Author: Hamilton

3rd District Court of Appeals Decision: Halderson v. Northern States Power Co. (Stray Voltage)

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In Halderson v. Northern States Power Co. (2017AP2522), the Court of Appeals District III upheld that Northern States Power (NSP) was negligent but not liable for treble damages for stray voltage on the Halderson family’s dairy farm.

The Halderson’s filed suit against NSP alleging stray voltage caused injury to their dairy herd. The Haldseron’s claimed negligence and damages under Wis. Stat. § 196.64(1), which requires public utilities to pay treble damages for negligent actions performed “willfully, wantonly or recklessly.”

The appeals court upheld the jury’s negligence verdict against NSP because NSP did not perform basic tests specified by the Public Service Commission (PSC) nor additional tests after the initial ones failed to reveal stray voltage. Furthermore, the court found NSP negligent because it did not conduct measurements in proper locations and did not initially inform the Haldersons of their right to request neutral isolation to mitigate the effects of the stray voltage on their cows.

NSP argued that the Halderson’s negligence claim was insufficient because it relied on testing beyond PSC mandates. However, the appeals court rejected this argument because Wis. Stat. § 196.857(1g)(b) does not prohibit public utilities from using testing procedures beyond those standardized by PSC, and PSC’s stray voltage Docket 106 mandates that utilities should pursue additional tests when animals exhibit stray voltage symptoms.

Although the court ruled NSP negligent, there was no clear and convincing evidence that NSP acted “willfully, wantonly or recklessly” as required for treble damages. The court upheld the circuit court judge’s directed verdict reversing the jury’s $4.5 million treble damages award to the Haldersons under Wis. Stat. § 196.64(1).

On appeal, NSP also raised objections to the jury instructions on finding negligence based on violation of a safety statute. NSP said the instructions misinterpreted PSC dockets as safety statutes, “cherry-picked” only docket provisions favorable to the Haldersons, and did not accurately reflect the dockets’ mandates. The appeals court held that NSP forfeited its right to object to the jury instructions during the circuit court trial.

The appeals court also denied NSP’s request for a new trial based on the fact that the Halderson’s attorney failed to disclose a familial relationship to one of the jurors.

ATRA Tort Reform Record Recognizes Wisconsin Legislation

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In its July 2018 Tort Reform Enactments and Record, the American Tort Reform Association (ATRA) has recognized Wisconsin for 2017 Act 235. Act 235 included common-sense discovery and class action reforms to address the high transactional cost of litigation. Act 235 also makes Wisconsin the first state in the country to require disclosure of third-party litigation funding.

ATRA’s biannual Tort Reform Enactments and Record highlights the civil justice laws enacted throughout the country. The report shows Wisconsin leading the way in terms of the substance and number of changes enacted into law.

Read more about Act 235.

Judge Neubauer Announces Run for Supreme Court

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Wisconsin Court of Appeals Chief Judge Lisa Neubauer announced last week her candidacy for Wisconsin Supreme Court.

Judge Neubauer is running for the seat that will be vacated by Justice Shirley Abrahamson’s retirement in 2019. Justice Abrahamson announced in May she will not run for re-election after four terms on the bench.

Judge Neubauer has served on the Second District Court of Appeals in Waukesha since she was appointed by Gov. Jim Doyle in 2007. She became chief judge in 2015. Prior to serving on the appeals court, Judge Neubauer was a partner at Foley & Lardner and clerked for U.S. Judge Barbara Crabb.

Judge Neubauer’s husband has previously served as a Democrat in the state legislature, and her daughter Rep. Greta Neubauer (D-Racine) currently represents Assembly District 66.

Second District Appeals Court Judge Brian Hagedorn has also expressed interest in running for Abrahamson’s seat, though he has not formally announced a candidacy.

Supreme Court Decision: Wisconsin Bell v. Labor and Industry Review Commission (Employment Discrimination)

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In a 5-2 decision, the Supreme Court established that employers must know an employee’s disability caused misconduct in order for the Labor and Industry Review Commission (LIRC) to determine intentional employment discrimination.

Previously in employment discrimination cases, LIRC used the “inference method,” which finds intent to discriminate when employers take action against employees for any misconduct caused by a disability. The decision amended LIRC’s “inference method” by requiring employers’ have knowledge that an employee’s disability caused the misconduct.

In 2010, Wisconsin Bell suspended employee Charles Carlson for inappropriately hanging up and blocking customer calls. In a hearing related to Carlson’s suspension, Carlson’s treatment providers wrote letters to Wisconsin Bell describing Carlson’s diagnosis of bipolar disorder, but the letters did not detail specifically how the disorder affects Carlson’s workplace conduct. As a condition for returning to work after the suspension, Carlson signed a “last chance agreement” stating that he would be terminated for another infraction.

