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Nov. 11, 2005

Acting on what economic development and business leaders have dubbed the number one economic development issue facing the state, the Wisconsin Legislature this week acted on four high profile civil justice bills, giving final passage to three of them. Bills relating to product liability, expert opinion evidence, and medical malpractice noneconomic damage caps have all passed both houses of the Legislature in identical form and now await action by the Governor. The proposal relating to manufacturer/seller liability (The Jobs Preservation Act) has been enacted in both houses but in separate bills - one Assembly and one Senate - and final action is not expected until December.

The Governor’s office has hinted at a likely veto of the medical malpractice caps, suggesting that the legislation as it relates to the amount of the cap is too close to what the Wisconsin Supreme Court struck down in July and, in the Administration’s view, would not withstand constitutional challenge. Legislators argue, however, that the Legislature responded to the Court’s concern about process and establishing a “rational basis” for its public policy enactment. A veto followed by a new bill with a different cap is a possible scenario.

According to the November 9 Milwaukee Journal Sentinel article, the Governor’s press secretary opined that the Governor is not likely to sign the product liability bill since it would give a “free pass” to those who make faulty products. Sen. Ted Kanavas and Assembly Majority Leader Mike Huebsch, the chief authors of the legislation, argue that a bill that adopts the same standard for establishing strict liability as 46 other states is not a radical proposal.

The third bill that has passed both houses of the Legislature would establish higher standards for the admission of expert opinion evidence in Wisconsin Courts in civil and criminal cases. If enacted, the standards would mirror or be very similar to the laws in 33 other states and the entire federal system. The standards are based on the U.S. Supreme Court Daubert decision from 1993. There has been no indication from the Governor’s office regarding whether or not the Governor will sign the bill, although he did veto a bill that passed last session but applied the standards to civil cases only.

The fourth proposal relating to manufacturer/seller liability and requiring traditional proof of causation in all but extremely limited circumstances has received a majority vote in both houses (separate bills) and will not receive final legislative approval until the week of December 5. The delay was precipitated by a legitimate desire to craft language between the Governor’s office and legislative sponsors that does not alter the intent of the bill, but allows the Governor to sign it into law.

Under the Wisconsin Constitution, the Governor has six days, excluding Sundays, to act on bills after they have “reached his desk” or those bills automatically become law. By tradition, unless bills are delivered directly by the Legislature, bills do not “reach the Governor’s desk” until the Governor is ready to act and calls for the bills. By law, however, any bills currently through the Legislature that have not been acted upon by the Governor will be delivered to him on January 5, which starts the six day time clock ticking.

Below are links to the specific bills discussed in this introduction.

The State of Wisconsin lost a real pioneer in the advancement of services to the Legislature, and I have lost a friend, with the passing of H. Rupert Theobald, who headed the Wisconsin Legislative Reference Bureau for 30 years from 1964 through 1994. The entire state is indebted to Rupert for the incredible contributions he made to the lawmaking process and the advanced clarity and understanding of complicated legislative enactments. He also developed a records and research center that continues to amass valuable information regarding our government. Rupert was my first boss out of law school as I worked as a bill drafter for first six months of my legal/government relations career. Articles in today’s papers recount that what the “H” stood for was always a mystery until, upon Rupert’s retirement, then Chief Justice Heffernan stated to all present that the “H” stood for Honorable. There can be no finer tribute.

Policy Developments

Liability Reform Legislation

• SB-58. Product liability of manufacturers, distributors and sellers. Concurred in by the Assembly on November 8 on a vote of 60-36.

• SB-70. Expert opinion evidence. Concurred in by the Assembly on November 8 on a vote of 60-36.

• AB-766. Caps on noneconomic damages in medical malpractice cases.  Concurred in by the Senate on November 8 on a vote of 19-14.

• SB-402. Liability of manufacturers and sellers, requiring proof of causation in nearly all cases. Passed the Senate on November 8 on a vote of 19-14. The companion bill, AB-778, passed the Assembly on a vote of 60-36.

Other Legislative Activity

• SB-164. Notice regarding unauthorized acquisition of personal information. Sub. 3 adopted, voice vote. Passed, voice vote.

• AB-764. Medical Malpractice - collateral source rule; concurred in 19-14.

