Vol. 80, No. 3, March 2007
Sanctions - Dismissal - "Blameless" Client
Industrial Roofing Servs. Inc. v. Marquardt, 2007 WI 19 (filed 8 Feb. 2007)
Industrial Roofing Services sued various defendants, mostly former employees, for breach of employment contracts, interfering with its customers, misuse of trade secrets, and the like. The circuit court dismissed the action, with prejudice, as a sanction for discovery violations allegedly committed by Industrial. The court of appeals affirmed.
The supreme court, in an opinion written by Justice Bradley, affirmed in an opinion that is necessarily fact-intensive. First, the supreme court held that the circuit court properly determined that Industrial's conduct was egregious. "The circuit court in this case explained that there was a persistent pattern in which Industrial's attorney failed to respond and follow court orders. The court considered the failure to be extreme. It said that this case represented the worst example of failure to respond that it had seen its entire career…. Finally, the court recognized the failures to be substantial. The court determined that despite the personal and emotional problems of Industrial's attorney, `at this point and certainly from the facts here, it fits into all the major sanction cases'" (¶ 55).
Second, the supreme court held that the circuit court properly imputed counsel's derelictions to his client. The court clarified language from prior cases and held "that it is an erroneous exercise of discretion for a circuit court to enter a sanction of dismissal with prejudice, imputing the attorney's conduct to the client, where the client is blameless. To the extent that [Johnson v. Allis-Chalmers Corp., 162 Wis. 2d 261, 470 N.W.2d 859 (1991)] can be interpreted as concluding that the client's conduct is irrelevant or that a dismissal with prejudice is warranted even when the client is blameless, then that part of Johnson is overruled" (¶ 61). The departure from Johnson had been "forewarned" in prior cases (see ¶ 63).
Here the record justified the circuit court's imputation of the lawyer's misconduct to the client, Industrial. Industrial's owner was present at earlier pretrial conferences where sanctions were discussed. "Additionally, Industrial bears some responsibility for the dismissal with prejudice. The circuit court initially entered an order of dismissal without prejudice that stated explicitly the conditions under which it would enter a dismissal with prejudice. Industrial was aware of those conditions and the consequences of failing to pay $3,926.81 in attorney's fees and re-file. Its failure to do so was neither reasonable nor prudent" (¶ 69).
The supreme court explained that after new counsel entered the case on Industrial's behalf, the circuit court scheduled a "viability hearing" but Industrial responded inadequately. "The hearing on viability was not, however, a hearing on the motions for sanctions for frivolousness. Rather, given the history of this case, it was a measure tailored to forestall one of the principal harms precipitated by Industrial's actions. One year after this case had been filed, the Marquardt defendants still did not know what allegations applied to which defendants, and did not know the factual basis of Industrial's allegations. The hearing on viability was therefore less a punitive measure against Industrial than a way to mitigate future harm. Because the standard Industrial would have to meet was sufficiently defined, and because a viability hearing is an appropriate response to the particular violations of this case, Industrial's attempt to justify its inaction is unpersuasive" (¶ 79).
Finally, the supreme court held that although the circuit judge mistakenly found that Industrial's owner was present at still another status conference, other facts of record sufficiently supported dismissal as a sanction.
Justice Butler filed a concurring opinion but refused to join the majority's limiting interpretation of Johnson. Chief Justice Abrahamson, joined by Justices Prosser and Roggensack, dissented. The dissent agreed with the majority's "blameless client" construction of Johnson but disagreed with its application in this case.
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Interstate Agreement on Detainers - Chapter 980 Commitment Following Service of Wisconsin Sentence
State ex rel. Pharm v. Bartow, 2007 WI 13 (filed 25 Jan. 2007)
While serving a life sentence in Nevada, Pharm (the petitioner) was informed that Wisconsin had filed a detainer against him based on pending charges in Milwaukee County. In response he executed a "Request for Disposition of Indictments, Informations or Complaints" pursuant to article III of the Interstate Agreement on Detainers (IAD). See Wis. Stat. § 976.03(3). The IAD is an interstate compact that prescribes procedures by which a member state may obtain for trial a prisoner incarcerated in another member jurisdiction and by which the prisoner may demand the speedy disposition of certain charges pending against him or her in another jurisdiction (see ¶ 14). The petitioner was transported to Wisconsin, tried and convicted of several felonies, and given an indeterminate sentence (under pre-truth-in-sentencing law) of 15 years to be served consecutively to his Nevada sentence. He was then returned to Nevada and, after being paroled there, was brought back to Wisconsin to serve his Wisconsin sentence.
On the date of his scheduled release from the Wisconsin prison system, the state of Wisconsin initiated a Wis. Stat. chapter 980 proceeding to commit the petitioner as a sexually violent person. A jury found him to be a sexually violent person and the circuit court committed him to a secure mental health facility in Wisconsin. His commitment was upheld on direct appeal. See State v. Pharm, 2000 WI App 167.
The petitioner subsequently filed a habeas corpus action, alleging that his chapter 980 commitment violated the IAD. He argued that Wisconsin had only temporary custody of him while he was in a Wisconsin prison and that, when he was paroled by Wisconsin, Wisconsin was required by the IAD to return him to Nevada, where he remained on parole. The circuit court denied the petition. In a published decision the court of appeals affirmed. It concluded that the petitioner had no right to be returned to Nevada or to expect immunization from potential commitment proceedings under chapter 980. See 2005 WI App 215.
