A $5 million punitive damage award has been effectively reinstated in a dispute between the shareholders of Link Snacks Inc., which makes beef jerky and other meat products.
The jury actually imposed reciprocal $5 million punitive damage awards against the parties, what some of the Wisconsin Supreme Court justices described as “a wash.” Both parties then filed untimely postverdict motions to reduce the awards.
One was indisputably time-barred, but the Supreme Court held that the circuit court acted within its discretion when it accepted the other, two minutes after the close of business hours.
As a result, one punitive damage award stands, while the other does not.
Nevertheless, a majority of the court concluded that, prospectively, a bright-line rule should bar court clerks from accepting late-filed motions as timely.
Link Snacks was owned by Jack Link and his two sons, Jay and Troy. A dispute arose, with Jay on one side, and Jack and Troy on the other. Both sides alleged breach of fiduciary duty.
The jury found that all three breached fiduciary duties and awarded $5 million in punitive damages against each side; as the court noted, “a wash.”
July 29, 2008, was the final day on which to file postverdict motions. Jack mailed his postverdict motion on that day, and they did not arrive until July 30.
Jay filed his at the courthouse at 4:32 p.m., two minutes after the close of usual business hours, but the clerk accepted the motions as being filed on July 29.
The circuit court considered both motions, and reduced the punitive damages award Jay was required to pay to $1, and reduced the award Jack was required to pay to $736,000.
The court also ordered Jay to surrender his shares to corporation in exchange for their fair market value of $19,400,000.
The Court of Appeals held that Jack’s postverdict motion was untimely, but that the circuit court properly considered Jay’s motion. Accordingly, it reinstated that part of the verdict ordering Jack to pay $5 million to Jay.
The Supreme Court accepted review, and affirmed that holding.
The lead opinion, written by Justice Michael Gableman, and joined by Justices David Prosser and Patience Drake Roggensack, concluded that circuit court clerks should have discretion to accept filings after business hours.
The lead opinion acknowledged that, in St. John’s Home of Milwaukee v. Continental Casualty Co., 150 Wis.2d 37, 441 N.W.2d 219 (1989), it adopted a bright-line rule that papers filed with the Supreme Court after the close of business on the last day would be deemed untimely.
But the lead opinion concluded that the bright-line rule should not be extended to circuit court clerks. In Hartford Citizens for Responsible Gov’t v. City of Hartford Bd. Of Zoning, 2008 WI App 107, 313 Wis.2d 431, 756 N.W.2d 454, the Court of Appeals held that a circuit court clerk properly exercised its discretion by accepting as timely a pleading filed three minutes late.
But in Granado v. Sentry Ins., 228 Wis.2d 794, 599 N.W.2d 62 (Ct.App.1999), it held that it was an abuse of discretion for a clerk to accept as timely, a complaint filed at the clerk’s home at 9:30 p.m.
The lead opinion agreed with the reasoning in both Hartford and Granado, for two reasons. First, circuit courts are elected constitutional officers. Second, the statutes are imprecise regarding how clerks may perform their duties.
Accordingly, the lead opinion concluded that clerks may adopt policies that are flexible or restrictive, as long as discretion is reasonably exercised.
Four justices disagreed.
Justice Annette Kingsland Ziegler wrote a concurrence joined by Justice Patrick Crooks.
“I would overrule Grenado and, in the future, apply the bright-line rule articulated in St. John’s Home to the clerks of circuit court,” she wrote.
Ziegler’s concurrence asserted that it was unfair to treat different litigants differently, and that the duties of court clerks are ministerial, and thus non-discretionary.
Ziegler’s concurrence added that, pursuant to sec. 805.15(6), on remand, the Court of Appeals may need to address whether a new trial on the issue of damages is the proper remedy.
Justice Ann Walsh Bradley wrote a separate concurrence, joined by Chief Justice Shirley Abrahamson, joining the Ziegler concurrence, except for the one-paragraph discussion of sec. 805.15(6).
Bradley wrote, “For the reasons set forth in Justice Ziegler’s concurrence, I join her conclusion that the court should overrule (Granado) and prospectively apply the bright-line rule articulated in (St. John’s Home) to circuit court clerks.”
Case: Northern Air Services, Inc. v. Link, No. 2008AP2897.
Issue: Did a court clerk abuse her discretion in accepting as timely, a postverdict motion filed two minutes after the close of business hours?
Holding: No. The acceptance of the filing was not an abuse of discretion.
Attorneys: For Plaintiffs: Michael D. Freeborn, Brian P. Norton, Michael P. Kornak, Andrew C. Nordahl, Chicago; Webster A. Hart, Stephanie L. Finn, Eau Claire; For Defendant: Michael J. Aprahamian, Michael S. Heffernan, Michael A. Bowen, Brian E. Cothroll, Milwaukee; Thomas O. Mulligan, Spooner.
Full text available at www.wislawjournal.com
David Ziemer can be reached at [email protected]