Almost a year later, Carlson broke the last chance agreement, and Wisconsin Bell terminated him. Carlson claimed Wisconsin Bell intentionally discriminated against him because his bipolar disorder caused his misconduct.

The court held that Wisconsin Bell did not violate Wisconsin’s employment discrimination statute (Wis. Stat. § 111.322(1)) because it was not aware Carlson’s bipolar disorder caused his misconduct.

This decision also further clarifies the court’s position on the agency deference doctrine, decided in Tetra Tech v. Department of Revenue. Here, the court did not defer to LIRC’s decision but gave “due weight” to the agency’s technical experience.

Supreme Court Decision: Department of Workforce Development v. Labor and Industry Review Commission (Unemployment Compensation)

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In a unanimous decision, the Supreme Court held in DWD v. LIRC that terminated employees are not eligible for unemployment compensation if they violate their employer’s absenteeism policy, even if the policy is stricter than the policy in statute.

In this case, terminated employee Valerie Beres violated the written attendance policy that she signed with her employer by missing a shift without notifying the employer. The employer’s single instance policy was stricter than the two occasions in a 120-day period policy laid out in the unemployment compensation absenteeism statute (Wis. Stat. § 108.04(5)(e)).

The unemployment compensation statutes state that employees terminated for “misconduct” – including absenteeism – are ineligible for benefits. Citing those statutes, the Department of Workforce Development (DWD) denied Beres benefits. Beres appealed to the Labor and Industry Review Commission.

The court’s ruling upheld DWD’s decision to deny Beres benefits. The court ruled that, according to the “unless clause” in Wis. Stat. § 108.04(5)(e), employers may adopt absenteeism policies stricter than the statute. If employees have violated their employer’s stricter policy, they are still ineligible for unemployment compensation.

Supreme Court Decision: Porter v. Wisconsin (Anti-Combination Statutes)

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A 5-2 Supreme Court held in Porter v. Wisconsin Funeral Directors Examining Board that the anti-combination laws prohibiting ownership of both a cemetery and funeral home are constitutional. In another interesting split decision for this term, liberal Justice Shirley Abrahamson wrote the opinion, and only two out of five conservative justices dissented.

The plaintiff in this case is E. Glen Porter, who owns Highland Memorial Park cemetery in New Berlin and wished to expand his business by opening a funeral home. Because owning both is illegal under the anti-combination laws (Wis. Stat. § § 157.067(2) and 445.12(6)), Porter sued the state, arguing a violation of the constitutional rights to due process and equal protection.

The court used the same rational basis test as in Mayo to determine that the anti-combination laws are rationally related to legitimate government interests in protecting consumers. Therefore, the anti-combination statutes survive the rational basis test and survive Porter’s constitutional challenge.

The dissent from Justices R. Bradley and Kelly disagrees with the state’s assessment that joint ownership of cemeteries and funeral homes would create an unfair market and harm consumers. Thus, the dissent argues the anti-combination laws lack rational relation to the legitimate government purpose of protecting consumers. The dissent also suggests that a potential violation of the fundamental right to economic liberty deserves strict scrutiny, rather than the broader rational basis test.

Supreme Court Decision: Kristi Koschkee v. Tony Evers (REINS Act & State Agency Counsel)

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The Supreme Court held that the Department of Public Instruction (DPI) and the state superintendent may retain separate counsel instead of representation by the Department of Justice (DOJ).

The cases rises from a dispute about whether DPI must comply with the Regulations from the Executive In Need of Scrutiny (REINS) Act (2017 Act 57). Stemming from the REINS Act dispute, another dispute arose between DPI and DOJ regarding whether DOJ attorneys should represent DPI. DOJ said DPI is subject to the REINS Act, a position contrary to DPI and DPI Superintendent Tony Evers. DOJ filed a motion that they should be DPI’s attorneys. DPI filed a motion to deny substitution of DOJ for their in-house counsel.

The court used its “superintending and administrative authority over all courts” (Wisconsin Constitution Art. 7 § 3) to allow DPI the counsel of their choice. The court argued that allowing DOJ to represent Evers and DPI would have given the attorney general too much power and would be unethical because of their disagreeing positions on the case.

The court also ruled that Gov. Scott Walker is not a necessary party to the action because he did not fulfill the statutory criteria necessary for a party to be joined in a case (Wis. Stat. § 808.03(1)). The court said the governor’s obligation to review scope statements under the REINS Act is not affected by the outcome of the DPI case.

