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Wisconsin Supreme Court Issues Split Decision Resulting in Loss for Manufacturer

Posted on by Hamilton

The Supreme Court of Wisconsin on Tuesday, October 7 issued a split decision which resulted in a loss for Sohn Manufacturing in a worker’s compensation case. The issue before the Court was whether the federal Occupational Safety and Health Act (OSHA) preempts the State of Wisconsin from imposing penalties for safety violations under Wisconsin laws.

In a 3-3 decision, Chief Justice Abrahamson, Justice Bradley, and Justice Crooks voted to affirm the Court of Appeals’ decision in favor of the employee. Justices Roggensack, Ziegler and Gableman voted to reverse the Court of Appeals’ decision. Justice Prosser did not participate, leading to the split decision.

The case is Sohn v. Manufacturing v. Labor and Industry Review Commission, 2014 WI 112.

Background
An employee (Tonya Wetor) was injured on the job while working at Sohn Manufacturing. Wetor was cleaning a machine when her hand was pulled into the machine, causing severe injuries. Sohn Manufacturing’s practice at the time was to clean the machines while they were running. The state investigated the accident and determined that Sohn Manufacturing had not complied with OSHA standards and Wisconsin’s Safe Place Statute (Wis. Stat. § 101.11).

During the worker’s compensation hearing, the issue was whether Sohn Manufacturing was liable for a penalty payment under Wis. Stat. § 102.57, which provides an extra 15 percent of the damages award, capped at $15,000, when employees’ workplace injuries are caused by their employer’s safety violations.

The administrative law judge determined that the injury was caused by Sohn Manufacturing’s violations of the OSHA standard and Wisconsin Safe Place Statute and therefore ordered the company to pay the 15 percent payment penalty.

The case was appealed to the Court of Appeals, which affirmed the administrative law judge’s decision.

Arguments before the Supreme Court
The Court heard oral arguments on September 23, 2014. The main issue was whether the State of Wisconsin may use OSHA standards or the Wisconsin Safe Place Statute (Wis. Stat. § 101.11) to inspect private workplaces and impose penalties under Wis. Stat. § 102.57. Specifically, Sohn Manufacturing argued that the federal law (OSHA) preempted both § 102.57 and the Wisconsin Safe Place Statute and therefore the State of Wisconsin did not have authority to issue the 15 percent payment penalty under § 102.57.

According to Sohn Manufacturing, OSHA preempts Wis. Stat. § 102.57 because the alleged violation of the state statute is predicated on the violation of an OSHA standard. The company argued that states may regulate occupational health and safety only by submitting state plans to OSHA for approval, or by limiting the state regulation to areas in which no OSHA standard exists.

Wisconsin has not submitted any such plan to OSHA. In addition, the lower courts determined that Sohn Manufacturing violated an OSHA standard relating to the control of hazardous electrical energy. Therefore, Sohn Manufacturing argued that state enforcement of Wisconsin Stat. § 102.57 has crossed into the federal government’s regulatory space and therefore is preempted.

Wisconsin Supreme Court Evenly Splits, Court of Appeals’ Decision is Upheld and Adopted
Because the Supreme Court split 3-3, the Court of Appeals’ decision is affirmed in favor of the employee. The Supreme Court provided no analysis of the decision, but instead adopted the Court of Appeals’ decision, Sohn Manufacturing v. Labor and Industry Review Commission, 2013 WI App 112.

This an unfortunate decision for businesses in Wisconsin and is even more troubling that the case was not decided by all seven members of the Court, with Justice Prosser not participating.

Groups Continue to Make False “Equal Pay” Claims

Posted on by Hamilton

A number of groups, including current and former Democratic officials, gathered today at the State Capitol to continue their misleading “war on women” theme. Specifically, the group cited a 2012 law – 2011 Wis. Act 219 – which they claim removes “equal pay for women.”

These claims are simply false, as demonstrated by numerous news outlets:

As shown by these news articles, Act 219 did not remove equal pay. Instead, Act 219 repealed a misguided law signed in 2009 by then Gov. Jim Doyle, which was a payback to his top campaign supporters – plaintiff attorneys.

The 2009 (2009 Wis. Act 20) law for the first time imposed punitive damages on Wisconsin businesses for alleged workplace discrimination. As a result, businesses could be hit with punitive damages up to $300,000. Moreover, the law indexed the punitive damage awards to inflation, meaning that the plaintiff attorney jackpot would increase each year.

The current law allows women, along with any other person alleging workplace discrimination, to sue their employer. For example, the new law still allows an employee to seek reinstatement of their job, back pay up to two years, as well as with attorney fees and court costs.

