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Supreme Court Decision: Department of Natural Resources v. District IV Court of Appeals (Administrative Law)

Posted on by Hamilton

On April 3, the Wisconsin Supreme Court issued a decision in Department of Natural Resources v. District IV Court of Appeals. The court held that the appeal by DNR in this case must be held outside of the District IV Court of Appeals under Wisconsin’s venue statute (Wis. Stat. § 752.21(2)) created by 2011 Act 61.

The underlying litigation in this case involved the reissuance of a Wisconsin Pollutant Discharge Elimination System permit under DNR regulatory authority to a dairy farm, Kinnard Farms, Inc., located in Kewaunee County. The permit was initially reissued to Kinnard with two new permit conditions imposed by DNR. Kinnard challenged the imposition of those permit conditions for lack of DNR explicit authority. DNR initially rejected the challenge but subsequently agreed to remove the conditions and reissued the permit to Kinnard.

Clean Wisconsin, Inc., a state-wide environmental advocacy group, and Kinnard’s neighbors, the Cocharts, challenged DNR’s decision to reissue the permit without conditions. Clean Wisconsin filed a petition for judicial review in Dane County Circuit Court, and the Cocharts filed their petition in Kewaunee County Circuit Court—the home counties of Clean Wisconsin and the Cocharts, respectively. Because the Clean Wisconsin petition was filed first, the venue of both petitions was moved to Dane County Circuit Court, where the two cases were consolidated into one case. The court subsequently ruled in favor of Clean Wisconsin and the Cocharts.

DNR then appealed the Dane County Circuit Court’s Clean Wisconsin decision, requesting venue in the Wisconsin District II Court of Appeals, instead of District IV. The DNR made the request under Wis. Stat. § 752.21(2), which provides in relevant part:

(2) A judgment or order appealed from an action venued in a county designated by the plaintiff to the action as provided under s. 801.50(3)(a) shall be heard in a court of appeals district selected by the appellant but the court of appeals district may not be the court of appeals district that contains the court from which the judgment or order is appealed.  [emphasis added]

Contrary to the highlighted language in the statute, the Wisconsin District IV Court of Appeals, whose district includes Dane County Circuit Court, took jurisdiction over the Clean Wisconsin case. DNR appealed the District IV decision to claim venue over the Clean Wisconsin appeal, arguing the District IV venue violated Wis. Stat. § 752.21(2).

In the 5-2 opinion (Justice Kelly, joined by Chief Justice Roggensack and Justices R. Bradley, Gableman, and Ziegler), the court agreed with DNR that the case was improperly venued under the explicit statutory section and ordered the case to be moved to the District II Court of Appeals, as initially requested by DNR.

In 2011, Gov. Scott Walker signed into law Act 61, which created Wis. Stat. § 752.21(2), aimed directly at establishing balance in administrative agency review appeals. Act 61 also amended another important venue provision governing Wisconsin courts, Wis. Stat. § 801.50(3)(a):

Except as provided in this subsection pars. (b) and (c), all actions in which the sole defendant is the state . . . shall be venued in the county designated by the plaintiff unless another venue is specifically authorized by law.

The court held that because the initial petitioner in the underlying case, Clean Wisconsin, designated Dane County Circuit Court as the court in which to file its petition, and because the Cochart’s petition was subsequently filed in Kewaunee County Circuit Court, but was removed to Dane County Circuit Court and consolidated with the Clean Wisconsin petition, the combined administrative challenge was properly venued in Dane County Circuit Court under Wis. Stat. § 801.50(3)(a), by designation of the initial petitioner. The decision said that although Clean Wisconsin was required to file in Dane County under Wis. Stat. § 227.53(1)(a), filing in the circuit court of Clean Wisconsin’s county of residence still falls under the definition of “designated” in Wis. Stat. § 752.21(2). Therefore, the initial designation of circuit court venue by Clean Wisconsin at the trial court then invoked DNR’s choice of appeals court venue under Wis. Stat. § 752.21(2).

This decision affirms the legislature and governor’s Act 61 venue reforms, enhancing Wisconsin businesses potential for receiving balanced consideration by the courts when challenging state administrative agency decisions.

