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    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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    Civil Procedure

    Personal Jurisdiction – Minimum Contacts – Internet Advertising

    Carlson v. Fidelity Motor Group LLC, 2015 WI App 16 (filed 14 Jan. 2015) (ordered published 25 Feb. 2015)

    HOLDING: The circuit court properly dismissed the plaintiff’s action for lack of personal jurisdiction over the defendant.

    SUMMARY: Carlson is a Wisconsin resident, and Fidelity Motor Group is an automobile dealership located in Illinois. Carlson observed on his wife’s cell phone a Fidelity advertisement for a BMW on the cars.com website. He called Fidelity’s toll-free number listed on the website and spoke with a Fidelity representative for approximately four minutes, during which time the representative told Carlson the vehicle was in excellent condition with no known mechanical problems. The representative called back Carlson two hours later and spoke with him for approximately one minute regarding the vehicle. Carlson and his wife traveled to Fidelity that same day. Carlson test drove the BMW and then purchased the vehicle.

    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.

    Five months later, Carlson experienced problems with and sustained damage to the BMW in Wisconsin, damage he asserts was caused by the oil not having been changed at the time of purchase as had been represented to him. He brought suit in Ozaukee County, Wis., alleging “fraud by wire” and “negligent representation.” The circuit court dismissed the action for lack of personal jurisdiction. In a decision authored by Judge Gundrum, the court of appeals affirmed.

    Fidelity is an Illinois limited liability company and has a single facility, located in Illinois, from which it sells vehicles. It has never owned, maintained, or had any office or other facility in Wisconsin. It has never advertised or purchased any advertisement or solicitation within Wisconsin except to the extent that its website is accessible to Wisconsin residents. Carlson neither alleged nor presented any evidence indicating that Fidelity has ever sold a vehicle to anyone else from Wisconsin, or even that it has ever had any contact with a Wisconsin business or resident other than Carlson and his wife (see ¶ 26). Nonetheless, he contended that Fidelity’s advertisements on third-party websites and the telephone conversations described above established the minimum contacts necessary for personal jurisdiction.

    The appellate court disagreed. “Fidelity’s advertisements on its own website, cars.com, or other third-party sites represent merely potential contacts with the state of Wisconsin. Significantly, Carlson has neither alleged nor shown facts suggesting Fidelity targeted Wisconsin residents with its Internet advertisements any more than any other state’s residents; instead, the advertisements were accessible to everyone regardless of location. There is no evidence suggesting Fidelity sent unsolicited communications into Wisconsin or advertised for any of the relevant websites within Wisconsin. Moreover, Fidelity does not control who views or responds to its own website or those of third parties. Further, the two phone calls between Carlson and Fidelity – one from and one to Carlson’s wife’s cell phone – do not constitute significant contact by Fidelity with Wisconsin, as they amounted to no more than five minutes of conversation and were initiated by Carlson” (¶ 25) (citations and internal quotes omitted).

    “Based on this record, we cannot conclude that Fidelity purposefully availed itself of the privilege of conducting activities within Wisconsin and thus invoked the benefits and protections of its laws, or that Fidelity’s conduct and connection with Wisconsin was such that it should have reasonably anticipated being haled into court here. Fidelity’s connection to Wisconsin was no more than random, fortuitous, and attenuated. Fidelity did not purposefully establish minimum contacts in Wisconsin so as to permit the circuit court to exercise personal jurisdiction over it” (¶ 28) (citations and internal quotations omitted).

    Constitutional Law

    First Amendment – Validity of Administrative Rule Restricting Certain Unpermitted Events in State Buildings

    State v. Crute, 2015 WI App 15 (filed 29 Jan. 2015) (ordered published 25 Feb. 2015)

    HOLDING: The circuit court did not err in concluding that Wisconsin Administrative Code section Adm 2.14(2)(vm)5. was not a valid time, place, and manner regulation of speech because it was not tailored to further the state’s significant government interests.

    SUMMARY: On many days, various individuals engaged in a noontime sing-along in the State Capitol rotunda. This became known as the Solidarity Sing-Along, a form of protest against recent legislation. On July 24, 2013, Crute participated in the Solidarity Sing-Along in the rotunda. The Capitol Police issued Crute a citation under Wisconsin Administrative Code section Adm 2.14(2)(vm)5. (hereinafter the rule) for participating in an unpermitted event in violation of the rule.

    In April 2013, the Wisconsin Department of Administration (DOA) issued the rule as an emergency rule, modifying Wisconsin Administrative Code chapter Adm 2 relating to the use of state facilities. The rule expired on Sept. 13, 2013. The provision in the emergency rule pertinent to this appeal authorized the DOA to impose a civil forfeiture on individuals who participate in or are spectators at any unpermitted “event” (as described in the rule) in state buildings.

