Author: Hamilton

Department of Justice Submits Budget Request

Posted on by Hamilton

Attorney General Brad Schimel submitted the Department of Justice (DOJ) 2017-19 budget request to Governor Walker on September 15, 2016. Including all funding sources, DOJ’s request is a 6.2 percent increase over the base fiscal year (2016-17) doubled. This increase amounts to $6.6 million in new general purpose revenue (GPR) over the biennium.

The largest cost drivers for the additional funding request are due to legislation that passed in the 2015-2016 session. 2015 Wisconsin Act 388 provided a funding increase to county grants for the Treatment Alternative and Diversion (TAD) program. The TAD program provides options for offenders for voluntary substance abuse treatment, case management, and other services, instead of incarceration. DOJ’s budget request includes $2 million in each year of the biennium to expand the TAD program.

DOJ’s budget request includes $1.5 million over the biennium for the cost-to-continue of overtime and training for local and state Internet Crimes Against Children (ICAC) taskforces. The additional investment for ICAC taskforces and staff is a result of 2015 Wisconsin Act 369, otherwise known as Alicia’s Law.

In addition to additional funding, DOJ’s request establishes an appropriation for new officer training and officer recertification training reimbursement to local law enforcement agencies. DOJ states that this change will ensure the training reimbursements are fully funded going forward.

Outside of his agency’s budget, Attorney General Brad Schimel asks in his budget letter that the governor address the staffing levels and compensation for District Attorneys. The District Attorneys submitted a separate budget request that included funding for a pay progression for assistant attorney generals and adds 96.3 positions across the state.

Supreme Court Justice Annette Ziegler Announces “Likely” Run for Second Term

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Wisconsin Supreme Court Justice Annette Ziegler announced she will “likely” run for re-election in April 2017. The conservative justice already claims endorsements of 48 sheriffs and 30 district attorneys.

Among others, her steering committee will include former Gov. Tommy Thompson, former Lt. Gov. Margaret Farrow, and former Wisconsin Supreme Court Justice John Wilcox. Her Sept. 20 preannouncement states that her formal announcement will be made later this year. She has over $200,000 cash in hand in her campaign account.

With Gov. Walker’s July 22 appointment of attorney Daniel Kelly, the Wisconsin Supreme Court has a 5-2 conservative majority. Justice Kelly is serving out the remaining term of former Justice David Prosser who resigned earlier this year. Kelly will face re-election in 2020. Conservative Justice Michael Gableman is next up after Ziegler, with his term expiring in 2018.

Former Chief Justice Shirley Abrahamson, initially appointed in 1976 by Gov. Pat Lucy, has her latest 10-year term ending in 2019.

Suit Challenging Wisconsin “Minimum Markup Law” Filed

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On Tuesday, August 23, 2016, the Wisconsin Institute for Law & Liberty (WILL) filed a lawsuit in Vilas County Circuit Court on behalf of plaintiffs Krist Oil and Robert Lotto challenging the constitutionality and legality of s. 100.30 of the Wisconsin statutes, Wisconsin’s Minimum Markup Law. Krist Oil is an independent, family-owned Michigan corporation having its principal place of business in Iron River, Michigan. Mr. Lotto is a Wisconsin citizen who regularly purchases gasoline, including gasoline from Krist Oil.

The lawsuit alleges the state’s Minimum Markup Law

(1) violates the Wisconsin Constitution’s Due Process Clause, which states “[a]ll people are born equally free and independent, and have certain inherent rights; among these are life, liberty and the pursuit of happiness,” because the law “arbitrarily and irrationally prevents Plaintiff Krist Oil from charging appropriate and non-predatory prices in connection with its business and from freely operating an otherwise lawful business in a manner that is in its own best interest and the best interest of its customers” and that “Wisconsin has no compelling, substantial, or legitimate government interest in regulating minimum prices, even prices below some measure of costs, except where such prices could result in an actual and persistent adverse effect on competition.”

