Tort Reforms Moving Wisconsin Ahead

Given the rancor surrounding collective bargaining changes and the recall elections of the past two years, little attention has been paid to the significance of the tort reform measures adopted in Wisconsin last year.
WMC and our coalition partners in the Wisconsin Civil Justice Council led the way as the Legislature passed major tort reforms during the January 2011 special session followed by another series of proposals in the September 2011 special session. The chairmen of the legislative Judiciary Committees, Senator Rich Zipperer (R-Pewaukee) and Representative Jim Ott (R-Mequon), deserve special recognition for their roles in shepherding these bills through the process and seeing them signed into law by Governor Walker.
The January 2011 reforms were approved as a comprehensive package known as Act 2. Taken together, these changes reversed the “Alabama North” moniker The Wall Street Journal had famously applied to Wisconsin after our state Supreme Court issued several unfavorable opinions in 2005.
Act 2 contained the following provisions: establishing strict product liability using the same standard to prove a defect that 46 other states use; capping punitive damages at $200,000 or two times compensatory damages; eliminating use of the “Risk Contribution” theory adopted by the Supreme Court in 2005, under which Wisconsin was the only state in the nation to discard the traditional proof of direct liability for a product liability claim and instead made all manufacturers of a given product collectively liable for a defective product; improving expert witness testimony by adopting the Daubert standard used by the federal system and 30 states; and adopting a frivolous claims statute that allows those bringing such a suit to be held liable for the costs and fees of the lawsuit.
The September 2011 reforms included three bills which were signed into law. Act 69 changed the interest rate on judgments from a fixed 12 percent rate, one of the highest in the nation, to a more contemporary standard of the Federal Reserve prime rate plus one percent. Act 92 adopted a standard for determining how reasonable attorney fees are set, using factors defined by the state Supreme Court; in addition, Act 92 limited attorneys’ fees to no more than three times compensatory damages. The third law, Act 93, provided that a property owner does not owe a duty of care to a trespasser, placing case law into state statute.
In addition to these changes, the Legislature also repealed punitive and compensatory damages allowed under the Wisconsin Fair Employment Act (WFEA) in 2009 that were driving up settlement costs for employers. While criticized by some commentators as being a tool of gender discrimination (state statute has long called for equal pay for equal work and continues to do so), the new law – Act 219 – preserves the traditional remedies available to workers: reinstatement, up to two years of back pay, and the cost of legal fees. WMC supports the existing equal pay for equal work statute.
Some of the reforms considered by the Legislature but left undone for 2013 include removing felony convictions from the list of protected classes under the WFEA and adopting a healthcare apology law which would make statements by healthcare providers to patients exempt from admission as evidence in civil and administrative proceedings.
The reforms adopted during the 2011 legislative session are helping to make our civil justice system more predictable and fair. While more work remains to be done, Wisconsin has taken a big step forward.
By Jason Culotta, WMC Director of Tax and Transportation Policy