Memo To The New Justices: That’s Not How We Do Things On The Court

wisconsin-supreme-courtAt last month’s Conference on the Wisconsin Supreme Court, the panel discussing the Court’s business law cases during the 2008-2009 term began with an observation and a question.  The panel noted that there were three business law cases in which the votes of the Justices split on a 5-2 basis.  These cases were Farmer’s Automobile Ins. Assn. v. Union Pacific Ry., 2009 WI 73; Krier v. Vilione, 2009 WI 45; and Star Direct, Inc. v. Dal Pra, 2009 WI 76.  The question our panel asked was “Is this 5-2 split just a coincidence, or is something else going on?”

I cannot speak for my co-panelists, Tom Shriner and Leonard Leverson, and these comments should not be interpreted to reflect their views.  However, I have concluded that, taken together, the three dissents filed by Justices Abrahamson and Bradley in the aforementioned cases can be read as an clear admonishment to their two newest colleagues on the Wisconsin Supreme Court.

 The message that comes through to me, loud and clear, is one of disapproval of Justices Ziegler and Gableman for failing to adhere to the unwritten standards of professionalism that apply to the highest court in the State.  It’s as if these two members of the “old guard” feel it necessary to remind their colleagues that they now sit on a Supreme Court, and that there are certain things that one just doesn’t do as a Supreme Court Justice.  That the concerns of the dissenters have arisen in the context of three cases involving business law disputes is nothing more than a coincidence.

 There has been much speculation concerning dissension among the seven members of the Wisconsin Supreme Court.  Most of the speculation centers on the supposed divide between the “liberal” justices and the “conservative” justices.  One result of viewing the conflict through an ideological prism is a natural tendency to circle the wagons around “our guys” and to discount criticisms from the other side.  Certainly the dispute involving Justice Gableman’s election campaign, and the veracity of his campaign commercials, has been infected by an ideological bias on both sides.  This is an unfortunate portent. 

However, I do not read the dissents by Justices Abrahamson and Bradley in these three business law cases as having an ideological basis.    None of the three cases turned on the choice between adopting a liberal or a conservative rule of decision in a particular business law dispute.  In fact, none of the dissents strike me as particularly concerned about the specific rule of decision adopted by the majority opinion (a far too common example of the Court’s general lack of interest in corporate and business law in general, in my opinion).  I cannot characterize either side in these particular disputes as either “pro-business” or “anti-business.”

Instead, the two dissenters seem to be focused on taking Justice Gableman (author of the Farmer’s Automobile and Star Direct opinions) and Justice Ziegler (author of the Krier opinion) to task for failings of a non-ideological nature.

 If I had to summarize the message that Justices Abrahamson and Bradley are sending to their colleagues on the bench, it would be as follows:

 1. Don’t Be So Quick To Adopt One Party’s Characterization of the Other Party’s Case, Without First Comparing Those Claims To the Record

 Justice Ziegler’s opinion in Krier v. Vilione characterizes the plaintiff’s claim as essentially seeking damages for two businesses that he owns as a result of an accounting firm’s breach of duty to a third and distinct business owned by someone else.  If that were in fact the crux of the plaintiff’s case, it strikes me that the plaintiff would have a difficult time finding a law firm willing to file the compliant, much less obtaining a favorable ruling from the Court of Appeals.

However, there is nothing in the complaint that can be fairly read to make such an allegation, and the report of plaintiff’s damages expert, which the majority opinion quotes, does not support the majority’s characterization of the plaintiff’s case.  The dissent, by Justice Bradley, charges that the majority’s finding that the plaintiff lacks standing is the inevitable result of the majority fundamental misunderstanding the nature of the plaintiff’s claim.  It is certainly troubling that, on an appeal of a summary judgment motion, the majority cannot point to any pleading by the plaintiff that describes his own claim in this fashion.

Given the lack of any citation in the record to support its characterization of plaintiff’s claim, I can only surmise that the majority opinion reflects an overly credulous acceptance of the arguments presented in the defendant’s brief.  It is common for the parties in litigation to engage in hyperbole in describing the defects of their opponent’s case, and I would not be surprised if the defendant’s brief is the source of the majority’s description.  If that is the case, then the most charitable description of Justice Ziegler’s opinion is that it is guilty of adopting the defendant’s hyperbole wholesale.    

2. Don’t Read Prior Precedent To Decide General Principles of Law Extending Beyond the Scope of The Facts of Those Cases

One can only hope that an excessive reliance on the arguments of defense counsel is also responsible for the characterization of precedent that one finds in these three opinions.  In each case, the majority opinion describes and applies precedent in ways that extend beyond far beyond the facts of those cases.

 For example, Justice Gableman’s opinion in the Farmer’s Automobile case relies upon Quinn v. New York Fire Insurance Co., 22 Wis. 2d 495 (1964).  A sentence in Quinn that states “The award, on its face, does not comply with the requirements of the policy” is used by Justice Gableman in Farmer’s Automobile to support the assertion that “review of an appraisal award should usually be limited to the face of the award.”  The scope of review of the appraisal award was not an issue in the Quinn case, primarily because the court in Quinn found the appraisal at issue invalid.  There may be Wisconsin Supreme Court precedent that speaks to the proper scope of judicial review of a valid appraisal, but Quinn is not that case.  

