Arbitration

Waiver of Arbitration – Litigation Conduct

U.S. Bank Nat’l Ass’n v. Klein, 2024 WI App 7 (filed Jan. 25, 2024) (ordered published Feb. 28, 2024)

HOLDING: Unless the parties’ arbitration agreement clearly and unmistakably provides otherwise, the issue of waiver-by-litigation conduct is for the court, not the arbitrator, to decide.

SUMMARY: Klein bought a boat and trailer using a retail installment contract and security agreement, which he entered into with the bank that provided the loan. When Klein stopped making payments, the bank repossessed the boat and trailer. The bank later sued Klein to recover the balance owed (about $10,000). Klein initially appeared without a lawyer but later retained counsel, who raised affirmative defenses and eventually counterclaims.

About one year after commencing litigation, the bank moved to compel arbitration. Klein objected, asserting that the bank had waived its right to arbitrate. The circuit court granted the bank’s motion to compel arbitration and dismissed the case without prejudice.

The court of appeals reversed and remanded with instructions in an opinion authored by Judge Nashold. The parties disputed whether the bank waived its right to arbitrate through its litigation conduct. Klein contended that the circuit court should decide the waiver issue; the bank argued that the circuit court judge correctly found that the issue was for the arbitrator to decide (see ¶ 14). Case law has generally addressed which issues should be presumptively decided by the courts and which ones by an arbitrator, but those cases had not clearly ruled on the waiver-by-litigation-conduct issue (see ¶ 16). The court of appeals concluded that waiver-by-litigation conduct “is an issue that should presumptively be decided by courts rather than in arbitration” (¶ 18).

The holding draws on federal precedent that the court found was “consistent with Wisconsin law” (¶ 19). The court carefully explained the federal cases and the Wisconsin precedent (¶ 24). “[U]nless the parties’ arbitration agreement clearly and unmistakably provides otherwise, a court must decide whether a party has waived the right to arbitration through its litigation conduct. … Here, the arbitration provision does not express a clear and unmistakable intent that the waiver-by-litigation-conduct issue should be determined by an arbitrator; therefore, the circuit court must decide the issue” (¶ 31).

Employment Law

Wisconsin Fair Employment Act – Arrest Record Discrimination – Civil Municipal Charges

Oconomowoc Area Sch. Dist. v. Cota, 2024 WI App 8 (filed Jan. 10, 2024) (ordered published Feb. 28, 2024)

HOLDING: The Wisconsin Fair Employment Act’s prohibition on arrest-record discrimination does not provide protection against terminations based on information related to a civil, municipal charge.

SUMMARY: The Oconomowoc Area School District terminated the employment of Gregory and Jeffrey Cota (hereinafter the brothers or the Cotas) based on the belief they stole from the district by personally retaining funds they received from selling scrap metal owned by the district. The brothers challenged their terminations, contending the terminations were unlawful employment discrimination based on each brother’s “arrest record,” as that term is statutorily defined. The Cotas said the district fired them because each brother had been issued a municipal citation for theft, the municipal prosecutor had indicated to the district that he could prevail on the citations if the matter proceeded to trial, and the Cotas agreed to resolve the matter by paying $500 to the district.

The Labor and Industry Review Commission (LIRC) agreed with the brothers, finding that the district had terminated their employment on these bases and concluding that such terminations violated the Wisconsin Fair Employment Act (WFEA). The circuit court upheld LIRC’s decision. In a majority opinion authored by Judge Gundrum, the court of appeals reversed.

The WFEA prohibits employers from discriminating against an employee (or prospective employee) based on the employee’s arrest record, which “includes, but is not limited to, information indicating that an individual has been questioned, apprehended, taken into custody or detention, held for investigation, arrested, charged with, indicted or tried for any felony, misdemeanor or other offense pursuant to any law enforcement or military authority.” See Wis. Stat. §§ 111.321, 111.322, 111.32(1) (emphasis added). The issue before the court in this case was whether the Wisconsin Legislature intended the above statutory provisions to provide employment-discrimination protection in connection with not only arrest-record information related to criminal offenses but also such information related to civil offenses such as the civil, municipal theft charges issued against the Cotas.

To resolve this question, the court of appeals needed to determine what the legislature intended when it included the phrase “or other offense” in Wis. Stat. section 111.32(1). The court held that “the legislature intended this phrase – and these statutory provisions – to protect only with regard to criminal-offense information, and thus, the District’s termination of the Cotas based on the noted civil, municipal offense information did not constitute unlawful employment discrimination” (¶ 7).

Said the court: “We conclude the legislature did not include ‘or other offense’ in order to make Wis. Stat. § 111.32(1) – and thus also Wis. Stat. §§ 111.321 and 111.322 – applicable to civil, municipal offenses, but included it in order to extend the employment-discrimination protection in relation to criminal arrest information from non-Wisconsin jurisdictions that do not use the designations of felony or misdemeanor” (¶ 16).

Judge Grogan joined the majority opinion in full but also authored a concurrence. Judge Neubauer filed a dissent.

Torts

Defamation – Actual Malice

Wagner v. Allen Media Broad., 2024 WI App 9 (filed Jan. 5, 2024) (ordered published Feb. 28, 2024)

HOLDING: When a news outlet made mistakes in identifying two individuals who had the same name, the circuit court properly dismissed a negligence claim but erred in dismissing a defamation claim.

SUMMARY: A broadcast by WKOW conflated the identities of two police officers, both named “Mark Wagner,” who were involved in two different shootings. One shooting occurred in 2002, the other in late 2022. The erroneous news report attributed both shootings to the same person. Mark Wagner, who had been cleared in the 2002 shooting and had retired from law enforcement in 2019, sued WKOW. The circuit court dismissed the complaint on a motion for judgment on the pleadings.

The court of appeals, in an opinion authored by Judge Graham, reversed in part and affirmed in part. The bulk of the opinion addresses defamation claims, especially a statement’s defamatory meaning and the “ascertainment” element. First, the news report was capable of defaming the plaintiff. The court found “no merit” (¶ 32) in WKOW’s contention that its ordinary viewers would have not made the same mistake it had (see ¶ 35). Further, WKOW’s contention that its story only described “activities” of law enforcement and carried no defamatory implications was “out of touch with contemporary societal views,” among other deficiencies (¶¶ 37, 41).

The court next addressed the degree of fault, closely examining how the actual malice standard applies to a retired “public official.” Case law appears inconsistent on whether a “public official necessarily sheds the public officer status upon leaving office,” but the court of appeals said that the conflict is for the Wisconsin Supreme Court to resolve (¶ 59). Turning to whether the plaintiff was a “limited purpose public figure,” the court held that the pleadings and incorporated news reports did not conclusively exclude plaintiff Wagner from that category.

“In sum, we agree with the circuit court that, at this stage of the proceedings, Plaintiff Wagner was not required to allege actual malice to state a claim for defamation against WKOW. However, nothing we say in this opinion should be read to preclude WKOW from raising the issue of Plaintiff Wagner’s status and the actual malice requirement again in a subsequent motion. Nor should anything in this opinion be read to foreclose the court from concluding, on a more developed record, that WKOW is entitled to judgment based on Plaintiff Wagner’s inability to show that that standard is met” (¶ 73).

Finally, to the extent that the pleadings might have stated a separate claim for negligence, the allegations were insufficient. “If negligence is the degree of fault applicable to Plaintiff Wagner’s defamation claim, Plaintiff Wagner does not identify any benefit of maintaining two causes of action that are entirely duplicative, one for defamation and another for negligence” (¶ 80).