As it relates to the current state of Wisconsin politics, the words “John Doe” have been omnipresent for what seems like Governor Walker’s entire tenure in office. The probe may be close to a conclusion as another challenge to the probe has been eliminated.

In the spring of 2014 Eric O’Keefe, Executive Director of Wisconsin Club for Growth, sued prosecutors in charge of the John Doe probe to hold them personally liable for violating his, and the Club for Growth’s, civil rights. U.S. District Court Judge Rudolph Randa ruled in favor of O’Keefe. The prosecutors appealed to the 7^th Circuit Court of Appeals. The 7^th Circuit reversed Judge Randa’s opinion, stating that the issues it raised should be decided by the state judiciary and dismissed the case. O’Keefe appealed to the U.S. Supreme Court in order to get the case reinstated and permanently block the probe. The Supreme Court denied certiorari last week, in effect rejecting O’Keefe’s appeal. The Supreme Court’s rejection ends O’Keefe’s case. However three cases concerning the probe are currently before the Wisconsin Supreme Court.

The state supreme court accepted three cases concerning the John Doe probe in mid-December 2014. Two cases were legal challenges from targets of the probe and a third was an action to reinstate the probe brought by special prosecutor Francis Schmitz. The court took up these cases after Judge Gregory Peterson determined the activities being investigated in the probe were not illegal. Schmitz appealed to the District Four Court of Appeals, based in Madison, arguing that Judge Peterson misinterpreted the campaign finance laws in question. The Court of Appeals rejected Judge Peterson’s ruling and the targets of the probe appealed to the state supreme court. The court decided not to hear oral arguments and rely solely on briefs when deciding the case. A decision is expected to be released this summer.

Within hours of state elections officials certifying the April 7^th referendum results, four Wisconsin Supreme Court Justices elevated Justice Patience Roggensack into the role of chief justice. The vote was taken via email with four justices – Gableman, Prosser, Ziegler, and Roggensack – taking part and voting for Roggensack. The other three justices on the court – Abrahamson, Bradley, and Crooks – did not cast votes in the election.

Justice Abrahamson filed a lawsuit the morning after the referendum passed in which she argues that she should remain chief justice until the end of her term in the spring of 2019.  In a letter to the U.S. District Court, Abrahamson’s attorney argued that she still holds the position of chief justice. Also in the letter, Abrahamson contests the procedure used for electing the chief justice. She argues the court should have conferenced to decide on a procedure before electing the chief justice. However Roggensack’s attorney, who is also the attorney for every other justice on the court but Justice Bradley, contended that once the election results were ratified the justices had the ability to elect a new chief justice at any time.

Chief Justice Roggensack stated in an interview this week “there’s no doubt about it,” she’s the new chief justice. The state supreme court website lists Roggensack as chief justice, and features a welcome message from her. She also plans to meet with staff to discuss the transition.

Bradley has stated the election of a new chief justice was premature. She noted that the issue of whether the constitutional amendment is to be applied “retroactively” (before Abrahamson’s term is up) needs to be decided in federal court. Therefore the court does not yet know if a vacancy exists to fill.

However, Justice Gableman argues the vote was not premature. He has told the media that when the federal judge denied Abrahamson’s request for a temporary restraining order to stop the members of the court from electing a new chief justice, the judge stated that when and how to implement the amendment was a question of state law. Therefore since the judge did not restrain the court from enacting the amendment, the members of the court were able to elect a new chief justice at a time of their choosing.

Justice Prosser, who voted in favor for Roggensack, says he does not think the court should install the new chief justice until the beginning of the court’s next term in the fall.

Chief Justice Patience Roggensack stated in a press release that as chief justice she intends to repair the damage done to the reputation of the state supreme court and broaden the involvement that justices, and judges around the state, have in the administration of the court system. Chief Justice Roggensack also intends to donate the addition $8,000 of her salary to the Access to Justice Commission which arranges civil legal services for those individuals who are unable to afford them. She has not indicated when she believes her term will begin.

Under current Wisconsin law, plaintiffs who win favorable verdicts are usually entitled to recover interest on the monetary judgments awarded to them. There are two types of interest. There is post-judgment interest, which is meant to compensate the plaintiff for loss of the use of the money while a defendant appeals an unfavorable judgment. Post-judgment interest accrues from the time the judgment is made until the time the judgment is paid. There is also pre-judgment interest, which accrues from the time the plaintiff makes an offer of settlement until the settlement is paid.