(2) violates the Wisconsin Constitution’s guarantee of equal protection of the law because the law “creates irrational and arbitrary classifications. Businesses that sell gasoline must mark that product up 9.18%. Businesses that sell alcohol or tobacco must mark those products up 6%. Businesses that sell any other product only have to sell their products above “cost.” There is no rational reason for forcing retailers to sell certain products at a specified percentage above “cost” when other products do not have the same requirements. There is no reasonable basis for those classifications and they serve no legitimate government purpose.”

Matt Hauser, on behalf of the Wisconsin Petroleum Marketers & Convenience Store Association(WPMCA), expressed confidence the law will be upheld and said the law “ensures that Wisconsin’s independent petroleum retailers can continue to provide their customers with a competitively priced product.”

A spokesman for Wisconsin Attorney General Brad Schimel said the Department of Justice plans to defend the state in the lawsuit.

Under s. 100.30 of the Wisconsin statutes, sales of merchandise below cost are generally prohibited. In addition, alcohol or tobacco products may not be sold less than cost, with the definition of cost including, as paraphrased by the Department of Agriculture, Trade and Consumer protection, “a presumptive 3% markup by wholesalers and presumptive 6% markup by retailers.”  Sales of motor vehicles fuels, again as paraphrased by the Department of Agriculture, Trade and Consumer protection, “the definition of ‘cost’ relies on the ‘average posted terminal price’ and includes a 9.18% markup over this amount.”

 

Related Items:

WILL Video Overview of Lawsuit

WPMCA Press Release

Walker Appoints Daniel Kelly to Wisconsin Supreme Court

Posted on by Hamilton

On Friday, July 22, Gov. Walker appointed attorney Daniel Kelly to the Wisconsin Supreme Court to replace retiring Justice David Prosser. Gov. Walker selected Kelly over the two other finalists, appeals court judges Thomas Hruz and Mark Gundrum.

Kelly is a founding partner and commercial litigator at the Milwaukee law firm Rogahn Kelly. Before starting the firm, Kelly worked for 15 years as a lawyer at the firm Reinhart Boerner Van Duren.

The Waukesha attorney has litigated cases before the U. S. Court of Appeals for the 7th Circuit in Chicago, the Wisconsin Supreme Court and the U. S. Supreme Court. Like outgoing Justice David Prosser and Justice Shirley Abrahamson, Kelly comes to the high court without any previous judicial experience.

In his career, Kelly served on the legal team that defended the 2010 Republican-drawn legislative maps before a panel of federal judges. Kelly has also served as an attorney to Justice David Prosser’s campaign during a 2011 recount after a close election against opponent Joanne Kloppenburg. Most recently, Kelly served as an advisor to Justice Rebecca Bradley’s 2016 campaign.

Kelly currently serves as President of the Milwaukee chapter of the Federalist Society and on the litigation advisory board for the Wisconsin Institute for Law and Liberty. Additionally, Kelly is on the state’s advisory board to the U. S. Commission on Civil Rights.

Many insiders view this as a legacy pick for Gov. Walker. Daniel Kelly will hold the seat until he is up for election in April 2020 and could potentially sit on Wisconsin’s high court for decades. The next Wisconsin Supreme Court justice up for re-election is Annette Ziegler in 2017. Justices Michael Gableman and Shirley Abrahamson follow in 2018 and 2019, respectively.

Prosser, who announced his retirement in early May, has served on the court since 1998 after being appointed by Gov. Tommy Thompson. Prosser then went on to win re-election in 2001 and 2011. He also served in the Assembly from 1979 to 1997 and spent two years as Speaker. Prosser’s last day on the bench will be July 31.

Supreme Court Finalists Narrowed to Three

Posted on by Hamilton

After the second round of interviews in late June, Gov. Scott Walker announced the final three contenders for the Supreme Court appointment. The three finalists include: Appeals Court judges Mark Gundrum, Thomas Hruz and attorney Daniel Kelly.

