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News & Pubs Search

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Format: MM/DD/YYYY
  • Members Only

    If you have moved, become a partner or an associate, or received a promotion or an award, let us know.
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    New Hires, Promotions, Partners

    Erika Bierma, Creighton 2003, has joined Axley Brynelson LLP, Madison, with the criminal defense and litigation practice groups. She represents young people and their parents in the juvenile court system and in university disciplinary proceedings and individual and business clients in civil litigation matters, including recovering misappropriated funds, personal injury, and insurance defense. She also assists with collection matters.

    Michael S. Brayer, Michigan 2001, has been promoted to voting shareholder at Boyle Fredrickson SC, Milwaukee. He focuses on technology patents. Sarah M. Wong, Marquette 2012, has joined the firm as a shareholder. Her practice includes patent, trademark, and copyright acquisition, litigation, transactions, and licensing.

    Megan MorriseyMegan Morrisey, U.W. 2004, has joined the Milwaukee Justice Center as the coordinator of the Mobile Legal Clinic, a partnership of the Marquette University Law School and the Milwaukee Bar Association and the MBA Foundation Inc. The Mobile Legal Clinic is a fully operational law office in a bus that travels into underserved communities in Milwaukee and partners with local law firms, volunteer law students, nonprofits, and other social service programs to assist individuals with civil legal matters.

    Mergers, Relocations, New Offices

    Gregory P. Sujack, Loyola-Chicago 1984, has moved his mediation practice to The Woodlands, Texas, continuing his work as a mediator nationally and internationally in cases arising under the Longshore and Harbor Workers Compensation Act, the Defense Base Act, and various state acts. He remains part of Pre-Trial Solutions of Louisiana.

    Appointments, Elections

    The American Academy of Matrimonial Lawyers (AAML) Wisconsin chapter recently named its new board: president – Daniel Bestul, U.W. 1983, Duxstad & Bestul S.C., Monroe; vice presidents – Alison H.S. Krueger, U.W. 1999, and Rebecca K. Millenbach, Marquette 2001, both with Nelson, Krueger & Millenbach LLC, Wauwatosa; treasurer – Anthony Menting, Marquette 1993, Stafford Rosenbaum LLP, Madison; and immediate past president – Hon. Thomas J. Walsh, Hamline 1992, Brown County Circuit Court, Green Bay. Millenbach is also AAML Board of Governors representative.

    Christine V. HamielChristine V. Hamiel, South Dakota 2007, has become president of the Wisconsin School Attorneys Association. Hamiel is a shareholder and chair of the school law section at von Briesen & Roper s.c., Milwaukee, and advises school districts, private schools, and charter schools on all aspects of education law.

    Awards, Degrees, Honors

    Jon E. AndersonChristy A. BrooksJon E. Anderson, Marquette 1981, and Christy A. Brooks, U.W. 1977, are recipients of the 2019 George Tipler Award for Distinguished Service in School Law from the Wisconsin School Attorneys Association. Anderson is a shareholder in the Madison office of Godfrey & Kahn LLP. He focuses on representation of K-12 school districts, charter schools, technical colleges, and universities in education law and labor and employment law.

    Brooks is a shareholder at von Briesen & Roper s.c., Milwaukee. She advises school districts on state and federal laws affecting pupil matters, including discipline and special education. She previously was president of the Wisconsin School Attorneys Association.

    Howard Schoenfeld, U.W. 1971, and David J. Schwartz, South Dakota 1978, litigators at DeWitt LLP, have been recognized as among the National Trial Lawyers Association’s Top 100 Trial Lawyers in Wisconsin. Schoenfeld, with the Metro Milwaukee office, represents clients in litigation matters ranging from civil rights issues to violation of constitutional rights, building defects, and personal injuries. Schwartz, with the Madison office, represents clients in a variety of civil litigation disputes, including personal injury, medical negligence, worker’s compensation, and commercial and real estate litigation.

    Pro Bono, Public Service

    Milwaukee-based trial and litigation law firm Gimbel, Reilly, Guerin & Brown LLP (GRGB) was recognized at the 2019 ALS Evening of Hope event for its dedication and support of that event and the ALS Association-Wisconsin Chapter. GRGB has supported the ALS Association-Wisconsin Chapter since Jeff Kaufman, a partner in the firm, was diagnosed with ALS in 1989 at age 34. Jeff, who started the Evening of Hope, lived with ALS for 21 years. GRGB partner Kathy Keppel, Marquette 1986, is the current ALS Association-Wisconsin Chapter Board president.

    In Memoriam

    John D. Bird Jr., Marquette 1957, Chapel Hill, N.C., June 29, 1930 – Feb. 20, 2019.

    Paul H. Brietzke, U.W. 1969, Valparaiso, Ind., July 30, 1944 – Jan. 2, 2013.

    Alan J. Forest, Northwestern 1968, Palm Coast, Fla., Nov. 23, 1943 – Dec. 15, 2011.

    John R. McDonald, U.W. 1960, La Crosse, May 16, 1931 – Feb. 25, 2019.

    Jack D. Moertl, Marquette 1949, Milwaukee, July 2, 1921 – Feb. 11, 2019.

    Hon. Gerald C. Nichol, U.W. 1963, Madison, July 9, 1935 – March 17, 2019.

    How to Place your Announcement

    If you have moved, become a partner or an associate, or received a promotion or an award, let us know. Talks, speeches (unless they are of national stature), honors from other publications, and political announcements are not accepted. Notices about State Bar members in good standing are printed as space is available, and at no cost, must be submitted in writing, and may be edited. Questions: (608) 250-6139.

    Photo placement: Submit a professional-quality photo. If the photo is used, the State Bar will issue an invoice ($30 each). Group photos are not accepted. High-resolution electronic photos are preferred.

    Deadline: The first of the month preceding publication. For example, to place an announcement in the May issue, it must be received before April 1. Email to: org MembersOnly wisbar wisbar MembersOnly org. Include your State Bar membership number.




  • Lawyer Discipline

    The Office of Lawyer Regulation, an agency of the Wisconsin Supreme Court, provides these summaries for educational purposes.
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    The Office of Lawyer Regulation (OLR), an agency of the Wisconsin Supreme Court, provides these summaries for educational purposes. The OLR assists the court in supervising the practice of law and protecting the public from misconduct by lawyers. Find the full text of these summaries at www.wicourts.gov/olr.

    Public Reprimand of William Norine

    The Office of Lawyer Regulation (OLR) and William Norine, Burnett County, entered into an agreement for imposition of a public reprimand, pursuant to SCR 22.09(1). A Wisconsin Supreme Court-appointed referee thereafter approved the agreement, and issued the public reprimand on Feb. 15, 2019, in accordance with SCR 22.09(3).

    Norine, while serving as the Burnett County district attorney (DA), communicated via Facebook to some women who had pending criminal cases in Burnett County. In these communications, Norine sought lunch, dinner, or drink dates; used personal endearments; and made improper inducements.  

    In one matter, Norine offered to buy dinner and “compare notes” with a woman who had a pending criminal case as well as a pending child in need of protection or services (CHIPS) case. The woman claimed she was desperate to get her children back and was in a vulnerable position.

    In another matter, Norine became Facebook friends with a woman who had a pending criminal case. Norine told the woman that she was a “wonderful beautiful person” who inspired him. He offered to pay her phone bill if she “had time to meet.” Norine repeatedly asked her out on dates. At one point, the woman, who was represented by counsel, missed a court date and Norine communicated with her through Facebook, including offering to pick her up after a bench warrant was issued and buy her lunch after the matter was resolved.

    In another matter, Norine had lunch with a woman whom his office was prosecuting, although when he met with the woman she purportedly had no pending charges. In Facebook messages, he called the woman “Babe” and at one point paid for three gigabytes of data on her cell phone. When she informed Norine that she was worried about a new pending charge and an anticipated sentence of probation, Norine advised her not to worry because “we usually take a noncriminal ordinance plea on those, no probation.” Norine also told her in a message that she was “lovely.” In other messages, the woman spoke of potential criminal matters and asked Norine for advice.

    In some of the cases, Norine was not personally prosecuting the women because the matters were assigned to a Burnett County assistant DA. Nonetheless, as the DA, Norine was responsible for all criminal prosecutions under his supervision in the county.

    By seeking dinner, lunch, or drink dates with women facing criminal charges in Burnett County, coupled with the use of personal endearments such as “Babe” or calling the women “lovely” or “beautiful” or otherwise offering or paying personal expenses and communicating legal advice, while in his capacity as Burnett County DA, Norine, in each instance, violated SCR 20:1.7(a)(2), SCR 20:1.16(a), and SCR 20:8.4(i).

    Norine had no prior discipline.

    Disciplinary Proceedings Against Patrick S. Sweeney

    On Feb. 19, 2019, the supreme court revoked the law license of Patrick S. Sweeney, Madison, and ordered him to pay the full $10,338.75 cost of the disciplinary proceeding, as well as comply with a $481,970 restitution order imposed on him in a related federal criminal prosecution. Disciplinary Proceedings Against Sweeney, 2019 WI 13.

    Sweeney was admitted to practice law in Wisconsin in 1992. Sweeney’s law license had been administratively suspended for failing to pay State Bar of Wisconsin dues and failing to certify his compliance with trust account record-keeping requirements.

    On July 10, 2015, the OLR filed a disciplinary complaint alleging that Sweeney committed five counts of professional misconduct and seeking revocation of his law license.

    On Jan. 6, 2017, after Sweeney was indicted on related criminal charges, the referee determined there was cause to defer the matter pending resolution of the related federal criminal prosecution. U.S. v. Sweeney, No. 16-CR-103 (W.D. Wis. 2017). The federal indictment alleged that from March 2007 to March 2011, Sweeney devised a scheme to defraud three limited liability companies (the Fairview entities) in which he held a member's ownership interest. The indictment also alleged that on Feb. 14, 2013, Sweeney made a false declaration in a bankruptcy matter when he submitted a sworn list of creditors that falsely listed the embezzled funds as “loans to debtor” in an effort to obtain a discharge in bankruptcy of his obligation to repay the funds he had embezzled.

    Sweeney ultimately entered a guilty plea to count two, the bankruptcy charge. On Nov. 17, 2017, the federal court sentenced Sweeney to five years’ probation, with the first year on home confinement, and ordered him to pay restitution of $481,970.

    On Jan. 31, 2018, Sweeney and the OLR executed a stipulation in which Sweeney withdrew his answer and pleaded no contest to each of the five allegations of misconduct alleged in the OLR’s disciplinary complaint.

    By misappropriating funds of the Fairview entities for his own personal use, Sweeney violated SCR 20:8.4(c). By representing to other members of the Fairview entities, while he was its managing member, that the Fairview entities had provided loans to his friend when in fact, the loan funds were disbursed to him for his own personal use without the knowledge or authorization of the other members, Sweeney again violated SCR 20:8.4(c).

    The court stated, “We determine that the seriousness of Attorney Sweeney’s misconduct demonstrates that his law license must be revoked to protect the public, courts, and legal system from the repetition of the misconduct; to impress upon Attorney Sweeney the seriousness of his misconduct; and to deter other attorneys from engaging in similar misconduct.”

    Sweeney’s misconduct also included violations of SCR 20:1.7(a)(2), SCR 20:3.4(c), and SCR 10.03(6) and former SCR 20:1.15(i)(4), enforced via SCR 20:8.4(f).

    Sweeney had no prior discipline.

    Public Reprimand of James G. Moldenhauer

    The OLR and James G. Moldenhauer, Eau Claire, entered into an agreement for imposition of a public reprimand, pursuant to SCR 22.09(1). A supreme court-appointed referee approved the agreement and issued the public reprimand on Feb. 23, 2019, in accordance with SCR 22.09(3).

    On or about Nov. 6, 2009, a client hired Moldenhauer to represent her in a Chapter 7 bankruptcy. On Nov. 20, 2009, Moldenhauer filed the client’s voluntary petition for a Chapter 7 bankruptcy.

    In a March 30, 2010, discharge of debtor order, the bankruptcy judge granted a discharge to the client. When the Chapter 7 bankruptcy was filed, the client had judgments against her in three cases. The three judgments against the client were discharged in the Chapter 7 bankruptcy.

    After the March 30, 2010, discharge of debtor order, the client paid Moldenhauer a total fee of $115 (in addition to the fee paid for the bankruptcy) to file a satisfaction of judgment in each of the three cases.

    In a January 2018 telephone conversation, nearly eight years after the Chapter 7 discharge, the client notified Moldenhauer that satisfactions of judgment had not been filed in the three cases. Moldenhauer apologized to the client and told her he would file the satisfactions of judgment and send her copies.

    Over the next several months, Moldenhauer did not respond to the client’s telephone calls requesting information and did not keep her informed regarding any progress he had made toward filing satisfactions of judgment in the three cases.

    Ultimately, in July 2018, Moldenhauer filed the satisfactions of judgment in the three cases and sent a letter to the client informing her of the filings and providing her with copies of the documents.

    By failing to file the satisfactions of judgment in a timely manner in the three cases, Moldenhauer violated SCR 20:1.3.

    By failing, after the client notified him in January 2018 that the satisfactions of judgment had not been filed in 2010, to keep the client reasonably informed regarding any progress he had made toward filing the satisfactions of judgment and by failing to respond to the client’s telephone calls requesting information, Moldenhauer violated SCR 20:1.4(a)(3) and (4).

    Moldenhauer received a private reprimand in 1996, a public reprimand in 2006, a public reprimand in 2008, a public reprimand in 2012, and a 60-day suspension in 2016.

    Disciplinary Proceedings Against Melinda Alfredson

    On Feb. 26, 2019, the supreme court suspended the law license of Melinda Alfredson, Oshkosh, for 90 days, effective April 9, 2019, and ordered her to pay the full $2,649.59 cost of the disciplinary proceeding. Disciplinary Proceedings Against Alfredson, 2019 WI 17.

    Alfredson was admitted to practice law in Wisconsin in 2009. The misconduct leading to her 90-day suspension occurred in two matters.

    In the first matter, a client hired Alfredson around September 2015 to represent him after he had fallen behind on certain post-divorce obligations, including a divorce judgment requirement that he place a boat owned by the parties on the market for sale, with proceeds to be shared by the parties. On Oct. 20, 2015, the client informed Alfredson that he sold the boat for $7,500. Alfredson agreed to deposit the sale proceeds in her trust account.

    Alfredson, however, deposited the funds in a non-trust account, in violation of SCR 20:1.15(b)(1). Alfredson failed to promptly deliver a portion of the sale proceeds to the lawyer for the client’s ex-wife, in violation of former SCR 20:1.15(d)(1) (effective before July 1, 2016) and SCR 20:1.15(e)(1) (effective July 1, 2016). Alfredson converted some of the funds to her own use, in violation of SCR 20:8.4(c). Alfredson violated SCR 22.03(2), enforced via SCR 20:8.4(h), by failing to timely respond to OLR inquiries during its investigation.

    In the second matter, a separate client hired Alfredson for divorce representation in October 2015. In a May 9, 2016, letter to Alfredson, counsel for the adverse party identified certain personal property items that Alfredson’s client had allegedly prevented the adverse party from retrieving from the marital residence.

