Estate Tax Changes:

In his budget, the President calls for the estate tax to revert to 2009 levels.  Under those parameters, the first $3.5 million of one’s estate would be tax-exempt and the portion above that would face a top tax rate of 45%. This means that married couples would still be able to use estate planning techniques to exclude the first $7 million of their estate, but this nonetheless shifts many clients into the category of being subject to taxation.  Going forward, the budget doesn’t state that the estate tax exemption amount will be indexed for inflation, so a person’s lifetime exemption would remain at $3.5 million until some other change is made. This means that down the road as inflation increases the amount of money taxpayers may place in their estates, a greater number of smaller estates would also be subject to the estate tax rate.

The budget also calls for a step-down in basis for assets that have a lower fair market value at the time of a person’s death than his or her basis.  The law would impose a duty for the executor or personal representative of a person’s to report to the IRS and to the recipient of the assets what the person’s basis was the time of his or her death.    The basis of property in the hands of the recipient could be no greater than the value of that property as determined for estate or gift tax purposes.

Gift Tax Changes:

In addition to scaling back the estate tax to 2009 levels, the President’s budget would return the gift tax to these levels.  This means that a person’s lifetime exclusion amount for gifts would be returned to $1 million.  This legislation would limit an estate planning attorney’s ability to utilize gifting techniques to remove assets from an estate, and would encourage individuals to retain assets until their death to take advantage of the larger exclusion.

New Limits on Retirement Accounts:

The new budget proposes to place a cap on the amount a person can hold in his or her individual retirement accounts.  The value of defined contribution plans like 401(k) and IRA accounts, as well as defined benefit pensions, would count toward the limit.  The measurement for the amount of the cap would be the amount needed to fund a $205,000 annual annuity for a 62-year-old, indexed for inflation, which currently amounts to a $3.4 million limitation.  This would affect less than 1% of individual retirement accounts in 2014, but it would be a step in the direction of the federal government beginning to scale back the tax benefits associated with these retirement accounts. 

Other Miscellaneous Changes:

• Generation Skipping Tax tax-exempt dynasty trusts will now have a maximum life of 90 years.
• Grantor Retained Annuity Trusts (GRATs) will be required to have a minimum trust term of ten years.
• Intentionally Defective Grantor Trusts will no longer be effective and gift tax will be imposed upon the entire value of the amount distributed from the trust.

Although this budget is still subject to change and debate, it shows the direction in which the country is likely headed with regard to the future of the estate and gift tax.

For the second time, the parties have again appealed to the Court of Appeals. The Circuit Court awarded Ms. Sands a front pay award of $603,333 and $576,469 in attorney fees. On remand, the Circuit Court refused to hear any evidence on the issue of front pay. The Circuit Court also refused to hear Menard’s two §806.07(1)(h) motions. Menards motions were based on after-acquired evidence of misconduct and evidence that Ms. Sands had paid her sister for false testimony during the arbitration proceedings. Menards also appealed the attorney fees award. The Court of Appeals ultimately found that dismissal of the first motion was proper given that Sand’s back pay award ended long before Menard’s found her misconduct, therefore Menards would not have been entitled to disgorgement as a matter of law. The Court of Appeals did remand Menard’s second motion back to the Circuit Court on whether Sands paid her sister for testimony at the arbitration proceeding, saying that such issue goes to the integrity of the arbitration proceedings themselves. In the interest of judicial efficiency, the Court then considered if the circuit court denied that motion, whether an evidentiary hearing should be held on the issue of front pay.

Both parties sought to introduce evidence on front pay, Ms. Sands sought to introduce evidence that she intended to remain with Menards for her entire career and Menards that Sands requested only two years of front pay at her arbitration hearing thereby judicially estopping her from receiving more and that Ms. Sands had failed to mitigate her damages. The Court of Appeals ultimately found that nothing barred Ms. Sands from her ability to introduce evidence of her intention to remain employed with Menards until retirement. Further, they found that she was not judicially estopped from receiving only 2 years of front pay as a result of her testimony at the arbitration proceeding. As rationale the court noted that because Ms. Sands failed to convince the arbitration panel of her position, the third element of estoppel was missing and more importantly at the time she requested it, she would not have foreseen the arbitration panel awarding reinstatement and that Menards would put up a lengthy and very public refusal to comply, which ultimately may have damaged Ms. Sands career possibilities.

