Jandrt v. Jerome Foods, Inc.

• Decision Date: 07 July 1999
• Docket Number: No. 98-0885.,98-0885.
• Citation: 597 N.W.2d 744,227 Wis.2d 531
• Parties: Todd JANDRT, a minor, by his Guardian ad Litem, Larry B. Brueggeman, Kristine K. Kinsley Stoeklen, as Special Administrator of the Estate of Mitchell J. Kinsley, deceased, Tierney Liazuk, a minor, by her Guardian ad Litem, Larry B. Brueggeman, Plaintiffs, v. JEROME FOODS, INC., Defendant-Respondent, Monica JANDRT, Jodi Liazuk and Kristen K. Kinsley Stoeklen, Third-Party Defendants, PREVIANT, GOLDBERG, UELMEN, GRATZ, MILLER & BRUEGGEMAN, S.C., Judgment Debtor-Appellant.
• Court: Wisconsin Supreme Court

227 Wis.2d 531

597 N.W.2d 744

Todd JANDRT, a minor, by his Guardian ad Litem, Larry B. Brueggeman, Kristine K. Kinsley Stoeklen, as Special Administrator of the Estate of Mitchell J. Kinsley, deceased, Tierney Liazuk, a minor, by her Guardian ad Litem, Larry B. Brueggeman, Plaintiffs, v. JEROME FOODS, INC., Defendant-Respondent, Monica JANDRT, Jodi Liazuk and Kristen K. Kinsley Stoeklen, Third-Party Defendants, PREVIANT, GOLDBERG, UELMEN, GRATZ, MILLER & BRUEGGEMAN, S.C., Judgment Debtor-Appellant.¹

No. 98-0885.

Supreme Court of Wisconsin.

Oral argument May 6, 1999.

Decided July 7, 1999.

For the judgment debtor-appellant there were briefs by Thomas W. St. John, Matthew W. O'Neill and Friebert, Finerty & St. John, S.C., Milwaukee and of counsel, Joe Thrasher and Thrasher, Doyle, Pelish & Franti, Ltd., Rice Lake and oral argument by Thomas W. St. John.

For the defendant-respondent there were briefs by James R. Troupis, Steven P. Means and Michael Best & Friedrich, LLP, Madison and David F. Girard-diCarlo, James T. Smith, Laurence S. Shtasel, Lisa A. Rosenblatt-Kaplan and Blank, Rome, Comisky & McCauley, LLP, Philadelphia, PA and oral argument by James R. Troupis and James T. Smith.

Amicus curiae brief was filed by Robert A. Slattery and Slattery & Hausman, Ltd. And James D. Ryberg and Kelly & Ryberg, S.C., Eau Claire for the American Board of Trial Advocates.

Amicus curiae brief was filed by Mark L. Thomsen and Cannon & Dunphy, S.C., Brookfield and William C. Gleisner, III and Hausmann-McNally, S.C., Milwaukee for the Wisconsin Academy of Trial Lawyers.

¶ 1. DONALD W. STEINMETZ, J.

This case is before us on certification from the court of appeals, pursuant to Wis. Stat. § (Rule) 809.61 (1997-98). Debtor-appellant appeals a judgment of the Circuit Court for Barron County, the Honorable Edward R. Brunner.

¶ 2. On May 9, 1995, Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C. (Previant firm) filed this lawsuit on behalf of three children born with birth defects. The lawsuit alleged upon information and belief that the plaintiffs' birth defects were caused by the exposure of their mothers during pregnancy to certain chemicals present and used at Jerome Foods, Inc. (JFI), a turkey processing plant located in Barron County, where the mothers worked. The causation allegation was made "upon information and belief" because, among other things, the Previant firm was advised by a medical consultant that it would need discovery from JFI concerning the specific chemicals used and levels of exposure before conclusively determining causation. The Previant firm filed the action within one week of a change in the law of joint and several liability that potentially would have a significant impact upon the plaintiffs' recovery should their lawsuit be successful.

