Vol. 85, No. 7, July 2012
Circuit Court Commissioners – Constitutionality of Statute Authorizing Commissioners to Issue Warrants
State v. Williams, 2012 WI 59 (filed 30 May 2012)
Wisconsin Statutes section 757.69(1)(b) allocates to circuit court commissioners the power to issue search warrants. In this case, the defendant moved to suppress evidence obtained by police during the execution of a search warrant on grounds that issuance of the warrant by a court commissioner was an invalid exercise of the judicial power under Wisconsin Constitution article VII, section 2 ("[t]he judicial power of this state shall be vested in a unified court system consisting of one supreme court, a court of appeals, a circuit court, such trial courts of general uniform statewide jurisdiction as the legislature may create by law, and a municipal court if authorized by the legislature...)." The circuit court denied the motion to suppress and, after pleading guilty, the defendant initiated this appeal. The court of appeals certified the appeal to the supreme court, which accepted certification.
In a majority decision authored by Justice Roggensack, the supreme court affirmed. It concluded that "the issuance of a search warrant is not an exercise of '[t]he judicial power,' as that phrase is employed in Article VII, Section 2 of the Wisconsin Constitution. Instead, issuance of a valid search warrant requires that the individual be authorized by law to issue the warrant, that he or she be neutral and detached, and that the warrant be issued only upon a showing of probable cause" (¶ 59). The court noted that throughout Wisconsin's history, including the period before ratification of the Wisconsin Constitution, persons in certain nonjudge positions have been authorized by statute to issue search warrants (see ¶ 3).
Because the court also concluded that Wis. Stat. section 757.69(1)(b), which allocates the power to issue search warrants to circuit court commissioners, does not impermissibly intrude on "the judicial power" granted to the courts by Wisconsin Constitution article VII, section 2, the court also held that section 757.69(1)(b) is constitutional. Therefore, the search warrant was validly issued (see ¶ 60).
Justice Bradley and Justice Prosser did not participate in the decision. Chief Justice Abrahamson filed a concurring opinion.
Discrimination – State/Federal Action
Aldrich v. LIRC, 2012 WI 53 (filed 23 May 2012)
This case involves the complicated interplay among federal and state agencies charged with protecting employees' rights. The time limit for filing a discrimination claim under the relevant federal and Wisconsin statutes is 300 days from the date of the alleged unlawful action. Aldrich worked for Best Buy, which she believed discriminated against her based on age and gender. She filed an initial claim (an "intake questionnaire") with the federal Equal Employment Opportunity Commission (EEOC) in August 2003; the EEOC in turn notified the Wisconsin Equal Rights Division (ERD) of Aldrich's claim pursuant to the federal/state "worksharing agreement" (¶¶ 18, 40). The agreement also calls for the ERD to "defer" to the EEOC, the agency in which the initial filing occurred. An EEOC investigator prepared a written "charge" against Best Buy, and Aldrich signed the charge in February 2004. In January 2005, the EEOC dismissed Aldrich's federal discrimination claim after finding no proof that Best Buy violated the statutes.
Aldrich then proceeded on dual tracks, state and federal. She authorized the ERD to conduct its own investigation and appealed the EEOC's ruling in federal court. The federal district court granted summary judgment in favor of Best Buy, finding that the February 2004 "charge" was filed after the 300-day time limit ended (see ¶¶ 46-47).
Meanwhile, the ERD case sparked several certiorari actions in the circuit court and two appeals concerning the timeliness of Aldrich's state-based claim. In the final round, the Labor and Industry Review Commission (LIRC) found the state claim untimely, the circuit court reversed LIRC, and the court of appeals reversed the circuit court, holding "that in a deferral situation like the present case, a complaint is deemed filed with the Wisconsin ERD on the date the EEOC receives a federal 'charge' of discrimination" (¶ 63). The court of appeals affirmed LIRC's decision to apply issue preclusion, thus barring Aldrich from relitigating the issue whether her intake questionnaire constituted a charge under federal law. See 2011 WI App 94.
A unanimous supreme court reversed the court of appeals in an opinion written by Chief Justice Abrahamson. The 55-page opinion includes a helpful overview of the decision at paragraphs 12 to 15. The appeal presented two issues. The first issue was whether "[i]n a deferral situation like the present case ... is a complaint deemed filed with the ERD on the date that the complainant filed documents with the EEOC that constituted a 'charge' under federal law, or is it deemed filed on the date that the complainant filed documents with the EEOC that would have constituted a 'complaint' under state law?" (¶ 65).