Past Reform

Prior to 2011, pre- and post- judgment interest rates were set at 12 percent. Because appeals or settlement agreements and payment can take time, plaintiffs could receive a significant windfall due to the high interest rate. 2011 Senate Bill 14 signed into law as 2011 Act 69 changed the interest formula from 12 percent to the prime rate set by the Federal Reserve Board plus one percent. This ensures that plaintiffs do not receive a windfall while also ensuring that defendants pay a reasonable interest rate.

2015 Assembly Bill 95

Assembly Bill 95 (AB 95) seeks to change the interest rate for pre- and post –judgment interest for verdicts in small claims court from the formula created in Act 69 back to the 12 percent rate. The primary author of AB 95 is Representative Thiesfeldt. The bill was introduced on March 12 and was referred to the Assembly Committee on Judiciary. A public hearing on the bill was held on April 7. The primary author AB 95’s companion in the Senate, 2015 SB 76, is Senator Nass. SB 76 was introduced on March 23 and referred to the Senate Committee on the Judiciary and Public Safety.

The Joint Finance Committee (JFC) held its first executive session this week on Governor Walker’s proposed 2015-2017 state budget. The committee took action in a number of areas, including the Secretary of State, the Public Service Commission (PSC), State Treasurer, Department of Revenue-Lottery Administration, Department of Administration – Division of Gaming, the Supreme Court, Circuit Courts, Court of Appeals, Judicial Council, Judicial Commission and Employment Relations Commission.

Read a summary of the proposals made by Governor Walker the state judiciary.

In the state judiciary budget, JFC rejected a number of Governor Walker’s proposals this week, including his proposal to eliminate the Judicial Council and reallocating appropriations of the Judicial Commission. In addition, the JFC took action on proposed block grants for the Supreme Court and Circuit Court.

Supreme Court Block Grant: JFC approved the governor’s proposal, on a party line vote, to consolidate GPR appropriations for the director of state courts and the state law library under the Director of State Courts and Law Library general program operations appropriation, funded at $10.3 million general purpose revenue (GPR) each fiscal year. The governor recommends these appropriations be changed from annual to biennial. However, the proposed consolidation of these appropriations does not include a decrease in revenue to these programs. Furthermore, the governor recommends transferring the appropriation for library collections and services to the Director of State Courts and Law Library general program operations appropriation. The block grant system is designed to give supreme court justices more flexibility to determine how to spend its appropriation.

Circuit Court Block Grant: JFC voted to approve the governor’s recommendation to create a circuit court block grant that would create individual appropriations from court interpreter fees, circuit court support payments and guardian ad litem costs. JFC modified the governor’s proposal slightly by delaying the consolidation of the appropriations until the second year of the biennium in order to provide the Director of State Courts time to determine how to implement the changes.

Also, following the governor’s initial budget recommendations it was revealed the budget did not include full funding increases and related costs provided for 278 court reporter positions. JFC resolved the error unanimously, and deleted the governor’s recommendation and maintained current law to provide funding for the court reporters.

Elimination of Surcharge Exemptions: Currently there are various exemptions from the civil clerk fee and justice information fee for failure to wear a seatbelt, smoking in a public place, failure to carry proof of motor vehicle insurance and failure to carry a handicap permit. The governor’s budget proposes to eliminate these exemptions in order to generate more revenue. JFC voted unanimously to delete the governor’s proposal from the budget.

Judicial Council: JFC voted 15-1 to reject the governor’s proposal to eliminate the Judicial Council. The JFC did change the council’s funding source.  The council is funded jointly through GPR and the supreme court’s program revenue (PR) appropriation.  The JFC voted instead to fund the council through the court’s PR appropriation. 

Judicial Commission: JFC unanimously approved rejecting the governor’s proposal to move the appropriations of the Judicial Commission under the Supreme Court’s purview.

Broadband Expansion Grants: The governor’s budget proposes to change the broadband expansion grants appropriation from a continuing appropriation to a biennial appropriation and authorizes the use of the universal serve fund revenues to fund the grant program. Currently, grant expenditures of up to $500,000 annually from a continuing appropriation, but the governor’s proposal would set the appropriation amount at $6 million biennially.

A motion put forward by Representative Amy Loudenbeck (R-Clinton) and Senator Alberta Darling (R-River Hills) modified the governor’s proposal by providing $1.5 million each year for four years, until 2018-19, instead of providing $6 million SEG in 2015-16 and an ongoing amount beginning in 2016-17. The motion was passed by JFC 16-0.

