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Wisconsin Lawsuit Climate Ranked 13th in U.S.

Posted on October 13, 2019October 13, 2019 by Hamilton

The U.S. Chamber Institute for Legal Reform recently ranked Wisconsin as the 13^th best litigation climate in the country.

The high ranking in fairness and reasonableness of the state’s liability system comes after the state legislature passed significant tort reforms in 2017 Act 235, led by Rep. Mark Born (R-Beaver Dam), Rep. John Nygren (R-Marinette), Sen. Dave Craig (R-Big Bend) and Sen. Tom Tiffany (R-Hazelhurst). The legislation included common-sense reforms such as how to handle electronic documents and to address the high transactional cost of litigation. Act 235 also made Wisconsin the first state in the nation to require third party litigation funding transparency.

In the 2019 Lawsuit Climate Survey, Wisconsin jumped seven spots from 20^th to the 13^th best ranked liability system in the country. Wisconsin beat neighboring states Minnesota (20^th), Michigan (33^rd), and Illinois (50^th). After passing the class action reforms in Act 235, Wisconsin also achieved a top-ten ranking in treatment of class action suits and mass consolidation suits in the 2019 Survey. Wisconsin was ranked 27^th in this category in 2017.

PFAS Update: Recent Regulatory Actions in Wisconsin

Posted on October 13, 2019October 13, 2019 by Hamilton

Regulation of PFAS compounds is quickly moving forward in Wisconsin at both the legislative and administrative rule levels. PFAS (per- and polyfluoroalkyl substances) are man-made chemicals that are found in many everyday products, including nonstick pans, cleaning products, paints, and firefighting foam. PFAS are present in the bloodstream of 98 percent of Americans. Competing studies debate whether or not PFAS have negative health effects and, if they do, at what level they are harmful.

WCJC is part of the Water Quality Coalition, a coalition of industries, job creators, and taxpayers in the state, as well as scientists and legal scholars, which supports balanced, science-based environmental standards to regulate PFAS. Unnecessarily strict of standards would be costly to Wisconsin industry and would open up the state for frivolous lawsuits and potentially millions of dollars in liability.

Executive Actions

On August 23, Gov. Tony Evers signed Executive Order 40, which directs the state Department of Natural Resources (DNR) to coordinate with the Department of Health Services (DHS) and Department of Agriculture, Trade & Consumer Protection to:

Establish a public information website.
Collaborate with municipal wastewater treatment plants on screening to identify potential PFAS sources.
Expand monitoring for PFAS in wildlife.
Develop regulatory standards.
Modify the Voluntary Party Liability Exemption law, “which provides future liability exemptions after successful completion of hazardous substance cleanup.”
Assess opportunities for using natural resources damages claims under state or federal law.
Create the PFAS Coordinating Council among state agencies. The council’s directions include developing an action plan, developing public education protocols, identifying sources, developing treatment protocols, collaborating with academic institutions on research, and exploring avenues for funding.

Agency Rulemaking

In June 2019, DHS recommended a groundwater standard of 20 parts per trillion (ppt) combined for PFOA and PFOS, the two most-studied types of PFAS. DHS also recommended a Preventive Action Limit (PAL) of 2 ppt. The PAL is the point at which DNR can begin working with a regulated entity to mitigate contamination before formal enforcement action. As part of the statutory process for developing groundwater standards in Wisconsin, DHS sends these recommendations to DNR, which then must promulgate administrative rules before the standard becomes enforceable.

WCJC, as part of the Water Quality Coalition, submitted a letter and comments to DHS regarding these strict recommendations. The comments noted DHS’s preventive action limit of 2 ppt for PFOA and PFOS combined could result in the most restrictive enforceable standard in the world, potentially greatly harming Wisconsin’s economy and significantly raising the cost of residential water. In particular, such a standard would require a permit holder, including municipal utilities, industrial facilities, and energy producers, to reach near-zero discharge levels of compounds that are pre-existing in groundwater.

