Author: Hamilton

1st District Court of Appeals Decision: Lang v. Lions Club of Cudahy Wisconsin, Inc. (Recreational Immunity)

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In Lang v. Lions Club of Cudahy Wisconsin, Inc. (2017AP2510), the Court of Appeals District 1 held that recreational immunity did not apply to a sound engineer who set up cords that injured a woman at a music performance.

At an event run by the Lions Club, plaintiff Antoinette Lang tripped over an electrical cord placed by sound engineer Fryed Audio, LLC. Fryed’s principal and a member of the band using the cords, Steve Fryed, positioned the cord prior to the event.

While a separate case ruled the Lions Club was entitled to recreational immunity, the court said Fryed was not an “agent” or “occupier” immune under the statute (Wis. Stat. § 895.52). The appeals court relied on two recent Supreme Court cases, Westmas v. Creekside and Roberts v. T.H.E. Insurance Co., deeming contractors are not property owners entitled to recreational immunity. Fryed was not an “agent” because he was not following specific instructions from the Lions Club. Furthermore, Fryed was not an “occupier” because his presence on the festival property was not permanent and his potential immunity would not affect whether the property would be open to the public in keeping with the intent of Wis. Stat. § 895.52.

Judge Brash wrote a dissent in the case arguing that Fryed actually was an “agent” because the Lions Club had ample opportunity to offer specific cord set-up instructions when it performed a safety check on the grounds. If both the Lions Club and the band are entitled to recreational immunity, Brash argued Fryed as an agent of the two entities should also be immune from liability.

WCJC Files Amicus Brief Urging Appeals Court to Stay Copycat Shareholder Litigation

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Wisconsin Civil Justice Council (WCJC) has filed an amicus brief in Yandoli v. REV Group, Inc. arguing the Waukesha County Circuit Court erred by denying the defendants’ motion to stay the court proceeding in a securities class action lawsuit when an identical class action case was filed first in federal court.

Plaintiffs filed actions against REV Group, a Milwaukee manufacturer, when its stock price dropped after its initial public offering. Plaintiffs in three federal lawsuits and the instant state case claim REV Group violated Sections 11 and 15 of the federal 1933 Act. The federal litigation consists of not only the same claims but also the same defendants, factual allegations, alleged class, and relief sought. Wisconsin courts typically stay proceedings when a class action involving federal laws is filed in federal court. However, the court in this case denied the defendants’ motion to stay.

The WCJC brief asks the Court of Appeals District II to grant leave for the defendants to appeal the circuit court’s decision not to stay the state case while the federal case is pending. The brief argues that:

  1. The circuit court’s decision not to stay the state level proceedings will harm Wisconsin businesses by allowing for meritless duplicative securities litigation. If permitted to stand, the holding will encourage a parade of opportunistic plaintiff attorneys to file duplicative lawsuits, forcing Wisconsin businesses to defend identical lawsuits in different venues.
  2. Allowing such “copycat” shareholder litigation to proceed in Wisconsin will significantly increase costs and harm Wisconsin’s business climate. Costs of defending these lawsuits will be borne by shareholders, employees, and consumers in Wisconsin. Furthermore, the “litigation tax” companies must consider in an unfavorable business climate would disincentivize growth and investment in the Wisconsin economy.
  3. The circuit court’s decision contravenes the purpose of the Commercial Court Pilot Project to increase efficiency and predictability in business litigation in Wisconsin. If the lower court’s decision is allowed to stand, it would open the Business Court (in which this case was filed) to numerous lawsuits that were never intended when the pilot rule was put into place by the Wisconsin Supreme Court.

US DOJ Files Statement of Interest Against Asbestos Trust Fraud

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The U.S. Department of Justice (DOJ) has filed a statement of interest in a recent asbestos trust proposal, stating the United States may object to asbestos trust plans that lack transparency and do not contain safeguards against fraud. The statement says the United States has an interest in preserving funds for legitimate asbestos claimants and ensuring proper reimbursement to the federal government for claimants’ asbestos-related Medicare costs. Nineteen state attorneys general, including Wisconsin’s Attorney General Brad Schimel, had written to DOJ last year regarding potential abuse in asbestos trusts.

Reports and cases in recent years have found evidence of fraud and mismanagement in asbestos trusts established under 11 U.S.C. § 524(g). While the asbestos trusts process was created as a streamlined solution to problems with asbestos liability litigation, reports have found illegitimate plaintiffs and opportunistic attorneys withholding evidence of exposure and filing inconsistent claims against multiple defendants, among other fraudulent activity. Abuse has also been reported in the mismanagement of the trusts, whose “trust advisory committees” often consist of asbestos claimants’ plaintiff attorneys.

