Punitive Damages Under Strenke and Wischer

WDC Journal Edition: Summer 2005
By: Donald H. Carlson & Remzy D. Bitar - Crivello, Carlson & Mentkowski, S.C.

Introduction

Since May 17, 1995, a plaintiff may receive punitive damages only if there is evidence that the defendant “acted maliciously toward the plaintiff” or with “intentional disregard of the rights of the plaintiff.” The Wisconsin Supreme Court recently handed down two opinions on the meaning of “intentional disregard of the rights of the plaintiff” under Subsection 3. In Strenke v. Hogner,and Wischer v. Mitsubishi Heavy Indus. America(“Wischer II”), the Supreme Court rejected the interpretation that § 895.85(3)’s standard of conduct – “intentional disregard of the rights of the plaintiff” – meant that a defendant was required to have (1) a general intent to perform an act, and (2) either (i) a specific intent to cause injury by that act or (ii) knowledge that the act is practically certain to result in injury. Although the Court found this interpretation to be inconsistent with the plain language of Subsection 3, the interpretation had previously gained popular support after the Court of Appeals’ decision inWischer v. Mitsubishi Heavy Indus. America(“Wischer I”), which many believed followed the intent of the statute to make it more difficult for a plaintiff to recover punitive damages. This article focuses on the Court’s pronouncements relating to “intentional disregard of the rights of the plaintiff.” It concludes with some helpful advice to implement these decisions in practice.

The Factual Background of Wischer II and Strenke

A trip to Milwaukee Brewers’ home games recalls the tragedy underlying its construction. Wischer II involved the case of three iron workers who died during the construction of parts of retractable roof of the Miller Park baseball stadium. The three men were in a basket held by a crane inside the stadium, preparing to bolt down “4R3,” an enormous section of the retractable roof (120 feet wide, 76 feet high and 913,000 pounds), which was being hoisted into place by Big Blue, a 45 story mobile crane outside the stadium walls. As Big Blue moved the enormous piece of roof into place, excess wind hit the crane and its load, causing the crane’s boom to hit the crane holding the men. The men fell to their deaths. Their wives sued individually and as special administrators. The defendants included Mitsubishi Heavy Industries America, Inc. (MHIA), who had the task of installing the stadium’s state-of-the-art retractable roof, and Lampson International, the firm that had leased Big Blue and loaned employees to Mitsubishi. Overall construction of, and responsibility for, the roof of the stadium remained in MHIA's control, primarily Victor Grotlisch (MHIA's site manager) and Wayne Noel (MHIA's safety superintendent).

At trial the plaintiffs “attempted to paint Grotlisch as an arrogant, intimidating, on-site supervisor who routinely disregarded workers' safety.” The plaintiffs claimed that the crane fell because it was used in high winds, no wind-speed calculations were made, and the crane's load chart limitations were exceeded. The plaintiff’s crane expert testified that the load chart, which placed limits on the crane's use in high winds, stated that Big Blue's maximum safe wind speed was 20 mph, regardless of the load. As the load increased, the maximum safe wind speed should have been reduced. The crane expert testified that the lift plan failed to calculate the effect of the wind on the load, a violation of industry standards, OSHA standards, and the load chart.

Evidence showed that MHIA was responsible for performing wind calculations and that Grotlisch was in charge of lift operations. According to Grotlisch's testimony, he was aware that tragedy might well result from lifting a piece of the roof as large as 4R3 if there was a failure to do wind-speed calculations to determine if it was safe to lift. He was also aware of the importance of the wind. A local meteorologist testified that winds 9.6 miles away were 21 mph steady and gusting to 26 mph. People at the site testified they observed winds between 20 to 32 mph throughout the afternoon, with gusts up to 35 mph. An Occupational Safety and Health Administration (OSHA) official on site that day told the MHIA safety superintendent that winds blew a worker off a scaffold. The OSHA official also testified that about two hours before the lift, he heard MHIA’s safety superintendent state that he had reports of wind speeds of 32 mph. The MHIA safety superintendent spoke twice with Grotlisch to express his concern about the high wind speed.