Moreover, those who wish to seek punitive damages can still do so in federal court. Act 219 simply removes the duplicative and unnecessary punitive and compensatory damage awards from Wisconsin statutes.

“It is unfortunate there are still those who claim 2011 Act 219 takes away equal pay for women even though the facts clearly show these claims to be false,” said Bill G. Smith, State Director, National Federation of Independent Business and President of the Wisconsin Civil Justice Council.

“Small business owners are focused on creating jobs that will help grow the state’s economy, not needlessly spending money on the legal fees,” said Smith.

Thanks to this and many other pro-business reforms over the past few years, Wisconsin’s economy is on the right track.

See the WCJC Press Release.

WCJC Submits Comments Opposing New Private Cause of Action for Hazardous Substance Spills

Posted on by Hamilton

The Wisconsin Civil Justice Council, Wisconsin Manufacturers & Commerce, and Wisconsin Insurance Alliance filed public comments to the Wisconsin Department of Natural Resources Brownfields Study Group, which is proposing that the Wisconsin Legislature amend Wisconsin’s “hazardous substance spills” law (Wis. Stat. § 292.11).

Specifically, a subcommittee of the Brownfields Study Group recommended amending Wisconsin’s law to “provide a private cause of action against any person responsible under Wis. Stat. § 292.11(3) for the recovery of costs incurred to restore the environment to the extent practicable and minimize the harmful effects of a discharge.”

WCJC notes that individuals can already bring lawsuits under the federal Comprehensive Environmental Response, Compensation, and Liability Act. In addition, plaintiffs can, and do, bring state claims using legal theories of trespass, nuisance, and negligence, to name a few. Therefore, the proposed new private cause of action is unnecessary.

WCJC also explains that enacting a private cause of action would do nothing for the environment, but instead would enrich trial attorneys and slow down the cleanup process. In short, WCJC argues that the proposal benefits trial attorneys at the expense of Wisconsin businesses and the environment.

Supreme Court to Determine Whether OSHA Regulations Preempt Wisconsin’s Worker’s Compensation and Safe Place Statutes

Posted on by Hamilton

The Wisconsin Supreme Court will hear oral arguments on Tuesday, September 23 in a case that will decide whether the federal Occupational Safety and Health Act (OSHA) preempts the State of Wisconsin from imposing penalties for safety violations under Wisconsin laws.

Background
An employee (Tonya Wetor) was injured on the job while working at Sohn Manufacturing. Wetor was cleaning a machine when her hand was pulled into the machine, causing severe injuries. Sohn Manufacturing’s practice at the time was to clean the machines while they were running. The state investigated the accident and determined that Sohn Manufacturing had not complied with OSHA standards and Wisconsin’s Safe Place Statute (Wis. Stat. § 101.11).

During the worker’s compensation hearing, the issue was whether Sohn Manufacturing was liable for a penalty payment under Wis. Stat. § 102.57, which provides an extra 15 percent of the damages award, capped at $15,000, when employees’ workplace injuries are caused by their employer’s safety violations.

The administrative law judge determined that the injury was caused by Sohn Manufacturing’s violations of the OSHA standard and Wisconsin Safe Place Statute and therefore ordered the company to pay the 15 percent payment penalty.

The case was appealed to the Court of Appeals, which affirmed the administrative law judge’s decision.

Arguments before the Supreme Court
The main issues before the Supreme Court is whether the State of Wisconsin may use OSHA standards or the Wisconsin Safe Place Statute (Wis. Stat. § 101.11) to inspect private workplaces and impose penalties under Wis. Stat. § 102.57. Specifically, Sohn Manufacturing argues that the federal law (OSHA) preempts both § 102.57 and the Wisconsin Safe Place Statute and therefore the State of Wisconsin has no authority to issue the 15 percent payment penalty under § 102.57.

According to Sohn Manufacturing, OSHA preempts Wis. Stat. § 102.57 because the alleged violation of the state statute is predicated on the violation of an OSHA standard. The company argues that states may regulate occupational health and safety only by submitting state plans to OHSA for approval, or by limiting the state regulation to areas in which no OSHA standard exists.

Wisconsin has not submitted any such plan to OSHA. In addition, the lower courts determined that Sohn Manufacturing violated an OSHA standard relating to the control of hazardous electrical energy. Therefore, Sohn Manufacturing argues that state enforcement of Wisconsin Stat. § 102.57 has crossed into the federal’s regulatory space and therefore is preempted.

A decision by the Wisconsin Supreme Court is expected by the end of July 2015.