In a majority decision authored by Justice Roggensack, the supreme court affirmed. Said the court, "[w]e conclude that neither the IAD nor [the petitioner's] waivers of extradition under the IAD for his prosecution and incarceration by Wisconsin precluded Wisconsin from commencing a ch. 980 commitment proceeding. [The petitioner's] rights under the IAD and its extradition waivers were fully accorded upon his return to Wisconsin to serve his outstanding criminal sentence. At that point, the IAD had no further application to [the petitioner]. In addition, any obligations Wisconsin had to Nevada under the IAD were concluded when [the petitioner] was returned to Nevada to complete his term of incarceration for his Nevada convictions. Accordingly, we affirm the decision of the court of appeals" (¶ 40).
Chief Justice Abrahamson filed a dissenting opinion that was joined by Justice Bradley.
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Other Acts - Defense Proffer
State v. Muckerheide, 2007 WI 5 (filed 17 Jan. 2007)
The defendant was convicted of homicide by use of a motor vehicle while operating with a prohibited blood alcohol concentration. The court of appeals affirmed.
The supreme court, in an opinion written by Justice Crooks, also affirmed in an opinion that addressed the circuit court's exclusion of "other act" evidence concerning the victim, Braun. Specifically, the defendant wanted to show that Braun, a passenger in the defendant's car, grabbed the steering wheel just before the crash and in effect caused his own death. The other act proof would have been proffered through Braun's father, who would have testified that his son had reached for the wheel of his car on different occasions and once had actually grabbed the steering wheel.
The court held first that the evidence failed the Sullivan analysis because the other acts were so dissimilar as to be irrelevant (see ¶ 28; see also State v. Sullivan, 216 Wis. 2d 768, 576 N.W.2d 30 (1998)). The court also held that the exclusion of this evidence did not violate the defendant's constitutional right to present a defense. "The exclusion of Muckerheide's evidence was not arbitrary or disproportionate. The circuit court properly excluded the other acts evidence offered by Muckerheide because it was deemed to be impermissible character or propensity evidence barred by Wis. Stat. § 904.04" (¶ 41).
Moreover, the defense had an unfettered opportunity to present its version of how the accident purportedly occurred. "The only evidence the jury did not hear was the minimally probative evidence that, on prior occasions with a different driver, under different circumstances, Braun had gestured toward or grabbed the steering wheel. In addition, the circuit court instructed the jury on Muckerheide's defense under Wis. Stat. § 940.09(2)(a), as requested by Muckerheide, and asked the jury to consider the question of whether Braun's death would have occurred even if Muckerheide had been exercising due care and had not been under the influence of an intoxicant"(¶ 42).
Chief Justice Abrahamson concurred but wrote separately to emphasize that the court need not have decided the relevancy of the other act proof (Sullivan's second step) because the defense had failed to satisfy even the first step, that is, to offer the evidence to prove something other than character and propensity to act (see ¶ 51). She observed that parties have unduly distorted the idea of "context" when straining to find ways to avoid the ban against character evidence (see ¶ 55).
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Independent Contractor - Employees
Acuity Mut. Ins. Co. v. Olivas, 2007 WI 12 (filed 25 Jan. 2007)
Olivas, a drywall installer, carried worker's compensation coverage issued by Acuity, which apparently thought that Olivas worked alone. In fact, Olivas worked with five other individuals who, unlike Olivas, spoke no English. Acuity decided that Olivas should pay increased premiums to reflect the additional workers, but Olivas refused to pay. Acuity then terminated the policy and sued Olivas for unpaid premiums of more than $30,000. Both the circuit court and the court of appeals ruled in Olivas' favor.
The supreme court, in an opinion authored by Chief Justice Abrahamson, affirmed. "We conclude that for Acuity Insurance to succeed in its claim for additional premiums from Olivas, the workers at issue (1) cannot be independent contractors under Wis. Stat. § 102.07(8)(b), and (2) must have an employer-employee relationship with Olivas" (¶ 29). The initial question was which party, Acuity or Olivas, had the burden of proof. Applying a multi-factor test, the court held that the burden fell to Acuity.
The court then turned to the issue of whether the workers were independent contractors within the meaning of the nine-part test in section 102.07(8)(b). The court concluded that "the workers in the present case failed the seventh and ninth parts of the test. Each worker in the present case supplied only labor and simple tools like hammers that do not require frequent repair or replacement. The workers at issue did not have to purchase their own drywall sheets. There was no risk that the workers would suffer a loss on any of the jobs. They were paid only for the labor they put in, and they did not control any of the other costs involved with the project. Their success was not related to the relationship of business receipts to expenditures, but rather to how much labor they were willing to provide"(¶ 71).
Although the court decided that the workers were not independent contractors, the court rejected Acuity's contention that it thus followed that they were employees for whom Olivas owed increased premiums. The precise issue was whether Olivas employed the workers within the meaning of the Worker's Compensation Act. "Key to defining an employee under the Act, then, is the concept that an employee is `in the service of another in the course of a trade, business, profession or occupation of an employer.' Clearly the Act does not impose worker's compensation liability on an employer when the employer does not have an employer-employee relationship with an injured person. The Act governs employers and their employees. `The foundation of the Workmen's Compensation Act is the existence of an actual employer-employe [sic] relationship'" (¶ 84). After scrutinizing several factors, the court held that the record showed that Olivas did not employ the workers; in sum, "Olivas, it appears, was the translator, not the employer, and his role as translator should not saddle him with obligations under worker's compensation" (¶ 103).
Justice Butler concurred but wrote separately to join issue with the dissent. The dissenting justices, Prosser, Roggensack, and Wilcox, contended that "this decision creates uncertainty for employers, insurers, and workers" because the majority made "law by opining about who qualifies as an employer and who qualifies as an employee under the Wisconsin Worker's Compensation Act in circumstances where the purported employees are undocumented workers" (¶ 115).
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