Tort Reform Update


WMC and a variety of other pro-business groups worked with the Wisconsin Civil Justice Council to craft Senate Bill 645/ Assembly Bill 773, which is moving its way through the Legislature. The bill had a hearing in the Senate Committee on Judiciary and Public Safety on Tuesday. The Assembly heard the bill on January 4th. This legislation is supported by thirty-two trade and business associations spanning a wide range of industries. One of the few organizations opposing the bill is the Wisconsin Association for Justice, an organization that represents the plaintiffs’ bar. WMC and our partners are pushing to make sure this bill is passed before the end of session. However, some legislators are placing the needs of trial lawyers over the need to rein in increasing litigation costs. With the end of session so close we need as much help as we can get to encourage state legislators to reduce litigation costs and stand with employers, not trial lawyers.

In many respects Wisconsin is a national model in how to improve a state’s business climate. CEO Magazine has ranked Wisconsin’s business climate the 10th best in the nation. However, one area where Wisconsin has stagnated is its litigation climate. A large reason for this stagnation is because of the drastic increases in transactional costs due to the increased retention of data that has come along with modern technology. The U.S. Chamber of Commerce’s 2017 Lawsuit Climate Survey ranked Wisconsin 20th in the nation for litigation climate, down from 15th in the nation in 2012. In a recent survey conducted by the U.S. Chamber of Commerce, 85 percent of corporate attorneys believe the state’s litigation environment will affect where their companies choose to locate and do business. This negative perception can be reversed with this bill’s common-sense reforms that modernize Wisconsin’s civil justice process. The legislation does the following:

  • First, SB 645/ AB 773 aligns Wisconsin’s rules on civil procedure for discovery with its federal counterparts ensuring the certainty and predictability in the law. In addition this bill adds a few additional reforms including the ability to stay discovery pending decisions on dispositive motions to resolve the lawsuit. A stay of discovery pending a court’s ruling on dispositive motions is important because these motions can change the scope of the suit or stop it completely.
  • Second, SB 645/ AB 773 would make Wisconsin the 49th state to federalize our state class action rules, which have not been substantially updated since the 19th century. Beyond the federalization, the bill would notably allow for an interlocutory appeal of class certification orders for all parties. Allowing both plaintiffs and defendants to have a right to an interlocutory appeal, instead of having to wait until the end of the lawsuit to appeal the certification, will make these actions run far more efficiently. Fifteen other states have a right to interlocutory appeal in their class action laws.
  • Third, SB 645/ AB 773 protects consumers from predatory consumer lawsuit lending practices. Consumer lawsuit lending is when a lender provides money to a consumer for purposes other than financing the litigation. This bill protects consumers by requiring a series of disclosures, prohibiting the lender from making decisions in the lawsuit, capping the interest rate and annual fees at 18 percent and $360 respectively, and requiring the disclosure of the loan to other parties in the suit.
  • Fourth, SB 645/ AB 773 takes a step forward in easing compliance costs for businesses being audited by private third-party audit firms looking for unclaimed property by banning the state from engaging in contingency fee contracts with these firms. The ban eliminates the perverse incentive for audit firms to be overly aggressive in their search for unclaimed property. The state would still be able to hire third-party firms using different fee structures.
  • Fifth, SB 645/ AB 773 revises Wisconsin’s “default” statute of limitations for miscellaneous claims to three years. This default provides ample time for plaintiffs to initiate a lawsuit, while reducing the burdens for the state and private parties for investigating stale claims.
  • Sixth, SB 645/ AB 773 changes the interest rates relating to the timely payment of insurance claims. The rate would be revised from 12 percent to prime plus one percent, which would mirror interest rates on general judgments and allow the rates to self-adjust consistent with markets.