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By Ryan M. Billings, Robert L. Gegios, and Melinda A. Bialzik
Kohner Mann & Kailas, S.C.
Milwaukee, Wisconsin

Introduction

The Wisconsin legislature has made important new rules for civil litigation, implemented new periods of limitations and repose, and made other significant changes to Wisconsin law. Changes to Wisconsin law in 2017 Wisconsin Act 235 (the “Act”) are likely to have longstanding, substantial impact on a number of areas of procedure and substantive law. This article discusses the key provisions.

Changes to Wisconsin Civil Procedure

Although the Act covers many areas, the bulk of the language addresses changes to the Wisconsin Rules of Civil Procedure. Given this, the Act was a noteworthy break from the standard process for amending procedural rules, as it did not originate from the Wisconsin Supreme Court, involve the Wisconsin Judicial Council, or include public hearings and comment. Instead, the legislature alone considered and passed the Act. Its key provisions are summarized below.

Automatic Discovery Stay

Under the Act, a party who files a motion to dismiss, for judgment on the pleadings, or for a more definite statement receives an automatic discovery stay for the shorter of 180 days or the date the motion is decided.1 If particularly discovery is needed during the stay, a party must move the court and show good cause.2 This change is a middle ground between the old federal rules prohibiting pre-answer discovery, and the current Federal Rules of Civil Procedure (“Federal Rules”), which allow for discovery as soon as the parties have a scheduling meet and confer conference under Rule 26(f).

Proportionality

Borrowing language adopted in the Federal Rules in significant 2015 amendments, the Act grafts a proportionality standard into the scope of discovery. Parties may obtain discovery concerning non-privileged matters that are relevant to the party’s claims or defenses and proportional to the needs of the case. In considering proportionality, courts must consider:

• The importance of the issues at stake in the action;

• The amount in controversy;

• The parties’ relative access to relevant information;

• The parties’ resources;

• The importance of the discovery in resolving the issues; and

• Whether the burden or expense of the proposed discovery outweighs its likely benefit.3

Thus, to be discoverable, material or information must be not only relevant to claims or defenses, but also proportionate to the needs of the particular case. Like the Federal Rules, the Act clarifies that documents and information need not be admissible to be discoverable, and removes the “reasonably calculated” language that framed the wide scope of discovery.4 Wisconsin courts may look to the emerging federal precedent interpreting proportionality to adopt standards to interpret this provision.

New Limitations on Electronic Discovery

The Act provides that, absent a showing of substantial need and good cause, electronically stored information (“ESI”) is not discoverable if it:

• Cannot be retrieved without substantial additional programming or transferring it to another form before search or retrieval;

• Is backup data that is substantially duplicative of more accessible data;

• Is legacy data from obsolete systems; or

• Is data that is not available in the ordinary course to the producing party, and is not reasonably accessible because of burden or cost.5

The initial burden is on the producing party to show that the ESI is not reasonably accessible. Once that showing is made, the burden shifts to the requesting party to show both: (1) good cause; and (2) that the discovery meets the new standards for limiting discovery in response to a motion for a protective order.6 This places certain ESI beyond the scope of discovery, gives producing parties a new tool to block discovery of obsolete or inaccessible ESI, and opens up a new front for electronic discovery battles. Considering how ESI is heavily utilized in civil litigation, this change could be very significant.

New Standards for Protective Orders

The Act also creates a new provision for courts to follow in considering motions for a protective order (the prior language also remains). On motion, a court “shall” limit the frequency or extent of discovery if it is cumulative or duplicative, can be obtained from a more convenient or less expensive source, if the cost of the discovery outweighs its likely benefit, or if it is not proportional to the needs of the case.7

Interestingly, while this provision invokes the new proportionality standard, it also establishes a burden versus likely benefit analysis as a stand-alone test. If the likely benefit of discovery sought does not outweigh the cost or burden of pursuing it, the court “shall” limit the discovery. Depending on how courts interpret this language, it may shift the balance of power generally in favor of parties opposing claims, particularly defendants.

This language also creates tension between the scope of discovery (where cost versus likely benefit is one of many proportionality factors), and the standard courts must adopt when considering a protective order (where cost versus likely benefit is an independent test).8 The legislators who proposed this language did not explain why this discrepancy exists, and it is unclear how that ambiguity will impact discovery practice.

New Time Limitations on Discovery Requests, Interrogatories and Depositions

The Act also imposes new limitations on the extent and number of discovery tools that can be utilized in a case. Unless the parties otherwise stipulate or the court otherwise orders, document requests cannot seek information from periods more than five years before the cause of action arises,9 can only issue a reasonable number of interrogatories, not to exceed 25,10 and take a reasonable number of depositions, not to exceed 10 per side, with no deposition exceeding seven hours in duration.11 These restrictions may lead to motion practice to address the total amount of discovery needed in bigger cases.