MHIA countered with its own evidence of the events of that day, including alternative interpretations of the estimates of wind speed. MHIA’s safety superintendent testified that the workers who were involved in the lift that day were told that "anyone in the room can stop this [lift] for any reason at any time if it is unsafe to continue," yet no one stopped the lift. MHIA also relied on a Lampson International employee in charge of the mechanical operation of the crane, who testified that he assured Grotlisch that "there were not any problems with the lift."
MHIA also presented other possible causes of the incident: Lampson International's alterations to the crane (including creating a gap in the king pin unit), Lampson International's failure to equip the crane with a tiltmeter to alert the operator to unsafe operating conditions, the placement of the three ironworkers in the basket in contravention of OSHA's regulations, and potential problems with construction of the concrete runway upon which Big Blue moved or the ground underneath the runway.

The jury found that MHIA had acted “in an intentional disregard of the rights of the plaintiffs” and returned a compensatory damage verdict of $ 5.25 million and a punitive damage award of $ 94 million against MHIA.

In comparison to these complex facts, Strenke involved a $225,000 punitive damage award arising out of an automobile accident. Levi Hogner had a blood alcohol content level of .269% when he turned his vehicle left into the path of LeRoy Strenke’s car, injuring Strenke. Hogner pled no contest to his fifth offense of operating a motor vehicle while intoxicated. Subsequently, the jury awarded the Strenkes $ 2,000 in compensatory damages. During the bifurcated punitive damages trial, Hogner testified that he had never injured anyone when drinking and did not intend to injure anyone on the date in question. However, he admitted that he had four prior convictions for driving while intoxicated. He further acknowledged that he consumed 16 to 18 twelve-ounce containers of beer within a five-hour span on the night of the accident.

The Meaning of “Intentional Disregard of the Rights of the Plaintiff”

Prior to § 895.85(3), Wisconsin common law awarded punitive damages for "outrageous" conduct, which meant the person acted “either maliciously or in wanton, willful and in reckless disregard of the plaintiff's rights.” Although Subsection 3 largely tracks Sharp, the Wisconsin Supreme Court began its analysis in Wischer IIand Strenkeby observing that “[t]he major difference between the two is that the legislature replaced the common law language of ‘wanton, willful and reckless’ with the term ‘intentional.’” The Court of Appeals should not have grafted onto Subsection 3 the requirement “intent to cause injury to the plaintiff,” the Supreme Court said, because “[t]he statute says nothing about ‘injury,’ or ‘harm,’ [but] … simply requires that the defendant engaged in conduct that constituted a ‘disregard of rights’ that was ‘intentional.’” The Court observed:

[The legislature] reaffirmed the common-law principle that punitive damages can be premised on conduct that is a "disregard of rights." However, the legislature chose the word "intentional" to describe the heightened state of mind required of the defendant who disregards rights, instead of the common law's description of "wanton, willful and reckless."

Nor did legislative history show that the “legislature intended to equate ‘intentional disregard of rights’ with intent to injure or cause harm.” The legislature showed heavy reliance on the distinction between malicious conduct – “‘acts are malicious when they are the result of hatred, ill will, a desire for revenge, or inflicted under circumstances where insult or injury is intended’” – and a second category of cases which did not involve the intent to cause injury, such as Wangen v. Ford Motor Co., Fahrenberg v. Tengel, and Sharp, all of which required wanton, willful, or reckless disregard of the rights of others. These latter cases were given the shorthand “outrageous” to refer to both categories. Importantly, it was this “second category where the change occurred. It now required an intentional disregard of rights.” Subsection 3, therefore, retained the language of “disregard of rights” and kept the two categories of conduct. Although the majority admitted the terms “intentional” and “disregard” “do not easily combine,” it nevertheless found that the Court of Appeals “inserted words into the statute” where “there is no indication that the legislature intended to alter the focus of punitive damages from the nature of the wrongdoer’s conduct to the likelihood of an injury and requiring a certain probability of injury.” For these reasons, the Court concluded that “the statute’s requirement that the defendant act ‘in an intentional disregard of the rights of the plaintiff” necessitates that the defendant act with a purpose to disregard the plaintiff’s rights or be aware that his or her conduct is substantially certain to result in the plaintiff’s rights being disregarded.” This interpretation, the Court said, fits comfortably with the Restatement of Torts definition of “intentional,” Wisconsin’s criminal code’s definition of “intentionally,” and Wisconsin’s model jury instruction.

