The Supreme Court of the United States effectively ended such use in June, when it handed down its opinion in J. McIntyre Machinery, Ltd. v. Nicastro.  Robert Nicastro severely injured his hand while using a metal-shearing machine.  Nicastro injured his hand while using the machine in New Jersey.  The machine had also been purchased in New Jersey.  While the machine had been purchased from a U.S. distributor who had, in turn, purchased the machine from the manufacturer, McIntyre, McIntyre actually manufactured the machine in England.  Further, McIntyre was also both incorporated and operated in England.  Despite never having advertised in or sent goods to New Jersey, the New Jersey Supreme Court, applying the stream of commerce theory, found that the sale of the machine to the U.S. distributor subjected McIntyre to jurisdiction in New Jersey. 

                 In a four-justice plurality, Justice Kennedy held that because McIntyre did not engage in any activities that revealed intent to benefit from the protection of New Jersey’s laws, McIntyre had not purposefully availed itself to jurisdiction in New Jersey.  In a concurrence, Justice Alito joined Justice Breyer in declining to adopt the plurality rule, noting that an isolated sale, even if accompanied by efforts to sell goods within the state, is not sufficient for personal jurisdiction.  

            Where does that leave us?  After Nicastro, what is purposeful availment?  Justice Kennedy noted that McIntyre did sell its goods to a U.S. distributor but that “it is (McIntyre’s) purposeful contacts with New Jersey not with the United States, that alone are relevant.”  How one can sell into the American market but not into particular states is unclear.  The importance of settling this issue is increased given the rapid growth of the selling of goods through the internet. 

          Although NLRA issues are commonly raised in union settings, the NLRA applies to non-union settings and non-union member employees who collectively raise issues of the terms and conditions of their employment.  More specifically, “Section 7” of the NLRA provides that employees have the right to self organization, to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.  See 29 U.S.C. § 157.[1]  Section 7 activity includes non-unionized employees’ “concerted” efforts at addressing complaints about the terms and conditions of their employment and extends to “concerted” efforts through social media outlets. 

          Because of the informality of social media postings, when employers are challenged for making adverse employment decisions because of an employee’s social media communications, a defense is often the informality and personal insults (usually directed at supervisors) included in the communications.  For Section 7 activity to lose its protections under the NLRA, however, it must be determined to be “opprobrious,” which is not satisfied merely because of swearing, sarcasm, or name-calling, in the context of a conversation that is otherwise related to the terms and conditions of employment or supervisory actions.  For example, an employee’s reference to her supervisor being a “scumbag” remained protected activity since it was made in the context of objecting to supervisory action.  Also, an employee’s reference to her employer company’s owner as an “asshole,” made in the context of objecting to faulty tax withholding (that resulted in multiple employees owing money for tax that was not properly withheld), was protected as both a “group complaint” and contemplated future group activity.  (Amusingly, the NLRB responded to the employer’s contention that the reference to the owner being an “asshole” was defamatory by stating that a statement “will not lose its protected status unless it is not only false but maliciously false,” and indicating that the employee’s Facebook postings “to the extent that they constituted statements of fact that could be alleged as defamatory, were not even false, much less maliciously false.”)  

          The context of the social media “conversation” was also significant.  The conversations that called for (and received) coworker comments and support, that were conducted in preparation for a meeting with supervisors, or that succeeded related discussions with supervisors were significant to the determination that the conversations constituted “concerted activity” for employees’ “mutual aid and protection,” and were not merely expressions of individual interests.  For example, where luxury car salespeople expressed concern about their employers’ decision to serve “inexpensive food,” e.g., hot dogs, chips, etc., at an automobile launch event and the impact it would have on their commissions, an employee’s Facebook photograph album, with accompanying descriptive criticisms, was found to be concerted activity related to the terms and conditions of employment.