 In a concurring opinion/dissent, Justice R. Bradley (joined by Justices Gableman and Kelly) agreed that Gov. Walker should not be a party to the action but would have allowed DOJ to represent DPI and Evers. The dissent argued that Wis. Stat. § 165.25(1m) says the governor can request DOJ represent any state department/agency in any matter in which the state has interest. The dissent says the court inappropriately exercised its superintending authority to override the statutes, which give no independent litigation authority to DPI or the state superintendent.

Supreme Court Decision: Cintas Corp. v. Becker Property Services (Indemnity Contracts)

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In this case, Becker Property Services contracted with Cintas Corp. to inspect regularly a fire suppression system at a property Becker managed. The property owner, tenants, and insurers sued Cintas, and Cintas sought to tender the defense to Becker pursuant to an indemnity clause in their contract.

In a 5-2 decision, the Supreme Court disagreed with Becker’s argument that, despite a choice-of-law provision requiring Ohio as the controlling law, Wisconsin’s strict construction rule for indemnity clauses that cover damages for negligence is an important enough public policy to nullify the contract. Instead, the court held that Ohio law controlled, pursuant to the contract, and ruling otherwise would have created uncertainty and “unpredictability in contractual relations.”

 The court held that the contract’s language was clear that Becker must indemnify Cintas for any liabilities and damages, including those caused by Cintas’s own negligence. The court said that even under Ohio law the indemnity agreement is not “public policy” for the purpose of invalidating the contract.

Supreme Court Decision: John McAdams v. Marquette University (Academic Freedom in Contract)

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In a 4-2 decision, the Supreme Court did not defer to the recommendations of a Marquette University advisory committee and held that Marquette breached its contract with a professor, John McAdams, by implementing disciplinary action for activities protected under academic freedom.

 McAdams had written a blog post criticizing another instructor at the university, who then filed a complaint against McAdams. The complaint went through the disciplinary hearing process laid out in Marquette’s handbook. An advisory committee reviewed the incident and presented a report with disciplinary recommendations to the university president. The president then decided to suspend McAdams without pay but with benefits through the fall semester and required he write a letter acknowledging wrongdoing and expressing regret for his comments against the other instructor. McAdams refused to write the letter and filed a complaint in circuit court against Marquette for breach of his tenure contract with the university. McAdams argued that the contract protects him from disciplinary actions for activities considered as academic freedom.

The court held that McAdams’s contract with the university does guarantee freedom from disciplinary actions for activity protected as academic freedom or free speech, and McAdams’s blog post falls under the definition of academic freedom. The court ordered Marquette to reinstate McAdams.

The court chose not to defer to the Marquette advisory committee’s recommendations to suspend McAdams for three reasons:

  1. The contract did not prohibit litigation outside Marquette’s disciplinary process.
  2. The disciplinary process was biased and did not represent a true arbitration process.
  3. The court recently ended the practice of agency deference in Tetra Tech v. Department of Revenue.

In a concurring opinion, Justice R. Bradley engaged in a philosophical analysis of academic freedom and free speech on college campuses.

In dissent, Justice Walsh Bradley (joined by Justice Abrahamson), citing the “shared governance” procedures of allowing faculty to participate in decisions affecting the university, argued that the court should have deferred to Marquette’s advisory committee, which is better suited to solve its own disputes. The dissent said the court should have preserved the university’s institutional academic freedom to determine who may teach there.

Wisconsin To Begin Collecting Online Sales Tax

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Last month, the U.S. Supreme Court ruled in South Dakota v. Wayfair that states may collect online sales tax from sellers with no physical presence in the state. Gov. Walker’s administration has announced that the Department of Revenue (DOR) will promulgate rules for administering Wisconsin’s 5 percent sales tax online and begin collection in October.

Wisconsin’s rule will be modeled after the South Dakota law approved by the Supreme Court in Wayfair. Online sales tax collection will exclude small businesses with less than $100,000 in sales or less than 200 transactions in the state.

The Legislative Fiscal Bureau estimated that collecting online sales tax would increase sales and use tax revenue by $120 million annually. A state budget provision in 2013 provided that any additional revenue resulting from changes to federal law regarding online sales taxes must be used to offset income tax reductions. The statute requires DOR to analyze revenue from the first 12 months of sales tax collection before administering income tax reductions, so DOR could implement income tax changes as early as 2020.

The Wayfair decision overturned Quill Corp. v. North Dakota, which held that states can only collect sales and use tax from retailers with a physical presence in the state. Before Wayfair, states relied on consumers purchasing from out-of-state, online retailers to self-report use tax. Since self-reporting is difficult to enforce, it was estimated that states missed out on significant revenue from online sales. South Dakota enacted its law to collect on this missed revenue, and its case against internet retailers including Wayfair was appealed to the Supreme Court.