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  • Wisconsin Lawyer
    December
    01
    2013

    Top 8 Recent Wisconsin Federal Court Decisions

    Michael B. Brennan

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    Federal court interpretations of Wisconsin law are of persuasive value to, but not binding on, Wisconsin courts. Yet, they affect how Wisconsin law is argued and develops. Here is a look at eight significant Wisconsin federal court decisions interpreting Wisconsin law in 2013.

    Capitol rotundaEach year, Wisconsin’s two U.S. district courts and the U.S. Court of Appeals for the Seventh Circuit render decisions interpreting Wisconsin statutes and Wisconsin common law, in many cases under federal diversity jurisdiction.

    Of course, federal court interpretations of Wisconsin law are of persuasive value to, rather than binding on, Wisconsin courts.1 These interpretations, however, still affect how Wisconsin law develops and how it is argued, including in cases pending in Wisconsin state courts.

    Wisconsin Right to Privacy Statute

    An individual’s right of privacy as recognized by Wisconsin statute,2 including protection against misappropriation of an individual’s name and image, was at issue in two Seventh Circuit cases.

    In the first case, Bogie v. Rivers,3 Ann Bogie attended a stand-up comedy performance by comedian Joan Rivers. After the show, Rivers autographed a book for Bogie and spoke with her briefly; their conversation was videotaped and appeared in a documentary film about Rivers. During the conversation, Bogie supported Rivers’s handling of a heckler in the audience, but Bogie alleged the documentary portrayed her as approving certain disparaging remarks Rivers had made. Bogie alleged that her privacy was invaded by the distribution of the film and that her image had been misappropriated for commercial purposes without her consent.

    The U.S. District Court for the Western District of Wisconsin dismissed the case for failure to state a claim, and the Seventh Circuit affirmed. Under Wisconsin’s general privacy statute, an invasion of privacy includes “an intrusion on the privacy of another of a nature highly offensive to a reasonable person, in a place that a reasonable person would consider private” and the use of the name, portrait, or picture of a living person, without having first obtained the written consent of the person, for advertising purposes or for purposes of trade.4

    Michael B. Brennancom brennan gasswebermullins Michael B. Brennan, Northwestern 1989, is a trial and appellate lawyer with Gass Weber Mullins LLC in Milwaukee.

    The Seventh Circuit concluded that Bogie’s conversation with Rivers did not take place in a private place – it happened backstage, in a relatively crowded area, with security personnel close by – and therefore the location was one where no reasonable person would expect privacy.5

    Also, under Wisconsin law, in circumstances in which a matter of legitimate public interest is concerned, “no cause of action for invasion of privacy will lie.”6 This “newsworthiness” or “public-interest” exception to misappropriation is construed broadly, and courts determine it as a matter of law. Citing reviews of the documentary, the Seventh Circuit panel found that the film fell within this exception.7

    The appellate court also noted that Wisconsin construes its privacy statute in accord with New York courts’ construction of the New York privacy statute, on which Wisconsin’s is modeled. New York recognizes an “incidental-use” exception to misappropriation, which exception bars such a claim unless there is a substantial connection between the image used and a commercial purpose. Because Bogie’s appearance was such a small fraction of the film – she was on screen 16 seconds – the court found the use incidental and thus not actionable.8

    The same exceptions to misappropriation under Wisconsin’s privacy act applied in a second Seventh Circuit case interpreting Wisconsin’s privacy act, Stayart v. Google Inc.9 The plaintiff, Bev Stayart, alleged that Google was using her name without permission to generate advertising revenue because searches for her name pulled up paid ads for drugs to treat erectile dysfunction.10

    The Seventh Circuit concluded that the “public-interest” exception to Wisconsin’s privacy law applied.11 Stayart had previously sued Yahoo on the same issue, and the panel concluded that court documents are matters of public interest. “It follows that if court documents warrant the public interest exception, the search providers … that lead the public to those documents or that capture key terms related to them are likewise entitled to that exception.”12 The “incidental-use” exception also applied because of the tenuous connection between Google’s use of Stayart’s name and any commercial purpose.

    Wisconsin Consumer Act

    In Beal v. Wyndham Vacation Resorts Inc.,13 a consumer filed suit alleging that a creditor violated the Wisconsin Consumer Act, Wisconsin’s privacy statute, and private-nuisance common law by trying to collect a debt the consumer owed for the purchase of a timeshare. (Beal also alleged Wyndham violated the federal Telephone Consumer Protection Act, and this resulted in federal-question jurisdiction for the suit and supplementary jurisdiction over the Wisconsin statutory and common-law claims.)

