental rights, so rational basis, not strict scrutiny, applied. The court agreed with DOJ that providing the public with the greatest information possible on their elected officials was a rational basis for the legislature to enact the statute distinguishing between public employees and elected officials. Therefore, the public records law is constitutional as applied to Moustakis.

 

Society Insurance v. Bessemer Plywood Co. (Duty to Defend)

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In Society Insurance v. Bessemer Plywood Co. (2018AP224), the Court of Appeals District III held that an insurer had no duty to defend because an injury occurred during the course of employment; therefore, the policy’s employment exclusion applied.

Bessemer Plywood Co. hired Maki Trucking & Logging to pick up a load of plywood from a Bessemer facility. At the facility, Maki employee Scott Friedle fell off the trailer of a Maki truck while securing the plywood.

Society insured Maki for worker’s compensation claims and made payments to Friedle accordingly. Great West Casualty Co. insured Maki for other liability. The Great Lakes policy specifically excluded coverage for injuries to employees arising out of the course of their employment with Maki.

Society brought the instant case against Bessemer to recover the worker’s compensation payments, arguing Bessemer was negligent. Bessemer tendered its defense to Great West, arguing it was an insured because it was a permissive user of the Maki truck covered under the Great West policy.

The appeals court held that Great West had no duty to defend because Friedle’s injury arose from the course of his employment, and such employment injuries were specifically excluded from the Great West policy. The court said that, because the employment exclusion applied, it did not matter whether or not Bessemer was a permissive user of the covered truck.

Roggensack Re-Elected as Wisconsin Supreme Court Chief Justice

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The Wisconsin Supreme Court has re-elected Chief Justice Patience Roggensack as Chief Justice for another two-year term. The Chief Justice serves as the administrative leader of the Wisconsin Court system.

Chief Justice Roggensack was elected to the court in 2003 and re-elected in 2013. She became the first Justice elected by members of the court to serve as Chief Justice after a 2015 constitutional amendment requiring election. This election begins her third term as Chief Justice. She is up for re-election to the court in 2023.

Wisconsin Supreme Court Accepts New Cases

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The Wisconsin Supreme Court recently accepted several new cases. Cases of note include:

  • Clean Wisconsin v. DNR. This case will decide whether 2011 Act 21 precludes the Department of Natural Resources (DNR) from considering cumulative environmental impacts in issuing high capacity well permits under Wis. Stat. § 281.34. The Wisconsin legislature recently moved to intervene in this case and a second Clean Wisconsin case (discussed below).
  • Clean Wisconsin v. DNR. This case will decide whether DNR has the authority as prescribed in Act 21 to impose off-site groundwater monitoring requirements and an animal maximum for CAFO wastewater permits.
  • Lamar Central Outdoor, LLC v. Division of Hearings & Appeals. In this case, the court of appeals held that the enlargement of a nonconforming outdoor advertising sign along an interstate highway caused it to lose its nonconforming status, making it illegal and subject to removal. The Supreme Court will decide whether Wis. Stat. § 84.30(14) gives the Department of Transportation the authority to promulgate rules related to outdoor advertising and whether those rules and applicable statutes apply to the sign at issue. Court of appeals decision.
  • Veritas Steel, LLC v. Lunda Construction Co. In this case, the Supreme Court will review a court of appeals decision maintaining a narrow application of the “de facto merger” and “mere continuation” exceptions to Wisconsin’s general rule against successor liability. The Supreme Court will review its decision in Fish v. Amsted Indus. Inc., determining 1) whether proof of identity of ownership between an original and successor entity is required to establish successor liability and 2) whether actual transfer of stock is required to establish successor liability under the de facto merger and mere continuation exceptions. Court of appeals decision.
  • Official Committee of Unsecured Creditors of Great Lakes Quick Lube LB v. John Theisen. This case will decide whether the fraudulent transfer statute of limitations in Wis. Stat. § 893.425 begins when plaintiffs could reasonably have discovered the fraudulent nature of the transfer, or when the transfer itself occurred. Court of appeals decision.