Vol. 78, No. 4, April
2005
Court of Appeals Digest
This column summarizes selected published opinions of the Wisconsin
Court of Appeals. Prof. Daniel D. Blinka and Prof. Thomas J. Hammer
invite comments and questions about the digests. They can be reached at
the Marquette University Law School, 1103 W. Wisconsin Ave., Milwaukee,
WI 53233, (414) 288-7090.
by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer
Civil Procedure
Notice of Claim - Prejudice
Moran
v. Milwaukee County, 2005 WI App 30 (filed 25 Jan. 2005)
(ordered published 24 Feb. 2005)
The plaintiff, Moran, claimed that she tripped over a "sign plate" in
an airport garage and suffered an injury in November 2000. The circuit
court dismissed the complaint because Moran failed to give the county
the notice required by Wis. Stat. section 893.80(1)(a).
The court of appeals, in an opinion written by Judge Fine, affirmed.
Moran claimed that she provided the requisite notice in December 2000 by
filing a "combined report" on a county form. The court held that the
report failed to provide the statutory notice because it was not signed
by Moran or her attorney, and it was never served on the chairperson of
the county board or the county clerk. Moran also failed to show that the
county was not prejudiced by her omission to comply with the notice
requirements. "The December 2000 `Combined Report,' however, gave no
notice that Mrs. Moran's injuries were or could be that serious. Thus,
although Milwaukee County took two photographs of the sign holder, the
County had no reason or duty to investigate further. Simply put, it is
contrary to the protection afforded by Wis. Stat. § 893.80(1) to
force a government entity to spend resources and taxpayer money to
investigate every injury where the requisite 120-day notice is not given
on the mere chance that the injury may turn out to be catastrophic,
irrespective of how minor it may seem initially. As of the December 5,
2000, `Combined Report,' as far as Milwaukee County knew, Mrs. Moran's
tripping-related injury was not serious" (¶ 10).
In April 2002 Moran did file a "notice of claim" that alerted the
county to the seriousness of her alleged injury, but the notice was
silent about "(1) who might have seen her trip; (2) who saw her
immediately after she tripped; or (3) to whom she spoke after the
accident" (¶ 12). The court pithily concluded that "Milwaukee
County is stuck with Mrs. Moran's recollections" (¶ 12).
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Criminal Procedure
Preliminary Hearings - Hearings Conducted by Court Commissioners -
No Right to De Novo Preliminary Hearing in Circuit Court
State
v. Gillespie, 2005 WI App 35 (filed 5 Jan. 2005) (ordered
published 24 Feb. 2005)
The defendant was charged with a felony. A preliminary hearing was
conducted by a circuit court commissioner, who found probable cause to
believe that the defendant had committed a felony and bound him over for
trial. The defendant then filed a motion for a de novo preliminary
hearing before the circuit court. The circuit court denied the request,
instead ruling that it would review a transcript of the preliminary
hearing. The defendant then petitioned for leave to appeal, which was
granted by the court of appeals. In a decision authored by Judge
Nettesheim, the court of appeals affirmed the circuit court.
The defendant argued that he was entitled to a de novo preliminary
hearing before a circuit judge by virtue of Wis. Stat. section
757.69(8). This statute, which deals generally with circuit court
commissioners' powers and duties, provides that "any decision of a
circuit court commissioner shall be reviewed by the judge of the branch
of court to which the case has been assigned, upon motion of any party.
Any determination, order, or ruling by a circuit court commissioner may
be certified to the branch of court to which the case has been assigned,
upon a motion of any party for a hearing de novo."
The appellate court concluded that a more specific statute in the
Criminal Procedure Code precluded the defendant's request for a second
preliminary hearing. Wis. Stat. section 970.04 (entitled "Second
Examination") provides that "if a preliminary examination has been had
and the defendant has been discharged, the district attorney may file
another complaint if the district attorney has or discovers additional
evidence." While the factual scenario under section 970.04 (the
defendant has been discharged and a new complaint filed) is different
from that presented in the defendant's case, the appellate court
concluded that the statute nevertheless reveals that the legislature had
the opportunity to address a second examination in the defendant's
situation and chose not to do so. "We also observe that the Wisconsin
Supreme Court has decreed that a motion to dismiss is the proper
procedure for obtaining circuit court review of a court commissioner's
bindover ruling and that such review is limited to a transcript of the
preliminary examination" (¶ 9).