Consistent with these changes, the Act introduces explicit language to confirm that it is obligation of both the parties and the court to pursue just, speedy and inexpensive determinations of actions, that courts may allocate costs of producing discovery that is the subject of a protective order, that objections to document requests must be stated with specificity, that documents must be produced either with the written responses or at a reasonable time specified in the responses, and that failing to produce documents is sanctionable conduct.12

Amendments to Class Certification Rules

The Wisconsin Supreme Court recently adopted changes to Wisconsin’s Class Action Statute, to conform it to the requirement of Federal Rule 23.13 These changes may lead to more discovery, expert involvement and analysis by courts before class decisions, as is the result in the federal courts. Adding to these changes, the Act provides for appeals as of right by either side after the circuit court makes a class certification decision, requires that court to provide detailed reasoning as to its certification decision so that the appellate courts have an adequate record to evaluate, and provides that all proceedings (except for settlement approvals) are automatically stayed until any appeal is resolved.14 This will focus attention on the certification decision in class actions, and require that issue to be resolved before the case proceeds.

New Limitations/Repose Periods

The Act also shortens the Statute of Limitations from six years to three for:

• Statutory claims (unless otherwise specified);

• Fraud;

• Injury to character, or rights of another; and

• Certain claims by franchised motor vehicle dealers.15

Repose periods for personal injury claims following construction are also shortened. Actions for injury now must be brought within seven years of completion of construction (previously 10), and injury will extend the repose period if it is first suffered in the fifth to seventh years after construction (previously eighth and tenth).16 Practitioners should take notice of these provisions, as they were implemented immediately on April 5, 2018.

Other Significant Changes

The Act makes a number of additional changes to Wisconsin law, including:

• Reducing the interest rate on overdue insurance payments from 12 to 7.5 percent17;

• Limiting the Secretary of Revenue’s use of third parties on a contingent basis to enforce the Uniform Unclaimed Property Act;18 and

• Requiring mandatory disclosure of agreements by a third party to fund litigation (excluding attorney contingency agreements).19

The third-party funding rule has attracted widespread attention, as Wisconsin is the first state to regulate this issue.

Effective Dates

For the most part, the Act’s provisions go into effect on April 5, 2018. However, the class action rules take effect on July 1, 2018 (to match the effective date of the Supreme Court’s changes), and most of the discovery rules first apply to actions filed on or after July 1, 2018.20 first apply to actions filed on or after July 1, 2018. Significantly, while application of the new discovery rules was postponed for nearly all changes, implementation of the proportionality standard for the scope of discovery was not postponed, and applies as of April 5, although it is unclear if courts will apply the change to existing actions.

Conclusion

While some of the Act’s provisions introduce ambiguities and create uncertainties that only the courts can resolve, it is clear that Act was intended to and will have a profound impact on Wisconsin litigation. Litigants should prepare to argue whether discovery is proportional, electronic information is reasonably accessible, and whether the likely benefit of discovery outweighs its cost. This may involve increased motion practice, and enhanced case supervision from judges, who now have additional issues they must decide. Only time will tell how these new rules and procedures will be interpreted and enforced.

1 Wis. Stat. § 802.06(1)(b).

2 Id.

3 Wis. Stat. § 804.01(2)(a) (adopting the 2015 amendments to Fed. R. Civ. P. 26(b)(1)).

4 Id.

5 Wis. Stat. § 804.01(2)(e)1g.

6 Wis. Stat. § 804.01(2)(e)1g.(d). The original language in Assembly Bill 773 specified that party had no obligation to preserve these kinds of ESI, unless the Court ordered otherwise on good cause and substantial need. However, this provision received substantial opposition in the Senate, threatening to derail the legislation. To appease the objecting Senators, this language was ultimately removed. See Strebel, Erika, Tort-reform bill may still have a chance, Wis. L. J. (Mar. 13, 2018), available at: https://wislawjournal.com/2018/03/13/tort-reform-bill-may-still-have-a-chance.

7 Wis. Stat. § 804.01(2)(am).

8 Compare Wis. Stat. § 804.01(2)(a) with Wis. Stat. § 804.01(2)(am)(2).

9 Wis. Stat. § 804.09(2)(a)3 (with exceptions for health care, vocational, educational and similar records).

10 Wis. Stat. §804.08(1)(am).

11 Wis. Stat. § 804.045.

12 Wis. Stat. §§ 804.01, 804.01(3), 804.09(2)(b)(1), 804.12(1)(a).

13 See Wisconsin Supreme Court Order 17-03.

14 Wis. Stat. § 803.08(11)(a)-(b).

15 Wis. Stat. §§ 218.0125(7), 218.0126, 893.93(1)(cm), (1m)(intro.), (a)-(b), 895.53.

16 Wis. Stat. §§ 893.891(1), (3)(b).

17 Wis. Stat. § 628.46(1).

18 Specifically, the Secretary may not hire third parties to perform audits on a contingent basis, unless the audited party resides outside Wisconsin (in which case, the Act caps the contingency at 12 percent), and bars third parties from purchasing information acquired during an audit (unless the information came from the federal government). Wis. Stat. § 177.30(6)-(7).

19 Wis. Stat. § 804.01(2)(bg).

20 Id., § 33(2). Why this one provision of the changes is singled out for immediate application is not explained, and it is not clear whether courts will apply this standard to pending cases.