          On the other hand, a bartender was permissibly terminated by his employer restaurant/bar because of a Facebook conversation he had with a non-employee, in which the bartender was critical of the employer’s tip-sharing policy.  The NLRB explained that the bartender’s complaints were not protected, because the topic of his posts (which the NLRB conceded would constitute “terms and conditions” of his employment) were never discussed with his coworkers, before or after his posting, and as a result, had not constituted “concerted activity.”  (In fact, at least three of the NLRB’s summarized cases were found to not involve “concerted activity,” because the speaker never had addressed his or her complaints with co-workers in an attempt to initiate group action.) 

          A union was found to have violated the NLRA by videotaping “interviews” of non-union laborer worksite crews about the workers’ immigration statuses and later posting the videos on You Tube and the union’s Facebook page.  The NLRB found that the union had engaged in a host of errors, including interfering with their performance for a nonunion employer, threatening to call immigration authorities, by videotaping/photographing the exchanges, and by posting the videos to Facebook and You Tube. 

          Perhaps the most practical lessons for employers are ensuring that their social media policies are not overly broad.  Many of the employers at issue in the NLRB’s example cases were guilty of having crafted policies that were too-broad in their prohibitions and failed to make necessary exceptions for conduct that would constitute concerted activity entitled to the NLRA’s protections.

          The NLRB was definite in striking down many of the subject employers’ social media policies, including those that prohibited employees from using social media outlets to:

           (1)  discuss or make disparaging remarks about the employer or supervisors;

           (2)  engage in “inappropriate” discussions about the company, management, and/or coworkers;

           (3)  violate, compromise or disregard the rights and reasonable expectations as to privacy or confidentiality of any person or entity;

           (4)  constitute embarrassment, harassment or defamation of the employer or its personnel;

          (5)  make statements that lack truthfulness or that might damage the reputation or goodwill of the employer or its personnel;

          (6)  talk about company business, make any post that they would not want their manager/supervisor to see or that would put their job in jeopardy, or from disclosing inappropriate or sensitive information about their employer.

At the very least, in light of the NLRB’s report, social media policies should specifically carve out an exception in the instances of application to “Section 7” activity. 

          Additionally, multiple employers in the NLRB’s example cases had policies prohibiting employees from depicting, in their personal social media accounts, photographs or videos of the employer (or other visual evidence of an employer, its brand, products, etc.).  The Board explained that the policies were overly broad because they would, as an example, unlawfully prohibit an employee from posting pictures of the employees picketing (labor matters) in front of the employer’s store.

          Consequently, although Facebook, Twitter, and other social media outlets are thought to be exclusively personal, they also represent employees’ modern-day method of discussing their collective employment interests, as well as their perceptions of their employer’s violations of those interests.  Employers should exercise caution in responding to an employee’s social media posts about their employment to ensure that any resulting disciplinary action does not violate the NLRA’s protections of concerted activity.  Moreover, in crafting social media policies, if an employer chooses to do so, an employer should just as carefully navigate around Section 7 rights to ensure that otherwise well-intentioned policies do not run afoul of the NLRA. 

Ferris concerned Ferris’ purchase of real property in Muskego from Location 3 Corporation.  After closing, Ferris discovered that the landfill next to his property was a Superfund site.  Ferris filed a complaint against Location 3 as well as three agents of Location 3 individually, alleging that they knew about the Superfund site but failed to disclose it on the real estate condition report.  The defendants moved for partial summary judgment alleging (in addition to other arguments) that the three named individuals should be dismissed because there were no facts pled to support piercing the corporate veil.  The trial court granted summary judgment against the three individuals on the grounds that there was nothing in the record indicating that they acted outside the scope of their authority as agents of Location 3. 

