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Commercial Docket Pilot Project Expanding

Posted on by Hamilton

The Wisconsin Court System announced this week the expansion of the Commercial Docket Pilot Project beginning April 1. Under the expansion, parties filing commercial cases in any Wisconsin county will now be able to transfer their cases to the Commercial Docket.

Wisconsin’s Commercial Docket (a.k.a. Business Court) Pilot Project began in July 2017 in Waukesha County and the Eighth Judicial Administrative District. The Commercial Docket allows parties filing large claim and commercial cases to transfer their cases to specific judges with business experience for expedited resolution.

In her 2018 State of the Judiciary Address, Wisconsin Supreme Court Chief Justice Roggensack highlighted the pilot project. According to Chief Justice Roggensack, the majority of cases have been filed as prohibited business activity cases, and other cases include internal business organizations, business sale consolidations, franchise related claims, and sales securities. Chief Justice Roggensack said while these cases typically take about 36 months to resolve, the commercial docket has typically resolved cases in less than one year.

 

Wisconsin Supreme Court Accepts Two New Cases

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The Wisconsin Supreme Court has accepted two new cases. The Supreme Court will review recent Court of Appeals decisions related to eminent domain and recreational immunity in the following cases:

 

DSG Evergreen Family Limited Partnership v. Town of Perry (Eminent Domain)

In this case, The Town of Perry took property from DSG in an eminent domain action. The land taken included a road, and the condemnation petition required the town to replace the road at a different location. DSG argued that the new road did not meet the “same construction standards” as the former road, violating the petition.

The appeals court held that DSG had no private right of action requiring the town to comply with certain construction standards under Wis. Stat. § 82.50(1) in completing the new road. The appeals court further held that claim preclusion applied because DSG failed to bring up its road construction standards argument in previous proceedings regarding just compensation for the eminent domain condemnation of its property.

The Supreme Court will examine whether claim preclusion bars property owners from actions to compel condemners to uphold promised standards of improvement, since they have already litigated just compensation. The court will also determine whether private citizens can bring actions against a town for failure to comply with Wis. Stat. § 82.50(1) design standards.

More information on the case.

 

Lang v. Lions Club of Cudahy Wisconsin, Inc. (Recreational Immunity)

In this case, the Court of Appeals District I held that recreational immunity did not apply to a sound engineer who set up cords that injured a woman at a music performance. The court said the sound engineer was not an “agent” or “occupier” immune under the statute (Wis. Stat. § 895.52).

The Supreme Court will revisit the issue of whether recreational immunity applies to the sound engineer.

More information on the case.

 

Supreme Court Decision: Kieninger v. Crown Equipment Corp. (Wages)

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In Kieninger v. Crown Equipment Corp. (2019 WI 27), the Wisconsin Supreme Court unanimously held that employers are not required to compensate employees for time spent commuting using the employer’s vehicle.

Crown Corp. allows its technicians to commute between work and home either in their personal vehicles or in company vans. Those commuting in personal vehicles meet at an assigned branch to pick up a company van at the beginning of the day, use the company van to travel between work sites throughout the day, then drop the van off again at the end of the work day and travel home in their personal vehicle. Those commuting in company vans may travel straight from home to various work sites, then straight home at the end of the day. Crown Corp. compensates technicians for all travel between work sites, but does not compensate technicians commuting using company vans for travel time between home and the first and last work sites of the day.

Crown Corp. technician Christopher Kieninger filed the instant class action lawsuit on behalf of similarly situated Crown Corp. employees who choose to commute using company vans. Kieninger argued that Crown Corp. is legally obligated to compensate technicians for the commuting time in company vans because he is transporting Crown Corp. tools to and from a jobsite. Because those tools are an “integral” (Wis. Admin. Code § DWD 272.12(2)(e)1.c.) part of the “principal activities” (§ DWD 272.12(2)(e)1.) technicians engage in during a “workday” (§ DWD 272.12(1)(a)2.), Kieninger argued Crown Corp. must compensate for commute time in company vans under Wis. Stat. § 109.03(1) and Department of Workforce Development rules.