Court Hears Consolidated Cases to Determine Whether Manure is a Pollutant and therefore Not Covered by Insurance Policies

Posted on by Hamilton

On Friday, September 12, the Wisconsin Supreme Court heard a number of cases dealing with the issue of whether septage is a “pollutant” that triggers the pollution exclusions in the insurers’ policies. Below is a discussion of the cases heard by the Supreme Court.

Background
In the first case (Preisler v. Kuettel’s Septic Service, 2012AP2521), the plaintiffs (Preislers) owned a dairy farm on which they raised cattle. The Preislers entered into an agreement with Duke Kuettel, owner of Kuettel’s Septic Service, to spread septage on Preisler’s farm as fertilitzer. Kuettel’s Septic Service received permission to spread the septage as fertilizer on Preislers’ farmland from the Department of Naturals Resources, and did so for several years.

In 2008 the Preislers started experiencing problems on the farm. A large algae bloom appeared in their pool, which had been filled with well water. In addition, the Preislers’ cattle, which drank the well water, began to die in an uncharacteristically high rate. The deaths began to subside after the Preislers dug a new well.

The Preisler filed suit against Kuettel’s Septic Service and numerous insurance companies for the harm allegedly caused by the septage. Each of the insurance policies contained a similarly worded exclusion for pollution. Specifically, the policies excluded damage caused by the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants. The policies also similarly defined “pollutant” as “as any solid, liquid, gaseous, or thermal irritant or contaminant.” The policies also included examples of pollutants, including, “smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.” Each policy defined “waste” as “materials to be recycled, reconditioned, or reclaimed.”

The Court of Appeals, Dist. III held that septage is “unambiguously a pollutant” and therefore was a pollution exclusion under the policies.

In a separate case (Wilson Mutual Ins. Co. v. Falk) involving slightly different facts, the Court of Appeals, District II reached the opposite conclusion. In that case, the court held that cow manure is not a pollutant under the farm owners’ policy and therefore did not trigger the pollution exclusion under the insurance policy.

A decision in each of the cases is expected by the end of July 2015.

WCJC Files Amicus Curiae Brief with Wisconsin Supreme Court in Employment Law Case

Posted on by Hamilton

On Tuesday, Sept. 2, the Wisconsin Civil Justice Council (WCJC) and Wisconsin Manufacturers & Commerce (WMC) filed an amicus curiae brief with the Wisconsin Supreme Court in Runzheimer Int., Ltd. v. Friedlen, 2013AP1392. The case involves a very important issue to Wisconsin employers that hire employees on an at-will basis and seek to protect themselves with non-competition, confidentiality, and non-solicitation agreements (hereinafter, “Non-Competes” or “Agreement(s)”). It is particularly important to employers who seek to update such agreements periodically to ensure the agreements are adequate and enforceable, as is necessary in this frequently-changing area of law.

The opinion of a Milwaukee County Circuit Court that is under review invalidated a Wisconsin employer’s Non-Competes with its at-will employees in Wisconsin. The Milwaukee Circuit Court held if an employer seeks to update its Non-Competes with existing at-will employees, it cannot simply make the signing of such agreements a condition of the at-will employees’ continued employment. It must, instead, offer some additional form of consideration and, under the parameters of the opinion, may even have to offer upfront, monetary payments to every existing employee signing such Agreements if it wishes to enforce them.

Background 

In 2008, Waterford-based Runzheimer Int’l, Ltd. (“Runzheimer”) updated its current Non-Competes to better protect its proprietary information and business model. Each employee presented with the updated Non-Compete was an at-will employee, and was informed that he or she could not continue to work at Runzheimer (and be exposed to Runzheimer’s proprietary information) unless he or she executed the updated Non-Compete. Any employee that executed the updated Non-Compete would receive continued employment and would be allowed to participate in the following years’ employee bonus incentive plan. Each of these facts is undisputed.

David Friedlen, an existing at-will employee at Runzheimer, elected to keep his job and execute the updated Non-Compete. Friedlen not only kept his job for over two years thereafter, but was allowed into the bonus incentive program and earned over $20,000 under it the year after he executed the Agreement. After his employment was terminated, he went to work for a Runzheimer competitor in Massachusetts in violation of the Agreement, and asserted it was unenforceable because he did not receive sufficient consideration for it. Friedlen argued that because he was an at-will employee, he could have been terminated at any time after he signed the Agreement and, if he had been terminated shortly thereafter, he would not receive “continued” employment or the benefits of the incentive plan paid out the next year.