The Court of Appeals reversed the trial courts’ dismissal of the three individuals, noting that “Wisconsin case law has firmly established that individuals are liable for their own tortious conduct” and that the individual defendants could not hide behind the corporate veil.  In so ruling, the Court of Appeals relied on three Wisconsin Supreme Court cases which addressed the issue:  Oxmans’ Erwin Meat Co. v. Blacketer, 86 Wis. 2d 683, 273 N.W.2d 285 (1979), Hanmer v. DILHR, 92 Wis. 2d 90, 284 N.W.2d 587 (1979), and Stuart v. Weisflog’s Showroom Gallery, Inc., 2008 WI 22, 308 Wis. 2d 103, 746 N.W.2d 762.  The Court of Appeals quoted from Hanmer:

The general rule is that the agent, as well as the principal for whom he is acting is responsible for the tortious acts of the agent.  In such situations the corporate shield protects only those who would otherwise be vicariously liable, not those whose own conduct is called into question.

Based on the above cases, the Court of Appeals concluded that it was not necessary for Ferris to show that the Location 3 agents acted outside of the scope of their authority in order to hold them personally liable.  The Court ruled that they may held personally liable if a fact finder finds that the engaged in tortious conduct, regardless of whether or they acted on behalf of Location 3 when they did so.  Accordingly, the Court of Appeals reversed the trial court’s ruling to the contrary.

Wohlers is a grandparent visitation case involving the special grandparent visitation provision set forth in sec. 767.43(3) Wis. Stats.  The special grandparent visitation statute applies when  a) there is a non-marital child whose parents have not subsequently married; b) the paternity of the child is established in this state, or another, if the grandparent filing the petition is a parent of the child’s father; and c) the child has not been adopted.

In Wohlers, the mother of E.B. was in jail and the maternal grandparents had assumed the care of the child for approximately 5 years.  Steve Wohlers was adjudicated E.B.’s father when the child was approximately 3 years old.  Once adjudicated the father, Wohlers was granted periods of physical placement with E.B.  The grandparents filed a motion allowing them to intervene and establish vistitation with E.B.  The parties subsequently entered into a stipulation granting sole custody to the Wohlers and visitation to the grandparents.  In a two-week period, Wohlers would have placement with E.B for nine days and the grandparents would have placement for five days. 

Wohlers then sought to amend the stipulation and filed a motion to establish or eliminate grandparent visitation starting with the 2007 – 2008 school year.  Wohlers, at a status conference on the matter, requested a hearing to determine whether the grandparents even had standing to assert visitation rights because there was no “significant triggering event” justifying intervention in the parent-child relationship under Holtzman v. Knott, 193 Wis. 2d 649, 533 N.W.2d 419 (1995).  After briefing the issue, the court denied Wohler’s motion regarding the grandparent’s lack of standing to assert visitation.  At trial, Wohlers submitted a plan outlining his proposed visitation schedule beginning with the school year.  Wohlers’s schedule allowed the grandparents one weekend per month with E.B., one mid-week evening visit per week upon his approval, and one vacation of up to seven days per year.  The Dane County Family Court Counseling Service (DCFCCS) and the GAL recommended every other weekend visitation during the school year.  The court only addressed school year placement.

The trial court found that the DCFCCS and the GAL’s recommendations of alternate weekend visitation to the grandparents was in E.B.’s best interest.  Wohlers appealed, stating that 1) the trial court erred by declining to require the grandparents to prove the existence of a “significant triggering event” under Holtzman; 2) the trial court failed to give “special weight” to Wohler’s proposal as required by Troxel; and 3) the trail court erred in failing to address placement for non-school year time.

The court of appeals held that Holtzman did not apply because in that case, the party seeking visitation with the child was a woman who had been in a relationship with the child’s biological mother.  The Holtzman court held that in determining whether to grant a third-party visitation with a child, there must first be a parent-like relationship with the child, and there must be a “significant triggering event” warranting intervention into the parent-child relationship.  The Holtzman court noted that the legislative intent of the third-party visitation statute was that it would apply in situations of marriage dissolution.  In Holtzman, there was no marriage so the two factors did not apply.

Applying that reasoning, the court of appeals in Wohlers stated that since there was no marriage, Holtzman factors were not applicable.

Secondly, Wohlers argued that under Troxel, there was a rebuttable presumption that Wohlers’s proposed placement schedule was in E.B.’s best interest.  Under Troxel, it is presumed the fit parents act in their child’s best interest.