    Alfredson failed to address the personal property issue with her client, leading to a contempt motion being filed against him. Alfredson’s lack of diligence in that regard violated SCR 20:1.3. The client hired successor counsel in June 2016. Alfredson did not provide the case file to successor counsel until September 2016, more than three months after the first request that she do so, in violation of SCR 20:1.16(d).

    The court concluded that “a 90-day suspension of Attorney Alfredson’s law license is sufficient to impress upon her the seriousness of her professional duties and to deter her and others from engaging in similar misconduct.”

    Alfredson received a 60-day suspension in 2017.




  • Court of Appeals Digest

    In this column, Profs. Daniel D. Blinka and Thomas J. Hammer summarize select published opinions of the Wisconsin Court of Appeals. Full-text decisions are linked below.

    Daniel D. Blinka & Thomas J. Hammer

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    Public Records Law

    “Authority” Having Custody of Records – Quasi-Governmental Corporations

    State ex rel. Flynn v. Kemper Ctr. Inc., 2019 WI App 6 (filed 29 Jan. 2019) (ordered published 27 Feb. 2019)

    HOLDING: Defendant Kemper Center Inc. is not a quasi-governmental corporation within the meaning of Wisconsin’s public records law.

    SUMMARY: Kemper Center was incorporated on July 2, 1975, as a Wisconsin nonstock corporation. The corporation was formed by alumnae of Kemper Hall, a private all-girls boarding school in Kenosha that had closed. According to Kemper Center’s articles of incorporation, its stated purpose was to raise funds to allow the city of Kenosha or Kenosha County to purchase and maintain the former Kemper Hall property.

    Kenosha County purchased Kemper Hall in 1977. No county funds were used for the purchase. Instead, the $225,000 purchase price was paid with $117,789 in funds raised by Kemper Center. The remainder of the purchase price came from two grants to the county.

    The Kemper Hall property was conveyed directly to the county by the religious corporation that had owned and operated the school. On the same day, the county executed a lease agreement with Kemper Center.

    Under the terms of the lease, Kemper Center pays the county one dollar in annual rent and has the right to use the property, which consists of 17 acres and contains a number of valuable historic buildings and an arts center. Kemper Center has a right to use the property as a “special purpose area” dedicated to historic preservation, educational and cultural programs, and individual and group activities. Kemper retains all fees, rental income, and other generated revenue but is responsible for operational and maintenance costs. The county’s grants to Kemper Center have totaled nearly $3 million since 1978.

    A county resident submitted to Kemper Center a request for disclosures under Wisconsin’s public records law. She sought documents regarding Kemper’s formation and tax-exempt status, employee work records, meeting minutes, records regarding certain events held at the facility, and documents regarding Kemper’s preferred caterer.

    Kemper denied the request, asserting that it was not a quasi-governmental corporation subject to the public records law. The circuit court concluded that Kemper Center is subject to the public records law. In an opinion authored by Judge Hruz, the court of appeals reversed.

    Daniel D. Blinkaedu daniel.blinka marquette Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.

    Thomas J. Hammeredu thomas.hammer marquette Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.

    The public records law applies to “authorities” having custody of a record; this includes “quasi-governmental corporation[s].” See Wis. Stat. § 19.32(1). The term “quasi-governmental corporation” is not defined by the statute. However, the supreme court has held that an entity is such a corporation if, based on the totality of the circumstances, it resembles a governmental corporation in function, effect, or status. See State v. Beaver Dam Area Dev. Corp., 2008 WI 90, 312 Wis. 2d 84, 752 N.W.2d 295.

    In the Beaver Dam decision, the court looked to five factors that guided its evaluation of whether the entity in question was a quasi-governmental corporation: “(1) whether the entity’s funding comes from predominately public or private sources; (2) whether the entity serves a public function; (3) whether the entity appears to the public to be a government entity; (4) the degree to which the entity is subject to government control; and (5) the amount of access governmental bodies have to the entity’s records” (¶ 15).

    Applying the five factors listed above, the appellate court concluded that Kemper is not a quasi-governmental corporation subject to the public records law. Said the court: “Under the circumstances here, the revenue generated by Kemper Center, Inc.’s use of Kemper Park is not properly treated as a ‘subsidy’ by the County, and therefore the bulk of Kemper Center, Inc.’s funding comes from non-County sources. Kemper Center, Inc.’s functions are not clearly public or private in nature. Rather, its purposes are commonly achieved by both public and private entities. Kemper Center, Inc. does not appear to the public to be an arm of County government, nor does the County wield any significant degree of control over Kemper Center, Inc.’s operations. Although Kemper Center, Inc. is required to make its books and records available to the County, on balance the application of the Beaver Damfactors compels the conclusion that Kemper Center, Inc. is not a quasi-governmental corporation” (¶ 52).

    Torts

    Safe Place – Repose – Independent Contractor Rule – Costs

    Soletski v. Krueger Int’l Inc., 2019 WI App 7 (filed 15 Jan. 2019) (ordered published 27 Feb. 2019)

    HOLDINGS: The statute of repose barred the plaintiff’s safe-place claim, his negligence claims were barred by the independent contractor rule, and the defense was entitled to its costs even though the objections were not resolved within the 30-day statutory period.

    SUMMARY: The plaintiff worked for a professional cleaning company and was seriously injured while cleaning a building owned by Krueger International Inc. The injuries occurred when a scissor lift, owned by Krueger, overturned while the lift was on an unmarked ramp. The plaintiff brought a variety of claims. The circuit court granted summary judgment in favor of the defense.

    The court of appeals affirmed in an opinion authored by Judge Seidl. First, the plaintiff’s safe-place claim was barred by the “builder’s statute of repose,” Wis. Stat. section 893.89. At bottom, the plaintiff’s claims about the “unmarked and unguarded ramp” ran to alleged structural defects, not unsafe conditions; hence, they were barred (¶ 14).

    The court considered and rejected multiple arguments, including the maintenance exception to the statute of repose. The “mere fact” that the plaintiff was engaged in building maintenance did not trigger the exception. The plaintiff forfeited the argument that the owner had negligently maintained the ramp by not raising the argument in the trial court (see ¶ 23).

    The independent contractor rule barred the plaintiff’s negligence claims. The rule provides that an independent contractor’s employee may recover against a principal employer for injuries caused by the principal employer’s affirmative acts of negligence (see ¶ 27). Most of the plaintiff’s claims sounded in omissions, not in affirmative acts. Although Krueger supplied the lift that toppled over, there was no proof the lift was defective (see ¶ 29).

    Finally, although Krueger timely filed its request for costs, the trial judge did not resolve the objections until nearly three months later, well after the 30-day period set forth in Wis. Stat. section 806.06(4). The court held, however, “that a prevailing party’s timely filing of its bill of costs within thirty days of the entry of judgment satisfies the time limit set forth in § 806.06(4)” (¶ 35).




  • Supreme Court Digest

    In this column, Prof. Daniel Blinka and Prof. Thomas Hammer summarize all decisions of the Wisconsin Supreme Court (except those involving lawyer or judicial discipline).

    Daniel D. Blinka & Thomas J. Hammer

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    Family Law

    Termination of Parental Rights – Termination of Grounds Phase Without Giving Respondent Opportunity to Present Case – Structural Error

    State v. C.L.K., 2019 WI 14 (filed 19 Feb. 2019)

    HOLDING: The circuit court committed structural error when it granted a directed verdict in the grounds phase of a termination of parental rights bench trial without giving the respondent parent an opportunity to present his own case in chief.

    SUMMARY: The state petitioned the circuit court to terminate the parental rights of C.L.K. (hereinafter Mr. K.). Mr. K. contested the state’s allegations. Mr. K. waived a jury trial, and the case proceeded as a bench trial. During the grounds phase of the proceedings, the state called Mr. K adversely as its only witness. Mr. K.’s lawyer cross-examined Mr. K. during the state’s case in chief. After the state rested, Mr. K.’s lawyer asked that he be allowed to “put my client on the stand and finish our side of the case.”

    Before he could do so, the guardian ad litem moved the court for a directed verdict, arguing that the state had proved adequate grounds for terminating Mr. K.’s parental rights. The circuit court granted the motion and found Mr. K. to be an unfit parent on the basis of abandonment of his children. The court then proceeded to the disposition phase of the case and permanently terminated Mr. K.’s parental rights to his children.

    Mr. K. appealed. He claimed that the circuit court’s decision in the grounds phase of the trial that he was an unfit parent before he could present his case to the court violated his due-process rights. The state admitted that it was error for the circuit court to direct a verdict without giving Mr. K. a chance to present his case.

    In an unpublished decision, the court of appeals affirmed. It concluded that the circuit court’s error was harmless because the evidentiary record (to which Mr. K. was unable to contribute except through the state’s adverse examination and his own counsel’s cross-examination) overwhelmingly established grounds for termination of Mr. K.’s parental rights.

    In a majority decision authored by Justice Kelly, the supreme court reversed the court of appeals. It concluded that “a proceeding in which a court decides a disputed matter in favor of the State, before allowing the respondent the option of presenting his case-in-chief, adversely affected the very framework within which the trial is supposed to take place. Consequently, the error so permeates the proceeding that it is incapable of producing a constitutionally-sound result. The error is, therefore, structural” (¶ 16).

    The consequence of structural error is “an automatic new trial” (¶ 1). This type of error is not susceptible to “harmless-error” review (id.). The court declined the state’s request that the trial court be permitted to resume the trial at the point it left off in the event the supreme court reversed the court of appeals. “[T]here must be a new trial ab initio” (¶ 36 n.16).

    Chief Justice Roggensack, joined by Justice Ziegler, dissented. While agreeing that it was error for the circuit court to grant the directed verdict, they believed that the error was not structural and that it was thus subject to a harmless-error analysis (see ¶ 39).

    Insurance

    Duty to Defend – Commercial General Liability Policies – Exclusions

    West Bend Mut. Ins. Co. v. Ixthus Med. Supply Inc., 2019 WI 19 (filed 28 Feb. 2019)

    HOLDING:An insurer had a duty to defend its insured under a commercial general liability (CGL) policy.

    Daniel D. Blinkaedu daniel.blinka marquette Prof. Daniel D. Blinka, U.W. 1978, is a professor of law at Marquette University Law School, Milwaukee.

    Thomas J. Hammeredu thomas.hammer marquette Prof. Thomas J. Hammer, Marquette 1975, is a law professor and Director of Clinical Education at Marquette University Law School, Milwaukee.

    SUMMARY: A medical supply company, Ixthus, was covered under a CGL policy issued by West Bend Mutual Insurance Co. Abbott Labs sued Ixthus and more than 100 other companies on multiple claims involving their advertising and distribution of blood-glucose test strips. Ixthus tendered its defense to West Bend, which denied coverage. The insurer then filed this declaratory judgment action to resolve whether it had a duty to defend or to indemnify Ixthus. The circuit court granted summary judgment in favor of West Bend. In an unpublished opinion, the court of appeals reversed, finding that the “knowing violation” exclusion did not apply to several claims.

    The supreme court affirmed the court of appeals in a unanimous opinion authored by Justice R.G. Bradley. The “sole issue” concerned whether West Bend had a duty to defend under state law. A duty to defend is “necessarily broader” than the duty to indemnify (¶ 10). Advertising-injury cases present special circumstances governed by three questions: “(1) Does the complaint allege a covered offense under the advertising injury provision? (2) Does the complaint allege that the insured engaged in advertising activity? and (3) Does the complaint allege a causal connection between the plaintiff's alleged injury and the insured's advertising activity?” (¶ 12).

    If all three conditions are met, the court next considers policy exclusions. If coverage is apparent for even one of the claims, the insurer has a duty to defend on all claims (see ¶ 14). Because the answers to questions 1 and 2 were clearly “yes” in this case, the court focused on the third question concerning a causal nexus. Applying the facts, the court also held that causation had been adequately alleged (see ¶ 21).

    The court then considered and rejected several proffered exclusions. First, the knowing violation exclusion, which had “eluded review” by the supreme court, did not apply to Lanham Act claims based on strict liability. “Unless an exclusion knocks out every pleaded claim, leaving no potentially covered advertising-injury claim for which the insured could be liable, the duty to defend remains” (¶ 30). The court discussed such claims and the facts in some detail.

    Second, the “criminal acts” exclusion also did not preclude all coverage because the complaint “alleges claims that are not dependent on a showing of criminal conduct” (¶ 39).

    Justice Ziegler did not participate in this decision.

    Jurisdiction

    Supervisory Writs – Stays – Arbitration

    State ex rel. CityDeck Landing LLC v. Circuit Court for Brown Cty., 2019 WI 15 (filed 21 Feb. 2019)

    HOLDING: The circuit court lacked authority to issue an order staying arbitration until it had decided an insurance coverage issue.

    SUMMARY: The Brown County Circuit Court ordered the private arbitration of a construction dispute stayed until it could decide an insurance coverage dispute between one of the contractors connected to the arbitration and the contractor’s insurer. A petition was then submitted to the court of appeals seeking a supervisory writ to vacate the circuit court’s stay order. The court of appeals construed the petition as an appeal from a nonfinal order and denied it. A petition for a supervisory writ was then filed with the supreme court, which accepted jurisdiction over the petition.

    In an opinion authored by Justice R.G. Bradley, the supreme court held that the circuit court lacked authority to issue the order staying arbitration until it resolved the coverage issue. “For the sake of clarity,” the court extensively reviewed the history of “supervisory writs” in Wisconsin, which, however, provided “no clear answers” regarding the scope of the term “supervisory writ” (¶¶ 5, 18). Later cases revealed still other “unexplained discrepanc[ies]” that “eroded any distinction between jurisdictional and non-jurisdictional categories of error” (¶¶ 27-28).

    The court held that the power invested in the supreme court by the Wisconsin Constitution may be used only in “extraordinary circumstances” (¶ 29). Parties seeking the issuance of a supervisory writ must satisfy a four-factor test: “(1) a circuit court had a plain duty and either acted or intends to act in violation of that duty; (2) an appeal is an inadequate remedy; (3) grave hardship or irreparable harm will result; and (4) the party requested relief promptly and speedily” (¶ 30) (internal quotations and citations omitted).

    Applying this test to the facts, the court held that all four factors had been met (see ¶ 43). It concluded that the stay order must be vacated (see ¶ 1).

    Justice A.W. Bradley dissented, joined by Justice Abrahamson. “Ignoring” the admonishment that supervisory writs are an “extraordinary and drastic remedy,” “the majority greatly expands the application of our supervisory writ jurisprudence. Throwing caution to the wind, it elevates jurisdictional errors above all others as deserving of special treatment under Wisconsin’s supervisory writ procedures” (¶ 46).

    Justice Dallet withdrew from participation in this decision.

    Juvenile Law

    Delinquency Proceedings – Juvenile Court’s Power to Reexamine Competency When Juvenile Has Been Found Incompetent and Not Likely to Become Competent Within Statutory Time Frame

    State v. A.L., 2019 WI 20 (filed 7 March 2019)

    HOLDINGS: 1) A circuit court can resume suspended juvenile delinquency proceedings to reexamine the competency of a juvenile who was initially found not competent and not likely to become competent within statutory time limits. 2) The expiration of a juvenile in need of protection or services (JIPS) order had no bearing on the circuit court’s competency to proceed with the respondent’s delinquency proceedings.

