Wis. justices consider out-of-state DOJ attorneys

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IRS, Commissioner of Insurance at odds over issue

Earlier this month, the Wisconsin Supreme Court heard oral arguments to decide whether attorneys with the U.S. Department of Justice can appear in Wisconsin state courts without being members of the bar or being admitted pro hac vice.

The DOJ alternatively argues that Supreme Court rules do permit them to appear, but even if they do not, the Supremacy Clause trumps the state court rule.

The issue arises in a complex rehabilitation of a Wisconsin insurance company, Ambac Insurance Corp., which obtained permission from the commissioner of insurance to create a “segregated account” to get its finances in order.

The circuit court issued an injunction against the Internal Revenue Service and the government appealed. However, its notice of appeal was not signed by a Wisconsin attorney, but by Robert Kovacev, an attorney with the DOJ’s Tax Division in Washington, D.C. Kovacev did not seek pro hac vice status before filing the notice.

The insurance commissioner moved to dismiss the appeal on that basis and the Wisconsin Court of Appeals granted the motion.

At issue before the Supreme Court is whether SCR 23.02(2) requires DOJ attorneys be licensed or obtain pro hac vice admission. Subsection (2)(n) contains an exception for “governmental agencies, Indian tribes and their employees carrying out responsibilities provided by law.”

In its brief the DOJ argues, “a Justice Department attorney who signs a filing in the course of representing the United States is not engaged in the unauthorized practice of law under Wisconsin rules. Instead, he is a federal government employee carrying out his responsibility to provide legal services as authorized by federal law, which would preempt Wisconsin law where the latter interferes with the implementation of federal laws.”

Even if the rule does not specifically permit such appearance, the DOJ argues that federal statutes do, however, and the Supremacy Clause trumps the rule. 28 U.S.C. 517 states that the attorney general may send any officer of the Justice Department “to any state or district in the United States to attend to the interests of the United States in a suit pending in a court of the United States, or in a court of a State, or to attend to any other interest of the United States.”

Finally, the DOJ relies on practical considerations in support of its position. It notes that some administrative districts require local counsel accompany an attorney admitted pro hac vice at all court appearances, a requirement that could require an assistant United States attorney drive hundreds of miles to appear in court for no purpose other than to accompany an expert in the particular field of law at issue.

The Office of the Commissioner of Insurance frames the case differently. At issue, it contends in its brief, is sec. 802.05(1), which requires all pleadings be signed by a Wisconsin-licensed attorney. The brief states, “as written, it applies to all attorneys, whether they work for the federal government or not. Just as DOJ attorneys are subject to Rule 11 when they sign pleadings and other papers in federal court, they also are subject to sec. 802.05 when they litigate in state court (cite omitted).”

The office contends that compliance with SCR 23.02 is irrelevant: “The IRS is focusing on the wrong rule. Although SCR 23.02 lists certain general ‘activities’ for which a law license is not required, sec. 802.05(1) describes a specific activity that does require a license.”

Addressing the IRS’ preemption argument, the Office of the Commissioner argues sec. 517 merely gives DOJ attorneys authority to practice in any state court, but does not excuse them from state court procedural rules, and thus, there is no conflict between state and federal law.

In Brief

Case: Nickel v. U.S.A., No. 2011AP987

Attorneys: For the United States: Richard Humphrey of the U.S. Attorney’s Office, Madison; Robert Kovacev of the Department of Justice, Washington, D.C. For the Office of the Commissioner of Insurance: Michael Van Sicklen of
Foley & Lardner LLP, Madison