Accordingly, the appellate court affirmed the circuit court's order
denying the defendant's request for a de novo preliminary hearing.
Traffic Stops - Consent to Search Vehicle
State
v. Jones, 2005 WI App 26 (filed 26 Jan. 2005) (ordered
published 24 Feb. 2005)
A deputy sheriff stopped a vehicle for speeding and asked both the
driver and his passenger for identification. The deputy then returned to
his squad car and ran checks on the identifications and the vehicle
registration; he found nothing irregular or suspicious. The deputy wrote
a warning citation for the driver and also called for backup assistance.
The deputy then had the driver accompany him to the rear of the vehicle
and at that point explained the warning citation to him. Once the deputy
returned the identification cards to the driver and passenger, he asked
the driver if he had any further questions regarding the citation, and
the driver indicated he did not. A few seconds later, the deputy asked
whether there was anything illegal in the vehicle. The driver responded
there was nothing illegal, and the deputy asked if he could search the
vehicle. The driver granted permission. The deputy found a semiautomatic
handgun under the front passenger seat and cocaine under the hood. The
driver and the passenger were arrested.
The parties agreed that the initial stop of the vehicle was legal and
that the traffic stop had concluded before the deputy made the request
to search the vehicle. Therefore, the narrow issue before the court of
appeals was whether, at the time the driver consented to the vehicle
search, he was considered to be "seized" for purposes of the Fourth
Amendment. In a decision authored by Judge Nettesheim, the court of
appeals concluded that he was.
The court looked to the decision in State v. Williams, 2002
WI 94, 255 Wis. 2d 1, 646 N.W.2d 834, for guidance in resolving the
issue in this case. Williams involved similar facts, except
that the officer, after returning the driver's license to Williams, told
him that "we'll let you get on your way then okay," shook hands with
him, and exchanged common parting pleasantries. Only then did the
officer ask Williams for consent to search. The Williams court
concluded that "the officer's words and actions, considered as a whole,
communicated permission to leave, as the traffic stop was over. The
officer did nothing, verbally or physically, to compel Williams to stay.
That Williams stayed, and answered the questions, and gave consent to
search, is not constitutionally suspect, and does not give rise to an
inference that he must have been compelled to do so" (Williams,
2002 WI 94, ¶ 29, 255 Wis. 2d 1).
In this case the court of appeals saw an important factual
difference. The officer never advised the driver that he was free to
leave, nor did he engage in any physical exchange with the driver, such
as a handshake or other gesture, that conveyed the idea that the driver
was free to leave. The Williams court saw such facts as
significant. In this case the court indicated that it was reading
Williams "to require some verbal or physical demonstration by
the officer, or some other equivalent facts, which clearly conveyed to
the person that the traffic matter is concluded and that the person
should be on his or her way. Absent that, it is a legal fiction to
conclude that a reasonable person would deduce, infer or believe that he
or she is free to depart the scene" (¶ 17).
Under the totality of the circumstances present in this case, the
appellate court concluded that a reasonable person in the defendant's
position would not have believed that he or she was free to leave. The
defendant was thus seized for purposes of the Fourth Amendment at the
time he gave consent for the search, and the consent was therefore
invalid because there was no other legal justification for the
seizure.
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Employment Law
Misrepresentation - Omissions
Bellon
v. Ripon College, 2005 WI App 29 (filed 26 Jan. 2005) (ordered
published 24 Feb. 2005)
Ripon College (the college) hired the plaintiff as an assistant
professor in 2000. She turned down an offer for a higher paying position
from another, less prestigious, academic institution. In August 2001,
the college notified the plaintiff that budgetary considerations
necessitated the elimination of her position. The plaintiff filed suit,
alleging common law misrepresentation to induce employment and a claim
of misrepresentation under Wis. Stat. section 103.43 (2003-04). The
trial court granted summary judgment in favor of the college.
