Closing Arguments: Taking sides on tort reform

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Shortly after Gov. Scott Walker took office in 2011, he and his fellow Republicans in the state Legislature passed sweeping legislation touching on many corners of the state’s tort laws.

Since then, scarcely a year has gone by without Republican lawmakers putting forward at least one piece of major tort-reform legislation. The latest proposals come in the form of Assembly Bill 773 and Senate Bill 645. If adopted by the Legislature and signed by the governor, these bills would affect everything from the state’s discovery rules and certification rules for class-action cases to the interest rate insurers could be charged for unpaid and overdue claims.

As is usual with tort-reform bills, proponents argue their proposals are needed to reduce legal costs and protect businesses from frivolous lawsuits. Opponents respond by contending that the reformers’ policies would rashly open the door to unintended consequences.

Amid the usual arguments, this year’s tort-reform battle does present one unusual twist. It’s coming a year after the state Legislature decided not to provide any money in the state budget for the Judicial Council, an advisory council that normally would have had a big say over any changes to the state’s rules of civil procedure.

Will the proposed changes be good for the legal profession and the state as a whole? We’ll let you decide.

Now, gentlemen, to your corners:

Unnecessary rush to change WI rules of civil procedure

Historically, changes to Wisconsin’s rules of civil procedure and evidence have been made by the Wisconsin Supreme Court.

Moreover, since its creation in 1951, the non-partisan Wisconsin Judicial Council has been called upon to vet such changes. Indeed, it is the statutory function of the Judicial Council (1) to observe and study the rules of pleading, practice and procedure, (2) to advise the Supreme Court about changes to those rules, and (3) to recommend to the Legislature changes to those rules which can only be put into effect by legislative action.  In short, the Judicial Council has been the liaison between the court and the Legislature regarding amendments to the rules of pleading, practice and procedure.

The Judicial Council consists of twenty-one members, including representatives of the judiciary, the Legislature, the governor and the State Bar. The council acts through committees, such as its evidence and civil procedure subcommittee. Upon request by the Legislature or the Supreme Court, or upon its own initiative, the council carefully reviews proposed rules, seeks advice from stakeholders, and recommends action, usually through a petition to the Supreme Court.

The Judicial Council carefully analyzes proposed rules and ensures that they are consistent with other rules and statutes, as well as the Constitution.

On Aug. 17, the council’s funding was eliminated. The council continues to operate, but it has now been forced to proceed without the services of a staff attorney. Assembly Bill 773 and its Senate companion, SB 645, were introduced on Dec. 21. The Assembly Judiciary Committee held a hearing on Jan. 4.  The Senate Judiciary Committee reviewed the bill on Jan. 30.

These hearings did not lack for witnesses in favor of the bills. Given the timing of the bills’ introduction – which happened over the holidays and late in what is expected to be a short legislative session – many would-be opponents in the legal community were simply unaware of the bills’ introduction and likely effects, and, therefore, have been unable to voice their concerns.

The Judicial Council, historically, has existed to prevent that from happening. The Judicial Council process ensures stakeholders have a say.

These bills, though, were never referred to the Judicial Council for consideration. Indeed, the hearings were scheduled before the legislation could be put on the council’s agenda for review.

The Judicial Council has not taken a position for or against either bill, and your authors do not speak herein for the Judicial Council.  However, we believe that it is in the best interest of the legal community, as well as the public at large, that the Judicial Council properly vet and review these bills.

