James G. DeJong, a 1973 Carroll graduate and president of the Milwaukee law firm O’Neil, Cannon, Hollman, DeJong and Laing, will be inducted into the Phi Kappa Phi National Honor Society during a ceremony at Carroll University in April. Founded in 1897, this highly selective honors society was created to recognize and promote academic excellence in all fields of higher education and to engage the community of scholars in service to others.

A Mequon, Wis., resident, DeJong joined Carroll’s Board of Trustees in May 2008. He has served on the Board’s Executive and Institutional Advancement committees and was elected Board Chair in 2013. He is serving a three-year term.

Wisconsin Act 76 went into effect on March 1, 2014. This Act makes numerous changes to Wisconsin’s landlord/tenant law, Chapter 704 of the Wisconsin statutes. There are a number of changes that have an immediate impact on the ordinary course of a landlord’s business that landlords and their counsel should consider.

First, Wis. Stat. § 704.05 potentially expands a landlord’s ability to treat a tenant’s personal property as abandoned in an eviction action in the absence of a written agreement to the contrary. The statute’s technical revisions have arguably broadened the circumstances which trigger a landlord’s rights with respect to abandoned property.

Second, the law now addresses costs associated with “infestation of insects or other pests, due to the acts or inaction of the tenant…” The landlord may elect to allow the tenant to repair such damage at his or her own cost, or alternatively, may take such action as is necessary to repair such damage and seek reimbursement for the reasonable costs associated with such action.

Third, while landlords are still required to provide a check-in sheet to new tenants, landlords no longer need to provide a “standardized information” check-in sheet.

Finally, the Act created Wis. Stat. § 704.14 which requires a “Notice of Domestic Abuse Protection” be included in all residential rental agreements. The required notice sets forth protections for tenants facing eviction in certain instances of domestic abuse as well as tenant termination rights pursuant to Wis. Stat. § 704.16.

Copies of the new legislation can be read here. There are a number of other changes landlords and their attorneys will find particularly of interest. Further information about this bill and its impact on Wisconsin landlords can be obtained by contacting any member of our firm’s Real Estate Practice Group, or if a dispute has arisen, by reaching out to our firm’s Litigation Practice Group.

Employers’ social media and internet policies are a top enforcement priority for the NLRB. Below is a checklist that employers can use to create an effective social media policy. Please continue to visit the Employment LawScene™ for more policy pointers and practical guidance.

• Evaluate your business’ needs and goals.
• Take a stance on social media use—will you encourage, permit, or simply tolerate it?
• Understand and be familiar with the latest federal and state laws and NLRB rulings and guidance.
• Create a Social Media Policy that addresses your business needs and goals.
• Define “Social Media.”
• Include key provisions:
  • Notify employees that they should have no expectation of privacy when using Company-issued equipment, systems, or networks.
  • Notify employees that the Company reserves the right to monitor data transmitted through Company-issued equipment, systems, or networks.
  • Remind employees that the Company’s computer systems, networks, and equipment are Company property.
  • Remind employees to include a disclaimer when writing personal blogs or posts stating that he or she is a Company employee and that any views and opinions expressed are the employee’s and do not represent official statements or views of the Company.
  • Remind employees of prohibitions against disclosing confidential or proprietary Company information.
  • Notify employees of prohibition against using social media to harass co-workers.
  • Encourage employees to report violations to the Company’s social media policy to management.
• Provide specific examples of prohibited conduct.
• Avoid overly broad statements, especially concerning disparagement of the Company, respectful workplace, and confidentiality.
• Include a clause stating that the employer’s policies are not intended to and should not be interpreted to interfere with or infringe upon employees’ rights to engage in protected concerted activity.
• Notify employees of the Company’s stance regarding social media use during working hours and while using Company resources.
• Clearly identify the consequences for violating the policy.
• Review other existing personnel policies to determine whether they apply to employees’ use of social media.
• Implement your Social Media Policy by distributing the policy to all employees and obtaining acknowledgment of receipt.
• Enforce and apply your policy consistently (be aware that monitoring employee use of social media sites and other off-duty conduct may be prohibited under federal or state law, terms and conditions of social media sites themselves, and collective bargaining agreements).
• Train employees on the appropriate uses of social media.
• Review your policy annually and update according to changes in the law.