Judge Mark Gundrum was appointed by Walker in 2011 to the Wisconsin District II Court of Appeals. Prior to his appointment, Gundrum served as Waukesha circuit court judge from 2010 to 2011 and was a state representative from 1998 to 2010. Daniel Kelly is an attorney at Milwaukee law firm Rogahn Kelly and served on Justice Rebecca Bradley’s campaign. Judge Thomas Hruz was appointed by Walker in 2014 to the Wisconsin District III Court of Appeals. Before his appointment, he was an attorney at Meissner Tierney Fisher & Nichols in Milwaukee.

The three finalists are vying to replace outgoing Justice David Prosser, who is retiring at the end of July. Gov. Walker has stated he hopes to have a replacement selected by this time. The applicant selected by Walker will hold the seat until the April 2020 election. Many consider this to be a legacy appointment by Walker considering a younger selection may sit on the state’s highest bench for over three decades.

Applicant Field for Supreme Court Vacancy Narrowed

Posted on by Hamilton

Gov. Scott Walker narrowed the field of Supreme Court applicants from 11 to five after the first round of interviews took place on June 13. The five finalists include: Appeals Court judges Mark Gundrum and Thomas Hruz, Jefferson County Judge Randy Koschnick, Marinette County Judge James Morrison, and attorney Daniel Kelly.

Milwaukee area attorney Daniel Kelly previously requested his name be kept confidential until the list of finalists was released.

Those who did not make it to the second round of interviews include: Appeals Court Judge Brian Hagedorn, Public Service Commission Chair Ellen Nowak, attorney Claude Coveli and former Dane County Judge Jim Troupis.

The five finalists are vying to replace retiring Justice David Prosser, whose last day on the bench will be July 31. Gov. Walker has stated he hopes to have a replacement selected by this time. The applicant selected by Walker will hold the seat until it opens for an April 2020 election. Many consider this to be a legacy appointment by Walker considering some of the younger applicants may sit on the state’s highest bench for over three decades.

The finalists are:

  • Judge Mark Gundrum, Wisconsin District II Court of Appeals, appointed by Walker in 2011. Served as Waukesha circuit court judge from 2010 to 2011 and was a state representative from 1998 to 2010.
  • Attorney Daniel Kelly from Milwaukee, served on Justice Rebecca Bradley’s campaign.
  • Judge Thomas Hruz, Wisconsin District III Court of Appeals, appointed by Walker in 2014.
  • Judge Randy Koschnick, Jefferson County Circuit Court. Koschnick served as a public defender prior to his election to the Jefferson County Circuit Court, and ran against Wisconsin Supreme Court Justice Shirley Abrahamson in 2009.
  • Judge James Morrison, Branch 2 of the Marinette County Circuit Court, appointed by Walker in 2012.

AG Opinion Validates Act 21 Limits on Agency Authority

Posted on by Hamilton

On May 10, 2016, Attorney General Brad Schimel issued a formal opinion finding that 2011 WI Act 21requires explicit delegation of authorities to agencies, making it clear that regulatory mandates may no longer arise from implied authority.

Whether enacting rules, imposing permit conditions, or exercising public trust authority, the Department of Natural Resources (DNR) and other agencies must point to explicit statutory delegations or their actions are legally void and unenforceable.

Key excerpts from the 23-page opinion include:

  • “Act 21 makes clear that permit conditions and rulemaking may no longer be premised on implied agency authority.”[1]
  • Given the lack of explicit authority in the statutes, “a monitoring well condition on a high capacity well permit is prohibited and unenforceable.”[2] Similarly, DNR lacks authority to require cumulative impact analysis as a well permit condition.
  • “[M]uch of the [Wisconsin Supreme] Court’s reasoning in Lake Beulah, including the breadth of the DNR’s public trust authority. . . , is no longer controlling.”[3]

The AG Opinion is significant, but also is consistent with prior positions taken by the AG’s Office, DNR, and by the court in the New Chester case[4]. One issue clarified by Schimel was that a key Act 21 provision, Wis. Stat. § 227.10 (2m), is not retroactive. Act 21’s effective date is June 8, 2011. Thus, any standard, requirement, or threshold, including permit terms, issued on or after June 8, 2011, must be tethered to explicit statutory or rule language. And draft rules submitted to the Legislative Council (before the public hearing) on or after that date must also arise from explicit statutory authority.