However, Crown Corp. and the court rely on different DWD code to find that commute time, even in company vans, is not compensable. § DWD 272.12(2)(g)2. states plainly that travel between home and work is not work time. Furthermore, since employees commuting in company vans are not “required to report at a meeting place” to pick up tools as exemplified in § DWD 272.12(2)(g)5., this section requiring compensation for carrying tools to a worksite does not apply. The court states that Kieninger’s interpretation would read the statutes and regulations much too broadly, to the point that almost any commuting could be considered compensable. Therefore, Crown Corp. is not obligated to pay employees for commuting time in company vans.

Court of Appeals Decision: Emer’s Camper Corral, LLC v. Alderman (Negligent Procurement)

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In Emer’s Camper Corral, LLC v. Alderman (2018AP458), the Court of Appeals District III held that plaintiffs claiming negligent procurement by an insurance agent must establish that they could have obtained a non-injurious policy but for their agent’s alleged negligence. In this case, Camper Corral failed to produce evidence that it could have otherwise obtained a desired policy, so its agent Alderman did not cause Camper Corral’s damages.

After Camper Corral, a business that sells campers, had twice previously filed claims under previous insurers for approximately $100,000 in hail damage, Alderman procured an insurance policy through Western Heritage Insurance Company for Camper Corral to insure its inventory. The Western Heritage policy had a hail damage deductible of $5,000 per unit. According to Camper Corral, the following year Alderson told Camper Corral he obtained a reduced deductible of $1,000 per unit with a $5,000 total deductible cap. However, when Camper Corral filed a claim for another hail storm under the policy, the policy language actually retained the original $5,000 per unit.

Camper Corral filed the instant negligence action, seeking damages of amounts they were required to pay above the $5,000 total deductible cap they thought the policy included. Alderman argued that there was no evidence Camper Corral could otherwise have obtained a policy with the desired $1,000 per unit, $5,000 total deductible cap, so Alderman could not be held liable.

With no Wisconsin precedent to rely on, the appeals court looked to a Minnesota decision that requires plaintiffs to show they would have been able to obtain the desired policy terms absent the agent’s negligence. Camper Corral did not produce evidence to prove it could have obtained the desired hail damage policy, so its negligence claim failed.

 

 

 

Court of Appeals Decision: O’Brien v. Travelers Inn, LLC (Minimum Wage)

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In O’Brien v. Travelers Inn, LLC (2018AP1483), the Court of Appeals District IV held that employees are entitled to the minimum wage minus a statutorily set lodging deduction, regardless of the value of the lodging provided.

Travelers Inn compensated employee Deborah O’Brien solely with lodging at a value of $500 per month. Divided by the number of hours O’Brien worked, the value of the lodging equaled $12.17 per hour, which is above the minimum wage. However, Wisconsin statutes and administrative code require a maximum lodging deduction of $58 per week or $8.30 per day (Wis. Stat. § 104.035(1)(b)1.; Wis. Admin. Code § DWD 272.03(3)(a)1.).

Although the value of the lodging was more than the maximum allowable lodging deduction, the court held that Travelers could only deduct the maximum $58 per week or $8.30 per day from the minimum wage owed to O’Brien. Therefore, Travelers owed O’Brien wages beyond the lodging. The court held that Wisconsin statutes do not allow Travelers to contract out of the minimum wage and maximum lodging deduction obligations.

Additionally, the court found that Travelers could not claim a lodging deduction under federal law because it did not comply with record keeping requirements. The court awarded O’Brien back pay and liquidated damages and stated she is entitled to attorney fees under federal law.

Court of Appeals Decision: Wolff v. Menard, Inc. (Negligence and Safe Place Statute)

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In Wolff v. Menard, Inc. (2018AP119), the Court of Appeals District I held that summary judgment was applicable because there were no issues of material fact related to where an accident at a Menards store occurred and who was responsible for it.

