This week, Reps. Mark Born (R-Beaver Dam) and John Nygren (R-Marinette) and Sens. Tom Tiffany (R-Hazelhurst) and David Craig (R-Big Bend) circulated litigation reform legislation (LRB 4700) aimed at lowering costs for Wisconsin businesses and government. The bill would modernize Wisconsin’s civil procedures for discovery and class actions to align with corresponding federal rules.

The bill’s reforms address the escalating transactional costs relating to discovery by:

• Making it clear that both courts and parties have an obligation to pursue the just, speedy, and inexpensive resolution of each case.
• Establishing cost-benefit and proportionality requirements for discovery to prevent litigants from abusing the discovery process to leverage a higher potential settlement or engage in a “fishing expedition.”
• Putting on hold discovery and other proceedings pending the court’s decision on a motion to dismiss or other dispositive motions, protecting parties from costly discovery in cases that may be dismissed or where refinement of the pleadings may clarify the allegations and scope of relevant discovery.
• Providing notice of third-party litigation financing, if the financier has a right to receive compensation that is contingent on and sourced from the outcome of the action. Such third party finance can increase the cost of litigation and cause suits to be brought that would not otherwise have been financially justified.
• Limiting discovery of electronically stored information (ESI) to address the escalating volume of ESI that is now one of the most significant discovery-related costs.
• Unless otherwise stipulated or ordered by the court, limiting discovery to 25 interrogatories, 10 depositions, none of which may exceed 7 hours in duration, and a look-back period of not more than 5 years prior to the accrual of the cause of action.

Other reforms related to class action litigation include:

• Aligning Wisconsin’s class action statute with Federal Rule 23. This will provide needed specificity, clarity, and consistency not found under Wisconsin’s current law. Wisconsin’s current one-sentence class action statute is essentially identical to the 1849 Field Code. After 168 years, it’s time for an upgrade. We would be the 48th state to do so.
• Providing a nondiscretionary right to an interlocutory appeal of class certification orders by both plaintiffs and defendants. This is a vital ruling that makes or breaks the case. It should be appealable before other aspects of the case proceed.
• Precluding “no-injury” class actions by requiring the type and scope of injury of the representative parties be typical of the type and scope of injuries of the class.
• Requiring that the class of consumers eligible to make a claim be “ascertainable” by requiring the members of the class be objectively verifiable by reliable and feasible means.

Other reforms in the bill include:

• Regulating lawsuit lending that provides money to consumers with repayment of the money derived from the consumer’s proceeds from the dispute (e.g., a judgment or settlement). There are times when reasonable settlement amounts that would otherwise be agreed upon between plaintiff and defense counsel are rejected because the injured party is “under water” to lawsuit lenders. The regulation of the industry will protect vulnerable Wisconsin consumers from lawsuit lenders that sometimes prey on those injured and unable to work or who may otherwise have substantial medical bills.
• Resetting statute of limitations – the maximum period that one can wait before filing a lawsuit – for certain civil litigation. The revised limits will bring consistency among Wisconsin liability laws and align us better with other states that have significantly lower limits. These lower time limits will promote efficiency and reduce burdens and costs on the state and businesses forced to investigate distant claims.
• Prohibiting the Department of Revenue from entering into a contingent fee agreement with third parties to engage in an audit relating to Wisconsin’s unclaimed property law. State unclaimed property laws, when fairly and appropriately enforced, serve several important functions. But private auditors working under contingency fee arrangements have taken an increasingly aggressive approach to the interpretation and enforcement of unclaimed property laws, which in turn, increases the costs of doing business in Wisconsin.
• Adjusting the interest rate insurers must pay on overdue claims from 12 percent to the prime loan rate plus one percent. In doing so, this rate will mirror interest rates on general judgments and allow the rates to self-adjust consistent with markets.

The bill is supported by Wisconsin Attorney General Brad Schimel, Wisconsin Civil Justice Council, Wisconsin Manufacturers and Commerce, American Tort Reform Association, and the U.S. Chamber of Commerce’s Institute for Legal Reform, among other organizations. Cosponsorship for the bill is due Wednesday, Dec. 6.