Downtown Milwaukee office building put in receivership

Milwaukee Journal Sentinel – February 24, 2014

A court-appointed receiver has been named to oversee the operations of a financially troubled downtown Milwaukee office building.

The eight-story building, at 211-219 W. Wisconsin Ave., adjacent to the Shops of Grand Avenue, is owned by 30 separate investment groups, all based outside Wisconsin, according to court records.

Those groups are insolvent. Their debtor is a Bank of America commercial mortgage fund, with U.S. Bank serving as its trustee.

Milwaukee Attorney Seth Dizard was appointed as receiver for the 105,000-square-foot building, which is leased mainly to the Internal Revenue Service.

The IRS moved its regional office there in 2006, the same year the property was sold by Wispark LLC to Chicago-based TSG Real Estate LLC for $20 million. Wispark bought the building in 2004 for $3 million, and remodeled it to accommodate the IRS.

Later in 2006, the building was sold to its current owners. It is now valued at $13 million, according to city assessment records.

It has been estimated that more than 90% of all information created today is stored electronically. This electronically stored information, or ESI, is crucial information in most business disputes.

The Federal Rules of Civil Procedure were amended in 2006 to address ESI, and additional amendments to these federal e-discovery rules have been proposed that could go into effect in late 2015. The Wisconsin Rules of Civil Procedures were amended in January, 2011, and again in January, 2013, to address ESI too. The state and federal e-discovery rules significantly broaden the concept of what constitutes a “document” for purposes of discovery and confirm that discovery of ESI in civil lawsuits stands on equal footing with discovery of paper documents.

The Wisconsin e-discovery rules for the most part parallel the federal e-discovery rules, making it easier for federal authority to be used in discovery disputes in the Wisconsin courts. But the Wisconsin rules differ slightly from the federal rules. For example, unlike Fed. R. Civ. P. 26(a), Wisconsin documents have a rule requiring mandatory initial disclosures. The drafters of the Wisconsin rules decided that certain portions of the federal e-discovery rules would be better addressed by substantive law rather than procedural rules changes.

Highlights of the January 2013 amendments to the Wisconsin e-discovery rules include:

• Wis. Stat. § 804.01(2)(c), which provides that the trial materials privilege is not automatically forfeited because of the inadvertent disclosure of ESI and that claims of forfeiture of this privilege must be considered under Wis. Stat. § 905.03(5) as if they involved privileged attorney-client communications.
• Wis. Stat. § 804.01(7), which creates a Wisconsin “clawback” rule allowing for the recovery of privileged ESI inadvertently produced in discovery and establishes the procedure to be followed in order to recover such information.
• Wis. Stat. § 805.07(2)(d), which adds ESI to the materials which may be discovered by subpoena and permits subpoenas for inspection, copying, testing or sampling of ESI.
Highlights of the proposed amendments to the federal e-discovery rules include:
• A proposed amendment to Fed. R. Civ. P. 1 which would encourage cooperation by the parties as to the efficient determination of a case, including e-discovery issues.
• A proposed amendment to Fed. R. Civ. P. 26 which would add a new “proportionality” test to the scope of allowable discovery.
• A proposed amendment to Fed. R. Civ. P. 30 which would reduce the limit on the number of depositions in a case from 10 to 5 and would reduce the maximum length of a deposition from 7 hours to 6 hours.
• A proposed amendment to Fed. R. Civ. P. 33 which would reduce the limit on the number of written interrogatories from 25 to 15.
• A proposed amendment to Fed. R. Civ. P. 36 which would limit the number of requests to admit to 25.
• A proposed amendment to Fed. R. Civ. P. 37 which would provide a uniform national standard for evaluating discovery preservation efforts and for the imposition of sanctions for failures to preserve discovery.

The public comment period for the proposed federal amendments runs until February 15, 2014. If approved, the federal amendments currently are expected to go into effect on December 1, 2015.

For more information about the state and federal e-discovery rules or ESI issues, please contact Grant Killoran at 414.276.5000, or at grant.killoran@wilaw.com.