Menard contracted with Neumann to maintain parts of its premises in the winter. 1st Auto & Casualty Insurance Co. insured Neumann’s vehicles used for salting. When plaintiff Marvin Wolff slipped and fell outside a Menards store, he sued Menard, Neumann, and 1st Auto for negligence and violation of Wisconsin’s Safe Place Statute. 1st Auto sought a summary judgement ruling that there was no coverage because Wolff fell on a sidewalk and Neumann was not responsible for maintaining sidewalks.

Menard argued there were genuine issues of material fact precluding summary judgment in regard to two issues: 1) whether Wolff fell on a sidewalk or in the parking lot and 2) whether or not Neumann was responsible for maintaining sidewalks in addition to the parking lot. However, the court found: 1) no evidence contrary to Wolff’s testimony that he fell on the sidewalk and 2) no evidence that Neumann used a vehicle to maintain the sidewalk, which would have implicated coverage. Therefore, the court upheld summary judgment in favor of 1st Auto.

Dane County Judge Orders Temporary Injunction of Extraordinary Session Laws

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On March 21, Dane County Circuit Court Judge Richard Niess issued an order granting a temporary injunction prohibiting the enforcement of laws passed in the 2018 Extraordinary Session. Provisions blocked by the order include limits on the attorney general’s authority to withdraw from or settle certain cases, the legislature’s ability to intervene in certain lawsuits, agency guidance documents transparency requirements, increased legislative oversight of agency rulemaking, and 82 agency appointments.

The plaintiffs in the case, League of Women Voters v. Knudson, argue that the extraordinary session was not convened in accordance with the Wisconsin Constitution, which authorizes the legislature to meet only as provided by law or when convened by the governor (Wis. Const. Art. IV, § 11).

The Legislature intervened as a defendant and argues that convening an extraordinary session does not violate the Wisconsin Constitution because the rules for the 2017-18 session prescribed in 2017 Senate Joint Resolution 1 specifically state that any days not reserved for scheduled floorperiods are available for the legislature to convene an extraordinary session. The Legislature met as provided by law under the Constitution and Wis. Stat. § 13.02(3).

In his order, Judge Niess agreed with the plaintiffs’ argument that non-prescheduled floorperiods in the joint resolutions are not “allowed by law” according to the Constitution because resolutions are not law. The judge stated that temporary injunction is necessary because the plaintiffs are likely to succeed with this argument, enforcement of the extraordinary session legislation would result in “substantial changes to Wisconsin government,” and failure to enjoin the enforcement of unconstitutional laws would be an irreparable harm to the state.

The judge also denied the Legislature’s motion to dismiss the case and its alternative motion to stay the temporary injunction pending appeal.

Immediately following the enjoinment of the extraordinary session laws, Gov. Tony Evers directed Attorney General Josh Kaul to withdraw Wisconsin from the multistate lawsuit seeking to declare the Affordable Care Act unconstitutional. Act 369, now temporarily unenforceable under the court order, had required approval of the legislature before the attorney general could withdraw from the lawsuit. Kaul subsequently filed a motion to withdraw Wisconsin from Texas v. United States.

Evers also rescinded the 82 appointments approved by the Senate in the extraordinary session.

 On March 22, the Legislature filed an emergency motion in the Court of Appeals District III to stay the injunction. The Legislature argues they are exceedingly likely to prevail on the merits on appeal, and a stay will prevent irreparable harm caused by blocking the extraordinary session laws. The appeals court has yet to issue a decision on the stay.

Institute for Legal Reform Issues Reports on Rise of Public Nuisance Lawsuits

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The U.S. Chamber Institute for Legal Reform (ILR) recently issued two reports analyzing the rise of public nuisance lawsuits by municipalities. The papers address the history, issues, and potential solutions to the rise of these types of lawsuits, which seek to hold private businesses liable for broad issues including lead paint, contaminants such as PFAS and PCBs, opioids, and even the global issue of climate change. Plaintiffs are using an ever-broader “public nuisance” theory to support their claims.

