Category: Editorials

Wisconsin Supreme Court Issues Positive Decision Limiting Personal Jurisdiction over Foreign Corporations

The Wisconsin Supreme Court today issued a positive decision in Rasmussen v. General Motors et al., 2011 WI 52. The Wisconsin Civil Justice Council filed an amicus curiae brief in support of Nissan Motors.

Although the case caption cites General Motors, the specific issue in this case was whether Wisconsin had personal jurisdiction over Nissan Japan.

The lawsuit involved a class action case against numerous auto manufacturers for alleged anti-trust violations. Specifically, the plaintiffs alleged that Nissan Japan and its wholly owned subsidiary, Nissan North America, conspired to keep new car prices at significantly higher prices than prices in Canada for same vehicles. The plaintiffs alleged that the defendants arranged for U.S. dealers to not honor warranties on cars imported from Canada to prevent lower prices cars from being imported to the U.S.

The case was dismissed for lack of personal jurisdiction by the trial court, which was upheld by the Court of Appeals. The issue before the Wisconsin Supreme Court was whether Wisconsin’s personal jurisdiction statute (Wis. Stat. § 801.05) allows for general or specific jurisdiction over a foreign parent corporation based on an agency theory.

The Wisconsin Supreme Court, in a 7-0 decision (Abrahamson issuing separate concurring opinion), upheld the Court of Appeals and ruled that Wisconsin did not have general personal jurisdiction over Nissan Japan.

The court held:

We conclude that even assuming arguendo that Nissan North Amercia were the agent of Nissan Japan, absent control by Nissan Japan sufficient to cause us to disregard the separate corporate identities of Nissan Japan and Nissan North America, the activities of the subsidiary corporation are insufficient to subject its nonresident parent corporation to general personal jurisdiction under Wis. Stat. § 801.05(1)(d). We also conclude that Rasmussen [plaintiff] has not met his burden to show that the corporate separateness of Nissan Japan and Nissan North America should be disregarded such that the activities of Nissan North America in Wisconsin should be imputed to Nissan Japan.

U.S. Supreme Court Strikes Down Public Finance Law Similar to Wisconsin’s “Impartial Justice Act”

The Supreme Court of the United States today issued a major decision — McComish et al v. Bennett, Secretary of State of Arizona, et al. — striking down Arizona’s public campaign finance law. The 5-4 decision, authored by Chief Justice John Roberts, and joined by Justices Scalia, Kennedy, Thomas, and Alito,  is likely to impact Wisconsin’s “Impartial Justice Act,” which contains similar campaign finance restrictions as the law struck down in Bennett.

The Arizona Citizens Clean Elections Act created a public financing system for candidates for state office. Candidates who opted to participate in public financing system were granted a certain amount of public campaign funds. In addition, the candidate that accepted public financing was granted additional matching funds if a privately financed candidate exceeded the publicly financed candidate’s initial state allotment. This also applied to campaign funds spent by independent groups. Thus, if a private third party group spent campaign funds against the publicly financed candidate, or in favor of the privately financed candidate, the publicly financed candidate would receive a dollar-for-dollar match. The matching funds under Arizona’s law topped out at two times the initial grant of money to the publicly financed candidate.

The Supreme Court struck down Arizona’s law, ruling that the matching funds scheme “substantially burdens political speech and is not sufficiently justified by a compelling interest to survive First Amendment scrutiny.” The court specifically noted how the campaign finance law burdened independent groups. For example, an independent group can only avoid the matching funds going to the candidate they oppose by changing their message or choosing not to speak altogether.

Wisconsin’s Impartial Justice Act, which was signed into law in 2009, contained a similar public funding matching scheme as the Arizona law. A lawsuit was filed in federal court, but the court upheld the law. The 2011-13 budget bill recently signed into law defunded the law. Wisconsin’s law is all but dead now, with the Supreme Court’s decision finding Arizona’s law unconstitutional.

