Wisconsin Business and Commercial Litigation

In the Wisconsin Law Journal, Jack Zemlicka writes about a potential statutory change that would increase the statute of limitations on an intentional cause of action from two years to three years.  The additional time would bring the statute on intentional claims into line with the statue for negligent claims, which is already three years. 

From a practical perspective, it may not make much of a difference, except in cases where there are likely to be claims of both negligent and intentional action.  For instance, negligent hiring and supervision claims often include claims of intentional action by the employee, or claims of inadequate security which often include claims of an underlying attack by a patron or invitee. 

This change might also curb attempts by plaintiffs’ counsel to characterize intentional behavior as negligent in order to obtain the benefit of a longer statute of limitation.  While not often successful, this strategy can cause expensive motion practice which increase settlement leverage.

Although it’s not Wisconsin-related yet, those of you in in-house practice want to keep a close eye (if you haven’t already been) on a case currently up on appeal from the First Circuit to the Supreme Court:  U.S. v. Textron.  The issue in the case is the viability of the work product privilege as it relates to the work of in-house counsel.  Susan Hackett of the Association of Corporate Counsel filed an amicus brief with the court, and writes a great post on the topic.  As I said, although it’s not a Wisconsin court, the case will impact what you do for your company and how you do it.

Although Wisconsin’s rules of civil procedure don’t currently deal specifically with e-discovery, the spectre of continuing increases in the number of cases that require it may force action sooner rather than later.  Jack Zemlicka of the Wisconsin Law Journal writes:

According to the Wisconsin Judicial Council, about 25 other states are considering or have already implemented rules incorporating elements of the 2006 amendments to the Federal Rules of Civil Procedure pertaining to e-discovery.

The Judicial Council recently presented a petition to the state Supreme Court seeking many of the same updates, including enabling parties to specify the form or forms in which electronically stored information is to be produced and a “safe harbor” provision that would prohibit court sanctions if a party fails to produce electronically stored information lost as a result of routine operation of a system

The Council is also recommending that business records be allowed to be produced in electronic form and that parties be permitted to request an opportunity to test or sample materials sought in addition to inspecting and copying them. However, the petition includes commentary from the Federal Rules of Civil Procedure Advisory Committee notes stating that “courts should guard against undue intrusiveness resulting from inspecting or testing such systems.”

One of the major problems with the current proposal, points out Zemlicka, is that there is no claw-back provision.  Given the volume of production and the time required to review the information, claw-back has become a mainstay of the federal system.  Of course, nothing official has happened yet, but stay on your toes — it’s sure to impact you one way or another.

Photo courtesy Robert S. Donovan’s Flickr gallery under this creative commons licence.

I’ve just signed on to attend (and my firm will sponsor) the annual conference of the Wisconsin Chapter of the Association of Corporate Counsel.  From the looks of the materials from past conferences, it’s a great way to brush up on issues vital to in-house counsel, and to stay (or get) in touch with lawyers who practice in business law, whether that means employment, litigation, or transactions.  Having run a trade association before, I can tell you that this chapter’s board of directors is more involved than most and takes a hands-on approach to the convention.  That sort of involvement inevitably results in programs that offer great value and insight for the members.  I look forward to being a part of this year’s event, and will keep you updated as the program takes more definite shape.

In Parkland Plaza Vet. Clinics v. Gerard, the court of appeals upheld Waukesha County Judge Ralph Ramirez’s restrictions on Gerard’s access to courts.  The court describes Gerard’s “Quixotic tilting at windmills,” and her frequent and unfounded tilting practices.  As a result of Gerard’s actions, Judge Ramirez imposed a number of sanctions “designed to protect the court and its staff from her vexatious conduct”:

That the Clerk of Courts for Waukesha County shall no longer accept any filings or correspondence from Gerard or anyone on her behalf;

That any documents or filings that are received by mail are to be sent back to Gerard’s last known address without review by the court or clerk;

That only upon proof of payment in full ($2,538.82) to Parkland Plaza Veterinary clinic S.C., or its attorney Basil Loeb, shall any documents be accepted from Defendant Gerard.

