Wednesday, April 3, 2013

Class Action Lawsuits Under Wisconsin Law

By Judge John DiMotto

I recently had a conversation with my judicial colleague, Rock County Circuit Court Judge Michael Fitzpatrick, about Class Action law in Wisconsin.  He sent me a copy of an opinion and order he authored with respect to a motion to certify a class. He suggested that it might be an interesting topic for this blog.  After reading his opinion and order, it prompted me to look closer look at the Wisconsin statute governing Class Actions as well as Wisconsin case law that addresses them.  I agree that it is an area of the law worth exploring and I thank him for his suggestion and his research which I have used extensively throughout this blog entry.
Wisconsin Statute Section 803.08
Section 803.08 of the Wisconsin Statutes addresses Class Actions in Wisconsin.  It sets forth:

"When the question before the court is one of a common or general interest of many persons or when the parties are very numerous and it may be impracticable to bring them all before the court, one or more may sue or defend for the benefit of the whole, except that no claim may be maintained against the state or any other party under this section if the relief sought includes the refund of or damages associated with a tax administered by the state."

A cursory reading of this statute might give the impression  that class action lawsuits can easily be brought.  A reading of Wisconsin and federal appellate decisions tells us that nothing is farther from the truth.  What is meant by "common"; what is meant by "general interest"; what is meant by  "impracticable"; what is meant by "the benefit of the whole"; is subject to differing interpretations depending on your position in the case.  As was stated in Mercury Records v. Economic Consultants, 91 Wis.2d 482, 490-491 (Ct. App. 1979):  "There has been no real guidance given by our Supreme Court in the area of state procedural requirements for class actions."  However, an examination of appellate cases that have addressed class actions do offer some direction.

Class Action Prerequisites
In Hermanson v. Wal-Mart, 290 Wis.2d 225 (Ct. App. 2006), the court addressed 803.08 and set forth the four prerequisite to class certification:

1)  There must be a common or general interest shared by all members of the class;
2)  The named parties must fairly represent the interest involved;
3)  It must be impracticable to bring all interested parties before the court; and.
4)  The proposed class must be manageable.

The Hermanson court indicated that the trial court must determine whether the advantages of disposing of the entire controversy in one proceeding are outweighed by the difficulties of combining divergent issues and person.  In essence, the trial court's decision regarding class certification is discretionary.  Furthermore, in that exercise of discretion, the trial court must respect the fact that 803.08 does not trump the defendant's right to a jury trial.  In that regard the manageability prerequisite must be carefully considered.

Common or General Interest Prerequisite
In determining whether common or general interests are shared by members of the class, it is important to recognize that it is not necessary for all member to share all interests but only that they share a common interest. see Hogan v. Musolf, 157 Wis.2d 362, 379 (Ct. App. 1990).  What is important is that all members of the class desire the same outcome of the lawsuit. see Mercury Records, supra. What is necessary is that there be a community of interest among them involving the general controversy.  see   Goebel v. First Federal Savings, 83 Wis.2d 668 (1977).  Furthermore, class members can have distinct causes of action yet the class may be certified if the common issues outweigh separate issues. see Schlosser v. Allis-Chalmers, 65 Wis.2d 153, 173 (1974).

Fair Representation Prerequisite
Adequate representation is the foundation which renders class actions consistent with due process. The criteria of adequate representation is whether class attorneys are qualified, experienced and able to conduct the litigation and whether the plaintiffs or attorneys have interests antagonistic to absent class members. see Cruz, supra.  Before counsel undertakes a class action lawsuit, counsel must understand both the complexity of the issues and the time commitment to the action.  Class action lawsuits are not for the "faint of heart" attorneys.
Impracticable Prerequisite

The question of impracticality addresses what Wisconsin case law talks about as "numerousness." see Cruz v. All Saints Healthcare System, Inc., 242 Wis.2d 432 (Ct. App. 2001).  This factor requires a showing only that joinder is impracticable but not impossible.  Plaintiffs only need to show that joining all members of the class as named parties would be difficult.  see Morales v. Greater Omaha Packing Co., 266 F.R.D. 294 (D. Neb. 2010).  Judicial economy is an issue to be considered by the trial court in the exercise of discretion.   

Manageability Prerequisite
The question of manageability necessitates an analysis and assessments of the benefits and the burdens of the class action.   The court must weigh these competing interests in light of the issues in the case.  An obvious benefit is the hope that one trial can address liability and damages.  However, the right a a jury trial attends a class action lawsuit and must be a consideration for the trial court.  see Markweise v. Peck Foods Corp., 205 Wis.2d 207 (Ct. App. 1996).  A class action jury trial could cause nightmares for a trial judge with a heavy docket.  803.08 does not trump the right to a jury trial. see Hermanson, supra.  Manageability deals with what is practical in the real world.
The proper exercise of discretion is the paramount concern of a trial court when faced with the decision of whether to certify a class and allow a plaintiff to proceed with a class action lawsuit. The decision will have serious ramifications on all involved in the case.  Discretion is properly exercised if the trial court examines the relevant facts, applies a proper legal standard and, in a rational process, reaches a conclusion that a reasonable judge could reach.  Clearly, the utmost caution and care must be exercised if the court is to properly exercise its discretion.


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