The Wisconsin Supreme Court recently held that a circuit court judge who appointed a referee to resolve disputes delegated authority that he could not delegate. Margaret Hickey discusses the case and its implications when using third-party decision-makers in family law.
In family law, decision-makers, such as a special master selected by the parties, can be used to achieve several goals:
- the case can be processed more quickly than through the court;
- if the matter can be handled informally instead of by litigation, it can save the parties money;
- if the parties wish to have a private proceeding, they can accomplish that with a referee or special master under Wis. Stat. section 805.06, or an arbitrator under Wis. Stat. section 802.12, and Wis. Stat. chapter 788.
A special master is especially helpful in cases that include analyzing past unreimbursed medical expenses, failure to pay variable expenses, or involving child placement and custody issues if the parents do not want to litigate in open court. In some counties, like Waukesha, they have forms to use for the appointment of a special master and it is fairly common.
Use of a special master in family law cases was condoned in Lawrence v. Lawrence1 (parties can stipulate to allow a third party to have impasse-breaking authority to make a major decision, including school choice), and in the unpublished but citable Rose v. Rose2 (court refused to remove special master on placement issues at request of parties).
But can we still use a special master in family law cases, after the decision in Universal Processing Services (Newtek) v. Circuit Court of Milwaukee County?3
In this case, the Supreme Court held that when a circuit court judge appointed a referee to resolve discovery and other disputes under section 805.06, he delegated authority that he could not delegate. The Supreme Court stated that “A referee may share judicial labor, but the Order of Reference may not allow a referee to assume the place of the Judge.”4
Universal Processing Services
In Universal Processing, the judge appointed a referee (a retired chief judge) to handle issues related to discovery disputes and to decide motions, including summary judgment motions. The circuit court judge retained the authority to review the referee’s decision based upon an “erroneous exercise of discretion” standard.
While no party objected to the appointment of the referee at the time of his appointment, after the referee heard 15 discovery motions and decided summary judgment motions, Universal Processing (Newtek) appealed to the judge. The judge agreed to review the referee’s decisions using a de novo standard, and he approved the Referee’s decisions.
Newtek appealed and lost before the court of appeals. Newtek did not follow proper procedure in filing a supervisory writ before the Supreme Court, but the court took the case under its “superintending authority” over lower courts. One reason for taking the case was the concern that many lower courts use referees, and this was a decision likely to affect many cases.5
The Supreme Court held that the trial court had “impermissibly delegated to the referee” its own judicial power to make decisions.6 Even though the court retained the power to review the decisions under the “erroneous exercise of discretion” standard, this was not sufficient.7
The party argued that the judge stated he would and did review the referee’s decisions de novo, but the Supreme Court was not persuaded, holding that the standard in the Order of Reference controlled. The stricter standard of “erroneous exercise of discretion” essentially made the trial court into an appellate court for purposes of review.8
Delegation and Definition
So, what can trial courts delegate, and what standard should apply to that delegation of authority?
Parties can still agree to have an arbitrator decide certain issues in a divorce under Wis. Stat. section 802.12(3). This might include disputes that courts dislike, such as resolution of variable costs and medical expenses, or disputes that need a speedier resolution than courts can accommodate, such as a school choice decision that needs to be made before the school year starts.
The key for the courts and litigants alike is to make sure that the trial court is not relinquishing its authority to oversee the result and perform a review. Such a review might be de novo if the delegation is to a special master, or the more rigorous standard that is required in arbitration referrals under Wis. Stat. section 802.12(3).
The key in the order appointing the special master, referee, or arbitrator is to define the review that the trial court will make. If the case is an arbitration, then the provisions of section 802.12(3) and chapter 788 will apply.
If instead, the parties wish to delegate the authority to make decisions, but have review in the circuit court then a de novo standard seems more appropriate under the reasoning of Universal Processing. Either way, the practitioner must be sure to explain to the client what he or she is relinquishing to the decision maker and what his or her rights will be to have that decision maker’s decision reviewed.
A Clear Definition Is Advised
It seems unlikely that parties will stop using a decision maker other than a judge or commissioner due to the back log in the courts, the high cost of litigation, and the need for decisions on issues that judges and commissioners do not want to deal with on a repeated basis.
However, to effectively delegate such decisions to a special master, referee, or arbitrator, the attorney must clearly define the matter delegated and the standard of review, and the client must understand what he or she may be relinquishing in that decision.