Menards also argues Ms. Sands is barred from receiving front pay for failure to mitigate her damages. The Court of Appeals again disagreed, stating that while she did decline a job offer in October 2006, the arbitrators still elected to reinstate her. From the time the arbitration award was given until the Supreme Court overturned the reinstatement, Ms. Sands would not have had a duty to mitigate her damages. However, the Supreme Court case ended over two years ago, and the Court of Appeals did find that Menards should be able to present evidence of her failure to mitigate damages since the Supreme Court ruling. The Court of Appeals also found that Menards should have been allowed to present its after-acquired evidence with respect to the determination of front pay, but also found that such evidence would not have barred her from recovering. The Court of Appeals found that an award of front pay would have begun in 2007 had reinstatement not been ordered, and that the after-acquired evidence was not discovered until late 2010. Therefore, at best, Ms. Sands front pay award could be limited by the after-acquired evidence to the time period between 2007 and late 2010.

The last issue before the Court of Appeals was whether the Circuit Courts award of $576,469 in attorney fees was appropriate. Sands had petitioned the court for $671,062.38 in attorney fees, which she claimed represented her fees since the day of the arbitration decision. Menards opposed the fees saying she could not recover because she was not a prevailing party and that her fee petition was insufficient. The Court of Appeals found that even though Menards had appealed to the Supreme Court, Ms. Sands had prevailed in that the Supreme Court had awarded her front pay in lieu of reinstatement in order to make her whole, making her a prevailing party for purposes of the attorney fees award. The Court of Appeals did find however that her fee petition was insufficient. The Circuit Court with little rationale had rejected Ms. Sands fee request, saying it was borderline shocking to the conscience but then awarded her the amount Menards had spent on attorney fees. In doing so it did not determine the reasonableness of her attorney fees petition, including whether the hourly billing rate was reasonable and if it was true that Ms. Sands’ attorneys had included numerous entries for legal work for Ms. Sand’s sister as Menards purported.

There are many significant issues standing between Ms. Sands and her award for front pay, including Menard’s motion on the issue of whether Ms. Sand’s paid her sister for testimony at the original 2007 arbitration proceeding, failure to mitigate her damages and the after acquired evidence of her misconduct if considered. Given the numerous issues again remanded to the circuit court, whether this is the last trip to the Court of Appeals for Menards and Ms. Sands remains to be unseen.

Cannon & Dunphy and Habush Habush & Rottier are competing Wisconsin personal injury law firms.   The Court noted that it was undisputed that Robert Habush and Daniel Rottier are both well-known personal injury attorneys whose names have commercial advertising value.  Cannon & Dunphy purchased the terms “Habush” and “Rottier” through several internet search engines.  Accordingly, when an internet user searches for either of those terms using one of those engines, “advertising” or “sponsored” links to Cannon & Dunphy’s website appear above and/or alongside the “organic” results for “Habush” and “Rottier”.   

Habush and Rottier filed suit against Cannon & Dunphy, alleging that Cannon & Dunphy used their names for advertising purposes without their written consent in violation of Wis. Stat. § 995.50(2)(b).  The circuit court granted summary judgment in favor of Cannon & Dunphy, ruling that Habush and Rottier had not established that the invasion of their privacy was unreasonable.

The Court of Appeals affirmed on different grounds.  Rather than focusing on whether a violation of § 995.50 required proof of an unreasonable invasion of privacy, it ruled that Cannon & Dunphy’s purchase of internet search terms did not constitute “use” under § 995.50.  Section 995.50(2)(b) (the operative portion of § 995.50) prohibits the “use, for advertising purposes or for purposes of trade” the name, portrait or picture of any living person without their written consent. 

The Court of Appeals concluded that the term “use” in § 995.50(2)(b) was ambiguous.  The Court found that “use” under the statute could reasonably mean any kind of use of a name or image if that use took advantage of the commercial value of a person’s identify; however, “use” could also reasonably mean only use that was visible to the public, meaning that the used name or image was found in or on the defendant’s product, advertisement, etc.   