Disagreeing with this legal analysis in both cases, Justice Wilcox believed “what the majority has really done is to allow punitive damages under § 895.85 in the same circumstances in which they were allowed under our common law.” Although the majority’s review of common law focused on the treatment of “rights,” which meant “rights of the plaintiff or others recognized by law,” and the treatment of “disregard of rights,” which meant “conduct that involved an indifference on the defendant’s part to the consequences of his or her actions,” Justice Wilcox focused more on the defendant’s mental state with respect to the consequences of his action. Justice Wilcox also focused in on the legislature’s removal of the “willfully, wantonly, or recklessly” standard.However, he observed that the legislature, aware that the common law allowed punitive damages where the mental state of the defendant was such that he knows or should have reason to know that his conduct creates an unreasonable risk of harm, removed this possibility in Subsection 3. The legislature also removed the possibility that punitive damages could be awarded where defendant’s conduct shows “‘a strong probability, although not a substantial certainty, that the harm will result and, nevertheless, proceeds with the conduct in reckless or conscious disregard of the consequences.’” In each case under the common law, rather than focusing on a “disregard of safety,” the analysis focused on the defendant’s awareness of the likelihood of some type of harm; the analysis at common law was not focused on the likelihood of a violation of the plaintiff’s rights in the abstract. Accordingly, “there was no need for the legislature to specify ‘injury’ or ‘harm’ when it enacted § 895.85(3)… because under the common law, it was understood that ‘disregard of the plaintiff’s rights ‘ referred to the harm caused by the defendant’s conduct in each particular case.” The upshot of this background, according to Justice Wilcox, is that since the enactment of § 895.85, “it is necessary that the defendant have knowledge that there is a ‘substantial certainty’ that harm will result from his conduct.” In his view, this conclusion comports with the removal of the “willfully, wantonly, or recklessly” standard, the legal definition of “intentional,” a technical term or legal term of art, and § 895.85’s position in a tort reform.

Sufficiency of the Evidence

The Wisconsin Supreme Court in Wischer IIand Strenkefound the evidence sufficient to put the issue of punitive damages to the jury. In Wischer II, the court found that the jury could have believed that the crane fell because it was used in high winds, no wind-speed calculations were made, and the crane's load chart limitations were exceeded. “One need not be an engineer or have heard all the evidence about the maximum safe wind speed and load limitations for operating this gigantic crane as it lifted this gigantic load on a windy day to know that wind plays an important factor in maneuvering objects outdoors. Anyone who has hung wet laundry, set up an outdoor art display, or driven a motor vehicle on a high bridge knows the havoc wind can play with items light or heavy.” Accordingly, a reasonable jury could find that the plaintiffs had proved by "clear and convincing evidence" that “MHIA acted in an intentional disregard of the rights of the plaintiffs, that is, that MHIA was aware that its conduct was substantially certain to result in the plaintiffs' rights being disregarded.”

Likewise, in Strenke, the Court focused on four factors that showed Hogner was aware that his conduct was substantially certain to cause a disregard of Strenke's rights. First, Hogner voluntarily and deliberately drank 16 to 18 twelve-ounce containers of beer and then chose to drive. Second, Hogner's act of driving with a blood alcohol level of .269% disregarded Strenke's right to safety in using the highway. Third, Hogner’s conduct was sufficiently aggravated to warrant punishment by punitive damages because he had four prior intoxicated driving convictions and he acknowledged that he consumed excessive beer within a five-hour span.

Practical Suggestions

Future cases will have to consider the impact of Strenkeand Wischer II on issues such as the insurability of punitive damages, whether intentional torts and financial harm claims will remain the so-called heartland of punitive damages, whether there will be a re-surfacing of the common law’s bad intent requirements, whether a breach of contract claim would still fail to qualify for punitive damages based on allegations of breach alone, and whether it can still be said that a lawsuit based on unlawful conduct or conduct which subjects the defendant to criminal prosecution does not automatically authorize the recovery of punitive damages.

