The failure to meet a threshold requirement can end litigation at the pleading stage. “Threshold issue” often describes something that must be established before a federal court can adjudicate a dispute. Federal courts are courts of limited jurisdiction and can only hear cases authorized by the U.S. Constitution or federal statutes. Parties seeking to invoke federal jurisdiction must meet certain threshold requirements before a case will be heard, and federal courts often act as gatekeepers in determining whether threshold requirements have been met.
Threshold issues are not limited to federal courts. Wisconsin state courts are courts of general, rather than limited, jurisdiction, and thus threshold issues in Wisconsin circuit courts are not completely synonymous with threshold issues in federal courts. Nevertheless, Wisconsin circuit courts can examine pleadings to determine whether certain threshold requirements are met. In this manner Wisconsin courts can also act as gatekeepers determining whether pleadings sufficiently meet threshold requirements necessary to maintain litigation.
Although not completely synonymous with federal court threshold requirements, state court threshold issues can lead to victory or defeat in litigation without the parties going through extensive discovery or the court or jury resolving the merits of a case. Consequently, attorneys practicing any manner of civil litigation should understand how threshold requirements can end an opposing party’s lawsuit and protect clients from costly litigation.
Unlike federal court threshold issues, which litigants can often raise at any time, litigants can waive or forfeit many state court threshold issues. Therefore, attorneys must often spot state court threshold issues sooner in litigation to take advantage of them.
This article examines recent case law that clarified some state court threshold issues including plausibility pleading, court competency, and standing. These cases modify prior rules that attorneys representing clients engaged in litigation must understand. Additional threshold issues not discussed in depth by this article, but which lawyers should also consider, include the political-question doctrine, ripeness, mootness, justiciability, and standard of review.
Wisconsin Statutes section 802.02(1), which is based on Fed. R. Civ. P. 8(a), requires pleadings to include a short and plain statement of the claim identifying the transaction or occurrence or series of transactions or occurrences out of which the claim arises and showing the pleader is entitled to relief. Two recent cases demonstrate how Wisconsin pleading standards now track federal pleading requirements that a complaint must allege facts that plausibly suggest the plaintiffs are entitled to relief.
com douglashoffer gmail Douglas Hoffer, Marquette 2010, is an Eau Claire Deputy City Attorney. He argued Voters With Facts v. City of Eau Claire, City of Eau Claire v. Booth, and Village of Elm Grove v. Brefka, referenced in this article, in front of the Wisconsin Supreme Court.
In Data Key Partners v. Permira Advisers LLC, decided in 2014, a minority shareholder brought an action against the corporation’s board of directors and majority shareholders alleging they breached their fiduciary duties with regard to the sale of the corporation.1 The defendants moved to dismiss the case, alleging the complaint failed to plead sufficient facts to overcome the deference due to business decisions under the business judgment rule.
In Data Key, the Wisconsin Supreme Court determined that the federal plausibility pleading standard is consistent with Wisconsin precedent, and held that state court pleadings must plead sufficient facts to plausibly demonstrate entitlement to relief. Adopting the heightened Twombly pleading standard, Data Key said a plaintiff’s pleading obligation required more than “labels and conclusions, and a formulaic recitation of the elements of a cause of action.”
Bare legal conclusions set out in a complaint provide no assistance in warding off a motion to dismiss. In applying the plausibility pleading standard in the business judgment rule context, Data Key concluded that the complaint did not plead sufficient facts to state a claim, and the allegations against the directors’ actions must be dismissed.
Another Wisconsin Supreme Court decision, Voters With Facts v. City of Eau Claire, decided in 2018, illustrates the importance of meeting the plausibility standard when filing a complaint and the importance of addressing all potential threshold requirement deficiencies.2 In Voters With Facts, a citizens group filed a lawsuit seeking declaratory judgment to invalidate the creation and amendment of tax increment districts to support a major redevelopment project that included a performing arts center, and to determine Wisconsin’s tax increment financing (TIF) law was unconstitutional.
