Wisconsin Lawyer
Vol. 81, No. 6, June 2008

Supreme Court Digest

by Prof. Daniel D. Blinka & Prof. Thomas J. Hammer

• Antitrust
• Civil Procedure
• Criminal Procedure
• Insurance

Antitrust

Eichenseer v. Madison-Dane County Tavern League, 2008 WI 38 (filed 6 May 2008)

This antitrust case grew out of efforts to curb college students' dangerous drinking in Madison. The defendants were Madison taverns, located near the U.W. Madison campus, that agreed to ban drink specials after 8 p.m. The ban was imposed after pressure was brought to bear by U.W. Madison and unilateral action was taken by the city's common council against eight of the taverns (see ¶ 51), but the city was not named a party to the lawsuit. ("[T]he City's regulation of Madison taverns is at the heart of this dispute" (¶ 48).) The circuit court granted summary judgment in favor of the defendants, a ruling affirmed by the court of appeals.

The supreme court, in an opinion authored by Justice Prosser, affirmed the court of appeals. The court assumed, for purposes of the opinion, that the defendants' conduct violated antitrust laws. It held, however, that the defendants' actions were immune under the implied repeal doctrine set forth in Town of Hallie v. City of Chippewa Falls (Hallie I), 105 Wis.2d 533, 314 N.W.2d 321 (1982). "The `implied repeal doctrine' addresses situations in which there is no explicit statutory exception to antitrust law but it is reasonably clear that the legislature intended to allow municipalities to undertake an action that is anticompetitive. If the legislature intends to allow municipalities to undertake an action that is anticompetitive, then that action is immune from antitrust enforcement under state law" (¶ 39). The court acknowledged "that the issue in this case is not whether the City is immune for its actions but whether the defendants are immune for their `voluntary' agreement to eliminate alcohol drink specials in their establishments after 8 p.m. on Friday and Saturday nights. In reality, we must determine whether private parties are eligible for antitrust immunity when they act in concert, in an anticompetitive manner, in direct response to pressure bordering on compulsion from a municipality with the power to condition or non-renew their licenses" (¶ 71).

The "inescapable" facts of record showed that the voluntary ban on certain drink specials was the direct result of the city's "intense demands" (¶¶ 72-73). "The undisputed facts suggest that the City compelled the defendants' actions through threat and coercion. The facts suggest that the City thereafter approved the defendants' actions. The facts suggest that the City is closely monitoring the defendants' actions and would not tolerate an end to those actions"(¶ 86). In sum, the court was "influenced … by the inextricable link between the City's objectives and the defendants' actions, as well as the transparency of this link" (¶ 98). "Accordingly, we conclude that Hallie I should be extended to recognize that the actions of the defendants, under the intense pressure of the City, were intended by the legislature to be immune from antitrust liability when the legislature granted municipalities broad authority to regulate the sale and consumption of alcohol beverages. To conclude otherwise would enshrine theory over practical reality" (¶ 89).

Chief Justice Abrahamson and Justices Bradley and Crooks did not participate. Justice Butler dissented on the ground that the private actions of the defendants, regardless of what motivated them, are not immunized from antitrust liability. He criticized the majority for focusing less on what the defendants (private actors) did and more on what the city could have done under its regulatory powers (see ¶ 108).

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Civil Procedure

AccuWeb Inc. v. Foley & Lardner, 2008 WI 24 (filed 28 March 2008)

AccuWeb, a manufacturer of Web guide control systems, sued several law firms and lawyers alleging that they were negligent and had committed malpractice by permitting one of its patents (the "414 patent") to lapse. AccuWeb claimed that as a result thereof, it suffered damages in several ways, including failure of a sale of the company to a purchaser (FiTech) at the price originally offered, loss of a valuable right in regard to the fair market value of the patent itself, and a diminution of the future resale value of the company. The respondents denied liability and also denied that AccuWeb had suffered any damages as a result of their alleged negligence.

The circuit court entered summary judgment against AccuWeb. It concluded that AccuWeb was unable to present either evidence of diminished business valuation damages to a reasonable certainty or evidence sufficient to enable a jury to make a fair and reasonable estimate of such damages (see ¶ 13). In an unpublished opinion a divided court of appeals affirmed the circuit court. In a decision authored by Justice Crooks, the supreme court reversed the court of appeals.