• AB-765. Coverage under the uninjured patients and families compensation fund of medical school graduates engaged in postgraduate training. Concurred, voice vote.

• AB-464 adds abandoned residential property to the definition of brownfield for purposed of the stature authorizing assignment of tax delinquent brownfield property.

• AB-783. (In lieu of SB-401). Duties of real estate brokers and salespersons.

• AB-298. Tourism promotion and development under the room tax. Sub. 1 adopted, voice vote. Passed, 80-14.

• SB-290. Claiming early stage seed and angel investment income and franchise tax credits. Passed, voice vote.

• AB-788. State Contract processes. Passed the Assembly 92-2.

• AB-129. Late Payments of property tax installments. Passed the Assembly 74-18. 

Assembly Approves WHEDA Modernization Bill
AB-593, which nearly doubles the Wisconsin Housing and Economic Development Authority (WHEDA) bonding authority, passed the State Assembly on Thursday, Nov. 10. WHEDA is a $3 billion organization which provides mortgages for first-time home buyers as well as finances economic development initiatives through a unique bonding program.

The WHEDA modernization bill had broad bi-partisan support, including support from Governor Doyle until Assembly Amendment 1 was added, which would prohibit WHEDA from assuming or providing loans to those with ITIN identification only. ITINs are issued to individuals who are required to have a U.S. taxpayer identification, however, are not eligible to obtain a Social Security Number.

The language stems from Assembly Bill 85, which was also passed by the Assembly this week. Since this amendment was adopted as part of the modernization bill, several democratic members removed their names from the bill.

AB-593 now goes to the Senate. Governor Doyle has not made any public statements on whether or not he will sign the bill, as amended, into law.

Prepayment Parity Legislation Passes Assembly
AB-456, relating to prepayment penalties on variable rate residential mortgage loans, passed the Assembly (95-0 without debate) on Tuesday. This bill, which is authored by Rep. Jean Hundertmark (R-Clintonville), would allow a lender to assess a prepayment penalty within the first three years of a variable rate interest loan.

The intent of this proposal is to level the playing field between state and federally chartered lending institutions, which are able to assess prepayment penalties. Prepayment penalties must be disclosed up front by the lender and may not be charged upon the sale of the house.

Businesses Qualify for Investor Tax Credits
Gov. Jim Doyle recently announced that the Department of Commerce (Commerce) has qualified five small businesses for investor tax credits under the new Angel Investor and Venture Fund Tax Credit Programs.

The Angel Investor and Venture Fund Tax Credit Programs offer Wisconsin income tax credits to angel investors and investors in seed-stage venture capital funds. These programs are designed to increase the supply of both qualified angel investors and investors in qualified venture capital funds. The tax credits are available only for investments made in technology businesses qualified by Commerce.

Eminent Domain in Supreme Court/Legislature
On Wednesday, Nov. 9, the Wisconsin Supreme Court heard testimony (03AP3353 J. Hilton v. Dept. of Natural Resources) on a case regarding a Department of Natural Resources order involving a Green Lake pier. The issues include whether the lower court correctly balanced the interests of the homeowners against the interests of the public, and whether the removal of boat slips constituted an illegal “taking” without due process.

The court case presents issues closely related to pending legislation, AB 657, introduced Sept. 9, that would restrict the condemnation of property if the community plans to turn over the property to a private party. The legislation was introduced in response to a Supreme Court ruling in June upholding the use of eminent domain for a redevelopment project in New London, Conn.

The Wisconsin Department of Natural Resources (DNR) recently completed the final draft of new administrative rules regulating the size and placement of piers (Wis. Admin. Code Ch. NR 326). The proposed pier rules will apply to both new piers and existing piers. DNR regulations could make thousands of piers in the state illegal and subject homeowners to steep fines, even for putting in the same pier they’ve had for decades.

The rule is being vehemently opposed by the Wisconsin Realtors and others who argue that one of the goals of the Jobs Creation Act (regulatory reform) was to create standards for piers based on law and have some oversight by elected officials over their enforcement.

Economic Growth Bill Advances
Assembly Bill 623 was passed by the Assembly Ways & Means Committee Wednesday by a unanimous vote. This legislation provides a sales tax exemption for electricity used in research and development activities in Wisconsin.

