Fighting City Hall

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by Michael A. Pollack

In 1962, the Wisconsin Supreme Court abolished the common law doctrine of sovereign immunity for municipalities and their employees in the landmark Holytz v. City of Milwaukee ¹ decision. Justice Gordon, writing for the court, cited numerous reasons for rejecting this long-standing doctrine. However, both Justice Gordon and Justice Currie's concurring opinion left the door open for the legislature to "restore the court abolished rule if it determines public policy so requires."² Shortly thereafter, the legislature enacted the predecessor of the current municipal claims statute.³ That legislation provided immunity for "acts which are done in the exercise of legislative, quasi-legislative, judicial, or quasi-judicial functions."⁴ This language merely repeats the exception that Justice Gordon provided for in Holytz, which established that "[H]enceforward, so far as governmental responsibility for torts is concerned, the rule is liability - the exception is immunity."⁵

What remains of municipal immunity is an affirmative defense, which may be waived if not pleaded in a timely manner.⁶ Nonetheless, the courts are again referring to the "rule of immunity,"⁷ making plaintiffs bear the burden of proving they fall within an exception, even though the legislature has not acted and the supreme court has not expressly overruled Holytz. Recently, three members of the supreme court noted, "Wisconsin law has become unintelligible in explaining what rights and remedies are available to persons who have been injured by state or local government."⁸

This article examines the history and current status of municipal immunity in the courts, and suggests future judicial and legislative action on this issue. It also shows how recent appellate court interpretations of the municipal immunity doctrine affected the recently concluded class action arising out of the 1993 cryptosporidium contamination of Milwaukee's drinking water. This author, as plaintiff class co-counsel in that litigation, believes that the change in appellate court treatment of the municipal immunity doctrine needlessly complicates and prolongs the proceedings in such cases.

History of Municipal Immunity after Holytz

Much of Justice Gordon's criticism of municipal immunity focused on "some highly artificial judicial distinctions" that had grown up around it, such as the "proprietary or governmental function" test, or the "governor to governed" relationship test. Cases dealing with the current immunity statute have avoided those distinctions, but created new ones to take their place. Today, the courts employ the "discretionary" (immune) versus "ministerial" (not immune) duty test when deciding whether a municipality is immune from suit.⁹ Likewise, cases dealing with municipal liability for accidents caused by absent or misplaced traffic signs distinguish between placement decisions (which may be immune) and maintenance issues (which are not immune).¹⁰ The salient issue now is whether these distinctions are any less artificial or any more necessary and workable than the ones that preceded Holytz.

The "ministerial/discretionary" test can be traced to Lister v. Board of Regents¹¹, a 1976 decision that held that state employees were immune from being sued by former U.W. law students for refunds of tuition overpayments. The courts first applied this test to a case involving a municipality in 1980, but held that negligent acts by medical doctors employed by a municipality were not covered because they were exercising nongovernmental discretion.¹² Later cases held that "quasi-legislative" and "quasi-judicial" were synonymous with "discretionary" acts, except those performed by medical professionals.¹³

At the same time, another court recognized that governmental immunity does not attach merely because the conduct involves discretion. "The question is whether the decision involved the type of judgment and discretion that rises to governmental discretion, as opposed to professional or technical judgment and discretion."¹⁴ Nonetheless, by the mid 1990s, the supreme court made it clear that the "discretionary/ministerial duty" test applied equally to state employees and to municipalities and their employees, regardless of the nature of their jobs or professions.¹⁵

Oddly, none of these cases overruled or even criticized a 1984 decision in Domino v. Walworth County, which found that a municipality was not immune for failing to dispatch a sheriff's squad to investigate a fallen tree that caused a motorcyclist to crash and injure himself.¹⁶ Arguably, Domino was decided upon the "known danger" exception to the "rule of immunity." However, application of an exception normally follows a finding that the rule applies. That did not happen in Domino. To the contrary, the Domino court criticized the "discretionary" immunity test, noting, "Nearly every human action involves the exercise of some discretion."¹⁷ Subsequent cases have ignored that observation.

Legislative Intent and Public Policy Considerations

Missing from recent cases involving municipal immunity is any discussion or analysis of the legislative intent behind the municipal immunity law. In Lister, the supreme court discussed many public policy considerations before it found the Board of Regents to be immune from the suit for tuition refunds. Those considerations include:

1) whether public officers would be influenced in making their decisions by the threat of a lawsuit;

2) the deterrent effect of potential liability on public servants;

3) the drain of public servants' valuable time in defending the lawsuit;

4) the unfairness of holding public officials liable for the acts of their subordinates; and

5) the desirability of using the political process to remedy the harm.