But, for now, Wisconsin lawyers should not hit the panic button for several reasons. First, the Court in both cases still believed § 895.85(3) required a heightened standard of conduct. Importantly, there must be deliberate acts, an actual disregard of plaintiff’s rights, and “an increased level of consciousness and deliberateness at which the defendant must disregard the plaintiff's rights in order to be subject to punitive damages.” Further, the act or conduct must be sufficiently aggravated to warrant punishment by punitive damages. These standards are definitely high, yet still beg the question whether punitive damages really will be harder to recover in practice. The tension can easily be seen in the Court’s admonition that circuit courts should act as “gatekeepers” and reject punitive damages based on varying levels of negligence. However, the circuit courts have been acting as gatekeepers since 1995 (and particularly after Wischer I) and have never granted awards of punitive damages based on mere negligence. Most defense practitioners firmly believed facts like those in Wischer IIand Strenkesimply fell into the vast majority of cases that showed only heightened negligence. Future cases will have to decide if Wischer IIand Strenkehave placed the bar on the shoulders of common law or on the “higher” shoulders of § 895.85(3).

Second, the majority of the Court agreed that sufficient evidence existed to submit the punitive damages issue to the jury in both cases. While Justice Wilcox parted ways in Wischer II in this regard, he joined the majority in theStrenkecase. Arguably, most cases will not share Wischer II’s collective facts and will not contain Strenke’s aggravating factors. Punitive damages have always been subject to such case-by-case analysis, which means adjudication will often take place in grey areas.

Third, under either the majority view or the approach of Justice Wilcox, the focus is still the nature of the wrongdoer’s conduct. Although Justice Wilcox’s fear is that the scale of conduct will slip back towards recklessness, this slide back into the common law does not have to be the case – the majority specifically demands deliberate conduct that is sufficiently aggravated to justify punitive damages. In practice, where discovery does not yield specific material evidence by clear and convincing evidence showing the requisite conduct, motions should be submitted, addressed to the court’s gate-keeping role, seeking to dismiss or limit any insufficient claims of punitive damages. A jury should only be given cases similar to the heightened set of facts in Wischer IIand Strenke; a jury should not be given an opportunity to impose deterrence and punishment, or otherwise vent its anger, on defendant’s negligent or reckless conduct. At the very least, motions to bifurcate punitive damages claims should be seriously considered and the defendant should be prepared to assume the burden of coming forward with evidence to rebut the claim or inference the defendants’ conduct was reasonably certain to cause harm.

Fourth, both Justice Wilcox and the majority looked to the technical definition of “intentional,” as borrowed from the criminal code, § 8A of the Restatement (Second) of Torts (1965), and cases like Shepard v. Outagamie County Circuit Court.The practitioner should do likewise.

In defending punitive damage claims, care must be taken by the defense to demonstrate to the Court and, if necessary, to the jury that the conduct complained of was not so egregious as to necessarily impinge on anyone’s “right.” For example, driving 85 mph on an expressway in Wisconsin violates the law, is negligent conduct and, under some circumstances, reckless. Nevertheless, it is done everyday in some areas of the state. Although statistically there may be a link between speed and fatal accidents, the driver typically does not expect the excess speed to result in an accident. Likewise, although the law abiding expressway driver has a right to assume others will also obey the speed limit, there is an understanding that some drivers will drive faster than the law allows and it is understood that the excess speed is not reasonably certain to cause an accident. Should an accident occur, the defense must demonstrate to the court that the type of conduct complained of in the vast majority of cases would not result in anyone being hurt. Under these circumstances, a punitive damage case presumably will not be permitted to go to the jury.

On the other hand, if the speeder is racing a friend through a school zone with children in the crosswalk and strikes a child, the court in all probability will allow the punitive damage claim to go to the jury. Under the Supreme Court’s analysis, the children have a right to expect drivers to be extra careful in their driving when the children are coming to and leaving school. Drag racers racing through that area have arguably disregarded those rights. It could well be argued that racing at 85 mph through a school zone with children present is reasonably certain to cause a tragic accident. Regardless of the precise language of the statute, at an emotional level it is hard to disagree. As a gut check, defense attorneys might want to keep these thoughts in mind when advising clients during the course of litigation and to help structure defenses.

Don H. Carlson serves as President and Chairman of the Board for Crivello, Carlson & Mentkowski. Don has tried well over 100 jury trials and has successfully handled matters for clients across the country. As lead trial counsel for a manufacturer of many of the world’s largest mobile cranes, he successfully defended the company in the Miller Park Baseball Stadium crane collapse litigation; at the conclusion of the trial, the court ruled that the crane was not defective as a matter of law and a co-defendant was found responsible for approximately $100 million in damages. Don has lectured extensively on issues such as products liability, toxic torts, trial practice, insurance coverage and commercial litigation for the Wisconsin Bar Association, the Milwaukee Bar Association, the Wisconsin Association of Corporate Counsel, the Marquette University Law School, and the Professional Education Seminar Group. Over the years, he has prevailed in cases brought against manufacturers of truck steering gears, truck axles, heart valves, pacemaker leads, punch presses, electrical controls, forklifts, power tools, thermostatic gas controls, boilers and water heaters. Don works with a variety of businesses on commercial issues as well as helping them with products liability claims.