On October 14, 2013, the Employment LawScene™ brought you an article explaining that the Supreme Court would hear oral arguments in Sandifer v. U.S. Steel Corp., a case out of the Seventh Circuit, to resolve disagreement among other circuit courts as to what constitutes “changing clothes” within the meaning of the Fair Labor Standards Act (“FLSA”) for purposes of determining whether time spent “changing clothes” at the beginning and end of each workday is compensable work time.

The Sandifer case specifically focused on Section 203(o) of the FLSA, which allows employers and unions to collectively bargain over whether employees must be paid for time spent “changing clothes” at the beginning and end of each workday. The Seventh Circuit held that time spent putting on certain articles of protective gear fell within the definition of “changing clothes” under the FLSA and, accordingly, was not work time that employees had to be paid for pursuant to the parties’ collective bargaining agreement.

On January 27, 2014, the U.S. Supreme Court unanimously affirmed the Seventh Circuit’s holding that the time employees spent “donning” and “doffing” protective gear was not compensable under the FLSA when, “on the whole”, the vast majority of the time was spent “changing clothes” and the employer and employees agreed that time was non-compensable under a collective bargaining agreement.

The U.S. Supreme Court noted that employees in Sandifer v. U.S. Steel Corp. were required to don and doff twelve (12) items of protective gear, nine of which fell within the definition of “clothes” under the FLSA (flame-retardant jacket, pants, hood, hard hat, “snood,” “wristlets,” work gloves, leggings, and steel-toed boots) and, therefore, were not compensable. Although the Court did not consider the other three items—safety glasses, earplugs, and a respirator—to fall within its definition of “clothes,” it found that, “on the whole”, a vast majority of the time was spent donning and doffing the other items that did fall within the definition and, accordingly, the time was not compensable. The Court instructed that in determining whether time spent donning and doffing certain protective gear is compensable under the Act, other courts should examine the time period at issue “on the whole” and determine whether the vast majority of donning and doffing time involves clothing items or non-clothing items as defined by the Court. If a vast majority of the time is spent on items that are “clothes,” then the entire period should qualify as time spent “changing clothes” and should not constitute compensable work time under the FLSA pursuant to an applicable collective bargaining agreement.

The U.S. Supreme Court’s decision in Sandifer makes clear that unionized employees are not entitled to compensation for time spent donning and doffing protective gear under the FLSA where a vast majority of time is spent “changing clothes” and where a collective bargaining agreement excludes such time from working time.

Click here to read the U.S. Supreme Court’s complete decision in Sandifer v. U.S. Steel Corp.

In July, the Employment LawScene™ advised our readers that a federal district court granted the EEOC’s motion to seek an interlocutory appeal before the Seventh Circuit as to whether the EEOC’s alleged failure to conciliate prior to commencing suit is subject to judicial review in the form of an implied affirmative defense to the EEOC’s suit. Title VII of the Civil Rights Act of 1964 requires the EEOC, prior to commencing suit against an employer, to “endeavor to eliminate the alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.” 42 U.S.C. § 2000e-5(b). The federal district court granted the EEOC’s motion for an interlocutory appeal because the Seventh Circuit had not yet directly addressed the issue and because there was a split between other federal circuits as to the scope of a court’s review of EEOC’s pre-suit conciliation efforts.

In a somewhat surprising decision, the Seventh Circuit became the first federal circuit court of appeals in the country to explicitly reject an employer’s ability to assert an implied affirmative defense that the EEOC failed to comply with its conciliation efforts prior to commencing suit. The Seventh Circuit’s decision also breaks ranks with the Second, Fourth, Fifth, Sixth, Tenth, and Eleventh Circuits who have all held that the EEOC’s pre-suit conciliation efforts are subject to judicial review, despite the fact that these courts are divided as to the level of scrutiny to apply in reviewing the EEOC’s conciliation efforts. The Second, Fifth, and Eleventh Circuits evaluate conciliation under a three-part inquiry whereas the Fourth, Sixth, and Tenth Circuits require instead that the EEOC’s efforts meet a minimal level of good faith. The Seventh Circuit, based upon the plain language of the statute, rejected the notion that the EEOC’s pre-suit conciliation efforts are subject to any level of judicial review or scrutiny.