In her dissent, Justice Abrahamson (joined by Justice Walsh Bradley) argued that the venue statute created by Act 61 does not apply in this case because Clean Wisconsin was required by Wis. Stat. § 227.53(1)(a) to file its petition in Dane County and thus did not “designate” the circuit court venue as required in Wis. Stat. § 752.21(2). The dissent said the term “designated by the plaintiff” indicates a choice in venue and cited the Legislative Reference Bureau and Fiscal Estimate Narrative of the original bill as indicating Act 61 “permits” the plaintiff to designate the circuit court venue, implying a necessary choice. Because Clean Wisconsin was required by statute to file in its county of residence, the dissent argues this lack of choice prohibits the application of Wis. Stat. § 752.21(2), and DNR should not be permitted to select the appellate court venue.

Supreme Court Decision: Shugarts v. Allstate (Underinsured Motorist)

Posted on by Hamilton

On April 5, the Wisconsin Supreme Court issued a decision in Shugarts v. Allstate Property and Casualty Insurance Co. The court held that the event triggering the notice requirement in an underinsured motorist (UIM) policy is when the tortfeasor’s underlying policy limit is exhausted.

In this case, Robert Shugarts, a deputy sheriff in Eau Claire County, was severely injured in his squad car in a pursuit of defendant Dennis Mohr. The accident occurred in October 2011. Mohr was insured by Progressive. The squad car was insured by Wisconsin Municipal Mutual Insurance Company, and Shugarts had a personal policy with Allstate that included UIM coverage.

Shugarts and Progressive negotiated for several years, and in October 2014 Progressive eventually offered a $50,000 settlement (the Progressive policy’s bodily injury liability limit). Believing his injuries were in excess of the $50,000 policy limit, Shugart notified Allstate of the proposed settlement in February 2015.

When Shugarts added Allstate as a defendant to his complaint in March 2015, Allstate argued that UIM coverage was not available to Shugarts because he did not provide timely notice of his intention to make a claim after the accident, pursuant to the Allstate policy and Wis. Stat. § 631.81(1):

Provided notice or proof of loss is furnished as soon as reasonably possible and within one year after the time it was required by the policy, failure to furnish such notice or proof within the time required by the policy does not invalidate or reduce a claim unless the insurer is prejudiced thereby and it was reasonably possible to meet the time limit.

In a unanimous decision, the court held that Shugarts did provide timely notice to Allstate because UIM coverage is not triggered until the tortfeasor’s liability limits are met. The decision noted that Allstate’s UIM policy did not specifically require Shugarts to provide “proof of loss” at the time of the accident, but instead required “proof of claim.” Because UIM coverage is excess coverage, the court said Shugarts did not have a claim until Progressive offered the $50,000 settlement. Furthermore, the court said Wis. Stat. § 631.81(1) did not apply because the Allstate UIM policy required “proof of claim,” not “notice or proof of loss” as presumed by the statute.

 

 

 

 

Dallet Elected to Wisconsin Supreme Court

Posted on by Hamilton

On April 3, Wisconsin voters elected Milwaukee County Circuit Court Judge Rebecca Dallet to the Wisconsin Supreme Court. Progressive candidate Dallet defeated her opponent, conservative Judge Michael Screnock, 56 to 44 percent. When Dallet replaces retiring Justice Michael Gableman on the bench in August, the court’s conservative majority will shift from 5-2 to 4-3.

While there is plenty of time for the political landscape to shift before the November elections, many see Dallet’s win as indicative of a potential Democratic wave in the fall midterms. Overall, the unusually high turnout for the spring election means voters – especially Democrats – are energized heading into November. However, there is a long summer of campaigning ahead, so many experts say anything can happen come fall.

Governor Signs Civil Litigation Reforms

Posted on by Hamilton

This week, Gov. Scott Walker signed Act 235, which contains a number of important civil litigation reforms, including discovery and class action rules. This major legislation will significantly reduce the cost of litigation for Wisconsin businesses.

Common-sense reforms under Act 235 will:

  • Prevent litigants from abusing the discovery process to leverage a higher potential settlement or engage in a “fishing expedition.”
  • Allow parties to appeal a trial court’s decision to certify a class in a class action lawsuit.
  • Lower the statute of limitations for a number of claims.
  • Prohibit the Department of Revenue from entering into a contract that includes contingency fee audits for any company domiciled in the state or that maintains its principal place of business in the state. Working under contingency fee arrangements incentivizes aggressive approaches to audits that unfairly increase costs for businesses in Wisconsin.
  • Require notice of third-party litigation financing. Such third-party finance can increase the cost of litigation and cause suits to be brought that would not otherwise have been financially justified. Act 235 was recognized by the National Law Journal as being ‘groundbreaking’ legislation, noting that Wisconsin is the first state in the country to pass this provision.