    SUMMARY: The state filed a juvenile delinquency proceeding against A.L. in 2012 when A.L. was 15 years old. Defense counsel challenged A.L.’s competency to proceed. Two psychologists found that A.L. was not competent and not likely to become competent within the statutory time frame.

    The circuit court agreed. Pursuant to Wis. Stat. section 938.30(5)(d), it suspended the delinquency proceedings, entered a JIPS order, and placed A.L. in a residential treatment center. The JIPS order was extended, and it expired in March 2015.

    Later in 2015, A.L. was found competent to proceed in other cases. The state then moved for reconsideration of A.L.’s competency in the 2012 delinquency case. The circuit court denied the motion, holding that under the circumstances of this case, in which A.L. initially was found not competent to proceed and unlikely to become competent, the statute cited above did not provide a procedure for reinstating the suspended delinquency proceedings. In a published decision, the court of appeals reversed the circuit court. See 2017 WI App 72.

    In a majority opinion authored by Justice Dallet, the supreme court affirmed the court of appeals. It concluded that “the language of Wis. Stat. § 938.50(5), read in conjunction with the language of ch. 938, allows a circuit court to resume delinquency proceedings that were suspended because a juvenile was initially found not competent to proceed under § 938.50(5)(d) and not likely to become competent within the statutory time limits” (¶ 23). The court further held that “the expiration of A.L.’s accompanying JIPS order in March 2015 has no bearing on the circuit court’s competency to proceed with A.L.’s delinquency proceedings” (¶ 27).

    A.L. is now an adult. In a footnote, the court indicated that “[i]f A.L. is ultimately found competent, the circuit court could then resume the proceedings in the … 2012 juvenile delinquency case. The circuit court would then have two options: dismissal of the action with prejudice or waiver of jurisdiction [to the adult criminal court] pursuant to Wis. Stat. § 938.18” (¶ 12 n.5).

    Justice Kelly filed a concurring opinion.




  • Briefly

    Interesting facts, trends, tips, bits and bytes in the news.
    Share This:

    Out There

    Flipping Bird at Cop is Protected, Federal Appeals Court Says

    someone swearing

    A police officer stopped a Michigan woman for speeding, and issued a ticket for a non-moving violation, a lesser offense. Unhappy, she flipped him off while driving away. That angered the officer, who

    stopped her again and issued the speeding ticket.

    Last month, however, a three-judge panel for the U.S. Court of Appeals for the Sixth Circuit ruled that the driver had a First Amendment right to express her discontent with the hand gesture.

    “Fits of rudeness or lack of gratitude may violate the Golden Rule," wrote Judge Jeffrey Sutton. “But that doesn't make them illegal or for that matter punishable.”

    "Any reasonable officer would know that a citizen who raises her middle finger engages in speech protected by the First Amendment," wrote Sutton, concluding the officer had no basis to stop the driver a second time to issue the speeding ticket.

    Source: NPR

    Got a Nugget to Share?

    Send your ideas for interesting facts, trends, tips, or other bits and bytes to org wislawmag wisbar wisbar wislawmag org, or comment below.

    By the Numbers

    95%

    – The percentage of all U.S. cases that are filed in state courts, according to 2016 statistics from the Court Statistics Project at the National Center for State Courts.

    For instance, there were 84 million filings in the state trial courts, compared with 368,000 filings in the federal district courts.

    Source: National Center for State Courts

    Tech Tip

    Beware of Caller ID Spoofing

    cell phone

    What is Caller ID spoofing? According to the Federal Communications Commission, “Caller ID spoofing is when a caller deliberately falsifies the information transmitted to your caller ID display to disguise their identity. Spoofing is often used as an attempt to trick someone into giving away valuable personal information so it can be used in fraudulent activity or sold illegally.”

    Spammers use Caller ID spoofing in a variety of schemes, most notably, for IRS and bank fraud. How it works: a person receives a phone call from a spammer claiming to be from the IRS or the person’s bank.

    If the person cannot tell it’s a scam from the beginning, the person might Google the phone number, only to find out the number is legitimate, and later, that the spammer is not.

    Be skeptical of callers who ask for personally identifiable information or demand immediate wire transfers. Do not trust the caller on the sole basis of their phone number. If you are unsure, end the phone call. Then call the trusted number on the back of your bank card or on authentic government websites to report the call and ask about its legitimacy.

    Source: Christopher C. Shattuck – Practice Management Advisor (Practice 411), State Bar of Wisconsin

    On the Radar

    U.S. Supreme Court to Decide “Fuct” Trademark Case

    folders

    Some California skateboarders wanted to trademark the word “Fuct” for a clothing line, but the U.S. Patent and Trademark Office refused on the ground that the word was “scandalous” or “immoral.”

    A federal appeals court ruled that trademark applications could not be refused simply because they were off-putting, and sided with the skateboarders. Now, the U.S. Supreme Court will decide.

    In deciding the case, the Supreme Court will likely revisit a 2017 decision that said federal law cannot bar trademarks that disparage people or “bring them into contempt or disrepute,” according to NBC legal analyst Pete Williams.

    “That decision was a victory for the Asian-American leader of a Portland dance-rock band who wanted to call his group ‘The Slants,’” wrote Williams, referring to band leader Simon Tam.

    Simon Tam will be talking about his eight-year journey to the U.S. Supreme Court on day one of the State Bar of Wisconsin’s two-day Annual Meeting and Conference, June 13-14, in Green Bay.

    Check out the schedule at amc.wisbar.org.

    Quotable

    “Our concern is that over the last couple of decades in the criminal justice system, many of the forensic disciplines we have traditionally relied upon lack fundamental validation and have in many cases produced results that are wrong.”

    caution tape

    – Keith Findley, U.W. Law School professor and senior director of the Wisconsin Innocence Project.

    Findley was recently quoted in an ABA Journal article, which notes that Findley and Wisconsin attorneys Jerry Buting and Dean Strang recently created a nonprofit called the Center for Integrity in Forensic Sciences, dedicated to strengthening forensic sciences and improving the reliability and safety of criminal prosecutions.

    Buting and Strang gained legal fame as defense attorneys for Steven Avery, the main character in the highly popular Netflix docuseries, Making a Murderer.

    Source: ABA Journal; U.W. Law School

    Good Ideas

    April is Alcohol Awareness Month

    empty shot glass

    In February 2016, Wisconsin Lawyer published an article on the high rates of problem drinking among lawyers, based on a landmark national study. It showed that problem drinking among lawyers was more than three times higher than in the general population.

    The legal profession is still talking about that study. Earlier this year, CNN noted the study and posted a story about Steven Wall, managing partner at the international law firm of Morgan Lewis.

    The article details Wall’s longtime drinking problem and how it finally escalated with his last bender, on a business trip, before a 30-day rehab stay that gave him a second chance. With his firm’s support, he remains the managing partner.

    The article also notes the ABA’s “well-being pledge campaign.” About 70 law firms and numerous law schools and corporations have pledged to acknowledge the problems of substance abuse in the legal profession and support a seven-point framework to tackle it.

    The State Bar of Wisconsin is here to help, through the Wisconsin Lawyer Assistance Program (WisLAP).

    This confidential resource for lawyers, judges, law students, and their families, can help address problems before they adversely affect the quality of your life and your career.

    WisLAP 24 Hour Helpline: (800) 543-2625
    WisLAP Manager Mary Spranger, org mspranger wisbar wisbar mspranger org, (800) 444-9404, ext. 6159




  • Inbox

    We want to hear from you! Post a comment, find us on social media, or send us your thoughts.
    Share This:

    Update to Article: Business of Marijuana in Wisconsin

    marijuana plants

    Based on additional information, I have updated the online version of “The Business of Marijuana in Wisconsin” (Wisconsin Lawyer, March 2019). This update includes reference to a Wisconsin Legislative Council memo issued to Rep. Katrina Shankland on March 5, 2019, which describes the legal status of CBD under current state and federal controlled substances law. In short, this memo clarifies that CBD products containing a THC concentration of 0.3% or less are legal under federal law.

    Wisconsin law authorizes the production, sale, and possession of CBD products derived from hemp produced under a federally authorized hemp program. In addition to CBD derived from hemp, Wisconsin law allows individuals to possess CBD without psychoactive effect, if the person has a valid physician’s certification stating that the person has a medical condition.

    For a more detailed explanation, please review the online edition of the article.

    Paloma Kennedy
    Boardman & Clark LLP, Madison

    We Want to Hear from You! Submit a Letter to the Editor

    Wisconsin Lawyer provides a forum for members to express ideas, concerns, and opinions on law-related subjects. Send comments to org wislawyer wisbar wisbar wislawyer org (include “Letters” in the subject line), or mail to Wisconsin Lawyer “Letters,” P.O. Box 7158, Madison, WI 53707-7158. Limit to 500 words. Writing guidelines available.

    Connect With Us Online. Post comments to articles online, and find us on Facebook, Twitter, LinkedIn, YouTube, and Instagram.

    E-Cigarettes, THC, and Tobacco

    vaping e-cigarette

    In “E-Cigarettes: Increasing Usage Among Teens Triggers Regulation, Lawsuits” (InsideTrack, Feb. 20, 2019), Joe Forward wrote that fewer people are smoking cigarettes. But more people, including many minors, are “vaping” or “juuling,” which refers to the use of electronic cigarettes (e-cigarettes).

    The Wisconsin Department of Health Services (DHS) recently issued a public health advisory noting a dramatic increase in e-cigarette use among Wisconsin teens. The DHS recommends strategies to curb e-cigarette advertising and marketing that appeals to youth, as well as reducing access to flavored tobacco products. Federal regulators have already moved in that direction, with underlying lawsuits driving some changes.

    Forward noted that while e-cigarette legislation was introduced in the Wisconsin Legislature’s last session (2017-18), the bills failed to pass.

    A reader posted a comment:

    Reader: While there has been nationwide pressure to make THC more accessible (which will inevitably make it more available for teens), the “government is my keeper” types want to eliminate a superior alternative to cigarettes. Fact: Tobacco remains a product that is (yet) legally consumed. Fact: It is largely the smoke inhalation that has the most deleterious health effects (this is true for any substance that is burned and inhaled); particularly for the second-hand, passive consumer. Fact: E-cigarettes have allowed a number of people to cease usage of tobacco, cigarettes, and cigars. Fact: Tobacco does not produce hallucinogenic effects.

    I am one who is actually allergic to tobacco, but I have stood next to a person who was vaping and I was neither annoyed nor adversely affected. I grew up at a time when cigarettes were cheap and very accessible, yet I rejected them. It’s time for the nanny state to back off. Teens find all sorts of ways to mimic what they believe is “adult” behavior. Unless these implements are declared utterly illegal, teens will use them, as well as cigarettes, pipes, and various devices for smoking marijuana, which is now the mind-altering substance of choice (another substance I utterly rejected using).

    Timothy S. Kittle
    Broken Arrow, Okla.

    Being Stereotyped Does In Fact Hurt

    experienced female lawyer

    In “Are You the Court Reporter?” (Wisconsin Lawyer, March 2018), Deanna Koll wrote, “I would have to take off my shoes and socks to accurately count the number of times I’ve shown up at a deposition and been asked, ‘Are you the court reporter?’”

    Koll said she could accept this as a compliment, but she doesn’t. She gets irritated because this is the stereotype: It’s more likely that she’s the court reporter than it is she’s the lawyer. The assumption exists, she wrote, because of her gender, and the assumption hurts. “You develop a sort of edge,” she wrote, “when you don’t get the benefit of the doubt that you’re the lawyer in charge.”

    Her article invited several comments. Another reader weighs in:

    Reader: I know what you are going through. I get the same thing, but it also seems to have a racial component sometimes in my case (I am partly Hispanic). I get a lot of incredulous looks.

    I agree that it does in fact hurt; that your entire legal career that you have carved out for yourself, a hard battle you have fought, day by day, means nothing to this stranger. Instead they make a snap judgment based on their own biases. It really can be very belittling and put a cloud over the rest of the day if you let it. I would like to think that they are embarrassed by their narrow-minded way of thinking and that their mistake will broaden their perspective. I hope so, anyway.

    Laura D. Frye
    Law Offices of Laura D. Frye Ltd., Antioch, Ill.

    Why Are Women Leaving the Legal Profession?

    woman walking out of office

    About half of today’s law school graduates are women. About half of law firm associates are women. Yet, only 20 percent of equity partners are women. What’s at the root of this situation?

    In “Women Leave Law Firms and the Legal Profession. Why?” (InsideTrack, Oct. 17, 2018), Joe Forward wrote insufficient work-life balance may be one reason women leave law firms having never advanced to partnerships, but it’s not the only reason. Implicit bias, sexual harassment, law firm culture, and unequal access to opportunity are cited as other reasons by women lawyers interviewed in this article.

    A reader posted a comment:

    Reader: Our daughter did well in law school (magna cum laude, law review editor, public service award), but never bothered to respond to “big law” attempts to recruit her. Instead, she clerked at the court of appeals, then got a job as an appellate public defender at a substantial cut in pay from the clerkship. Why? Large law firms have a well-deserved bad reputation as places that use you up and shove you out, paying no attention to there supposedly being a life after law school.

    Gene Rankin
    Gene R. Rankin Law Office, Madison




  • Final Thought
    Happy to Be at Work? What Is Wrong With Me?

    Why don't we all pinky-swear to give each other permission to enjoy time away without stressing about the work awaiting our return? Can we right this ship?

    Deanne M. Koll

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    I’m back from vacation. When I got to work on Monday, I exhaled and thought, thank goodness that I’m in the office all week. I was elated to know that I had five full work days ahead of me. The thought of getting down and dirty in my work files for five full days pleased me. Then I thought, what the hell is wrong with me?

    Deanne M. Kollcom dkoll bakkenorman Deanne M. Koll, William Mitchell 2006, is an attorney and shareholder with Bakke Norman S.C., with offices in Menomonie and New Richmond, Wis.

    When I was out on vacation, I checked my email, and not just once per day. I checked it in the morning when I was lying in bed. I checked it pool-side between trips down the lazy river. I also logged into work – on multiple occasions. I felt the insurmountable need to keep my files moving until my return. I made mental checklists of what I needed to do upon my return and conceptually prioritized that list. The weight of knowing the work waiting for me in my office was substantial. As vacation drew to an end, I could feel my anxiety rising, thinking of that to-do list knocking at my door.

    Now, I had fun on vacation – don’t get me wrong. In fact, I live for vacations. Traveling, spending time with my family, and exploring new places are my jam. But even that said, a part of my brain was always somewhat preoccupied with work.

    I have genuine envy for people who, when they go on vacation or are out of the office, have other employees who take over their work. There are jobs, I assume, that don’t cause this kind of stress, right? Or maybe I’m wrong.

    There’s something about lawyering that makes it so darn hard to be away from the office. What is it, I wonder? Is it that no one else can do the work that we do (or our misconception that this is the situation)? Is it the demands of clients? Opposing counsel? Is it the complexity of our files? Is it the billable-hour requirements? Or, is it just that we’re too inept to create a culture in which being away from the office is okay? Why can’t we have a culture that accepts an out-of-office email reply?

    I thought for a second, what if I just let go of all that worry about getting my work done when I was on vacation. Imagine what that would feel like: true bliss, I suspect. Then, just thinking about not thinking about work while I’m out gives me angst. I Have A Problem, I thought. But, I’m also acutely aware that I am not in the minority.

