Day: September 19, 2014

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

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

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

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

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, 2013AP1392The 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.