The city of Eau Claire moved to dismiss the lawsuit, citing various pleading deficiencies in the complaint, including the failure to meet several threshold requirements. The city argued that similar deference should be applied to the legislative determinations of the Eau Claire City Council as Data Key applied to corporate decisions under the business judgment rule in determining whether the pleadings contained sufficient facts to state a claim. The circuit court granted the motion to dismiss, citing a lack of standing and the political-question doctrine, and the Wisconsin Court of Appeals affirmed dismissal of the declaratory-judgment claims primarily on standing grounds.
As Wisconsin courts continue to assert their gatekeeping function in examining the sufficiency of pleaded facts, plaintiffs’ lawyers should ensure that pre-filing investigations collect sufficient facts to support their claims.
In Voters With Facts, the supreme court affirmed the declaratory-judgment claims’ dismissal because the complaint failed to plead sufficient facts to state a claim, and because legislative TIF determinations do not present justiciable issues of fact or law. Data Key and Voters With Facts demonstrate the importance of making sure pleadings include sufficient facts under Wisconsin’s plausibility pleading standard. Merely reciting a cause of action’s elements and asserting entitlement to relief does not provide sufficient heft to survive a motion to dismiss.
As Wisconsin courts continue to assert their gatekeeping function in examining the sufficiency of pleaded facts, plaintiffs’ lawyers should ensure that pre-filing investigations collect sufficient facts to support their claims. Lawyers representing civil defendants should also examine whether the complaint pleads sufficient facts to state a claim, especially in situations in which the actions challenged, like the actions in Data Key and Voters With Facts, are entitled to deference and thus may require additional pleaded facts.
The Wisconsin Constitution grants circuit courts broad subject matter jurisdiction, which cannot be revoked by statute.3 Consequently, a party’s failure to meet a statutory requirement results in a loss of court competency rather than a loss of subject matter jurisdiction.4 Competency refers to whether a court can adjudicate the specific case before it; subject matter jurisdiction refers to whether a court can adjudicate the kind of case before it.
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Courts have not always clearly distinguished between subject matter jurisdiction and court competency, and often the difference is irrelevant if the challenge to court authority is timely. Unlike subject matter jurisdiction challenges, competency challenges can be waived or forfeited if not timely raised before the circuit court.
Village of Trempealeau v. Mikrut, decided in 2004, was the seminal case that clarified the difference between subject matter jurisdiction and court competency.5 In Mikrut the supreme court examined whether a challenge to a civil forfeiture judgment that was allegedly entered in violation of statutory requirements implicated subject matter jurisdiction or court competency.
Mikrut concluded that the broad subject matter jurisdiction granted to circuit courts by the Wisconsin Constitution cannot be revoked by statute, and therefore a failure to follow a statutory mandate implicates a circuit court’s competency rather than its subject matter jurisdiction. The supreme court held in Mikrut that court competency challenges, unlike subject matter jurisdiction challenges, could be waived.
Some jurists believe the post-Mikrut court competency doctrine is confusing, but recent Wisconsin Supreme Court decisions provide additional guidance in applying the doctrine. For example, in Village of Elm Grove v. Brefka, decided in 2013, the supreme court held that the failure to meet a statutory time limit deprived a court of competency to proceed.6 In State v. Starks, decided in 2013, the supreme court held that a party’s failure to bring an action in the proper forum, by filing a motion claiming ineffective assistance of appellate counsel with the circuit court, deprived the court of competency.7 Additionally, in Xcel Energy Services Inc. v. LIRC, decided in 2013, the supreme court held that the failure to name a necessary party may result in a court losing competency to proceed.8 These cases demonstrate the types of mandatory statutory requirements that implicate competency rather than subject matter jurisdiction.
It now appears that Wisconsin courts almost never lack subject matter jurisdiction.
In 2016, the supreme court further refined Wisconsin’s court competency doctrine in City of Eau Claire v. Booth.9 Booth involved a defendant with pending seventh-, eighth-, and ninth-offense operating while intoxicated (OWI) charges. Hoping to avoid mandatory penalties associated with a seventh-offense OWI conviction, the defendant moved to vacate a 1992 (civil) first-offense OWI conviction prosecuted by the city of Eau Claire.