    What if we entered into a professional truce that we would leave our work at the office while on vacation, that we’d grant everyone a courtesy extension if they were returning from vacation, and that we wouldn’t file pleadings during sleeping hours?

    There has to be a better way, doesn’t there? Should we – as a profession – reshape client expectations? Could we all pinky-swear that we won’t respond to each other’s emails at 10:30 p.m.? (Just think about being able to play Candy Crush instead of replying to emails while lying in bed! Dream big, people!) Think about if we had a professional agreement that if we received an out-of-office email response, we would never follow up with that lawyer’s assistant to try and track down the lawyer. What if we entered into a professional truce that we would leave our work at the office, that we’d grant everyone a courtesy extension if they were returning from vacation, and that we wouldn’t file pleadings during sleeping hours? Sounds pretty blissful, right?

    I feel as though lawyers bear some of the responsibility for this wild work environment. We’ve allowed our clients to demand this from us, and we’ve not given each other enough slack when we’re on vacation. Can we right this ship? I sure would like to be more excited about time out of the office than I currently am about time in the office. I bet you would be, too.




  • Proposed Changes to Wisconsin Child Placement and Support Laws

    A Legislative Council Study Committee recently proposed changes to child placement and support laws in Wisconsin. Tiffany Highstrom reviews the committee’s proposals and their potential impact on family law.

    Tiffany L. Highstrom

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    The Joint Legislative Council is a nonpartisan group charged with conducting studies on issues or problems identified by the Legislature and then making recommendations on proposed legislation.

    The council appoints subcommittees to conduct these studies. The subcommittees include members of the Legislature and citizens having special knowledge of the particular subject matter. The council reviews the legislation recommended by the subcommittee and, if approved by a majority of the council, sponsors the proposed legislation.

    In 2018, the Legislative Council Study Committee on Child Placement and Support met to review the current law on physical placement and child support.

    On March 11, 2019, the council sponsored a package of bills proposed by the Study Committee. The bills make several revisions to the current laws on child support and placement of minor children.

    AB-094: Child Support Obligations for Incarcerated Parents

    Under current law, courts have wide discretion to determine the child support obligation for an incarcerated parent. This bill would not consider incarceration as voluntary unemployment when calculating child support obligations. An existing child support obligation will be suspended if a parent is incarcerated for a significant amount of time, as long as the incarceration is unrelated to an applicable family law issue.

    Tiffany Highstrom com thighstrom staffordlaw Tiffany Highstrom, Marquette 2004, is a partner with Stafford Rosenbaum in Madison, where she practices in all aspects of family law.

    This proposal aligns with a national trend which recognizes the issues payors face when confronted with large arrearages, including less formal employment and a reduction in long term child support compliance.

    This change would provide relief to incarcerated parents so they are not confronted with an insurmountable child support liability when released. However, the financial responsibility of the child is then wholly placed on the primary parent, who is already assuming full physical and emotional responsibility for the children during the other parent’s incarceration.

    AB-101: Elimination of Family Support

    Current law allows a single payment, called family support, which combines the component parts of child support and maintenance. Family support payments are generally treated for federal and state tax purposes as maintenance payments, such that the payment is deductible to the payor and taxable to the payee. The Tax Cuts and Jobs Act of 2017 eliminated the deduction for maintenance payments. This legislation eliminates the family support option, as such an order is no longer advantageous for tax savings.

    AB-102: Military Benefits in Determining Gross Income for Child Support

    AB-102 provides guidance on the type of military benefits to be counted as income for the purposes of calculating child support. The bill specifies that gross income still includes veterans’ disability and basic military allowances for subsistence and housing, but excludes military allowances for variable housing costs.

    AB-096: Department of Children and Families Administrative Rules Regarding Calculation of Child Support Obligations

    Under this proposal, while the manner of calculating child support will remain unchanged, the shared placement calculation will be listed as the default calculation rather than among the calculations for “special circumstances.” This is an administrative change to recognize the importance of shared placement.

    AB-103: Limitation of Recovery of Birthing Costs

    Under current law, effective July 1, 2018, fathers in intact families are exempt from reimbursing medical assistance (such as BadgerCare) for pregnancy and birth costs. This new legislation would require fathers, regardless of whether or not they are part of an intact family, to contribute to these birth and pregnancy costs.

    AB-093: Adoption of Uniform Deployed Parents Custody and Visitation Act

    Under existing law, courts have no authority to award placement to a third party (such as a stepparent or grandparent) when one parent is a deployed service member. This legislation allows courts to award temporary placement to a third party during a deployment, either through an agreement between the parents or as ordered by the court following a hearing. This proposal allows courts to consider maintaining important third-party relationships for a child when one parent is deployed.

    AB-099: Parenting Plans in Relation to Mediation

    When there is a dispute on custody and placement of the minor children, parties must attend at least one mediation session (unless waived by the court). This bill requires each party to submit a parenting plan to the mediator at least 10 days before a scheduled mediation.

    Preemptive sharing of information assists the mediator in assessing what issues are in dispute and should help facilitate resolution of contested cases. If mediation is unsuccessful or waived, the parties must file a parenting plan with the court within 60 days. Finally, the bill revises what the parenting plan must address.

    AB-095: Modification of Legal Custody or Physical Placement Order Contingent on a Future Event

    Under current law, an original judgment on custody and placement cannot be modified unless the court finds that the custody and placement arrangements are causing physical or emotional harm to the child.

    Case law states that the court must make decisions on the current circumstances and may not order a modification of placement upon a contingent event in the future. This has created difficulty for family law practitioners when there may be reasons to change placement over a period of time, such as for very young children.

    This bill allows an agreement between the parents to potentially modify future custody or placement. Such an agreement must be filed as a stipulation alongside an initial custody and placement order, and be contingent upon events or needs of the parents or child that are reasonably certain to occur within two years (and not on anticipated behavior modifications). For example, a placement schedule could be modified upon a child entering first grade.

    AB-100: Judicial Notice of CCAP Records Related to Domestic Violence or Child Abuse

    This bill would allow judges to take judicial notice of convictions and injunctions related to domestic abuse, if available in the electronic consolidated court automation program (CCAP). The proposal makes it easier for litigants (especially those who are pro se) to present to the court evidence of other related cases relevant to their family case.

    AB-097: Statement of Participation of Both Parents in Physical Placement

    The current statute requires the court to maximize the amount of time with each parent when awarding a placement schedule. This bill proposes to add a general statement that any court’s allocation of physical placement presumes that the involvement and cooperation of both parents is in the best interest of the child.

    AB-098: Amendments to Physical Placement Factors

    Pursuant to Wis. Stat. section 767.41(5), courts must consider 16 factors when making determinations about custody and placement of minor children. This bill reorganizes the statutory factors and removes two of the current factors. The court would also be required to prepare a written best-interest explanation any time the court grants less than 25% placement to one parent.

    Supreme Court Rule 35.015(1) Requirements for Guardians ad Litem

    In a chapter 767 (family court) proceeding, a prospective guardian ad litem (GAL) must receive six hours of continuing legal education credits approved as GAL credits from the Board of Bar Examiners in each reporting period.

    Currently, three of those six credits can be related to a wide variety of family law related issues and court procedures. This bill adds a requirement that new family court GALs must receive three CLE hours related to the dynamics and impact of family violence education. The petition could also require ongoing domestic violence training for experienced GALs. This would clarify the specific number of hours that a GAL must obtain on the issue of domestic violence.

    Stay Tuned

    Though not yet adopted as law, the proposed bills would make major changes to the child support and placement statutes. All of the bills are now introduced in the Assembly and assigned to various committees. The bills could be posted at any time during the legislative session and will like be scheduled for public hearings in May 2019.

    Family Law practitioners should stay informed on the proposed changes and whether the bills are passed during the next legislative session.




  • On Our Radar
    Alcohol Sales: Can Online Retailers Sell Directly to Consumers?

    By June 2019, the U.S. Supreme Court might determine whether the Constitution guarantees online retailers such as Amazon the right to sell alcohol directly to consumers. The effects on Wisconsin’s alcohol distribution system could be significant.

    Aaron Richard Gary

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    beer bottle

    On Jan. 16, 2019, the U.S. Supreme Court heard argument in the case of Tennessee Wine & Spirits Retailers Ass’n v. Blair, a case sometimes referred to as Granholm II. Although the issue in the case is narrow, the Court’s decision could potentially have a significant impact on Wisconsin’s alcohol distribution system.

    Like Granholm,1 the Blair case requires the U.S. Supreme Court to demarcate the boundaries of state regulatory authority when the 21st Amendment and the dormant Commerce Clause collide. At oral argument, the Justices were clearly thinking beyond the narrow issue in the case, contemplating whether the Court’s decision could ultimately lead to the conclusion that states lack authority to stop Amazon and other online retailers from selling alcohol directly to consumers.

    Wisconsin’s Local Control of Alcohol Distribution

    Like most states, Wisconsin has adopted a three-tier system for alcohol distribution. Subject to various exceptions, alcohol beverages (beer, wine, and spirits) must be sold by the producer to a licensed, independent, in-state wholesaler and then sold by the wholesaler to a licensed, independent, in-state retailer. Only a licensed retailer can then sell the product to the public. An applicant for a retail license (or a wholesaler’s permit) must have been a Wisconsin resident for at least 90 days before the application.2

    Retail sales of alcohol must be made in a face-to-face transaction on retail licensed premises. Online sales of alcohol to a consumer, whether as part of an interstate transaction or an order for local delivery, are generally not legal in Wisconsin. The Wisconsin Department of Revenue and local law enforcement agencies have authority to inspect retail licensed premises to ensure compliance with Wisconsin’s alcohol beverage laws.3

    Regulators have generally favored the three-tier system. Arguments in support of the three-tier system are that it facilitates effective and efficient tax collection, aids in the enforcement of alcohol beverage laws such as underage drinking prohibitions, and promotes orderly market conditions.

    Tennessee Wine & Spirits Retailers Ass’n v. Blair at the Sixth Circuit

    The appeal in Blair arose from the attempt by a national alcohol retailer operating under the trade name Total Wine Spirits Beer & More (Total Wine) to obtain a retail liquor license in Tennessee. Tennessee, like most states, has a residency or in-state presence requirement for retailers. Tennessee requires an applicant for a retail license to be a Tennessee resident for at least two years immediately preceding the application. However, to renew a license, Tennessee requires the licensee to have been (at some point) a Tennessee resident for at least 10 consecutive years. Tennessee further imposes similar residency requirements on the officers, directors, and shareholders of corporate applicants.4

    Aaron R. GaryAaron R. Gary, U.C.–Davis School of Law 1992, is senior attorney for the Wisconsin Legislative Reference Bureau, Madison.

    Along with another retailer, Total Wine challenged this “durational residency” requirement as a facially discriminatory attempt by the state to favor local business interests by excluding out-of-state competitors, in violation of the dormant Commerce Clause. Relying on Granholm and Bacchus Imports,5 the Sixth Circuit Court of Appeals agreed, concluding that the 21st Amendment does not immunize Tennessee’s durational residency requirement from scrutiny under the dormant Commerce Clause.6

    Instead, the court must determine whether the interests implicated by the state regulation are so closely related to the powers reserved to the states by the 21st Amendment that the regulation prevails. The court recognized that imposing a residency or physical presence requirement on retailers or wholesalers may be legitimate and an essential aspect of the three-tier system, but a two-year durational residency requirement is not.7

    The court further rejected any argument that the state’s interest in maintaining a high degree of oversight, control, and accountability over persons operating licensed premises justified the requirement, because no showing had been made that a reasonable, nondiscriminatory alternative could not achieve Tennessee’s goals. For example, one available alternative might be requiring the retailer’s general manager to be a resident of the state.8 In dicta, the court also stated that “a state’s alcoholic-beverages laws ‘cannot deprive citizens of their right to have access to the markets of other States on equal terms.’”9

    U.S. Supreme Court Precedent: Granholm v. Heald

    The Granholm case involved a challenge to Michigan and New York laws that created an exception to the state’s three-tier system to favor local wine producers. These laws, in effect, allowed in-state wineries to ship their wine directly to consumers but prevented out-of-state wineries from doing the same on equal terms. The U.S. Supreme Court struck down these laws as violative of the dormant Commerce Clause, finding that the 21st Amendment was not intended to supersede the dormant Commerce Clause.10

    “States have broad power to regulate liquor under § 2 of the Twenty-first Amendment. This power, however, does not allow States to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers. If a State chooses to allow direct shipment of wine, it must do so on evenhanded terms.”11

    When state laws discriminate against interstate commerce or favor in-state economic interests over out-of-state interests, they face “a virtually per se rule of invalidity” and will be struck down unless the state can meet a high standard of justification – that the law advances a legitimate state purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.12 The justifications offered by Michigan and New York for their discriminatory direct-shipping laws – to keep alcohol out of the hands of minors and to facilitate tax collection and orderly market conditions – were insufficient.13

    While finding the state laws unconstitutional, the Supreme Court simultaneously expressed support for broad state authority to regulate alcohol. The 21st Amendment gives states broad authority to regulate the importation, distribution, and use of alcohol beverages.14 The 21st Amendment grants the states “virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system.”15 A state’s adoption of a three-tier distribution system is “unquestionably legitimate.”16

    Online sales of alcohol to a consumer, whether as part of an interstate transaction or an order for local delivery, are generally not legal in Wisconsin.

    Granholm’s History Review. In Granholm, the majority and two dissenting opinions extensively reviewed the history of the 21st Amendment, and while agreeing on the basic chronology and background facts, they relied on this history to reach contrary conclusions.17

    The majority’s historical argument seems thin.18 The majority overruled the foundational 21st Amendment case, Young’s Market19 (authored in 1936 by Justice Brandeis, just three years after ratification of the 21st Amendment) based in part on the assertion that the Young’s Market decision “did not take account of this history” of the 21st Amendment.20 The majority’s understanding of “this history” also runs contrary to the understanding of Justice Hugo Black, who participated in passage of the 21st Amendment when he was a U.S. senator and who believed the 21st Amendment was meant to give “absolute control” of regulatory authority for alcohol beverages to the states, free of all restrictions under the federal Commerce Clause.21

    It is not surprising that the Justices reached different conclusions in Granholm as to the meaning of the historical record. The majority in Bacchus Imports stated that “more recently we have recognized the obscurity of the legislative history of § 2 [of the 21st Amendment]. No clear consensus concerning the meaning of the provision is apparent.”22 In an earlier case, the Court noted its preference for focusing on the language of the 21st Amendment and its “wise reluctance to wade into the complex currents beneath the congressional proposal of the [21st] Amendment and its ratification in the state conventions.”23

    Discussion of Bacchus Imports. In addition to examining the historical record, the majority in Granholm relied on Bacchus Imports, a case in which Hawaii, to help local producers, created excise tax exceptions for two uniquely local products, brandy called okolehao and pineapple wine. In rejecting Hawaii’s argument that the tax preference was within its authority under the 21st Amendment, the Court balanced the state’s 21st Amendment interests against the federal Commerce Clause interests:

    “The question in this case is thus whether the principles underlying the Twenty-first Amendment are sufficiently implicated by the exemption for okolehao and pineapple wine to outweigh the Commerce Clause principles that would otherwise be offended. Or as we recently asked in a slightly different way, ‘whether the interests implicated by a state regulation are so closely related to the powers reserved by the Twenty-first Amendment that the regulation may prevail, notwithstanding that its requirements directly conflict with express federal policies.’”24

    The Court held that this tax preference violated the Commerce Clause “because it had both the purpose and effect of discriminating in favor of local products.”25 The Court further stated that “the central purpose of the provision [§ 2 of the 21st Amendment] was not to empower States to favor local liquor industries by erecting barriers to competition. … State laws that constitute mere economic protectionism are … not entitled to the same deference as laws enacted to combat the perceived evils of an unrestricted traffic in liquor. Here, the State does not seek to justify its tax on the ground that it was designed to promote temperance or to carry out any other purpose of the Twenty-first Amendment, but instead acknowledges that the purpose was ‘to promote a local industry.’ Consequently, because the tax violates a central tenet of the Commerce Clause but is not supported by any clear concern of the Twenty-first Amendment, we reject the State’s … claim based on the [21st] Amendment.”26

    Learn More About Alcohol Regulation

    Whether you represent retailers, distributors, producers, or others who need to conform to the regulatory system, you’ll appreciate the clear, concise, yet comprehensive review of Wisconsin law in the State Bar of Wisconsin PINNACLE® Alcohol Beverages Regulation in Wisconsin, by Aaron Gary.