The Court of Appeals ruled that the more reasonable interpretation of the word “use” in § 995.50 does not include purchasing someone’s name as a search term, although it called the issue “a close one”.  Key to the Court’s ruling was the concept of “proximity advertising”.  Proximity advertising is the practice of locating an advertisement or a business near an established competitor to take advantage of the flow of potential customers or clients to the established competitor (for example, locating a car dealership across the street from an existing car dealership or placing a yellow pages ad in proximity to a competitor’s phone listing).  Proximity advertising undeniably takes advantage of an established competitor’s name and its ability to draw potential customers, but is undisputedly a proper practice that would not violate § 995.50. 

The Court failed to see a meaningful distinction between Cannon & Dunphy locating a branch office next to an established Habush Habush & Rottier office to take advantage of the flow of people seeking out Habush Habush & Rottier (again, a proper practice that would not violate § 995.50) and Cannon & Dunphy’s purchase of the search terms “Habush” and “Rottier” to take advantage of the flow of people who may seek out Habush Habush & Rottier on the internet.  Thus, it does not constitute prohibited “use” under § 995.50 and does not violate the statute.  Important to the Court’s ruling was the fact that Cannon & Dunphy’s use of Habush’s and Rottier’s names was “invisible”, meaning that the names Habush and/or Rottier did not physically appear on any of Cannon & Dunphy’s advertising — links to Cannon & Dunphy’s website simply appear along with the results when the search terms “Habush” or “Rottier” are entered. Like proximity advertising, Cannon & Dunphy’s search term purchase takes advantage of the name of an established business but does not visibly “use” a competitor’s name in the same way as putting the name or image in an advertisement or on a product.   However, the Court of Appeals did limit its holding to internet search terms and results at issue in this case; the Court declined to adopt a bright line rule exempting all “non-visible” advertising from coverage under the statute because there may be variations on non-visible use of a name that the Court thought it could not anticipate.

Around 2010, Bev Stayart searched her own name in various search engines, including Yahoo! and Google.  Apparently, in addition to the expected results, e.g., her own website pages and her blog entries, she was offended to find that her name was linked with Cialis, Levitra, and pornographic websites.  Presumably, Bev Stayart’s name was linked with Cialis, Levitra, and pornographic websites, through the search engines’ paid placement advertising programs.  For example, Google will, for such a paid advertiser, “automatically embed[] up to eleven ‘sponsored links’ to [an] advertiser’s website on each search results page.”  That embedded coding can result in the search engine suggesting “related searches” that link to the advertiser’s websites. 

Ms. Stayart was appalled that a search of her name directed the searcher to websites for Cialis, Levitra, and pornography.  As a result, she began filing lawsuits. Ms. Stayart first sued Yahoo! in federal court on January 19, 2010, claiming a violation of her rights under Section 43(a) of the Lanham Act, which provides a “private remedy for a commercial plaintiff” whose “commercial interests have been harmed by a competitor.”  Although noting Ms. Stayart’s “humanitarian efforts on behalf of baby seals, wolves and wild horses,” the Court concluded that Ms. Stayart had no “commercial” interest to protect.

So, Ms. Stayart tried again, by filing a second lawsuit against Google.  The second lawsuit was based on Wisconsin’s broadly-worded, yet infrequently litigated, Privacy Statute, which prohibits misappropriation or “[t]he use, for advertising purposes or for purposes of trade, of the name, portrait or picture of any living person, without having first obtained the written consent of the person.”  Wis. Stats. § 995.50(2)(b).  Wisconsin’s Privacy Statute has exceptions, however, and one of those exceptions is if the connection between the complained-of misappropriation and the defendant’s commercial purposes is incidental, rather than substantial.  The Court concluded that the exception applied, because Ms. Stayart had failed to prove “that the connection between Stayart’s name and Google’s efforts to generate revenues through its use is ‘substantial rather than incidental.’” 

Perhaps more importantly, however, the Court said that regardless of whether the connection was substantial, a second exception to Wisconsin’s Privacy Law, for matters of “legitimate public interest,” precluded her from a successful claim against Google.  The Court found that Bev Stayart had made her name, in connection with Levitra (for example), a matter of public interest by filing her previous lawsuit against Yahoo!  Consequently, it dismissed her complaint against Google. 

