Vol. 85, No. 8, August 2012
Jury Trial – Fraud – Deceptive Practices – Verdicts
State v. Abbott Labs., 2012 WI 62 (filed 22 June 2012)
The state of Wisconsin sued the Pharmacia Corp. for Medicaid fraud and deceptive-trade practices, alleging Pharmacia had reported inflated drug prices. A jury found in the state's favor on both claims. It awarded damages of more than $9 million, which the trial judge reduced in postverdict proceedings because the evidence supported only 4,600 violations, not the 1.4 million found by the jury. Both parties appealed, and the court of appeals certified the case to the supreme court.
The supreme court affirmed in an opinion authored by Justice Gableman. First, the court upheld the state's right to a jury trial on both claims. The court separately analyzed the deceptive-trade claim and the fraud claim under the prevailing historical test: was the claim recognized at common law in 1848 and was it regarded as "at law" in 1848? The court analogized the deceptive-trade claim to the common law claim of "cheating"; although the two claims differed somewhat, the divergence was not significant enough to eliminate the right to a jury trial (see ¶ 39). The Medicaid fraud claim was sufficiently similar to common law fraud (see ¶ 48). The opinion elaborates on the court's historical analysis.
Second, the court rejected Pharmacia's contention that the jury's findings were impermissibly speculative. The opinion reviews the conflicting evidence about pricing, compensation, and the brand name- and generic-medication markets, finding that the verdict was reasonably supported by the evidence.
"In sum, with respect to both generic and brand name drugs, Pharmacia sought to convince the jury that Medicaid knew it was paying pharmacies more than the pharmacies were themselves paying. It ably made that case at trial, placing its evidence in the most convincing light possible. Nevertheless, it lost the battle and the jury credited contrary evidence suggesting that the inflated AWPs [average wholesale prices] injured the state by causing it to overpay for the drugs. That evidence also supported the reasonable inference that Wisconsin, if it had been equipped with actual wholesale prices for both brand name and generic drugs, would have paid Pharmacia in those amounts. In such circumstances, we are not permitted to substitute our judgment for that of the jury, and we therefore uphold its damage award" (¶ 81).
Third, the trial judge properly reduced the number of Medicaid fraud violations found by the jury from 1.4 million to 4,600. In so doing, the circuit court complied with the 90-day provision of Wis. Stat. section 806.16(3) when it vacated the verdict answer within that time frame but determined the factually correct number after the 90-day period expired. The supreme court found "absurd" Pharmacia's contention that the number of violations should be left at zero because only the vacature occurred within the 90-day period (see ¶ 91).
Finally, the trial judge correctly found the number of violations to be 4,600 based on the evidence. The jury was properly instructed on the law but was misled by the state's contention that a separate violation occurred each time Medicaid overpaid for a drug (1.4 million times). The trial record showed that the violations occurred only when inflated values were given to Medicaid for purposes of reimbursement (4,600 times) (see ¶¶ 106, 109).
Justice Bradley, Justice Crooks, and Justice Prosser did not participate in this decision.
Interference with Custody – Multiplicity – Mug Shots – Stun Belts
State v. Ziegler, 2012 WI 73 (filed 3 July 2012)
A jury convicted Ziegler of multiple charges relating to sexual misconduct with children. One count charged him with interference with a child's custody, contrary to Wis. Stat. section 948.31. The court of appeals certified Ziegler's appeal to the supreme court chiefly to determine whether State v. Bowden, 2007 WI App 234, 306 Wis. 2d 393, 742 N.W.2d 332, correctly stated the law.
The supreme court affirmed the convictions in an opinion written by Justice Ziegler. First, Bowden was wrongly decided. Bowden held that the "third method" of interference contemplated by section 948.31(2) "focuses on the presence of the child's parents," requiring proof that the person who took the child has the parents' initial permission to do so.
