Author: Hamilton

Governor Walker Signs Special Session Tort Reform Bills

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Today, Governor Scott Walker signed into law two of the remaining special session tort reforms bills recently passed by the Legislature. The two bills the Governor signed were:

TRESPASSER LIABILITY – SPECIAL SESSION SB 22/AB 22 – 2011 WISCONSIN ACT 93

Previously, trespasser liability law was based solely on common law, which adopted provisions of the Restatement (Second) of Torts. At common law, a land possessor is liable for intentional or willful injury against a trespasser and is required to warn known trespassers of dangerous conditions on the premises. This legislation codifies the traditional common law regarding trespasser liability and prevents the implementation of a newly rewritten Restatement of the Law (Third) Torts: Liability for Physical and Emotion Harm (Section 51). This new Restatement would have imposed a duty on land possessors to exercise reasonable care to all entrants, including unwanted trespassers, unless the trespasser is “flagrant,” which has yet to be defined. This bill codifies current case law and protects landowners from potential liability due to injury to trespassers.

AWARDING REASONABLE ATTORNEY FEES – SPECIAL SESSION SB 12/AB 12 – 2011 WISCONSIN ACT 92

This legislation provides certainty for businesses by creating new factors for a court must weigh in determining reasonable attorney fees in fee-shifting cases. The bill also places a cap on attorney fees.

The bill lists the following criteria a court must consider when setting reasonable attorney fees: 1) the time and labor required by the attorney; 2) the novelty and difficulty of the questions involved; 3) and the complexity of the case; 4) the skills needed to perform the legal service properly; 5) the likelihood that the acceptance of the particular case prevented the attorney from accepting other work; 6) the fee customarily charged in the locality for similar legal services; 7) the amount involved in the legal dispute and the results obtained; 8 ) the fees granted in similar cases; 9) the time limitations imposed by the client or by the circumstances; 10) the nature and length of the professional relationship with the client; 11) the experience, reputation, and ability of the attorney performing the services; 12) whether the fee is fixed or contingent; and 13) the legitimacy of any defenses raised in the case.

The bill also limits attorney fees to three times the amount of compensatory damages awarded, except in cases of nonmonetary relief, or in cases involving both compensatory and nonmonetary relief. Senate Amendment 2 modified the provisions of the bill regarding the “three times” limitation. Under the amendment, the court must presume that reasonable attorney fees do not exceed three times compensatory damages, but this presumption may be overcome if the court determines, after weighing the above factors, that a greater amount is reasonable.

For more information, please visit WCJC’s Key Issues page. Also, please feel free to contact Andy Cook or Bob Fassbender if you have any questions or comments.

Governor Walker and Legislature Continue Focus on Civil Liability Reforms

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WCJC’s Legislative Director, Andrew Cook, had an article published in the most recent edition of the Wisconsin Defense Counsel’s Wisconsin Civil Trial Journal.

The article, Governor Walker and Legislature Continue Focus on Civil Liability Reforms, summarizes the slew of civil justice initiatives considered in the regular and special legislative sessions during the last half of this year.

Additional information about the reforms discussed in the article is available on the WCJC Key Issues page. These landmark reforms were for the most part drafted in prior sessions by WCJC consultants and members to address major deficient in existing Wisconsin law, many of which were needed to address flawed court decisions.

Wisconsin Surpeme Court Hears Oral Argument in Case Deciding Default Judgments

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The Wisconsin Supreme Court today heard oral arguments in Johnson v. Cintas Corp. No. 2, et al., 2011 WI App 5, 2009AP2549, which is the latest in a number of recent cases accepted by the Court dealing with default judgments. (The oral argument can be viewed on WisconsinEye.)

The issue is whether a default judgment is void because the summons and complaint names the wrong corporate defendant and thus personal jurisdiction is not obtained over the correct corporate entity.

Facts

Robert Johnson, an employee for Cintas Corporation No. 2 (“Cintas No. 2”), was injured in a car accident resulting in permanent injury. Johnson was a passenger in the vehicle, which was being driven by a friend. Johnson was required to use his vehicle during the course of his employment and held auto liability insurance through Cintas No. 2. Johnson sought treatment coverage from Cintas No. 2 through its health insurance provider. When Cintas No. 2 refused to pay benefits, Johnson filed suit.

Johnson’s attorney filed the original summons and complaint naming “Cintas Corporation” as the defendant, instead of Cintas Corporation No. 2. Cintas Corporation No. 2 is a wholly-owned subsidiary of Cintas Corporation. Cintas Corporation No. 2 is a foreign corporation registered with the State of Wisconsin, whereas Cintas Corporation is a foreign corporation not registered in Wisconsin and does not do business within the State of Wisconsin.

Neither Cintas Corporation No. 2 nor Cintas Corporation responded to the complaint, and Johnson moved for default judgment. Cintas Corporation filed an Emergency Motion to Strike and Dismiss for Lack of Personal Jurisdiction. At the default judgment hearing Johnson was allowed to amend the summons and complaint. The trial court then granted default judgment against Cintas Corporation No. 2.