The supreme court held that "AccuWeb demonstrated that there were genuine issues of material fact that were sufficient to preclude the granting of a motion for summary judgment against it on the issues of whether there was evidence of damages resulting from the loss of its 414 patent, and on the amount of those damages. Based on the record before us, we are satisfied that AccuWeb could present evidence sufficient to enable a reasonable jury to award damages to the company in an amount that is supported by the evidence" (¶ 2).

The court's holding focused on three main areas as to which, it believed, AccuWeb presented sufficient evidence on damages to avoid the granting of summary judgment against it. "First, AccuWeb showed diminution of business valuation problems upon any attempt to sell its business. Second, AccuWeb clearly demonstrated a loss of its ability to license or assign the rights to use the invention formerly protected by the 414 patent. Third, AccuWeb presented enough information to establish reasonable competing inferences on the reason for FiTech's substantial reduction in the amount of its offer to purchase AccuWeb, which was a reduction from approximately $12.2 million to $5.5 million" (¶ 20). Although the quality of some of AccuWeb's evidence was challenged by the respondents (for example, a valuation appraisal of AccuWeb paid for by AccuWeb and the testimony of AccuWeb's president and his son regarding the patent's value and the reasons they believe the sale to FiTech fell through), the court concluded that this evidence should be weighed by the jury at trial and not determined on summary judgment (see ¶¶ 26, 31).

Justice Ziegler did not participate in this decision.

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Criminal Procedure

State v. Walker, 2008 WI 34 (filed 1 May 2008)

After the defendant completed the term of initial confinement of his bifurcated sentence, he began serving the extended supervision component. His extended supervision subsequently was revoked, and he was returned to court for a reconfinement hearing. A judge other than the original sentencing judge presided over the reconfinement proceedings. Although the reconfinement judge considered several relevant factors in fashioning the defendant's reconfinement term, nothing in the record indicated that he reviewed the original sentencing transcript in full. This failure was the basis of the court of appeals' decision to reverse the reconfinement order. See 2007 WI App 142. In reversing the reconfinement order the court of appeals relied on the supreme court's decision regarding reconfinement proceedings in State v. Brown, 2006 WI 131, 298 Wis. 2d 37, 725 N.W.2d 262, and on the court of appeals' interpretation of Brown in State v. Gee, 2007 WI App 32, 299 Wis. 2d 518, 729 N.W.2d 424. In Gee, the court of appeals relied on Brown to conclude that the circuit court must review the original sentencing transcript every time it presides over a reconfinement hearing.

In a unanimous decision authored by Justice Ziegler, the supreme court reversed the court of appeals. The supreme court characterized the issue before it as follows: "Did this court create a per se rule in State v. Brown that a circuit court judge must review the original sentencing transcript before reconfining a defendant?" (¶ 2) The supreme court answered this question in the negative. "A circuit court is not required to read the original sentencing transcript in every case. Rather, the circuit court should be familiar with the case. It, however, can accomplish the requisite familiarity in a number of ways, and we acknowledge that this may differ from case to case. As articulated in Brown, the circuit court must decide which factors are relevant for consideration in any given case, and the circuit court must use its discretion as to how it ascertains the information needed to consider the relevant factors" (¶ 15). "While it certainly may be good practice for the circuit court to review the sentencing transcript, it may not always be necessary, and therefore, we do not create a per se rule, but instead leave it to the trial court's discretion" (¶ 23). Accordingly, the supreme court overruled the court of appeals' decision in Gee to the extent that the decision created a requirement that circuit court judges must read the original sentencing transcript before every reconfinement hearing. "Additionally, to the extent other cases call for such a requirement, we reject their directives" (¶ 24).