    Inside you’ll find an examination of the laws affecting alcohol beverages in Wisconsin, from manufacture through taxation, transport, storage, and sale, including details regarding who can buy alcohol, how, and when.

    Alcohol Beverages Regulation in Wisconsin is available in print and Books Unbound subscription. Learn more by visiting www.wisbar.org/marketplaceand search AK0363.

    Attend the State Bar of Wisconsin PINNACLE seminar, Alcohol Beverage Law in Wisconsin, presented by Aaron Gary. Gain the experienced guidance you need to advise your clients, including information on

    • Identifying which license type may (or may not) be necessary

    • The roles of suppliers, wholesalers, and retailers

    • Inspection and enforcement by the Wisconsin Department of Revenue

    • What to do about license suspensions, revocations, and non-renewals

    • Real estate and business transactions involving liquor licenses

    Webcast replays begin April 30 and run through June 19. Click here to view listings.

    Retreat from Granholm or Extend It?

    At oral argument on Jan. 16, 2019, in Blair,27 counsel for the states (including Tennessee and Illinois, as amici curiae) and counsel for the Tennessee retailers association (whose members benefit from excluding national retail competitors such as Total Wine) aligned in favor of the Tennessee durational residency requirement and state authority under the 21st Amendment to impose requirements that disadvantage out-of-state interests, and counsel for Total Wine argued the contrary.

    The apparent strategy of the association and the states was to seek a retreat from Granholm. Denying that they sought to have Granholm overruled,28 the association’s counsel and states’ counsel asked the Court to give the narrowest of readings to Granholm – to limit its scope to products (like okolehao). That is, a state must only treat in-state products and out-of-state products the same.29 Espousing a “historical analysis” or “historical test,”30 counsel for the association and the states made arguments that had been considered and generally rejected by the majority in Granholm, including that the 21st Amendment restored to the states pre-Prohibition power to override the dormant Commerce Clause and was “designed to supplant or displace dormant Commerce Clause analysis” to foreclose court scrutiny.31

    In summary, according to the states’ counsel, “States have virtually complete control over intrastate distribution and sale.”32 The association’s counsel further argued that because the 21st Amendment restored to the states pre-Prohibition powers, and most states at that time had laws imposing residency requirements that were considered legitimate, such requirements must necessarily be valid under the 21st Amendment.33

    Granholm was a 5-4 decision, and only three of the nine Justices who decided Granholm are still on the Court. The association and the states are clearly inviting the six new Justices to chart a different course.

    At the oral argument, all counsel agreed that a retailer’s in-state residency or physical presence was a constitutionally permissible requirement legitimately advancing a state’s regulatory interests.34 Physical presence in the state allows the state to inspect and monitor activities on the licensed premises and supervise persons who are in control of the licensed premises, facilitating effective enforcement of the state’s alcohol beverage laws. But how long a period of residency is necessary to meet the state’s regulatory needs? One day? Ninety days? Two years? Ten years? What standard would the Justices use to draw such a line on what is constitutional and what is not?

    Justice Sotomayor stated, “[W]e understand that having someone there who’s responsible to the community is necessary. That was inherent in the three-tier system. But why is it inherent in the three-tier system that you have to have someone who’s only a local do it?”35 Justice Kagan inquired at what point in the continuum from a simple residency requirement to, for example, a 12-year residency requirement, a statute becomes clearly protectionist, with Justice Sotomayor echoing this query.36

    Counsel for the association and the states argued that the very purpose of the 21st Amendment was to stop courts from even asking the question of how long is too long, that this “approach … would still embroil the courts in the kind of line drawing that the Twenty-First Amendment was designed to relieve them of by creating what this Court has called an exception to the normal operation of the dormant Commerce Clause. It would be at odds with the broad regulatory discretion that’s conferred by the Twenty-First Amendment.”37

    Granholm was a 5-4 decision, and only three of the nine Justices who decided Granholm are still on the Court. The association and the states are clearly inviting the six new Justices to chart a different course.

    Counsel for Total Wine suggested that the Court need not worry about drawing a line in this case because the durations at issue (two years and 10 years) are so clearly unreasonable and protectionist of local industry, and lacking any asserted justification by the state of Tennessee, that Tennessee’s law must be found to be an unconstitutional attempt to create barriers for out-of-state economic interests.38

    Justice Gorsuch took the inquiry one step further. The substance of his point is that, in an age when so much commerce is conducted online, it might be unrealistic to believe that states cannot adequately control online business and that brick-and-mortar operations are actually necessary for a state to be able to enforce its laws. Justice Kavanaugh pointed out that the three-tier system necessarily entails favoritism of in-state interests, like requiring liquor to be sold by an in-state wholesaler.39

    Justice Gorsuch: “I would think that the next case would be … that the next lawsuit would be that, yes, this three-tier system is, in fact, discriminatory by requiring some sort of physical presence in state. And under the dormant Commerce Clause jurisprudence, you have a point. You have a good point. So I – why isn’t this just the camel’s nose under the tent?”

    Mr. Phillips (counsel for Total Wine): “[I]t is fundamentally at odds with my client’s business model to be looking to undo the three-tier principle.”

    Justice Gorsuch: “But isn’t the next business model just to – to try and operate as the Amazon of – of liquor?”40

    Counsel for Total Wine responded that his client operates a “brick-and-mortar business model” and is asking only to not be discriminated against as an in-state operator,41 but Justice Kagan followed up on the Amazon question:

    Justice Kagan: “But, to go back to Justice Gorsuch’s question, I mean, I’m trying to figure out what kind of opinion we could write, Mr. Phillips, that says you win, but then, when the next case comes along and the next case is somebody that says we don’t like this brick-and-mortar stuff, we don’t want to have any physical presence at all, and the state is preventing that, and in doing so, the state is discriminating against out-of-state companies. And, you know, you’ve said that that’s not valid, so we’re entitled to do what we want to do too. … [W]hat I’m asking you for is why would some kinds of discrimination be permissible and other kinds of discrimination not be permissible?”42

    To which Justice Gorsuch followed up again:

    Justice Gorsuch: “Isn’t that exactly where you want us to go? Not today, of course, but tomorrow or next year. … And we’ll see you again. And – and, surely, you know, the state can achieve all the regulatory interests it wants to achieve through virtually – dealing with virtual sellers from out of state, just as easily as it can with the physical presence sellers in state. I mean, surely that’s tomorrow’s argument, isn’t it? … This is just like … just like milk, just like books.”43

    Counsel for Total Wine responded that it would then be the state’s job to demonstrate to the court why it cannot effectively regulate online sellers. At that point the state would say, “This is why we can’t regulate effectively. This is why we won’t have the orderly market. This is why we need this restriction.”44 But to counsel for the association, this is exactly the kind of examination the 21st Amendment was intended to stop the courts from undertaking.45

    Conclusion

    Police officers and Department of Revenue agents inspect retail premises for legal violations. For example, certain drip markings on liquor bottles in a tavern may be a sign that the proprietor has refilled liquor bottles with cheaper brands. An inspection of invoices may reveal that a retailer has illegally purchased beer from Costco instead of going through the exclusive wholesaler in the sales territory. In package stores, where alcohol is sold in original, sealed containers, the enforcement issues are less numerous, typically involving sales to underage or intoxicated persons, hours of operation, supervision by an authorized individual (for example, a person with a “bartender’s” license), and ensuring the seller has a valid retail license.

    It is difficult to see how Wisconsin officials can effectively enforce these provisions against a retailer located in Seattle that ships products directly to consumers in Wisconsin. However, if a court were to determine that there is an effective way to monitor out-of-state retailers and enforce their compliance with Wisconsin laws (or that the laws exceed state authority), the U.S. Supreme Court decision in Blair could potentially conclude that Amazon has a constitutional right to ship alcohol directly to consumers in Wisconsin. A decision in Blair is expected in June.

    Meet Our Contributors

    What is your most memorable experience as a lawyer?

    Aaron R. GaryI had just started my first “real job” in Boise after two years of judicial clerkships when the lead partner on the case walked into my office and announced, “Steve’s having back surgery. You’re coming with me to California.” The five-week trial in California that followed was the most stressful, exhilarating, and educational experience of my legal career.

    The case involved a lumber mill that burned down in a small mountain town. My firm had taken on the $20 million subrogation claim of the insurer that covered the fire loss, asserting the security company hired to make regular rounds and guard against fire risk neglected to do so. There were rumors of a romantic entanglement between employees on the night watch that resulted in other priorities for their time.

    Opposing counsel, who chided us that he would win this case 9 out of 10 times, expected to home-town the out-of-state Idaho lawyers. But in this remote mountain county, the jury showed greater affinity for the Gerry Spence-like partner leading our case than the Armani-clad lawyers from one of the Bay Area’s largest firms.

    Every day of that trial I learned something about strategy, tactics, witness prep, and especially resilience, all from a master. Five grueling and amazing weeks later, the jury returned the unlikely plaintiff’s verdict.

    Aaron R. Gary, Wisconsin Legislative Reference Bureau, Madison.

    Become a contributor! Are you working on an interesting case? Have a practice tip to share? There are several ways to contribute to Wisconsin Lawyer. To discuss a topic idea, contact Managing Editor Karlé Lester at (800) 444-9404, ext. 6127, or email org klester wisbar wisbar klester org. Check out our writing and submission guidelines.

    Endnotes

    1 Granholm v. Heald, 544 U.S. 460 (2005).

    2 See Wis. Stat. §§ 125.04(1), (5)(a) 2., 125.25(2)(a), 125.26(2)(a), 125.28(2)(a), 125.30(1), 125.33(9), 125.51(2)(b), (3)(c), 125.54(2), 125.58(1), 125.69(6).

    3 See Wis. Stat. §§ 125.272, 125.51(6), 139.08(3), (4).

    4 Byrd v. Tennessee Wine & Spirits Retailers Ass’n, 883 F.3d 608, 612-13 (6th Cir. 2018). The petitioner in this case, Clayton Byrd, was the executive director of the Tennessee Alcoholic Beverage Commission when the action was filed. While the appeal was pending before the U.S. Supreme Court, Zackary Blair replaced Mr. Clayton and the case caption before the U.S. Supreme Court reflects this change.

    5 Bacchus Imports Ltd. v. Dias, 468 U.S. 263 (1984).

    6 Byrd, 883 F.3d at 614, 618-19, 621, 624-25, 628.

    7 Id. at 621, 623.

    8 Id. at 625-26.

    9 Id. at 623 (quoting Granholm, 544 U.S. at 473).

    10 Granholm, 544 U.S. at 469-71, 474-76. Section 2 of the 21st Amendment primarily created an exception to the normal operation of the dormant Commerce Clause, to permit states to prohibit commerce in, or delivery or use of, alcohol beverages within the state. 44 Liquormart Inc. v. Rhode Island, 517 U.S. 484, 516 (1996). The 21st Amendment reserves to the states power to impose burdens on interstate commerce in intoxicating liquor that, absent the amendment, would be invalid under the Commerce Clause. Capital Cities Cable Inc. v. Crisp, 467 U.S. 691, 712-13 (1984). Although intended to create an exception to the normal operation of the dormant Commerce Clause, the 21st Amendment did not entirely remove state regulation of alcohol beverages from the reach of the Commerce Clause. Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 331-32 (1964). The 21st Amendment was not intended to supersede the dormant Commerce Clause and does not abrogate Congress’s Commerce Clause powers with regard to liquor. Granholm, 544 U.S. at 486-87; Capital Cities, 467 U.S. at 712-13.

    11 Granholm, 544 U.S. at 493; see also id. at 481, 483, 489.

    12 Id. at 475, 487, 489.

    13 Id. at 489-93.

    14 Id. at 476, 484-88, 493.

    15 Id. at 488-89 (quoting California Retail Liquor Dealers Ass’n v. Midcal Aluminum Inc., 445 U.S. 97, 110 (1980)).

    16 Granholm, 544 U.S. at 489 (quoting North Dakota v. United States, 495 U.S. 423, 431-32 (1990)).

    17 See Granholm, 544 U.S. at 476-84; id. at 498-514 (Thomas, J., dissenting); id. at 497 (Thomas, J., dissenting) (criticizing the majority’s “questionable reading of history”); id. at 494-95 & n.1 (Stevens, J., dissenting) (offering a more general assault on the majority’s historical reconstruction).

    18 The history of the 21st Amendment, Prohibition, the original package doctrine, the Wilson Act, the Webb-Kenyon Act, Justice Hugo Black’s pronouncements, and numerous other U.S. Supreme Court decisions interpreting the 21st Amendment are all discussed in significant detail in 1 Aaron R. Gary, Alcohol Beverages Regulation in Wisconsin 2-8 to 2-33 (State Bar of Wis. 2d ed. 2016). The Granholm case is also discussed in more detail in Aaron R. Gary, Treating All Grapes Equally: Interstate Alcohol Shipping After Granholm, Wisconsin Lawyer (March 2010).

    19 State Board of Equalization v. Young’s Market Co., 299 U.S. 59 (1936).

    20 Granholm, 544 U.S. at 485.

    21 Hostetter, 377 U.S. at 336-40 (Black, J., dissenting).

    22 Bacchus Imports, 468 U.S. at 274 (citation omitted).

    23 Midcal Aluminum, 445 U.S. at 106-07 & n.10.

    24 Bacchus Imports, 468 U.S. at 275-76 (quoting Capital Cities, 467 U.S. at 714).

    25 Id. at 273; see also id. at 265-66, 270-72, 274-75.

    26 Id. at 276 (citation omitted).

    27 The transcript of the oral argument on Jan. 16, 2019 (hereinafter Transcript) is available on the U.S. Supreme Court’s website at www.supremecourt.gov/oral_arguments/argument_transcripts/2018/18-96_09m1.pdf.