Funding for State Broadband Office: The governor’s budget proposed to increase expenditure authority of the PSC’s appropriation of the state broadband office by $250,000 PR annually. JFC passed a motion 15-1, put forward by Rep. John Nygren (R-Marinette), which increases expenditure authority by $125,000, instead of the governor’s proposed $250,000 increase.

Wind Energy Health Study: The governor’s budget included a proposal to allocate no more than $250,000 PR in 2015-16 to study health issues related to wind energy systems. The PSC would be required to submit its report a little over one year after the biennial budget goes into effect. JFC voted to approve a motion that would require the PSC to review studies previously conducted to ascertain the health effects of industrial wind turbines on people residing near a wind turbine. Unlike the governor’s provision, the motion did not include an increase of any appropriations to the PSC.

JFC is meeting on Friday, April 17 to take hold another executive session on the budget. The agenda includes:

• Department of Health Services – Medical Assistance – Administration
• Office of the Commissioner of Insurance
• Wisconsin Technical College System
• Department of Military Affairs
• Department of Veterans Affairs
• Board on Aging and Long Term Care
• Board for People with Developmental Disabilities

A bill that would amend Wisconsin’s current statute governing non-compete agreements has been introduced in the legislature and if passed would preemptively override the Wisconsin Supreme Court decision in Runzheimer Int’l v. Friedlen (2013AP1392), a case which the Wisconsin Civil Justice Council (WCJC) filed an amicus curiae brief in last fall.

Current Law

Wis. Stat. § 103.465 is Wisconsin’s current statute governing non-compete agreements. Current law allows employers to restrict the ability of employees to compete within a certain geographic area, in a certain professional field, for a limited amount of time after the termination of employment. These restraints are only enforceable if they are reasonably necessary for the protection of the employer. If one portion of the agreement is found unreasonable by the courts, then the entire agreement is unreasonable unless the clauses are separate enough that one can be struck down and others upheld and the non-compete can still work (this is a judicial innovation).

Recent Wisconsin Supreme Court Case

Last October, the state supreme court heard the case Runzheimer Int’l v. Friedlen (2013AP1392) dealing with non-compete agreements last October. In that case Runzheimer Int’l, Ltd. updated its non-compete agreement with its employees. Each at-will employee was informed that in order to continue employment at Runzheimer he or she had to sign a new non-compete agreement. David Friedlen signed the new non-compete agreement in exchange for continued employment and continued access to the Runzheimer incentive plan. Two years later Friedlen’s employment was terminated. He then went to work for a Runzheimer competitor.

Runzheimer argued that by working for a competitor Friedlen violated the non-compete agreement. Friedlen asserted that because he was an at-will employee, and therefore could have been terminated at any time, that the offer of continued employment and continued access to the incentive package is illusory.

The trial court agreed with Friedlen holding that continued employment and continued access to the benefits plan was not sufficient consideration to support a non-compete agreement.

The WCJC’s amicus curiae brief filed in the case argues that if the trial court was not overturned, then it will be harder for employers to protect their proprietary processes and information.

Proposed Changes

On March 5^th Senator Paul Farrow introduced 2015 Senate Bill 69, which if passed, will amend Wis. Stat. § 103.456 in multiple significant ways:

1. Including At-will Employment: First SB 69 would include continued at-will employment as valid consideration for a non-compete agreement provided that the employee’s pay and benefits are equal before and after entering the agreement. Continued employment is only valid consideration if it is contingent on the execution of the non-compete agreement (meaning the employer actually terminates the employment of those employees who refuse to sign the agreement). This would preemptively override the state supreme court decision in Runzheimer.
2. Defining “Legitimate Business Interests”: The bill defines “legitimate business interests” as: (1) a trade secret, (2) substantial relationships with specific existing or prospective customers, (3) customer, patient, or client goodwill associated with a specific geographic area, (4) unique, extraordinary, or specialized training provided by the business or obtained as a result of employment.
3. Time Restriction: The bill creates a rebuttal presumption that a time restriction on being employed in the same field as they previously worked of six months or less on the employee is presumed reasonable while a time restriction of more than two years is presumed unreasonable.
4. Revisions by the Court: Changes made by the bill would enable Wisconsin courts to revise a non-compete agreement by amending sections that are considered unreasonable (known as “blue-penciling”) when necessary to protect the employer’s legitimate business interest(s).
5. Prohibiting “Individualized Economic Hardship”: The changes also prohibit a court from considering “individualized economic hardship” of the former employee when determining whether the non-compete should be enforced or not. The changes also limit the ability of a court to use statutory interpretation to interpret the scope of the non-compete narrowly or to invalidate the non-compete on public policy rationales.