The Wohlers court of appeals held that the record clearly indicated that the court considered that there is a rebuttable presumption that Wohlers is acting in E.B.’s best interest, but that the GAL’s recommendations were appropriate.  The Wohlers court stated that “the court’s decision reflects an analytical process that shows the court applied the correct legal standard.”  First, the court rejected the idea that the experts’ opinions were entitled to any special weight.  The court found that E.B. was attached to both Mr. Wohlers and the grandparents. 

Lastly, the court of appeals held that the trial court erred in limiting the scope of the issues before the court to only the school year visitation.  The record is clear that Wohlers intended for any order to reflect school, as well as non-school visitation.  The issue was mentioned in correspondence and briefing to the court.

Olsen’s Mill, one of Wisconsin’s largest grain mills, entered into a Chapter 128 Receivership in 2009 by entering a written agreement for assignment for the benefit of creditors. The assignment was approved by the Green Lake Circuit Court and an interim Receiver was appointed with authority to sell any and all of Olsen’s property free and clear of all liens, with all liens attaching to the proceeds of the sale, subject to prior consent of the creditors holding perfected liens of the assets sold and the approval of the court.

Olsen’s largest creditor was a French bank, BNP Paribas, which had provided Olsen’s Mills with an 80 million line of credit, of which $58 million was due and owing. It’s clear that Paribas had a properly perfected security interest in various assets of Olsen’s Mill, that Olsen’s Mill defaulted on its obligations, but it was unclear what part of the amount owed represented a secured interest. The Receiver moved the Court to sell certain assets of Olsen’s Mill under terms proposed by the Receiver and consented to by BNP Paribas. These terms were explicit that the court not approve a bid over a secured creditors objection to the sale of collateral.

The Receiver held an auction on April 7, 2009. The highest bid was ultimately submitted by PRM Wisconsin LLC, an affiliate of Paribas. The second highest bid was submitted by Olsen’s Mill Acquisition Corporation (OMAC), affiliated with Olsen’s Mill’s prior management. At the hearing to approve PRM’s bid, Olsen’s Mill’s attorney objected saying that PRM’s bid was not in the best interest of the creditors as it would be difficult to operate the mill as a going concern under their bid and urged the court to accept OMAC’s bid. The Receiver objected stating Paribas had not consented to OMAC’s bid, and that under Ch. 128 if a secured creditor is to receive less than the full amount due and owing they must consent, further pursuant to the Auction Terms they must consent. The hearing was ultimately put on hold when Olson’s Mill announced it would file federal bankruptcy. After the federal court dismissed Olsen’s bankruptcy petition, the hearing was resumed on April 14^th where the Green Lake Circuit Court ultimately, after ignoring objections from Paribas, the Receiver and Baylake Bank, a second secured creditor, allowed for an adjournment during which OMAC negotiated a new handwritten bid and reconvened to accept OMAC’s handwritten bid. The Receiver upon receipt of the new bid again objected stating that not only had Paribas not consented to this sale but the new offer would disrupt the priority scheme for distribution as laid out in Wis. Stat. §128.17.  Paribas’ attorney again made his objections on the record.

The Green Lake Circuit Court, without citing any statutory text, approved OMAC’s revised offer stating it “works for the balanced interest of those who are entitled to be protected.” Paribas then appealed to the Wisconsin Court of Appeals, which upheld the Circuit Court in a roundabout rationale stating that Chapter 128 allows a circuit court to value a secured creditor’s security interest and the circuit court valued Pariba’s collateral at 9 million and because Paribas had been paid 9 million for their interest in the inventory under OMAC’s purchase, Paribas’ arguments were moot. Paribas then appealed to the Supreme Court of Wisconsin which overturned the Court of Appeals and remanded to the Green Lake Circuit Court for a determination of what remedy is available under the circumstances.