    28 Transcript, pp. 6-7.

    29 Id. at 7, 10-13, 31-32. In contrast to counsel for the association, Total Wine’s counsel framed the issue not as equal treatment of in-state products and out-of-state products but as equal treatment of in-state operators and out-of-state operators. Transcript, p. 44.

    30 Id. at 7, 12, 31-32.

    31 Id. at 4-5, 8-9, 13-16, 22-25, 30.

    32 Id. at 34.

    33 Id. at 4-9.

    34 Id. at 17, 39-42, 49, 53, 58.

    35 Id. at 16.

    36 Id. at 25, 40-42.

    37 Id. at 30; see also id. at 25, 59-60.

    38 Id. at 36, 40-42, 57.

    39 Id. at 48-49.

    40 Id. at 49-50.

    41 Id. at 50-51, 54.

    42 Id. at 53, 55.

    43 Id. at 56, 57.

    44 Id. at 57.

    45 Id. at 59-60.




  • Solutions
    Time Management 101: Let's Get Real

    Generic organizing and time management tips don't apply for every lawyer. Here are the basics for finding a time management system you can stick to while complying with the ethics rules and building your business.

    Gretchen G. Viney

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    Because the Code of Professional Conduct implicates time management principles in “diligence” (SCR 20:1.3) and “communication” (SCR 20:1.4), lawyers are bombarded with advice about time and life management, procrastination, and prompt response to client concerns, all coupled with dire warnings about the ethical consequences of poor time management habits. The volume of advice is overwhelming. For example, a 2013 American Bar Association publication by Amy L. Jarmon, Time and Workplace Management for Lawyers, contains a “summary” appendix of more than 130 “quick tips.” Likewise, if we google “time management for lawyers,” we raise more than 190 million hits.

    When lawyers seek out and review these time management resources, they should approach them critically. My experience raises a number of caveats:

    • Time management experts usually are not lawyers. Many, if not most, time management strategies are aimed at business managers; the strategies may not work for lawyers.

    • Context is important. Effective time management strategies for lawyers may depend on the type of law practice. What works for a probate lawyer may be quite different from what works for a general practitioner, and that may be quite different from what works for a litigator. Effective strategies may also depend on the size of the practice. What works in a huge firm with a burgeoning staff may be quite different from what works for a solo or small firm with little or no staff. Time management literature often fails to recognize the importance of context.

    • Time management people often wear us out with time management strategies and costs. Often, the strategy becomes the goal rather than the strategy being the means to a goal, not to mention that the strategy often involves buying a product or system that is almost always expensive.

    • Most sustainable, successful time management strategies are personal, developed by the individual lawyer based on what works and, unfortunately, what does not. While reading multiple resources is useful for gleaning approaches to time management problems, lawyers generally must pick and choose among specific suggestions to find a good fit. Some of the best time management ideas arise from sharing idiosyncratic stories about what works or what does not because personal style is often more important than one size fits all.

    • Lawyers may not have a choice about certain time management strategies or tools, even if those are ineffective or superfluous. For example, a malpractice carrier may require a double-write or triple-write calendar system even if the lawyer has never missed a deadline with a one-write system.

    Overview of Approaches

    Most time management literature adopts, or combines, one or more of these overall approaches.

    Gretchen Vineyedu gretchen.viney wisc Gretchen Viney, U.W. 1978, is a distinguished clinical professor at the U.W. Law School, Madison, where she is the director of the Lawyering Skills Program. She previously practiced law in Baraboo.

    Get Organized. This type of system focuses on organizing things, organizing tasks, and organizing people. The downside here is that sometimes it’s hard to herd cats.

    Set and Achieve Goals. Under this popular approach, an individual sets long-term, mid-term, and short-term goals, and then achieves, achieves, achieves. All activities are goal oriented and every task is evaluated by the filter: Does this help me reach my goal? People who know how to set and achieve goals generally do accomplish what they set out to do and often in a timely way. The weakness here is that, as Steven Covey and coauthors famously wrote in First Things First (Covey Leadership Ctr., 1995), it means little to climb the ladder if the ladder is leaning against the wrong wall. Also, life has a way of interfering with all these goals that we spend so much time setting.

    Acquire a Magic Tool. Often, time management systems are commercial, so someone is trying to sell the latest and best product: calendaring system, computer program, case management program, time-keeping and time-alerting systems, and so on. These mostly electronic tool-based systems work for people who like, and use, new toys. For the rest of us, these systems can be alluring but useless over the long haul because we quit using them.

    Learn More and Better Techniques. Under this approach, time management is a discrete skill that can be mastered by learning and applying the basic techniques of time management. These basics usually involve, in one form or another, the following: using a planner, creating “to do” lists, setting goals, delegating, organizing, and prioritizing. Intricate systems may result, or stand-alone “tools in the toolbox” may be advanced. The techniques are often interconnected: When one piece fails, the crafted system tumbles. The touted solution is that we must become better at using tools and techniques, but sometimes we become overwhelmed trying to master new techniques.

    Ideas to Ponder

    Given the importance of competence and diligence in the legal profession, we cannot afford to ignore the importance of “Time Management 101” skills. We also cannot achieve a higher level of life management unless we know how to use the clock. In the end, sustainable micro and macro time management strategy is relatively straightforward: 1) evaluate yourself and your goals; 2) look at creative ways to use existing time; 3) investigate ways to find more time in your day; and 4) learn to control yourself and how you spend your time. If you consider these four steps and create a realistic action item or two under each, you will improve your time management skills.

    Looking at 3. and 4., the following simple, basic suggestions may help create more time in the day and control how time is spent.

    Organize Your Work Area. One of the biggest time wasters is searching for things, rummaging around for things, moving stacks from one place to another, moving papers from one place to another, and generally shuffling stuff around in your office. The modern equivalent is searching through electronic files, folders, and indexes.

    To avoid the time waste, keep your physical and electronic work environments in some sort of order. When working on a number of files at once, those files (or parts of them) will be on your desk or open on your computer, or both. The goal is to make sure that nothing else is there, or that whatever is there is necessary to the current task.

    Do not spend inappropriate amounts of time on tasks that do not require that degree of accuracy or completeness.

    Plan Your Day. We can plan life goals and five-year goals and year-end goals and monthly goals and weekly goals, but if we do not know what we need to do today, the planning is for naught. You may have a to-do list, you may have notations on your calendar, you may have sticky notes (paper or electronic) on your desk top. In whatever way you plan for today, stick to the resulting plan. If you decide not to follow the plan, make that a conscious decision, not a “whoops.” Some people prefer to plan the day first thing in the morning; others plan for tomorrow at the end of today.

    Schedule Your Tasks. At least until you have a feel for how you spend your time, it probably is a good idea to schedule nearly all the tasks of life on your calendar. Schedule the unbudgeable appointments first: court appearances, meetings involving other people, obligations that are outside motivated or that involve others. Then schedule long-term and short-term projects, broken into small tasks, if possible.

    For example, if you know you must write a brief, break that project into tasks and schedule each task as an appointment on your calendar. You can always reschedule these “task” appointments should your priorities change or outside-motivated obligations impose, but then your choice will be a choice, not a “whoops.”

    Remember, you must also schedule your life. If you do not work at certain times, cross off those times. If you have a standing obligation, cross off that time. If you have a family event, cross off that time. Keep your home calendar transcribed onto your office calendar if you are permitted to do so. That way, you will not accidently schedule over your mother’s birthday dinner or your child’s school program. This does not mean that you may not choose to do so, but at least you will be making a choice.

    Choose When to be a Perfectionist. Many time management resources advise “don’t be a perfectionist.” That’s great advice for a middle manager in a huge company, but not such great advice for a lawyer. For lawyers, I would revise the advice: Do not spend inappropriate amounts of time on tasks that do not require that degree of accuracy or completeness.

    The issue, of course, is identifying which tasks those are and how to define inappropriate. Lawyers must quickly learn what tasks must be close to perfect and which can be good enough.

    The volume of email increases exponentially each year; handling the onslaught is an ongoing project, and problem, for lawyers and law firms.

    Embrace Interruptions. This advice is not the same as “practice procrastination.” Of course, do not look for distractions. But to be effective, we must learn to work despite interruptions. Frequently, interruptions are not time wasters but opportunities arriving at inopportune times. A quiet hour may be useful if the reason it is quiet is because no one is calling – like at 7 a.m. or 7 p.m.

    An artificially constructed do-not-disturb hour may be a good time management tool but may be a terrible practice management tool. Do you really want to be uninterrupted if the interruption is a new, valuable client? Expect interruptions and do not let them derail you.

    Manage Your Email. The avalanche of email will crush you if you do not come up with a good system to sort, read, respond, and save. The obvious best practice is to automatically sort incoming email into separate folders via “rules” or other built-in programs and then follow a systematic routine to review the various folders. After review, the email is moved from the in file to a permanent resting spot in accordance with your practice management or law firm rules. The volume of email increases exponentially each year; handling the onslaught is an ongoing project, and problem, for lawyers and law firms.

    Schedule Social Media and Internet Time. If you keep up with colleagues, friends, current events, professional events, and emerging legal issues by visiting social media and internet sites, you can preserve time by strictly scheduling these visits and ending them when the metaphorical bell rings.

    Respect Others. A popular time management strategy is to delegate work to others. Perhaps the advocates of that strategy have never been in the position of delegatee or have not noticed the effect of thoughtless or clumsy delegation. A good rule of thumb is to remember that people are not time management tools. These “delegatees” are people who have their own schedules and who have presumably engaged in their own goal setting, planning, and scheduling. Managing my time more effectively by interrupting someone else is arrogant.

    If by “delegate” we mean sharing the load in a team-building, cooperative way, then this may be a healthy way to run our practices and manage our time. If by “delegate” we mean that we have too much to do and we intend to dump some of it on someone else who also has too much to do, then we may be helping our personal time management problems but we are creating other, probably more serious, problems along the way. People are not time management tools, they are people.

    Conclusion

    In the end, lawyers manage their time so that they can serve their clients diligently and competently, not so they can support the world of self-help management resources. Evaluate your goals, find a few tools that address the specific time management problem you encounter, evaluate the process periodically, and focus on what works in your personal and professional life.

    Meet Our Contributors

    What did you do to survive this long, snowy winter?

    Gretchen VineyI commute to work from Baraboo to Madison, so my primary strategy involved snow tires and an intrepid Corolla with 193,000 miles on the odometer. Beyond that, the Badger women’s hockey team (to which I am currently the U.W. Athletic Board liaison) kept me in excellent spirits. I attended 22 of 23 home games and also traveled to away games at Ohio State, Bemidji, and St. Cloud; to the conference tournament in Minneapolis; and to the NCAA Frozen Four in Connecticut, where they won the national championship!

    More mundanely, I also read (mostly mysteries and fiction), sang in the church choir, listened to opera, and generally tried to keep myself from hibernating, at one extreme, or overreacting to national and world events, at the other. At this point, I am pining for summer and walleye.

    edu gretchen.viney wisc Gretchen Viney, U.W. Law School, Madison.

    Become a contributor! Are you working on an interesting case? Have a practice tip to share? There are several ways to contribute to Wisconsin Lawyer. To discuss a topic idea, contact Managing Editor Karlé Lester at (800) 444-9404, ext. 6127, or email org klester wisbar wisbar klester org. Check out our writing and submission guidelines.




  • Marketing
    How to Improve Your Law Firm's Website

    Ditch the bells and whistles. Instead, craft a website that gives potential clients information, relief, and hope.

    Laurence Bodine

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    Business was slow at the law firm, the associates were not busy, and the best files were going to a competitor across town. The partners had a vague sense that the firm website wasn’t working to generate new business.

    I examined it and was struck by how little there was to read on the site. The home page had nothing but moving words like “Trustworthy. Loyal. Helpful. Friendly” – in front of a continuously running animation. The site had been online for four years with virtually no changes. Even the “About Us” had only 175 words, beginning with “Our story began in 1994, when John Doe, Joe Bleaux, and Tim Everyman established the firm….” The site did have a blog, last updated six months earlier, including posts by lawyers who had left the firm.

    Larry Bodinecom Larrybodinenow gmail Larry Bodine, Seton Hall 1981, is the Senior Legal Marketing Strategist for LawLytics, a web marketing company. He is also the editor of The National Trial Lawyers website.

    A search in Google for the partners’ primary practice area revealed all their competitors, but not the partners’ own firm. Searches in FindLaw and Martindale produced the same results, and a Yelp search turned up a bad review.

    This was definitely a law firm website that was not working.

    One-third of potential clients begin their search for a lawyer online.1 If your law firm is still operating without a website in the modern internet era, it is likely losing business to firms that put more effort into their online presence. About 70 percent of law firms have generated new cases through their websites, and nearly three-quarters of consumers visit a law firm’s website ready to take action.2

    Fixing a Website That Is Not Working

    A lack of new business is a compelling reason to make a change, but it’s important to make sure that you’re changing the right things. Unfortunately, lawyers often blame red herrings. For example, a lawyer may decide that her site is failing because it lacks a security certificate, it’s loading slowly, or it doesn’t have a live chat feature. And when lawyers make changes because of red herrings they end up confused, depleted, and defeated. But this fate is 100 percent preventable when you know the two real causes of website failure.

    • You’re Not Attracting Qualified Potential Clients. This happens because the partners bought into the wrong online client acquisition methods, their search engine optimization (SEO) is poor, or both. In all cases, this results in the most viable potential clients finding your competitors’ websites before they find yours.

    • Qualified Potential Clients Visit Your Website, But Don’t Contact You. If potential clients are not contacting your firm, the problem can almost always be traced to the design of the site, the content on the site, or both.

    The common denominator in most poorly performing websites is content. It is the most important part of SEO and part of converting visitors into clients.3

    Designs That Don’t Work

    Your website should represent you well, which means creating both an intellectual and an emotional connection with your potential clients. People don’t care how much you know until they know how much you care. These bells and whistles will kill your conversions:

    • Uninstructive animations

    • Image hover effects

    • Fancy fonts

    • Huge fonts

    • Background videos

    • Elaborate menus

    • Jumpy content that flies out

    As a result, when people visit your site, they subconsciously associate motion and flashiness with advertisements, which most web users are trained to ignore. They have to work harder to consume the information that they need. They conclude that you’re covering up a lack of substance with style.

    For example, The Lemon Lawyer’s design about California lemon law is simple and can be viewed at a glance. See sidebar: Good Samples of Law Firm Websites.

    A custom, novel website design may win awards for the design agency, but this is expensive and is not connected to improving the website conversion rates.

    Designs That Work

    Put yourself in the shoes of your potential clients. Why are they on your website? Nobody goes to a law firm website to be entertained. They don’t want or need to be dazzled. They want information, relief, or at least hope. What does the website need to do to the potential client to cause them to know, trust, and like you?

    Give your potential clients the experience they want:

    • A professional-looking site. This rules out do-it-yourself sites such as WordPress, GoDaddy, or Wix.

    • Logical layout and nothing to figure out.

    • Control by the visitor.

    • Easy to navigate and find key information.

    • Easy to read – no moving text, disappearing images, or animated background.

    • Clear calls to action – either completing a web-based form or calling you.

    Don’t let the sunk-cost fallacy deprive your future clients of your services. Consider the design mistakes of the past to be expensive lessons and make the necessary corrections. That said, there is no reason to spend $10,000 or more for a fancy but ineffective design.