The DOJ statement of interest in In re Kaiser Gypsum Co. argues the asbestos trust plans in the case are missing safeguards to prevent abuse and to educate claimants about their obligation to reimburse Medicare for asbestos-related health care covered before the trust payment. The statement of interest says plans should also include transparency provisions allowing the United States to monitor claims, payments, and trust governance; protections against excessive administrative costs and attorney fees; and adequate defenses against non-meritorious claims.

U.S. Associate Attorney General Jesse Panuccio said the statement of interest is “just one action the Department will take to increase the transparency and accountability of asbestos trusts.”

Wisconsin has been a leader in combatting asbestos trust fraud and requiring transparency. In 2014, the Wisconsin Legislature enacted into law 2013 Wisconsin Act 154, which created various requirements for plaintiff attorneys to produce information regarding claims the plaintiff has made or anticipates making against an asbestos trust.

 

Second to Last MU Poll Before Election Shows AG Schimel Ahead

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On Oct. 10, 2018, Marquette University Law School (MU) released its second to last poll before the Nov. 6 election. In the state attorney general race, incumbent Republican Attorney General Brad Schimel maintained his lead over Democrat opponent Josh Kaul at 45 percent to 41 percent. Schimel’s lead narrowed slightly from his six point lead in the previous poll.

The October results showed voters have a favorable view of Schimel, with 32 percent viewing him as favorable and 22 percent viewing him as unfavorable. Meanwhile, a majority of voters have not heard enough to form an opinion about Kaul, with 67 percent still saying they have not heard enough (compared to 69 percent in the previous poll). 37 percent said they have not heard enough about Schimel (compared to 44 percent in the previous poll).

Read about MU poll results for other Wisconsin races.

WCJC Presents James E. Hough Distinguished Service Award to Bob Fassbender

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On Oct. 12, 2018, WCJC presented the James E. Hough Distinguished Service Award to Robert Fassbender. Bob helped co-found the Wisconsin Civil Justice Council in 2009 and served as its Executive Director until he retired from the Hamilton Consulting Group in December 2017. During his tenure as Executive Director, WCJC experienced unprecedented success, which started in 2009 when WCJC helped defeat numerous bills introduced at the behest of the plaintiff’s bar. Beginning in 2011 and lasting through 2017, Bob helped lead the coalition in passing an unprecedented number of civil justice bills supporting the business community and helping Wisconsin gain national recognition.

The Distinguished Service Award is presented in honor of James E. Hough, former Hamilton Consulting Group partner, who for many years represented Wisconsin business interests in civil justice matters before the Wisconsin Legislature.

Supreme Court Accepts Seven Cases

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The Supreme Court accepted seven new cases last week. Cases of note include:

 

John Teske v. Wilson Mutual Insurance Co. (claim preclusion)
The Supreme Court will decide whether previous litigation related to underinsured motorist (UIM) coverage precludes the instant tort claim alleging negligence by the driver insured by Wilson. The appeals court ruled the causes of action of the UIM action and the tort action differed, so claim preclusion should not apply. Wilson appealed to the Supreme Court, seeking to dismiss the tort action.

Ann Cattau v. National Insurance Services of Wisconsin (negligence and breach of fiduciary duty)
The plaintiffs, former teachers and school administrators, claim negligence, breach of fiduciary duty, and misrepresentation against MidAmerica and NIS, which administered their retirement plans. The plans were noncompliant with federal law, and the plaintiffs ultimately owed several years of tax dollars back to the Internal Revenue Service. The plaintiffs claim they relied on MidAmerica and NIS as experts to administer a qualifying plan, and MidAmerica and NIS misrepresented the plan as federally compliant. The issues before the Supreme Court are whether the plaintiffs stated an adequate claim against defendants MidAmerica and NIS and whether the plaintiffs should be able to amend their complaint for a second time.

L.G. v. Aurora Residential Alternatives, Inc. (compelled arbitration)
The issue presented in this case is whether a circuit court’s order denying a motion to compel arbitration is a “final order” under Wis. Stat. § 808.03(1), allowing the order to be appealed.

 

All Supreme Court pending cases.

Supreme Court October Oral Arguments

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The Supreme Court plans to hear several cases in October that are relevant to the Wisconsin business community. The court has already heard oral arguments in six cases and will hear three more at the end of the month.