The first ILR report, Mitigating Municipality Litigation, focuses on opioid, climate change, and data privacy lawsuits. First, the report analyzes how municipal lawsuits have increased in recent decades. The report points to the “big tobacco” settlements of the late 1990s as an example of the ineffectiveness of municipal lawsuits. Municipalities are incentivized by the prospect of large settlements like the tobacco settlement and what are perceived as low risk contingency fee arrangements with private plaintiff attorneys. However, settlement money does often not actually go to recovering legitimate municipal costs or helping actual injured victims.

The report describes further issues with these types of lawsuits. With thousands of local entities able to sue individually, municipal litigation deprives defendants of certainty and finality and can prolong settlements, increasing costs and delaying implementation of remediation programs.

Furthermore, municipalities who use outside plaintiff attorneys reduce public accountability. As the report states, contingency fee arrangements with outside counsel “reward aggressive, duplicative litigation that forces large, rapid settlements” to the benefit of plaintiff attorneys, not municipalities, victims, or defendants.

Finally, the report discusses several ways states can disincentivize municipalities from filing these types of lawsuits and gives examples of states with statutes already in place. Solutions include:

  • Restrict municipalities’ authority to sue. The report notes that a now repealed Wisconsin statute once prevented municipalities from bringing public nuisance lawsuits.
  • Require attorney general approval of municipal lawsuits.
  • Codify the municipal cost recovery rule.
  • Restrict municipalities’ ability to hire outside counsel, cap contingency fees, and impose other transparency requirements.
  • Ban municipalities from filing lawsuits against certain industries.
  • Enter into state level settlements that waive municipal claims.
  • Narrow the definition of a “public nuisance” claim and limit other causes of action.
  • Shorten the time period in which municipalities may file complaints. The report highlights Wisconsin’s statute of repose in its products liability act.
  • Bar recovery when the plaintiff also contributes to the nuisance.
  • Require plaintiffs to prove specific damages.
  • Restrict courts from hearing certain types of claims.

 

The second ILR report, The Misuse of Public Nuisance Actions, analyzes how public nuisance theory has expanded beyond its traditional scope and argues legislatures, not courts, should decide how to remediate large public crises like global warming, the opioid crisis, and lead paint.

First, the report overviews the history of the public nuisance tort and discusses cases that have created precedent for public nuisance claims by municipalities. The discussion notes a Wisconsin court of appeals lead paint decision City of Milwaukee v. NL Industries. The appeals court in this case ruled against lead paint manufacturers and in favor of the city’s public nuisance argument, holding that evidence attributing paint to specific manufacturers was unnecessary because use of the paint and advertising for the paint in the city was a community-wide public health nuisance.

The report then discusses emerging public nuisance litigation in the areas of mortgage lending, PCBs, and opioid manufacturing and how municipalities are circumventing traditional limitations on the public nuisance tort to give standing to their claims.

Overall, the report argues that municipal public nuisance lawsuits are an inappropriate venue to create public policy. Instead of courts, the legislature and agencies should determine public policy solutions to widespread issues like environmental contamination and the opioid crisis.

 

The American Tort Reform Association also issued a report on public nuisance lawsuits earlier this year.

Peter Ogden Family Trust of 2008 v. Board of Review for the Town of Delafield (Property Tax Assessment)

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In Peter Ogden Family Trust of 2008 v. Board of Review for the Town of Delafield (2019 WI 23), the Wisconsin Supreme Court held that property owners do not need a business purpose in order for their land to be assessed as agricultural.

The Ogdens owned two lots that were originally assessed as agricultural. The Ogdens grew Christmas trees, apples, and hay on the two lots. In 2016, an assessor reclassified their property as residential, resulting in an over $800,000 increase in taxes owed by the Ogdens. The Ogdens appealed to the Delafield Board of Review.

The assessor argued that the Ogdens were using a “loophole” in agricultural assessment because they were not harvesting the trees, apples, and hay for commercial purposes. According to the assessor, the Ogdens did not appear to be generating an income from their agricultural activities, and the law prevents property from being assessed as agricultural unless it has a legitimate business purpose.

