Wisconsin Business and Commercial Litigation

In Anderson v. Hebert, the District III Wisconsin Court of Appeals reviewed a Barron County decision regarding the application of the exclusive remedy of workers compensation to a claim alleging post-employment defamation.  The plaintiff resigned from his Barron County Highway Department post after his part in a scheme to overcharge the state by falsifying county work records came to light.   Hebert, the county administrator, made a number of statements on the topic to the local media and in an open meeting of the County Board.  Anderson sued, claiming among other things, that the statements were defamatory.

The County won summary judgment on the defamation claim, arguing that Farady-Sultze v. Aurora Medical Center, 2010 WI App 99, 327 Wis. 2d 110, 787 N.W.2d 433 “stands for the proposition that the Worker’s Compensation Act provides the exclusive remedy for defamation by an employer, even if the defamation occurs after the employee has been terminated.”  Anderson appealed, and the court of appeals reversed:

We conclude the language of the Act is plain and unambiguous. The Act’s exclusive remedy provision states that, where an injury is covered by the Act, “the right to the recovery of compensation under [the Act] shall be the exclusive remedy against the employer, any other employee of the same employer and the worker’s compensation insurance carrier.” WIS. STAT. § 102.03(2). An injury is covered by the Act where certain conditions are present. See WIS. STAT. § 102.03(1).

As relevant here, an injury is only covered if, at the time of the injury: (1) both the employer and employee are subject to the provisions of the Act; and (2) the employee is performing service growing out of and incidental to his or her employment. WIS. STAT. § 102.03(1)(b)-(c)1. It is undisputed that the injury to Anderson–the alleged defamation–did not occur until after Anderson resigned. Thus, at the time of the injury, Anderson was not the County’s employee and was not subject to the provisions of the Act. See WIS. STAT. § 102.03(1)(b). Furthermore, because he had already resigned, Anderson was not “performing service growing out of and incidental to his employment” at the time of the injury. See WIS. STAT. § 102.03(1)(c)1. Anderson’s injury therefore is not covered by the Act. Consequently, the Act’s exclusive remedy provision does not bar his defamation claim.

That’s the current state of the law.  However, stay tuned for what is likely to be a request for review by the Supreme Court. 

Highway truck photo courtesy OregonDOT’s photostream via this creative commons license.

Everyone just move along, there’s nothing to see here.  This one sputtered and fizzled to a finish.  The Supreme Court split evenly (3-3) on overturning or upholding the court of appeals, and so sent the case back to the court of appeals.  A disappointment for those of us looking for a statement by the state’s high court.

At my recent presentation to the Muskego Area Chamber of Commerce, the issue of insurance coverage for company employees arose.  Many employees, and even owners, are understandably concerned about the existence and scope of insurance coverage for acts taken in the course of employment. 

Two events are crucial to making sure that you’ve got the coverage you want.  The first is bringing the issue up with your insurance agent, and also with your lawyer.  You can’t make a good decision if you don’t know what coverage is available, what it costs, and what potential problems you might face.  Talking with both your agent and your lawyer should cover all these bases.  By the way, if your agent isn’t bringing this issue up to you (or hasn’t brought it up to the owner/manager of the company for which you work) it might be time to find a new agent.

Second, once the decision has been made, you have to confirm that what you’ve got is what you’ve asked for.  When you get the policy, review the language.  Does it say what you think it should say?  Also, I’d take the policy back to your lawyer and find out if the language in the policy is sufficient to effectuate the decision you made earlier. 

If you’re an employer, I can tell you now that this issue is important to your employees.  If you’re an employee, let your employer know that the issue is important to you, and find out what you can about how (and if) you’re protected.

My firm regularly publishes an employment law update, filled with summaries of the latest cases.  Have a look at the most recent edition:

http://www.hinshawlaw.com/employment-practices-alert-05-03-2010/#Employer

A new bill in the Wisconsin Legislature would make employers liable for “workplace bullying.”  Jack Zemlicka of the Wisconsin Law Journal describes the legislation:

Currently, workers’ compensation is typically the exclusive remedy for an employee with a claim against an employer. But Assembly Bill 894 provides that an employee can sue over an abusive work environment and potentially recover medical expenses, back pay, front pay, compensation for emotional distress, punitive damages and attorney fees.

This bill even has its own website, which describes the bill as part of a “movement.”  Thankfully, none of the states to which the “movement” has spread have gone so far as to accept the proposal.

Since 2003, 17 states have introduced similar proposals, but none have passed, according to the office of Rep. Kelda Roys, a sponsor of the Wisconsin legislation.

If you’re an employer, keep your eyes on this one.  This could be full-time employment for plaintiff and defense lawyers alike.

Argument image courtesy Francis Carnauba’s flickr gallery through this creative commons license.

In Cape & Sons v. Streu Construction (Sept. 9, 2009), the District II Court of Appeals addressed a creative twist on employer liability for employee actions.  Cape sued Beaudoin, one of Cape’s employees, and two other companies that colluded with Beaudoin in a bid-rigging scheme that allocated bids to each of the three companies in turn.  The defendants argued that the doctrine of respondeat superior (which imputes an employee’s actions within the scope of its employment to its employer) applied to constructively make Cape & Sons part of the bid-rigging process, thereby preventing liability (although the scheme was one of the reasons that Cape & Sons eventually sought bankruptcy protection).

To reverse the trial court’s conclusion that the doctrine applied and prevented Cape & Sons from recovering, the appellate court dusted off an 1866 case (Zulkee v. Wing, 20 Wis. 429) in which the Supreme Court concluded that respondeat superior applies “only as between the master or principal and third persons,” and was not applicable in a suit between an employer and employee. 

Cape & Sons victory was not the only September 9 setback for the corporate defendants, who also lost the coverage fight with their insurance companies, leaving payments of about $1.15 million on the table.  This second decision is an important lesson for plaintiffs that the language of the complaint is crucial to triggering coverage for defense and/or indemnity purposes.

As most of you know, if you’ve read my previous postings (see June 12, 2009), the City of Milwaukee passed, through so-called direct legislation, an ordinance requiring employers to provide paid sick leave for all workers.  The legislation was later found unconstitutional because, among other things, the phrasing of the issue on the ballot was overly vague. 

Proponents of the legislation appealed the ruling.  Last week, the City of Milwaukee announced that it was not joining in the appeal.  Naturally, the private groups supporting the legislation and the appeal (in all other instances known as special interest groups) argue that by not joining the appeal, the City is turning its back on all those who voted in favor of the legislation.

This argument ignores the finding of the court that the phrasing of the issue on the ballot left the voters without a real understanding of what they were voting on.   However illogical, the argument is typical of that used to support this and similar issues that require business owners (including stockholders) to subsidize services provided to the community at large.

This article in the Wisconsin Law Journal discusses the issues in greater detail.

Once again, Northwestern Mutual Life is being sued by former representatives seeking overtime and wage pay protections under federal and state law.  The Milwaukee Business Journal article gives a more-detailed rundown of the current California-venued case and the history of this kind of claim against NML.

This kind of litigation is fairly common to organizations with large commissioned sales forces.  The challenge for these employers is to structure the relationships with an eye toward the various regulations by multiple layers of government.