Category: Editorials

Governor Walker Signs Special Session Bill into Law Limiting Interest on Judgments

Posted on by Hamilton

On November 16, Governor Walker signed Special Session Senate Bill 14 into law. The new law changes Wisconsin’s pre- and post-judgment interest from 12 percent – the highest in the nation – to the Federal Reserve prime rate plus one percent. The final bill included amendments that apply the interest on judgments to all cases – not just tort law-, and set the rate twice a year (January 1 and July 1).

This bill was part of Governor Walker’s “Back to Work Wisconsin” Special Session. Two other bills from that special session are now on the Governor’s desk including the Trespasser Liability Act (SB 22) and Reasonable Attorneys Fees (SB 12).

This post was authored by Hamilton Consulting Group’s intern, Lane Oling, a 2L at the University of Wisconsin Law School.

Daubert Comes to Wisconsin — CLE Summit on Expert Opinion

Posted on by Hamilton

This one day “summit” is for trial lawyers who are engaged in the defense of civil litigation as well as those lawyers who represent businesses and professionals, and whose litigation fate relies heavily on the admissibility—or non-admissibility—of expert testimony, including the elimination of “junk science.” A comprehensive understanding of decisions and trends from other jurisdictions will be critical for lawyers to assist in helping to shape Wisconsin law in the manner intended by the adoption of the Daubert standards for Wisconsin in January of this year.

For more information or to register, click here.

Governor Walker Calls Second Special Session on Jobs

Posted on by Hamilton

For the second time this year Governor Scott Walker has called the legislature into special session to address jobs. The “Back to Work Wisconsin” special session is expected to begin on Thursday, September 19, and run through November.

Walker’s announcement included a list of 26 pieces of legislation for the session. Several of the bills contain civil liability reforms.

Factors for determining the reasonableness of attorney fees.

LRB 2670–Rep. Vos and Sen. Zipperer

Summary:

  • Requires a court to consider certain factors to determine reasonable attorney fees
  • Factors include, but not limited to the following:
    • amount involved in the dispute
    • actual outcome of the dispute
    • novelty and difficulty of the questions involved
    • complexity of the case
  • Would limit attorney fees to three times the award with certain limiting factors and exemptions including whether nonmonetary relief is awarded or in cases involving both compensatory damages and nonmonetary relief

Providing immunity from liability to drug and device manufacturers and sellers under certain circumstances

LRB 2890–Rep. Kooyenga and Sen. Zipperer

Summary:

  • This bill provides immunity to manufactures and sellers of medical devices/drugs from lawsuits if their product received approval from the federal Food and Drug Administration at the time the device/drug left the control of the manufacturer or seller.
  • Also provides immunity from liability to a manufacturer or seller of a drug/device for any claim based on the failure to warn of the risk of the drug/device if labeling was made available to the consumer, the person who prescribed the drug/device, and the labeling was in compliance with established FDA standards
  • Legislation covers defects in design, which undergo a strenuous FDA approval process
  • Does not cover defects that occur in the manufacturing process

Duty of care owed to trespassers

LRB 2939–Rep. Williams and Sen. Galloway

Summary:

  • Current law in WI does not hold property owners and outdoor employers liable for trespassers who are injured on their property through no fault of the property owner.
  • Under the Third Reinstatement of Torts spreading across the country, landowners have a duty to exercise reasonable care to all entrants on property, including unwanted trespassers.
  • This bill would pre-empt courts in WI from adopting this Third Reinstatement
  • Current law in WI would be preserved

Interest rates on judgments in certain civil actions

LRB 2966–Rep. Paul Farrow /  LRB 2838 – Sen. Rich Zipperer

Summary:

  • Currently, Wisconsin allows interest on judgments involving the recovery of money at the rate of 12% per year from the date of entry judgment. This is one of the highest interest rates in the country and was established in the 1979-1980 legislative session.
  • Changes the interest rate on judgments for the recovery of money in certain civil actions to an annual rate of 1 percent plus the prime rate in effect on the day the judgment is entered.
  • Improves the legal climate for job creators.

Legislators Circulate Bills that Would Protect Employers from Costly and Dubious Lawsuits

Posted on by Hamilton

Two bills circulating in the Wisconsin Capitol would amend Wisconsin’s Fair Employment Act (WFEA) by repealing punitive and compensatory damages in employment discrimination cases and allowing employers to consider an applicant’s prior felony conviction when hiring or terminating the person from employment.

A more in-depth explanation of each bill can be found here and here. After the draft bills are circulated for co-sponsors, the bills will be officially introduced and will likely receive public hearings in the near future.

WCJC will provide continuous updates on these bills.

