Wisconsin Lawyer
Vol. 79, No. 10, October 2006

Time to Serve Responsive Pleading: Should 2005 Wis. Act 442 be Repealed?

Under 2005 Wis. Act 442, which became effective on Oct. 1, a responsive pleading must be made within 20 days, except that a 45-day period applies when the complaint alleges that a tort occurred, or when the defendant is an insurance company, the state, or a state officer, agent, employee, or agency.

The following two articles address whether the State Bar or its Litigation Section should take a position in favor of repealing Act 442 or support the change as enacted earlier this year. The full text of the Act is at www.wisbar.org/act442. To weigh in on the issue, please reply to Adam Korbitz, State Bar government relations coordinator, at akorbitz@wisbar.org, or (800) 444-9404, ext. 6140.

Support Act 442:  (continued)

The standard time to answer in the federal courts is 20 days, and no other state gives defendants 45 days to answer in suits between private parties (although some states do allow up to 30 days to respond to certain types of claims). What is it about Wisconsin, or Wisconsin lawyers, that we would need 45 days to answer all private lawsuits? My personal experience has been that clients (especially out-of-state clients) often were appalled when they learned that Wisconsin gave defendants a leisurely 45 days to respond.

Nonlawyers understand that improvements in communications and computing technologies have enabled other sectors of the economy to do things much faster, with a higher level of quality than before. There is no reason why Wisconsin lawyers should be saying that we as lawyers need to be doing things much slower than before.

Wisconsin now competes in a global economy. Perceptions about the efficiency, costs, and fairness of a state's legal system affect where companies choose to do business. Wisconsin lawyers should support reasonable procedural rules that promote efficiency, not rules that are inconsistent with rules in other states and that unduly support delay. Act 442 brought Wisconsin law back into line with the Federal Rules of Civil Procedure and the rules in most other states.

Many of my firm's clients are businesses that are owed money by others. I know how creditor clients feel about this issue. Time is money; businesses that provide goods and services on credit know that the value of almost all debts decreases each day that invoices go unpaid. The 45-day answer period enacted in 1998 worked a hardship on those businesses, which is why their organizations have worked for several years to repeal the extension to 45 days. They strongly believe that the change to 45 days was bad for the Wisconsin economy as a whole, and that the restoration of the 20-day period will help make credit more available and affordable, thus improving the competitiveness and vigor of the Wisconsin economy.

Study the Act's Effect Before Seeking Modification. From the State Bar's standpoint, we will lose credibility with legislators if we now rush to them requesting that they repeal a law that they just enacted. This is especially true in a situation in which other organizations proposed the change for years, while the Bar remained completely silent on the issue. The proposal to return the deadline to 20 days for most nontort claims was included in 2005 Senate Bill 99, which ultimately became Act 442. Sen. Ted Kanavas introduced SB 99 in March 2005, and the Senate and Assembly held two public hearings on the bill before its passage in April 2006. At the public hearings on SB 99, no one from the State Bar, nor any private lawyer, expressed any objections to the bill. The Wisconsin Academy of Trial Lawyers officially took the position that it was neutral on SB 99, and the State Bar and the Civil Trial Counsel of Wisconsin took no position on the bill. Given this history, if the State Bar is going to do anything about Act 442, my suggestion would be that it study what effect, if any, Act 442 has over the next two years. Then, only if the study shows the Act has a deleterious effect on our justice system and our state's economy as a whole, should the State Bar consider approaching the Wisconsin Legislature with a proposed modification.

Conclusion. Act 442 is not confusing. Lawyers are capable of determining whether a case involves the state, an insurance company, or a tort. Lawyers already knew before Act 442 was enacted that some defendants had more time to answer and some had less (for instance, defendants in foreclosure actions had 20 days, the state had 45 days, and the federal government had 60 days). Lawyers often are called on to determine what is and is not a tort (for example, when resolving statute of limitation or economic loss doctrine issues). Act 442 implements a workable compromise regarding the time to answer, and precipitously attempting to modify Wis. Stat. chapter 801 yet again will only create confusion.

Who are we? Are we the diligent, hard working Atticus Finch of To Kill a Mockingbird, or are we the self-interested and forever delaying lawyers of the Jarndyce and Jarndyce case in Bleak House? We as the bar need to ensure that the civil procedure rules we support are balanced and beneficial for society as a whole, and not designed primarily to benefit the dilatory litigant or (the more rare) dilatory lawyer. I urge the State Bar not to seek to repeal Act 442.