We have grave concerns (and you should too) about the changes proposed by these bills. It is beyond the scope of this article to list all the questions, concerns and flaws presented by these bills. However, the following are a few concerns that all practicing lawyers should have:

• The Judicial Council’s evidence and civil procedure subcommittee spent more than a year evaluating how best to carry out Federal Rule 23 in Wisconsin. The council accepted the recommendations of the subcommittee and petitioned the Supreme Court for the adoption of Rule 23. Responding to the council’s work, the Supreme Court unanimously adopted the council’s version of Rule 23 by order on Dec. 21. On the basis of testimony from Washington, D.C. lawyers, bills 645 and 773 would overrule the very recent unanimous order of the Wisconsin Supreme Court and reject the lengthy study of Rule 23 by the council.
• Proponents of bills 645 and 773 claim the legislation will merely bring Wisconsin discovery practice into conformity with federal practice. However, this is demonstrably false. In fact, the United States Judicial Conference began a review of the federal discovery rules in 2010 and issued what is known as the Duke Proposal that year. The proposed amendments were subjected to five years of study, including testimony by three thousand stakeholders. Ultimately, the Duke proposed amendments were rejected in 2014. The actual amendments made in 2015 to the federal rules were very different from the Duke proposals. And yet, the Senate and Assembly bills adopt the rejected Duke proposals instead of the actual federal amendments adopted in 2015.
• Bills 645 and 773 propose changes to statutes that have recently been evaluated by the Judicial Council and other stakeholders. For example, these bills make changes to the rules regarding the preservation and discovery of electronically stored information. However, the Judicial Council’s evidence and civil procedure subcommittee recently evaluated this issue and concluded that no changes were warranted at this time.
• Bill 645 and 773 will lead to perplexity. For example, section 30 of Bill 773 purports to amend Wis. Stat. §804.09(2)(a)3. Wis. Stats. to read as follows:

804.09(2)(a)3. The request shall be limited, unless otherwise stipulated or ordered by the court in a manner consistent with s. 804.01(2), to the following:

a. A reasonable number of requests, not to exceed 25 interrogatories, including all subparts, and not to exceed 10 depositions, none of which may exceed 7 hours in duration.

b. A reasonable time period of not more than 5 years prior to the accrual of the cause of action.

The trouble with this amendment is that §804.09 deals with the production of documents, but this amendment purports to limit the number of “interrogatories” (covered by §804.08) and the number and duration of “depositions” (covered by §804.05). In other words, regardless of whether you are for or against these new limits on discovery, the very structure of the proposed legislation will lead to massive confusion.

We do not doubt the good faith of the Legislature. But because this bill affects all civil litigation, it is important that this type of legislation be vetted by the Judicial Council, and that advice be sought from all interested stakeholders, such as judges, practitioners, public interest groups, trade associations and others.

Although a small minority of political operatives may be salivating at the prospect of a quick change of the rules to suit their interests, those of us who work with these rules every day know that a slow, methodical evaluation of these rules is the best way to develop this type of legislation. We encourage members of the legal community, judges and lawyers alike, to share any concerns they may have regarding bills 645 and 773 with their legislators as soon as possible.

William Gleisner and John Orton have each practiced law for about 40 years. Gleisner has been a representative of the State Bar on the Wisconsin Judicial Council for 10 years and Orton was recently appointed to the Judicial Council by the President-Elect of the State Bar.

Civil litigation reform bill will reduce costs

Since 2011, Gov. Scott Walker and the Wisconsin Legislature have made civil-liability reform a top priority. The numerous civil-liability reforms enacted over the past seven years have brought Wisconsin’s civil justice system back into the mainstream and created a stable and fair litigation climate.

The proposed reforms contained in Assembly Bill 773 and Senate Bill 645 – authored by Representatives Mark Born, R-Beaver Dam, and John Nygren, R-Marinette, and Senators Tom Tiffany, R-Hazelhurst, and David Craig, R-Vernon – build on these reforms by making a number of common sense and reasonable changes to Wisconsin’s civil-procedure laws.

A state’s litigation environment has consequences for its economy. According to a recent study by the U.S. Chamber Institute for Legal Reform, 85 percent of respondents said a state’s litigation environment is likely to affect important business decisions at their companies, such as where to move or do business.