See related coverage from MacIver Institute.

On Sept. 26, Gov. Walker set forth his small business agenda while hosting the seventh annual Small Business Summit. His plan to improve Wisconsin’s business climate includes lawsuit and regulatory reform.

At the summit, the governor renewed his commitment “to enact lawsuit reforms to protect small businesses.” According to the National Federation of Independent Businesses, a typical small business is six times more likely to be sued than to sue.

The Wisconsin Civil Justice Council (WCJC) hailed the renewed commitment to litigation reform, with WCJC President Billy G. Smith noting “the easiest way to lower litigation costs for everyone, including large and small businesses, state and local governments, plaintiffs and defendants, is to address the escalating transaction costs associated with discovery.”

A recent study found that most of the documents retrieved in discovery are never submitted as evidence. In 2008, for example, of the close to 5 million pages of documents produced in discovery in major cases that went to trial, only 4,772 exhibit pages were marked. That means over 99.9 percent of those documents retrieved were never used. “That is an incredible waste of time and money,” according to Smith.

This week, the budget process came to halt, as the Joint Finance Committee (JFC) remains at an impasse on education, transportation and property taxes.  After the long Memorial Day weekend, JFC met only once last week on Wednesday, May 31. As the Assembly and Senate tried to smooth over their differences on the remaining items, JFC cancelled this week’s Tuesday and Thursday meetings.

Assembly Republicans released an education plan on Tuesday that cuts property taxes, but not as much as Gov. Scott Walker’s budget recommended. Walker has threatened to veto a budget that does not cut property taxes below the 2014 level, and Sen. Majority Leader Scott Fitzgerald (R-Juneau) said the Senate would stick to Walker’s plan. The Assembly’s transportation plan has also yet to gain traction in the Senate. Fitzgerald hinted recently that the Senate could take up their own budget, an unprecedented move in the history of the Joint Finance Committee. Lawmakers have just three weeks left to approve a budget before the June 30 deadline.

At the time of this writing, the next JFC meeting to take up the budget has not been scheduled. However, JFC will be in next Thursday June 15, to act on the state’s pending contracts to self-insure state employees.

With no JFC action to report on from this week, below are highlights from JFC’s May 31 executive session:

Department of Corrections (DOC)– Parole Commission: Gov. Walker recommended eliminating the parole commission and moving its functions to one Director of Parole position within DOC. Instead, Republicans passed a motion 12-4 that would not eliminate the commission, as Gov. Walker suggested, but would eliminate three positions on the commission that have been vacant all year, and retain a total of four members and two staff on the commission. Democrats on the committee fought to keep the eight-member commission as is, but their motion was rejected 12-4.

Supreme Court: Gov. Walker proposed creating a new process to determine judicial compensation. Under Walker’s proposed process, the Director of State Courts would submit salary recommendations to the Joint Committee on Employment Relations (JCOER) for approval. JFC did not accept the governor’s recommendation to create a new process, but approved a motion to maintain current law that judicial compensation be determined under the state employee compensation plan. Under the approved motion, judges and justices would also get a two percent raise in each year of the biennium. The motion also gives the administrator of the Division of Personnel Management the authority to establish even higher raises after consulting with the Chief Justice and obtaining the approval of JCOER.

Also under the Supreme Court, Democrats pushed to incorporate a former petition and current bill that would require justices and judges to recuse themselves in cases where the litigants have donated significant campaign contributions. However, the motion failed 12-4.

District Attorneys: JFC also approved a pay raise for district attorneys and public defenders at an increased rate from Walker’s plan. The committee unanimously voted to establish a state prosecutor board and statutory state prosecutor’s office. The motion’s authors say the board will give district attorneys representation in the capitol. The board would be made up of district attorneys, prosecutors and the attorney general. Its duties would include providing best practices for prosecuting cases, continuing education opportunities, submitting budget requests and providing recommendations on bills and administrative rules.

Tourism: JFC approved Gov. Walker’s standard budget adjustments for the Department of Tourism. Additionally, JFC approved Walker’s recommendation to transfer the Department of Tourism’s financial manager to the Department of Administration, moving $50,000 annually from salary and benefits to supplies and services for the department.