    After attending a sales presentation in Wisconsin Dells, Beal agreed to purchase “timeshare points” by paying 10 percent cash down and financing the remainder through a credit contract with the defendant. Beal stopped paying, and the defendant’s in-house debt collectors used an automatic dialing service to call her to make payment arrangements. Wyndham Vacation Resorts also filed a state court foreclosure action declaring an interest in Beal’s real estate. Beal successfully moved for summary judgment in that state court case on the ground that Wyndham failed to send Beal a notice of right to cure default before seeking foreclosure.

    Beal claimed that Wyndham, by filing the state court foreclosure action, violated the Wisconsin Consumer Act’s prohibition against debt collectors “claim[ing] or attempt[ing] or threaten[ing] to enforce a right with knowledge or reason to know that the right does not exist.”14 Beal contended that Wyndham violated this provision by, among other things, not attaching a copy of the timeshare contract to the state court complaint and not providing her with a proper right-to-cure-default notice.

    The Western District court, Judge Crabb presiding, concluded that neither of these theories could sustain a claim under the Wisconsin Consumer Act. Both requirements are procedural hurdles for a creditor to clear to pursue its remedies, not substantive causes of action for a debtor. “Instead, the appropriate remedy for a creditor’s failure to comply with these procedural requirements is dismissal of the creditor’s action, which is what happened to defendant’s action.”15 Wyndham’s mistakes in the state court action “do not mean that it attempted to enforce a right it did not have.”16

    Beal also claimed Wyndham invaded her privacy and created a private nuisance by serving the state court complaint on her and calling her to collect. But the court concluded that although Beal may have been upset when a police officer served her with process at her home, no reasonable person would conclude that such conduct was “highly offensive” or constituted a “substantial interference with the enjoyment of her property,” and so the conduct did not violate Wisconsin’s privacy statute17 and private-nuisance doctrine.18 The district court concluded, however, that the applicable statute of limitation did not bar Beal’s privacy and nuisance claims for the collection calls because they constituted a “continuing violation” under Wisconsin law.19

    Wisconsin Safe-Place Statute

    Wisconsin’s premises-liability law, also known as the safe-place statute,20 creates for premises owners a nondelegable statutory duty with legal obligations distinct from those, for example, arising under the common law of negligence. The U.S. District Court for the Eastern District of Wisconsin interpreted the safe-place statute in Anderson v. Proctor & Gamble Products Co.21

    In Anderson, the decedent worked as a union electrician at facilities in the Green Bay area for more than 40 years until he retired. He allegedly became ill as a result of occupational asbestos exposure, and his widow brought claims against various defendants, including Proctor & Gamble (P&G), which owned a Charmin paper mill where Anderson worked as a contract electrician for many years.

    P&G argued that it had no duty to an employee of an independent contractor performing work on its premises. P&G cited Wisconsin law that a principal employer is only liable in tort for injuries sustained by an independent contractor’s employee performing the contracted work if 1) the owner commits an affirmative act of negligence, and 2) the employee was injured while engaged in an extrahazardous activity.22

    The Eastern District court, Judge Griesbach presiding, noted the distinction between the safe-place statute, which addresses unsafe conditions and structural defects, and common-law negligence, which addresses negligent acts.23 He found that the plaintiff had submitted sufficient evidence to support a claim that P&G failed to meet its duty to make the Charmin mill safe for those who frequented the premises, including evidence that P&G possessed constructive notice of the dangers of asbestos insulation at the plant since 1971.24

    P&G also argued that it could not be liable under the safe-place statute because it did not have control over the work site and the decedent never took direction from P&G. But under the safe-place statute, an owner is only absolved of its statutory duty if it relinquishes complete control of the premises to the contractor and the premises are in a safe condition at the time.25 Because P&G owned and operated the factory where the decedent performed electrical work, and the plaintiff submitted evidence that her husband worked alongside P&G employees who oversaw his work, a genuine dispute of fact was created for a jury.26

    The district court also interpreted Wisconsin’s statute of repose,27 and found that its enumerated exception for damages before a certain date applied.28

    Wisconsin Uniform Commercial Code

    TecStar, a Wisconsin manufacturer, issued purchase orders to A. Raymond Tinnerman, a Michigan company, to provide metal rails to TecStar for use in solar-panel parts that TecStar had agreed to provide to Solyndra LLC. Later, TecStar cancelled certain purchase orders, Tinnerman demanded full payment, and the parties’ dispute headed to federal court under diversity jurisdiction, in A. Raymond Tinnerman Manufacturing Inc. v. TecStar Manufacturing Co.29

    The forms the parties exchanged contained various terms and conditions, including that the Uniform Commercial Code (UCC) as adopted in Wisconsin applied.30 Based on those terms and conditions, TecStar raised a series of contractual defenses, including a limitation on liability that TecStar read to preclude its liability to Tinnerman for any breach of any kind.