In overturning the Court of Appeals, the Supreme Court noted the significant lack of case law with respect to Chapter 128 proceedings. In coming to its conclusion, the Supreme Court relied upon the significant difference in treatment of secured and unsecured creditors under Chapter 128, and cited to an earlier case, Wisconsin Brick & Block Corporation v. Vogel, which held that without a secured creditor’s consent the court does not have the power under ch. 128 to sell property that is collateral, free of the creditor’s mortgage. [1]The Supreme Court rejected OMAC’s assertion that by consenting to the 128 voluntary assignment, Paribas had consented to the sale. In their rejection they noted the specific requirements of the Auction Terms, which required Paribas’ consent, as well as the multiple objections that Paribas made on the record. Further, the circuit court did note Paribas objection as a finding of fact. The Supreme Court held that by ignoring this objection, the circuit court erred by ordering a sale of the property without Paribas consent. OMAC then tried to offer the theory accepted by the Court of Appeals that the circuit court valued Paribas security interest at 9 million and since they received 9 million they were not injured by the sale.

This assertion was also rejected by the Supreme Court, because while they acknowledged it was unclear how much of Paribas claim was secured, even if Paribas secured interest had been satisfied as OMAC contended their remained a significant unsecured claim. Under the order of distribution approved by the Circuit Court, the order circumvented the mandatory order of distribution under Wis. Stat. §128.17(1) and provided for payment of certain unsecured claims, ignoring others, ultimately allowing $10 million to be paid for specified unsecured creditors as opposed to being distributed on a pro-rate basis among all unsecured creditors. The Supreme Court after rejecting OMAC’s arguments and reversing the Court of Appeals, ultimately remanded to the circuit court to decide what remedy would be appropriate. As two years has now passed since the circuit court had approved the sale, even Paribas has acknowledged reversing the sale at this point would not be feasible. On remand, the Court ordered that the circuit court take all necessary and appropriate actions to determine the existence of a remedy that is fair to all parties under the circumstances. It remains unclear at this point, what that remedy will be.

Joseph Casias was terminated from Wal-Mart Stores, Inc., in Michigan state, after he tested positive for marijuana.  See Casias v. Wal-Mart Stores, Inc., 764 F. Supp.2d 914 (W.D. Mich. 2011).  Michigan is one of the states that permits medical marijuana use (pursuant to the “Michigan Medical Marijuana Act”), and Mr. Casias was an approved user, as the result of his inoperable brain tumor. 

Mr. Casias prosecuted his wrongful termination claim under the theory that Wal-Mart illegally applied its drug policies to him.  To support the wrongful termination claim, Mr. Casias argued that the MMMA provided him a private cause of action, but the Michigan district court dismissed the claim, noting that a private right of action cannot be inferred without evidence of legislative intent to create the cause of action. 

Consequently, Mr. Casias alternatively argued that his termination violated public policy of Michigan vis-à-vis the MMMA.  The court also dismissed the public policy claim, stating that the purpose of the MMMA was to create an “affirmative defense” (the legislation did not effectuate any “de-criminalization”) to prevent the arrest of those who are “seriously ill who have a medical need to use marihuana.”   Id. (citing to M.C.L. § 333.26422(b)).

Finally, the court noted that the MMMA did not purport to regulation or mention private employment, and accepting Mr. Casias’ theory would “create a new protected employee class in Michigan and mark a radical departure from the general rule of at-will employment in Michigan.”  Id. (citing to Lytle v. Malady, 458 Mich. 153, 163, 579 N.W.2d 906 (1998)). 

What Mr. Casias did not argue, however, is that Wal-Mart, under either state disability discrimination legislation or the federal Americans With Disabilities Act, had any obligation to accommodate his prescribed cancer treatment.  That argument was, however, asserted in the case of Emerald Steel Fabricators, Inc. v. Bureau of Labor and Industries, Case No. SC S056265 (Oregon April, 14 2010).

