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Wisconsin Supreme Court Hears Oral Arguments in First Extraordinary Session Challenge

Posted on by Hamilton

In its last oral arguments of the 2018-19 term, the Wisconsin Supreme Court heard a case that will decide whether the Legislature constitutionally convened the December 2018 extraordinary session. The issue in League of Women Voters v. Evers is whether extraordinary sessions are “provided by law” as required by Wisconsin Constitution Art. IV § 11.

Counsel for the defendant Legislature Misha Tseytlin argued that the Legislature did not violate the Wisconsin Constitution by meeting in December. Citing State ex rel. Sullivan v. Damman (1936) and State ex rel. Thompson v. Gibson (1964), the Legislature said that while each chamber recessed in March 2018 the legislature did not finally dissolve itself and end the biennial session until January 2019. The biennial session continued after March 2018 as a committee period, and in December 2018 the Legislature converted the committee period to a floor period pursuant to 2017 Senate Joint Resolution 1. Wis. Stat. § 13.02(3) authorizes the legislature to develop a work schedule such as SJR 1.

Justice Kelly seemed to agree with the Legislature’s argument, emphasizing the logic that Wis. Const. Art. IV § 11 requires the Legislature to meet “as provided by law” and that law is Wis. Stat. § 13.02(3), which then allows the Legislature to create its own work schedule by joint resolution. If the court finds the Legislature met according to SJR 1, the Legislature met constitutionally.

Justices Dallet and Walsh Bradley voiced concerns with the Legislature’s argument, questioning how an “extraordinary session” can be part of a “regular session.” Tseytlin responded that the December 2018 floor period was constitutional whether the Legislature called it an “extraordinary session” or simply a non-prescheduled floor period within the regular session.

(Defendants’ brief)

The plaintiffs’ arguments began with Justice R. Bradley questioning how the decades-old practice of the Legislature holding extraordinary sessions can just now be found unconstitutional. Counsel for the plaintiff League of Women Voters Jeffery Mandell argued that no Wisconsin law provides for extraordinary sessions. Justice Kelly questioned whether regularly scheduled floor periods would also be unconstitutional since they are not found explicitly in the statutes. Overall, the plaintiffs seek to invalidate the extraordinary session laws because § 13.02 did not “provide by law” for the December 2018 extraordinary session in accordance with Wis. Const. Art. IV § 11.

(Plaintiffs’ brief)

While it can be difficult to predict how the court will decide based on the line of questioning by the justices, it is likely the court will narrowly rule in favor of the Legislature.

League of Women Voters is the first of several cases challenging the extraordinary session to be heard by the Wisconsin Supreme Court. Read about other extraordinary session litigation here.

JFC Removes Qui Tam Provision from Gov. Evers Budget

Posted on by Hamilton

In its first executive session on the 2019-21 state budget on May 9, the Wisconsin Legislature’s Joint Finance Committee voted to remove a provision of Gov. Tony Evers’s budget that would have restored a private individual’s ability to bring a qui tam claim against a person who makes a false claim against the state.

Gov. Evers’ budget bill would have reinstated the qui tam law, not just for alleged Medicaid fraud, but for all state agencies. This policy provides an incentive for plaintiff attorneys to sue medical providers, pharmaceutical companies, and any other business contracting with the state, for alleged fraud. The proposal would allow the whistleblower and his or her plaintiff attorney to seek up to 30 percent of all of the damages, along with attorney’s fees and costs.

WCJC actively lobbied against the qui tam provision and were successful in convincing the Joint Finance Committee to remove the provision. WCJC met with key committee members and submitted a memo explaining why the law is unnecessary and would only benefit plaintiff attorneys.

At the May 9 executive session, the Joint Finance Committee also removed Gov. Evers’s proposal to repeal of provisions of extraordinary session legislation 2017 Act 369 including:

  • The requirement that the legislature approve certain settlements and legal actions by the attorney general.
  • The ability of the legislature to intervene in lawsuits involving the state.
  • The ability of the legislature to obtain outside legal counsel.
  • The definition and public transparency requirements for agency guidance documents.
  • The requirement that agencies cite statutes supporting any interpretation of law they publicly provide.
  • The ability of the Joint Committee for Review on Administrative Rules to suspend rules multiple times.