The Seventh Circuit reasoned that the language of Title VII, the lack of a meaningful standard for the courts to apply, and the overall statutory scheme that Congress set forth in Title VII precluded a court from reviewing the EEOC’s pre-suit conciliation efforts and likewise precludes an employer from asserting an affirmative defense on that basis. The Seventh Circuit found the language of Title VII made clear that conciliation is an informal process entrusted solely to the EEOC’s expert judgment and that the conciliation efforts between the EEOC and an employer must remain confidential. The Seventh Circuit also found persuasive that there is no meaningful standard to apply is determining whether the EEOC’s efforts to conciliate were sufficient. The Seventh Circuit even rejected applying a good faith standard because in applying such a standard, the court reasoned, a reviewing court could not help but to engage in a prohibited inquiry into the substantive reasonableness of particular settlement offers – not to mention using confidential and inadmissible materials as evidence. In rejecting the application of a good faith review standard, the Seventh Circuit found compelling that Congress granted the EEOC the unreviewable discretion on the choice to settle or not to settle. Finally, the Seventh Circuit held that the broader statutory scheme of Title VII in protecting individuals from unlawful discrimination trumps an employer’s interests in asserting an affirmative defense based on the EEOC’s failure to conciliate because, according to the Seventh Circuit, “the conciliation defense tempts employers to turn what was meant to be an informal negotiation into the subject of endless disputes over whether the EEOC did enough before going to court.”

At least in the Seventh Circuit, which oversees the federal district courts in Illinois, Indiana, and Wisconsin, the manner in which the EEOC conducts pre-suit conciliation efforts may very well change as its efforts, and whether such efforts were conducted in good faith, are no longer subject to challenge by an employer or review by a court. This lack of oversight gives the EEOC wide-latitude and considerable leverage in negotiations with an employer prior to commencing suit. The question will become whether the EEOC will use that leverage and its relatively large litigation budget to force employers into needless litigation. Employers, on the other hand, as always will have to weigh the cost/benefit of surrendering to the EEOC’s attempt to extract a high monetary settlement through the conciliation process versus the high cost of litigating against the EEOC. Given the Seventh Circuit’s decision precludes judicial review of the EEOC’s conciliation efforts, there will be no watchdog over whether the EEOC’s pre-suit settlement demands are made in good faith and commensurate with the merits of a particular case.

The Seventh Circuit’s decision and the clear split that now exists between other federal circuits on this issue provides a basis for the Supreme Court of the United States to address this issue and resolve the dispute among the different circuit court of appeals. We will let our blog readers know if the U.S. Supreme Court decides to hear this case to resolve this important issue.

As reported in the Milwaukee Journal Sentinel, State Rep. Evan Goyke (D-Milwaukee) introduced five bills designed to alleviate what Rep. Goyke  considers ongoing problems arising from the housing crisis that began in 2008.  Lenders and their counsel would be wise to pay careful attention to a number of the bills in the package, as they could, if passed in to law, significantly affect future foreclosure actions.

Of particular concern to lenders is the proposal to require a plaintiff filing a foreclosure action to post a $15,000 demolition bond with the clerk of courts of the county in which the property is located.  If the property in question must be demolished, the $15,000 would be applied to the cost of the demolition.  Additionally, the $75 filing fee currently associated with a foreclosure action would be increased by $50.  This fee increase would be used to install lighting at existing abandoned homes.  Another bill in the package would give municipalities and lenders the right to enter foreclosed properties to address any potential problems.  It is uncertain whether the bill is intended to create a requirement to do so.

Copies of the legislation can be read here.  Further information about these bills, and the other bills included in the package, as well as the impact they may have on the decision to bring a foreclosure action, can be obtained by contacting any member of our firm’s Creditors’ Rights Practice Group.

On Monday, January 13, 2014, the U.S. Supreme Court heard oral arguments in National Labor Relations Board v. Noel Canning, a case that could potentially result in hundreds of recent rulings by the National Labor Relations Board (“NLRB”) being invalidated.