For more discussion about Wisconsin’s law, click here.

Supreme Court Issues Big End of Session Opinions

This morning the United States Supreme Court issued four decisions, including the global warming standing case American Electric Power Co. v. Connecticut and the class action certification case Wal-Mart v. Dukes.

American Electric Power Co. v. Connecticut

This is the Court’s first opinion on climate change since it ruled in 2007 in Massachusetts v. EPA that greenhouse gases are “pollutants” subject to Clean Air Act regulation.

Wisconsin (before it dropped out of the case) was one of eight states that sued defendant utilities, American Electric Power Co., Southern Co., Xcel Energy Inc., the Tennessee Valley Authority, and Cinergy Corp., for their alleged contribution to global warming. The states were asking the court to impose stricter greenhouse-gas regulations than those currently imposed by the EPA by declaring CO2 a nuisance.

The Court unanimously ruled that the Clean Air Act and EPA action authorized by the Act displaced any right under federal common law to sue for reduction of carbon dioxide emissions from these companies.

Opinion author Justice Ruth Bader Ginsburg emphasized the role of the EPA compared to the courts. “The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation displaces federal common law,” and “[i]t is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions. The expert agency is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions. Federal judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order.”

The Supreme Court split 4-4 on the issue of whether the U.S. Court of Appeals for the Second Circuit had jurisdiction to hear this case in the first place, questioning the states’ standing to sue. Justice Sotomayor abstained from the entire case since she sat on the lower court whose opinion was being reviewed.

Justice Alito, joined by Justice Thomas, wrote a short concurrence. Justice Alito made clear that he agreed with the Court only on the assumption that Massachusetts v. EPA interpreted the Clean Air Act correctly since the merits of that opinion were not at issue. This could be a signal that Alito and Thomas would reconsider the holding in Massachusetts v. EPA if the issue were before them.

The outcome is viewed as a win for the Obama administration and industry, both of which would rather regulate climate change through the EPA (if at all), and a defeat for environmentalists who had previously been successful at advancing their goals in the courts. However, the courts may not be completely off limits. The Court remanded the questions of whether parties can take action against utilities under certain state laws to the U.S. Court of Appeals for the Second Circuit.

Wal-Mart v. Dukes

The 5-4 majority in Wal-Mart reversed the decision of the Ninth Circuit which certified a class of hundreds of thousands of female employees of Wal-Mart who claimed they were discriminated against through pay and promotion policies.

Justice Scalia authored the majority opinion, which was joined in full by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito. The opinion held that the certification of the class violated Federal Rule of Civil Procedure 23(a)’s requirement that a party seeking certification prove that the class has common “questions of law or fact.”

“Here respondents wish to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.”

Justice Ginsburg filed an opinion concurring in part and dissenting in part, which was joined by Justices Breyer, Sotomayor, and Kagan. Ginsburg agreed that the class “should not have been certified under Federal Rule of Civil Procedure 23(b)(2),” but would have remanded the case since “[a] putative class of this type may be certifiable under Rule 23(b)(3) if the plaintiffs show that common class questions ‘predominate’ over issues affecting individuals— e.g., qualification for, and the amount of, backpay or compensatory damages—and that a class action is ‘superior’ to other modes of adjudication.”

This ruling means that the thousands of plaintiffs must pursue their claims individually. The ruling could affect other class-action lawsuits, such as those against tobacco companies and Costco, and is considered to be the most important employment case of the last decade.

The other two cases released today are Borough of Duryea v. Guarnieri, on the right of a public employee to petition for grievances under the U.S. Constitution, and Turner v. Rogers, on an individual’s right to counsel in a civil contempt hearing.

This post was authored by Hamilton Consulting Group’s intern Emily Kelchen, a recent graduate of the University of Wisconsin Law School.