Conspicuously absent from this list is the desire to protect the public treasury. Nonetheless, it is difficult to suppress the suspicion that such a desire is behind recent decisions finding municipalities immune from suit. The courts also have failed to consider the impact of governmental immunity on third parties. Therefore, in light of recent cases, an analysis of all of these public policy considerations and justifications for governmental immunity is in order.

Would public officers be influenced in making their decisions by the threat of a lawsuit? Presumably, no one ever wants to be sued, even when they are negligent and cause injuries. However, we protect only municipalities and state and municipal employees from such lawsuits. Why? In the recently settled cryptosporidium litigation in Milwaukee, the city suggested that "[W]ater treatment is not a fit subject for a court or jury to substitute its own discretion. ..." There certainly are governmental decisions that are properly left to one branch of government, free from judicial second guessing. The amount of supervision exercised by jailers¹⁸, parole officers¹⁹, gym teachers²⁰, and foster care workers²¹ may be among them. Immunity might be especially appropriate in cases against police officers by plaintiffs who have been injured by criminals or other third parties who are under government supervision, not by state or municipal employees themselves.²² Such supervision traditionally has been a uniquely governmental function. However, one might question why, in this day and age of private (and "choice") schools and private prisons, only government employees should be immune from suit. Surely, government employees are not less likely to be negligent than employees in the private sector.

As a matter of public policy, municipal governments and their employees should not be immune from being sued for negligence in situations where their counterparts in private business would not be immune. Either all teachers should be immune from being sued for negligence on the job, or none of them should be. Likewise, water works employees should be liable for their negligence or immune from suit regardless of whether a municipality or a private company owns the utility. Municipal immunity should apply only when the government is providing a uniquely governmental service (that is, there is no private sector counterpart).

Deterrent effect of lawsuits on public servants. It is not in the public interest to deter anyone from running for public office because they might be sued for something the government or its employees do wrong. But how far down the line do we go? Cabinet officers? Department heads? Staff and line employees? Since the government normally is liable for judgments against its employees arising out of actions performed in the line of duty²³, is this really a legitimate rationale for immunity? There is no evidence to suggest that immunity is necessary in order to attract quality municipal employees.

Drain of valuable time in defending lawsuits. Where defendants are law enforcement officers, teachers, or foster care workers, courts are reluctant to take up their time reviewing the myriad of decisions they make in allocating their time between many competing and urgent demands. Outside of those occupations, this author cannot think of any other governmental units or employees who need more protection from lawsuits than private businesses or their employees have.

Unfairness of holding public officials liable for the acts of their subordinates. This consideration is really a restatement of the concerns underlying the three previous considerations. Again, where is the empirical evidence that municipal officials are being sued unjustifiably for the acts of their subordinates or others whose actions they cannot control? Our jurisprudence regarding negligent hiring and supervision, and the burdens of proving liability and causation, usually are sufficient to screen out the meritless cases. Where is the need to provide more protection against legal action to government officials than to their counterparts in private business?

Desirability of using the political process to remedy the harm. Where many citizens are alleged to have been harmed by the action or inaction of an elected public official, it might properly be argued that it should be left to the electorate to decide what to do about it. For example, the Chicago mayor in 1979 was blamed for not providing enough workers and equipment to clean up after a New Year's Eve snowstorm, leaving people stranded and businesses closed for more than a week. A new mayor was elected within a year, largely due to the snow removal crisis.

The question our courts, and perhaps the legislature, need to resolve is what to do when the culpable public employees are merely civil servants, rather than elected officials or their direct appointees. When lower-level municipal employees (for example, operators and chemists at the water works) cause the public harm, should the injured parties be left to their political remedies? Two municipal elections have been held since the 1993 crypto outbreak in Milwaukee, and no one has been able to make it into a campaign issue against either the incumbent mayor or any alderperson. In this situation, the political process has failed to bring about accountability. Immunity from liability for damages in tort would remove the only other available recourse.

Protecting the public treasury. Ideally, governmental immunity would provide municipalities and their employees with a quick and inexpensive means for obtaining dismissal of civil lawsuits upon a motion to dismiss at the outset of the case.²⁴ In practice, Wisconsin's immunity statute has required most cases to be litigated through discovery and resolved only upon a motion for summary judgment or following a trial.