JFC also passed three other motions in Tourism. The first motion provided the department additional onetime funding of $7,500 for geographical signing in Pittsville. The second motion provided the department, on a one-time basis, $75,000 to improve structures and property in Vernon County that are used to facilitate a national or international ski jumping competition. The last motion provided the Wisconsin Arts Board with a one-time $59,500 to match federal grants received from the National Endowment for the Arts.

Department of Natural Resources: JFC addressed several of Gov. Walker’s divisive proposals under the Department of Natural Resources (DNR) at the May 31 meeting. Walker had proposed eliminating DNR’s Wisconsin Natural Resources magazine and move its content online. Democrats pushed to leave the magazine as is, but the committee ultimately voted to keep the magazine, but reduce its publication from six to four times per year and require more online content. Second to education funding, the elimination of the DNR magazine was one of the top items, Wisconsin residents testified against in the public hearings in March.

JFC also adopted Gov. Walker’s proposal to increase daily park fees by up to $5, but kept annual admission fee rates intact.

Gov. Walker had also proposed sunsetting the state forestry mill property tax as part of his promise to eliminate the state property tax altogether. JFC held over voting on this provision and instead will take it up later under property taxes. However, JFC co-chair Sen. Alberta Darling (R-River Hills) indicated that the GOP majority would approve it.

Josh Kaul, attorney in Madison and son of former state Attorney General Peg Lautenschlager, announced on Monday, April 10 that he will challenge Brad Schimel for his position as Wisconsin Attorney General. The election will be held on November 6, 2018. Lautenschlager resigned from her position with the Wisconsin Ethics Commission on Friday, April 7 before Kaul’s campaign announcement. Kaul is the first Democrat to announce plans to run against current Republican incumbent Schimel.

Josh Kaul grew up in Oshkosh and Fond du Lac, WI, going on to attend Stanford Law School. Kaul worked as a law clerk at the U.S. Court of Appeals for the First Circuit in Boston, MA before becoming an associate in Washington, D.C. He later became a federal prosecutor in Baltimore, MA before joining Perkins Coie LLP in Madison, WI. His practice at Perkins Coie included representing former Secretary of State Hillary Clinton during her 2016 presidential campaign.

Current Wisconsin Attorney General Brad Schimel announced his plans to seek re-election for another four-year term in December 2017. A former Waukesha County district attorney, Schimel is serving in his first term as state Attorney General after defeating Democrat Susan Happ in 2014. Schimel has been very active in his first two plus years, frequently defending legislation passed by the GOP legislative majority.

In his statement announcing his campaign, Kaul stated, “We deserve an attorney general who is focused on protecting Wisconsin families, not on partisan politics.” The Republican Party of Wisconsin defended Schimel, releasing a statement that said, “Attorney General Brad Schimel has fought for Wisconsin families by improving public safety, upholding the rule of law, and stopping federal overreach from Washington.”

 

On Feb. 2, the leadership committees in both the Wisconsin Senate and Assembly approved the hiring of an outside law firm to file a friend-of-the-court brief in defense of their redistricting map.

The redistricting plan, enacted as 2011 Wis. Act 43, was struck down by the U.S. District Court for the Western District of Wisconsin. In their 159-page opinion, the court found that:

Act 43 was intended to burden the representational rights of Democratic voters throughout the decennial period by impeding their ability to translate their votes into legislative seats. Moreover, as demonstrated by the results of the 2012 and 2014 elections, among other evidence, we conclude that Act 43 has had its intended effect. Finally, we find that the discriminatory effect is not explained by the political geography of Wisconsin nor is it justified by a legitimate state interest. Consequently, Act 43 constitutes an unconstitutional political gerrymander.

Attorney General Brad Schimel will represent the state Election Commission in defense of the redistricting map. “In his news release after the court decision, Schimel noted that the “2-1 decision does not affect the results of [the November 2016] election or any prior election and legislative district boundaries remain unchanged until the court rules on any remedy.”