Gerard naturally appealed, and the appellate court upheld Ramirez:

An individual has a due process right of access to the courts, Piper v. Popp, 167 Wis. 2d 633, 644, 482 N.W.2d 353 (1992), however, that right is not absolute and may be curtailed where a litigant abuses the court system.  See Support Sys. Int’l, Inc. v. Mack, 45 F.3d 185, 186 (7th Cir. 1995) (prohibiting prodigious litigator from filing noncriminal motions).  A trial court has “inherent power to protect itself against any action that would unreasonably curtail its powers or materially impair its efficiency.”  Jacobson v. Avestruz, 81 Wis. 2d 240, 245, 260 N.W.2d 267 (1977) (citation omitted).

. . . .

 We agree with the trial court’s finding that Gerard’s vast and vexatious filings in this case establish Gerard has “a history of non-compliance with court orders, prosecution of frivolous motions, [and] reckless disregard of court orders.”  A court faced with a litigant who has engaged in a pattern of frivolous litigation has the authority to implement a remedy that may include restrictions on that litigant’s access to the court.  Minniecheske v. Griesbach, 161 Wis. 2d 743, 748, 468 N.W.2d 760 (Ct. App. 1991).  Such restrictions may include barring the litigant from filing further civil actions, aside from habeas corpus, until the litigant has paid fees or costs imposed in the same case or a prior case.  Puchner v. Hepperla, 2001 WI App 50, ¶¶6, 10 and n.7, 241 Wis. 2d 545, 625 N.W.2d 609.  We are satisfied the trial court’s restriction on future filings by Gerard was appropriately crafted to be a bar only until she paid the sanction previously imposed and well within its discretion given Gerard’s pattern of abusing the court system.

Although unpublished, the court’s reasoning will provide ammunition when faced with an unreasonable chronic filer of lawsuits.

Cannon County Courthouse photo courtesy SeeMidTn.com (aka Brent) flickr gallery under this creative commons license.

The case law, although there is not much of it, indicates that offers of judgment inclusive of costs are acceptable.

When an offer-of-settlement provision is implicated, as it is here, costs are added to any settlement, unless the terms of the settlement provide otherwise. Alberte v. Anew Health Care Serv., Inc., 2004 WI App 146, ¶6, 275 Wis.2d 571, 685 N.W.2d 614.  That case cites Marek v. Chesny, 473 U.S. 1, 6, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985), for the proposition that cost-inclusive offers are legitimate within the bounds of the statute:

If an offer recites that costs are included or specifies an amount for costs, and the plaintiff accepts the offer, the judgment will necessarily include costs; if the offer does not state that costs are included and an amount for costs is not specified, the court will be obliged by the terms of the Rule to include in its judgment an additional amount which in its discretion, it determines to be sufficient to cover the costs. In either case, however, the offer has allowed judgment to be entered against the defendant both for damages caused by the challenged conduct and for costs.

The Marek case analyzes the federal counterpart to Wis. Stat. §807.01, Fed. R. Civ. P. 68.

FRCP 68 is the Federal Rules’ equivalent of Wis. Stat. § 807.01(1), and is descended from the same New York statute from which 807.01 traces its lineage.  DeWitt Ross & Stevens, S.C. v. Galaxy Gaming and Racing Limited Partnership, 2004 WI 92, ¶35, 273 Wis.2d 577, 682 N.W.2d 839; see, e.g., Duello v. Board of Regents of University of Wisconsin System, 220 Wis.2d 554, 570, 583 N.W.2d 863 (Ct. App. 1998)(noting the similarity between FRCP 68 and Wis. Stat. §807.01 and finding it appropriate for Wisconsin courts to apply the state rule to federal claims); Donaldson v. West Bend Mut. Ins. Co., 2009 WI App 134, n. 9, 773 N.W.2d 470 (”When a state statute mirrors federal law, we may look to federal cases for guidance in interpreting the state statute.”)

I feel somewhat guilty that between the holidays and a recent crush of work, I’ve been unable to meaningfully post something for a while.  So here’s a pretty lengthy discussion of offers of judgment and plaintiffs who seek to have a court construe the offer before the plaintiff decides to accept or reject it.