On Oct. 10, the court heard oral arguments in City Deck Landing LLC v. Circuit Court for Brown County. The case will determine whether a circuit court properly stayed a private arbitration proceeding while a related insurance company duty to defend action proceeded in circuit court. The court also heard Midwest Neurosciences Associates v. Great Lakes Neurosurgical Associates, a contract dispute which will examine whether an arbitration clause from a prior agreement is applicable in a subsequent contract. In Stuart White v. City of Watertown, the court will determine whether cities, in addition to towns, may enforce statutes related to fences for farms.

On Oct. 12, the court traveled to Sparta, Wisconsin to hold oral arguments. One notable case was Kieninger v. Crown Equipment Corp., which will determine whether employees who voluntarily commute using an employer’s vehicle should be compensated for commuting time under the federal Employee Commuting Flexibility Act.

On Oct. 29, the court will be back in the state capitol to hear arguments in Steadfast Insurance Co. v. Greenwich Insurance Co., which will decide how coverage and defense costs should be allocated between the two insurance companies that covered Milwaukee Metropolitan Sewerage District during several rain events that caused damage to homeowners.

Check back on the WCJC blog for updates on these and other Supreme Court cases of note to the business community.

4th District Court of Appeals Decision: Thomas Zimmer Builders, LLC v. Roots (Compelled Arbitration)

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In Thomas Zimmer Builders, LLC v. Roots (2017AP2037), the Court of Appeals District IV held that an arbitration clause was enforceable because the complaint challenged the contract as a whole and because a company’s employee may invoke an arbitration clause even if the employee is not a signatory party to the contract.

Kurt and Monika Roots entered into a Design Consultant Agreement with Udvari-Solner Design Co. The Rootses later challenged the contract on the basis that employee Mark Udvari-Solner misrepresented himself as an architect before they signed the agreement. Udvari-Solner moved to compel arbitration pursuant to the contract’s arbitration clause.

The appeals court reversed the circuit court’s denial of Udvari-Solner’s motion to compel arbitration because:

  1. Federal and state cases have held that challenges to the validity of a contract as a whole must be arbitrated when the contract has an arbitration provision.
  2. An established legal rule states that employees may compel arbitration under a contract between their employer and a third party, even if the employee is not named in the contract, if the employee is acting within the scope of their employment.

2nd District Court of Appeals Decision: Daniel White v. LIRC (Worker’s Compensation)

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In Daniel White v. LIRC (2017AP1605), the Court of Appeals District II held that Sevenson Environmental Service did not violate Wisconsin worker’s compensation statutes when it refused to rehire an employee after he abandoned his job.

Daniel White injured his back while working for Sevenson and was subsequently placed on “light duty” instead of his usual tugboat operating duties. About a month later, White took a week of authorized leave for a family matter. White asked for another week off, but no one from Sevenson returned his call. White did not return to work for another month. When he returned, Sevenson said they no longer needed him. White claimed Sevenson violated Wis. Stat. § 105.35(3) by not rehiring him after his injury.

The court denied White’s claim for one year’s wages. The court found credible and substantial evidence supported LIRC’s decision that Sevenson did not violate Wis. Stat. § 102.35(3) because White abandoned his job, giving Sevenson “reasonable cause” to refuse to rehire him.

4th District Court of Appeals Decision: Gage Corp. v. Tamareed Co. (Contract Dispute)

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In Gage Corp. v. Tamareed Co.(2017AP881), the Court of Appeals District IV held that Gage Corp. did not owe commission to sales agent Tamareed Corp. after Gage’s deal for a Saudi building project collapsed.

Tamareed procured a contract between Gage and the Saudi company. Gage and the Saudi company entered into an agreement, but Gage later discovered that the Saudi company was counterfeiting the design for its product. The two companies settled, and Gage offered Tamareed a portion of its settlement proceeds. Tamareed rejected the settlement funds and sought its full commission payment in court.

The court determined that email agreements between Gage and Tamareed established a contract between the parties that Gage would only pay Tamareed upon receiving payment for the goods it sold. Therefore, since Gage ultimately sold no goods to the Saudi company, Tamareed was not entitled to the full commission payment. The court rejected Tamareed’s argument that a prior case, Foster v. Holbrook-Armstrong Iron Co., created a blanket rule that sales agents should receive commission for procuring contracts between buyers and sellers, whether or not the sale ultimately goes through. The court ruled such a “procuring clause doctrine” favoring sales agents does not override contracts. Furthermore, the court said Tamareed could not pursue an unjust enrichment claim as an alternative to its breach of contract claim.

The court also rejected Tamareed’s argument that the circuit court erred in allowing expert witness testimony under the Daubert standard. The court ruled the expert used by Gage to testify to custom and usage in the trade industry was relevant and reliable, so the admissibility was at the proper discretion of the circuit court.