In the cryptosporidium cases, counsel for the city of Milwaukee argued in court and in public statements that a settlement or judgment against the city would only take money from all taxpayers' pockets and put it into the pockets of some of those taxpayers. This ignores the fact that many of those who were sickened by the contaminated water were not Milwaukee residents, but drank the water at the airport, hospitals, restaurants, schools, or other businesses in the service area. More importantly, if this argument were true, it would be only because the city of Milwaukee is "self-insured." Milwaukee could have protected itself (and its taxpayers and water utility ratepayers) by buying general liability insurance, as other water utilities and other municipalities have done. Municipalities, like other defendants in civil lawsuits, should not be allowed to argue that they should be immune from suit merely because they are "self-insured" or uninsured.

In the crypto cases, six years of motions and discovery (including hundreds of depositions of lay and expert witnesses) passed before defense counsel felt comfortable enough to file a motion for summary judgment on the immunity issue. Defense counsels' fees and costs exceeded $1.5 million.²⁵ In the absence of liability insurance, that money obviously came from taxpayers' pockets. Thus, the immunity defense did very little to protect the public treasury in those cases. It did multiply the time, effort, and costs of litigating the case for all parties.

In addition, even when immunity has been applied to protect municipal employees, the municipality itself has been held liable for its own negligence.²⁶ Municipalities also are not immune from suits for breach of contract²⁷ or for maintaining a nuisance.²⁸ Thus, in the universe of things for which a municipality may be sued, immunity against suits for damages in tort provides very limited protection. Further, Wisconsin's municipal claims statute is a three-headed hydra. In addition to the immunity provision, the statute imposes notice requirements and a damage cap that is among the lowest in the nation.²⁹ If immunity did not exist, the gates holding back a flood of municipal tort claims would hardly be budged.

Effect of governmental immunity on third parties. A frequently overlooked side effect of any immunity doctrine is that the injured parties inevitably look to viable nonimmune parties for compensation. In the crypto case, it was the private company that sold a water treatment chemical to the city that eventually came up with the lion's share of the settlement money. It is companies like this (and their insurers) who should be leading the attack on the governmental immunity doctrine. If Wisconsin municipalities continue to insist that all of their activities involving some discretion are immune from suit, regardless of how tangentially they may or may not be related to legislative or judicial functions, then private companies doing business with them had better take precautions against being sued as the only viable parties connected with the incident. Contractual provisions for indemnification or waiver of the immunity defense may be necessary to protect relatively innocent private companies whose products are misused by municipal employees, like the chemical company in the crypto case.

Other grounds for dismissal of cases against municipalities. Sometimes, immunity has been unnecessarily employed instead of other, more conventional, means of defending municipalities and their employees. For example, in one recent case, a man sued a school district because it gave him bad advice regarding insurance and retirement benefits resulting from the death of his wife, who had been a schoolteacher.³⁰ The court held that the school district was immune from being sued for giving the bad advice because it was a "discretionary" function. This holding was unnecessary because the case could have been resolved on other grounds.

The case was based solely on negligence and involved only monetary loss (not personal injury or public safety, the traditional concerns of tort law). The defense should have based its motion on the economic loss doctrine. Alternatively, it could have argued that the school district had no duty to render what was essentially legal advice to the widower. He paid nothing for the advice and the information he needed was easily obtainable from other sources, like the public statutes, regulations, or a lawyer. There was no contractual obligation to provide this advice, and no guarantee that it would be correct. Under either theory, the case could and should have been disposed of upon a motion to dismiss for failure to state a claim at the outset.

Conclusion

The present municipal immunity statute, as interpreted by judicial decisions in the 1990s, does not work. It does not accomplish any of the public policy goals ever posited for it. When the crypto-sporidium cases were filed in 1993, it was unlikely that the municipal defendants could prevail on an immunity defense under the cases that had been decided up to that point. However, beginning in 1995, the courts broadened their interpretation of section 893.80(4) of the Wisconsin Statutes, and the city's chances of prevailing increased. Finally, in 1999, following six years of litigation and the expenditure of millions of dollars in attorney fees and costs by all parties, the city filed its motion for summary judgment based upon its "discretionary" immunity. Before the court ruled on that motion, the parties reached a settlement that the court approved on a class-action basis.³¹ The fairness of the settlement was based, at least in part, upon the prospect that the case would be tied up for several more years in an appeal of the trial court's ruling on immunity, regardless of who won in the trial court.