The supreme court noted that relevant reconfinement information also may be available to the judge in the "Court Memo" (the document prepared by the Department of Corrections that contains information pertinent to reconfinement) and in other documents in the circuit court's file. Additionally, the prosecutor and defense counsel often will review the file, which includes the sentencing transcript, to prepare for the hearing. "The parties are, therefore, encouraged to identify relevant information from the sentencing transcript or any other document and bring it to the circuit court's attention, so the judge may then specifically review that information" (¶ 19). "While the circuit court may ascertain relevant information from a number of sources, we do not require that any one source or list of sources be utilized in every case. Rather, we merely require that the circuit court be familiar with the case before it. Ultimately, it is for the circuit court to determine the appropriate manner in which to accomplish this, and it may vary based upon the particular case" (¶ 20). .

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Insurance

Stone v. Acuity, 2008 WI 30 (filed 11 April 2008)

While riding a bicycle, Stone was struck and seriously injured by a van. Stone carried an Acuity automobile liability insurance policy, which included $300,000 in underinsured motorist (UIM) coverage. Stone also carried personal umbrella coverage of $1 million with Acuity. Both policies were issued in 1993. In 1996 Acuity notified policy holders of the availability of UIM coverage on auto renewal policies, a notice that complied with revisions of Wis. Stat. section 632.32(4m). In 1999 Acuity first began offering UIM coverage on its personal umbrella policies as well, but notice was provided only to new applicants, not existing policy holders such as Stone. Stone sued the van driver and her insurer but also claimed UIM coverage against Acuity under both the liability and the umbrella policies. Acuity denied that the umbrella policy provided UIM coverage. After the court of appeals' decision in Rebernick v. Wausau, 2005 WI App 15, 278 Wis. 2d 461, 692 N.W.2d 348, which held that the notice requirement of section 632.32(4m) extended also to personal umbrella coverage, the circuit court ruled in favor of Stone on this issue. The parties stipulated that a judgment be issued in favor of Stone for $500,000, subject to Acuity's appeal. The court of appeals affirmed, relying now on the supreme court decision in Rebernick (2006 WI 27, 289 Wis. 2d 324, 711 N.W.2d 621).

The supreme court, in an opinion written by Justice Bradley, affirmed the court of appeals. "[U]nder Rebernick, it is clear that insurers must provide notice of the availability of UIM coverage under umbrella policies that insure against liability `for loss or damage resulting from accident caused by any motor vehicle,' § 632.32(1), and `against loss resulting from liability imposed by law for bodily injury or death suffered by a person arising out of the ownership, maintenance or use of a motor vehicle,' § 632.32(4m). There is no dispute that in this case, the Stones' umbrella coverage applies to motor vehicle liability coverage" (¶ 26). The court held that the umbrella coverage constituted a "policy" within the meaning of the statute. It also rebuffed Acuity's contention that its 1996 notice, which came three years before it even offered UIM as part of the umbrella policy in 1999, constituted adequate notice.

The court next addressed the appropriate remedy for the statutory notice violation. It noted that "Wisconsin seems to be anomalous in interpreting a state statute that requires insurers to provide UIM coverage at a statutory minimum level as applying to umbrella policies. That is, the cases requiring insurers to provide UIM coverage in umbrella policies do so on the basis of statutes requiring insurers to provide UIM coverage at the liability limit of automobile policies" (¶ 59). The court ultimately was "persuaded that where an insurer fails to provide adequate notice of the availability of UIM coverage, the appropriate remedy is to read in only the minimum level of UIM coverage required under § 632.32(4m)(d) - $50,000 per person and $100,000 per accident" (¶ 61).

Finally, the supreme court determined that although the default remedy generally is the statutory minimums for UIM coverage, Acuity is bound by its stipulation of $500,000 in this case. The court rejected Acuity's arguments to the effect that it should be released from its stipulations. "[T]he stipulation avoided a dispute over whether, if coverage was found to exist on appeal, such coverage was subject to a reducing clause. Acuity therefore avoided the potential that it would have to pay the full $1 million limit of the policy should an appellate court determine that the coverage was not subject to a reducing clause" (¶ 73).

Justice Ziegler did not participate. Justice Roggensack concurred in the majority opinion except for that part which bound Acuity to its stipulation. Justice Butler concurred in the majority's conclusion that Acuity had violated the statute and that Stone's remedy is "potentially set by the stipulation," but he dissented from the majority's analysis of the general remedy for statutory violations (see ¶ 102).

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