Supreme Court Digest

By Prof. Daniel D. Blinka & Prof. Thomas J. Hammer

This column summarizes all decisions of the Wisconsin Supreme Court (except those involving lawyer or judicial discipline, which are digested elsewhere in the magazine). Prof. Daniel D. Blinka and Prof. Thomas J. Hammer invite comments and questions about the digests. They can be reached at the Marquette University Law School, 1103 W. Wisconsin Ave., Milwaukee, WI 53233, (414) 288-7090.

Employee Benefits

Worker's Compensation - Scheduled Injuries -
Great Deference Standard

Hagen v. LIRC, No. 94-0374 (filed 6 June 1997)

Hagen was employed as a nurse's aid when she injured herself while lifting a patient. Based on her worker's compensation claim, an administrative law judge (ALJ) found that Hagen's shoulder and arm problems were "scheduled injuries" but that her back injury was too "minor" to merit a loss of earning capacity claim. LIRC adopted the ALJ's findings and the circuit court affirmed. The court of appeals, however, reversed, concluding that Hagen's shoulder injury was not covered by the permanent partial disability schedule of section 102.52(1) of the Wisconsin Statutes.

The supreme court, in an opinion written by Justice Bradley, reversed the court of appeals. First, the court held that LIRC's interpretation of section 102.52(1) was entitled to "great weight deference." LIRC and the Department of Workforce Development have consistently interpreted the phrase "the loss of an arm at the shoulder" to include injuries to the shoulder. The interpretation was based on the agencies' specialized knowledge and provides uniformity in applying the law to shoulder injuries. Moreover, the interpretation was reasonable. It viewed "a shoulder injury" largely in terms of its effect on the extent of an arm's usefulness. Nor was it contrary to the Legislature's goal in enacting Chapter 102. Second, the evidence supported LIRC's factual findings that Hagen suffered only a scheduled permanent partial disability.

Worker's Compensation

Protective Occupation Employees -
Duty Disability Payments

Coutts v. Wisconsin Retirement Board, No. 95-1905

Des Jarlais v. Wisconsin Retirement Board, No. 95-2228 (filed 22 May 1997)

These consolidated cases, which involved a firefighter and a deputy sheriff who were injured in the line of duty, presented the issue of whether, pursuant to Wisconsin Statute section 40.65(5)(b)3, the Wisconsin Retirement Board (Board) may reduce duty disability benefits by worker's compensation benefits which were paid to a Wisconsin Retirement System participant before the duty disability payments commenced. The statute provides that the Board shall reduce a protective occupation participant's monthly duty disability benefit payment by "any worker's compensation benefit payable to the participant."

In a unanimous decision authored by Justice Bradley, the court concluded that the statute is unambiguous and does not authorize the Board to reduce section 40.65 duty disability benefits with worker's compensation benefits that were paid prior to the commencement of duty disability benefits. The court's determination of the legislature's intent with regard to this issue was based upon the plain meaning of the statute and was further supported by the context in which the statutory language quoted above appears.

Municipal Law

Annexation - Reservation of Land For Public Use - Regulatory Takings

Hoepker v. City of Madison Plan Commission, No. 95-2013 (filed 16 May 1997)

The Hoepkers own approximately 49 acres of land in the Town of Burke which they seek to develop as a residential subdivision. The property is located within the City of Madison's extraterritorial plat approval jurisdiction. The Hoepkers' preliminary plat consists of 62 single-family residential lots. The proposed subdivision development is permitted by current zoning.

The City of Madison approved the Hoepkers' preliminary plat subject to several conditions. One of those conditions was the annexation of the property in question to the city. Another was that the property be reconfigured to provide an open space corridor for a future recreational trail.

The Hoepkers sought certiorari review challenging these conditions. The circuit court denied relief. The court of appeals held that the city could not condition approval of the plat on annexation, but could condition it on the open space corridor. In a unanimous decision authored by Justice Crooks, the supreme court affirmed the court of appeals' decision in part and reversed in part.

The first issue before the supreme court was whether the city has authority under section 236.45 of the Wisconsin Statutes to condition approval of the preliminary plat on a requirement that the Hoepkers agree to annexation. It concluded that the city does not have this authority because to hold otherwise would be contrary to the annexation standards specified in Chapter 66 of the Wisconsin Statutes. The Legislature has set forth the standards for annexation in Chapter 66 and a municipality must follow these procedures because it has no power to extend its boundaries otherwise than as provided for by legislative enactment or constitutional provision. In particular, Chapter 66 provides safeguards so that no populated fringe area may become part of a city until the majority of electors and/or property owners in a particular area desire to annex. Municipalities cannot coerce or unfairly induce an elector or property owner into agreeing to annexation.

The court concluded that, in this case, the City of Madison is unduly influencing a property owner to sign an annexation petition contrary to the safeguards provided in Chapter 66. Although the city claimed that it is not coercing the Hoepkers because they can refuse to sign an annexation petition and therefore not receive approval to develop their land, the court did not find this argument persuasive. If the Hoepkers signed an annexation petition because the alternative would be to leave their land undeveloped, their consent would be the product of direct economic pressure from the city. Thus, the city's action is improper because it denies the Hoepkers their political right to participate in an annexation proceeding by voluntarily deciding whether to support or oppose annexation.