The unresolved question is whether the legislature in 1963 intended to reinstate municipal immunity beyond the "legislative, quasi-legislative, judicial, and quasi-judicial" functions that survived the Holytz decision. If it did find that public policy required it to restore the court-abolished rule and legislatively overrule Holytz, the legislature could and should have done so in much more direct and comprehensive language. However, in the absence of compelling empirical evidence that this is necessary, the legislature should leave the current immunity statute alone. Instead, plaintiffs' and defendants' attorneys, and judges, need to reexamine the public policy considerations identified in Lister before applying the "discretionary/ministerial" function test to anyone other than police, jailers, teachers, and foster care workers.

It also is unnecessary to resurrect the "proprietary/governmental" function test. Rather, immunity should be seen as the affirmative defense that it is, and the burden should be placed upon the municipal government to establish that the conduct for which it is being sued is "legislative, quasi-legislative, judicial, or quasi-judicial." This should be a legal decision that the courts can resolve upon a motion to dismiss. The parties should not have to engage in discovery to determine that issue.

In many cases, better defenses and procedural motions exist to accomplish the stated goals of the municipal immunity defense. If that is not enough protection for fragile public treasuries, more municipalities should consider obtaining liability insurance. That also would be the best protection for those injured due to the occasional negligence of public employees.

Example Cases in which Government Conduct Was Found to be Discretionary or Ministerial The following is a list of cases showing examples of cases in which government conduct has been found to be discretionary (immune) or ministerial (not immune). The list is not exhaustive. CaseName Date Court Plaint.1 Defend.2 Cause of Action PI3 Public Work Immunity4 Coffey v. City of Milwaukee 1976 S.Ct. Individ. M Negligence No Bldg./fire inspect. No Lister v. Board of Regents 1976 S.Ct. Individ. S Declaratory judgment No Law school registrar Yes Lange v. Town of Norway 1977 S.Ct. Individ. M Nuisance No Dam No Cords v. Anderson 1977 S.Ct. Individ. S Negligence Yes State park No Scarpaci v. Milwaukee County 1980 S.Ct. Individ. M Negligence Yes Coroner Yes / No Domino v. Walworth County 1984 App. Individ. M Negligence Yes Police No Hillcrest Golf & Country Club v. City of Altoona 1986 App. Bus. M Nuisance No Sewer No C.L. v. Olson 1988 S.Ct. Individ. S Negligence Yes Parole agent Yes Energy Complexes v. Eau Claire County 1989 S.Ct. Bus. M Breach of contract No Power plant No Stann v. Waukesha County 1991 App. Individ. M Negligence Yes Beach lifeguards Yes Sheridan v. City of Janesville 1991 App. Individ. M Negligence Yes Police Yes Barillari v. Milwaukee 1995 S.Ct. Individ. M Negligence Yes Police Yes Kara B. v. Dane County 1995 App. Individ. M Negligence Yes Foster care Yes Menick v. City of Menasha 1996 App. Individ. M Nuisance No Sewer No Kimps v. Hill 1996 S.Ct. Individ. S Negligence Yes University phy. ed. class Yes Estate of Cavanaugh v. Andrade 1996 S.Ct. Individ. M Negligence Yes Police No / Yes Bauder v. Delavan-Darian School District 1996 App. Individ. M Negligence Yes School gym class Yes Ottinger v. Pinel 1997 App. Individ. S Negligence Yes Prison guards Yes Spencer v. Brown County 1997 App. Individ. S Safe-place Yes Jail Yes Anderson v. City of Milwaukee 1997 S.Ct. Individ. M Safe-place Yes Sidewalk No (waived) Pichler v. Hamilton Sch. Dist. 1999 App. Individ. M Negligence Yes School Yes Kierstyn v. Racine Unified Sch. Dist. 1999 S.Ct. Individ. M Negligence No School Yes Willow Creek Ranch LLC v. Town of Shelby 2000 S.Ct. Bus. M Negligence No Zoning Yes 1 Plaintiff: Individ. = Individual; Bus. = Business. 2 Defendant: M = Municipality; S = State. 3 PI = Personal Injury. 4 Immunity: Yes / No = Municipality immune but individual employees are not; No / Yes = Municipality not immune but individual employees/officers are.

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Endnotes

1 Holytz v. City of Milwaukee, 17 Wis. 2d 26, 115 N.W.2d 618 (1962).

2 115 N.W.2d at 625 and 627.