The defendant argued that the 1992 circuit court lacked subject matter jurisdiction because at the time of the 1992 conviction she had a prior out-of-state conviction, and thus she should have been issued a criminal second-offense OWI charge as required by Wisconsin statutes. Booth argued that the failure to follow the statutory requirement to charge the second offense as a crime deprived the 1992 court of subject matter jurisdiction to enter the 1992 conviction.
The city of Eau Claire, citing Mikrut, argued that any alleged failure to follow a statutory requirement implicated court competency rather than subject matter jurisdiction. Thus, the city argued, the defendant either waived or forfeited her challenge to the court’s competency by waiting more than 20 years to bring her challenge.
In Booth, the supreme court clarified several important concepts in the court competency analysis. First, Booth clarified that court competency challenges not only can be waived but also can be forfeited. This clarification is important because waiver requires intentionally relinquishing a known right, whereas forfeiture only requires the failure to timely assert a right. By waiting 22 years to bring her challenge, the supreme court held, Booth forfeited her right to bring her challenge.
Second, Booth also withdrew language from State v. Bush that concluded that facial constitutional challenges to state statutes implicate subject matter jurisdiction.10 Consequently, except for cases in which federal law confers exclusive jurisdiction over certain subject matter to federal courts, precluding state court jurisdiction in those areas by operation of the Supremacy Clause, it now appears that Wisconsin courts almost never lack subject matter jurisdiction.11
Careful lawyers will scrutinize pleadings to ensure all mandatory statutory requirements are followed, and lawyers seeking to challenge court competency should make sure to bring timely challenges to avoid waiving or forfeiting arguments that can win a case.
Standing is another important threshold issue state courts may examine to determine whether to allow a case to proceed. Standing refers to a party’s right to make a legal claim or enforce a duty or right. Wisconsin’s standing jurisprudence includes subtle differences from federal standing jurisprudence. For example, standing is evaluated in federal courts as a jurisdictional prerequisite, and consequently parties in federal lawsuits can challenge standing at almost any time. Wisconsin courts, on the other hand, evaluate standing as a matter of judicial policy rather than as a jurisdictional prerequisite.
A 2011 supreme court decision examined and sought to harmonize Wisconsin’s standing jurisprudence, noting that there is no single longstanding, uniform, or consistently applied test to determine standing in the case law. As a matter of first impression, in Foley-Ciccantelli v. Bishop’s Grove Condo Ass’n the supreme court examined whether a former client had standing to move to disqualify plaintiffs’ counsel based on the plaintiffs’ counsel’s prior representation of nonparties.12
In concluding the former client had standing, Foley held that successfully invoking standing generally requires demonstrating 1) a personal interest in the controversy (sometimes referred to in case law as “personal stake” in the controversy); 2) an injury to the person whose standing has been challenged; and 3) that judicial policy calls for protecting the interest of the party whose standing is challenged (sometimes referred to as a “legally protectable interest”).
Standing is evaluated in federal courts as a jurisdictional prerequisite, and consequently parties in federal lawsuits can challenge standing at almost any time. Wisconsin courts, on the other hand, evaluate standing as a matter of judicial policy rather than as a jurisdictional prerequisite.
Two concurring opinions in Foley also provide useful analysis of Wisconsin’s standing jurisprudence. Justice Prosser’s concurring opinion provided guidance on a number of important standing concepts, including the meaning of “judicial policy,” by concluding that judicial policy embodies the same prudential considerations discussed by the U.S. Supreme Court in the Valley Forge case.13 In so doing, Justice Prosser sought to provide courts analyzing standing with reasonable constraints rather than ad hoc standards for every new case. Justice Prosser’s concurrence also cited Krier v. Vilione, a 2009 Wisconsin Supreme Court decision, to support the proposition that plaintiffs whose arguments had no basis in Wisconsin or traditional corporate law lack standing.14
Justice Roggensack’s concurring opinion cited a number of standing decisions that demonstrate the importance of articulating an actual injury to a legally protectable interest. Abstract injuries are not sufficient to demonstrate standing, and demonstrating standing often requires examining whether the relevant statute or regulation provides legal protection for the asserted interest.