    SEO Strategies

    The best traffic that you can attract to your website comes from qualified potential clients doing Google or Bing searches about their matter and clicking on the free listings. These potential clients are serious and focused and are often more educated and affluent than potential clients who click on paid advertising. Free search-engine traffic is more cost effective and more sustainable.

    The Shouse Law Group site generates substantial business for the firm. See sidebar.

    “Unfortunately, attorneys have become the preferred targets for SEO snake oil salesmen for several reasons. 1) Attorneys have money to spend; 2) It’s prohibitively expensive for many attorneys to compete using paid advertising; 3) Attorneys are busy and many don’t have the time or inclination to learn the basics of SEO that would easily protect them from SEO grift,” says website expert Dan Jaffe, CEO of Lawlytics.com.

    SEO drawbacks include the following:

    • Off-site optimization is generally illusory. It’s an expensive way for SEO salespeople to say “we’re doing things to benefit your site that we can’t quantify, prove, or explain.”

    • Paid link-building is ineffective and dangerous, so don’t solicit links or offer an exchange of value.

    • Directory links don’t move the needle.

    • Keyword optimization is ineffective and dangerous.

    • If SEO sounds like magic, it will eventually hurt you.

    Don’t try to game the search engines. Their employees have lots of Ph.Ds. and you can’t outsmart them. Optimization is generally not an ongoing project. Once it’s optimized, a site will stay optimized.

    High-quality Content is Key

    Consistently world-class SEO has three parts: high-quality content (80 percent) that is well structured (18 percent) and earns quality inbound links (2 percent). Ignore everything else.

    Ineffective content 1) talks only about your firm; 2) sounds like advertising; 3) fails to educate or add informational value; 4) doesn’t make an emotional connection that inspires potential clients to trust you; 5) tells, but doesn’t show, them your expertise; 6) dumbs it down or speaks in generalities; and 7) is written to try to trick search engines.

    Marketers can describe you as the “best attorney” in your practice and location and make simple statements like “need a divorce lawyer in Memphis” or “the best personal injury firm in Denver.” The result is tens of thousands of lawyers are all declaring essentially the same thing.

    “The content on your website must prove three things to your potential clients. It must show them that you care about them and their goals or plight. It must provide them proof that you’ve successfully helped people just like them. And it must establish you as an expert,” Jaffe says.

    The Keen Law firm emphasizes client satisfaction. See sidebar.

    The trick is to write the way your potential clients think. If you pay attention to how your clients talk to you when you meet with them or talk with them on the phone, and observe how they respond to your answers, you’ll have a blueprint for what to say and how to say it.

    The content on your website must prove:

    1. How much you care;

    2. That you’ve helped people just like them; and

    3. That you’re an expert. Your proof can include:

      • Vivid case studies and results

      • Client recommendations with context

      • Substantive legal pages

      • Timely and insightful blog posts

    For example, declaring that you were Order of the Coif means absolutely nothing to nearly 100 percent of your potential clients. But, if you explain that you excelled in law school because you had a focused vision and lifelong dream of helping people just like them, it means a lot. If you declare that you have a published court of appeals opinion by listing the citation, it means nothing to most of your potential clients. But if you tell the human story behind the wrong that you righted or the lengths you went in trying, and why you cared passionately about the cause, it means a lot.

    If you don’t want to write your own content or don’t have the time, consider hiring writers who are lawyers.4

    Time For a Change

    At this point, many lawyers will realize they need a new website company. Remember these points when making a change:

    • Don’t get a site built on top of generic platforms like WordPress.

    • Avoid a company that has conflicts of interest – such as selling directory listings or pay-per-click advertising, which puts its law firm customers into competition with each other.

    • Be sure you have total control over the site and can easily add or delete content yourself and rearrange sections easily.

    • Find a company that specializes in websites for lawyers.

    • Avoid money-wasting add-ons like paid social media marketing.

    For more, watch “The Safe Way to Change Website Companies.”5

    Conclusion

    Today is the day you should check to see if your website is working. Are you not getting visits from qualified potential clients? Check by doing a Google search on your top practice area and see what comes up. Are you on page one of Google? Examine the site to see if it has been updated in the last 10 days. (It’s true that the more you blog, the more clients you will get.6) Look up the number of page views the site is getting in Google Analytics or your built-in traffic logs.

    If potential clients are indeed visiting, are they calling the firm (ask your receptionist) or completing your online form? If not, take a look at the site design – is it busy and moving around and does it resemble an advertisement? Take a close look at the content on the site. Is it boilerplate? Two years old? It should tell stories that cause visitors to know, trust, and like you.

    A professionally designed and written website will attract potential clients and cause them to contact you for help. But you’ll only know if you check.

    Good Samples of Lawfirm Websites

    lemon law 

    Shouse California Law Group 

    Keen Law Office 

    Endnotes

    1 See https://goo.gl/iSXCze.

    2 See https://goo.gl/xee9VK.

    3 For more information, watch “Content Creation for Lawyers” at https://goo.gl/yVDF1k.

    4 See https://goo.gl/UGJZN1.

    5 See https://goo.gl/x4rUdM.

    6 See https://goo.gl/GfqJv2.

    ​​



  • Ethics
    Can Lawyers Contact a Represented Person in an Unrelated Matter?

    The key to contacting an individual who is represented by another lawyer is whether the existing representation relates to the same matter the lawyer wishes to discuss.

    Dean R. Dietrich

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    Question

    I recently read an ethics article about contacting a represented person in an unrelated legal matter. I wonder if I am allowed to do that if I know that a person is represented by a lawyer.

    Answer

    Many people are confused about this topic. The State Bar of Wisconsin Professional Ethics Committee has issued an informal ethics opinion that addresses this question under different scenarios. One scenario involves a witness who was represented by a lawyer in a different matter. Another scenario involves a lawyer who is asked to meet with a potential client, even though that person is represented by counsel. The third scenario involves a situation in which a lawyer wishes to contact a former client, now represented by a new attorney, to discuss fees owed to the lawyer. Informal Ethics Opinion EI-17-04 can be found at www.wisbar.org/ethop.

    Dean R. Dietrichcom dietrich dvlawgroup Dean R. Dietrich, Marquette 1977, of law firm of Dietrich VanderWaal Law Group SC, Wausau, is chair of the State Bar Professional Ethics Committee.

    State Bar Ethics Counsel Tim Pierce has also discussed a very common scenario: a lawyer wishes to contact a person (who likely would be a witness on behalf of the lawyer’s client) but knows that the person is represented by an attorney in an unrelated criminal proceeding. There is always concern about whether the lawyer can contact this potential witness directly because the potential witness has an attorney in the other pending matter. The conclusion is that the lawyer can contact the person as a potential witness because the representation by the other lawyer is in an unrelated matter. It would be appropriate to contact the attorney for the other person (the potential witness) before making a contact, but that is not a requirement under the Rules. Pierce’s article, Ethical Dilemmas: Contact with a Person Represented in an Unrelated Matter, appears in the June 21, 2017 issue of InsideTrack.

    These are challenging situations because of the requirements of SCR 20:4.2, which provides that a lawyer may not communicate with another person the lawyer knows is represented by counsel. The SCR 20:4.2 requirements (or perhaps protections) only apply, however, when a lawyer is communicating about the subject of his or her representation and knows that the person he or she is communicating with is represented by another lawyer “in the matter.”

    The reference to “in the matter” is a significant limit on the applicability of the Rule. If the person a lawyer wishes to communicate with is not represented by counsel in connection with the legal matter the lawyer is working on for the client, there is much more freedom to contact the person directly without seeking permission from the attorney who represents that person. Obviously, much depends on the exact fact situation, as well as a reasonable determination of whether the person the lawyer wishes to contact is represented by counsel in the matter that the lawyer wants to discuss.

    I encourage you to look at Informal Ethics Opinion EI-17-04 and Tim Pierce’s article for more guidance.

    If the person a lawyer wishes to communicate with is not represented by counsel in connection with the legal matter the lawyer is working on for the client, there is much more freedom to contact the person directly.



  • Preparing for the End of the London Interbank Offered Rate in 2021

    In 2021, the London Interbank Offered Rate – the benchmark reference rate that underpinned hundreds of trillions of dollars of finance contracts for three decades – will no longer be used. Patricia Lane and Louis Wahl IV discuss the cessation of what has been called “the world’s most important number,” and offer recommendations for addressing its cessation in credit agreements, securities, and other finance contracts.

    Patricia J. Lane and Louis E. Wahl IV

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    In July 2017, the United Kingdom’s Financial Conduct Authority (FCA) announced that it and the panel banks whose submissions are used to determine the London Interbank Offered Rate (LIBOR) will only sustain LIBOR until the end of 2021.

    The FCA declined to provide a successor reference rate for LIBOR, leaving it to the international finance community to select a successor to what has been called “the world’s most important number.”

    The magnitude of the situation cannot be overstated – it is estimated that LIBOR cessation has the potential to disrupt $200 trillion of U.S. dollar LIBOR contracts, ranging from consumer auto loans to derivatives, including $4 trillion of syndicated loans and $500 billion of collateralized loan obligations.

    Suffice it to say, a transition from LIBOR presents the finance industry with a monumental, arguably unprecedented challenge.

    LIBOR and SOFR

    In the United States, a new reference rate has emerged as the preferred successor to LIBOR, the Secured Overnight Financing Rate (SOFR).

    SOFR is an overnight, secured reference rate administered by the Federal Reserve Bank of New York. It broadly measures the cost of borrowing cash overnight with U.S. Treasuries as collateral, and therefore reflects fewer risks than unsecured rates. On the other hand, LIBOR is an unsecured reference rate and tends to be higher than secured rates to reflect counterparty risk.

    Patricia J. Lane com plane foley Patricia J. Lane, Chicago 1986, is a partner with Foley & Lardner LLP, Milwaukee, where she specializes in the finance practice area.

    Louis E. Wahl com lwahl foley Louis E. Wahl IV, Minnesota 2012, is an associate with Foley & Lardner LLP, Milwaukee, where he specializes in the finance practice area.

    SOFR is based entirely on transactions in the U.S. Treasury repurchase market, and encompasses a robust underlying market (about $750 billion per day). In contrast, LIBOR is only partially based on actual transactions and encompasses a much smaller market (for example, the average daily trading volume for three-month LIBOR is less than $1 billion per day).

    Moreover, the process for determining SOFR is relatively more transparent compared with LIBOR’s. One notable drawback of SOFR is that it tends to be more volatile than LIBOR, especially at month and quarter-end dates, by virtue of it being tied to U.S. Treasury bill issuances.

    Suggestion: Use Fallback Language

    While there is increasing momentum for SOFR to replace LIBOR and notable SOFR-based debt issuances closed in Q4 2018 and early Q1 2019, the market has not yet widely adopted SOFR (or a variation thereof) as LIBOR’s successor. Until that time, affected parties need to implement interim plans immediately.

    For credit agreements, securities, and other finance contracts using LIBOR as a reference rate and with obligations maturing beyond 2021, we recommend that LIBOR fallback language be incorporated therein to address LIBOR cessation.

    If a finance contract already includes fallback language, check to see whether the existing language merely addresses the temporary unavailability of LIBOR (for example, if the relevant LIBOR screen rate is unavailable) as compared to the permanent unavailability of LIBOR. Until recently, fallback language addressed only the former. Such legacy language is inadequate to provide a workable solution when LIBOR becomes permanently unavailable.

    Fallback Language: What’s Necessary

    To address LIBOR cessation, fallback language should at a minimum provide that, in the event LIBOR becomes permanently unavailable or is no longer a widely-accepted benchmark for new indebtedness or obligations, the contracting parties will endeavor to establish an alternate rate of interest to LIBOR that gives consideration to the then-prevailing market convention for determining a rate of interest for transactions of that type, and that the parties will enter into an amendment to the subject agreement to appropriately incorporate such alternate rate of interest.

    Such fallback language should permit other adjustments to the terms of the finance contract that might be required to ensure that the parties are in the same economic position once the fallback language is triggered, including appropriate adjustments to the spread.

    In addition, fallback language may need to address the mechanics and approval thresholds to amend the subject finance contract to give effect to the alternate rate of interest and other related terms.

    This last point becomes particularly relevant in the context of finance contracts that require the consent of multiple parties (such as syndicated credit agreements and indentures), so a streamlined amendment process should be included with respect to the replacement of LIBOR.

    Conclusion: Update Your Contracts and Monitor Market Developments

    Given the size and scope of LIBOR usage as a reference rate throughout the finance industry, it is essential that affected parties update their credit agreements, securities, and other finance contracts with appropriate fallback language, and actively monitor market developments regarding SOFR and its possible replacement of LIBOR as the preferred reference rate for finance transactions.




  • 101
    Export Control: Your Client May Be Subject to Regulation

    Lawyers with clients who ship items overseas, work with foreign companies, manufacture scientific or military equipment, travel overseas, or employ non-U.S. citizens should incorporate export control analysis into their practices. More clients may be subject to regulation than you might expect. Know the basics.

    Bethany Christine Nelson

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    transport ship

    Consider the following scenario: A client hires you to look over a contract. A foreign company is interested in a product developed by one of the client’s employees, a British citizen. The foreign company has requested both an emailed file showing the product’s design and delivery of a sample product to their overseas headquarters for testing. If the foreign company likes the product, it will proceed with a large sale outlined in the contract you are reviewing.

    Most lawyers would focus on the contract terms without necessarily considering the actions of transfer involved. To do so, however, would be missing some potentially damaging issues that could result in enormous legal and financial consequences. This is because the client has presented several export control issues.

    If you have clients that ship items overseas, work with foreign companies, manufacture scientific or military equipment, travel overseas, or employ non-U.S. citizens, then you should incorporate an export control analysis into your practice.

    Export Control and Exports

    Export control is a series of federal laws and regulations implemented by the U.S. government to protect exports that have potential military applications. These laws apply to all persons and companies that do business within the United States.

    Bethany Nelsoncom bethanynelsonjd gmail Bethany Nelson, U.W. 2010, is the export control coordinator for U.W.-Madison. Additionally, she runs her own consulting firm, Bethany Nelson JD LLC, focusing on helping companies navigate export control issues.

    The term “export” covers a much broader group of actions than one might expect. It includes not only shipping items overseas but also sending information or data to foreign persons. Actions such as sending faxes and emails to people overseas, making calls to foreign persons, and transporting items in carry-on luggage all fall under the category of exports.

    Additionally, export-controlled information, technology, or data within the United States to which a foreign citizen has access is deemed to have been exported.1 This means that providing any non-U.S. person working in the United States with access to controlled technology and information has potential export control implications. This is known as a deemed export and is, by far, the most often overlooked export.

    The deemed export rule applies to anyone who is not one of the following: a U.S. citizen, a permanent resident, a green card holder, or a refugee with asylum status. Being granted a visa does not mean a person is exempt from export laws.

    In the opening example, there would be several exports to consider: sending plans via email, transporting an item overseas, and eventual shipping of items. Additionally, the fact that the person who developed the item is not a U.S. citizen means there are potential deemed export issues to review.

    Federal Regulations

    Export control laws are administered by many agencies in the federal government, but the two agencies that have the greatest responsibility are the Department of State (DOS) and the Department of Commerce (DOC).