In 2017, Wisconsin climbed into the top ten of best states for business for the first time in the history of the rankings by Chief Executive Magazine. In 2010, before various tort and other regulatory reforms were enacted by the Legislature, Wisconsin was among the bottom ten states.

Although Wisconsin has made great strides through the enactment of meaningful tort reforms, Wisconsin lags behind federal courts and other state civil-justice systems when it comes to rules governing discovery and class-action practice. The proposed legislation will further improve Wisconsin’s litigation environment and reduce costs. Below is a discussion of the main parts of the legislation.

Reducing burdensome discovery costs

Unlike the federal legal system, Wisconsin now has few rules placing reasonable limits on discovery. Discovery abuse has become more pervasive in recent years because of the advent of electronic data storage.  Because technology allows businesses to store far more information in corporate records than they ever could in the past, those businesses can incur substantial discovery costs by responding to legitimate discovery requests. This is why discovery ranks as the top litigation concern for businesses.

The proposed legislation contains a number of discovery-related reforms that are aimed at reducing the costs and delays associated with unfettered discovery.  Specifically, the legislation would bring Wisconsin’s discovery rules in line with those applicable in federal court by: 1) establishing cost-benefit and proportionality requirements for discovery, 2) giving courts the discretion to shift discovery costs, and 3) placing limits on the number of interrogatories and depositions that can be sought.

Various other sensible discovery-related reforms have been proposed, including an automatic stay of discovery during the pendency of early dispositive motions, limiting the kind of electronically stored information that is subject to discovery, and mandating the disclosure of third-party litigation-financing arrangements in all civil actions.

Updating Wisconsin’s class-action statutes

At the end of last year, the Wisconsin Supreme Court replaced the state’s previous one-sentence class-action rule with a more comprehensive rule which was intended to align Wisconsin with the federal class-action rule. The Wisconsin Civil Justice Council supported those changes.

Importantly, the new rule adopts the vast majority of the class-action provisions of the pending legislation. For example, the new rule adopts the numerosity, commonality, adequacy-of-representation and predominance requirements contained in the legislation. The new rule also sets forth certain other basic class-action requirements that have long been the law in federal court – for example, that notice of the class be given to potential class members, and that any class settlement receive approval by the trial court.

These amendments adopted by Wisconsin Supreme Court will substantially improve the State’s civil justice system, providing much needed specificity and consistency to class-certification standards. But more can be done to make Wisconsin’s class-action law fairer and efficient.

That is why businesses are calling on the Wisconsin Legislature to enact other class-action provisions that are contained in the legislation but did not make their way into the Wisconsin Supreme Court’s recent order. These provisions would eliminate “no-injury” class actions, require class membership to be ascertainable by objective means, and provide a nondiscretionary right to an interlocutory appeal of class-certification orders by both plaintiffs and defendants.

Over the last several years, a number of courts have departed from the long line of decisions rejecting no-injury class actions. Courts are certifying such cases, even when it is clear that many class members have no cause for compliant about the subject product and most likely never will.

There is public support to deal with overly broad no-injury class actions.  A 2015 DRI – The Voice of the Defense Bar National Poll on the Civil Justice System found that 78 percent of Americans would support a law requiring a person that joins a class action to show actual harm rather than just the potential for harm.

Conclusion

Thanks to the leadership by Gov. Walker and the legislature over the past seven years, Wisconsin’s litigation environment has improved considerably. Wisconsin’s economy is growing and the state is attracting new businesses, including Foxconn’s new factory, one of the largest in the world.

While Wisconsin has led the way in enacting substantive tort reforms, we still lag behind other states when it comes to our outdated discovery and class-action statutes. Senate Bill 645 and Assembly Bill 773 will bring Wisconsin into the mainstream and reduce litigation costs.

Bill G. Smith is state director of the National Federation of Independent Business-Wisconsin and Scott Manley is senior vice president of government relations for Wisconsin Manufacturers & Commerce. Smith and Manley are president and vice president, respectively, of the Wisconsin Civil Justice Council.