The NLRB is made up of five (5) sitting board members, who are appointed by the President to serve on the Board. Generally speaking, the NLRB has the power to issue rulings in labor disputes, which can then be challenged in court. NLRB rulings have the potential to shape U.S. labor law and so selecting the individuals to issue those rulings is often a hotly debated political issue.

The issue before the Supreme Court in the Noel Canning case is whether a President can use his “recess appointment” power under the Constitution to fill vacant positions during congressional recess, which is what President Obama did in 2012.

Why does this matter? Because, in order for an NLRB ruling to be valid, the ruling must be issued by a “quorum,” which is three (3) confirmed Board members. Typically, the President nominates individuals for a Board seat and those nominations are then confirmed by Congress. In 2012, however, after the President’s nominations to three empty seats on the NLRB had been blocked repeatedly by Congress, the President made “recess appointments” to give the Board a quorum. Although the President does have the power under the Constitution to make “recess appointments,” Senators in 2012 were holding pro forma sessions every three days to prevent that from happening. So, the question becomes whether the Senate was actually in recess.

The U.S. Supreme Court’s review of the President’s recess appointments to the NLRB stems from the D.C. Circuit Court of Appeals’ decision in Noel Canning, where the court held that a president can only make “recess appointments” during the period between formal sessions of the Senate. The argument goes that the President did not have the power to make the recess appointments because the Senate was not actually in recess and, therefore, his appointments were invalid, leaving the NLRB without a quorum and without the power to issue valid rulings.

During oral arguments on Monday, the Supreme Court Justices expressed doubt and seemed skeptical of the Obama administration’s contention that it could bypass the Senate to make appointments during short congressional breaks. The Supreme Court’s decision in Noel Canning could have far-reaching implications and could potentially force the NLRB to revisit hundreds of rulings issued in recent years if the Supreme Court determines the President’s recess appointments were unconstitutional and the Board lacked a quorum to issue rulings.

We will keep you posted as to the final outcome of this case and its impact on the NLRB’s rulings and operations.

Wisconsin’s so-called “Lemon Law” statute, § 218.0171, Wis. Stats., has long been considered the most consumer-friendly Lemon Law in the country.  The statute itself, and the numerous appellate court decisions which interpret it, made it extremely difficult for motor vehicle manufacturers who sold or leased new motor vehicles in Wisconsin to comply with the law on a pre-lawsuit basis and also made it very difficult to resolve lawsuits after they were filed.  The revised law is intended to change this.  The elimination of the double damages provision alone will create a much more level playing field for consumers and manufacturers.  This and the other changes should hopefully result in a decrease in the number of lawsuits filed.  Also, if a lawsuit is filed, the revisions to the law should make it more workable for manufacturers to resolve lawsuits, and encourage consumers’ attorneys to do so as well.

Generally speaking, Wisconsin’s Lemon Law was designed to protect consumers who purchased or leased new motor vehicles that turn out to be defective and the defects were not remedied within a reasonable period of time.  If a new vehicle exhibited a warranty “nonconformity,” a defect which substantially impaired the vehicle’s use, value or safety, within the first year after the vehicle is delivered to the consumer and the consumer makes the vehicle available to the manufacturer or an authorized dealership for the necessary repairs, the manufacturer or dealership were required to make a reasonable attempt to repair the vehicle.  If the manufacturer or dealership did not repair the vehicle after a reasonable attempt, such that the vehicle was “out of service” for at least 30 days due to warranty nonconformities or had a nonconformity that was subject to repair at least four times during that first year and the nonconformity continued, the consumer was entitled to request at his or her option that the manufacturer repurchase the vehicle and put the consumer back in the position he or she was in prior to purchasing the vehicle, or request that the manufacturer replace the vehicle with a comparable new vehicle.  Significantly, the manufacturer was required to actually complete the vehicle repurchase or provide the comparable new motor vehicle within thirty (30) days from the consumer’s request.  That proved very challenging to manufacturers, especially when consumers were less than cooperative in providing all the necessary documentation and information which was necessary for the manufacturer to repurchase the vehicle or provide the comparable new motor vehicle.