State Court Challenges to Legislatively Enacted Tort Reforms

Posted on by Hamilton

The Summer 2011 edition of the Federalist Society’s State Court Docket Watch features an article co-authored by Andrew Cook, Legislative Director of the Wisconsin Civil Justice Council and a lobbyist and attorney with the Hamilton Consulting Group, and Great Lakes Legal Foundation staff attorney Emily Kelchen.

State Court Challenges to Legislatively Enacted Tort Reforms provides a summary of recent state supreme court cases in which opponents of civil liability reform have challenged reform laws, mostly on constitutional grounds. The article also provides a summary of the recent reforms in Wisconsin law and an analysis of past Wisconsin reforms that were found unconstitutional.

Fairly Allotting Liability Among Defendants

Posted on by Hamilton

Andrew Cook, Legislative Director of the Wisconsin Civil Justice Council and a lobbyist and attorney with the Hamilton Consulting Group, was asked to present his paper on Fairly Allotting Liability Among Defendants at the August 2, 2011 meeting of the American Legislative Exchange Council (ALEC) in New Orleans.

The paper discusses the different variations of joint and several liability using Wisconsin as an example of how the law has changed over time.

Supreme Court Holds Not-for-Profit Outpatient Clinic is Tax-exempt

Posted on by Hamilton

Covenant Healthcare v. City of Wauwatosa, (2011 WI 80)

The Wisconsin Supreme Court this morning released its opinion in Covenant Healthcare v. City of Wauwatosa. In a 6-1 decision, the Court found that the St. Joseph Hospital Outpatient Center qualifies as tax-exempt property.

In an opinion by Justice Gableman, the court held that the Outpatient Clinic is used for the primary purposes of a hospital and is therefore tax-exempt property. The court found that the Clinic is neither a doctor’s office nor a property used for commercial purposes and is therefore tax exempt. Further, the court held that no benefit inured to any member of St. Joseph because the term “member” does not include not-for-profit entities.

St. Joseph Outpatient Clinic is a freestanding clinic located 5 miles from St. Joseph Hospital. The Outpatient Clinic was owned by St. Joseph from 2003 to 2006. Covenant is the sole member of St. Joseph. In 2003, Covenant constructed a building that including three levels of the Outpatient Clinic. Covenant transferred ownership of the building to St. Joseph, but maintained ownership of the land and leased it to St. Joseph.

Covenant filed timely Property Tax Exemption Requests with the City of Wauwatosa in each year from 2003 to 2006. Covenant claimed property tax exemptions for both the Outpatient Clinic building and the land on which the building is located. The city assessor denied the property tax exemption for each of these four years and Covenant paid the assessed tax. Covenant sued to recover the amount of the City’s allegedly unlawful assessment.

Through extensive factual analysis, the court concluded that the Outpatient Clinic is used primarily for the purposes of a hospital because the Outpatient Clinic is fully integrated with St. Joseph Hospital. The court concluded that the Clinic “effectively serves as a department of the larger St. Joseph Chambers Street Hospital.”

The court held that the Outpatient Clinic was not a doctor’s office. According to the court, “physicians practicing at the Outpatient Clinic do not receive variable compensation related to the extent of their services. Second, the Outpatient Clinic physicians do not receive extra compensation for overseeing non-physician staff. Third, the Outpatient Clinic’s bills are generated on the same software system as the bills generated by St. Joseph. Fourth, physicians at the Outpatient Clinic do not have their own offices.”

Additionally, the court held that the Outpatient Clinic was not used for commercial purposes. The court concluded that just because a not-for-profit may operate “in the black” does not mean it is generating revenue in the commercial sense.

Finally, the court held that the benefit did not inure to any member of St. Joseph because the term “member” does not include not-for-profit entities. The court held that even though the net benefits of St. Joseph inured to the benefit of Covenant, the tax exemption can still apply because Covenant is not a “member” for the purposes of property tax exemption determinations.

Chief Justice Abrahamson dissented, concluding that the Outpatient Clinic property is used as a doctor’s office and therefore does not qualify for the property tax exemption.

This post was authored by GLLF’s intern, Lane Oling, a 2L at the University of Wisconsin Law School.

Supreme Court Issues Important Decision Dealing with Corporate Officer Liability and Default Judgments

Posted on by Hamilton

Today, the Wisconsin Supreme Court issued a significant decision (Casper v. American Int. South Ins., 2011 WI 81) dealing with the liability of corporate officers for non-intentional torts and default judgments. The Wisconsin Civil Justice Council and the Wisconsin Insurance Alliance filed an amicus curiae brief in support of the employer and insurance company sued in the case.

The opinion was mostly positive. In particular, the court held that the corporate officer was not personally liable for approving the driving route of his employee who injured the plaintiffs. In addition, the court ruled that the trial court properly allowed the insurance company more time to answer the plaintiffs’ complaint based on the insurance company’s “excusable neglect” in failing to meet the 45-day timeline required by law.