    The DOS oversees the international Traffic in Arms Regulations (ITAR).2 This includes a list of items that are used for military purposes, such as firearms and chemical weapons.

    The DOC’s counterpart to ITAR is the Export Administration Regulations (EAR).3 The EAR list is significantly longer and more comprehensive than the ITAR list and contains items that could be used for a military purpose (referred to as dual-use items). Chemicals, lasers, centrifuges, laptops, encryption software, and telecommunications equipment are only a small sampling of controlled items. If an item is on either of these two lists, it is considered controlled.

    Unknowingly violating any of the regulations can lead to fines of up to $500,000, and willfully violating the regulations carries fines of up to $1 million per violation.

    If the item is not specifically listed on either the ITAR or EAR list, then it likely is classified as EAR99. This is the lowest control level; ordinary items such as pencils and toothbrushes are classified as EAR99. Items with this classification are restricted only for Cuba, Iran, North Korea, Sudan, and Syria.

    Determining whether an item is on the ITAR or EAR list can be a lengthy process. There are more than 3,000 controlled items on the lists, divided over 551 designations.

    Because the items on these lists are so wide ranging and detailed, there is simply no short list of items to consult and no fast way to determine something’s status. There are, however, some general rules to guide making a basic determination:

    • Items that have a military purpose are likely controlled.

    • Items that could have a military purpose may be controlled.

    • Major pieces of scientific equipment may be controlled.

    • Basic scientific equipment like test tubes and pipettes are designated EAR99.

    • Most household items like furniture and clothing are designated EAR99.

    One common mistake is to assume that being able to purchase an item from a major retail chain means it is not controlled. While some controlled items (for example, chemical weapons and uranium) have restrictions on their sale and distribution, the vast majority can be purchased freely (for example, laptops and firearm sights). Merely because something is easy to purchase does not mean it is not controlled.

    Sanctions and Restricted Parties

    Even if a client is not working with export-controlled equipment, other restrictions should be considered: sanctions and restricted parties.

    The U.S. Department of Treasury (Treasury) and the DOS have issued a range of sanctions against several countries. These sanctions limit transactions with certain countries; the most restrictive apply to Cuba, Iran, North Korea, Sudan, and Syria. There are less comprehensive sanctions against other countries, including China, Russia, and Venezuela.

    In addition to broad sanctions against specific countries, the U.S. government also maintains several lists of individuals, companies, and organizations that U.S. citizens and companies are limited or prohibited from doing business with. These often are collectively referred to as the restricted party lists.

    Foreign persons accessing controlled data in the United States is an export.

    Restricted party lists contain criminals, spies, and terrorists, along with several seemingly benign organizations that are actually fronts for illegal operations, such as Tsunami Relief Fund in Sri Lanka, which has terrorist ties. While foreign entities make up large portions of these lists, there are some U.S. companies and individuals on them. An example is the Benevolence International Foundation, in Illinois, which has also been linked to terrorists.

    It is prudent to do a restricted party screening on any foreign companies or persons a client may interact with by running their names through these lists. The U.S. government provides a free tool, the Consolidated Screening List, that allows for easy restricted party screenings.4

    Staying Compliant Without Interrupting Work

    Lawyers must advise clients as to how to best proceed while complying with export control laws when clients want to do any of the following:

    • Work with a controlled item;

    • Ship a controlled item;

    • Allow a foreign person access to a controlled item; or

    • Do business with a restricted party or sanctioned country.

    If clients want to move forward with any of these actions, lawyers must develop formal plans using legal authorizations from the government. The three main paths to pursue are exceptions, exemptions, and licenses.

    Exceptions and exemptions provide authorization for specific activities involving controlled items without requiring a license. They are listed, respectively, in ITAR and EAR and are wide ranging in their scope.5 They can be item specific, country specific, value dependent, or depend on the activity itself.

    As an example, EAR has a temporary exception (TMP) that can be used for “tools of the trade.”6 This allows for the shipment of goods overseas for a short period of time to be used by employees of a company, so long as the goods remain under their control and are not shipped to a high-risk country.7 This exception is particularly helpful to any client who needs to take abroad equipment that may otherwise require a license.

    There are, however, many other exemptions and exceptions that should be explored to determine if they apply to a client’s situation. Each one has a narrow set of circumstances which must be in order to claim, but it will usually not require any specific government authorization to proceed.

    Lawyers should ensure that there is proper documentation explaining why an exception or exemption was used in a particular situation. Certain exceptions and exemptions must be listed on shipping documentation.

    If an exception or exemption is not applicable, a license must be obtained from the proper agency. Licenses can be issued for a variety of situations including shipping controlled items, interactions with restricted parties, dealings with sanctioned countries, and deemed export licenses for foreign persons working with controlled items, technology, or data.

    Applications for a specific activity (for example, shipment of a specific item to a particular company or a foreign person working with a certain item) must be submitted to the appropriate agency for review. Agencies will not issue licenses that cover a wide variety of activities or shipments, so each event must be submitted separately. Different information may be required for different licenses, so it is important to pay attention to what an agency requires.

    Because response times can vary from a few days to several months, make sure to submit applications as soon as possible and keep in mind that there is no guarantee that a license will be granted.

    Consequences for Violations

    The consequences for violating export control laws can be severe. Unknowingly violating any of the regulations can lead to fines of up to $500,000, and willfully violating the regulations carries fines of up to $1 million dollars per violation.8 Jail time of up to 20 years is possible for each violation depending on which agency is overseeing the matter.9 Violators may also lose their export privileges.

    There are no hard and fast rules regarding how agencies mete out punishment. Ignorance of the law is not a valid excuse, and fines have been levied without a company having any knowledge of wrongdoing.

    Individuals as well as companies and organizations can be held responsible. There is nothing to shield a person who committed a violation on behalf of a company from being punished along with the company.

    Violation Examples

    Numerous fines have been handed out by multiple agencies for violations of export control laws. Violations can happen without a company even being aware it is doing something illegal.

    Humane Restraint Inc.10 Humane Restraint Inc. in Waunakee, Wis., makes restraining devices used in hospitals and correctional facilities. These items are controlled, but the company shipped less than $17,000 of items overseas without the required license.

    The company was convicted of 32 violations, 27 of which were done without knowing they were violating the regulations, and was fined $465,000 (reduced to $50,000 if there were no additional violations for two years).

    Teledyne LeCroy Inc.11 Teledyne LeCroy makes controlled oscilloscopes. They shipped some to Beihang University of Aeronautics and Astronautics in China. This university is on a restricted-party list, and the oscilloscopes require a license to be shipped to China, which was not obtained. Teledyne was fined $75,000 for oscilloscopes sold at retail for around $16,000.

    J. Reece Roth.12 J. Reece Roth was an emeritus professor of physics at the University of Tennessee. His research to improve drone performance included export-controlled information.

    Roth committed several violations, including having a Chinese graduate student work on the project, taking files overseas to China, and having a student email a Chinese colleague export-controlled information. These actions were all done without the required license, and Roth ultimately spent four years in prison for these violations

    FLIR Sys. Inc.13 FLIR, which makes infrared and sensing technology, committed 347 violations, including transferring technology to Iranian and Cuban nationals. The company was fined $30 million, one-half of which will be suspended if the company completes all DOS-imposed remedial conditions.

    Spotting Potential Export Control Issues

    Because export control often does not receive a dedicated review, lawyers should familiarize themselves with potential red flags and make sure to inform clients of the potential compliance issues that may arise when they engage in the following activities.

    Traveling Overseas. Anytime overseas travel occurs, consider the destination, the reason for travel, who the traveler is meeting, and items being carried.

    If the client is traveling to an embargoed country, special consideration should be given to the reasons for the trip to ensure that no laws are inadvertently broken.

    Additionally, regardless of country of travel, a restricted party screening should be done for persons and companies a traveler is visiting.

    Licenses should be obtained as necessary, and exceptions and exemptions noted and documented for any controlled items, technology, or information that qualifies.

    Working with Controlled Items, Technology, and Data. Any time a client has controlled items, technology, or data, proper measures must be taken to ensure that any foreign persons’ access is authorized by law. This extends to any company visitors or customers.

    Additionally, the client should have procedures in place for shipping, transfer, and destruction of controlled items as well as a policy on access to controlled electronic data. These policies need to safeguard these items and data from unauthorized releases to foreign persons.

    Selling Controlled Items. When selling controlled items, check to see whether the item is going abroad. Some overseas destinations may require a license.

    Additionally, it is good practice to do a restricted party screening of buyers of the controlled items in case a license is needed to send them to certain buyers.

    Shipping Items Overseas. Three things should be considered with overseas shipments: what is being shipped, who it is being shipped to, and the destination.

    Check whether any controlled items are being shipped and if a license is required to ship them to the destination country. Check for embargoes on the destination country, and complete a restricted party screening for the organization or person who is receiving the item.

    Employing Foreign Persons. Employing citizens of foreign countries should trigger an analysis to see if they are working with any controlled information, technology, or data. If the answer is yes, an attorney must determine if the foreign person qualifies for an exception or exemption or must obtain a license so work can continue.

    Working with Foreign Collaborators. Working with collaborators either in the United States or abroad will require an attorney to do the same analysis as for items being shipped overseas to ensure compliance with deemed export requirements.

    Business, Shipments, or Travel to Iran, Syria, Sudan, North Korea, or Cuba. These countries have the most restrictions of any foreign countries for export control purposes and any export actions will require a more thorough and detailed analysis to ensure compliance with the regulations.

    Conclusion

    Export control is often overlooked but can have major effects on companies of all sizes. While these regulations can seem intimidating, lawyers should learn and incorporate export control analyses in interactions with clients to help minimize risk. After a few interactions with these laws, attorneys will soon find export control reviews to be an ingrained habit of their practices that will result in better compliance for their clients.

    Meet Our Contributors

    What drew you to your practice area of export control?

    Bethany NelsonI kind of fell into it. My undergraduate degree is in physics. When I went to law school I wanted to do something that would combine my love of science with what I was learning, but I didn’t find anything that was a good fit for me.

    I had worked a series of legal jobs for a few years after law school before someone pointed out the listing for the new position of Export Control Coordinator at U.W.-Madison. The listing said the ideal candidate would have a mix of scientific knowledge and legal training as well as be very self-starting. The position had not been offered before so the person who accepted it would have to work hard to ensure its success.

    I distinctly remember not having any idea how to answer the first question I was asked in the interview and so I thought I was done for, but my answers on the rest of the questions impressed the interviewers enough that I was hired.

    Within a month of starting the job, I realized that it was exactly what I had been looking for. I get to use the legal skills I gained in law school to spot issues in complex situations, often many times per day, and I combined that with my love of science by understanding the underlying technology that makes up export control.

    As to the best work advice I’ve received? I was once in the middle of a difficult project. There were a lot of people involved, but no one was doing a good job of communicating. I asked my boss for advice on how to sort things out, and he asked me, “Have you seen the movie This is Spinal Tap?”

    I said yes, and he continued, “Do you remember the scene in which the band is discussing the fact the dancer kept running into the replica of Stonehenge that was accidentally made 18 inches tall instead of 18 feet?” I confirmed that I did. “The bassist says that to fix the issue they could just have the dancer do different choreography. The choreography wasn’t the problem.”

    The point being, you have to fix the underlying issue, not just try to work around it. You can come up with a million solutions that incorporate the problem, but until you fix the problem itself, you will never actually make the system work. It was said in such a clever way, I just hold onto it.

    com bethanynelsonjd gmail Bethany Nelson, Bethany Nelson JD LLC, Madison.

    Become a contributor! Are you working on an interesting case? Have a practice tip to share? There are several ways to contribute to Wisconsin Lawyer. To discuss a topic idea, contact Managing Editor Karlé Lester at (800) 444-9404, ext. 6127, or email org klester wisbar wisbar klester org. Check out our writing and submission guidelines.

    Endnotes

    1 15 C.F.R. § 734.13.

    2 22 C.F.R. pt. 122.

    3 15 C.F.R. pt. 774.

    4 www.export.gov/csl-search.

    5 15 C.F.R. pt. 740; 22 C.F.R. pt. 125.

    6 15 C.F.R. § 740.9.

    7 Cuba, Iran, North Korea, Sudan, and Syria.

    8 www.bis.doc.gov/index.php/enforcement/oee/penalties; 22 C.F.R. pt. 127; 31 C.F.R. pt. 501.

    9 www.bis.doc.gov/index.php/enforcement/oee/penalties; 22 U.S.C. § 2778(c).

    10 In the matter of Humane Restraint Inc., 912 Bethel Circle, Waunakee, WI 53597.

    11 Teledyne Lecroy Settlement Agreement, June 16, 2015.

    12 U.S. v. Roth, 628 F.3d 827 (6th Cir. 2011).

    13 In the matter of FLIR Systems Inc., Consent Agreement with the Department of State.




  • Your State Bar
    In 280 Characters or Less

    Being on Twitter has given me a pulse on the communities where I live and work.

    Larry J. Martin

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    Okay, I’ll admit it. I’m not very “tech savvy.” I don’t do laptops, use dual monitors, or know how to sync my phone with my computer without assistance. Heck, I still get my news from a daily newspaper and listen to FM radio. When it comes to social media, I don’t have a Facebook page, never send an Instagram, and I couldn’t even tell you what Snapchat is.

    Larry J. Martinorg lmartin wisbar Larry J. Martin is the executive director for the State Bar of Wisconsin.

    Given my reluctance to fully join the 21st century, my kids thought it was pretty funny when I announced that I was going to open a Twitter account. I did it because of the prodding of a colleague who told me “all the cool executive directors are doing it.” Well then, count me in!

    My real motivation was to reach out and connect with a growing number of members who use Twitter as a way to further promote the work and activities of the State Bar.

    My first tweet was to wish my friend Dan Fay, also a member of the State Bar’s Board of Governors, a speedy recovery from bypass surgery. Sadly, the next tweet I sent was to mourn his passing. This wasn’t what I had envisioned for this new venture and as I would learn, tweeting would become far more than another avenue for promoting programs, products, and services.

    I have used my tweets to be an unapologetic cheerleader for our legal system, the profession, and the great work of countless elected and volunteer leaders, as well as talented colleagues at the State Bar. It has also been an opportunity to connect with the broader community in ways I had not expected.

    While social media will never eclipse direct human interaction in value and importance, it is one more way not only to interconnect but also to build community. Tweeting at its best can be a powerful way to share news, celebrate success, promote awareness, tell stories, and enhance relationships. That’s not to say that every tweet fits neatly into this ideal. Far from it. It is often used as another way to shout at each other, using colorful metaphors that would displease your parents.

    Tweeting at its best can be a powerful way to share news, celebrate success, promote awareness, tell stories, and enhance relationships.

    My mom taught me that if you don’t have something nice to say about someone, say nothing at all. My kids tell me that what you post on social media lives forever. I have taken both these words of wisdom to heart.

    I make it a point to follow an eclectic mix of individuals and organizations. No one group or political philosophy has a lock on wisdom or knowledge. Although tweets rarely provide deep thought or analysis, being on Twitter has given me a pulse on the communities in which I live and work.

    I’ve been tweeting for about a year and I must admit, I enjoy it far more than I thought I would. Join me on Twitter and we can follow each other. Now, what’s this Snapchat?

    You can follow me on Twitter: @LarryJMartinED.

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