Altogether, the Joint Finance Committee removed a total of 131 policy items that had been proposed by the governor.

The Joint Finance Committee will continue voting on various agency budgets throughout May before sending their amended budget to the full legislature for approval.

 

Wagner v. Allstate Property and Casualty Insurance Co. (Judicial Estoppel)

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In Wagner v. Allstate Property and Casualty Insurance Co. (2018AP162), the Court of Appeals District IV declined to dismiss a personal injury case based on the doctrine of judicial estoppel. The court said it was unclear whether the plaintiff intentionally contradicted her claim in a previous bankruptcy case.

In April 2015 plaintiff Melinda Wagner was injured in a car accident. Wagner later filed the instant lawsuit against the other driver’s insurer Allstate and her own insurer Acuity. The insurers sought to dismiss the action based on the doctrine of judicial estoppel. The insurers argued Wagner failed to disclose her claims against the insurers as required in her previous filing for bankruptcy.

Under Wisconsin case law, the doctrine of judicial estoppel, which states that a party cannot take a position contrary to a position taken in a separate case, requires an intentional misrepresentation by the party. The appeals court agreed that Wagner did present a position in the personal injury case against the insurers inconsistent with her position in the bankruptcy case by failing to disclose the case against the insurers during the bankruptcy proceedings. However, the court found there were genuine issues of material fact as to whether Wagner’s failure to disclose the information was intentional and remanded the case to circuit court.

Moustakis v. DOJ (Public Records)

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In Moustakis v. DOJ (2018AP373), the Court of Appeals District III held that the public records law is constitutional as applied to elected officials.

Former district attorney Albert Moustakis was the subject of a public records request. The Department of Justice (DOJ) compiled records, which contained unsubstantiated complaints about Moustakis, and performed a weighing of interests, ultimately determining disclosure of the records was in the public’s interest.

Moustakis received a copy of the records prior to their release, then filed the instant lawsuit seeking to enjoin DOJ from releasing the records. Moustakis argued that 1) DOJ’s records custodian made an arbitrary determination and should redo the public interest balancing test, and 2) the public records law (Wis. Stat. § 19.356) is unconstitutional as applied to him in his capacity as an elected official.

The appeals court rejected both Moustakis’s arguments. First, the court determined Moustakis did not show he had a clear legal right to a writ of mandamus requiring a new balancing test. Statutes favor disclosure of records even when they contain unsubstantiated complaints, and the law does not require the records custodian to consult with the records subject before making a disclosure determination. Therefore, the DOJ records custodian was acting within his discretionary power and did not make an arbitrary determination to release the records.

Second, the court determined that the public records law is constitutional as applied to Moustakis in his capacity as an elected official. Wis. Stat. § 19.356 provides that authorities need not notify record subjects before release; however, the statute does have an exception for public employees. Moustakis argued this exception offered to public employees and not elected officials violates his constitutional equal protection rights. The court determined that the statute did not violate Moustakis’s fundamental rights, so rational basis, not strict scrutiny, applied. The court agreed with DOJ that providing the public with the greatest information possible on their elected officials was a rational basis for the legislature to enact the statute distinguishing between public employees and elected officials. Therefore, the public records law is constitutional as applied to Moustakis.

 

Society Insurance v. Bessemer Plywood Co. (Duty to Defend)

Posted on by Hamilton

In Society Insurance v. Bessemer Plywood Co. (2018AP224), the Court of Appeals District III held that an insurer had no duty to defend because an injury occurred during the course of employment; therefore, the policy’s employment exclusion applied.

Bessemer Plywood Co. hired Maki Trucking & Logging to pick up a load of plywood from a Bessemer facility. At the facility, Maki employee Scott Friedle fell off the trailer of a Maki truck while securing the plywood.