The court declined to answer this question definitively. "We have serious reservations about both Best Buy's and LIRC's proposed interpretation of Wis. Admin. Code § DWD 218.03(5) on the one hand and Ms. Aldrich's on the other hand. We are hesitant to adopt either interpretation when it is difficult to square either with the text of the rule. We are also hesitant to upset, on this record, LIRC's interpretation of the rule in the context of the complex and longstanding worksharing agreement between the EEOC and the ERD" (¶ 82).
Putting aside the first issue, the court took up the second issue, namely, whether issue preclusion barred Aldrich from litigating the timeliness of her state claim with the ERD. "In other words, does the determination of the federal district court that the intake questionnaire filed with the EEOC did not qualify as a 'charge' under federal law preclude Ms. Aldrich (under the doctrine of issue preclusion) from litigating this question anew before the ERD?" (¶ 87). The court held that this issue should be reviewed de novo.
Addressing issue preclusion, the supreme court held that the matter was "actually litigated," which is the first step of an issue-preclusion analysis (see ¶ 99). The second step addresses the "fundamental fairness" of applying issue preclusion. Here the supreme court considered a wide range of factors that affect the fairness determination, emphasizing "intervening contextual shifts" and "public policy" concerns (see ¶113) arising from federal case law developments that came after the district court's decision in this case (see ¶¶ 130, 148) as well as the "unique circumstances" in which Aldrich found herself (see ¶ 139).
The court concluded that "it would not comport with our notion of fundamental fairness if Ms. Aldrich were precluded from relitigating whether her intake questionnaire constituted a 'charge' under federal law" (¶ 148). The court thus remanded the case to LIRC and directed LIRC to remand the case to the ERD for further proceedings (see ¶ 149).
Coverage – Reservation of Rights
Maxwell v. Hartford Union High Sch. Dist., 2012 WI 58 (filed 30 May 2012)
In this important decision, the supreme court held that an insurer's failure to provide a reservation of rights letter did not preclude it from later asserting a coverage defense. Maxwell sued a school district for wages and benefits. The school district turned over the claim to its insurer, Community Insurance Corp. (CIC,) although the district's general counsel remained involved in the litigation for a time. CIC assigned an attorney to represent the district. CIC did not send a reservation of rights letter to the district or its general counsel.
The circuit court granted summary judgment in favor of Maxwell, after which CIC informed the district that it was not liable for any judgment for lost wages or lost benefits under its policy. Litigation over coverage commenced; the district pointed to CIC's failure to provide a reservation of rights letter. The circuit court refused, however, to grant summary judgment to the district on the coverage issue. The court of appeals reversed, holding that long-standing case law "supported an application of waiver or estoppel to preclude the insurer from asserting the policy defense of noncoverage" (¶ 24). See 2010 WI App 128.
The supreme court reversed the court of appeals in a majority opinion written by Justice Prosser. "[T]he issue presented is whether, because CIC failed to issue a reservation of rights letter to its insureds (before or during the time that it provided an unsuccessful defense in the contract suit against them), CIC either waived or may be estopped from asserting its noncoverage defense, thereby requiring CIC to provide insurance coverage that is not in the insurance contract" (¶ 28). The majority opinion canvasses case law dating to the 1890s in support of its holding that such an omission cannot create coverage in a situation in which none existed.
"In this case, CIC provided a defense – fulfilling its duty to defend the District. While the District raised several claims in its third-party complaint against CIC, the issue before this court is whether CIC's failure to send a reservation of rights letter while defending the District is enough, under waiver or estoppel, to prevent CIC from invoking its defense of noncoverage. CIC's failure to issue a reservation of rights letter in this case did not constitute a breach of the duty to defend or bad faith. Thus, CIC did not breach its duties to the District. The exclusion clause relates to the scope of coverage contracted for and is thus not waived by the collateral conduct of the insurer" (¶ 59).
The majority cautioned, however, that forthright communication between the insured and the insurer is essential. "In short, this opinion must not be interpreted as a license for insurers not to communicate forthrightly with their insureds – especially when insurers dispute coverage. It certainly would have been better practice for CIC to send a reservation of rights letter in this case. Its failure to do so has created ill will and completely overshadowed CIC's extensive costs in providing a defense. As CIC conceded in oral argument, this case would not be here if CIC had sent a reservation of rights letter. The lesson here is that CIC could have avoided the costs of this appeal by issuing a reservation of rights letter. A reservation of rights letter can not only head off litigation but also preserve forfeiture defenses at a time when an insurer may not know whether such a defense exists. As we have clearly stated, forfeiture defenses can be waived, because the insured has purchased the coverage the insurer seeks to deny" (¶ 61).