3 Wis. Stat. § 895.43, later renumbered as § 893.80.

4 Id.

5 Holytz, 115 N.W.2d at 625.

6 Anderson v. City of Milwaukee, 208 Wis. 2d 18, 559 N.W.2d 563 (1997).

7 Barillari v. Milwaukee, 194 Wis. 2d 247, 258, 533 N.W.2d 759 (1995).

8 Willow Creek Ranch LLC v. Town of Shelby, 2000 WI 56, 59, 235 Wis. 2d 409, 611 N.W.2d 693 (June 20, 2000). The dissenters further elaborated that "The law on governmental immunity has become so muddled that it no longer provides reasonable guidance about when local governments may be sued, what remedies are available to persons claiming injury, and the circumstances in which local governments and their employees may be held liable." 120.

9 E.g., Barillari v. Milwaukee, supra note 7.

10 Foss v. Town of Kronenwetter, 87 Wis. 2d 91, 102, 273 N.W.2d 801 (Ct. App. 1978). Interestingly, the court noted, "Sec. 81.15, Stats., has spawned a line of cases which have not always been consistent in their development, theory, or language." 87 Wis. 2d at 100.

11 Lister v. Bd. of Regents, 72 Wis. 2d 282, 299, 240 N.W.2d 610 (1976).

12 Scarpaci v. Milwaukee County, 96 Wis. 2d 663, 683, 292 N.W.2d 816, 826 (1980).

13 Stann v. Waukesha County, 161 Wis. 2d 808, 468 N.W.2d 775 (Ct. App. 1991).

14 Sheridan v. City of Janesville, 164 Wis. 2d 420, 474 N.W.2d 799 (Ct. App. 1991).

15 Kimps v. Hill, 200 Wis. 2d 1, 546 N.W.2d 151 (1996). See also, Barillari, supra note 7, and Kara B. v. Dane County, 198 Wis. 2d 24, 542 N.W.2d 777 (Ct. App. 1995).

16 Domino v. Walworth County, 118 Wis. 2d 488, 347 N.W.2d 919 (Ct. App. 1984).

17 Id. at 492, 247 N.W.2d at 919.

18 Spencer v. Brown County, 215 Wis. 2d 641, 573 N.W.2d 222 (Ct. App. 1997).

19 C.L. v. Olson, 143 Wis. 2d 701, 422 N.W.2d 614 (1988).

20 Bauder v. Delavan-Darien Sch. Dist., 207 Wis. 2d 312, 558 N.W.2d 881 (Ct. App. 1996); Pichler v. Hamilton Sch. Dist., 1999 WL 486927 (Ct. App. unpublished).

21 Kara B. v. Dane County, 198 Wis. 2d 24, 542 N.W.2d 777 (Ct. App. 1995).

22 E.g., Barillari, n.5, supra note 7.

23 Wis. Stat. § 895.46. See Graham v. Sauk Prairie Police Comm'n, 915 F. 2d 1085 (7th Cir. 1990).

24 Penterman v. Wisconsin Elec. Power Co., 211 Wis. 2d 458, 468-69, 565 N.W.2d 521 (1997).

25 According to reports in the local press.

26 Estate of Cavanaugh v. Andrade, 202 Wis. 2d 290, 550 N.W.2d 103 (1996). The police officer who was engaged in a high-speed chase that resulted in the death of an innocent bystander was found to be immune from liability, but the municipality itself was not immune for failing to adopt adequate high-speed chase guidelines.

27 Energy Complexes Inc. v. Eau Claire County, 152 Wis. 2d 453, 449 N.W.2d 35 (1989).

28 Menick v. City of Menasha, 200 Wis. 2d 737, 547 N.W.2d 778 (Ct. App. 1996). "The actions of the city in operating and maintaining a sewer system do not fall within the immunity provisions of § 893.80." 200 Wis. 2d at 739, 740.

29 Wisconsin recovery limit for victims of municipal torts: A conflict of public interests, 1986 Wis. L. Rev. 155.

30 Kierstyn v. Racine Unified Sch. Dist., 228 Wis. 2d 81, 596 N.W.2d 417 (1999).

31 The case was originally certified as a class action for litigation purposes, but that was reversed on appeal, Markweise v. Peck Foods, 205 Wis. 2d 207, 556 N.W.2d 881 (Ct. App. 1996). After remand, further hearings on class certification were held, and ultimately the trial court denied certification for litigation purposes.

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