DNR issued three scope statements related to PFAS earlier this month. Scope statements are the first step in the administrative rulemaking process. The scope statements would:

Adopt groundwater standards. (SS 090-19). Under this scope statement, DNR would promulgate the DHS standards recommendations of 20 ppt combined for PFOA and PFOS and a 2 ppt PAL. This rule would apply to all regulated facilities that may impact groundwater.
Economic impact: DNR estimates a “moderate to significant” economic impact, ranging from $50,000 to greater than $5 million. However, other estimates of future business liability for PFAS have ranged in the billions.
Public hearings: DNR expects public hearings to occur in November 2020.
Adopt surface water quality standards for PFAS. (SS 091-19). Under the scope statement, DNR could also change Wisconsin Pollution Discharge Elimination System (WPDES) permit implementation procedures related to PFAS chemicals, including additional monitoring and new effluent limitations. Currently, DNR can address PFAS discharges in WPDES permits on a case-by-case basis. The proposed rule would set a uniform standard and procedures.
Economic impact: DNR anticipates the economic impact to “sources of PFOS and/or PFOA…to be significant,” citing costs associated with treatment technology.
Public hearings: DNR expects public hearings to occur in August 2021.
Adopt maximum contaminant levels (MCLs) for drinking water. (SS 089-19). MCLs for drinking water would mostly affect municipal water systems.
Economic impact: DNR estimates the economic impact of the rule to be “significant.” Treatment could cost municipal public water systems at least $25 million.
Public hearings: DNR expects public hearings to occur in August 2021.

If the scope statements become rules promulgated by DNR, they will be enforceable against regulated entities. In Wisconsin, rulemaking is a relatively lengthy process. DNR has stated they believe this rulemaking process will take about 30 months. The scope statements are the very first step in that process.

The DNR Board is set to approve the scope statements and an initial preliminary comment period at their meeting on Oct. 23.

Legislation

Rep. John Nygren (R-Marinette) & Sen. Rob Cowles (R-Green Bay) have introduced legislation (SB 310/AB 323) to address PFAS contamination from fire-fighting foams. The bill would prohibit the use of fire-fighting foams that contain intentionally added PFAS in training, unless the testing facility has appropriate containment and treatment measures (as determined by DNR rule).

The bill has mostly Republican cosponsors but also includes Rep. Melissa Sargent (D-Madison), whose district includes a well in Madison that has tested positive for PFAS. Other supporters of the bill include American Chemistry Council, American Petroleum Institute, Wisconsin Manufacturers & Commerce, Wisconsin Paper Council, and Wisconsin Rural Water Association. Several environmental advocacy groups have concerns that the bill does not go far enough to address PFAS contamination in Wisconsin.

The Senate Committee on Natural Resources & Energy and the Assembly Committee on Environment each held a public hearing on the bill on Sept. 3. At the hearing, DNR testified recommending changes to the bill to strengthen the state’s authority to prevent future PFAS discharges. The DNR recommendations included:

Authorizing DNR to regulate more types of PFAS-containing foams.
Requiring manufacturers to clearly label PFAS-containing foams.
Requiring preventative and mitigative actions for entities using PFAS-containing foams in emergencies.

DNR noted that, in their opinion, the bill does not go far enough to address PFAS from other industries and noted that another bill currently introduced in the Legislature would address their concerns: SB 302/AB 321 by Sen. Mark Miller (D-Monona), Sen. Dave Hansen (D-Green Bay), Rep. Chris Taylor (D-Madison), Rep. Stausch Gruszynski (D-Green Bay) & Rep. Melissa Sargent (D-Madison). This bill has not yet received a hearing in the Legislature.

The Democrats’ bill would require DNR to establish and enforce PFAS standards by rule for drinking water, groundwater, surface water, air, solid waste, beds of navigable waters, and soil and sediment if DNR deems it harmful to human health or the environment. The bill also provides that DNR may require entities possessing PFAS to provide proof of financial responsibility for remediation of potential discharge. Additionally, the bill requires any facility under investigation by DNR to provide DNR with access to information related to transportation of hazardous waste to any other site. The bill provides 7.5 positions at DNR and 2 positions at DHS, plus $150,000 for identifying and prioritizing PFAS sources, $50,000 for a study on use of fire-fighting foam containing PFAS, $87,000 for testing landfills and leachate, and $120,000 for investigation of PFAS sources and providing drinking water.

Assembly Speaker Robin Vos (R-Rochester) has also convened a Speaker’s Task Force on Water Quality, which has discussed PFAS at several of their public hearings throughout the summer.

For more information on PFAS developments in Wisconsin, visit /pfas/.

AG Kaul Declines Opioid Settlement Proposal

Posted on October 13, 2019October 13, 2019 by Hamilton

Wisconsin Attorney General Josh Kaul has declined to join a proposal to settle multidistrict litigation against opioid manufacturer Purdue Pharma. Purdue had reportedly reached a $10 to $12 billion settlement deal with the multidistrict plaintiffs. Kaul, along with several other state attorneys’ general, declined to sign off on the proposed settlement.