"[T]he court of appeals' interpretation of the phrase 'withholds a child for more than 12 hours from the child's parents' in Wis. Stat. § 948.31(2), as set forth in Bowden, is contrary to the plain language of the statute. We therefore withdraw from Bowden any language that suggests that § 948.31(2) requires the State to prove that the defendant had the parents' 'initial permission' to take the child. The remainder of Bowden retains its precedential value" (¶ 54). Sufficient evidence supported the jury's finding that Ziegler violated the statute, as correctly construed (see ¶ 55).
The defendant also argued that five of his sexual assault convictions were impermissibly multiplicitous. The court rejected this argument as well. Although the five offenses were identical in law, they differed in fact and thus constituted five separate crimes (see ¶ 67). The factual differences, which involve the details of Ziegler's sexual misconduct, are summarized at paragraph 73.
The court also held that cumulative punishment for these offenses was intended by the legislature. "Each act of sexual contact and sexual intercourse, while proscribed by the same statute and perpetrated against the same victim on the same evening, resulted in a new and different humiliation and danger on the part of a child. Indeed, it is hard to imagine a series of acts that is more appropriately subject to cumulative punishments" (¶ 77).
The state's use of the defendant's mug shot was also appropriate. Ziegler's appearance had changed since his arrest such that one victim did not recognize him in court. The victim did, however, identify his mug shot, which in turn was authenticated by a police officer. The mug shot was never shown to the jury (see ¶ 80). (The court also rejected the argument that the in-court use of the mug shot constituted an impermissible "show up" identification procedure (see ¶ 81).)
Finally, the circuit court properly ordered the defendant to wear a stun belt during trial. The record reflected that the stun belt was not "visible" to the jury (see ¶ 86).
Chief Justice Abrahamson concurred in part and dissented in part, joined by Justice Bradley. The dissent disagreed with the overruling of the language in Bowden, which, it contends, results in an unreasonable interpretation of section 948.31(2) (see ¶ 135).
Sentencing – Conditions of Extended Supervision – Battery to Peace Officer – "Acting in Official Capacity" Element
State v. Rowan, 2012 WI 60 (filed 8 June 2012)
This case was before the supreme court on certification from the court of appeals. The defendant, Rowan, was convicted of battery to a peace officer, obstructing an officer, carrying a concealed weapon, and operating while intoxicated (OWI). The first certified question concerned a condition imposed as part of the extended-supervision component of the defendant's bifurcated sentence, which she argued is overly broad and violative of her constitutional rights. The certification asked the supreme court to determine "whether a sentencing court violated the Fourth Amendment [to the United States Constitution] or Wis. Const. art. I, § 11, by setting a condition of extended supervision that allows any law enforcement officer to search the defendant's person, vehicle, or residence for firearms, at any time and without probable cause or reasonable suspicion" (¶ 1).
In a unanimous decision authored by Justice Crooks, the supreme court affirmed. It noted several facts that were important to the circuit court in imposing the above condition on Rowan's extended supervision. Rowan's arrest and convictions resulted from an incident on March 13, 2008, during which a police officer observed Rowan drive erratically, run a stop sign, and crash into a pole. Rowan appeared intoxicated and agitated. She cursed emergency responders and asked them where her gun was while reaching toward the floor of her car. Police later discovered a semiautomatic handgun and ammunition on the floor of the driver's side of Rowan's car. Rowan was taken to the hospital for medical treatment and a blood draw and then was arrested. At the hospital, Rowan was combative, cursing, spitting, and grabbing medical staff. She threatened to kill the officers and medical staff in the emergency room and also threatened to kill their families. Rowan resisted a police officer who tried to restrain her and seriously injured the officer's hand.
The circuit court considered the nature of Rowan's crime – involving violence, threats, and a firearm – and Rowan's conduct before and during the trial. "The court stated, 'The scope of persons that she threatened was quite expansive and shows at least at that point an unusual level of risk to the public while she was in this mind set.' Further, the court noted that Rowan was charged in a separate case with threatening a judge. There was also testimony from a gun shop owner that Rowan had purchased several guns after the March 13, 2008, incident at issue and before she was sentenced. In prescribing the search condition, the circuit court relied on these facts that reflect Rowan's history of violence and threats, which often involved firearms" (¶ 3).