Bev Stayart’s lawsuits against Yahoo and Google were, admittedly, not exemplary models of the art of pleading, e.g., a different result may have been reached in her claim against Yahoo had she originally plead a violation of her rights under Section 995.50 of the Wisconsin Statutes.  If nothing else, however, Bev Stayart’s cases heed caution to those considering a privacy-based claim, because as soon as a claim is filed with a court, the public interest exception will operate to preclude any subsequent “kick at the cat.” 

The circuit court held that the Zernia MPA was enforceable as to the provisions regarding the parties’ retirement accounts; however the MPA was unenforceable as to the remaining provisions.  As a result, the circuit court awarded indefinite maintenance to Ms. Zernia.  Dr. Zernia appealed, arguing that 1) the entire agreement was enforceable; 2) the circuit court improperly considered the value of his retirement account when determining maintenance; and 3) the court erred in awarding permanent maintenance.  Ms. Zernia cross-appealed, arguing that the entire agreement is unenforceable.

The court of appeals started its discussion with a review of Button v. Button, 131 Wis.2d 84, 388 N.W.2d 546 (1986).  In Button, the court held that in order for a MPA to be considered equitable, and therefore enforceable, the following three elements must be met:  1) each party made a full and accurate financial disclosure; 2) each party entered into the agreement voluntarily; and 3) the substantive provisions are fair to each party.  In this case, the court of appeals held that the third element of fairness was not satisfied, and therefore the entire agreement was unenforceable

To determine if an agreement is fair, the court must consider the facts as they existed at the time the parties entered into the agreement.  In this case, the court of appeals examined the record to determine if the agreement, when executed, contemplated a reasonable change in circumstances to the parties.  In this case, the record indicated that the parties contemplating living on a farm and having children, which the court of appeals noted would likely affect the ability of one party to continue working full-time, and thus this was not a change in circumstances thereby rendering the agreement unenforceable.  The MPA indicates that each party contemplated that they could each financially support themselves; however, Ms. Zernia left the workforce to raise children and tend to the family home.  As a result, there was a financial change in circumstances and the agreement was now unfair to Ms. Zernia. 

In addition, the court of appeals noted that the parties deviated from the terms of the agreement by having joint bank accounts and Dr. Zernia being the sole provider, financially, for the family.  Brandt v. Brandt,145 Wis.2d 394, 427 N.W.2d 126 (Ct.App. 1988) held that when parties ignore the prior agreement and manage their finances in a manner that was acceptable to all during the marriage, it is inequitable to enforce the agreement at the time of the divorce.

While this is an unpublished decision, it may be used for its persuasive value.  It is important to note that when entering into a MPA, the terms must be fair to both parties at the time of execution and the parties must have reasonably contemplated and addressed a possible change in circumstances.

Beginning many months ago, the NLRA, which applies to both union and non-union employment settings, was used as the basis for objecting to terminations of a variety of employees for their use of Facebook. Numerous employees had contested the legality of their terminations, arguing that they had been illegally terminated for their “concerted” efforts at addressing complaints about the terms and conditions of their employment through Facebook. As a result, those employees contended that their terminations violated “Section 7” of the NLRA.  (Refer to earlier article)

The NLRB has begun releasing its decisions in those many Section 7/Facebook cases.  Those cases were, admittedly, greatly varying in their facts, including whether the complaints were individualized or group issues, the context in which the issues were being raised, the content of the issues being complained about, and other unique factors, e.g., the informality of the Facebook posts, which largely involved the use of swearing, sarcasm or name-calling in the Facebook posts. 