Cintas No. 2 then contacted the trial court and filed its answer to the original and amended complaints, but the court refused to hear Cintas No. 2’s motions because it had already granted default judgment against Cintas No. 2.

Cintas No. 2 filed a motion for relief from judgment, which the court granted and then vacated the default judgment. Johnson filed a motion for reconsideration and argued that newly obtained information proved that Cintas No. 2 effectively held itself out as Cintas Corporation. The trial court granted Johnson’s motion and reinstated the default judgment.

Court of Appeals Decision

The court of appeals reversed the trial court. The court held that because Johnson’s summons failed to accurately name the proper defendant (Cintas Corporation No. 2), the service of process failed to confer personal jurisdiction over that defendant.

The court further explained that regardless of how Cintas Corp. No. 2 held itself out to the public, the amendment of the summons and complaint had the effect of bringing a new party into the action. According to the court, added parties must be served with the summons or voluntarily appear. The court further noted that strict compliance with the rules of statutory service upon amendment naming a new corporate entity is consistent with Wisconsin’s policy viewing default judgments with disfavor.

A decision by the Wisconsin Supreme Court is expected before it ends its current term in July 2012.

Andrew Cook, Director of Legal Service, Great Lakes Legal Foundation

Governor Walker Signs Special Session Bill into Law Limiting Interest on Judgments

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On November 16, Governor Walker signed Special Session Senate Bill 14 into law. The new law changes Wisconsin’s pre- and post-judgment interest from 12 percent – the highest in the nation – to the Federal Reserve prime rate plus one percent. The final bill included amendments that apply the interest on judgments to all cases – not just tort law-, and set the rate twice a year (January 1 and July 1).

This bill was part of Governor Walker’s “Back to Work Wisconsin” Special Session. Two other bills from that special session are now on the Governor’s desk including the Trespasser Liability Act (SB 22) and Reasonable Attorneys Fees (SB 12).

This post was authored by Hamilton Consulting Group’s intern, Lane Oling, a 2L at the University of Wisconsin Law School.

Daubert Comes to Wisconsin — CLE Summit on Expert Opinion

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This one day “summit” is for trial lawyers who are engaged in the defense of civil litigation as well as those lawyers who represent businesses and professionals, and whose litigation fate relies heavily on the admissibility—or non-admissibility—of expert testimony, including the elimination of “junk science.” A comprehensive understanding of decisions and trends from other jurisdictions will be critical for lawyers to assist in helping to shape Wisconsin law in the manner intended by the adoption of the Daubert standards for Wisconsin in January of this year.

For more information or to register, click here.

Governor Walker Calls Second Special Session on Jobs

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For the second time this year Governor Scott Walker has called the legislature into special session to address jobs. The “Back to Work Wisconsin” special session is expected to begin on Thursday, September 19, and run through November.

Walker’s announcement included a list of 26 pieces of legislation for the session. Several of the bills contain civil liability reforms.

Factors for determining the reasonableness of attorney fees.

LRB 2670–Rep. Vos and Sen. Zipperer

Summary:

  • Requires a court to consider certain factors to determine reasonable attorney fees
  • Factors include, but not limited to the following:
    • amount involved in the dispute
    • actual outcome of the dispute
    • novelty and difficulty of the questions involved
    • complexity of the case
  • Would limit attorney fees to three times the award with certain limiting factors and exemptions including whether nonmonetary relief is awarded or in cases involving both compensatory damages and nonmonetary relief

Providing immunity from liability to drug and device manufacturers and sellers under certain circumstances

LRB 2890–Rep. Kooyenga and Sen. Zipperer

Summary:

  • This bill provides immunity to manufactures and sellers of medical devices/drugs from lawsuits if their product received approval from the federal Food and Drug Administration at the time the device/drug left the control of the manufacturer or seller.
  • Also provides immunity from liability to a manufacturer or seller of a drug/device for any claim based on the failure to warn of the risk of the drug/device if labeling was made available to the consumer, the person who prescribed the drug/device, and the labeling was in compliance with established FDA standards
  • Legislation covers defects in design, which undergo a strenuous FDA approval process
  • Does not cover defects that occur in the manufacturing process

Duty of care owed to trespassers

LRB 2939–Rep. Williams and Sen. Galloway

Summary:

  • Current law in WI does not hold property owners and outdoor employers liable for trespassers who are injured on their property through no fault of the property owner.
  • Under the Third Reinstatement of Torts spreading across the country, landowners have a duty to exercise reasonable care to all entrants on property, including unwanted trespassers.
  • This bill would pre-empt courts in WI from adopting this Third Reinstatement
  • Current law in WI would be preserved

Interest rates on judgments in certain civil actions

LRB 2966–Rep. Paul Farrow /  LRB 2838 – Sen. Rich Zipperer

Summary:

  • Currently, Wisconsin allows interest on judgments involving the recovery of money at the rate of 12% per year from the date of entry judgment. This is one of the highest interest rates in the country and was established in the 1979-1980 legislative session.
  • Changes the interest rate on judgments for the recovery of money in certain civil actions to an annual rate of 1 percent plus the prime rate in effect on the day the judgment is entered.
  • Improves the legal climate for job creators.