The supreme court concluded that "while the condition that the circuit court imposed on Rowan's extended supervision 'may impinge on constitutional rights,' it does not violate them. The supervision condition imposed in this case does not violate Rowan's constitutional rights because the circuit court made an individualized determination, pursuant to the circuit court's authority under Wis. Stat. § 973.01(5), that the condition was necessary based on the facts in this case – involving violence, threats, and a firearm. It conforms with the applicable two-part test –that it is 'not overly broad' and that it is 'reasonably related' to Rowan's rehabilitation" (¶ 25).
The second question presented by this case involved the sufficiency of the evidence in regard to Rowan's conviction for battery to a police officer. One of the elements of this crime is that the officer who is the victim was "acting in an official capacity" at the time of the battery. Rowan argued that the evidence was insufficient on that element, because the evidence showed that the officer was assisting a nurse who was performing a medical procedure, which she claims is not what the officer is employed to do. The state responded that in restraining a combative person who was under arrest, the officer was "acting in an official capacity" at the time of the injury.
Said the supreme court, "[t]he jury heard that the officer was dispatched to the hospital by her employer; that she assisted fellow officers and medical staff with Rowan, a combative suspect who was under arrest for drunk driving; and that Rowan was at the hospital for a blood draw, without her consent, as part of the investigation of a crime. Given the standard of review that governs this challenge, we are satisfied that the evidence presented to the jury, 'viewed most favorably to the state and the conviction,' is not 'so lacking in probative value and force that no trier of fact, acting reasonably, could have found guilt beyond a reasonable doubt'" (¶ 26) (citation omitted).
Withdrawal of Guilty Plea After Imposition of Sentence – Manifest Injustice
State v. Cain, 2012 WI 68 (filed 28 June 2012)
Defendant Cain entered a no-contest plea to a charge of manufacturing tetrahydrocannabinol (THC) in an amount of more than 200 grams but not more than 1,000 grams, or more than four plants containing THC but not more than 20 plants containing THC, in violation of Wis. Stat. section 961.41(1)(h)2. At the plea hearing he told the court that he had four plants in his house. Following sentencing, the defendant moved to withdraw his no-contest plea. His motion stated that he did not admit to having more than four marijuana plants at the time of the plea colloquy; instead, the motion asserted that he admitted to having only four plants. The circuit court denied the motion and, in an unpublished decision, the court of appeals affirmed. In a majority decision authored by Justice Gableman, the supreme court affirmed the court of appeals.
The issue presented by this case was whether Cain should be allowed to withdraw his no-contest plea to correct a manifest injustice. In essence, Cain's argument was that he did not personally enter or ratify the no-contest plea, which would be a basis for a finding of manifest injustice entitling him to withdraw the plea after sentencing. Said the supreme court, "[Cain] is essentially contending that he did not plead at all, in the sense that he did not admit to the manufacture of more than four marijuana plants" as charged in the information (¶ 27). Cain further contended that the supreme court's review of the record should be limited to the plea hearing alone.
The supreme court first concluded that its review properly includes the entire record from the circuit court (see ¶ 29). When examining that entire record, the court determined that Cain did personally enter or ratify his plea of no contest to the charged offense. Even though Cain stated at the plea hearing that he had only four plants, his attorney stipulated to the facts contained in the criminal complaint as a factual basis for the plea; the complaint stated that law enforcement officers found 16 marijuana plants in Cain's workshop.