The court of appeals, in an opinion written by Judge Snyder,
affirmed. The record revealed that the college had truthfully disclosed
the actual value of its endowment and its actual student enrollment
figures and trends when the plaintiff interviewed for the position. She
claimed, however, that the college "had a duty to say more" (¶ 10).
The court rejected this contention of "passive fraud" or
"misrepresentation by nondisclosure" because the plaintiff sought, in
essence, to impose a duty "to supply predictions, not facts" (¶
10). In a related contention, the plaintiff also unsuccessfully argued
that the nondisclosure of details regarding the college's financial
straits prevented her from "predicting future economic events"(¶
11). The court held that the college had no duty to disclose such
details.
Finally, the court of appeals held that the trial court properly
restricted the scope of Wis. Stat. section 103.43 "to manual laborers
only" (¶ 12). Indeed, the plaintiff's argument was foreclosed by
dispositive case law.
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Insurance
CGL Policies - Limited Liability Companies - Named Insureds
Brown
v. MR Group LLC, 2005 WI App 24 (filed 26 Jan. 2005) (ordered
published 24 Feb. 2005)
After a child drowned in a water-filled excavation site, the child's
parents and estate sued various defendants including the MR Group LLC,
which owned the real estate, and Raush, its de facto manager. Raush
counterclaimed against other defendants for contribution or
indemnification. An insurer, West Bend, obtained summary judgment on the
ground that it owed no duty to defend or to indemnify Raush, and Raush
appealed.
The court of appeals, in a decision authored by Judge Brown, affirmed
in "the first case that construes how comprehensive general liability
[CGL] policies should be interpreted as they apply to Wisconsin limited
liability companies with respect to `Named Insured' language" (¶
1). The court held that "when a clause in a standard CGL policy refers
to a `manager' or `member' of a limited liability company, the signators
to the insurance policy intend for those words to mean the same as they
are defined pursuant to Wisconsin's limited liability company statute,
Wis. Stat. § 183.0102 (2003-04), and are not defined according to
the common usage found in a recognized dictionary" (¶ 1). "[A]
reasonable insured that is a limited liability company would understand
`manager' and `member' to mean `manager' and `member' as the terms are
used with respect to limited liability companies. The relevant provision
of the policy providing coverage for managers and members applies
exclusively to limited liability companies. It does not deal
with other sorts of business establishments commonly thought to have
`managers' or `members.' In addition, we must keep in mind that limited
liability companies are statutory creatures. We expect that a reasonable
insured would be familiar with statutory definitions of major players in
its organizational structure and that references to such players would
commonly be thought to allude to those particular definitions" (¶
10).
The term "real estate manager" in the CGL policy was not restricted
to limited liability companies nor was it defined by Wis. Stat. chapter
183 (see ¶ 12). The court used a dictionary definition of
"real estate manager": "one who manages the business affairs of certain
real estate" (¶ 13). Construing the complaint in its most liberal
sense, the court held that Raush was neither a member nor a real estate
manager within the meaning of West Bend's CGL policy.
Interest - Third-Party Claims
Kontowicz v.
American Standard Ins. Co., 2005 WI
App 22 (filed 19 Jan. 2005) (ordered published 24 Feb. 2005)
The court of appeals consolidated two cases that raised identical
issues, namely, "whether the [Wis. Stat.] § 628.46 interest
penalty, by reference to Wis. Stat. § 646.31(2)(d), applies to a
third-party personal injury claim against a liability insurance policy"
(¶ 2). In an opinion by Judge Snyder, the court held that the
third-party claimants were not entitled to the statutory interest
penalty.
Finding that Wis. Stat. section 628.46 was ambiguous (see
¶ 10), the court turned to the statute's historical context. In the
mid-1970s, while dealing with the issue of fair practices within the
insurance industry, the legislature enacted a predecessor statute. At
the same time, the supreme court was grappling with "bad faith" actions.