The first of the cases, Karl Knauz Motors, Inc. & Robert Becker, Case 13-CA-046452, decided at the end of September, involved a luxury car salesman for BMW who had made Facebook posts about both a lackluster (in his opinion) promotional event at the dealership and an accident at a nearby Land Rover dealership.  The employing dealership had a “courtesy” policy that required its employees to be “courteous, polite and friendly,” and which prohibited employees from being “disrespectful or us[ing] profanity or any other language which injures the image or reputation of the Dealership.”  Although the NLRB found the policy to be illegal under the NLRA, because of its tendency to chill employees’ exercise of their rights under the NLRA, the plaintiff-employee’s termination was affirmed on the basis that his Facebook posts about the Land Rover dealership had nothing to do with the terms and conditions of his employment at the BMW dealership.  The Karl Knauz Motors decision will prove to be little help for employers trying to decipher the protection due to their employees for employment-related Facebook posts, however, because the NLRB declined to issue any decision or opinion regarding the plaintiff-employee’s critical Facebook posts about his own employer. 

More recently, in Hispanics United of Buffalo, Case 3-CA-27872, the NLRB concluded that an employer’s termination of employees for participation in a Facebook conversation violated the NLRA.  In that case, an employee had posted on Facebook that a colleague was complaining that their fellow coworkers were not doing enough and soliciting opinions from their coworkers.  Four coworkers posted comments to the post, disputing their work ethics and job performance.  Of note, however, is that those four commenting coworkers used profanity and sarcasm in their defensive posts. All five employees who had posted to Facebook were terminated, allegedly pursuant to the employer’s anti-harassment policy. 

The NLRB’s decision of Hispanics United of Buffalo indicated that it would treat Facebook no differently than it had analyzed similar issues in the past.  It indicated that Facebook was perhaps a new form of communication, but was merely a “virtual water cooler.”  It affirmed that the NLRA’s protections extend to employees’ conduct on off-duty hours and are not trumped by an employer’s broad policies.  The NLRB held that the five employees’ posts constituted “protected concerted activity,” and were “step[s] toward taking group action to defend themselves against the [coworker’s] accusation” about their job performance.  The NLRB also refused to allow the employer’s “zero tolerance” anti-harassment policy to control, noting that the comments could not reasonably construed to be bullying but that even if they could, the policy could not lawfully be applied. 

The NLRB has yet to release its decisions in a number of other Facebook-related cases.  For the time being, employers should take heed to the decision of Hispanics United of Buffalo – although coworker conversation may appear casual and more like colleague camaraderie than “concerted activity,” it may nevertheless be protected.

Additionally, the time periods in which an employee must allege a violation of their FMLA rights differs between the state and federal FML Acts.  For the federal FML Act, an employee has two years from the date of the alleged violation to file a complaint.  For the state FML Act, an employee must file an administrative claim with the Wisconsin Equal Rights Division within thirty (30) days of the alleged violation.  This is a uniquely-short time period, because most other employee claims (most typically, discrimination claims) must be filed within three hundred (300) days of the alleged violation.

Finally, the Wisconsin FML Act permits employees, if specific conditions are met (discussed below) to file a claim against their employer for damages arising from a violation of the FML Act in circuit court.  This, too, is unique, because discrimination and many other employment-based claims may only be pursued by an employee in an administrative context through the Equal Rights Division.  An employee cannot, for example, ever file a discrimination claim against his or her employer in circuit court.  It is the conditions under which an employee may file a FMLA claim against his or her employer in circuit court that was the subject of a recent Court of Appeals’ decision from the Fourth District.

In Hoague v. Kraft Foods Global, Inc., District Four of the Court of Appeals, decided whether a Dane County Circuit Court judge correctly dismissed Robert Hoague’s Wisconsin FMLA claim against Kraft Foods Global, Inc.  Mr. Hoague was seeking recovery of over $30,000 in back pay and benefits and attorney fees and costs.  He had properly filed an initial administrative claim with the Equal Rights Division, which ultimately ordered that Kraft pay Hoague $18,893.51 for back pay and benefits and $12,143.49 in attorney fees and costs. 

Wisconsin Statutes Section 103.10(13), which defines the circumstances under which an employee may file a FMLA claim against his or her employer in circuit court, provides that:

 (13) Civil action.

(a)   An employee or the department may bring an action in circuit court against an employer to recover damages caused by a violation of sub. (11) after the completion of an administrative proceeding, including judicial review, concerning the same violation.