At the sentencing hearing, Cain, again with his attorney present, was given the opportunity to contest the presentence investigation report (PSI), which stated that law enforcement officers had discovered 16 marijuana plants in Cain's workshop. Cain did not contest the accuracy of the PSI. In fact, later at the sentencing hearing, Cain's attorney asked the court to "consider this particular infraction, even with the 16 plants, as on the lower end of this continuum of [C]lass H felonies" (¶ 35) (emphasis added by supreme court).
Said the court, "[t]his statement was not qualified as being merely what the State alleged, but rather constitutes an endorsement of what was recited both in the criminal complaint as well as in the PSI. The record indicates no objection from Cain" (id.). The record further showed that Cain admitted at his sentencing hearing that there were five plants in his house (see ¶ 29).
In sum, "Cain's statements and actions, when viewed in the totality of the circumstances, demonstrate that he personally entered and ratified his plea of no contest. The facts contained in the record indicate that Cain was well aware that he was pleading to the offense of manufacturing more than four marijuana plants, and that he did not maintain that he had four or fewer marijuana plants. Accordingly, we conclude that given the totality of the circumstances, Cain has not met the burden of showing by clear and convincing evidence that allowing the withdrawal of his no contest plea is necessary to correct a manifest injustice" (¶ 37).
Chief Justice Abrahamson filed a concurring opinion.
Terry Stops – Reasonable Suspicion – Informant's Tip
State v. Miller, 2012 WI 61 (filed 12 June 2012)
The circuit court denied a motion by defendant Miller to suppress physical evidence (marijuana, cocaine, a digital scale, and cash) and his statement in which he admitted using heroin the morning of the day on which police made an investigatory stop of a car Miller was driving. The sole issue on appeal was whether information provided to police from several informants and police corroboration of the information provided the requisite reasonable suspicion for the investigatory stop. In a summary disposition, the court of appeals affirmed. In a unanimous decision authored by Justice Crooks, the supreme court affirmed the court of appeals.
Officers with the Marinette County Sheriff's Department stopped a black Ford Explorer that Miller was driving on suspicion that Miller was engaged in a drug-related crime. Before the stop, the police had received information from several informants indicating that Miller was involved in selling drugs. Initially, police officers were unable to corroborate information from two sources of limited reliability (an inmate awaiting revocation of his supervision and anonymous tips from Crime Stoppers).
Police officers later received information from an informant who wished to remain anonymous but who provided his cellphone number and first name to Deputy Berlin. The informant also risked disclosing his identity to police by contacting Deputy Berlin through one of Deputy Berlin's confidential informants. The information provided by this final informant, including police corroboration of some details and predictions in the tips, along with information from the prior tips, led police to conduct an investigatory stop of the vehicle that Miller was driving.
This decision contains a very useful summary of the many cases dealing with the use of informants' tips in the formulation of the reasonable suspicion necessary to support an investigative stop. Applying that substantial body of case law, the court concluded that "under the totality of the circumstances police acted reasonably when they conducted an investigatory stop of the vehicle Miller was driving based on reasonable suspicion 'that criminal activity may be afoot.' We are confident that police had the requisite reasonable suspicion primarily based on the reliability of the final informant and the information provided by him. Such information was supported by the prior tips to police. We note that while the initial tips were of limited reliability, the final informant and his tips had significant indicia of reliability because the informant provided self-identifying information that made him more reliable than a truly anonymous informant. Additionally, the final informant provided details and accurate future predictions that police were able to corroborate" (¶ 59).
Ambiguity – Umbrella – Uninsured Motorist Coverage
Wadzinski v. Auto-Owners Ins. Co., 2012 WI 75 (filed 5 July 2012)
Wadzinski was killed in a collision involving an uninsured motorist in 2006. Auto-Owners Insurance Co. paid his estate the limits of its commercial automobile policy's uninsured motorist (UM) coverage, $150,000. It refused to pay an additional $2 million of UM benefits under an executive umbrella policy. The estate sued the insurer. The circuit court granted summary judgment in favor of the insurer, finding that the umbrella policy provided only third-party liability coverage and no first-party coverage. In a published decision, the court of appeals reversed. See 2011 WI App 47. It found the policy contextually ambiguous and ruled that a reasonable insured could expect $2 million in UM coverage.