Based on this history, the court of appeals concluded "that §
628.46 arose from the legislature's intent to protect the insured from
improper claims settlement practices" (¶ 17). Third-party
claimants' rights under the statute were restricted, as made clear by
later amendments to section 628.46. Specifically, "[b]y eliminating the
bodily injury and personal injury language from the statute, the
legislature has preserved eligibility for a more narrow group,
specifically: (1) third parties whose claims arise under the policy in
the same manner and under the same provisions as the named insured, and
(2) third-party worker's compensation claimants" (¶ 18).
In delimiting the first category of third-party claimants, the court
offered this explanation: "Under Wis. Stat. § 632.32(3)(a), an
automobile insurance policy must provide coverage `to any person using
any motor vehicle described in the policy when the use is for purposes
and in the manner described in the policy.' Furthermore, a policy may
not exclude coverage for `[p]ersons related by blood, marriage or
adoption to the insured' or a `passenger in or on the insured vehicle.'
Sec. 632.32(6)(b)1. and 2.a. Consequently, the insured has paid premiums
with the expectation that these third parties will be covered under the
policy and the insurer has set premiums and issued coverage accordingly"
(¶19). Since the third-party claimants in this case fell under
neither eligibility category, they were not entitled to the interest
penalty set forth in section 628.46.
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Motor Vehicle Law
OWI - Field Sobriety Tests - Admissibility
City of
West Bend v. Wilkens, 2005 WI App 36 (filed 12 Jan. 2005)
(ordered published 24 Feb. 2005)
This case involved a question of admissibility versus weight of
evidence. The defendant was charged with driving with a prohibited
alcohol concentration. He complained that the field sobriety tests
(FSTs) the arresting officer administered to him were unreliable because
they failed to conform to standardized FST procedures approved by the
U.S. Department of Transportation's National Highway Traffic Safety
Association. In municipal court and circuit court proceedings, the
defendant unsuccessfully sought to suppress evidence of his performance
on the FSTs, arguing that the evidence was not scientifically
reliable.
The defendant was convicted following a trial in the municipal court.
He appealed to the circuit court, where a trial de novo on stipulated
facts also resulted in a guilty finding. The circuit court relied on the
FST evidence as well as other evidence of impairment. The circuit court
determined that the reliability of the FST evidence was for the fact
finder to determine.
In a decision authored by Judge Brown, the court of appeals affirmed.
It rejected the defendant's argument for suppression of the FST evidence
on two grounds. First, it concluded that FSTs are not "scientific
tests." Said the court, "We reject [the defendant's] attempt to cast
this case as one involving the use of scientific evidence, the
reliability of which this court must determine before the fact finder
may consider it. FSTs are not scientific tests. They are merely
observational tools that law enforcement officers commonly use to assist
them in discerning various indicia of intoxication, the perception of
which is necessarily subjective. Moreover, it is not beyond the ken of
the average person to understand such indicia and to form an opinion
about whether an individual is intoxicated. The evidence was not without
probative value and therefore was admissible" (¶ 1).
Second, the court concluded that, even if FSTs are "scientific
tests," reliability is not a prerequisite to admitting scientific
evidence in this state. "Wisconsin, unlike the federal courts, considers
the reliability of scientific evidence a question of weight and
credibility for the trier of fact to decide. A party can challenge the
reliability of such evidence through cross-examination or other means of
impeachment. The evidence is admissible as long as it is relevant, the
witness testifying to such evidence is a qualified expert, and the
evidence will assist the fact finder in understanding the evidence or
determining some factual issue. [The defendant] has not challenged the
trial court's consideration of the FST evidence on any of these grounds"
(¶ 23).
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Paternity
Lying-in Expenses - Lack of Ability to Pay
Rusk
County Dep't of Health & Human Servs. v. Thorson, 2005 WI
App 37 (filed 11 Jan. 2005) (ordered published 24 Feb. 2005)
The Wisconsin Medical Assistance Program paid expenses associated
with the birth of the twin children of the respondent. The Rusk County
Department of Health and Human Services filed a paternity petition
seeking, among other things, reimbursement for the lying-in expenses.
The parties agreed, and the circuit court found, that the respondent did
not have the present ability to pay any of the expenses. Nevertheless,
the court ordered that he was obligated for more than $4,300, although
it held the payment in abeyance.