“Act 235 is a major victory for small to large Wisconsin businesses and will greatly reduce the cost of litigation. The legislation brings Wisconsin in line with the vast majority of other states when it comes to its discovery procedures and class action rules. WCJC thanks Gov. Walker and the bill authors, Sens. Tom Tiffany and Dave Craig and Reps. Mark Born and John Nygren,” said Bill G. Smith, president of the Wisconsin Civil Justice Council and state director for National Federation of Independent Business-Wisconsin.

For more information on Act 235, please visit the Wisconsin Civil Justice Council website.

Supreme Court Decision: Nationstar v. Stafsholt (Attorney Fees)

Posted on by Hamilton

On March 23, the Supreme Court issued a unanimous decision in Nationstar Mortgage v. Robert R. Stafsholt. The court held that circuit courts, acting in equity, have the power to award attorney fees to prevailing parties. In this case, the court held that the defendant was entitled to attorney fees but was not exempt from paying interest on a loan during the time of litigation.

In this case, Robert and Colleen Stafsholt obtained a mortgage that required them to maintain insurance on their home. The bank (Bank of America, at the time – the mortgage eventually changed hands to Nationstar) sent a letter to the Stafsholts informing them it would purchase and charge them for lender placed insurance (LPI) if they did not provide proof of homeowner’s insurance. The Stafsholts sent proof of insurance but continued to receive charges for LPI on their mortgage account.

When Stafsholt called the bank to get the charge removed, the bank representative told him he should skip a mortgage payment and become delinquent in order to reach the next level of customer service. Stafsholt followed the representative’s instructions but never reached the next level of customer service. Instead, the bank accelerated his mortgage, continued to charge LPI, ignored Stafsholt’s offers to reinstate the loan, and eventually filed a foreclosure action against Stafsholt.

The issue before the Supreme Court was whether Stafsholt could recover attorney fees and whether the bank could recover interest accrued during the time of litigation.

The Supreme Court held that circuit courts do have the power to award attorney fees in equitable actions in exceptional cases. The court ruled this an “exceptional” case because the bank intentionally caused the dispute and its “conduct was an attempt to use Wisconsin courts to extort the LPI charges from Stafsholt.”

However, the court also held that the bank could still collect interest accrued during litigation because Stafsholt would “receive a windfall” if he was exempt from interest and received attorney fees.

Legislature Passes Common Sense Civil Litigation Reforms

Posted on by Hamilton

In their March 22 extraordinary session, the Wisconsin Assembly concurred in AB 773, which contains a number of important civil litigation reforms, including discovery and class action rules. The bill now heads to Gov. Scott Walker for his signature.

AB 773 is a major victory for Wisconsin businesses and will significantly reduce the cost of litigation. Common-sense reforms under the bill will:

  • Prevent litigants from abusing the discovery process to leverage a higher potential settlement or engage in a “fishing expedition.”
  • Allow parties to appeal a trial court’s decision to certify a class in a class action lawsuit.
  • Lower the statute of limitations for a number of claims.
  • Prohibit the Department of Revenue from entering into a contract that includes contingency fee audits for any company domiciled in the state or that maintains its principal place of business in the state. Working under contingency fee arrangements incentivizes aggressive approaches to audits that unfairly increase costs for businesses in Wisconsin.
  • Require notice of third-party litigation financing. Such third-party finance can increase the cost of litigation and cause suits to be brought that would not otherwise have been financially justified. Wisconsin will become one of the first states in the nation to require mandatory disclosure of third party litigation financing.

“AB 773 is a major victory for small to large Wisconsin businesses and will greatly reduce the cost of litigation. The legislation brings Wisconsin in line with the vast majority of other states when it comes to its discovery procedures and class action rules. WCJC thanks the bill authors, Sens. Tom Tiffany and Dave Craig, along with Reps. Mark Born and John Nygren,” said Bill G. Smith, president of the Wisconsin Civil Justice Council and state director for National Federation of Independent Business-Wisconsin.

Floor Report: Senate and Assembly Wrap Up Priority Issues of 2017-18 Session

Posted on by Hamilton

The Senate and Assembly met this week for what is likely the last floor votes of the 2017-18 session. Although the Assembly had said they were finished in February, Senate changes to priority issues led the Assembly to meet in extraordinary session on Thursday. In the extraordinary session, the Assembly passed gun safety legislation outside of what passed the Senate, and it is unclear whether the Senate will return to take up the controversial bill.