Society insured Maki for worker’s compensation claims and made payments to Friedle accordingly. Great West Casualty Co. insured Maki for other liability. The Great Lakes policy specifically excluded coverage for injuries to employees arising out of the course of their employment with Maki.

Society brought the instant case against Bessemer to recover the worker’s compensation payments, arguing Bessemer was negligent. Bessemer tendered its defense to Great West, arguing it was an insured because it was a permissive user of the Maki truck covered under the Great West policy.

The appeals court held that Great West had no duty to defend because Friedle’s injury arose from the course of his employment, and such employment injuries were specifically excluded from the Great West policy. The court said that, because the employment exclusion applied, it did not matter whether or not Bessemer was a permissive user of the covered truck.

Roggensack Re-Elected as Wisconsin Supreme Court Chief Justice

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The Wisconsin Supreme Court has re-elected Chief Justice Patience Roggensack as Chief Justice for another two-year term. The Chief Justice serves as the administrative leader of the Wisconsin Court system.

Chief Justice Roggensack was elected to the court in 2003 and re-elected in 2013. She became the first Justice elected by members of the court to serve as Chief Justice after a 2015 constitutional amendment requiring election. This election begins her third term as Chief Justice. She is up for re-election to the court in 2023.

Wisconsin Supreme Court Accepts New Cases

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The Wisconsin Supreme Court recently accepted several new cases. Cases of note include:

  • Clean Wisconsin v. DNR. This case will decide whether 2011 Act 21 precludes the Department of Natural Resources (DNR) from considering cumulative environmental impacts in issuing high capacity well permits under Wis. Stat. § 281.34. The Wisconsin legislature recently moved to intervene in this case and a second Clean Wisconsin case (discussed below).
  • Clean Wisconsin v. DNR. This case will decide whether DNR has the authority as prescribed in Act 21 to impose off-site groundwater monitoring requirements and an animal maximum for CAFO wastewater permits.
  • Lamar Central Outdoor, LLC v. Division of Hearings & Appeals. In this case, the court of appeals held that 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 decide whether Wis. Stat. § 84.30(14) gives the Department of Transportation the authority to promulgate rules related to outdoor advertising and whether those rules and applicable statutes apply to the sign at issue. Court of appeals decision.
  • Veritas Steel, LLC v. Lunda Construction Co. In this case, the Supreme Court will review a court of appeals decision maintaining a narrow application of the “de facto merger” and “mere continuation” exceptions to Wisconsin’s general rule against successor liability. The Supreme Court will review its decision in Fish v. Amsted Indus. Inc., determining 1) whether proof of identity of ownership between an original and successor entity is required to establish successor liability and 2) whether actual transfer of stock is required to establish successor liability under the de facto merger and mere continuation exceptions. Court of appeals decision.
  • Official Committee of Unsecured Creditors of Great Lakes Quick Lube LB v. John Theisen. This case will decide whether the fraudulent transfer statute of limitations in Wis. Stat. § 893.425 begins when plaintiffs could reasonably have discovered the fraudulent nature of the transfer, or when the transfer itself occurred. Court of appeals decision.

Legislature to Intervene in Act 21 Cases

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The Legislature’s Joint Committee on Legislative Organization has voted to intervene in two cases addressing the application of 2011 Act 21. The 2011 legislation clarified that agencies may not enforce requirements unless explicitly permitted by statute or properly promulgated rule. The two cases, both titled Clean Wisconsin, Inc. v. DNR, would clarify the general scope of Act 21 in environmental cases.

One case (appeal no. 2018AP59) will decide whether Act 21 precludes the Department of Natural Resources (DNR) from considering cumulative environmental impacts in issuing high capacity well permits under Wis. Stat. § 281.34. DNR argues that Act 21 prevents the agency from considering environmental impacts not specifically noted in the statutes. DNR’s argument relies on a May 2016 formal opinion from former Attorney General Brad Schimel.