The respondent appealed the order, arguing that the circuit court had
no authority to order that he was obligated to pay the lying-in expenses
for his children when, at the time of the order, he had no ability to
pay.
In a decision authored by Judge Peterson, the court of appeals agreed
with the respondent and reversed the circuit court order. Wis. Stat.
section 767.51(3)(e) authorizes the circuit court to order a "father to
pay or contribute to the reasonable expenses of the mother's pregnancy
and the child's birth, based on the father's ability to pay or
contribute to those expenses." Under the plain language of the statute,
the circuit court's ability to order payment is contingent on "the
father's ability to pay." Because it was undisputed that the respondent
had no ability to pay at the time of the hearing, the circuit court had
no authority to set his obligation to pay lying-in expenses.
However, the appellate court did indicate that "when and if a father
has the ability to pay, the court may order him to pay or contribute to
the lying- in expenses. If the father's ability to pay changes, the
order may be modified" (¶ 7).
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Torts
Worker's Compensation - "Temporary Help Agency"
Peronto
v. Case Corp., 2005 WI App 32 (filed 26 Jan. 2005) (ordered
published 24 Feb. 2005)
Jacquelyn Peronto was employed by a service contractor, Compass
Group, and suffered an injury while working at Case Corp. Peronto filed
suit against Case. The circuit court granted summary judgment in favor
of Case.
The court of appeals, in an opinion written by Judge Anderson,
reversed. The sole issue on appeal was whether Compass was a "temporary
help agency" under Wis. Stat. section 102.29(6). If Compass was a
temporary help agency, the negligence action against Case would be
barred. The court held that Compass "did not place [Peronto] with Case,
Case did not control her work activities and Case did not compensate
Compass for [her] services" (¶ 1). Under Wis. Stat. section
102.201(2)(f), a "`temporary help agency' has the following
characteristics: (1) an employer who places its employee with a second
employer, (2) the second employer controls the employee's work
activities, and (3) the second employer compensates the first employer
for the employee's services" (¶ 9).
The court applied each of these factors to the Case/Compass
relationship. First, "Case and Compass had a contractual arrangement
that left the details of how to fulfill that contract to Compass.
Compass maintained exclusive control over the day-to-day operations of
the catering and vending services, including the employees. The purpose
of [Peronto]'s work was to assist Compass in fulfilling its contractual
obligations - to plan meals, prepare meals, serve meals and clean up
after meals. Her activities at the Case facility had only an incidental
benefit to Case - well-fed employees. Thus, while [Peronto] worked
at Case facilities, she did not work for Case" (¶
12).
Second, Case's supervision of Peronto "was not sufficient to
constitute control of her work activities" (¶ 16). Indeed, the
record showed that "Compass exercised near complete control over
[Peronto]'s daily work activities" (¶ 18). Third, "when Case paid
Compass under the contract, it was paying for the end product - the
cafeteria and vending services - and not specifically for the labor of
the individual employees like [Peronto]. The compensation element then
is not satisfied" (¶ 19).
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Trade Secrets
Misappropriation of Trade Secrets - Customer Lists - Pricing Data -
Statutory Preemption of Certain Common Law Claims
Burbank
Grease Servs. LLC v. Sokolowski, 2005 WI App 28 (filed 20 Jan.
2005) (ordered published 24 Feb. 2005)
Burbank Grease Services collects and processes used restaurant fry
grease, trap grease, and industrial grease. The defendant was a former
employee of Burbank, where his final position was as a procurement and
territory manager. When he left Burbank, the defendant retained certain
information about Burbank's customers and pricing data.
The defendant later helped form a new company that competed with
Burbank. He used customer information he had learned at Burbank to
solicit some of Burbank's customers for his new business. Burbank then
filed suit asserting several claims, all of which were dismissed on
summary judgment. In a decision authored by Judge Vergeront, the court
of appeals affirmed.
The first claim involved an allegation that the defendant
misappropriated trade secrets in violation of Wis. Stat. section 134.90,
Wisconsin's Uniform Trade Secrets Act. By definition, a trade secret
must involve information that "derives independent economic value,
actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use." Wis. Stat. §
134.90(1)(c)1.