Change Act 442:  (continued)

While section 751.12(4) also provides that "[t]his section shall not abridge the right of the legislature to enact, modify, or repeal statutes or rules relating to pleading, practice, or procedure," this does not alter the supreme court's underlying constitutional power to regulate the administration of justice. I submit that any rule relating to pleadings clearly falls within the supreme court's "core zone of exclusive authority," and thus the court has ample justification under the separation of powers doctrine to defend that authority against legislative intrusions such as Act 442.

The separation of powers doctrine requires each of our three branches of government to respect the prerogatives and authority of the other branches. In Joni B. v. State,³ the supreme court stated that the separation of powers doctrine is inherently present in the Wisconsin Constitution. According to the Joni B. court:

"Under the doctrine, each branch is prohibited from intruding upon another's `core zone of exclusive authority.' Further, even in an area where the authority of the legislature and judiciary is shared or overlaps, `the legislature is prohibited from unreasonably burdening or substantially interfering with the judicial branch.'"⁴

While the supreme court may tolerate an intrusion on some of its prerogatives, if a statute invades the court's ability to administer justice the court is under no obligation to defer to the legislature.⁵ According to the Joni B. court: "Any intrusion [by the legislature] is prohibited if the judicial authority is exclusive, and even if the power is viewed as shared, the legislature may not place an unreasonable burden on or substantially interfere with the judiciary's exercise of that power."⁶ In State v. Holmes,⁷ the supreme court specified that "[j]udicial power extends beyond the power to adjudicate a particular controversy and encompasses the power to regulate matters related to adjudication."⁸

Even assuming but by no means conceding that the legislature and the supreme court share power over pleadings, policy reasons argue strongly against Act 442 in terms of the separation of powers doctrine. What judicial goal is furthered by creating a statute that introduces two default standards into the administration of justice? How much unnecessary confusion and increased expenditure of judicial resources will result from the enactment of Act 442? How can the court countenance such an intrusion in view of the unequal treatment created by the Act, as described in the next section of this article?

Equal Protection Denied to Arbitrarily Created Class of Defendants. In violation of article I, section I of the Wisconsin Constitution, Act 442 denies equal protection of the law to one of two arbitrarily created classes of defendants. As the supreme court observed most recently in Ferdon v. Wisconsin Patients Compensation Fund:⁹

"Equal protection analysis and substantive due process have much in common. Under substantive due process analysis the statute must bear a rational relationship to a reasonable legislative goal. Under equal protection analysis there must be a rational relationship between the disparity in treatment resulting under a statute and a legitimate governmental objective."¹⁰

Equal protection of the law is denied to a class created by a statute if the statutory classifications are not rationally related to the purpose of the statute,¹¹ or if the classifications treat differently those in similar circumstances, among whom no reasonable basis for distinction exits.¹²

Even in the absence of suspect classifications,¹³ in order to survive an equal protection challenge a statutory classification scheme must at a minimum meet the following five criteria of reasonableness. According to the supreme court in Strykowski:

"1) all classifications must be based on substantial distinctions that make one class really different from another;

"2) the classification adopted must be germane to the purpose of the law;

"3) the classification must not be based on existing circumstances only ...;

"4) [the law must apply equally to each member of the class]; and

"5) the characteristics of each class should be so far different from those of other classes as to reasonably suggest ... the propriety ... of substantially different legislation.¹⁴

Act 442 fails the Strykowski test on several levels. Under Act 442, there are no substantial distinctions between the class of defendants that is subject to a 20-day rule and the classes of defendants that are subject to a 45-day rule. The two classifications of defendants created by Act 442 are clearly based on the existing circumstances of each case, rather than on the inherent differences between defendants. The provisions of Act 442 apply differently to the members of the class of defendants that is subject to the 20-day rule, depending on whether there are tort allegations in the complaint they must answer.

Finally, there is nothing apparent from the face of Act 442 that would suggest that each class of defendants is "so different" as to reasonably suggest the propriety of different legislative treatment.

Conclusion. Act 442 impermissibly intrudes on the powers of the Wisconsin Supreme Court under the separation of powers doctrine. The supreme court should strictly insist on its prerogatives under that doctrine because the classifications created by Act 442 are arbitrary and clearly contrary to the equal protection clause of the Wisconsin Constitution. Any defendant prejudiced by this Act should not hesitate to challenge its constitutionality for the reasons stated in this article.

Endnotes

Wisconsin Lawyer