The court stressed that the city is not being forced to approve the Hoepkers' preliminary plat. If, on remand, the city determines that the land is unsuitable for the proposed development, it may reject the preliminary or final plat. However, if the city rejects the plat on suitability grounds, it must inform the Hoepkers of the particular facts on which it bases its conclusion and provide them with an opportunity to present evidence regarding suitability at a public hearing.

The court also considered whether the requirement that the Hoepkers reconfigure their plat to provide an open space corridor constitutes a temporary regulatory taking for which just compensation is due under the Fifth Amendment of the U.S. Constitution, applicable to the states through the Fourteenth Amendment. The court concluded that the Hoepkers' takings claim is not presently ripe for adjudication for two reasons. First, the U.S. Supreme Court has determined that a claim that the application of government regulations effects a taking of a property interest is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue. Second, the Supreme Court has determined that if a state provides an adequate procedure for seeking compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.

In the present case, the city has not made a final determination as to the approval of the Hoepkers' plat. More important, the dimensions and exact location of the open space corridor are presently unknown. Since it is impossible to ascertain the nature and extent of permitted development on the Hoepkers' land, the court could not determine whether the city's actions are excessive and therefore constitute a "taking." Further, the Legislature has established a procedure for inverse condemnation through which an individual may seek compensation for a regulatory taking. The Hoepkers have not used this procedure. Accordingly, their regulatory takings claim is not ripe for adjudication.

Public Utilities

Telecommunications - "Remainder Assessment"

MCI Telecommunications Corp. v. State, No. 91-0915 (filed 13 May 1997)

MCI Telecommunications Corporation (MCI) is a public utility that provides telecommunications services. It provides interexchange (long distance) services that originate in Wisconsin and terminate both within and outside the state.

The Public Service Commission (PSC) is the state agency charged with regulating all utilities, including telecommunications utilities, in Wisconsin. Section 196.85(2) of the Wisconsin Statutes authorizes the PSC to annually assess public utilities to recover expenses reasonably related to the performance of its regulatory duties. This statute applies equally to utilities providing water, energy and telecommunications services. To recover expenses not attributable to a specific utility, the PSC assesses each utility's share of PSC expenses on the basis of the utility's "gross operating revenues ... derived from intrastate operations" (emphasis supplied). See Wis. Stat. § 196.85(2). This statute is referred to as Wisconsin's "remainder assessment" statute.

The PSC interprets the term "intra-state operations" in the statute quoted above to include revenues from all telecommunications made from a telephone located within the State of Wisconsin, regardless of whether the call terminates within or outside the state. MCI brought this lawsuit to challenge the PSC's interpretation of the statute and assessments made thereunder arguing that the statute is plain on its face and that the phrase, "revenues ... derived from intrastate operations," does not include revenues from telecommunications that originate in Wisconsin but terminate outside the state. The circuit court granted MCI's motion for summary judgment, a decision that later was reversed by the court of appeals. In a unanimous decision authored by Justice Steinmetz, the supreme court affirmed the court of appeals. It held that the PSC's interpretation of the phrase "revenues ... derived from intrastate operations" includes revenues from interstate communications originating in Wisconsin is a correct interpretation of the statute.

Torts

Statute of Limitations - Discovery Rule -
Medical Malpractice - Legal Malpractice

Claypool v. Levin, No. 94-2457 (filed 9 May 1997)

While being treated in March 1989, Mrs. Claypool became permanently blind. A short time later she retained attorney #1 to investigate a possible malpractice case. Sometime prior to 1992 attorney #1 told the Claypools that a medical expert had concluded that there was no cause of action. In the summer of 1993 the Claypools retained attorney #2, who advised them they did have a viable claim against the treating doctor. In October 1993 the Claypools brought an action against the doctor and a separate claim against attorney #1 in the event that the statute of limitations had expired as to the doctor. The doctor sought summary judgment on the ground that the statute of limitations had expired. (Wis. Stat. § 893.55(1)) Attorney #1 opposed the motion, arguing "that any failure on his part to exercise due diligence should not be imputed to the Claypools." The circuit court dismissed the claim against the doctor. The court of appeals, however, reversed.

The supreme court, in an opinion written by Justice Wilcox, reversed the court of appeals. Under Wisconsin law, "discovery occurs when a potential plaintiff has information that would give a reasonable person notice of her injury and its cause. This does not mean that if there is more than one reasonable cause of the injury that discovery cannot occur. This standard also does not require that the potential plaintiff know with certainty the cause of her injury." Moreover, case law "indicates that a valid legal opinion is not necessary for discovery to occur[.]" Put another way, "discovery occurs when the potential plaintiff has information that would give a reasonable person notice of her injury and its cause regardless of whether she has been given a misleading legal opinion." On the facts before it, the court held that the Claypools discovered or in the exercise of reasonable diligence should have discovered the injury in March or early April 1989. Thus, her claim against the doctor should have been filed within one year of that date, as provided in section 893.55(1).