    The Eastern District court, however, focused on a different paragraph providing for total liability not exceeding the price allocable to the goods or services giving rise to a claim. The district court also applied Wisconsin case law critical of limitations on liability31 and deleted the portion of the limitation-on-liability clause that left Tinnerman with no remedy. Instead, the district court concluded that remedy “may be had as provided in Wisconsin’s UCC,”32 which in this case was the amount of the price of the goods accepted.33

    Wisconsin Personal Jurisdiction Law

    Wisconsin’s long-arm statute34 was interpreted by the Eastern District court in a diversity case concerning a dispute over Internet computer services.

    The plaintiff, Vesuvius Technologies, a Florida limited liability company with its principal place of business in Wisconsin, had installed its own equipment at the Illinois facility of the defendant ServerCentral Inc. Vesuvius tried to remove its equipment, but ServerCentral prevented it from doing so. Vesuvius sued ServerCentral, which moved to dismiss the case for lack of personal jurisdiction in Wisconsin or, in the alternative, transfer the action to the U.S. District Court for the Northern District of Illinois.35

    In Vesuvius Technologies LLC v. ServerCental Inc., the court held that venue is proper in “a judicial district in which any defendant resides.…”36 A corporate defendant such as ServerCentral resides in any judicial district where it “is subject to the court’s personal jurisdiction with respect to the civil action in question.”37 Thus, U.S. Magistrate Judge Aaron Goodstein looked to Wisconsin’s long-arm statute to determine whether ServerCentral was subject to personal jurisdiction in Wisconsin.

    The district court noted that the Wisconsin Supreme Court has not merged the analysis under Wisconsin’s long-arm statute with considerations of constitutional due process.38 Accordingly, the district court looked to Wisconsin case law (and federal cases applying Wisconsin law) to determine whether the statutory factors of “taking up local presence or status within the state,”39 causing injury in Wisconsin, or carrying on solicitations within Wisconsin applied to ServerCentral.40 After considering the facts presented and the applicable Wisconsin case law, the court found that Wisconsin’s long-arm statute applied. The court also held there were no constitutional due process concerns and that ServerCentral had not met its burden to show that transfer to the Northern District of Illinois was necessary.

    Wisconsin Tort and Contract Law

    The design and construction of a 65-mile underground water pipeline that serves communities in central Brown County was the subject of a lawsuit between the water authority for those municipalities and an engineering company, in Central Brown County Water Authority v. Consoer, Townsend, Envirodyne.41

    The Eastern District court, which had the case under diversity jurisdiction, considered the parties’ summary judgment motions regarding whether certain alleged defects in the pipeline could serve as the basis for contract and tort damages given the future possibility of leaks or other malfunctions in the pipeline.

    Among the disputes as to contract damages was whether under Wisconsin law, a plaintiff must have suffered actual damages to state a claim.42 The engineering company, citing various Wisconsin authorities, argued that the water authority had to prove to a reasonable degree of certainty that it suffered damages. The water authority contended that a finding of liability for breach of contract does not depend on proof of damages.43

    Judge Griesbach found that the water authority’s argument that evidence of actual damage was not required to sue for breach of contract was based on a misreading of Wisconsin case law and, if adopted, would lead to a waste of public and private resources. Because the pipeline work had been completed, and the parties had no ongoing contractual relationship, absent actual damages, the water authority’s contract claim could be dismissed.44

    The district court then considered whether the water authority had presented evidence to support this element. The answer depended on whether the theory of liability was in tort or in contract. The water authority had presented evidence that the pipeline might have been of a lesser quality, as a result of the absence of concrete supports the contract allegedly called for and alleged failure to ensure that certain bolts and gaskets were used in valves. The court said these were evidence of damages resulting from alleged breach of contract, but not tort. Accordingly, the district court granted summary judgment to the engineering company as to the water authority’s claim arising in tort, but not its contract claim.45

    Wisconsin Law of Collateral Estoppel/Issue Preclusion

    The U.S. Court of Appeals for the Seventh Circuit interpreted Wisconsin’s law of collateral estoppel (issue preclusion) in DeGuelle v. Camill.46 While employed by S.C. Johnson Inc., DeGuelle, an accountant, said he discovered tax fraud. The company fired DeGuelle and then sued him in Wisconsin state court for breach of contract, conversion, and defamation, alleging he took confidential corporate tax documents and defamed the company by accusing it of tax fraud in a newspaper article. A Wisconsin circuit court granted the company summary judgment on DeGuelle’s claims, and the Wisconsin Court of Appeals affirmed.