 

Senate Session

The Senate session on March 20 began with a several-hour delay while the Republican Senate and Assembly caucuses finalized compromises on several key issues including juvenile justice reform, the child tax rebate and sales tax holiday, and school safety.

On the child tax rebate and sales tax holiday, the Senate passed its own bill (SB 798) that narrowed the Assembly’s version, but still included the $100 per child credit and a one-time, two-day sales tax holiday the first weekend in August of 2018. The sales tax holiday exempts from sales taxes purchases of 1) clothing priced up to $75, 2) personal computers priced up to $750, 3) school computer supplies priced up to $250, and 4) school supplies priced up to $75.

Despite initial reluctance from the Republican Senate caucus, the Senate ultimately decided to pass a version of the juvenile justice bill (AB 953) restoring much of the legislation passed by the Assembly. The Senate plan closes Lincoln Hills, establishes a new facility for the more serious offenders, and includes the county run model for secured residential care centers for children and youth. The bill includes a study committee to make recommendations throughout the process.

On school safety, the Senate passed a substitute amendment to a bill already on the calendar (AB 843). The Senate’s plan mirrors most of Gov. Scott Walker’s proposal, including establishing an Office of School Safety in the Department of Justice and funding $100 million in school safety grants. The Senate version does not allow school safety officers as an eligible expense under the grant program and removes the privacy exemption in Walker’s plan for law enforcement access to school surveillance footage.

The Senate also passed an amended version of AB 773, a bill that would lower litigation costs for businesses by modernizing Wisconsin’s civil procedures for discovery and class actions. The Senate amendment to the bill, which first passed the Assembly on a bipartisan voice vote, would eliminate the provisions limiting discovery of electronically stored information.

The Senate also concurred in a long list of bills that now await Walker’s signature.

On AB 259, which updates the Wisconsin tax code to certain provisions in the Internal Revenue Code, Sen. Janis Ringhand (D-Evansville) introduced an amendment related to property tax assessments based on comparable sales, or what municipalities are calling the “dark store loophole.” While leadership ruled the amendment not germane, Senate Majority Leader Scott Fitzgerald (R-Juneau) said there would be an upcoming legislative study committee on the issue. The Senate then concurred in AB 259, as amended by the Assembly.

Other notable bills that will be signed into law include: occupation credential fee waivers for low-income individuals and veterans, apprenticeship participation for high schoolers, a $6.8 million talent attraction initiative, and this session’s two opioid abuse treatment and prevention bills.

 

Assembly Extraordinary Session

In the extraordinary session on Thursday, March 22, the Assembly took up and passed a short list of bills that had been amended by the Senate on Tuesday. The following bills were concurred in and sent to Gov. Scott Walker for signature:

  • AB 953, the juvenile corrections bill.
  • AB 773, related to civil litigation reform.
  • SB 798, the child tax rebate and sales tax holiday.

The bulk of the Assembly session focused on gun control and school safety proposals. After lots of debate on both sides of the aisle, the Assembly passed the Senate version of the school safety proposal (AB 843). That bill, which contains the school safety measures proposed by Walker, now heads to his desk for signature.

However, the Assembly also passed a substitute amendment to one of the original school safety bills (AB 1031) that expands background checks, creates a school safety hotline, and changes victim compensation statutes. The Assembly also passed AB 1033, which allows a privacy exemption in for law enforcement access to school surveillance footage. The bill was part of Walker’s original school safety plan but was removed in the Senate proposal. It is still unclear whether the Senate will reconvene to take up AB 1031 and 1033.

WCJC Urges Wisconsin Senate to Pass AB 773

Posted on by Hamilton

In their Feb. 22 session, the Assembly passed AB 773, which contains a number of important civil litigation reforms, including discovery and class action rules. The bill passed the Assembly on a voice vote and has been messaged to the Senate.

AB 773 aligns Wisconsin’s civil procedures for discovery and class actions to the corresponding federal rules. The modernization of these court procedures, mostly aimed at costly discovery practices, will reduce litigation costs for businesses, as well as state and local governments who must spend taxpayers’ dollars responding to abusive discovery practices.