The only negative portion of the decision was the court’s determination that a liability insurance policy need not be delivered, or issued for delivery, in Wisconsin in order to subject the insurer to direct action under Wisconsin law.

Facts and Legal Issues

Members of the Casper family and a friend were injured when their vehicle was rear-ended by a vehicle driven by Mark Wearing. At the time of the accident, Wearing was co-employed by Transport Leasing/Contract, Inc. (TLC) and Bestway Systems, Inc. (Bestway). The truck he was driving had been leased to Bestway by Ryder. Litigation ensued and three separate appeals were filed, two of which went before the Supreme Court.

The first issue presented to the court was wholly procedural and involved the question of what constitutes “excusable neglect” when failing to respond to a complaint within the 45-day requirement. The Caspers filed suit against a number of parties, including, as relevant here, National Union, as an insurer of one of the driver’s co-employers, TLC.

The Caspers served National Union with a copy of the amended complaint, on May 5, 2006. National Union failed to timely answer the amended complaint. The Caspers promptly moved for default judgment. Shortly thereafter, National Union filed an answer that was six days late and also moved to enlarge time for filing their answer.

The circuit court found that National Union’s failure to file its answer in a timely manner was “excusable neglect” under Wisconsin’s law. Accordingly, the court granted National Union’s motion to enlarge time and denied the Caspers’ motion for default judgment.

The second legal issue involves a novel question about the personal liability of a corporate officer, Jeffrey Wenham, the CEO of Bestway, one of the employers of the driver. The Caspers alleged that Wenham was personally liable in negligence for approving the route that Wearing (his employee) was driving the day of the accident, knowing that the route could not be safely completed pursuant to federal regulations. Initially, the circuit court dismissed all of the Caspers’ claims against Wenham as an individual.  On reconsideration, however, the circuit court reinstated the negligence claim against Wenham, agreeing with the Caspers that it had erred in finding that there was no evidence or testimony that Wenham personally approved the route.  Wenham appealed and the court of appeals affirmed.

The third legal issue is whether under Wisconsin law a direct action claim against an insurer can be maintained where the insurance policy was not delivered or issued for delivery in Wisconsin, but the insurance policy covers the insured “business operations” conducted in this state.

Supreme Court Decision

In a 5-2 decision by Justice David Prosser (joined by Justices Patrick Crooks, Patience Roggensack, Annette Ziegler, and Michael Gableman; Chief Justice Shirley Abrahamson and Justice Ann Walsh Bradley dissenting in part and concurring in part), the Supreme Court both affirmed and reversed the lower court.

Default Judgment — Excusable Neglect: The court held that the trial court did not erroneously exercise its discretion in finding excusable neglect and granting National Union’s motion to enlarge time by seven days to answer the amended complaint. The court found that National Union provided sufficient affidavits explaining its failure to respond to the complaint within the 45 days required by Wisconsin law.

Corporate Officer Liability for Non-Intentional Tort Liability: A corporate officer can be held personally liable for a non-intentional tort liability that occurs while he or she is performing his or her job and which is within the scope of his or her employment. However, the court ruled that in this case Wenham’s (the CEO) actions were too remote to provide a basis for liability. According to the court, “any negligence on Wenham’s part in approving a route, from his office in Ohio, to be driven entirely in other states, is simply too far removed from the injury the Caspers suffered in Wisconsin.”

In reaching its decision, the court cited WCJC’s and WIA’s brief discussing the “business judgment rule,” which “limits judicial review of corporate decision-making when corporate directors make business decisions on an informed basis, in good faith, and in the honest belief that the action taken is in the best interest of the company.” According to the court, “the very existence of a business judgment rule reflects public policy that corporate officers are allowed some latitude to make wrong decisions without subjecting themselves to personal liability.”

Direct Action: The court ruled that a liability insurance policy need not be delivered or issued for delivery in Wisconsin in order to subject the insurer to a direct action under Wisconsin law. In reaching this decision, the Supreme Court overruled a previous court of appeals decision – Kenison v. Wellington Insurance Co. – which reached a different conclusion.

Wisconsin Supreme Court Issues More End of Session Opinions

Posted on by Hamilton

The Wisconsin Supreme Court continues to issue its final opinions of the 2010-11 Term. Below are two decisions decided by the court on Tuesday:

DeBoer Transportation, Inc. v. Charles Swenson, 324 Wis. 2d 485, 781 N.W. 2d 709 (2011)

The issue in this case is whether an employer failed to show “reasonable cause” by not rehiring an employee recovering from an injury who refused to participate in the company’s mandatory overnight reorientation.