The multidistrict litigation combined claims of over 2,000 cities and counties and 22 states, including over 50 Wisconsin local governments. Plaintiffs filed the claims against Purdue over the company’s alleged role in the opioid crisis.

Both the U.S. Chamber Institute for Legal Reform and the American Tort Reform Association released reports this year on the rise of public nuisance lawsuits such as this multidistrict opioid litigation.

Federal Extraordinary Session Case Dismissed

Posted on October 13, 2019October 13, 2019 by Hamilton

The U.S. District Court for the Western District of Wisconsin recently dismissed DPW v. Vos, the federal case challenging the 2018 extraordinary session laws. The Democratic Party of Wisconsin (DPW) had filed a complaint in February seeking to declare the extraordinary session legislation in violation of the U.S. Constitution. DPW alleged that the legislation violates the plaintiffs’ First and Fourteenth amendment rights, as well as the Guarantee Clause (a clause assuring States shall have a republican form of government).

The district court opinion states that it is not federal courts’ role to intervene in how states allocate power among their branches of government. Any remedy to the plaintiffs’ alleged harms would have to occur in state courts. The Wisconsin Supreme Court ruled this summer in League of Women Voters v. Evers that the Legislature’s extraordinary session was held constitutionally. The state Supreme Court is hearing oral arguments this month in SEIU v. Vos, which will litigate the policies contained in the legislation passed during the extraordinary session.

The district court further held that the plaintiffs lacked standing because they had not identified any concrete harms from the extraordinary session laws. The district court cited the recent U.S. Supreme Court decision Gill v. Whitford, the Wisconsin redistricting case, holding that plaintiffs must have “concrete and particularized” injuries and that voters do not have legally protected interests in advancing particular policies. The court found that the extraordinary session laws did not prohibit or require any actions by the plaintiffs. Instead, the laws were directed at the governor and attorney general, so plaintiffs had no standing to file the lawsuit.

Read more about this and other extraordinary session litigation at https://www.wisciviljusticecouncil.org/2019/04/10/extraordinary-session-litigation-update/

Supreme Court Oral Arguments – October 2019

Posted on October 13, 2019October 13, 2019 by Hamilton

The Wisconsin Supreme Court is in the midst of a busy month of oral arguments. Cases heard this month include the second case litigating the 2018 extraordinary session litigation, insurance issues, employee wages, and misrepresentation claims.

Hinrichs v. DOW Chemical Co. (Fraudulent Representation) – Oct. 3

This case involves a dispute between a manufacturer and a supplier over a failing product. Plaintiffs alleged claims of negligent misrepresentation, intentional misrepresentation, strict responsibility misrepresentation, and violation of Wisconsin’s fraudulent representations statute (Wis. Stat. § 100.18). The appeals court dismissed misrepresentation claims based on the “economic loss doctrine,” which provides that plaintiffs cannot sue to recover solely economic losses from the nonperformance of a contract, but the court remanded for further discussion on whether plaintiffs could file the fraudulent representation claim.

The Supreme Court will clarify who is a member of “the public” eligible to file a fraudulent representation claim under Wis. Stat. § 100.18. Specifically, the court will determine whether plaintiffs can file 100.18 claims against entities with which they have a commercial relationship. The court will also address the scope of the economic loss doctrine in misrepresentation claims.

Supreme Court Oral Arguments – September 2019

Posted on October 13, 2019October 13, 2019 by Hamilton

The Wisconsin Supreme Court held oral arguments on several notable cases in September. (Calendar and case synopses.) Issues before the court included legal nonconforming uses, successor liability, and annexation.

Lamar Central Outdoor, LLC v. Division of Hearings & Appeals (Legal Nonconforming Use) – Sept. 4

This case will review whether the enlargement of a nonconforming outdoor advertising sign along an interstate highway caused it to lose its nonconforming status, making it illegal and subject to removal. The Supreme Court will determine whether Wis. Stat. § 84.30(14) and Wis. Admin. Code § TRANS 201.10(2)(e) prohibit enlarging legal but nonconforming signs, whether the Department of Transportation (DOT) should have provided the sign owner a right to cure, and whether DOT’s policy change violated Wis. Stat. Ch. 227 rulemaking requirements. Read more about the case.