The supreme court reversed the court of appeals in an opinion written by Justice Roggensack. "The sole question for review is whether a reasonable insured would read the Executive Umbrella insurance policy at issue here to afford $2,000,000 of uninsured motorist (UM) coverage" (¶ 1). The opinion traverses the case law governing coverage issues. The court concluded "that the Executive Umbrella policy's grant of coverage provides only one type of coverage: excess third-party liability coverage. Read in context, neither the exclusion of first-party coverage nor its exception that reaffirms Auto-Owners' underlying obligations can be read to rewrite the umbrella policy's unambiguous grant of third-party coverage" (¶ 39).
Justice Bradley dissented, joined by Chief Justice Abrahamson. The majority, they contended, adopted a "novel approach" to insurance coverage issues. "Its approach is erroneous because it: (1) evinces a misunderstanding of how policies are written; (2) is inconsistent with how courts heretofore have approached the interpretation of policies; and (3) is based on a nonsensical premise that an endorsement in an umbrella policy could ever negate coverage in an underlying policy" (¶ 43). The dissent concluded the policy was contextually ambiguous, "at the very least," and should be construed in favor of coverage.
Motor Vehicle Law
OWI – Implied-Consent Law – Issues at Refusal Hearing
State v. Anagnos, 2012 WI 64 (filed 26 June 2012)
Following an early morning (1:15 a.m.) arrest for operating while intoxicated (OWI), the defendant refused to submit to a chemical test. In the implied-consent-refusal hearing that followed, the circuit court determined that the traffic stop of the defendant's vehicle was unconstitutional and that the defendant's operating privileges should not be revoked on account of his refusal to take a chemical test. In a published decision, the court of appeals affirmed. See 2011 WI App 118. In a decision authored by Justice Bradley, the supreme court reversed.
One of the statutorily specified issues at a refusal hearing is "whether the officer had probable cause to believe the person was driving or operating a motor vehicle while under the influence of alcohol … and whether the person was lawfully placed under arrest for violation of [an OWI-related statute]." See Wis. Stat. § 343.305(9)(a)5.a.
The issue before the supreme court was whether under this statute the defendant may contest the constitutionality of the officer's initial decision to conduct a traffic stop. The state argued that the statute limits the defendant to contesting whether there was probable cause to believe that he or she was operating under the influence of an intoxicant based on all the information the officer had gathered during a traffic stop and up until the moment of the arrest.
The supreme court concluded that "Wis. Stat. § 343.305(9)(a)5.a. does not limit the defendant to contesting whether the officer had probable cause to believe the defendant was operating while under the influence of an intoxicant. The language of the statute provides that a defendant may also contest whether he was lawfully placed under arrest. As part of this inquiry, the circuit court may entertain an argument that the arrest was unlawful because the traffic stop that preceded it was not justified by either probable cause or reasonable suspicion" (¶ 4).
[Editors' Note: In a footnote, the court observed that "[t]he parties did not make any arguments about what preclusive effect, if any, a determination in a refusal hearing that the person was not lawfully placed under arrest would have in a subsequent prosecution for OWI. Accordingly, we do not address that question" (¶ 25 n. 7).]
The court went on to conclude that the deputy sheriff who stopped the defendant had reasonable suspicion to do so, even though (as the circuit court determined) he did not observe the defendant violate any law. The defendant's actions of driving over a slightly elevated median, "though arguably not illegal, would encourage a reasonable officer to further monitor the driver" (¶ 57). The defendant's subsequent actions – twice accelerating rapidly (but not to the point of speeding) and turning without signaling (though not illegal because no traffic was affected thereby) – "could confirm to a reasonable officer that there was cause for suspicion," a suspicion that would "reasonably be heightened by the officer's experience that he is more likely to encounter impaired drivers at 1:15 in the morning" (¶ 58).