The employee, Charles Swenson (Swenson), injured his knee at work. After several months away from work, Swenson was cleared to return to his job. His employer, DeBoer Transportation, instituted a “reorientation” program for drivers that have been off work more than 60 days. One of the requirements was an overnight “check-ride” that required the driver to spend a number of nights on the road traveling.

Swenson took care of his terminally ill father and therefore requested that DeBoer pay the cost of caring for his father during the overnight check-ride. Because DeBoer refused to pay for the care of Swenson’s father and refused to make alternative check-ride arrangements, Swenson decided not to participate in the check-ride. As a result, Swenson was not rehired.

Swenson filed a complaint with the Labor and Industry Review Commission (LIRC), who determined the deBoer failed to show “reasonable cause” for its refusal to rehire Swenson. LIRC concluded that deBoer’s actions did not constitute
“reasonable cause” because deBoer offered no explanation for why it could not alter the check-ride to accommodate Swenson’s personal need to take care of his father.  The court held that LIRC incorrectly applied the worker’s compensation statute.

Courts have previously held that merely saving costs is reasonable cause. The court concluded that Swenson’s failure to complete the check-ride, a long standing “legitimate safety policy” of deBoer, was reasonable cause for refusing to rehire Swenson. The court concluded that worker’s compensation statute §102.35 (3) does not require an employer to change its legitimate and long-standing safety policies in order to assist an employee in meeting personal obligations.

Justce Bradley, joined by Chief Justice Abrahamson dissented, arguing the check-ride was merely a pretext for a refusal to rehire.

Kilian v. Mercedes – Benz USA, 324 Wis. 2d 583, 785 N.W. 2d 687 (2011)

In a unanimous decision, the Wisconsin Supreme Court held that Mercedez-Benz’s enforcement of a lease after the plaintiff received a refund for the leased car violated Wisconsin’s Lemon Law. The court concluded that the plaintiff was entitled to his costs, disbursements, and reasonable attorney fees, but was not entitled to an award for pecuniary loss.

Steve Kilian (Kilian) leased a Mercedes-Benz from Mercedes-Benz Financial (Financial). After numerous problems associated with the vehicle, Kilian returned the vehicle to the dealer and received a refund check from Mercedes-Benz as required by Wisconsin’s Lemon Law.

After Kilian returned the vehicle, he began receiving phone calls from Financial (the lessor) indicating that he was in default on the lease payments. Financial also reported this information to credit bureaus. When Kilian was unable to resolve the dispute, he filed a lawsuit under Wisconsin’s Lemon Law.

Kilian sued Mercedes-Benz arguing that the manufacturer violated the Lemon Law by not automatically refunding Financial the current value of the lease within 30 days of the demand for refund. Kilian also sued Financial for damages for reporting the information to the credit bureaus. Both the trial court and court of appeals ruled in favor of Mercedes-Benz and Financial.

Even though Kilian sought equitable relief and not pecuniary damages, the Supreme Court concluded that he could maintain an action under Lemon Law. In reversing the lower court, the Supreme Court ruled that the court of appeals incorrectly interpreted the Lemon Law statute by limiting its remedy to pecuniary loss.

The Supreme Court rejected Financial’s argument that it made an innocent mistake because there was no way to stop the notices from being mailed by its automated collections system. According to the court, this argument ignored that fact that the Lemon Law unambiguously prohibits enforcement of the lease following the issuance of a refund to the customer and that the statute provides no exception for “mistaken enforcement.”

The court ruled that Kilian was entitled to his costs, disbursements, and reasonable attorney fees, but was not entitled to an award for pecuniary loss. According to the court, because Kilian had already received a complete refund from Mercedes – Benz USA, it would be against legislative intent to award him double pecuniary damages, the usual remedy under the Lemon Law.

Justice Ziegler did not take part in this decision.

National Publication Highlights Wisconsin’s Tort Reforms

Posted on by Hamilton

A recent article in Business Insurance noted the numerous civil liability reforms being enacted throughout the country. The article singled out Wisconsin for its significant changes contained in 2011 Wisconsin Act 2:

A lot of [Texas] Gov. Perry’s fellow governors are beginning to pick up that mantle,” said Mr. Joyce, who cited Wisconsin’s Scott Walker as a governor who has “really embraced reform as part of an economic package.”

While the article focused mainly on Texas’ recent reforms, American Tort Reform Association President Tiger Joyce noted the numerous other states, including Wisconsin, that have enacted significant reforms this year:

But while Texas received considerable attention for its reform, it was not the only state to enact changes to its civil justice system.

In fact, 2011 “by contrast to recent years, has been a very successful year for us,” said ATRA’s Mr. Joyce, citing Alabama, Arizona, Oklahoma, South Carolina, Tennessee and Wisconsin.