Tort Reform Improving Business Climate

In a recently published editorial, The Wall Street Journal reported that Texas has created 37 percent of all new American jobs since the economic recovery began last summer. The Journal interviewed Richard Fisher, the president of the Federal Reserve Bank of Dallas, who attributed much of Texas’s job surge to the Lone Star State’s tort reforms:

Based  on his conversations with CEOs and other business leaders, Mr. Fisher says one of Texas’s huge competitive advantages is its ongoing reform of the tort system, which has driven litigation costs to record lows.

According to an article in today’s Milwaukee Journal Sentinel, Milwaukee’s jobs outlook is brightening as well. The story cites a new survey conducted by ManpowerGroup placing Milwaukee among the U.S. cities where hiring is the strongest.

And just last month Wisconsin jumped 17 spots – from 41st to 24th –  in a study performed by Chief Executive, a magazine that annually surveys the nation’s CEOs on their perception of business climates.

It appears that the landmark tort reforms contained in Act 2 — among other reforms — have helped improve Wisconsin’s business climate.

GAB Approves Recall Elections for Republicans

Government Accountability Board (GAB) has approved recall elections for Wisconsin Republican Senators Robert Cowles (Allouez), Alberta Darling (River Hills), and Sheila Harsdorf (River Falls).

Six Wisconsin GOP senators are almost certain to face recall elections this summer.

The consideration of petitions against Democratic Senators Robert Wirch (Pleasant Prairie), Jim Holperin (Conover) and Dave Hansen (Green Bay) may be delayed because election staff need more time to review the Democratic challenges to the petitions, according to GAB.

The six GOP senators will likely be scheduled for a recall vote on July 12th, however this date may change given legal challenges and an extension request. It is likely that the elections for targeted Democrats would be held later if an extension is approved.

Justice Prosser Officially Wins WI Supreme Court Election

Eight weeks after the election, Justice David Prosser has officially won another 10-year term to the Wisconsin Supreme Court. Justice Prosser’s challenger, JoAnne Kloppenburg, announced today that she will not legally challenge the final election results.

After a close election on April 5, Justice Prosser won by 7,316 votes. A statewide recount was requested by Kloppenburg, which found that Justice Prosser won by 7,006 votes.

This race was important on many levels. Had Justice Prosser lost the race, the Court would have swung the balance of power back to the more liberal justices. It is likely that a number of the major civil liability reforms in Act 2 will ultimately land in the court system. Those provisions could have been in jeopardy had Kloppenburg won the race.

Wisconsin Supreme Court Recount Yields No Major Changes – Justice Prosser Still Well Ahead of Kloppenburg

With 71 of 72 counties having completed the recount in the race between Justice David Prosser and his challenger, JoAnne Kloppenburg, Justice Prosser’s lead has declined by only 355 votes. The only county left to report its official recount is Waukesha County, where Kloppenburg would have to pick up 6,962 votes.

According to University of Wisconsin political science professor, Ken Mayer, the chance of Kloppenburg winning is statistically impossible. In order for Kloppenburg to pull out a victory in Waukesha County, she would have to pick up one vote for every 18 votes cast. According to Prof. Mayer, the probability of this happening is “zero.”

Yet, it’s uncertain whether Kloppenburg will stop at the recount. As the Milwaukee Journal Sentinel editorial page notes, the sole reason for Kloppenburg ordering a recount all along maybe to setup a legal challenge.

Visit the Wisconsin Civil Justice Council’s website for continuous updates.

Justice Prosser Declares Victory

Today, Justice David T. Prosser declared victory after all 72 counties officially reported their numbers. After Milwaukee County finished its counting last Friday, Justice Prosser won by 7,316 votes. This margin is within threshold that allows Justice Prosser’s opponent, JoAnne Kloppenburg, to petition for a recount paid for by Wisconsin taxpayers. Ms. Kloppenburg has until Wednesday to decide whether to file a petition.

To view Justice Prosser’s press conference on Wisconsin Eye, click here.