    Crute filed a motion to dismiss the citation, claiming that the permit scheme created by the rule was facially unconstitutional under the First Amendment. Crute’s principal argument was that the regulation was not a valid time, place, and manner regulation because it was not narrowly tailored to serve a substantial governmental interest. In particular, Crute argued that the rule did not specify a numerical floor for the group size that would trigger the permit requirement, and therefore, the rule unconstitutionally required a permit even for very small groups of individuals.

    The circuit court granted Crute’s motion to dismiss the citation. In a decision authored by Judge Kloppenburg, the court of appeals affirmed.

    The parties disputed whether the rule was “narrowly tailored” within the meaning of First Amendment law. At the same time, no one argued that the rule as written was narrowly tailored. Rather, the real dispute was whether the rule was amenable to a narrowly tailored interpretation that would render it constitutional.

    The state conceded that the rule was not narrowly tailored absent a numerical floor that would prevent application of the rule to very small groups. In the state’s view, the circuit court should have read a numerical floor for enforcement of the permit requirement into the rule. That numerical floor, the state argued, is 21, such that groups involving 20 or fewer persons would not be required to possess a permit (see ¶ 24). The appellate court was not persuaded by the state’s argument that there was textual and caselaw support for its position, and it therefore declined to save the rule by reading into it a specific numerical floor.

    In a footnote, the court noted that, after Crute was issued the citation at issue in this case, “ch. Adm 2 was amended to allow groups of 12 or fewer persons to use the ground floor or first floor of the Capitol rotunda without applying for a permit and without providing advance notice. See Wis. Admin. Code §§ Adm 2.04(2z) and 2.14(2)(vm) (effective August 1, 2014)…. This case concerns only the emergency rule that governed at the time of Crute’s citation, which, as already noted, did not specify a minimum group size for triggering the permit requirement” (¶ 40 n.11).

    Employment Law

    Unemployment Insurance – “Mandatory Successor”

    Neenah Foundry Co. v. LIRC, 2015 WI App 18 (filed 29 Jan. 2015) (ordered published 25 Feb. 2015)

    HOLDING: The Labor and Industry Review Commission (LIRC) properly concluded that a company that emerged from Chapter 11 reorganization was a “mandatory successor” for purposes of calculating its obligation under the unemployment insurance system.

    SUMMARY: Emerging from a Chapter 11 reorganization, Neenah Foundry claimed it should be treated as a “new employer” under the state’s unemployment insurance system. LIRC determined that the reemerged Neenah Foundry was instead a “mandatory successor.” The distinction meant additional payments between $400,000 and $560,000 over a seven-year period. The circuit court upheld LIRC’s determination.

    The court of appeals affirmed in an opinion authored by Judge Lundsten. The court assumed, without deciding, that the Chapter 11 reorganization constituted a “transfer” under Wis. Stat. section 108.16(8)(a). First, it held that LIRC was entitled to great-weight deference on this issue for multiple reasons, especially its “experience interpreting and applying the mandatory successor provisions in a variety of factual situations” (¶ 25).

    Second, applying this deferential standard, the court held that LIRC’s finding was reasonable (see ¶ 30). Under Wis. Stat. section 108.16(8)(e)1, LIRC reasonably concluded that Neenah Foundry was “‘managed … in substantial part … directly … by the same … interests’ as before the Chapter 11 reorganization” (¶ 30). For example, Neenah Foundry had retained six of its eight officers, including the chief operating officer and the corporate controller (see id.). Although “reasonable minds may differ” over whether substantial change had occurred, LIRC was better suited to decide the issue (¶ 35). Finally, federal law did not preempt LIRC’s determination.

    Family Law

    Paternity – First Appearance in Paternity Action – Power of Court to Dismiss Action in the Best Interest of the Child – Genetic Testing

    Stuart S. v. Heidi R., 2015 WI App 19 (filed 21 Jan. 2015) (ordered published 25 Feb. 2015)

    HOLDING: The circuit court properly dismissed a paternity action at the first appearance after deciding it would not be in the child’s best interest for the court to determine the petitioner was the child’s father, even though genetic testing already established a great likelihood that the petitioner was in fact the child’s father.

    SUMMARY: Stuart S. filed a paternity action against Heidi R. and Scott R., alleging that Stuart is the biological father of a child born to Heidi while she was married to Scott. Before filing the action, genetic testing was done and showed a 99.9999996 percent likelihood that Stuart is the child’s father. The circuit court dismissed the paternity action pursuant to Wis. Stat. section 767.863(1m), concluding that a judicial determination that Stuart is the child’s father would not be in the child’s best interest.

    Section 767.863 governs first appearances in paternity actions. Subsection (1m) of the statute provides in pertinent part that if the court determines that a judicial determination of whether a male other than the husband is the father is not in the best interest of the child, no genetic tests may be ordered and the action must be dismissed.