The Milwaukee County Circuit Court agreed with Friedlen and invalidated Runzheimer’s Non-Competes. It held that because at-will employees could be terminated at any time, offering them continued employment as consideration is illusory. It also held the incentive plan was illusory, because any consideration that was tied to the continued employment would also disappear if the employee was terminated. Thus, although the Wisconsin Supreme Court has held since 1933 that at-will employment is sufficient consideration to support Non-Competes, even though it can be terminated at any time, this Circuit Court created an exception for existing at-will employees. After reviewing the case, the Court of Appeals certified the issue to the Supreme Court for resolution.

WCJC/WMC Amicus Brief

WCJC and WMC argued in the amicus brief that if the Milwaukee County Circuit Court’s ruling is not overturned, it will have a broad and detrimental impact on Wisconsin employers’ ability to protect their proprietary processes and information. WCJC and WMC also explain in its brief that Wisconsin courts frequently alter the law of Non-Competes, rendering previously-enforceable agreements unenforceable and necessitating that employers update them. Employers generally do so by requiring existing, at-will employees to sign them as a condition of further employment. Under the existing Milwaukee County Circuit Court ruling, employers will be required to offer consideration such as upfront cash payments to their entire at-will workforce if they want to do nothing more than alter their Non-Competes to account for changes in their business or comply with existing law.

Oral argument for the case is scheduled for October 1, 2014. A decision by the Supreme Court is expected before the end of its term in July 2015.

Wisconsin Supreme Court to Determine Extent of Liability in Dog Bite Case

Posted on by Hamilton

The Wisconsin Supreme Court earlier this month heard oral arguments in a case deciding whether the defendant is an “owner” and thus liable for damages caused by a dog at the home he owned, but in which he did not live. The case is Augsburger v. Homestead Mut. Ins., 2012AP641.

Background
The defendant owned a home in which he allowed his daughter and son-in-law live rent free. The defendant’s daughter and son-in-law owned two dogs when they moved in. They later acquired more dogs, which the defendant also allowed on the property.

The plaintiff, who was friends with the defendant’s daughter, visited the defendant’s home where the dogs were residing. When the plaintiff entered the property, a number of dogs attacked her leading to her injury.

The plaintiff filed a lawsuit against both the defendant as the owner of the property and his daughter, who owned the dogs and who lived on the property. The issue in the case was whether the defendant-owner of the property was liable for the injuries even though he neither owned the dogs nor lived on the property where the injuries occurred.

Court of Appeals Decision
The Court of Appeals held that the defendant was considered an “owner” of the dogs even though the dogs were not his and he did not live on the property. The court pointed to the definition of a dog “owner” under Wisconsin’s statute (Wis. Stat. § 174.001(5)). Under the statute, an “owner” is “any person who owns, harbors, or keeps a dog.”

The court determined that the defendant did not “own” or “keep” the dogs because the dogs were not his and he did not reside at the home. Instead, the court determined that the defendant “harbored” the dogs by affording his daughter’s dogs shelter and lodging at the home he owned.

The court noted that while “one may question the legislative policy behind defining ‘owner’ to include a person who merely harbors a dog or the manner in which case law has defined ‘harbor,’ we are bound by both.”

The Wisconsin Supreme Court is expected to issue a decision by the end of its term in July 2015.

Democrat Lawmakers Seek to Repeal Portions of Asbestos Transparency Law

Posted on by Hamilton

Democratic lawmakers held a press conference last week to announce legislation they plan to propose in the 2014-15 legislative session that would repeal portions of Wisconsin’s recently enacted asbestos transparency law (2013 Wisconsin Act 154). Joining the Democrats at the press conference was asbestos plaintiff attorney lobbyist, Jason Johns. The law was one of WCJC’s top priorities and major wins for 2013-14 and was opposed heavily by out-of-state asbestos plaintiffs’ attorneys.

The Democratic lawmakers continue to claim that veterans oppose the bill, when the much of the opposite is true. The AMVETs Department of Wisconsin supported the transparency law. Also, a recent op-ed published in the Milwaukee Journal Sentinel by former VFW State Commander Larry Kutschma and American Legion member Steven Stefonik explains how the law benefits veterans and all victims, while also protecting businesses from unscrupulous trial attorneys.

Earlier this summer, Democratic gubernatorial candidate Mary Burke announced that she would repeal the law if she were elected governor.

Click here to learn more about Wisconsin’s asbestos transparency law.

NPR Story Cites Wisconsin’s Asbestos Transparency Law

Posted on by Hamilton

National Public Radio recently ran a story discussing a court ruling (In re Garlock Sealing Technologies) issued earlier this year in which the judge found a “startling pattern of misrepresentation” and extensive abuse by plaintiffs’ attorneys in asbestos cases. Specifically, the judge uncovered plaintiffs’ attorneys withholding evidence in asbestos lawsuits which resulted in “unfairly inflating recoveries.”