 In the Krier case Justice Ziegler’s opinion discusses Jorgensen v. Water Works, Inc., 2001 WI App. 135.  Jorgensen adopted a test for determining whether a specific injury is to the corporation as a whole or whether the injury is to an individual shareholder of the corporation.  It held that a direct injury is suffered by the individual shareholder in circumstances where the violation of law inflicts a harm that is not shared by the other shareholders.  This test is most significant in the context of a closely held corporation, where one shareholder can use the corporate form to direct benefits to himself at the expense of a single remaining shareholder.  Justice Ziegler, in Krier, states flatly that the embezzlement of corporate funds is always an injury to the corporation, without considering whether, under Jorgensen, one shareholder’s embezzlement of  corporate funds serves to benefit himself while harming the only other remaining shareholder.  As Justice Bradley’s dissent points out, this is not a case where all of the shareholders are affected equally by the misappropriation.  Justice Ziegler’s opinion seems to abandon the Jorgensen approach in favor of a subjective declaration that the only person capable of suffering a direct injury in an embezzlement is the corporation.   

(Justice Bradley’s dissent in Krier is strangely silent on the majority’s treatment of Citizen’s State Bank v. Timm, Scmidt & Co., 113 Wis. 2d 376 (1983).  Justice Ziegler’s opinion characterizes Citizen’s State Bank as a case that supports accountant liability to third parties only in cases where the plaintiff shows detrimental reliance on information provided by the accountant.  In fact, the Citizen’s State Bank opinion expressly considered and rejected a rule that would have limited accountant liability to those persons with access to financial information prepared by the accountant, saying that “[t]he Restatement’s statement of limiting liability to certain third parties is too restrictive a statement of policy factors for this Court to adopt.” Citizen’s State Bank at 386.  Justice Ziegler’s discussion of Citizen’s State Bank in the Krier case inverts the precedent’s holding.)

Perhaps the most striking treatment of prior precedent occurs in Justice Gableman’s opinion in Star Direct.  The issue was whether a covenant not to compete can prohibit the solicitation of former customers, in addition to prohibiting the solicitation of current customers.  In the course of his majority opinion, Justice Gableman engages in a lengthy discussion of three prior Wisconsin cases where restrictive covenants included a ban on soliciting former customers.  While recognizing that none of these cases had ruled that such provisions were legally enforceable, or had even considered the issue of their legality, Justice Gableman  notes that the courts considering these cases “have been untroubled” by provisions of this type.

 Justice Bradley objects to this entire discussion in her dissent.  It is difficult to understand how the failure of the judges to affirmatively state their objection to such provisions in these prior cases should be read to constitute an expression of judicial approval of this type of restrictive covenant.  Justice Gableman concedes Justice Bradley’s point that past judicial silence on an issue is not evidence of approval.  However, Justice Gableman fails to explain why he raises these cases or what he thinks the silence of the court in these prior cases does prove.     

 3. Don’t Raise and Decide Questions of Law That Have Not Been Briefed By the Parties

 Finally, in the Krier case Justice Bradley objects to Justice Ziegler’s majority opinion on the grounds that it reaches out and decides several issues that were not briefed by the parties.  While the parties briefed the question of whether the plaintiffs had standing to assert their claims for injuries traceable to the accountants’ conduct, the majority opinion went beyond the issue of standing to hold that, even if standing had been established, public policy would bar any recovery for negligence or breach of fiduciary duty.  In addition, the majority opinion determines the appropriate statute of limitations for a breach of fiduciary duty claim and finds the claim to be barred.  Other than the standing issue, none of these legal questions were briefed by the parties.

Thus, the message form Justices Bradley and Abrahamson is clear: “That’s not how we do things on the Supreme Court.”   

 Justices Abrahamson and Bradley seem to believe that their dissents are drawing attention to legitimate and serious defects in the craftsmanship of the judicial opinions at issue.  However, one can’t help but wonder whether the targets of their criticisms will merely dismiss those complaints as nothing more than sour grapes from two liberals who came out on the short end of the vote.  The risk is that, come re-election time, Wisconsin voters will be tempted to view these types of criticisms as having a purely partisan motivation, and will discount them accordingly.   

Rick Esenberg has led several posts and comments on this blog that have treated the difficulties inherent in a system that relies upon an elected (as opposed to appointed) judiciary.   These difficulties include the question of whether it is possible to police the speech of judicial candidates and the question of whether large campaign donations by interest groups to judges create due process concerns.  To this list of difficulties, we can add one more: the infection of judicial elections by partisan politics may frustrate the public’s ability to have an objective discussion about the professionalism and competence of our current Supreme Court Justices.

This Post Has 2 Comments

  1. Terrence Berres

    Some might find it more interesting that Justice Bradley, joined by the Chief Justice, at one point puts this critique in terms of the judicial role being analogous to a baseball umpire’s, Krier v. Vilione, 2009 WI 45 ¶99.

  2. Richard M. Esenberg

    It certainly agree that ideological bias can frustrate an objective discussion of judicial craftsmanship. It can also push the justices into opposing “camps” which circle the wagons even when those ideological interests are not at stake.

    I would be more willing to see these cases as the “old guard” admonishing the “new guard” if I thought that these were sins that the Court regularly avoids, i.e., that we really don’t do things that way. I’m not sure that I can say that.

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