The Emerald Steel case similarly involved Oregon’s “Medical Marijuana Act,” which authorizes persons holding registry identification cards to use marijuana for medical purposes and similarly exempts those individuals from state criminal prosecution.  See ORS § 475.306(a).  The employee in the Emerald Steel case obtained a registration card for the use of marijuana for anxiety, panic, and associated physical ailments.  The employee advised his supervisors of his prescription for medical marijuana, and a week after that notice was given, the employee was terminated.  The employee contested the termination under Oregon’s anti-discrimination statute.

After a convoluted discussion of the interplay between the federal Controlled Substances Act and Oregon’s Medical Marijuana Act, the Oregon court concluded that the federal law preempted the state law.  Id. (stating that “whatever the wisdom of Congress’s policy choice to categorize marijuana as a Schedule I drug, the Supremacy Clause requires that we respect that choice when, as in this case, state law stands as an obstacle to the accomplishment of the full purposes of the federal law”). 

While states are seeming to lead toward decriminalizing or authorizing of medical marijuana use, that “approval” has not been extended into private employment regulation.  Consequently, in these states, an individual who uses marijuana may be protected from criminal prosecution, but his or her employment will not similarly be protected.

In October of 1993, officers from the Rock and Walworth County sheriff’s departments executed a search warrant for the premises occupied by Juan Martinez.  During a pat down of Martinez, one of the officers found a “Dr. Grabow” pipe in Martinez’s pocket.  The pipe contained THC residue and Martinez was charged with possession of drug paraphernalia.  The trial court found Martinez guilty and Martinez appealed. 

Wis. Stat. § 961.573 provides “No person may use, or possess with the primary intent to use, drug paraphernalia to…inhale or otherwise introduce into the human body a controlled substance…”  Drug paraphernalia is defined, by Wis. Stat. § 961.571(1)(a), as “…all equipment, products and materials of any kind that are used, designed for use or primarily intended for…inhaling or otherwise introducing into the human body a controlled substance…”  Subsection (b)(2), however,  excludes from drug paraphernalia “Any items, including pipes, papers and accessories, that are designed for use or primarily intended for use with tobacco products.”

Like many pipes, the pipe found in Martinez’s pocket, the “Dr. Grabow” pipe, could be legally purchased in Wisconsin stores because it was intended for use with tobacco products.  The Court of Appeals ruled that a pipes actual use is irrelevant.  Thus, subsection (b)(2) excluded the pipe found in Martinez’s pocket from the definition of drug paraphernalia regardless of the fact that  it was being used for THC and had THC residue in it.

Factual Background

This ordinance was brought under Wisconsin Statute §9.20 which permits city and village electors to submit a petition to the governing body requesting that the body either adopt the ordinance attached to the petition or submit the ordinance to the local electors for a vote.  A petition under Wis. Stat. 9.20 was brought to the City of Milwaukee Common Council with an ordinance requiring paid sick leave for employees within the City of Milwaukee. The Common Council then elected to submit the ordinance to the local electors for a vote on November 4, 2008. Notice of the election, including the full text of the ordinance was published and posted as required under Wisconsin Statutes and the ballot question read “Shall the City of Milwaukee adopt Common Council File 080420, being a substitute ordinance requiring employers within the City or provide paid sick leave to employees?” The ordinance passed with nearly 70% affirmative vote and the ordinance became effective on November 12, 2008.

Circuit Court Challenge

Nearly immediately after passage the Milwaukee Metropolitan Association of Commerce, Inc. (“MMAC”) filed an action seeking declaratory judgment that the ordinance was invalid on multiple statutory and constitutional grounds and requested temporary and permanent injunctive relief, which they were granted. MMAC’s primary objections centered around the fact that the ordinance included two acceptable sick leave reasons that MMAC did not believe were within the commonly accepted understanding of sick leave and were not rationally related to the police powers of the City and therefore the ordinance was unconstitutional. These two accepted sick leave reasons were to seek relocation due to domestic or sexual violence or stalking and to prepare for or participate in a civil or criminal legal proceeding related to domestic or sexual abuse. Interestingly, the circuit court denied the City and 9 to 5, Inc. (an intervening defendant who collected the majority of petition signatures) request to sever those provisions from the ordinance. The circuit court agreed with MMAC and granted a permanent injunction.