    Long before the Wisconsin state court suit was resolved, DeGuelle had sued S.C. Johnson Inc. in federal court alleging federal and state violations emanating from the alleged tax fraud. The Eastern District court also granted the company summary judgment, reasoning that the finding by the Wisconsin state court that there had been no tax fraud bound the district court under the doctrine of collateral estoppel.47

    After a general discussion of collateral estoppel, Judge Richard Posner, writing for the Seventh Circuit, interpreted Wisconsin’s version of that doctrine. He concluded that although Wisconsin case law lists five factors as comprising the doctrine, there are at least eight, if not 11 factors, plus a “formless test” of “the trial court’s sense of justice and equity.”48 The appeals court reached the same result as the trial court, however. “Freewheeling as the Wisconsin courts’ formulation of the doctrine of collateral estoppel is, none of its curlicues provide a basis for doubting that the rulings by the Wisconsin trial court and appellate court are entitled to collateral estoppel effect in this case.”49

    Endnote

    1 Lexington Ins. Co. v. Rugg & Knopp Inc., 165 F.3d 1087, 1092-93 (7th Cir. 1990).

    2 Wis. Stat. § 995.50(2)(b).

    3 Bogie v. Rivers, 705 F.3d 603 (7th Cir. 2013).

    4 Wis. Stat. § 995.50(2)(a) (b).

    5 Bogie, 705 F.3d at 610-12.

    6 Van Straten v. Milwaukee J. Newspaper-Publisher, 151 Wis. 2d 905, 921, 447 N.W.2d 105 (Ct. App. 1989).

    7 Bogie, 705 F.3d at 614-15.

    8 Id. at 615-16.

    9 Stayart v. Google Inc., 710 F.3d 719 (7th Cir. 2013).

    10 See Michael B. Brennan, Top 8 Recent Wisconsin Federal Court Decisions, 84 Wis. Law. 10-11 (Nov. 2011).

    11 Stayart, 710 F.3d at 723.

    12 Id.

    13 Beal v. Wyndham Vacation Resorts Inc., No. 12-cv-274-bbc, WL 3870282 (W.D. Wis. June 20, 2013).

    14 Wis. Stat. § 427.104(1)(j).

    15 Beal, 2013 WL 3870282 at *6.

    16 Id.

    17 Wis. Stat. § 995.50.

    18 Beal, 2013 WL 3870282 at *9.

    19 Id. at *10-13.

    20 Wis. Stat. § 101.11.

    21 Anderson v. Proctor & Gamble Paper Prods. Co., 924 F. Supp. 2d 996 (E.D. Wis. 2013).

    22 Tatera v. FMC Corp., 2010 WI 90, ¶ 2, 328 Wis. 2d 320, 786 N.W.2d 810.

    23 Anderson, 924 F. Supp. 2d at 1003 (citing Gennrich v. Zurich Am. Ins. Co., 2010 WI App 117, ¶ 23, 329 Wis. 2d 91, 789 N.W.2d 106) (internal citation omitted).

    24 Id. at 1003.

    25 Id. at 1004 (internal citations omitted).

    26 Id.

    27 Wis. Stat. § 893.89.

    28 Anderson, 924 F. Supp. 2d at 1004-05.

    29 A. Raymond Tinnerman Mfg. Inc. v. TecStar Mfg. Co., No. 12-CV-667-JPS, 2013 WL 787367 (E.D. Wis. March 4, 2013).

    30 Id. at *2.

    31 Murray v. Holiday Rambler Inc., 83 Wis. 2d 406, 265 N.W.2d 513 (1978); Phillips Petroleum Co. v. Bucyrus-Erie Co., 131 Wis. 2d 21, 388 N.W.2d 584 (1986).

    32 Tinnerman Mfg., 2013 WL 787367 at *6.

    33 Id. at *5-7.

    34 Wis. Stat. § 801.05.

    35 Vesuvius Techs. LLC v. ServerCentral Inc., No. 12-CV-1161, 2013 WL 1879107 (E.D. Wis. May 3, 2013).

    36 28 U.S.C. § 1391.

    37 Id.; 28 U.S.C. § 1392(c)(2).

    38 Vesuvius Techs. LLC, 2013 WL 1879107 at *2.

    39 Wis. Stat. § 801.05(1)(d).

    40 Wis. Stat. § 801.05(4)(a).

    41 Central Brown Cnty. Water Auth. v. Consoer, Townsend, Envirodyne, No. 09-C-0131, 2013 WL 501419 (E.D. Wis. Feb. 11, 2013).

    42 Id. at *5.

    43 Id. at *6.

    44 Id. at *7.

    45 Id. at *8-10.

    46 DeGuelle v. Camilli, 724 F.3d 933 (2013).

    47 Id. at 935.

    48 Id. at 937-38.

    49Id. at 938.