Wisconsin Business and Commercial Litigation

In Alsteen v. Wauleco, the asymptomatic plaintiff argued that because she was exposed to a dangerous chemical, which increased her risk of developing cancer, she should be able to recover from the defendants.  The defendants argued that increased risk of injury is not enough, and because there was no physical injury, the plaintiff’s claim should be dismissed. 

On June 14, 2011, the Wisconsin District III Court of Appeals agreed with the defendants:

In Wisconsin, a plaintiff does not have a personal injury claim until he or she has suffered “actual” injury or damage. Increased risk of future harm is not an actual injury under Wisconsin law.

In an exhaustive review of applicable case law, the Court of Appeals confirms Wisconsin’s requirement of actual injury or damages.  This case, while written in the context of a personal injury, can certainly be applied in other contexts, as demonstrated by the breadth of case law interpreted by the court in its analysis.  As plaintiff’s lawyers become more creative in their approaches, this case is certain to be useful in limiting claims that include risk of damage.

Many of you will remember the 2000 Milwaukee e. coli outbreak that occurred at a local Sizzler restaurant.  After defending Sizzler, the franchisor of the restaurant, in the Kriefall e. coli poisoning case, my firm was also retained to represent Sizzler in the appeal of a jury verdict finding that Excel, the company supplying meat to Sizzler and its franchisees, was the cause of the outbreak.  The jury also found that Sizzler had suffered approximately $7.161 million in lost profits, expenses, and lost franchise royalties as a result of Excel’s provision of contaminated meat.  The basis for liability was Excel’s breach of the implied warranty of merchantability under the Wisconsin Uniform Commercial Code (the trial court previously dismissed, on summary judgment, the express warranty claim). 

Excel appealed the verdict, and Sizzler cross appealed.  Sizzler sought to reverse, among other things, the trial court’s decision preventing Sizzler from recovering a $1.5 million advance payment (made in exchange for a $2 million credit against any eventual judgment) made to the Kriefalls, the parents of the child who died as a result of e. coli poisoning.  The District 1 Court of Appeals, in a decision written by Judge Fine, upheld the verdict and reversed the trial court’s advance pay decision, awarding Sizzler another $1.5 million. 

I’ve been working on this case since 2005, when I joined my current firm.  Congrats to my partner Russ Klingaman, and to trial counsel Fred Gordon from San Diego, California, who succesfully tried the case and argued before the court of appeals. 

At issue in the court’s decision is the reading of a contract provision which said “This Guaranty shall not render Seller liable for any incidental or consequential damages of whatsoever nature. . . .”  Excel argued that the exclusion should extend to limit consequential damages arising from breaches of all warranties.  Sizzler, on the other hand, contended that the language of the contract applied the exclusion only to the express warranty, and not to any other warranties.  The appellate court (as did the trial court) agreed with Sizzler:

As the trial court recognized, the phrase in the Continuing Guaranty excluding the right of Sizzler USA Franchise to recover consequential damages is hardly ambiguous and encompasses only the express warranties undertaken by the Continuing Guaranty: “This Guaranty shall not render Seller liable for any incidental or consequential damages of whatsoever nature.” (Emphasis added.) Stated another way, incidental and consequential damages are excluded from those damages that might be recovered if the express warranties in the Continuing Guaranty were breached. Excel argues that the Continuing Guaranty’s consequential-damages exclusion should apply to the implied warranties under the Uniform Commercial Code because, as Excel writes in its main appellate brief, the exclusion represents the parties’ “bargained for allocation of risk.” (Capitalization omitted.) The parties specifically limited their “allocation of risk” in connection with consequential damages, however, to the express warranties agreed-to in the Continuing Guaranty.

The court’s decision is much more detailed and both well-reasoned and well-written.  For those of you whose practice includes the UCC, it’s a must read, particularly the court’s reasoning relating to damages limitations and its analysis of the intersections between UCC 2-719 and 2-316.

You know, every time I get into court, I learn something new, or at least have a lesson reinforced.  I tried a case last week in federal court, and it became more clear to me than ever that brevity is crucial.  Judges and juries have little patience for repetitive questioning, cumulative evidence, and the investigation of irrelevant issues.  Unfortunately, that doesn’t mean that judges (who often profess to want things done quickly and cleanly, but then refuse to limit irrelevant or cumulative evidence) will take the risk of preventing a particular piece of evidence.   But at the very least, less is more, and the more extraneous baggage can be pared from what’s presented, the better.

The corollaries to this are two.  First, preparation is crucial.  The time spent in considering the elements of the claim and the specific evidence required to prove (or nullify) those elements is always well spent.  As a young lawyer, my rule of thumb was that when I was more exhausted than scared, I was ready for trial.  Since then, I’ve luckily gained more insight into how much is enough, and how to know when I’m there. 

The second corollary is to trust your instincts.  Trials, like the rest of the law, are art, not science.  You should feel when enough is enough, and you should understand what it is you need to prove, and what evidence will get you there.  The more time you spend considering such things, the more you’ll understand exactly what testimony and evidence you need. 

I love what I do — trials are one of the best parts of this job.  If anyone who reads this has comments, I’d love to hear how you prepare, and what your thoughts are on deciding what evidence you have to use, and what you can leave out.

In Ciccantelli v. Bishop’s Grove Condo Association, 2011 WI 36, the Supreme Court addressed a challenge by Bishop’s Grove to the attorney representing the Ciccantellis.  Opposing parties often make noise about conflicts of interest, but typically, unless there’s a current conflict or past representation on an issue directly related to the case, it goes nowhere.  Here, though, the Supreme Court broadened the standing requirements for parties to disqualify opposing counsel. 

The main issue was whether a nonclient party (one who is not a former or current client of opposing counsel) had standing to to move for disqulification of opposing counsel.  The court, in a bit of a fractured opinion, found that they do, but disagreed about how to make that decision.  Justices Abrahamson, Bradley, and Crooks, joined in part by Justice Prosser, effectively broadened the standing requirements to include nonclient parties.  Justices Roggensack, Gableman, and Ziegler agreed that the requirements should be broadened, but disagreed on the analysis required for the determination. 

In short, this case means that nonclient parties can move to disqualify opposing counsel when opposing counsel (or his or her firm) has has represented a nonparty on matters closely tied to the case.  For more analysis of the decision, have a look at Joe Forward’s article for the State Bar of Wisconsin.  This decision is sure to bring a rise in disqualification motions as parties and lawyers test the parameters of the new standards.