    On appeal, Stuart argued that the circuit court erred as a matter of law by dismissing his paternity action under Wis. Stat. section 767.863(1m) after genetic tests were performed. In a decision authored by Judge Stark, the court of appeals disagreed. It concluded that the circuit court correctly disregarded the genetic testing on which Stuart relied because it was not completed pursuant to court order and the court properly determined that a judicial determination that Stuart was the child’s father would not be in the child’s best interest (see ¶ 2).

    The statute “does not limit the court’s authority to dismiss paternity actions to cases in which no genetic tests have been performed” (¶ 32). “We do not believe the legislature … intended to allow parties to circumvent a court’s authority to dismiss paternity actions at the initial stage of the proceeding based on the child’s best interest by preemptively obtaining genetic testing without court approval” (¶ 37).

    The court further held that dismissal of the paternity action did not violate Stuart’s constitutional rights as the child’s putative father because his relationship with the child was not substantial enough to give rise to a constitutionally protected liberty interest (see ¶ 2). The facts of record supporting this conclusion are
    detailed at paragraph 45 of the decision.


    Offers to Settle – Interest Rate

    Johnson v. Cintas Corp. No. 2, 2015 WI App 14 (filed 14 Jan. 2015) (ordered published 25 Feb. 2015)

    HOLDINGS: 1) The retroactively reduced interest rate applicable to judgments in Wis. Stat. section 807.01(4) is unconstitutional. 2) The jury was properly instructed about negligence. 3) No error occurred when a party’s criminal record was mentioned.

    SUMMARY: Johnson was a passenger in a car driven by Crandall, who crashed the car and injured Johnson. Both men were drunk. The car was insured by “Cintas 2,” Johnson’s employer. Because Crandall was a permissive driver, Johnson sued Cintas 2 and offered to settle for $300,000. The case went to trial and a jury awarded $400,000, also finding Johnson 20 percent contributorily negligent. Johnson demanded interest on the judgment at 12 percent, but the court applied the lower rate of interest applicable under the December 2001 amendment to Wis. Stat. section 807.01(4).

    The court of appeals reversed in part in an opinion authored by Chief Judge Brown. The main issue was whether “the 2011 reduction in the interest rate on judgments that exceed offers of settlement under Wis. Stat. § 807.01(4) applies if a statutory offer of settlement was filed before the amendment took effect” (¶ 13). When Johnson made his offer, the statutory interest rate was 12 percent; the 2011 amendment reduced the rate to one percent over prime (see ¶ 17). Cintas 2 contended that there was no retroactivity issue because Johnson’s entitlement occurred when the judgment occurred, which was after the new law was effective (see ¶ 18).

    The court held, however, that the law concerns a substantive right, not a “mere procedural rule” (¶ 24). The same result would follow if “the tables were turned” and the retroactive rate were higher, not lower (¶ 26). This follows because the offer of settlement and the current interest rate shapes parties’ expectations in litigation (see ¶ 25). The conclusion was supported by case law and the absence of any public interest that supported retroactivity here (see ¶ 28).

    The court also held that the jury was properly instructed about contributory negligence, and that no prejudice occurred when an improper question referred to the driver’s criminal record.

    Asbestos – Statute of Repose

    Peter v. Sprinkmann Sons Corp., 2015 WI App 17 (filed 27 Jan. 2015) (ordered published 25 Feb. 2015)

    HOLDING: It was reversible error to dismiss the plaintiff’s asbestos damage claims: although the claims did not fall within an exception to a statute of repose, the defendant’s conduct was not an improvement to real property and hence was not subject to the statute.

    SUMMARY: The plaintiff’s late husband began work as a maintenance machinist at a brewery in 1959. He was diagnosed with a lung disease in 2012 and died in 2013. From 1959 to 1979, the defendant contractor performed “constant” maintenance to repair pipe insulation containing asbestos at the brewery. The circuit court granted summary judgment to the defendant contractor under the statute of repose.

    The court of appeals reversed in an opinion written by Reserve Judge Cane. First, the court took up the “damages exception” in Wis. Stat. section 893.89, an issue that has led to “split decisions in our circuit courts” (¶ 10). The exception applies to “[d]amages that were sustained before April 29, 1994.” Wis. Stat. § 893.89(4)(d). The court held the exception applies to those who had a “valid claim” before April 1994, not to those who sustained an “injury” that had yet to result in such a claim (¶ 17).

    The second issue was whether the contractor’s work was an improvement to real property or only “routine repairs and maintenance” to which the statute of repose did not apply (¶ 20). The court held that the statute was inapplicable here because “[d]aily repairs are not improvements to real property as that phrase is used in the statute of repose” (¶ 23). The “distinction is reasonable because improvements to real property have a completion date whereas regular repairs and maintenance can continue ad infinitum” (¶ 23).

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