Not every litigant interested in filing a lawsuit can demonstrate standing, and all three opinions in Foley discuss how standing rules can differ depending on the type of action or the identity of the plaintiff. Various tests for standing have been applied in different contexts including constitutional law cases, declaratory-judgment cases, and other settings. Prudent lawyers will examine how the type of action and the plaintiff’s identity affect the standing analysis and will scrutinize whether sufficient facts are pleaded to demonstrate standing.
By anticipating threshold issues, lawyers can draft complaints less likely to be dismissed at the pleading stage and respond to pleadings in a manner that ends litigation before engaging in time-consuming and expensive discovery or a decision on the merits. Plausibility pleading, court competency, and standing are not the only threshold issues Wisconsin courts examine in determining whether to allow a case to proceed, and lawyers should consider all threshold requirements that may be at issue in their case.
When drafting pleadings, lawyers should include sufficient facts to meet threshold requirements. When responding to pleadings, lawyers should examine whether sufficient facts are pleaded to meet threshold requirements. If pleadings contain insufficient facts to meet threshold requirements, lawyers should consider filing a motion to dismiss. Attorneys filing a motion to dismiss should consider the sometimes duplicative and redundant nature of some threshold issues and make sure to include arguments addressing all threshold issues that may apply.
Lawyers who lose a motion to dismiss based on a failure to meet threshold requirements – whether representing a plaintiff or a defendant – may want to consider whether the case would be a good candidate for appeal. Case law examining state court threshold issues continues to evolve, and many recent decisions include spirited dissenting opinions.
Understanding threshold issues in state courts is important regardless of whether you represent defendants seeking an early dismissal or plaintiffs seeking discovery and a review on the merits. Recent case law provides useful clarification on these important issues, but some recent cases remain controversial. Threshold-requirement jurisprudence will likely continue to evolve, and sensible lawyers will examine how these issues can help or hurt their clients’ cases.
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com douglashoffer gmail Douglas Hoffer, City of Eau Claire, Eau Claire.
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1 Data Key Partners v. Permira Advisers LLC, 2014 WI 86, 356 Wis. 2d 665, 849 N.W.2d 693.
2 Voters With Facts v. City of Eau Claire, 2018 WI 63, 382 Wis. 2d 1, 913 N.W.2d 131.
3 Wis. Const. art. VII, § 8; Douglas J. Hoffer, Keep Your Case Afloat: Wisconsin’s Court Competency Doctrine, 87 Wis. Law. 26 (June 2014).
4 Village of Elm Grove v. Brefka, 2013 WI 54, 348 Wis. 2d 282, 832 N.W.2d 121.
5 Village of Trempeauleau v. Mikrut, 2004 WI 79, 273 Wis. 2d 76, 681 N.W.2d 190.
6 Brefka, 2013 WI 54, 348 Wis. 2d 282.
7 State v. Starks, 2013 WI 69, 349 Wis. 2d 274, 833 N.W.2d 146.
8 XcelEnergy Servs. Inc. v. LIRC, 2013 WI 64, 349 Wis. 2d 234, 833 N.W.2d 665.
9 City of Eau Claire v. Booth, 2016 WI 65, 370 Wis. 2d 595, 882 N.W.2d 738.
10 State v. Bush (In re Commitment of Bush), 2005 WI 103, 283 Wis. 2d 90, 699 N.W.2d 80.
11 Mikrut, 2004 WI 79, ¶ 8 n.2, 273 Wis. 2d 76.
12 Foley-Ciccantelli v. Bishop’s Grove Condo. Ass’n, 2011 WI 36, 333 Wis. 2d 402, 797 N.W.2d 789.
13 Valley Forge Christian Coll. v. Americans United for Separation of Church & State Inc., 454 U.S. 464, 471 (1982).
14 Krier v. Vilione, 2009 WI 45, 317 Wis. 2d 288, 766 N.W.2d 517.