Legislators Circulate Bills that Would Protect Employers from Costly and Dubious Lawsuits

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Two bills circulating in the Wisconsin Capitol would amend Wisconsin’s Fair Employment Act (WFEA) by repealing punitive and compensatory damages in employment discrimination cases and allowing employers to consider an applicant’s prior felony conviction when hiring or terminating the person from employment.

A more in-depth explanation of each bill can be found here and here. After the draft bills are circulated for co-sponsors, the bills will be officially introduced and will likely receive public hearings in the near future.

WCJC will provide continuous updates on these bills.

State Court Challenges to Legislatively Enacted Tort Reforms

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The Summer 2011 edition of the Federalist Society’s State Court Docket Watch features an article co-authored by Andrew Cook, Legislative Director of the Wisconsin Civil Justice Council and a lobbyist and attorney with the Hamilton Consulting Group, and Great Lakes Legal Foundation staff attorney Emily Kelchen.

State Court Challenges to Legislatively Enacted Tort Reforms provides a summary of recent state supreme court cases in which opponents of civil liability reform have challenged reform laws, mostly on constitutional grounds. The article also provides a summary of the recent reforms in Wisconsin law and an analysis of past Wisconsin reforms that were found unconstitutional.

Fairly Allotting Liability Among Defendants

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Andrew Cook, Legislative Director of the Wisconsin Civil Justice Council and a lobbyist and attorney with the Hamilton Consulting Group, was asked to present his paper on Fairly Allotting Liability Among Defendants at the August 2, 2011 meeting of the American Legislative Exchange Council (ALEC) in New Orleans.

The paper discusses the different variations of joint and several liability using Wisconsin as an example of how the law has changed over time.

Supreme Court Holds Not-for-Profit Outpatient Clinic is Tax-exempt

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Covenant Healthcare v. City of Wauwatosa, (2011 WI 80)

The Wisconsin Supreme Court this morning released its opinion in Covenant Healthcare v. City of Wauwatosa. In a 6-1 decision, the Court found that the St. Joseph Hospital Outpatient Center qualifies as tax-exempt property.

In an opinion by Justice Gableman, the court held that the Outpatient Clinic is used for the primary purposes of a hospital and is therefore tax-exempt property. The court found that the Clinic is neither a doctor’s office nor a property used for commercial purposes and is therefore tax exempt. Further, the court held that no benefit inured to any member of St. Joseph because the term “member” does not include not-for-profit entities.

St. Joseph Outpatient Clinic is a freestanding clinic located 5 miles from St. Joseph Hospital. The Outpatient Clinic was owned by St. Joseph from 2003 to 2006. Covenant is the sole member of St. Joseph. In 2003, Covenant constructed a building that including three levels of the Outpatient Clinic. Covenant transferred ownership of the building to St. Joseph, but maintained ownership of the land and leased it to St. Joseph.

Covenant filed timely Property Tax Exemption Requests with the City of Wauwatosa in each year from 2003 to 2006. Covenant claimed property tax exemptions for both the Outpatient Clinic building and the land on which the building is located. The city assessor denied the property tax exemption for each of these four years and Covenant paid the assessed tax. Covenant sued to recover the amount of the City’s allegedly unlawful assessment.

Through extensive factual analysis, the court concluded that the Outpatient Clinic is used primarily for the purposes of a hospital because the Outpatient Clinic is fully integrated with St. Joseph Hospital. The court concluded that the Clinic “effectively serves as a department of the larger St. Joseph Chambers Street Hospital.”

The court held that the Outpatient Clinic was not a doctor’s office. According to the court, “physicians practicing at the Outpatient Clinic do not receive variable compensation related to the extent of their services. Second, the Outpatient Clinic physicians do not receive extra compensation for overseeing non-physician staff. Third, the Outpatient Clinic’s bills are generated on the same software system as the bills generated by St. Joseph. Fourth, physicians at the Outpatient Clinic do not have their own offices.”

Additionally, the court held that the Outpatient Clinic was not used for commercial purposes. The court concluded that just because a not-for-profit may operate “in the black” does not mean it is generating revenue in the commercial sense.

Finally, the court held that the benefit did not inure to any member of St. Joseph because the term “member” does not include not-for-profit entities. The court held that even though the net benefits of St. Joseph inured to the benefit of Covenant, the tax exemption can still apply because Covenant is not a “member” for the purposes of property tax exemption determinations.

Chief Justice Abrahamson dissented, concluding that the Outpatient Clinic property is used as a doctor’s office and therefore does not qualify for the property tax exemption.

This post was authored by GLLF’s intern, Lane Oling, a 2L at the University of Wisconsin Law School.