Like many defense lawyers, I occasionally make offers of judgment under Wis. Stat. 807.01. The upside, while minor, is that the costs that are awarded to the prevailing party is shifted by the making (and subsequent rejection) of the offer. Also like many defense lawyers, my offers typically include a total amount offered for judgment. That is, judgment is offered in a given amount, including whatever potential costs are outstanding at the time. I might make an offer of judgment “in the total amount of Fifty Thousand and 00/00 Dollars ($50,000.00). Such amount includes all costs and fees.”

The plain language of the offer (in the total amount of Fifty Thousand,” “Such amount includes all costs and fees) specifically includes costs in the total amount of the offered judgment. A cost-inclusive offer makes sense, in that it sets the potential liability for the offering defendants at a specific number, rather than leaving an open-ended addition (costs) that the offering defendants have no way of accurately estimating before making the offer.  More in my next post on authority regarding the enforceability of cost-inclusive offers of judgment.

Plaintiffs, on the other hand, are fully capable of determining what their costs are, and can make a reasoned judgment to accept or reject the offer. Hadrian v. State Farm Mut. Auto. Ins. Co., 2008 WI App 188, ¶8, 315 Wis.2d 529, 763 N.W.2d 215 (party to whom offer is made must be able “to fully and fairly evaluate the offer from his or her own independent perspective.”)

Recently, I had a plaintiff ask the court to “construe” the offer (although the plaintiff had not yet accepted or rejected the offer), arguing that because the language of the statute contains the phrase “with costs,” that the offer does not comply with the statute. Attorneys are free to hold that opinion, and ignore or reject the offer for costs.  If their interpretation is accurate, they will suffer no ill effects, regardless of whether they recover more or less than the offer.  

Some plaintiffs may argue, despite their ability to understand the terms of the offer and simply ignore or reject the offer, that an offer specifically including the costs in the total amount offered, should be transformed by the court into an offer they believe comports with the language of the statute (that is, fifty thousand plus whatever accrued costs are at the time of the offer). 

There are multiple problems with this approach. First, it demands that the require the defendants to offer more to settle the matter than they intended to offer, or did offer. If the defendants intended to offer to settle the matter for $50,000 plus whatever unknown costs the plaintiffs have incurred, the defendants could make that offer. Second, I’ve never seen any authority that the court has the ability to unilaterally alter the terms of an unaccepted offer of judgment.

In fact, it is likely this issue, unless the plaintiff has either accepted or rejected the offer, is not ripe for consideration.  Among other reasons, the offer remains susceptible to revocation. until it’s accepted or time runs out.  See, e.g., Sonnenburg v. Grohskopf, 144 Wis.2d 62, 65-66, 422 N.W.2d 925 (Ct. App. 1988)(offers under Wis. Stat. §807.01(3) revocable at any time prior to acceptance); See, e.g., DeWitt Ross & Stevens, S.C. v. Galaxy Gaming and Racing Limited Partnership, 2004 WI 92, ¶39, 273 Wis.2d 577, 682 N.W.2d 839 (”If Wis. Stat. § 807.01 is to fulfill its purpose, litigants must have clear guidance about the proper scope of a valid offer.  A clear rule will help parties draft valid offers and assess their potential exposure to costs and prejudgment interest. Moreover, it will expedite dispute settlement by minimizing the need for post-trial litigation about rejected settlement offers. We further note that Wis. Stat. § 807.01(1) and 807.01(3) provides: “If notice of acceptance is not given, the offer cannot be given as evidence nor mentioned on the trial . . . .” A clear rule is therefore uniquely appropriate here because the parties may not obtain a ruling on the validity of the offer during trial.)

Plaintiffs who seek a court determination of the viability of the offer (or, for whatever reason, a judicial re-writing) of the offer before they make their decision to accept or reject the offer, oppose the goals of the statute.  If plaintiffs wish to reject a cost-inclusive offer, and recover less than the offer, they are free to argue to the court at that time that the offer does not comport with the statute. On the other hand, if the plaintiffs wish to accept the offer as it’s been presented, they can also do that, and then argue to the court that it should enter costs in addition, despite the language of the offer document.  