Remzy D. Bitar is an associate with the law firm. His principal practice is in Municipal Law, Civil Rights Litigation, and Products Liability in federal and state court. Remzy joined the firm after completing a judicial clerkship with the Supreme Court of Missouri for the Honorable Laura Denvir Stith. He is a member of the American Bar Association, the Milwaukee Bar Association, the Milwaukee Young Lawyer's Association, and the Milwaukee Metropolitan Association of Commerce. In addition to his work here, Remzy accepts pro bono assignments with the Public Defender’s Office at the Milwaukee County Children’s Court.

Wis. Stat. § 895.85(3). Unless otherwise noted, all references are to the Wisconsin Statutes 2001-2002.

2005 WI 25

2005 WI 26

2003 WI App 202, 267 Wis. 2d 638, 673 N.W.2d 303

See, e.g., Boomsma v. Star Transp., Inc., 202 F. Supp. 2d 869, 880 (E.D. Wis. 2002); Unified Catholic
Sch. v. Universal Credit Card Servs. Corp., 34 F. Supp. 2d 714, 718 (E.D. Wis. 1999).

Beyond the scope of this article, yet significant, is that both cases are also noteworthy for passing on the constitutionality of the awards and for determining that a defendant’s conduct giving rise to punitive damages need not be directed at the specific plaintiff seeking punitive damages in order to recover under the statute.

Sharp v. Case Corp., 227 Wis. 2d 1, 21, 595 N.W.2d 380 (1999).

Strenke, 2005 WI 25, ¶ 16

Id.at ¶ 20.

Id. at ¶ 19. at ¶ 20. The Supreme Court picked up on a fact the Court of Appeals missed: “there was another statute enacted in the same legislative session in which [§ 895.85(3)] was enacted that demonstrates this point. Wisconsin Stat. § 895.525(4m) … allows liability of contact sports participants only ‘if the participant who caused the injury acted recklessly or with intent to cause injury.’” Id. at ¶ 21. The dissent did not address this matter, but did note that § 895.83(3) was enacted “as part of a broader, comprehensive tort reform.” Id. at ¶ 64. Significantly, § 895.525 does not mention punitive damages. It was established to decrease uncertainty regarding the legal responsibility for injuries that result from recreational activities and to insure the continued availability in the state of commercial enterprises that offer recreational activities to the public.

Id. at ¶ 23

97 Wis.2d 260, 294 N.W.2d 437 (1980)

96 Wis.2d 211, 291 N.W.2d 516 (1980)

Id. at ¶¶ 24-25, 26-27.

Id. at ¶ 65.

Id. at ¶ 27.

Id. at ¶ 28

Id. at ¶¶ 33, 34.

Id. ¶ 36.

Id. at ¶¶ 35-37.

Wischer II, 2005 WI 26, ¶ 88.

Id. at ¶¶ 30-31

Id. at ¶ 66.

Id. at ¶¶ 66, 68-69.

Id. at ¶¶ 66, 69, citing, James D. Ghiardi & John J. Kircher, 1 Punitive Damages L. & Prac. § 5.01, at
8 (1996) (emphasis in original).

Id. at ¶¶ 73, 83.

Id. at ¶ 86.

Id. at ¶ 87.

Id. at ¶¶ 64, 67, 87-88

Wischer II, 2005 WI 26, ¶ 8

Id.

Strenke, 2005 WI 25 ¶¶ 54-58

Strenke, 2005 WI 25 ¶ 22

Id.at ¶ 38

Id.

Id.at ¶¶ 39, 42.

Bank of Sun Prairie v. Esser, 155 Wis.2d 724, 736, 456 N.W.2d 585 (1990).

189 Wis.2d 279, 287, 525 N.W.2d 624 (Ct. App. 1994). See Strenke, 2005 WI 25, ¶¶ 35, 88.