Milwaukee judge’s appointment of special master raises questions for justices

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The Wisconsin Supreme Court justices showed concern on Tuesday that a Milwaukee County judge may have granted too much power to a special master the judge appointed  to handle a business dispute between two parties.

The case of Universal Processing Services v. Circuit Court of Milwaukee County is a petition for a supervisory writ from the high court.

At issue is whether Milwaukee County Circuit Court Judge John DiMotto properly appointed a special master to handle a dispute between the Wisconsin-based bank card processing service Newtek and an independent contractor, Samuel Hicks, whom it had hired to vet and bring on customers.

Newtek fired Hicks in April 2014 after conducting an internal review, then sued him five months later. Among other things, Newtek alleged that Hicks was soliciting Newtek’s customers and disclosing Newtek’s trade secrets. Hicks counterclaimed that Newtek had caused him and his company nearly $17 million worth of damages.

Judge DiMotto appointed a special master, the retired judge Michael Skwierawski, in February 2015 to handle discovery motions. DiMotto also decided to have the parties pay Skwierawski $450 an hour plus expenses. About a year later, Newtek challenged the appointment in the Court of Appeals, which denied the petition.

Newtek is arguing, among other things, that DiMotto gave Skwierawski the ability to issue orders as well as findings of fact and law — all things well outside what’s permitted under Wisconsin’s referral statute.

The DOJ is arguing on DiMotto’s behalf that the petition for a supervisory writ was not properly made and that DiMotto had broad discretion to appoint a referee.

Arguing for the court on the behalf of Newtek was Ryan Billings of Kohner, Mann & Kailas, in Milwaukee. David Rice of the Wisconsin DOJ represented Milwaukee County and DiMotto.  Joan Huffman of Gutglass, Erickson, Bonville & Larson appeared for Hicks.

Justice Dan Kelly was the first to fire off a question during oral arguments Tuesday. He noted that Newtek had waited about a year to challenge the special master’s appointment.

Why, Kelly asked, had Newtek not filed its motion immediately?

“We’ve filed motions we all think are doomed,” he said. “Why not file?”

Justice Shirley Abrahamson also pressed the matter, noting that Newtek waited months before filing an interlocutory appeal to the Wisconsin Court of Appeals.

“There was delay here,” she said. “It seems to me … you started getting decisions contrary to what you wanted.”

Justice Ann Walsh Bradley asked Rice to respond to Newtek’s argument that the appointment violated Article I, Section 9 of the state Constitution, which provides that a person is entitled to a remedy for a wrong without having to purchase it.

She noted that the parties in this case had already paid Skwierawski about $20,000 by January. The money came as a result of the $450-an-hour fee that DiMotto had ordered them to pay for Skierawski’s services.

Abrahamson also jumped in, noting that reserve judges, who get roughly $500 a day, aren’t paid nearly as much.

When Rice replied that Newtek and Hicks could afford the rate ordered for Skwierawski, Abrahamson fired back sharply.

“People who have money should be treated the same as those who are indigent,” she said.

Toward the end of the arguments, Justice Rebecca Bradley asked Huffman if a circuit court judge can use a special master to make dispositive motions.

After Huffman answered, Bradley pressed on, asking Huffman to approach the question from a different point of view.

“Doesn’t Judge DiMotto’s order concern you as a litigator?” Bradley asked. Follow @erikastrebel