Hamilton Consulting represented several clients in advancing Act 21. Through the Great Lakes Legal Foundation, some of us were attorneys of record for business associations on the leading cases, including Lake Beulah[5], Rock-Koshkonong Lake Dist.[6], and New Chester.

For more on this issue, consider WMC’s June 22 Symposium: Act 21: The Demise of Implied Agency Authority.

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[1] OAG-01-16 (May 10, 2016), p. 15, ¶29.

[2]Id. p. 22, ¶50.

[3] Id. P. 8, ¶16

[4] New Chester Dairy v. DNR, No. 14CV1055 (Wis. Cir. Ct. Outagamie Cty. Dec. 2, 2015).

[5] Lake Beulah Management District v. Department of Natural Resources, 2011 WI 54, 3355 Wis. 2d. 47 (2011).

[6] Rock-Koshkonong Lake Dist. V. DNR, 2013 WI 74, 350 Wis. 2d 45 (2013)

Supreme Court Upholds Independence of State Superintendent of Public Instruction

Posted on by Hamilton

In a split opinion, the Wisconsin Supreme Court upheld lower court decisions that 2011 Wisconsin Act 21 (Act 21) is unconstitutional as applied to the Superintendent of Public Instruction (SPI) and the Department of Public Instruction (DPI).

Act 21 amended various provisions in the statutes that set forth procedures agencies must follow when promulgating administrative rules. The provisions the court found problematic related to the governor’s ability to withhold approval of SPI and DPI rules.

The May 18 decision was written by Justice Michael J. Gableman and rests on the constitutional provision that gives supervisory powers to the Superintendent of Public Instruction and other officers of public instruction. According to the opinion, “Act 21 does not allow SPI and DPI to proceed with their duties of supervision without the Governor’s, and in some circumstances the Secretary of the Administration’s approval [which] unconstitutionally vests the Governor. and the Secretary of Administration with the supervision of public instruction in violation of the [Constitution].”

Chief Justice Pat Roggensack wrote the dissent, joined by justices Annette Ziegler and Rebecca Bradley. The dissenting justices found that Act 21 provided constitutional procedural safeguards to be employed in rulemaking by DPI and other administrative agencies. Ziegler wrote a separate dissenting opinion. Justices David Prosser and Shirley Abrahamson wrote separate concurring opinions.

Given the numerous separate opinions, some believe the decision has little precedential value. Regardless, the opinion only affects Act 21 as it relates to SPI and DPI. Act 21 provisions relating to gubernatorial approval and the requirement that agency regulatory authorities be “explicitly” set forth in the statutes are not affected as they relate to all other agencies. (See article on AG’s opinion on Act 21 and DNR)

Court of Appeals Puts a Hold on Dane County Right to Work Decision

Posted on by Hamilton

On May 24, a state court of appeals reversed Dane County Circuit Judge William Faust’s ruling not to grant a stay of his controversial decision that the state’s new right-to-work law was unconstitutional. The appeals court decision allows the right-to-work law to be in effect and enforceable pending appeal of Faust’s underlying decision.

Wisconsin became the 25th right to work state last year. Right-to-work laws bar businesses and unions from reaching labor agreements that force workers to pay fees to the union. Various state unions challenged the constitutionality of the law.

On April 15, 2016, Faust granted the unions’ request for summary judgment, concluding that the right-to-work law effects an unconstitutional taking of private property of Wisconsin’s labor organizations. As a result, the Dane County court enjoined the state and the attorney general from enforcing the statute.