Harold Kim, Executive Vice President of the U.S. Chamber Institute for Legal Reform, who is interviewed in the story,  explained that the court decision played a key role in helping pass the asbestos transparency law (2013 Wisconsin Act 154) in Wisconsin.

According to Kim, “After the Garlock decision came out, it really helped build momentum for the Wisconsin law that was passed and signed in the spring of this year.”

The NPR story noted that Wisconsin’s “law requires asbestos plaintiffs to disclose if they’ve filed claims with bankrupt companies,” and that a similar law has been introduced in Congress.

Former Delaware judge, Peggy Ableman, was also interviewed. Judge Ableman testified on AB 19/SB 13 before the Wisconsin Senate Judiciary Committee to provide her first-hand experience with shenanigans she witnessed in asbestos lawsuits in her court. According to Judge Ableman, the court order should be “required reading for judges overseeing asbestos cases.”

Wisconsin became the third state in the nation to pass such a law, following Ohio and Oklahoma. Click here to learn more about Wisconsin’s asbestos transparency law.

WCJC Files Amicus Curiae Brief in Employment Discrimination Case

Posted on by Hamilton

The Wisconsin Civil Justice Council recently filed an amicus curiae brief with the Wisconsin Court of Appeals, Dist. II in an important case involving the Wisconsin Fair Employment Act (WFEA). The issue is whether the employer (Chrysler) violated the WFEA by placing an employee on paid leave who admitted to drinking excessively prior to coming to work. The case is Chrysler Group LLC v. Labor and Industry Review Commission (Case No. 2014AP0083).

Facts

Chrysler Group LLC (Chrysler) placed an employee on “layoff/no work available status” due to the employee’s excessive drinking.

Chrysler’s physicians examined the employee and determined it was not prudent to approve the employee’s return to work based on her admissions of excessively drinking prior to coming to work.

By placing the employee on layoff/no work available status, the employee was still eligible for Supplemental Unemployment Benefit pay, which meant she could collect 95 percent of her net pay (or about 65 percent of her gross pay).

Despite this, the employee filed an employment discrimination complaint under the WFEA against Chrysler, claiming discrimination on the basis of disability. The employee sought the difference between the Supplemental Unemployment Benefit pay and the amount she would have earned had she been returned to active duty.

Labor and Industry Review Commission and Circuit Court Decision

The Labor and Industry Review Commission ruled in favor of the employee. The Commission ruled that Chrysler had discriminated against the employee and had failed to show that the employee’s pre-work drinking posed a safety risk.  The circuit court affirmed.

WCJC Amicus Curiae Brief

WCJC argues in its brief that if the decisions by LIRC and the circuit court are upheld, it would have broad and sweeping implications for employers throughout the state. The brief also explains that it would prevent employers from being able to protect the safety of their employees.

Legal Arguments by Chrysler

Chrysler’s legal briefs contained the following arguments:

  • Chrysler argues that the Wisconsin Fair Employment Act (WFEA) states that it is “not employment discrimination because of disability…if the [employee’s] disability is reasonably related to the individual’s ability to adequately undertake the job-related responsibilities of that individual’s employment.” Wis. Stat. § 111.34(2)(a).
  • Chrysler explains that the legislature has expressly provided that employers may take into account the “present and future safety of the individual, of the individual’s co-workers and, if applicable, of the general public” when determining whether the employee is capable of adequately performing a job. Wis. Stat. § 111.34(2)(b).
  • The Wisconsin Supreme Court has held that the WFEA must be construed to permit employers to address safety risks in the workplace. Chi. & N.W. R.R. v. Labor & Indus. Review Comm’n, 98 Wis. 2d 592, 297, N.W. 819 (Wis. 1980).
  • To be entitled to the workplace safety defense, the employer doesn’t need to show an absolute certainty that an employee poses a safety threat; rather, the employer need only to show a reasonable probability of such a risk. Dairy Equip. Co. v. Dep’t of Indus., Labor & Human Relations, 95 Wis. 2d 319, 290 N.W. 2d 330 (Wis. 1980).
  • Its decision to continue the employee on leave was justified on safety grounds given her history of drinking before work.
  • It was justified on the alternative basis that the employee was incapable of performing the physically demanding job of a picker/packer.
  • Chrysler accommodated her disability by placing her on paid leave and ensuring she obtained generous Supplemental Unemployment Benefit payments while she sought medical help and treatment.