Month: April 2014

Wisconsin Supreme Court Rules Excessive Punitive Damages Unconstitutional

On April 22, the Wisconsin Supreme Court issued a positive decision (4-2) in Kimble v. Land Concepts, Inc., 2014 WI 21, holding that $1 million in punitive damages against a title insurance company violated due process and therefore was unconstitutional. Justice Annette Ziegler authored the decision, and was joined by Justices Patrick Crooks, Patience Roggensack, and Michael Gableman. Chief Justice Shirley Abrahamson authored a dissenting opinion and was joined by Justice Ann Walsh Bradley. Below is a discussion of the case and the court’s decision.

Wisconsin Insurance Alliance, Wisconsin Civil Justice Council, and Wisconsin Manufacturers & Commerce filed an amicus brief in the case arguing that the $1 million award of punitive damages was unconstitutional.

Issue: Whether the $1,000,000 punitive damages award against First American Title Insurance Company violates the Wisconsin Constitution or the common law of the state of Wisconsin.

Facts: The case involves a jury verdict awarding the plaintiff-property owners $1 million in punitive damages against First American Title Insurance Company for bad faith in denying the insureds’ requested defense of title and claim.

The plaintiffs purchased property in Door County that was land-locked on three sides and surrounded by water on the other side. The plaintiffs-buyers believed they had an easement over adjoining property allowing access to the nearest road. However, it was determined after the purchase of the property that the plaintiffs did not have an easement and therefore filed suit against First American Title Insurance Company when it denied that the policy coverage had been triggered.

The case went to trial and the court awarded the plaintiffs $29,738 in compensatory damages against First American. The jury also awarded the plaintiffs $1 million in punitive damages against First American for its bad faith in denying the claim. The court of appeals upheld the punitive damages.

The sole issue before the Wisconsin Supreme Court is whether the $1 million is unconstitutional. (The new caps under 2011 Wisconsin Act 2 are not implicated because this case was commenced prior to enactment of Act 2.)

Wisconsin Supreme Court’s Decision: The court held that the award of $1 million did “not bear a ‘reasonable relationship’ to either the compensatory damages award or the potential harm faced by the plaintiff.” According to the court, the punitive damages award was excessive and deprived the First American its right to due process under the constitution. Therefore, the court reversed the lower court and held that appropriate amount of punitive damages was $210,000, plus compensatory damages.

PolitiFact Gives Mary Burke “False” Rating for Claiming that Gov. Walker Repealed Wisconsin’s Equal Pay Act for Women

In 2009, the Wisconsin Legislature enacted legislation (2009 WI Act 20), which for the first time imposed punitive and compensatory damages under the Wisconsin Fair Employment Law (WFEL), the law prohibiting discrimination in the workplace. Before 2009 WI Act 20, the WFEL allowed individuals to sue for back pay, reinstatement of the job, plus compensation for costs of bringing the suit and attorney fees.

WCJC and the entire business community actively opposed Act 20 because it added punitive and compensatory damages that went beyond what was allowed under federal law. Plus, WCJC felt that the current remedies were more than adequate.

During the 2011-12 legislative session, WCJC and the business community supported legislation (2011 WI 219) that repealed the punitive and compensatory damages that were included in 2009 WI Act 20. (Click here to read WCJC’s memo, “Myths vs. Facts” – SB 202: Eliminating Punitive and Compensatory Damages.”)

In the 2012 elections and recall of Gov. Walker, the Democrats used the repeal of the punitive and compensatory damages under the WFEL for the basis of its “War on Women” theme by arguing that Gov. Walker removed “equal pay for women.” Fortunately, PolitiFact (which is a unit of the Milwaukee Journal Sentinel), saw through this falsehood and labeled such statements as “False.” (Click here and here to view the “False” ratings by PolitiFact.)

Some politicians are once again picking up on the “War on Women” theme and continuing to argue that Gov. Walker repealed the “Equal Pay Act” when he signed into law 2011 WI 219.

Most recently, Democratic gubernatorial candidate Mary Burke alleged in a press release that Wisconsin is “one of five states without an equal pay law protecting women from gender discrimination in their paycheck.” Ms. Burke based this comment on the repeal of the 2009 punitive and compensatory damages law.

PolitiFact analyzed this statement, and not surprisingly, gave Ms. Burke a “False” rating. In its article, PolitiFact explained how the repeal of the punitive and compensatory damages law did not remove the ability of women to sue for workplace discrimination.

According to PolitiFact:

So the 2009 bill allowed persons to sue in court – and get compensatory and punitive damages – after they had exhausted their administrative cases in the state Department of Workforce Development.

But that 2009 law – the one repealed in 2012 by Walker and the Republicans – was a fairly narrow one focused on tougher enforcement of existing protections for women and other groups.

It did not establish a new set of equal-pay protections – those already were in the Fair Employment law, where they have ben since 1982 and where they remained even after the 2012 repeal.

But while Walker reversed an attempt to toughen up Wisconsin law, its protections against gender discrimination in workplace pay date back decades. The governor’s 2012 action left those in place, albeit without tougher penalties for employers.

We rate Burke’s claim False.