Chief Justice Abrahamson, joined by Justice Geske, dissented. They contend that there was an insufficient basis on which to grant summary judgment and would have remanded the case for a jury determination on whether the Claypools exercised due diligence in not learning of the injury until the summer of 1993.

Negligent Supervision - Sexual Exploitation of Patients - First Amendment

L.L.N. v. Clauder, No. 95-2084 (filed 23 May 1997)

The plaintiff alleged that a priest assigned as a hospital chaplain abused his position by sexually exploiting her. The sole issue before the court was whether the Roman Catholic Diocese of Madison Inc., was entitled to summary judgment on plaintiff's claim that it negligently supervised the priest. The supreme court, in an opinion written by Justice Crooks, reversed the court of appeals, holding that the Diocese was entitled to summary judgment.

First, the court held that the First Amendment to the U.S. Constitution precluded the negligent supervision claim. For purposes of this case only, the court assumed that a claim for negligent supervision exists under Wisconsin law. The plaintiff attempted to distinguish Pritzlaff v. Archdiocese of Milwaukee, 194 Wis. 2d 302 (1995), on the ground that she was sexually exploited by a hospital chaplain whom she viewed as a pastoral counselor. In short, this was not a case involving a priest and a parishioner.

The plaintiff also alleged that the Diocese was put on notice by an earlier incident involving the same priest and another woman. The court held, however, that "in order to decide [plaintiff's] claim, a court would be required to examine the vow of celibacy." Moreover, in order to assess whether the earlier incident put the Diocese on notice, the court would have to examine whether the priest who witnessed it was acting within his authority to bind the Diocese or had a duty to give the Diocese information about the defendant priest. Such inquiries would necessitate a consideration of church law, policies or practices. Thus a court would be unable to apply neutral principles of law.

Second, regardless of the First Amendment claim, the court concluded that there was insufficient evidence on which the plaintiff could base a claim for negligent supervision. Other states that recognize such claims hold employers liable "only if it knew or should have known that its employee would subject a third party to an unreasonable risk of harm." In this case it was "undisputed that the diocese had no actual knowledge of the [defendant priest's] alleged tendency to abuse his position as chaplain until after the sexual relationship" between him and the plaintiff ended. The earlier incident involved a "nonpatient"; thus, it did not provide constructive notice that the priest "was likely to abuse his position as chaplain to engage vulnerable patients in sexual intercourse."

Justice Bablitch concurred but declined to reach the First Amendment issue. Justice Bradley, joined by Chief Justice Abrahamson, dissented on the ground that the plaintiff's evidence did raise a disputed issue of fact and because the majority unnecessarily reached and erroneously resolved the First Amendment issue.

Punitive Damages - Nominal Damages -
Retroactive Effect - Excessive Damages

Jacque v. Steenberg Homes Inc., No. 95-1028 (filed 16 May 1997)

The plaintiffs, the Jacques, denied Steenberg Homes Inc. permission to move a mobile home across their property onto an adjacent lot. Upon learning of the Jacque's rebuff, an assistant manger for Steenberg said that he did not "give a ____" what they said. His employees then used a Bobcat^TM hydraulic excavator to cut a path across the Jacque's snow-covered field and hauled the home across it. Steenberg Homes received a $30 citation from the local sheriff. The Jacques sued and received $1 in nominal damages and $100,000 in punitive damages. The court of appeals upheld the circuit court's determination that Wisconsin law precluded the punitive damages based solely on nominal, as opposed to compensatory, damages.

The supreme court, in an opinion written by Justice Bablitch, reversed. First, the court held that an award of nominal damages for intentional trespass to land can support a punitive damages award. The court's holding qualifies the rule set forth in Barnard v. Cohen, 165 Wis. 417 (1917). "[T]he Barnard rule sends the wrong message to Steenberg Homes and any others who contemplate trespassing on the land of another. It implicitly tells them that they are free to go where they please, regardless of the landowner's wishes. As long as they cause no compensable harm, the only deterrent intentional trespassers face is the nominal damage award of $1. ... We conclude that both the private landowner and society have much more than a nominal interest in excluding others from private land."

Second, even though the court was overruling precedent, it held that the Jacques were entitled to the application of this rule. Steenberg Homes argued that it deserved "sunburst" effect, thereby limiting the rule to prospective application only. Neither Steenberg Homes' conduct nor the Jacque's interest, however, warranted a sunburst application.

Third, the $100,000 award was not excessive. The court applied the three factors recently outlined in BMW v. Gore, 116 S. Ct. 1589 (1996): 1) the degree of reprehensibility of the conduct; 2) the disparity between the harm or potential harm suffered by the plaintiff and the punitive damage award; and 3) the difference between this remedy and the civil or criminal penalties authorized or imposed in comparable cases. In applying the facts to the federal standard, the court also discussed prior Wisconsin case law which eschews any "simple mathematical formula." While actual harm and criminal penalties have "some relevance to the amount of punitive damages," they were not controlling. In this case Steenberg Homes' egregious and "brazen" conduct justified the $100,000 deterrent.