Appeal

The Court of Appeals in reversing the circuit court made several important holdings. The first is that a statement under Wis. Stat. 9.20 is in fact a brief statement. The elector has several opportunities to review the full version of a proposed ordinance as a result of the extensive requirements to publish notice and the full ordinance, including access to the ordinance at the polling place. Further, ordinances can be lengthy and if MMAC’s theory that every element must be included in the statement, the statement would no longer be a brief and concise statement as the statute requires. Therefore, the more reasonable construction is that Wis. Stat. §9.20(6) requires a brief statement of the general purpose of the proposed ordinance, which this ballot question satisfied. In deciding that the purposes of the ordinance were rationally related to the City’s police powers, the Court of Appeals held that the question was not as MMAC posed it “whether the challenged provisions are rationally related to the state purpose of the ordinance” but “whether the challenged provisions are rationally related to any legitimate municipal objective” i.e. the health, safety and welfare of City residents.  The Court of Appeals in concluding that provisions were rationally related to a legitimate municipal purpose found that it is a reasonable assumption that a person who has been a victim of domestic or sexual abuse will have better physical and mental health if the abuse stops and it is further reasonable to assume that measures taken to assure that it stops, such as relocation or legal proceedings are obvious preventative measures.

MMAC further challenged the requirement of paid sick leave verse unpaid sick leave as not rationally related to health, safety and welfare of the City. The Court of Appeals quickly disregarded this finding it is reasonable to conclude that employees who receive paid sick leave will be more inclined to use it when necessary as opposed to unpaid leave and the fact that unpaid sick leave would accomplish man of the same goals does not make paid sick leave unreasonable. The Court of Appeals quickly struck down other challenges that the ordinance is preempted by the Minimum Wage Law, FMLA and Workers Compensation Act, stating it does not increase minimum wage or conflict with FMLA or the Workers Compensation Act. For similar reasons the Court of Appeals holds that the ordinance is not preempted by Federal Law, specifically the NLRA and LMRA. The Court of Appeals also rejected MMAC’s argument that the ordinance impaired contracts nor extended extra-territorial activities outside of the City’s boundary. Lastly, the Court of Appeals was forced to address MMAC’s challenge that if the ordinance is passed the two year safe harbor provision had already passed allowing voters to repeal the ordinance. The Court held such a ruling would be contrary to the reasonable construction of the statute since the two year period would have ended before the injunction was lifted and the ordinance enacted.

Legislative Intervention

Amidst the confusion and commotion surrounding the State Budget Repair Bill, another bill was passed by republican senators on March 3, 2011 known as  SB 23. SB 23 preempts cities, villages, towns and counties from creating ordinances requiring employers to provide employees with leave to deal with family, medical or health issues. The bill basically provides that the State of Wisconsin’s Family and Medical Leave Act is the law of the land,  is uniform and consistent and ordinances taken by a municipality requiring employers to provide leave would be inconsistent with, go against the spirit of and defeat the purpose of that Act. On April 12, 2011 the Wisconsin State Assembly passed SB23 on April 12, 2011 and Governor Walker has stated he will sign the bill into law.

On December 22, 2010, the Court of Appeals released an opinion in the case Champion Companies of Wisconsin, Inc. v. Stafford Development, LLC, 2011 WI App 8.  In a case regarding bricks used in construction of a building, the Court held that plaintiff is not entitled to $344,000 in damages to replace defective bricks which could be repaired for $11,000 even though no credible evidence was offered regarding the diminished value of the property at issue.   In Champion, defective bricks were used in the construction of a home.  The home builder sued the company he purchased the bricks from and offered evidence that the bricks were worthless and that the only solution was to replace them all at a cost of $344,000.  Defendant offered evidence that it would cost less than $7,500 to correct the defect by re-staining the house.  Neither party offered credible evidence as to the property’s diminished value.  After finding that the bricks were defective, the circuit court applied the economic waste rule and entered judgment based on defendant’s evidence of $7,500 to re-stain the bricks. 