This bill is supported by, among others, Wisconsin Economic Development Association and Wisconsin Manufacturers & Commerce.

Committee Recommends Changes to Repossession Law
The Assembly Financial Institutions Committee on Thursday voted to recommend passage of AB-594, which makes various changes relating to the repossession of property that are intended to bring Wisconsin law in line with virtually every other state in the country.

Dr. H. Rupert Theobald
Dr. Theobald, 75, died on Wednesday, November 9. He had served as Chief of the Legislative Reference Bureau for 30 years, retiring in 1994. Funeral arrangements are pending.

Wisconsin Politics

Falk Announces Candidacy for Attorney General
On Monday, Nov. 7, Dane County Executive Kathleen Falk announced her intention to run as a candidate for state attorney general, setting up a primary contest with incumbent Peg Lautenschlager.

Falk was elected county executive in 1997; she was re-elected in 2001 and again in April, without opposition. Before that, she served as an assistant attorney general at the state Department of Justice and was the state's public intervenor on cases to protect natural resources.

Former U.S. Attorney, J.B. Van Hollen is and Waukesha County District Attorney Paul Bucher are the announced Republican candidates.

Political News

Fixing the burden of proof (opinion): Milwaukee Journal Sentinel, Nov. 10, 2005.

State will review sales tax payments: Milwaukee Journal Sentinel, Nov. 10, 2005.

Property law defended: Milwaukee Journal Sentinel, Nov. 10, 2005.

Windfall from Asia: Milwaukee Journal Sentinel, Nov. 10, 2005.

Post-hurricane energy recovery may take longer: Milwaukee Journal Sentinel, Nov. 9, 2005.

Senate soothes business interests: The Capital Times, Nov. 9, 2005.

Malpractice caps bill goes to Doyle: Milwaukee Journal Sentinel, Nov. 9, 2005.

Assembly panel votes to pass conceal carry bill: Milwaukee Journal Sentinel, Nov. 9, 2005.

Cutbacks in child support challenged: Milwaukee Journal Sentinel, Nov. 9, 2005.

Some On Board OK With Falk: Wisconsin State Journal, Nov. 9, 2005.

Bill on abortion warnings advances: Milwaukee Journal Sentinel, Nov. 9, 2005.

Bill puts cost of health care on agenda (opinion): Marshfield News Herald, Nov. 9, 2005.

State to file complaints against hospitals: Milwaukee Journal Sentinel, Nov. 8, 2005.

Local doctors, lawmakers at loggerheads over malpractice caps: Ashland Daily Press, Nov. 8, 2005.

Lawmakers work to sink DNR's new regulations on piers: Milwaukee Journal Sentinel, Nov. 8, 2005.

It's An Issue In The Race For Attorney General: Wisconsin State Journal, Nov. 8, 2005.

Falk is in race for AG: The Capital Times, Nov. 7, 2005.

Gov. Doyle leading Europe trade mission: The Capital Times, Nov. 7, 2005.

GOP candidates visit town for Reagan Day celebration: Ashland Daily Press, Nov. 7, 2005.

Upcoming Fundraisers

Nov. 14

• Scott Walker (R) gubernatorial candidate, Franklin

• Rep. Sue Jeskewitz (R-Menomonie Falls), Hubertus

• Rep. Judy Krawczyk (R-Green Bay), Green Bay

• JB Van Hollen (R) AG candidate, Marshfield

• Rep. John Gard (R-Peshtigo), De Pere

Nov. 15

• Scott Walker (R) gubernatorial candidate, Waterford

• Sen. Roger Breske (D-Eland), Madison

Nov. 16

• Scott Walker (R) gubernatorial candidate, Milwaukee

• Rep. John Lehman (D-Racine), Racine

Nov. 17

• Sen. Joe Leibham (R-Sheboygan), Madison

• Rep. John Gard (R-Peshtigo), Wausau

• Rep. Gene Hahn (R-Cambria), Fall River

• Pat Kreitlow (D) 23rd SD candidate, Chippewa Falls

• Sen. Scott Fitzgerald (R-Juneau), Madison

• Sen. Ron Brown (R-Eau Claire), Warrens

Nov. 18

• Scott Walker (R) gubernatorial candidate, Cedarburg