Justice Crooks, joined by Chief Justice Abrahamson and Justice Bradley, dissented. The dissent contended that the majority opinion substantially changes Wisconsin law. "This case illustrates precisely the kind of unfairness that reservation of rights letters are intended to prevent. The majority does away with a perfectly clear and effective rule that was intended to protect insureds without providing any good reason to do so" (¶ 67).
A more accurate statement of the issue, the dissent said, is "whether CIC has waived, or is estopped from asserting, any coverage defense because it controlled the District's defense throughout litigation resulting in an adverse judgment against the District, and only later contested coverage. When the issue is examined in this way, Wisconsin law clearly provides that CIC has waived, or is estopped from asserting, a defense to coverage because it failed to follow the proper procedure for contesting coverage when providing a defense to its insured" (¶ 70).
"The majority concludes that waiver and estoppel may never apply to coverage clauses, because doing so would impermissibly expand coverage. To the contrary, our precedent provides that for certain conduct, applying waiver or estoppel does not expand coverage, but rather provides a just remedy for an insurer's prejudicial actions" (¶ 86).
Waivers – Ex Parte Contacts with Prosecutors
State v. Tyler T., 2012 WI 52 (filed 22 May 2012)
The state filed a delinquency petition against Tyler T., age 15, based on his involvement in a robbery. It also filed a petition asking that Tyler be waived into adult court. The circuit court requested that the Walworth County Department of Health and Human Services (the DHHS) prepare a waiver investigation report. While preparing the report, the prosecutor handling the case met with DHHS staff to discuss the case; neither Tyler nor his attorney was present. The DHHS also obtained information from Tyler's lawyer during "short hallway conversations" (¶ 17). The DHHS report made no formal recommendation on the waiver issue because the DHHS staff did not reach a consensus. Tyler objected to the report based on the prosecutor's ex parte contacts with DHHS employees. The circuit court held a hearing and waived Tyler into adult court, despite observing that it was not a "good idea" for the prosecutor to have such ex parte contacts. The court of appeals affirmed.
The supreme court affirmed the court of appeals in an opinion authored by Justice Ziegler. Tyler contended that the circuit court should have struck the DHHS report based on the prosecutor's ex parte participation (see ¶ 26). The court examined case law involving preparation of presentence investigation reports, which it contrasted with the waiver reports.
"Given the DHHS's role in delinquency proceedings as outlined in Wis. Stat. ch. 938, we do not think that the DHHS's contact with the juvenile and the State must necessarily cease at the preparation of a waiver investigation report. Indeed, in light of the criteria under Wis. Stat. § 938.18(5) that the DHHS is directed to analyze, a waiver investigation report may not be complete unless the DHHS continues to communicate with the juvenile and the State" (¶ 39). Allowing the DHHS to contact the parties (through counsel) thus "effectuates the express objectives" of such waiver reports and chapter 938 (¶ 40).
The court declined to create a bright-line rule precluding the DHHS from contacting the state or the juvenile. "That being said, in the instant case, we share the circuit court's reservations about the DHHS's decision to invite only ADA Wiedenfeld to its final staffing meeting. Inviting only one party to a final staffing meeting creates a perception of imbalanced information, a perception which – like in the instant case – may prove inaccurate. Here, any perceived imbalance caused by ADA Wiedenfeld's participation in the staffing meeting was refuted by the circuit court's uncontroverted findings that ADA Wiedenfeld's presence was not coercive and that positions both in favor of waiver and against waiver were represented" (¶ 41).
Justice Bradley dissented, joined by Chief Justice Abrahamson. They found improper the prosecutor's ex parte contacts with the DHHS and criticized the majority for relying on a "fallacy of false choice instead of squarely addressing the question presented..." (¶ 47). Tyler did not argue that all contact between the DHHS and the parties is prohibited; rather, he objected to the prosecutor's "ex parte advocacy" at the DHHS staff meeting (¶ 51). The dissent also criticized the majority's selection of case law in concluding that waiver reports "are held to a lower standard of objectivity" than presentence reports (¶ 61).
Manufacturer's Affirmative Defense – Definition and Burden of Persuasion
Marquez v. Mercedes-Benz USA LLC, 2012 WI 57 (filed 24 May 2012)
Marquez brought an action against Mercedes-Benz USA and alleged the following: his new car was a "lemon," as defined in Wis. Stat. section 218.0171(2); he had requested a refund and provided Mercedes-Benz with the required notice and information; and Mercedes-Benz failed to provide a refund within the 30-day time limit, as required by section 218.0171(2)(c). It was undisputed that 1) the vehicle at issue was a lemon under the lemon law; 2) Marquez gave Mercedes-Benz proper notice and information to start the time limit during which Mercedes-Benz was required to provide a refund; and 3) Mercedes-Benz did not provide the required refund within the time limit. The issue was whether Mercedes-Benz has a valid defense to its failure to issue a refund within the 30-day statutory period.