On appeal, plaintiff asserted that the court misapplied the economic waste rule because there was no credible evidence of the property’s diminished value offered and thus, the economic waste rule did not apply.  The Court of Appeals rejected that argument and ruled that the economic waste rule applies even when no evidence of diminished value is offered by either party and the fact-finder is always free to consider whether or not a given repair constitutes economic waste.   Thus, it was not error for the circuit court to determine that replacing all of the bricks would constitute economic waste and award damages accordingly, even in the absence of evidence of the property’s diminished value. 

In Lyman, the parties entered into a stipulation regarding the husband’s (Scot’s) child support obligation.  The 1999 stipulation provided that the husband would pay 25% of his gross income for purposes of child support up to $185,000 in earnings.  On anything above that income level, Scot would pay 5% towards child support, but the funds would be held in a trust for the children.

In 2002, Scot entered into a 10-year contract with St. Jude Medical where he was guaranteed commissions of at least $725,000 per year for the first four years of the contract.  The wife (Sally) moved the court to modify the previous child support order, and the family court commissioner entered an award of $10,275 per month.  Upon de novo review, the circuit court judge modified the amount to $6,250 per month.

Unfortunately, Scot lost his job soon after the circuit court’s award.  Scot sued his employer for wrongful termination.  Scot and Sally then entered into another stipulation incorporated a graduated child support obligation; however that agreement was again modified in 2007 when the older son was emancipated.  Under the 2007 stipulation, Scot would pay the statutory 17% of his monthly income up to $6,999, 14% of his monthly income between $7,000 and $12,499, and 10% of his monthly income over $12,499.

Scot settled his lawsuit against St. Jude’s in June 2008.  He received $3,490,000 and reported all of the settlement as income on his 2008 tax return.  He paid $1,180,000 in attorney fees.

After receiving the settlement, the Lymans stipulated to a shared placement schedule, with the same child support obligation as set forth in the 2007 stipulation and order.  A hearing regarding how to treat the settlement money for purposes of child support was held later, and the court found that all of the settlement was income to Scot and that the children were ultimately deprived of that money.  The circuit court concluded that, after deducting costs Scot incurred to obtain the settlement, $2.2 million was income subject to child support.  The court awarded Sally $220,000.  Scot appealed.

Scot argued on appeal that unallocated settlements are not income for purposes of child support.  Scot cited Krebs v. Krebs and Weberg v. Weberg and argued that in those cases, unallocated settlements were not considered income.  The problem with that argument was that those cases pertained only to maintenance, which is a discretionary award based on fairness and need, versus child support which is an obligation from parent to child. 

Scot’s second argument on appeal was that because his settlement included an unallocated portion for the loss of a contractual right to sell his company, the settlement is not income.  The court of appeals noted that Scot presented no expert testimony to show that the lost right to sell his company was different from the replacement of his income that he received in the settlement. 

Scot then argued that the court applied the incorrect prior order, and that the court should have followed the terms set forth in the 2005 order, which limited child support to $6,250 per month.  The court of appeals held that Scot willingly entered into the 2007 stipulation, which was the last binding order.  Scot had not grounds for complaining about the Order now when he voluntarily entered into the stipulation.

Lastly, Scot argued that any money he owes in child support from the settlement income should be placed in trust for the children.  The court of appeals disagreed.  When a party argues that a trust should be used, the party making the argument must show that the other party would not use the money for the intended purpose.  In this case, there was no showing that Sally was incapable of using the child support monies. 

In summary, the court of appeals affirmed that ALL gross income is subject to child support under the administrative code.  If a party argues that money is not gross income, he/she has the burden of showing why that is the case.  The court also affirmed that unallocated settlements are treated differently depending on whether the issue is maintenance or child support.