Veritas Steel, LLC v. Lunda Construction Co. (Successor Liability) – Sept. 19

In this case, the Supreme Court will review the Court of Appeals’s narrow application of the “de facto merger” and “mere continuation” exceptions to Wisconsin’s general rule against successor liability. The court will review previous case law Fish v. Amsted Indus. Inc., which held that these exceptions apply when there is an identity of ownership, evidenced by a transfer of ownership for stock or a continuity of owners between the selling and purchasing entities.

Lunda Construction, which was seeking a $16 million judgment from successor company Veritas, argues that an identity of control could show a mere continuation from seller to purchaser, establishing successor liability. The appeals court acknowledged the tension between its narrow reading of the de facto merger and mere continuation exceptions in Fish and the ability of entities to achieve what is essentially a merger or continuation without satisfying the strict “identity of ownership” requirement. However, the appeals court said it is bound by Fish, and only the Supreme Court could change this interpretation of the exceptions. Read more about the case.

Town of Wilson v. City of Sheboygan (Annexation of Town) – Sept. 19

The Supreme Court will review Kohler Co.’s petition to annex land from the Town of Wilson to the City of Sheboygan for the purpose of developing a golf course. The City of Sheboygan adopted the annexation ordinance, and the Town of Wilson filed this lawsuit.

The Town argues that the annexation does not satisfy statutory requirements for contiguity, certified population count, and signatures. Furthermore, the City did not show there was a need for the annexed property.

On the other hand, the City argues they and Kohler followed all statutory requirements related to the annexation. Furthermore, the City argues it had a need for expanded residential housing and other economic benefits provided by the annexation.

McCormick v. Auto Club Insurance Association (Doctrine of Accord and Satisfaction)

Posted on October 13, 2019October 13, 2019 by Hamilton

In McCormick v. Auto Club Insurance Association (2018AP753), the Court of Appeals District I held that the doctrine of accord and satisfaction applied when the plaintiff cashed a check that the defendant insurer intended to settle the claim.

After David McCormick was injured in an automobile accident with an uninsured driver, McCormick sought his full uninsured motorist coverage policy limit of $300,000 from his insurer Auto Club Insurance Association (AAA). AAA disputed McCormick’s $300,000 claim, and instead offered a settlement of $20,000. In a letter, AAA included a check for $20,000 and a release form. McCormick cashed the check but did not sign the release form.

McCormick filed the instant lawsuit seeking the full policy limit plus damages for loss of companionship on behalf of his son. AAA pled the affirmative defense that the doctrine of accord and satisfaction barred McCormick’s claim because he cashed the $20,000 check.

The court agreed that the doctrine of accord and satisfaction barred McCormick’s claim. The accord and satisfaction doctrine requires a dispute, offer, acceptance, and consideration in order to bar future claims. In this case, the plaintiff and defendant disagreed over whether AAA had presented an offer to McCormick. The court found the $20,000 check that McCormick cashed constituted an offer because the language of the attached letter and notes on the check and check stub provided “reasonable notice” that the check was an offer to settle McCormick’s claims.

The court also found that McCormick’s failure to sign the release did not prevent the application of the defense of accord and satisfaction. McCormick’s cashing the check was enough to constitute accord and satisfaction, a separate defense than the defense of release.

Harwood v. Wheaton Franciscan Services, Inc. (Class Action Certification)

Posted on October 13, 2019October 13, 2019 by Hamilton

In Harwood v. Wheaton Franciscan Services, Inc. (2018AP1836), the Court of Appeals District I affirmed class action certification in a lawsuit against a medical provider related to medical record fees.

Plaintiff Elizabeth Harwood filed the lawsuit against Wheaton Franciscan, alleging Wheaton Franciscan illegally charged her attorney fees for copies of her health records. Harwood sought to certify a class including all Wheaton Franciscan patients in Wisconsin (or persons authorized to obtain their medical records) whom Wheaton Franciscan charged retrieval or certification fees in violation of Wis. Stat. § 146.83(3f)(b)4.-5. That statute allows health care providers to charge such fees only to persons other than the patient or person authorized by the patient.