The decision by the Wisconsin Court of Appeals District 3, based in Wausau, does not directly go to the merits of the case. But presiding judge Lisa K. Stark rested her decision on the finding that the law was presumed constitutional and that the state established “there is sufficient likelihood of success on appeal to warrant the grant of the stay.”

Attorney General Brad Schimel had initially requested Faust stay his own decision during the pendency of the appeal. Faust refused to do that, which moved that request to the court of appeal. The attorney general filed a memorandum in support of the stay on April 29, 2016. Wisconsin Manufacturers and Commerce (WMC) and the National Federation of Independent Business Small Business Legal Center also filed briefs in support of the state.

The bulk of the attorney general’s brief focuses on his argument that the state is “extremely likely to succeed on the merits.” Schimel issued a May 24 press release lauding the Court of Appeals decision and expressing his confidence “the law will ultimately be found constitutional.” WMC also issued a press release praising the decision.

Obama Doubles Overtime Exemption Level to $47,476

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The Obama Administration’s new overtime rule will double the salary threshold for “white collar” workers to $47,476. The current exemption, set in 2004, is $23,660. The new threshold that will impact 4.2 million salaried workers goes into effect on December 1, 2016. Under the new rule, the threshold will automatically increase every three years.

Business groups say the new rule will force millions of salaried professionals to be reclassified as hourly wage workers. They argue that small businesses, nonprofits, and public sector employers will be specially hurt. The U.S Department of Labor estimates businesses will end up paying workers an additional $1.3 billion a year.

The final overtime rule was published on May 23 by the U.S. Department of Labor.

Under the final rule, an automatic escalator to the salary threshold will occur every three years, beginning on January 1, 2020. The benchmark for the salary adjustment is the 40th percentile of full-time salaried workers in the lowest-wage census region, which is currently in the south. Based on that formula, the Department of Labor estimates the new threshold will be $51,168 in 2020.

The rule also updates the total annual compensation level above which most white-collar workers will be ineligible for overtime. That level is set to the 90th percentile of full-time salaried workers nationally, or from the current $100,000 to $134,004 per year.

For workers with salaries above the new threshold, employers will continue to use the same duties test to determine whether or not the workers are entitled to overtime pay.

In its fact sheet explaining the rule, Labor provides businesses a “choice” under the new rule:

  1. Increase their employees’ salaries to the $47,476 threshold.
  2. Pay workers the time-and-a-half overtime premium for every hour beyond 40 per week.
  3. Limit workers to a 40-hour work week.

Some groups assert that market considerations over time will prove the paycheck benefits an illusion. To curb costs, some businesses will simply forbid employees from working over 40 hours. They may also have to cut back other expenses such as non-cash benefits or suppress the base pay itself.

Beyond frustrating ambitious individuals willing to tackle longer hours in efforts to rise into management ranks, the rule will “force millions of workers into time-clock or hourly-tracking arrangements even if they themselves prefer the freedom and perks of salary status.” See The High Cost of Obama’s Overtime Edict, Cato Institute, May 20, 2016.

The US Chamber of Commerce issued the following statement on the new rule:

Despite the modifications, the dramatic escalation of the salary threshold, below which employees must be paid overtime for working more than 40 hours a week, will mean millions of employees who are salaried professionals will have to be reclassified to hourly wage workers. Small businesses, nonprofits, and public sector employers will be especially impacted as they will have the hardest time finding more income to cover the increased labor costs, even if they will have a longer time to implement the new requirement. Furthermore because the threshold will increase every three years, the impact on these employers will continue to ratchet up. This will result in charities providing fewer services to those in need, local governments having to reduce services and raise taxes, and small businesses having to curtail operations or plans to expand. The Department of Labor failed to accurately assess the impact this regulation would have on these, and other, employers.

Also see comments by WMC’s Director of Health and Human Resources Policy Chris Reader.