The Effect of Jandrt
on Satellite Litigation

Jandrt's probable effects on trial counsel

The supreme court's decision to uphold a frivolous litigation sanction in Jandrt v. Jerome Foods Inc. will alter the nature of satellite litigation under sections 802.05 and 814.025 and may very well change the overall practice methods of all civil litigators in Wisconsin. The Advisory Committee Notes to Federal Rules of Civil Procedure 11 refer to litigation over the imposition of sanctions under Rule 11 as litigation that is "satellite" to the main litigation from which it was derived.

by Janine P. Geske & William C. Gleisner III

ccording to Chief Justice Abrahamson in her dissent to the Supreme Court's Denial of the Motion to Reconsider its decision in Jandrt v. Jerome Foods Inc., ¹ "[t]he court's opinion will have a significant effect on the practice of law in this state for both plaintiffs' and defendants' counsel and on the people of the state of Wisconsin seeking redress of wrongs or defending themselves in court."²

In Jandrt, the Wisconsin Supreme Court substantially upheld the trial court's imposition of a $716,081 sanction against a Milwaukee law firm. In essence, the supreme court concluded that while a lawsuit commenced on May 10, 1995, was not frivolous, it became frivolous just 43 days later. The basis for why the suit became frivolous, and the supreme court's discussion of Wisconsin sanction law in connection with its finding of frivolousness, should be of serious concern to all Wisconsin litigators.

At a minimum, the Jandrt decision will almost certainly alter and increase the nature of "satellite"³ litigation in Wisconsin under sections 802.05 and 814.025 of the Wisconsin Statutes. At its worst, this decision may very well change the overall practice methods of all civil litigators in Wisconsin, regardless of whether they represent plaintiffs or defendants, and may harm clients and the trial bar, and unacceptably increase the business of the courts.

The Jandrt decision reflects, in part, some of the deficiencies of our existing sanction rules, as those rules are set forth in sections 802.05 and 814.025. As demonstrated in this article, the adoption of the current standards under Rule 11 of the Federal Rules of Civil Procedure (FRCP) could ameliorate many of the adverse consequences of Jandrt without diminishing the manifest necessity of regulating and discouraging frivolous litigation.

The Majority Decision

In Jandrt, upon certification from the Wisconsin Court of Appeals, a majority of the Wisconsin Supreme Court reversed the trial court's decision that the Milwaukee law firm of Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman (Previant) had commenced a frivolous action against Jerome Foods.⁴ However, the supreme court's majority upheld the trial court's determination that Previant's continued prosecution of that action became frivolous.⁵ While it remanded the action to the trial court for a recalculation of the sanction amount that should be imposed against Previant, the court's majority did not directly criticize the trial court's imposition of a $716,081 sanction against Previant.⁶ The sanction represented a portion of the fees and costs incurred by Jerome Foods Inc. (JFI) in defending the Previant action.

Jandrt involved an alleged toxic tort. Previant commenced an action against JFI alleging that several children had been born with birth defects due to the leaking of certain chemicals into the atmosphere of the JFI plant.⁷ The action was styled a class action and had two main claims: a claim for common law negligence and a claim for a violation of Wisconsin's Safe Place law under section 101.11 (2) of the Wisconsin Statutes.⁸ Both the majority and dissent in Jandrt considered the chronology of events before and after the filing of the action to be significant.

Relevant Chronology. The relevant chronology according to the majority's decision follows.

1. In November 1994 Previant received a referral from a trusted referring attorney, who had made a preliminary investigation that had disclosed to him that between 12 and 15 women had indicated problem pregnancies while working at JFI. Referring counsel had done a medical literature search for evidence of a possible relationship between carbon dioxide or ammonia and birth defects. The referring attorney also had a statement from one of his clients stating that her doctor had told her that JFI was probably responsible for her child having a birth defect.⁹

2. In February 1995 the mothers of the children with birth defects first retained Previant.¹⁰

3. In February 1995 Previant had an associate and a law librarian conduct a medical literature search. Previant also consulted with a toxic tort consultant MD, who told Previant that "in order to obtain an expert opinion on causation it [will] be necessary to commence an action and obtain discovery."¹¹

4. On March 1, 1995, Senate Bill 11 was passed by the Wisconsin Legislature, significantly altering the law on joint and several liability.¹²

5. In April 1995 Previant was advised by numerous sources, including its malpractice carrier, that suit should be filed in order to protect the rights of clients such as the plaintiffs in Jandrt.¹³

6. On or about May 10, 1995, Previant commenced suit sooner than it otherwise would have because of its concerns relative to Senate Bill 11.¹⁴

7. On May 17, 1995, Senate Bill 11 became law.¹⁵

8. In May and again on June 21, 1995, Previant formally requested documents from JFI, which request JFI resisted on the grounds that it would only produce documents under an order of confidentiality.¹⁶

9. On July 8, 1995, JFI learned from its expert that there was no way in which the plaintiffs could prove a causal relationship between the chemicals at JFI and the birth defects.¹⁷ JFI nevertheless retained one local and one national law firm, several experts on negligence and causation, a public relations firm, and a private investigation firm.¹⁸

10. On July 13, 1995, JFI answered the Previant complaint, without making any mention of its belief that causation could not be proved. In fact, JFI did not in any way affirmatively raise the possible frivolousness of the Previant claim in its answer.¹⁹

11. On Dec. 7, 1995, after extensive negotiations, an order of confidentiality was entered.²⁰

12. On Jan. 31, 1996 and Feb. 1, 1996, Previant first had an opportunity to review more than 200,000 documents produced by JFI.²¹

13. Previant consulted with two experts; one of those experts consulted with an out-of-state expert, who advised Previant that cause could not be proved (none of the experts saw the documents produced by JFI).²²

14. On Feb. 28, 1996, Previant voluntarily dismissed its action, and only then was put on notice by JFI of its intention to seek sanctions under sections 802.05 and 814.025.²³

The majority's decision is divided roughly into two parts. The first part analyzes whether Previant frivolously commenced an action under section 802.05. The second part analyzes whether Previant frivolously continued the action under section 814.025.

Was the action frivolously commenced under section 802.05? The majority stated that it would turn to federal case law interpreting Rule 11 in order to determine whether the trial court had correctly concluded that the action had been frivolously commenced.²⁴ However, the majority relied upon federal authorities from prior to a fundamental and critical 1993 amendment to Rule 11. Citing a 1993 case, the majority stated that the circuit court is to apply an objective standard of conduct for litigants and attorneys.²⁵ Citing federal decisions from 1983, 1987, and 1989, the majority then stated that decisions under Rule 11 are not to be made using the wisdom of hindsight.²⁶

The majority then states that the single allegation in the Previant complaint upon which JFI based its claim that the action against it had been frivolously commenced was Paragraph 28, which contained an allegation of cause "on information and belief."²⁷ The majority focused on Previant's failure to deal with the issue of causation under its common law negligence claim, while dismissing Previant's point made that the alternate claim for relief under Wisconsin's Safe Place law required no proof of causation.²⁸ It appears clear that negligence or safe place law constituted completely alternate causes of action in every sense and either theory could have allowed for a recovery against JFI for the alleged harm done to the plaintiffs.²⁹

Then citing federal authorities from 1985, 1986, 1987, 1992, and 1993, the majority concluded that Previant had no right to rely upon what the referring attorney or the client said about the claim.³⁰

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