Assembly Committee Holds Hearing on Litigation Reform Bill

Assembly Committee Holds Hearing on Litigation Reform Bill

The Assembly Committee on Judiciary held a hearing Thursday on a bill that would reform Wisconsin’s civil liability statutes to lower litigation costs for Wisconsin businesses and government. AB 773, authored by Reps. Mark Born (R-Beaver Dam) and John Nygren (R-Marinette) and Sens. Tom Tiffany (R-Hazelhurst) and David Craig (R-Big Bend), would further improve Wisconsin’s litigation climate by making changes to discovery and class action statutes, among other reforms.

The bill’s authors began the hearing by emphasizing their goal to draft legislation that makes Wisconsin consistent with federal rules and other states’ procedures and maintains fairness in Wisconsin’s civil justice system.

A wide variety of groups testified in support of the bill. The National Federation of Independent Business, Wisconsin Chapter, and the American Tort Reform Association (ATRA) focused on the costs savings for businesses small and large that could be affected by the debilitating costs of discovery. According to ATRA’s testimony, from 2006 to 2008, the average company paid average discovery costs per case of $600,000 to $3 million. Under the bill’s reforms, they said, businesses will be able to settle based on the merits of the cases, not simply in fear of paying these massive discovery costs. Wisconsin Manufacturers and Commerce’s testimony also emphasized the importance of lowering litigation costs for Wisconsin businesses and improving Wisconsin’s litigation climate to help job creation and economic development.

The Wisconsin Defense Counsel (WDC) later testified in support of the bill’s provisions regarding discovery and lawsuit lending. The bill’s limit on discovery of electronically stored information would reduce overburdensome discovery requests, and its proportionality requirements would prevent unnecessary “fishing expeditions.” WDC also noted that regulating lawsuit lending makes Wisconsin’s civil liability procedures fairer by protecting consumers and ensuring transparency in civil cases.

The Wisconsin Civil Justice Council and the U.S. Chamber of Commerce’s Institute for Legal Reform testified on the class action portions of the bill. The bill would make class action statutes more fair and efficient by requiring the type and scope of injury of the representative class members be typical of the type and scope of injury being alleged by the absent class members, thus precluding “no-injury” class actions. The bill also requires class members be verifiable by reliable and feasible means and would provide for interlocutory appeal of class certification. The groups said these changes would make Wisconsin’s civil justice system fairer and less costly.

The Wisconsin Insurance Alliance also testified in support of the bill’s provision adjusting the interest rate insurers must pay on overdue claims. The bill provides that the rate mirror interest rates on general judgments and self-adjust consistent with markets.

The Department of Revenue (DOR) testified for information only on the bill’s provision prohibiting DOR from using contingency fee arrangements with unclaimed property auditors. DOR expressed concerns that this provision could increase costs and make it difficult to hire auditors, but later testimony assured legislators that contingency fee arrangement bans have been implemented in other states and would not prohibit audits from taking place in Wisconsin.

Those testifying against the bill, including the Wisconsin Association for Justice and the Alliance for Responsible Consumer Legal Funding, argued that the changes stray too far from simply federalizing Wisconsin statute. Many said that there is no evidence of discovery abuses in Wisconsin and that state judges consistently keep discovery in check. However, supporters refuted that the bill would give judges guidelines related to discovery and class actions that are currently missing from state statute.

AB 773 has 23 sponsors in the Assembly and five in the Senate. So far 17 groups have registered in support.

The Senate version of the bill has been referred to the Committee on Judiciary and Public Safety, and no public hearing has been scheduled.