The first two months of 2011 brought Wisconsin a new Legislature, a new governor and a wave of tort reform.
Along with punitive damages caps, the Daubert standard for admissibility of expert testimony and numerous changes to the law governing products liability cases, we now have a new set of reforms requiring our attention.
The Legislature’s special session in September saw the passage of additional reforms dealing with attorney fees, judgment interest rates and trespasser liability.
While the reforms have been alternately derided and praised by the plaintiffs and defense bars, and it is likely too early to assess the impact of many reforms, it is important to recognize that most of these changes have now placed Wisconsin in the mainstream.
Until recently, Wisconsin was one of only four states employing the “consumer expectation test” in products liability cases. Now, like more than 90 percent of the states, Wisconsin recognizes the “reasonable alternative design” standard.
While a significant departure from prior practice in our state courts, recognition of Daubert puts Wisconsin in line with the federal courts and two-thirds of the other states.
Before the reforms, Wisconsin already had one of the most stringent standards for awarding punitive damages. Punitive damages caps are used in several states. Moreover, Wisconsin’s cap is not nearly as restrictive as the several states that prohibit awarding punitive damages altogether. Punitive damages awards can still be significant — the greater of $200,000 or twice the amount of compensatory damages — and there is no cap in cases involving drunken driving.
The plaintiffs’ bar also condemned the latest round of changes, alleging that consumers’ rights have been sacrificed at the altar of corporate influence. The response of defense attorneys, while less clamorous, has been nonetheless affirmative. While certainly favorable to defense attorneys, the new reforms, like those of several months ago, appear to make Wisconsin less of an outlier in civil litigation.
Until now, the 12 percent interest rate on judgments in Wisconsin was among the highest in the nation. The new rate of 1 percent plus the prime rate recognizes that fact, as well as the economic realities of the world outside the courthouse. Furthermore, 2001 saw prime rates routinely over 8 percent and the prime rate from 2005 to 2007 was often more than 7 or 8 percent. Painting this new rate as a disincentive to pay judgments may not hold water if, and when, the prime rate goes up.
The new law limiting attorney fees does not appear entirely novel or onerous. The bill caps fees at three times damages. The court has discretion to award more, with the presumption that the statutory cap is sufficient. Those opposing the law saw that lawyers will no longer take small, albeit complex, cases that require significant time and expense. Of course, few cases require more than $150,000 in fees and costs to sue a car dealer over $5,000 in repairs. For the vast majority of “small” cases, consumers have affordable, easy access to the legal system.
There will likely be more changes and perhaps a reversal of these reforms could come sooner than expected. Litigators should closely monitor their cases for issues where these reforms may come into play. No matter one’s political persuasion or side of the docket, all civil litigators are faced with absorbing and evaluating the impact of these changes on our practices and, most importantly, our clients.
Nick Rudman is an associate at McCoy Law Group SC, Waukesha. The firm has a civil litigation practice that includes insurance defense, construction dispute and commercial/business litigation.