(b)   An action under par. (a) shall be commenced within the later of the following periods, or be barred:

1. Within 60 days from the completion of an administrative proceeding, including judicial review, concerning the same violation.
2. Twelve months after the violation occurred, or the department or employee should reasonably have known that the violation occurred.

When the Equal Rights Division mailed its order on Hoague and Kraft, it outlined that the parties had twenty days to petition the Division for a rehearing or thirty days to petition for judicial review (an appeal) by the circuit court.  Kraft did neither.

Hoague filed a civil action against Kraft in the Dane County Circuit Court on the 88^th day following the Equal Rights Division’s issuance of the order.  Kraft filed a motion to dismiss Hoague’s civil action, arguing that Hoague’s sixty day period to file an action, under Wisconsin Statutes Section 103.10(13)(b)(1), expired sixty days after the Division had issued its order.

The Court of Appeals concluded that the statute – Section 103.10(13) – was ambiguous, so it looked to the “context, scope, and purpose” of the language of the statute.  The Court of Appeals described that the administrative phase through the Equal Rights Division has the purpose of allowing the employee to establish a violation of the Wisconsin FMLA.  If the employee prevails, the employee may thereafter file an entirely new civil action in circuit court seeking monetary damages like consequential and punitive damages.  The Court of Appeals concluded that the sixty day time period was intended to given an employee an adequate opportunity to retain an attorney, investigate his or her claim, and make an informed decision about whether to pursue a civil action in circuit court.  Consequently, it concluded that the sixty day period does not begin to run until after the window for seeking judicial review is closed, or, thirty days after the issuance of the order from the Equal Rights Division. 

The Court of Appeals’ decision in Hoague v. Kraft Foods Global, Inc. highlights how technical and complicated the Wisconsin Family and Medical Leave Act can be for employees and employers.  For employees who believe their rights have been violated, it is important they act quickly, because the Wisconsin Family and Medical Leave Act provides very short time periods for challenging alleged violations.  The Court of Appeals’ recent decision makes an impact, albeit small, in expanding the time period for an employee to pursue a civil action against his or her employer for a violation of the Wisconsin Family and Medical Leave Act.

Plaintiff Johnson filed a summons and complaint against Cintas Corporation (Cintas), which he identified as his employer in the complaint, based on its purported refusal to pay him benefits after he was injured in an automobile accident which he contended was related to his employment.   However, Plaintiff’s actual employer was a company called Cintas Corporation No. 2 (Cintas No. 2), a wholly-owned subsidiary of Cintas but ultimately a separate legal entity.  Plaintiff believed that Cintas was his employer because Cintas No. 2 (again, his actual employer) held itself and identified itself publically and to Plaintiff as Cintas.  Plaintiff served his summons naming Cintas as defendant on the registered agent for Cintas No. 2.  When no one answered, Plaintiff moved for a default judgment, which the circuit court granted after allowing Plaintiff to amend summons and complaint to name Cintas No. 2 as the named defendant (Plaintiff subsequently learned the identify and relationship between him and Cintas and Cintas No. 2).  The circuit court denied Cintas No. 2’s subsequent motion for relief from default judgment.   The court of appeals reversed, holding that because the summons served on Cintas No. 2 did not name Cintas No. 2 as defendant, the circuit court lacked personal jurisdiction over Cintas No. 2.

The Supreme Court’s decision largely turned on the distinction between fundamentally and technically defective service.  If service is fundamentally defective, a court lacks personal jurisdiction over the defendant even if the defect did not prejudice the defendant.  If service is technically deficient, a court has personal jurisdiction if the plaintiff can show that the defect did not prejudice the defendant.  The court noted that the difference between a fundamental and technical defect, “can be a fine one.”   The Court first discussed one case which held that the failure to name a defendant in the summons and complaint is a fundamental defect that deprives the court of personal jurisdiction over the unnamed defendant, even where the intended defendant was served with the summons and complaint, and another which held that a “misnomer” of a party may be corrected at any point by amendment.  The court further noted that there is a difference between an amendment that merely corrects the defendant’s name and one that brings a new party into the action – an amendment to correct the name under which the right party is sued is permitted, while one that has the effect of brining in a new party will be refused. 