These facts, as articulated by the deputy, "lead to a reasonable suspicion that the driver of the vehicle made a series of unusual and impulsive driving choices, suggestive of impairment" (¶ 56). When considering the totality of the facts and circumstances, taken together with rational inferences from those facts, the supreme court concluded that the deputy had reasonable suspicion for an investigative stop of the defendant (see ¶ 60).
Justice Ziegler, together with Justice Roggensack and Justice Gableman, joined the majority opinion but wrote separately in concurrence.
Justice Crooks and Justice Prosser did not participate in this decision.
Public Records Law
Requests – Expenses – Redaction
Milwaukee Journal Sentinel v. City of Milwaukee, 2012 WI 65 (filed 27 June 2012)
The Journal Sentinel newspaper sought various arrest records from the Milwaukee Police Department. The city complied with some requests but when the newspaper requested more voluminous records, the city demanded advance payment to cover its expenses for redaction of confidential information, which in one instance exceeded $3,000. The newspaper declined to pay and began this action, in which the newspaper asked the court to order the city to release the records without prepayment of fees for redaction. The circuit court ruled in favor of the city, finding that the newspaper must cover the costs of redaction as well as copying the documents.
The supreme court granted a petition to bypass the court of appeals and reversed the circuit court in an opinion written by Chief Justice Abrahamson. "The issue presented is whether an authority may impose a fee on a requester of a public record for the actual, necessary, and direct costs incurred by the authority (including staff time) of deleting nondisclosable information included within the responsive records. We conclude that it may not" (¶ 1).
"This case is not about a direct denial of public access to records, but the issue in the present case directly implicates the accessibility of government records. The greater the fee imposed on a requester of a public record, the less likely the requester will be willing and able to successfully make a record request. Thus, the imposition of fees limits and may even serve to deny access to government records. In interpreting the Public Records Law, we must be cognizant that the legislature's preference is for 'complete public access' and that the imposition of costs, as a practical matter, inhibits access" (¶ 5).
The parties agreed that the deletions were necessary and the expenses sought by the city were reasonable and in good faith. Nonetheless, neither the text of the Public Records Law nor its underlying policy authorized compensation for time spent redacting the records. The legislature contemplated that agencies would have to spend time and resources deleting and redacting records (see ¶ 21). The supreme court parsed the text of Wis. Stat. section 19.35, which authorizes fees for reproduction and transcription, photographing and photographic processing, locating records, and mailing or shipping copies. Redactions did not fall into any of these carefully delineated categories (see ¶ 33).
"If the legislature had wanted to allow an authority to impose fees for a broad range of tasks, or if it had wanted to include the task of redaction as a task for which fees may be imposed, it would have said so. It did not. The most reasonable way to interpret the Law is to say that the legislature intended an authority to impose fees only for the tasks specified in the Law. As the court is fond of saying in statutory interpretation cases, if the legislature had intended to accomplish what a party is urging on the court (like allowing an authority to impose fees for redacting records), the legislature knew how to draft that language and could have done so had it wished" (¶ 36). Nor was an "unnatural or creative reading" of the statute required to further the public policy at stake (see ¶ 3).
Finally, the court distinguished language in two prior cases that the city relied on to support its position. "We take this opportunity to clarify that neither of the cases in question intended to expand or did expand the scope of allowable fees beyond those provided in the statute" (¶ 44).
Justice Prosser wrote a separate concurring opinion to emphasize that the legislature should revisit the Public Records Law with an eye toward protecting taxpayers (see ¶ 63). Justice Roggensack also concurred in an opinion joined by Justice Prosser, Justice Ziegler, and Justice Gableman. "The lead opinion's decision today is driven by those policies that the legislature articulated in the Public Records Law. However, the statutes enacted to further those policies indicate that the legislature did not anticipate voluminous public record requests such as those that the Journal Sentinel and others have made recently" (¶ 74).