The case was tried to a jury, which found in favor of Mercedes-Benz, but the circuit court then entered a directed verdict in favor of Marquez. Mercedes-Benz appealed, and the court of appeals certified the appeal to the supreme court, which granted certification. In a majority decision authored by Chief Justice Abrahamson, the supreme court affirmed the circuit court.
The court's decision focused primarily on a manufacturer's affirmative defense to lemon law liability, a defense that the court of appeals recognized in an earlier appeal in this litigation. In Marquez v. Mercedes-Benz USA LLC, 2008 WI App 70, 312 Wis. 2d 210, 751 N.W.2d 859, the court of appeals held that a consumer who intentionally thwarts a manufacturer's efforts to provide a refund within the 30-day time limit cannot recover the lemon law's statutory remedies provided in Wis. Stat. section 218.0171(7) (see ¶ 13).
In arguments to the supreme court, Mercedes-Benz contended that the affirmative defense also should be available in situations in which the manufacturer proves that the consumer's conduct was unreasonable. The supreme court disagreed and held that "a manufacturer may avoid Lemon Law penalties for failing to provide a refund within the 30-day statutory period if it proves that the consumer intentionally prevented the manufacturer from providing a refund within the 30-day statutory period" (¶ 33) (emphasis added).
As for the manufacturer's burden with respect to this affirmative defense, the supreme court held that "[t]he manufacturer must meet the middle burden of proof in its affirmative defense that a consumer intentionally prevented it from providing a refund within the 30-day statutory period under the Lemon Law" (¶ 10). This is often referred to as the "clear and convincing" burden. "To meet the middle burden in Wisconsin, a party must convince the jury to a reasonable certainty by evidence that is clear, satisfactory, and convincing" (¶ 36).
The supreme court further concluded that, on the facts of this case, the circuit court was not clearly wrong in directing the verdict in favor of Marquez because no credible evidence was presented at trial that supported a finding of intentional conduct or from which a jury reasonably could have inferred that Marquez intentionally thwarted the manufacturer's efforts to provide a refund (see ¶ 50).
Lastly, the supreme court held that the circuit court did not erroneously exercise its discretion by denying Mercedes-Benz's request for an adjournment on the morning of trial or by denying Mercedes-Benz the opportunity to call Marquez's attorney to testify (see ¶ 122). As for the latter, Mercedes-Benz "did not present the circuit court with a clear argument why [the plaintiff's attorney's] testimony would have probative value" (¶ 120).
Justice Roggensack filed an opinion concurring in part and dissenting in part.
Mental Health Commitments
Alzheimer's Disease – Wis. Stat. chapter 51
Fond du Lac Cty. v. Helen E.F., 2012 WI 50 (filed 18 May 2012)
At the time of this litigation, Helen E.F. (Helen) was in her mid-80s and had resided in a nursing home for several years. She has been diagnosed with Alzheimer's disease based on symptoms including loss of memory and an inability to learn new information. In April 2012, after exhibiting symptoms of aggression and agitation, Helen was taken to a hospital emergency room. A police officer placed her in a locked behavioral unit at the hospital under authority of the emergency detention procedures of Wis. Stat. section 51.15, and Fond du Lac County (the county) then initiated a chapter 51 placement proceeding. At the probable cause hearing, a court commissioner converted the chapter 51 commitment to a Wis. Stat. chapter 55 protective placement action and ordered Helen committed under chapter 55.
On the day the 30-day protective placement ended, the county filed a second chapter 51 petition. At the final commitment hearing, the court ordered Helen committed to a locked psychiatric unit for up to six months, pursuant to Wis. Stat. chapter 51. The court of appeals reversed, holding that a chapter 51 commitment was inappropriate because Alzheimer's disease cannot be treated. See 2011 WI App 72.
The supreme court affirmed the court of appeals in an opinion written by Justice Gableman. "Wis. Stat. ch. 55 provides Helen with the best means of care. This is so because ch. 55 was specifically tailored by the legislature to provide for long-term care of individuals with incurable disorders, while ch. 51 was designed to facilitate the treatment of mental illnesses suffered by those capable of rehabilitation" (¶ 13). The opinion provides an overview of both the scope of and the procedures governing chapter 51 and chapter 55 proceedings. Although similar in some ways, chapter 51 and chapter 55 "serve substantially different purposes" (¶ 21).
