Supreme Court weighs control of settlement funds

In the latest chapter of a long-running dispute between the Republican-controlled Legislature and the state’s Democratic attorney general, the Wisconsin Supreme Court heard arguments Wednesday over which side controls money from multi-state settlements.

Conservative and liberal justices on the court raised skeptical questions of lawyers on both sides of the lawsuit, with one justice suggesting both parties had “overcomplicated” the case.
Wednesday’s arguments are the latest in a series of challenges to Republicans’ “lame duck” laws enacted just before Democratic Attorney General Josh Kaul and Democratic Gov. Tony Evers took office in 2019. The laws limited the powers both men would have when they began their terms.

One of the laws’ provisions required any money coming to Wisconsin from multi-state lawsuits to be deposited in the state’s general fund. In 2021, the Legislature sued Kaul, arguing he was illegally depositing settlement money into an account he controls.

A Polk County Circuit Court judge sided with Kaul and the case was appealed. Wisconsin’s 2nd District Court of Appeals reversed that decision in 2024 in a decision written by conservative Judge Maria Lazar, who is now running for a seat on the Supreme Court. Kaul petitioned the Supreme Court to review the case in January.

Standing before the court Wednesday, Assistant Wisconsin Attorney General Hannah Jurss told justices that Kaul has been following the 2018 law, which allows the DOJ to deposit settlement funds into the state treasury and credit them to various programs. She said the Legislature’s argument has changed over the years to now claim the Wisconsin Department of Justice can’t use settlement money to pay state attorneys fees.
“There are now monies sitting there that are left to the attorney general’s discretion that the attorney general cannot spend,” Jurss said.

But multiple justices seemingly took issues with Jurss’ argument. Liberal Justice Susan Crawford, who joined the court last year, said the DOJ was interpreting the 2018 law “pretty broadly, as almost a catch-all for all proceeds.” Conservative Justice Rebecca Bradley, who is not running for reelection in April, said she struggled to see whether Kaul thinks any money should go to the state’s general fund.

Representing the Legislature, attorney Misha Tseytlin argued the 2018 statute, when read in conjunction with a previous law, clearly shows settlement money should go into the state’s general fund and doesn’t allow the DOJ to move it to other accounts without lawmakers’ approval.
“I think that the attorney general should not enter into settlements where he gets essentially a piggy bank to do other stuff,” Tseytlin said. “This is what happened before, and I’m not blaming anyone for what happened before. You know, maybe I liked it. Maybe I didn’t. But the Legislature obviously didn’t like it.”

Tseytlin worked at DOJ as state solicitor general under former Republican Attorney General Brad Schimel, who preceded Kaul. The lame duck law passed in 2018 also eliminated that position and made it easier for the Legislature to hire private attorneys, like him, to represent them.

It’s unclear where the court will ultimately land on the settlement funds issue, but justices have already struck down a different portion of the lame duck law from 2018 that took away Kaul’s ability to resolve lawsuits without legislative approval. Last year, the Supreme Court issued a unanimous decision arguing the attorney general has authority over civil enforcement actions.