Sexually Violent Persons Law
Wis. Stat. Chapter 980 – Proceeding with Commitment After Revocation of Parole or Extended Supervision
State v. Gilbert, 2012 WI 72 (filed 29 June 2012)
These consolidated appeals from a published decision of the court of appeals (see 2011 WI App 61) involve Wisconsin's Sexually Violent Persons Law (Wis. Stat. ch. 980). The issue before the supreme court was whether chapter 980 requires the dismissal of a pending commitment petition when the individual subject to the petition is reincarcerated because of the revocation of parole or extended supervision.
In a majority decision authored by Justice Gableman, the court held that the controlling statutes allow a chapter 980 commitment petition to proceed normally after parole or extended supervision has been revoked (see ¶ 22). Said the court, "[w]e conclude that ch. 980 does not require … dismissal [of the commitment petition] because it: 1) does not contain language allowing for dismissal in this case; 2) does not set a time period for execution of a commitment order; and 3) states that an individual may be simultaneously committed under ch. 980 and incarcerated at a DOC facility" (¶ 28). Although chapter 980 does require commitment to the custody of the Department of Health Services "for control, care and treatment," it does not require an immediate execution of the commitment order in situations in which parole or extended supervision has been revoked (see ¶ 48).
Justice Bradley filed a dissenting opinion that was joined in by Chief Justice Abrahamson.
Collateral Source – Medical Malpractice – Jury Instructions
Weborg v. Jenny, 2012 WI 67 (filed 28 June 2012)
The plaintiffs brought this medical malpractice action against physicians following a man's death from heart disease. The jury heard evidence that the deceased's widow received life insurance proceeds of more than $1 million and Social Security benefits. The judge also instructed the jury that it was bound by the experts' testimony on the standard of care. The jury returned a verdict in favor of the defendant physicians. In an unpublished opinion, the court of appeals affirmed.
The supreme court affirmed in an opinion authored by Justice Ziegler. First, the court addressed the application of the collateral source rule in medical malpractice cases. Case law held that by operation of Wis. Stat. section 893.55(7), evidence concerning third-party payments (collateral sources) is admissible in medical malpractice cases despite the general rule barring collateral-source evidence in other tort actions (see ¶ 48). Such evidence must, however, be relevant; it is not automatically admissible. The circuit court erred when it admitted testimony concerning the life insurance payout and the Social Security payments without assessing the relevancy of this evidence (see ¶ 66). Nonetheless, the supreme court held that the circuit court's error was harmless, the lead opinion emphasizing the trial's length and the scant use made of this evidence.
The second issue concerned the circuit court's (erroneous) modification of the standard jury instruction on expert testimony, Wis. J.I. – Civil 260. "The circuit court modified Wis JI – Civil 260 by adding the following emphasized language: 'You are not bound by any expert's opinion, except with regard to the standard of care exercised by medical doctors.' (Emphasis added)" (¶ 71). This was error.
"It is true, as the physicians point out, that Wis JI – Civil 1023 instructs that the standard of care exercised by medical doctors must be determined from expert testimony. See Wis JI – Civil 1023 (providing that the standard of care exercised by medical doctors 'is within the special knowledge of experts in the field of medicine and can only be established by the testimony of experts'). However, that the jury must determine the standard of care from expert testimony does not mean that the jury is bound by any one expert's opinion on the standard of care. Rather, by evaluating the qualifications and credibility of each expert, the jury may still accept one expert's opinion on the standard of care over another's. Because the modified jury instruction suggested otherwise, we conclude that the instruction was an incorrect statement of the law" (¶ 73). This error too, however, was harmless.
Chief Justice Abrahamson, joined by Justice Bradley, concurred in part and dissented in part. The dissent contended that the erroneous admission of the collateral-source evidence was not harmless, particularly in light of the large life insurance payout. Such evidence opened the way for emotions to color the jury's assessment of liability (see ¶ 86).