In ruling that Plaintiff’s failure to name Cintas No. 2 was a fundamental defect, the court emphasized that, although they have similar names, Cintas No. 2 is a separate legal entity from Cintas and a summons which does not name the party intended to be sued fails, as a matter of law, to give notice to that party that an action has been commenced against it.  Because Cintas No. 2 was not named in the summons, the circuit court did not have personal jurisdiction over Cintas No. 2, even if Cintas No. 2 was served with the summons.  The Court did not view this as a case where the entity clearly and unequivocally intended to be sued was simply misnamed.  Plaintiff’s amendment subsequently naming Cintas No. 2 also did not correct the misnaming of the only party who was unequivocally intended to be sued; rather, it replaced Cintas with an entirely new and distinct party – Cintas No. 2.  In order to exercise personal service over Cintas No. 2, the amended complaint naming Cintas No. 2 therefore had to be served on Cintas No. 2. Because this did not occur, the court lacked personal jurisdiction over Cintas No. 2 and the default judgment was vacated.

While acknowledging that Cintas No. 2 held itself out to the public and to Plaintiff specifically as Cintas, the Supreme Court rejected Plaintiff’s argument that Cintas No. 2’s doing so rendered Plaintiff’s defects technical, not fundamental.  The Supreme Court reiterated that Cintas and Cintas No. 2 are distinct and separate legal entities and that the summons served on Cintas No. 2 named Cintas, not Cintas No. 2, as the party being sued, depriving the court of personal jurisdiction over the unnamed party – Cintas No. 2. 

Justice Bradley, joined by Chief Justice Abrahamson, dissented, claiming that the majority failed to properly examine the misnomer argument and that the majority’s ruling creates a bright line rule that a misnomer which happens to state the correct name of another legal entity is transformed from a technical to fundamental defect.

The facts of the case are straightforward:  the Milwaukee Journal Sentinel made an Open Records Request of the City of Milwaukee Police Department of computer-aided dispatch records and related incident reports for fourteen crime categories for a two-week period in March 2010.  See Milwaukee Journal Sentinel v. City of Milwaukee, —- WI —-,¶ 8, — N.W.2d —-, 2012 WL 2401566 (2012).  The City found that 2,312 dispatch records and 743 incident reports were responsive to the Journal Sentinel’s request.  Id.  The City requested $2,018.80 in advance for the location and copying of the requested records.  Id.  After numerous modifications to the Journal Sentinel’s requests and the City’s response on the charges to be made in response to those requests, the Journal Sentinel requested an incident summary for sexual assaults during the year of 2009.  Id. at ¶ 12-13.  The City requested advance payment of $3,516.75, over $3,000 of which were costs associated with the time spent reviewing and redacting the records.  The Journal Sentinel refused to pay the demanded amounts and commenced suit against the City, seeking an order compelling the City to disclose the records without charges for redacting.  This Case reached the Wisconsin Supreme Court on bypass from the Court of Appeals. 

Chief Justice Shirley Abrahamson, perhaps the member of the Wisconsin Supreme Court most committed to Wisconsin’s Open Records Law, authored the majority of opinion of the Court.  After reviewing Wisconsin’s strong commitment to open government and the fact that the law does require deletion of certain information that is not subject to disclosure, Chief Justice Abraham then turned the focus on the fees that may be imposed under the Open Records Law.  Specifically, Wisconsin Statutes Section 19.35(3) provides that the “actual, necessary, and direct cost” of reproduction and transcription, photographing and photographic processing, location of, and mailing or shipping of the requested records may be charged to the requester.  Id. at ¶ 25.  Chief Justice Abrahamson spoke for the majority in rejecting the City’s argument that redaction costs are necessarily included in the “location” and “reproduction,” based on the standard definitions of those words, of the requested records.  Id. at ¶ 26.  The majority opinion gave its observation that the “language of Wis. Stat. § 19.35(3) is not particularly complex” and that the “legislature provided four tasks for which an authority may impose fees on a requester:  “reproduction and transcription,” “photographing and photographic processing,” “locating,” and “mailing or shipping.”  Id. at 33.  It then noted that it would be an “unnatural reading” of the statute to include costs of redaction into any of the categories for which charges may be imposed.  Id. at ¶ 38. 