If the manufacturer decided to comply with the consumer’s request for a repurchase or a comparable new motor vehicle, but did not actually provide the refund or replacement vehicle within the aforementioned thirty (30) days, the consumer was entitled to file a lawsuit and, if successful, was entitled to recover double damages and reasonable attorney fees.  Note that reasonable attorney fees were recoverable by consumers if they were successful with their lawsuit, but manufacturers were not entitled to recover their attorney fees if they were successful defending a lemon law lawsuit.

On December 13, 2013, Governor Scott Walker signed into law a revised Wisconsin Lemon Law.  The following are highlights of the revised law, but a thorough reading of the revised statute here will be necessary to fully understand it and for consumers and manufacturers to be able to comply with it.

EFFECTIVE DATE:  The new law takes effect for new motor vehicles which are sold or leased on or after March 1, 2014.

DOUBLE DAMAGES:  Double damages have been eliminated and consumers are now only entitled to single damages if they are successful with their Lemon Law case.

OUT OF SERVICE:  The prior law did not provide a definition of “out of service,” but the Wisconsin Court of Appeals held that “out of service” “includes those periods when the vehicle is not capable of rendering service as warranted due to a warranty nonconformity, even though the vehicle may be in the possession of the consumer and may still be driven in the performance of other services by the consumer.”  Vultaggio v. GM, 145 Wis. 2d 847, 886, 429 N.W.2d 93, 97 (Ct. App. 1988).  The new law creates a definition of “out of service” in paragraph (1)(g) as follows:

“Out of service,” with respect to a motor vehicle, means that the vehicle is unable to be used by the consumer for the vehicle’s intended purpose as a result of any of the following:

1. The vehicle is in the possession of the manufacturer, motor vehicle lessor, or any of the manufacturer’s authorized motor vehicle dealers for the purpose of performing or attempting repairs to correct a nonconformity.

2. The vehicle is in the possession of the consumer and the vehicle has a nonconformity that substantially affects the use or safety of the vehicle and that has been subject to an attempt to repair under sub. (2) (a) on at least 2 occasions.

DEFINITION OF MOTOR VEHICLE:  The new law at paragraph (1)(bt) creates a separate definition for a “Heavy-duty vehicle,” which means any vehicle having a gross weight rating or actual gross weight of more than 10,000 pounds.  Different rules apply to heavy-duty vehicles, which are not addressed in this writing.

ELECTION OF REFUND:  This section of the law is essentially unchanged and still requires the manufacturer to actually provide the refund to the consumer within 30 days.

ELECTION OF A REPLACEMENT VEHICLE:  If a consumer requests a replacement vehicle, the manufacturer has 30 days to agree in writing to provide the vehicle or a refund of the full purchase price plus other taxes, fees and collateral costs.  It then gives the manufacturer 15 additional days (“45 days total”) to provide the comparable new vehicle or refund.  The statute specifically states that “[u]pon the consumer’s receipt of this writing, the manufacturer shall have until the 45th day after receiving from the consumer the form specified in sub. (8)(a)2. to either provide the comparable new motor vehicle or the refund.”  If the manufacturer agrees to provide a comparable new motor vehicle, the manufacturer retains the right to provide a refund if a comparable new motor vehicle does not exist or cannot be delivered within this 45-day period.

STATUTE OF LIMITATIONS:  The prior law provided a six year statute of limitations based on contract law.  The new law now specifies that the statute of limitations to file an action expires three years from the date the vehicle was first delivered to the consumer.

DAMAGES:  Other than the elimination of double damages, this provision essentially stays the same and allows consumers who are successful at trial to recover pecuniary losses, together with costs, disbursements and reasonable attorney fees.

REQUIREMENT THAT CONSUMERS AND MANUFACTURERS COOPERATE:  While the previous statute did not specify any such requirement, the new law at section 218.0171(7)(b) states that if a court finds that any party to the action has failed to reasonably cooperate with another party’s efforts to comply with obligations under this section, which hinders the other party’s ability to comply with or seek recovery under this section, the court may extend any deadline specified in this section, reduce any damages, attorney fees, or costs that may be awarded under par. (a), strike pleadings, or enter default judgment against the offending party.

SUMMARY

Hopefully the revised Lemon Law statue will help to facilitate what the law was originally intended to accomplish for both consumers and motor vehicle manufacturers.