The court concluded that Burbank's customer lists were not trade
secrets. It held that "a straightforward application of the language of
§134.90(1)(c)1. to the undisputed facts of this case persuades us
that the names, addresses, and contact persons of Burbank's customers
are readily ascertainable by proper means. The undisputed evidence is
that any business that cooks or processes food is a potential customer
for the services Burbank provides, and Burbank's own witnesses
acknowledge that anyone can identify the businesses that likely have a
need for the services Burbank provides from such common sources as the
telephone book, the internet, and trade associations. As for contact
persons, the evidence is that one can find that out by asking at the
business" (¶ 18).
The information retained from the defendant's employment at Burbank
also included certain pricing data. The appellate court said that no
reported Wisconsin cases address the trade secret status of pricing
information. Looking for guidance from other jurisdictions, the court
found that "generally, it appears that when prices are based on
complicated or unique formulas that the customers do not know about,
courts conclude the information meets the standard embodied in Wis.
Stat. §134.90(1)(c)1. .... However, when there is no such
unique or complicated information behind the pricing, the actual price
charged does not meet that standard because - in the absence of special
circumstances - it can be readily ascertainable from the customers
themselves by proper means" (¶ 22). "We conclude this general
approach is sound and apply it here. There is no evidence that Burbank's
prices are based on information not known to the customers. There is
also no evidence of a contract prohibiting Burbank's customers from
disclosing the price Burbank charges, nor is there evidence that it is
the custom in this industry for customers not to disclose the prices
they are charged ...We conclude the evidence is insufficient, as a
matter of law, to show that the prices Burbank charges its customers are
not readily ascertainable by proper means" (¶ 23).
Among the other claims pressed by Burbank were two involving breach
of fiduciary duty. The question before the appellate court was whether
these common law claims were preempted by section 134.90(6). According
to its terms (which are subject to certain exceptions like contractual
remedies), the trade secrets law "displaces conflicting tort law,
restitutionary law and any other law of this state providing a civil
remedy for misappropriation of a trade secret" (¶ 25, quoting Wis.
Stat. § 134.90(6)). Burbank argued that preemption does not occur
if the misappropriated information does not meet the definition of a
trade secret.
Again looking to cases from other jurisdictions, the appellate court
concluded that the majority of jurisdictions that have considered the
issue have concluded that the trade secrets law preempts common law
claims for unauthorized use of allegedly confidential information that
does not meet the statutory definition of a trade secret. "The rationale
for this conclusion is that the purpose of the preemption provision is
to preserve a single tort action under state law for misappropriation of
a trade secret as defined in the statute and thus to eliminate other
tort causes of action founded on allegations of misappropriation of
information that may not meet the statutory standard for a trade
secret"(¶ 29). "On the other hand, where a claim for breach of
fiduciary duty is based on allegations or factual showings that are not
solely dependent on misappropriation of a trade secret or unauthorized
use of allegedly confidential information, courts have concluded there
is no preemption" (¶ 33).
Persuaded by the reasoning of the great majority of courts that have
construed the preemption provision, the court of appeals concluded that
"the purpose of Wis. Stat. § 134.90(6) is to make clear that §
134.90 is intended to provide a single, uniform standard for the type of
information that, in the absence of a contract, is entitled to
protection from misappropriation under civil law. We construe §
134.90(6) to preempt common law claims for unauthorized use of
confidential information that does not meet the statutory definition of
a trade secret, as well as common law claims, however denominated, that
are based solely on allegations or evidence either of misappropriation
of a trade secret in violation of § 134.90(1) and (2) or
unauthorized use of confidential information. We conclude that this
construction best effectuates the purpose of § 134.90(6)" (¶
37).
On the facts of this case, the appellate court concluded that the
claim that the defendant breached his fiduciary duty to Burbank was
based solely on evidence that he used and disclosed Burbank's customer
information after the termination of his employment with Burbank.
Accordingly, that claim was preempted by Wis. Stat. section 134.90(6)
and was correctly dismissed by the circuit court.
Wisconsin Lawyer