Clean Wisconsin argues that the 2011 Supreme Court decision Lake Beulah Management District v. DNR still holds. Lake Beulah broadly held that DNR has the authority to preserve waters of the state under the constitutional and statutory public trust doctrines. Since the Supreme Court decided Lake Beulah after the enactment of Act 21 but declined to address the Act’s bearing on the case, a decision in the Clean Wisconsin case would clarify DNR’s authority on high capacity well permits.

The second case (consolidated appeal nos. 2016AP1688 and 2016AP2502) will decide whether DNR has the authority to impose off-site groundwater monitoring requirements and an animal maximum for CAFO wastewater permits. In this case, Clean Wisconsin argues that a Wisconsin Pollution Discharge Elimination System permit allowing the expansion of Kinnard Farms CAFO in Kewaunee County should have included these restrictions. DNR argues Act 21 prohibits DNR from imposing the permit conditions because the statutes do not grant the agency explicit authority.

The Supreme Court accepted both Clean Wisconsin appeals on April 9 and stated it will hear oral arguments on the cases on the same date (not yet scheduled). Several business groups are participating as amici curiae and intervenors in the cases.

Previously, the Department of Justice (DOJ) sided with DNR in both cases. However, this week Attorney General Josh Kaul filed two motions seeking to change DOJ’s position on the cases.

Swanson v. Gatzke (Dental Malpractice)

Posted on by Hamilton

In Swanson v. Gatzke (2018AP305), the Court of Appeals District III held that a circuit court erred in changing jury apportioned negligence in this dental malpractice case.

Mary Swanson was diagnosed with a dental disease that increases the patient’s susceptibility to tooth decay. Despite recommendations from several practitioners, Swanson did not see her dentist Dr. Gatzke regularly. Dr. Gatzke failed to diagnose tooth decay in Swanson’s teeth, forcing her to ultimately undergo a total restoration of her teeth. Swanson filed the instant lawsuit against Gatzke for dental malpractice.

At the circuit court trial, the jury found Swanson 60 percent negligent for her own injuries. According to Wisconsin’s contributory negligence laws (Wis. Stat. § 895.045), Swanson did not receive damages because her negligence was greater than Dr. Gatzke’s. However, the circuit court later determined that the jury did not properly apportion negligence and reapportioned negligence to 50 percent liability for both Swanson and Dr. Gatzke. The new apportionment allowed Swanson to recover damages.

The court of appeals determined that the circuit court erred in reapportioning negligence. Furthermore, the court declined to award Swanson a new trial. The appeals court determined there was sufficient evidence supporting the jury’s decision that Swanson’s negligence was greater than Dr. Gatzke’s.

Gene Frederickson Trucking and Excavating, Inc. v. Wagner (Prima Facie Tort)

Posted on by Hamilton

In Gene Frederickson Trucking and Excavating, Inc. v. Wagner (2018AP436), the Court of Appeals District III declined to adopt a new “prima facie tort” under Wisconsin law.

Frederickson contracted with an LLC to perform trucking and excavation work. The LLC failed to fully pay Frederickson. The LLC later defaulted on two separate loans from a bank and faced a foreclosure action. Frederickson was unable to collect the unpaid fees from the contract because of the foreclosure. Owners of the LLC then formed a new entity which purchased the bank’s rights to the foreclosed property and purchased the property back from a sheriff’s sale. The sale extinguished Frederickson’s ability to collect the unpaid fees from its contract with the original LLC.

In the instant lawsuit, Frederickson alleged the owners’ deliberate default on the loans, formation of a new entity, and buyback of the property was a civil conspiracy. Furthermore, Frederickson asked the court to adopt a new civil cause of action for “liability for intended consequences.” What Frederickson refers to as a “prima facie tort” would provide a cause of action for harmful conduct that does not fall within an existing category of tort liability.

The appeals court declined to adopt the “prima facie tort,” which the opinion notes has been adopted in other states, because it does not currently exist under Wisconsin law. Instead, the appeals court leaves the development of a new form of tort liability up to the state Supreme Court. The appeals court also dismissed Frederickson’s civil conspiracy argument for failure to state a claim.