Common-sense reforms under the bill will:

  • Prevent litigants from abusing the discovery process to leverage a higher potential settlement or engage in a “fishing expedition.”
  • Require notice of third-party litigation financing. Such third-party finance can increase the cost of litigation and cause suits to be brought that would not otherwise have been financially justified.
  • Limit discovery of electronically stored information (ESI) to address the escalating volume of ESI that is now one of the most significant discovery-related costs.
  • Allow parties to appeal a trial court’s decision to certify a class in a class action lawsuit.
  • Lower the statute of limitations for certain claims.
  • Prohibit the Department of Revenue from entering into contingency fee arrangements with third parties in unclaimed property audits. Working under contingency fee arrangements incentivizes aggressive approaches to audits that unfairly increase costs for businesses in Wisconsin.

The Substitute Amendment passed by the Assembly makes the following changes to the original bill, while keeping the rest of AB 773 intact:

  • Removes lawsuit lending.
  • Removes two of the class action provisions (“no-injury” class actions and “ascertainability”) but keeps the third provision allowing an interlocutory appeal of the trial court’s decision to certify a class.
  • Amends the five-year “lookback” provision by exempting medical records, vocational records, and educational records.
  • Amends language dealing with proportionality of discovery requests to directly mirror language contained in the federal rules.

Unfortunately, the legislation has met some resistance in the Wisconsin Senate. Specifically, Senator Van Wanggaard (R-Racine) has voiced his opposition to the legislation, going so far as to call the bill “unethical” in an interview with Wispolitics.com. Yet, as explained in a WCJC “Myths v. Facts” memo responding to the plaintiff attorneys’ arguments, AB 773’s language is a common-sense reform that does not give parties free rein to destroy evidence in a lawsuit.

WCJC is urging the Wisconsin Senate to take up and pass AB 773 when it returns for what is likely to be their last day in session on March 20.

The bill is supported by over 30 Wisconsin business organizations.

Update on State Supreme Court Race

Posted on by Hamilton

After several months of campaigning for the state Supreme Court primary election, on Tuesday, Feb. 20, Wisconsin voters selected Sauk County Circuit Court Judge Michael Screnock and Milwaukee County Circuit Court Judge Rebecca Dallet to advance to the general election.

Screnock, who is considered the conservative in the race, received 46 percent of the vote. Dallet, a progressive, received 36 percent. Madison attorney and progressive Tim Burns received 18 percent of the vote and did not advance to the general.

While Screnock “won” the primary, it is unclear if he will have the numbers to win the general. Progressives Dallet and Burns altogether took 54 percent of the votes, so Screnock will need to convert some of the Burns votes or hope for higher conservative turnout in the general. Yet, with the typically low turnout for spring elections, many experts say anything can happen.

In the Marquette University Law School poll released on March 5, 14 percent of registered voters said they had a favorable opinion of Judge Rebecca Dallet. 10 percent had a favorable opinion of Judge Michael Screnock. However, most voters had not heard enough about the candidates to state an opinion.

Screnock and Dallet are participating in two debates before the April 30 election. On March 2, the candidates debated at Marquette University Law School, discussing issues including the role of justices, recusal rules, campaign contribution limits and the effects of donor influence, and the Act 10 ruling. Dallet touted her experience as a prosecutor and judge and said the court needs to move away from special interest groups that have gained too much influence. Screnock focused on his promise to uphold the rule of law and respect the state constitution and separation of powers doctrine. The next debate will be March 30.

Gov. Walker Signs Worker’s Compensation Fix

Posted on by Hamilton

On Feb. 28, the governor signed SB 781 into law as Act 139. Act 139 prohibits an injured employee from filing an action in tort against third parties regardless of whether the employee makes a claim for compensation under the Worker’s Compensation Act against his or her employer.

The law reverses a  Wisconsin Court of Appeals, Dist. III decision (Ehr v. West Bend Mutual Ins. Co.) that significantly altered the Worker’s Compensation Act. The court ruled that the estate of a deceased employee could sue the employee’s temporary employer for an action in tort instead of filing a worker’s compensation claim under the Act. Specifically, the court ruled that the “exclusive remedy” provision under the Worker’s Compensation Act, “does not bar a temporary employee from bringing tort claims against his or her temporary employer.” The decision runs counter to how the Worker’s Compensation Act has been interpreted for many years. The exclusive remedy provision provides that an employee may only receive benefits from worker’s compensation for the injury. By ruling that the exclusive remedy did not apply in this case, the employee was able to sue his employer rather than submit a claim under worker’s compensation.