The trial court certified the class, and Wheaton Franciscan appealed. The appeals court rejected Wheaton Franciscan’s argument that the trial court did not apply a rigorous analysis of the specific facts of the case as required by federal class action law. The trial court properly found that Harwood’s proposed class met the four prerequisites of Wisconsin’s class action law (§ 803.08):

Numerosity. Harwood presented 44 invoices wherein Wheaton had charged patients or their authorized representatives retrieval or certification fees. The numerosity requirement was met because it would be impracticable to bring all the invoiced patients before the court.
Commonality. All members of the proposed class suffered a common injury of allegedly unlawful charges for medical records.
Typicality. Harwood’s claim was typical of the claims of the rest of the proposed class. The court dismissed Wheaton’s argument that there was not enough evidence to determine typicality.
Adequacy. Harwood acting as class representative would adequately protect the interests of the class. Her claim was substantially similar and her interests were not adverse to the rest of the class’s interests.

The trial court further found – and the appeals court upheld – that the shared claims of the class members and Harwood were predominant to any individual claims. Class action was the superior means of addressing the controversy because addressing the individual claims, each of which was only $28, would be impracticable (§ 803.08(2)(c)).

Finally, the appeals court found that federal case law did not require additional discovery to certify the class. Therefore, Harwood’s class action lawsuit against Wheaton Franciscan could proceed.

Beedle v. Wisconsin Mutual Insurance Co. (Insurance Policy Business Exclusion)

Posted on October 13, 2019October 13, 2019 by Hamilton

In Beedle v. Wisconsin Mutual Insurance Co. (2018AP2147), the Court of Appeals District IV held that an insurance policy’s business exclusion applied when the insured was engaging in a side job, barring coverage for an injury caused by the insured’s negligence on the job.

Plaintiff Jacob Beedle was injured while helping the insured construct a pole barn. Beedle filed this lawsuit against the insured and his insurer IMT Insurance Co., alleging the insured’s negligence caused Beedle’s injury. The insured’s homeowner’s policy included an exclusion for losses from business, defining business as “a trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis.”

The insured was primarily employed by a company that constructs pole barns, but the project where Beedle was injured was a side job outside of the insured’s primary employment. The issue in this case was whether the side job constituted “business” under the IMT policy, barring coverage for Beedle’s injuries.

The court found that the insured’s work on the side job was unambiguously a “trade” that he engaged in on an “occasional basis.” Using the “continuity-profit motive” test established in Bertler v. Employer Ins. of Wausau (1978), the court found that the side job was a continuation of the insured’s primary employment constructing pole barns. The court found the insured had a profit motive because he was ultimately paid $3,000 for work on the side job. By meeting both the continuity and profit motive standards, the side job would have fallen under the policy’s business exclusion according to Bertler.

The court rejected Beedle’s argument that the side job would not fall under the business exclusion because it was not the insured’s primary employment. Therefore, the policy’s business exclusion applied, barring coverage for Beedle’s injuries.

Paynter v. ProAssurance Wisconsin Insurance Co. (Medical Malpractice Coverage)

Posted on October 13, 2019October 13, 2019 by Hamilton

In Paynter v. ProAssurance Wisconsin Insurance Co. (2017AP739), the Court of Appeals District III held that a medical malpractice insurance policy did not provide coverage for a doctor’s alleged liability connected with services performed in another state.

The underlying claim in the case arose when Dr. James Hamp, who operates offices in both Wisconsin and Michigan, misdiagnosed a growth on patient David Paynter, a Michigan resident. Paynter first saw Dr. Hamp in his Michigan office, but Dr. Hamp called Paynter with the misdiagnosis from his Wisconsin office. Paynter was residing in Michigan at the time of the call and for the next four years before he found out his growth was cancerous.

Paynter sued Dr. Hamp and his Wisconsin malpractice insurer ProAssurance, claiming both negligence and violation of the patient’s right to informed consent. The Wisconsin Supreme Court dismissed Paynter’s informed consent claim based on Wisconsin’s borrowing statute, remanding the negligence claim to the court of appeals. The issue remaining on appeal was whether the ProAssurance policy provided coverage for the negligence claim.

The ProAssurance policy included a location endorsement, which stated ProAssurance would not cover “liability arising from, relating to, or in any way connected with the rendering of or failure to render professional services…in the State of Michigan and/or outside the State of Wisconsin.” The appeals court agreed with ProAssurance that, because Dr. Hamp first tested Paynter in Michigan, the alleged negligent misdiagnosis was “connected with” services provided in Michigan. Therefore, the ProAssurance policy’s location endorsement unambiguously excluded coverage for Paynter’s negligence claim.