The court disagreed with the assessor’s argument, finding that there is no language in statute or rule requiring a business purpose for agricultural assessment. Wis. Stat. s. 70.32(2)(c)1g. defines “agricultural land” as land with a primarily “agricultural use” as defined by the Department of Revenue (DOR). The DOR definition of “agricultural use” includes growing Christmas trees, apples, and hay. Neither statute nor DOR rules require any business purpose in growing these crops.

Since the assessor had misinterpreted the law, the court ordered the Ogden’s land to be reclassified as agricultural. A dissent from Justices Dallet and Walsh Bradley agreed that a business purpose was not required for agricultural assessment, but argued that the court should have remanded to the Delafield Board for further proceedings instead of ordering the reassessment of the land.

Supreme Court Oral Arguments – March 2019

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The Wisconsin Supreme Court held oral arguments this month on several notable cases, addressing issues including UIM coverage, subrogation waivers, and conditional use permits.

Cases of interest include:

 

Ann Cattau v. National Insurance Services of Wisconsin (negligence and breach of fiduciary duty) – March 18

The plaintiffs, former teachers and school administrators, claim negligence, breach of fiduciary duty, and misrepresentation against MidAmerica and NIS, which administered their retirement plans. The plans were noncompliant with federal law, and the plaintiffs ultimately owed several years of tax dollars back to the Internal Revenue Service. The plaintiffs claim they relied on MidAmerica and NIS as experts to administer a qualifying plan, and MidAmerica and NIS misrepresented the plan as federally compliant. The issues before the Supreme Court are whether the plaintiffs stated an adequate claim against defendants MidAmerica and NIS and whether the plaintiffs should be able to amend their complaint for a second time.

 

John Teske v. Wilson Mutual Insurance Co. (claim preclusion and UIM coverage) – March 18

The Supreme Court will decide whether previous litigation related to underinsured motorist (UIM) coverage precludes the instant tort claim alleging negligence by the driver insured by Wilson. The appeals court ruled the causes of action of the UIM action and the tort action differed, so claim preclusion should not apply. Wilson appealed to the Supreme Court, seeking to dismiss the tort action.

 

Rural Mutual Insurance Co. v. Lester Buildings, LLC (contractor subrogation waiver) – March 20

Jim Herman, Inc. and Lester Building entered into a contract to build a barn. The contract contained a subrogation waiver requiring both parties to waive all rights against each other and their subcontractors. Lester then contracted with a concrete provider in the building process. When a storm caused half of the barn to collapse due to improper installation of the concrete, Herman’s insurer Rural Mutual alleged breach of contract and negligence against Lester. Lester argued the claims were barred because of the subrogation wavier. Issues before the court include whether contractors may use such subrogation waivers to limit tort liability despite Wis. Stat. § 895.447, which provides that any provision to limit tort liability in a construction contract is against public policy and void.

 

Enbridge Energy Co., Inc. v. Dane County (conditional use permit) – March 26

Dane County issued Enbridge Energy a conditional use permit to expand the volume of oil pumped through a local Enbridge pipeline. The permit contained conditions requiring Enbridge to maintain two liability insurance policies. Shortly after Dane County issued the permit, the legislature passed in the 2015-16 state budget a provision precluding counties from requiring pipeline operators to obtain insurance if they already carry general liability insurance including coverage for sudden and accidental pollution liability. After the law change, Dane County retained the previous insurance conditions in Enbridge’s permit, but added language indicating that the new state law made the conditions unenforceable.

Enbridge filed the instant lawsuit asking the court to remove the unenforceable insurance conditions. Additionally, several Dane County property owners filed a lawsuit asserting that Enbridge was not in compliance with the new state law insurance requirements, so Dane County could enforce the conditions. The Supreme Court will address issues including whether counties can include unenforceable insurance permit conditions and whether property owners can bring citizen suits to enforce such conditions.