Wisconsin's new "tort reform" package eliminates some litigation tools now available to plaintiffs and adds some tools for defendants. Some of the changes may have large effects in certain circumstances, some will apply more generally in all litigation, and some will arise only in limited cases.
Gov. Scott Walker introduced the measure as Senate Bill 1, the very first in his new administration. With new Republican majorities supporting him in both the Assembly and Senate, the bill was considered, amended, and adopted in just 15 days. Gov. Walker signed it today. "Improving our state's legal climate is important to creating an environment that allows the private sector to create jobs," the governor said, adding that "lawsuit reform" means Wisconsin is "no longer the Alabama of the North."
The bill certainly does not eliminate the prospect of litigation against businesses, but it does make it harder to sue and recover in some respects. Whether that is beneficial in a given case depends on whether you're the one who needs to sue or needs to defend.
The bill applies to actions filed after it takes effect, which will be upon publication about 10 days after its signing. News media have reported a flurry of personal injury cases being filed now to avoid restrictions included in the new bill. Here is a look at key provisions (with new statute sections noted for reference):
New Rules Limit Strict Liability in Product Liability Cases
New rules limiting strict liability in products liability cases are probably the most noticeable change for many businesses. (Sec. 895.045(3).) Establishing strict liability leaves manufacturers with few defenses, and the bill makes proof a bit harder.
For example, a strict liability products claim must now be dismissed if the damage was caused by an "inherent characteristic of the product that would be recognized" by someone who normally used it. (Sec. 895.047(3)(d).)
Clearer criteria are now set to determine whether the product was defective. (Sec. 895.047.) Also, products will be presumed not defective if they comply with applicable state and federal regulations or specifications. (Sec. 895.047(3)(b).) Where the operator of the product was legally drunk or using drugs, that — rather than a defect — is presumed to be the cause of injury. (Sec. 895.047(3)(a).)
Comparative fault will now be a key factor in product liability cases. A plaintiff whose own responsibility for the injury exceeds the percentage attributed to the defective condition of the product cannot collect. (Sec. 895.045(3)(b); see also 895.947(3)(c).) A plaintiff whose percentage of fault is less than the product's can still collect, but the award will be reduced proportionately. (Sec. 895.045(c)(3).) The plaintiff's liability will be compared against the liability of the defendants as a group, however, not against each defendant individually.
A product defendant who is 51 percent or more strictly liable for the injury will be jointly and severally liable, meaning that the plaintiff can recover the entire amount of available damages from that defendant alone, and that defendant must bring contribution actions against other liable defendants to offset the payment. (Sec. 895.045(3)(d).) Defendants with liability less than 51 percent are responsible only for their own shares.
The bill reduces the exposure to distributors or dealers for claims based on defects in products they handle. Generally speaking, they will have no liability for products they receive and pass on in a sealed container. (Sec. 895.047(3)(e).) If jurisdiction over the manufacturer is established in the suit, distributors or sellers are dismissed from the action. (Sec. 895.047(2)(b).) However, a distributor may be liable for the entire claim if the manufacturer is not subject to jurisdiction in Wisconsin. (Sec. 895.047(2)(a).)
Evidence of remedial measures taken after the sale of the allegedly defective product can be used only to show that a reasonable alternative design existed at the time of sale. (Sec. 895.047(4).)
Claims are not permitted against products made more than 15 years before accrual of the claim unless the manufacturer specified the product would last longer. (Sec. 895.047(5).) Claims for harm from a latent disease are not subject to this 15-year limit.
Risk-Contribution Theory of Liability
The risk-contribution theory of liability in Wisconsin also was modified. Under the Supreme Court's 2005 ruling in Thomas v. Mallett, 2005 WI 129, where a child who suffered lead poisoning could not prove specifically which company made the white lead he ingested, any manufacturer in that market could be held liable.
Under the new law, such a plaintiff can bring a risk contribution claim only against a manufacturer of a product that was sold in the state and was chemically identical to the specific product claimed to be defective. (Sec. 895.046(4).) The suit must name as defendants the manufacturers of at least 80 percent of the relevant product. Id. This change is seen as better distributing liability to those more likely to be at fault. Only products sold in Wisconsin within 25 years before the plaintiff's claim accrued can be named (Sec. 895.046(5).).
Punitive damages will be capped at two times compensatory damages or $200,000, whichever is greater. (Sec. 895.043(6).) Contrary to some media reports, legal standards for obtaining punitive damages will not change. The Legislature rejected Gov. Walker's move to impose stricter requirements after critics said it would become too difficult to obtain punitive damages in lawsuits against drunk drivers who kill or injure others. Likewise, the cap on punitive damages will not apply to lawsuits related to operating a motor vehicle while intoxicated. Id.
There is no statutory cap on punitive damages now, something plaintiffs have sometimes used as a threat during settlement negotiations.
Expert witnesses in all cases — civil and criminal alike — will be held to a higher standard. The new bill adopts the Daubert standard used in federal courts and most other states. Qualified experts must reliably apply reliable principles and methods to sufficient facts or data, or their testimony will be excluded. (Sec. 907.02.) Under Wisconsin's old standard, scientific, technical, or specialized testimony was allowed without a specific showing that it was reliable or reliably applied.
Frivolous claims may now result in payment of damages to the opponent. (Sec. 895.044.) Under current law, a court may find a litigant's lawsuit or conduct frivolous and may impose sanctions that could include warnings, payments to the court, dismissal of the case, or an award of attorney fees incurred by the other party in responding to the frivolous conduct. (Section 802.05(3).)
Under the new measure, a damages award also is available. A party may now bring a motion at any time during the litigation and seek to show the court by clear and convincing evidence that an opponent's conduct is frivolous, including because it lacks basis in law or is brought in bad faith or solely for harassment. If the court agrees, it may impose sanctions even if the opponent withdraws the improper conduct in 21 days and must award costs and attorney fees as damages if the impropriety is not withdrawn or corrected in that time.
The sanctions in Sec. 802.05 remain in effect, and it is not clear how the two laws will relate.
Another new provision requires that if these damages are affirmed on appeal, or if new frivolous conduct surfaces during the appeal, the appeals court must send the action back to the lower court for an award of attorney fees. (Sec. 895.044(4), (5).) Until now, such actions by the court of appeals were discretionary.
Health Care Quality Improvement Reviews and Reports
Health care quality improvement reviews and reports or employee statements required by the state may not be used in any civil or criminal proceeding against the health care provider. (Sec. 146.38(2m).) This is broader than the current ban, which prohibits use of quality improvement reviews only in personal injury actions against the provider and makes them available if subpoenaed in criminal actions.
Providers' Immunization From Criminal Liability
Health care providers are immunized from criminal liability for negligent conduct that leads to the death or injury of a patient. (Sec. 940.08.)
Damages Caps for Long-Term Care Providers
Long-term care providers, such as nursing homes, assisted living facilities, and hospices, will now benefit from the same damage caps in medical malpractices actions. Non-economic "pain and suffering" damages are limited to $750,000, for example. (Sec. 893.55.) Actions against long-term care providers must be brought within three years of the date of injury or within one year of the discovery of the injury, but never more than five years after the act or omission at issue. (Sec. 55(2), (4).)