The majority noted the technological advances that had been made in recent years and that a court may entertain a “creative” reading of a statute if it is necessary to further the statute’s purpose or prevent an absurd result.  Id.  Ultimately, however, the majority concluded that because the Open Records Law’s purpose is to “provide the people of Wisconsin with the greatest possible information regarding the affairs of the government,” it could not accept the City’s unnatural reading of the fees that may be imposed under the Open Records Law.  Id. at 39-40. 

Justice Patience Roggensack filed a concurring opinion, which was joined by Justice David Prosser, Justice Annette Ziegler and Justice Michael Gableman.  She noted that although the policies underlying the Open Records Law are clear, the “legislature did not anticipate voluminous public record requests,” as evidenced by the “very low” dollar amounts referenced in the Open Records Law.  Id. at ¶¶ 74 and 75 (noting that Wis. Stats.  § 19.35(3)(c) permits imposition of location fee if the cost is $50 or more and § 19.35(3)(f) authorizes prepayment requirements if the fee imposed will exceed $5).  She then referenced a previous decision of the Court, Osborn v. Board of Regents of the University of Wisconsin System, 2002 WI 83, 254 Wis.2d 266, 647 N.W.2d 158, for the argument that redaction costs of over $300,000 could have been incurred by the University (but, in actuality, the taxpayers in Wisconsin) to comply with the records request. She disagreed with the justness of shifting of the financial burden of a record requester onto taxpayers and urged the legislature to revisit the Open Records Law to “determine whether the taxpayers should bear the full financial burden for public record requests or whether requesters should be active participants in the cost involved in required record separations.”  Id. at ¶ 81. 

Justice David Prosser filed a concurring opinion and joined Justice Patience Roggensack’s concurring opinion.  He believed that a “shrewd requester” would be able to “obtain valuable information at little or no cost so long as they are able to minimize or avoid the ‘four specific tasks.”  Id. at 62 (citation omitted).  He also expressed his opinion that permitting authorities to impose costs necessitated by a records request would limit “malicious, frivolous, or unreasonable requests.”  Id. at ¶ 65.  Consequently, Justice Prosser joined in Justice Roggensack’s concurrence.

Only time will tell if the legislature takes Justice Roggensack up on her request to revisit the charges that may be imposed under the Open Records Law.  Until such time that it does, however, records requesters in Wisconsin will continue to receive full support of the Wisconsin Supreme Court, so long as their requests (or any challenges arising therefrom) comport with a strict constructionist reading of the Open Records Law.

Currently, sec. 767.511(1)(a) states that a support order must be stated as a fixed sum unless the parties agree, via stipulation, to use a percentage of the payor’s income in the child support order. sec. 767.34(2)(am)(1).  However, even then, certain conditions must be met. In Tierney, the father was ordered to pay a set monthly amount of child support, but was also ordered to pay a percentage of his bonus income towards child support for the minor children.  Tierney argued that sec.  767.511 and sec. 767.34(2)(am)(1) prohibits percentage orders unless a) there is a stipulation and b) the exceptions of 767.34(2)(am)(1) are met.

The court of appeals, noting that no cases about mixed child support orders exits, examined case law relevant to maintenance.  In Hefty v. Hefty, 172 Wis.2d 124, 493 N.W.2d 33 (1992).  In Hefty, the husband was ordered to pay maintenance of $5,000 per month, plus 20% of his bonus income to the wife.  The supreme court held that percentage standards in maintenance cases are permitted in “very unusual circumstances.”  The court classified discretionary, unknown bonuses as falling within this category since they cannot be predicted.

The child support situation parallels Hefty. The court of appeals first noted that the statute does not completely prohibit percentage orders; rather, if the parties agree, via stipulation, that child support shall be a percentage rather than a fixed sum, that a percentage standard could be used.  In this case, while there was no stipulation, there are “very unusual circumstances” – namely that Mr. Tierney receives a bonus each year, of an unknown amount, and that the bonus money would clearly be subject to child support.  As such, having a monthly obligation based on known income, as well as a percentage order regarding the discretionary bonus, was appropriate in child support cases as it is in maintenance cases.