Damages – Indemnification – Attorney Fees
Estate of Kriefall v. Sizzler USA, 2012 WI 70 (filed 29 June 2012)
This litigation arises from episodes of E. coli contamination at Sizzler restaurants in 2000, which killed one young girl and seriously sickened other people. Before trial, the plaintiffs settled for approximately $14 million; one group of plaintiffs received $10.5 million and another got $3.5 million. The case was then tried to determine liability among the defendants – Sizzler USA; the meat processor, Excel; the Sizzler franchisee, E&B; and their insurers. The jury found that Excel was 80 percent liable, E&B was 20 percent liable, and Sizzler was not liable. The circuit court apportioned liability for the settlement amounts among the various parties based on this determination and the welter of contractual relationships. In a published decision, the court of appeals reversed in part and affirmed in part. See 2011 WI App 101.
The supreme court affirmed the court of appeals in an opinion written by Justice Roggensack. The court's analysis is grounded in the complex contractual relationships among the defendants. Because the opinion is so fact intensive, only a brief summary of the issues is practicable. The court's summary of its holdings is succinctly set forth in paragraph 81 of the lead opinion.
The first issue concerned whether a limitations-of-damages provision in a continuing guaranty barred Sizzler from recovering consequential damages for Excel's breach of implied warranties of merchantability and fitness (see ¶ 17). This involved two contracts plus provisions of the Uniform Commercial Code (UCC). The court held that one contract, the "guaranty," lacked the requisite specificity to exclude or modify the implied warranties of Wis. Stat. chapter 402 (part of the UCC) found in a second contract ("the Boxed Beef contract") (¶ 32).
The court then took up indemnification (equitable and contractual), contribution, and subrogation. Equitable indemnification permitted Sizzler to shift its payment burden to Excel (see ¶ 47). Contractual indemnification meant that E&B may recover from Excel 80 percent of the $3.5 million it paid into the settlement pool (see ¶ 63). The court also considered indemnification and subrogation issues as between E&B and another insurer (Federal), finding E&B had no contractual right to indemnification for the $1 million paid by Federal (see ¶ 68).
The collateral source had no impact on the apportionment of liability between the tortfeasors, namely, E&B and Excel: "The collateral source rule has never been applied to benefit a tortfeasor, and the policies that underlie the collateral source rule support its use to benefit only injured plaintiffs. E&B is a tortfeasor, as is Excel. Neither one is an injured plaintiff whose damages have been supplemented by payments received from one who is not a tortfeasor" (¶ 70).
Finally, Sizzler was not entitled to attorney fees under an exception set forth in Weinhagen v. Hayes, 179 Wis. 62, 190 N.W. 1002 (1922), which applies to "an innocent party, wrongfully drawn into litigation with a third party" (¶ 73). "Accordingly, we conclude that Sizzler has not stated a claim for attorney fees under the Weinhagen exception to the American Rule because Sizzler has not demonstrated that Excel engaged in wrongful conduct as to Sizzler. Sizzler's role in this litigation began as a party potentially liable for the claims of the plaintiffs who were injured by the E. coli contaminated meat Excel sold in Sizzler's franchised restaurants. Sizzler was not an unrelated, third party, notwithstanding the jury's ultimate apportionment of fault. Therefore, Sizzler may not look to Excel or any other party to recover the attorney fees that Sizzler incurred defending against the plaintiffs' tort claims in these consolidated cases" (¶ 80).
Chief Justice Abrahamson, joined by Justice Bradley, concurred in part and dissented in part. The dissent centered on the resolution of the fourth issue, involving "indemnification reduction." The dissenting justices contended that the majority misinterpreted a "hold harmless agreement" (¶ 100) and erred when it held that the collateral source rule was inapplicable – Excel should not be relieved from paying for its damages simply because E&B "had the foresight to voluntarily pay premiums over the years in order to maintain insurance" (¶ 107).