If a court accepts a motion ceeking a “construction” of the offer before the offer is accepted or rejected, the court removes the risk of rejecting the offer from the plaintiffs. This action opposes the purpose of the statute, which is to encourage settlement by increasing the downside of losing at trial.

In what I would consider an unexpected decision, the court of appeals has expanded the universe of awardable costs to recognize internal copy costs.  Wis. Stat. 814.04(2) provides for the recovery of

amounts actually paid out for certified and other copies of papers and records in any public office; postage, photocopying, telephoning, electronic communications, facsimile transmissions, and express or overnight delivery.

Most parties opposing the award of internal copying argue (as did the plaintiff in this case), that internal copy costs are not expenses that are “actually paid out.”  The court here disagreed:

First, the statute does not say that photocopy costs must be paid out to a third party before they can be claimed by a defendant. Second, the phrase ‘”actually paid out” modifies the amounts paid “for certified and other copies of papers and records in any public office.”  The disputed costs here do not involve certified or other papers and records in a public office.

So, from now on, include internal copy expenses in all your cost affidavits.

In a single appeal from a Racine County case, a busy court of appeals addressed three issues of first impression.   The first issue from S.C. Johnson v. Morris revolved around the impact of invoking Fifth Amendment rights in civil discovery proceedings:

The first issue concerns a party’s continuous invocation of the Fifth Amendment privilege against self-incrimination in a civil action where that party later waives the privilege in the middle of trial when all discovery and preparation for trial is complete and the other party’s theory of the case has been established.  Federal case law instructs that this decision requires the trial court to balance the prejudice to both parties.  And one of the most important factors in the balancing test is the timing of the request to withdraw because invoking during discovery and then waiting until trial to withdraw runs the danger of undermining the purpose of discovery.  We find this authority persuasive and adopt it in Wisconsin. 

Second, the court addressed the duty to mitigate in intentional tort cases:

We again adopt persuasive federal case law which explains that expanding the duty to mitigate in such a way as to place a burden on the victim to investigate whether warning signals existed would allow tortfeasors to purposely exploit a victim’s weak internal investigation mechanism and then use it as an affirmative defense at trial.  We conclude that adopting Russell and Buske’s position would place too high a burden on victims.  Thus, as the trial court ruled, actual knowledge is required for the duty of mitigation to apply.

Finally, the court analyzed the damages provision of WOCCA:

And third, is the multiple damages provision of the Wisconsin Organized Crime Control Act (WOCCA) remedial such that the entire damage award is doubled?  The answer is “yes” because that provision, like its federal counterpart, is a remedy to address the private economic injury aspect of the violation, not the penal, criminal feature.  Therefore, we again affirm the trial court, and thus uphold its doubling of the entire damage award.

Cases of this size ($147 million damages finding remitted to $101.9 million) make it worthwhile for parties to chase down and elaborate novel issues.

municipal court judges 2001 photo courtesy Seattle Municipal Archives flickr gallery under this creative commons license

Jack Zemlicka’s recent article on internet research of potential or actual jurors raises some good issues.  The article primarily discusses investigating potential jurors in the days leading up to jury selection (kinda like Gene Hackman in the Runaway Jury).  As the article points out, however, there are many courts (Milwaukee County, for one) where the juror list is not available until a few minutes before the jurors walk into the court room.  Unless a client is willing to pay for a LOT of support, the time frames make it impossible to glean useful information in such short order.  As a result, most Milwaukee County juries are picked the old-fashioned way — intuition, experience, and let’s face it, some luck.

However, that doesn’t mean that no research can or should be done once the jury has been selected.  In the last trial I had in Milwaukee, we learned a great deal about our jury after the close of business on the first day.  I believe that it helped to better craft our case, which eventually prevailed.  It’s easy to get caught up in the science of lawyering — the details of preparing for the next witness, the arguments over evidence, preserving objections and the record for appeal, or preparation of exhibits and demonstrative evidence.  We can sometimes overlook that a trial is mostly about persuading the people who sit in the jury box that we are fair, trustworthy, and reasonable.  The more we know about them, the more chance we have to succeed.

Jury dootie begins photo courtesy kelly cree under this creative commons license.