In emphasizing their differences, the supreme court focused on placement, guardian ad litem provisions, and the distinction between rehabilitation and long-term care. "In sum, Wis. Stat. ch. 55, unlike ch. 51, is better suited for Helen's situation because her Alzheimer's [d]isease is not treatable. Because ch. 55 provides additional processes and protections for Helen, it is better suited to her needs and those of the County. Accordingly, the circuit court was in error to proceed under ch. 51 and the court of appeals was correct to reverse and remand. We therefore must affirm" (¶ 41).
Chief Justice Abrahamson, joined by Justice Bradley, concurred but wrote separately to address the problems created by the "substantial overlap and similarity" between chapter 51 and chapter 55 despite their "ostensibly ... different purposes" (¶ 45). According to the concurrence, the majority opinion poses problems in situations in which people meet the criteria for both chapter 51 commitments and chapter 55 placements. Moreover, the majority opinion creates tension between an approach that focuses on symptoms exhibited by a class of persons (all individuals with Alzheimer's disease) and an approach that considers the conduct and symptoms of a particular individual (Helen)(see ¶ 47). "Although I agree with the result reached in the majority opinion, I am concerned that the opinion may have broad, unforeseen implications for many people who fall within the scope of Chapters 51 and 55 and for local governments" (¶ 55).
Justice Prosser did not participate in this decision.
Independent Physician Appointed to Examine Worker's Compensation Applicant – No Statutory or Constitutional Right to Cross-Examine Independent Physician
Aurora Consolidated Health Care v. LIRC, 2012 WI 49 (filed 11 May 2012)
The Labor and Industry Review Commission (LIRC) determined that Jeffrey Schaefer was permanently and totally disabled as a result of a work injury. LIRC made this determination after denying the last-minute request of his former employer, Aurora Consolidated Health Care (Aurora), to cross-examine or make further inquiries of Dr. Jerome Ebert, a physician appointed by the Department of Workforce Development (DWD) to examine Schaefer and report on the cause of his disability.
Aurora filed a complaint in circuit court seeking review of LIRC's decision. Aurora asserted that it had a statutory and a due process right to cross-examine Ebert, and that LIRC erroneously exercised its discretion when it declined Aurora's request for a remand for that purpose. The circuit court affirmed LIRC's decision, as did the court of appeals. See 2010 WI App 173. In a majority decision authored by Justice Bradley, the supreme court affirmed.
Wisconsin Statutes section 102.17(1)(g) provides that "[w]henever the testimony presented at any hearing indicates a dispute or creates a doubt as to the extent or cause of disability ..., the department may direct that the injured employee be examined, ... by or from an impartial, competent physician, chiropractor, dentist, psychologist or podiatrist designated by the department who is not under contract with or regularly employed by a compensation insurance carrier or self-insured employer...." The statute provides further that this examining health-care provider (the independent physician) must submit a written report and the parties must be given an opportunity to "rebut" that report. Aurora argued that its right to rebut the independent physician's report includes the right to do so through cross-examination of the independent physician.
The supreme court observed that rebut is "a general term, and it could encompass many different strategies employed by attorneys to undermine the credibility of an independent physician's report. For example, a party might rebut the conclusion of a report by pointing to internal inconsistencies, by presenting contrary opinions, or by introducing additional evidence, such as surveillance videos, that undermine the credibility of the report. It is not clear that the legislature intended to provide an absolute right to cross-examine the independent physician just because it provided the parties an opportunity to rebut the independent physician's written report" (¶ 57).
"Because it did not specify the right to cross-examination, it appears the legislature left to the [DWD]'s discretion whether to allow cross-examination in circumstances where it might provide relevant and probative evidence" (¶ 62). Accordingly, Wis. Stat. section 102.17(1)(g) does not provide an absolute right to cross-examine the independent physician (see ¶ 65).
The court further concluded that LIRC did not violate Aurora's due process rights when it declined to remand this case for cross-examination of Ebert. In an administrative proceeding, the ultimate test to determine whether due process of law has been accorded a party is the presence or absence of fair play. Prior cases have determined that there are three elements of fair play in an administrative proceeding: "(1) the right to seasonably know the charges or claims preferred; (2) the right to meet such charges or claims by competent evidence; and (3) the right to be heard by counsel upon the probative force of the evidence adduced by both sides and upon the law applicable thereto" (¶ 71).
In this case, "there is no dispute that Aurora was seasonably informed of Schaefer's claims and that it was represented by able counsel. Additionally, Aurora had ample opportunity to present competent evidence about the cause and extent of Schaefer's disability, and it was represented by competent counsel who made compelling arguments about the force of the evidence adduced by both sides" (¶ 72).
Justice Prosser did not participate in this decision. Justice Roggensack filed a dissenting opinion.