¶ 3. Nine months after the action was filed, the Previant firm offered to voluntarily dismiss the action. The Previant firm and its clients had concluded that the causal connection between chemicals at JFI and the plaintiffs' birth defects could only be demonstrated through epidemiological studies, and chose not to commence such an undertaking. JFI then filed a motion seeking sanctions against the Previant firm for allegedly commencing and continuing a frivolous action. After a two-day hearing on the motion, the circuit court filed its memorandum decision which included 118 findings of fact and 74 conclusions of law. The court held that the commencement and continuation of the action was frivolous because the Previant firm failed to make a reasonable inquiry into the facts underlying the allegation of causation prior to and following filing. The circuit court awarded JFI a total of $716,081 in attorneys fees and costs.

¶ 4. Accordingly, the issues presented for review are:

¶ 5. (1) Whether the circuit court applied a proper standard of law and used a demonstrated rationale process in concluding that the filing of this action without proof of causation was frivolous under Wis. Stat. §§ 802.05 or 814.025. We hold that the circuit court erroneously exercised its discretion in concluding that the commencement of the action was frivolous.

¶ 6. (2) Whether under Wis. Stat. § 814.025 the Previant firm's continuation of the action for nine months was frivolous. We hold that the circuit court did not err as a matter of law in concluding that the action was frivolously maintained.

¶ 7. (3) Whether an award of $716,081 in attorneys fees and costs was reasonable as a matter of law. As we hold that the filing of the action was not frivolous, we remand to the circuit court to determine the amount of reasonable attorneys fees and costs JFI is entitled to as a result of the Previant firm's continuation of a frivolous action.

I.

¶ 8. In November 1994, Larry Brueggeman (Brueggeman), a shareholder with the Previant firm, was contacted by Jonathan Sherman (Sherman), a Wisconsin attorney with whom he had worked in the past. Sherman told Brueggeman that he represented a potential class of children who had suffered birth defects as a result of their mothers' exposure to chemicals at JFI during their pregnancies. Sherman inquired whether Brueggeman would be interested in handling the case on behalf of the plaintiffs.

¶ 9. Brueggeman understood from Sherman's preliminary investigation that between 12 and 15 women had indicated that they had "problem pregnancies" while working at JFI. Sherman had obtained information from some of the mothers who worked at JFI that there had been ammonia leaks and that on occasion the facility had been evacuated. He also had some evidence that the level of carbon dioxide (CO2) was such that there was CO2 build-up on the floor and that a number of women had complained of breathing problems, headaches, and dizziness.

¶ 10. Brueggeman also understood that Sherman had run a medical literature search to determine whether there was a relationship between birth defects and chemicals in the environment. Sherman indicated that his office had not located any scientific literature specifically addressing the possible relationship between CO2 or ammonia, two chemicals known to be present at JFI, and birth defects.

¶ 11. Finally, Sherman also provided Brueggeman with a transcript statement made by Jodi Liazuk (Liazuk), the mother of one of the plaintiffs, taken approximately a year after the birth of her daughter in a conversation with Sherman. Liazuk explained that her daughter's neurologist, Dr. Harris, told her that the cause of her daughter's spina bifida could have been chemicals at JFI:

[Dr. Harris] had asked us where we worked and well, my husband asked him how does this happened [sic] and he said there's there's several different reasons that it can be hereditary it can be caused by chemical pollution, by chemicals you work with and he asked us where did you work because we didn't you know have any idea of anything in the family and we told him where we worked and, what I worked around and he said there's a good cause right there he said that's he says that I could be almost certain almost certain that the chemicals that you worked around and with could have cause [sic] the spina bifida.

¶ 12. In February 1995, Jodi Liazuk and the mothers of the two other plaintiffs' in this suit retained the Previant firm to represent them in this matter. The plaintiffs Tierney Liazuk and Todd E. Jandrt were born with spina bifida. Kristine K. Kinsley Stoeklen was the third plaintiff, the special administrator of the Estate of Mitchell J. Kinsley, who was deceased. Mitchell Kinsley was born with hypoplastic heart malformation.

¶ 13. After its retention, the Previant firm made additional investigation to determine whether a complaint should be filed. Previant firm associate Lisa Bangert (Bangert) and a Previant firm librarian conducted a search of medical and scientific literature regarding the relationship between exposure to ammonia or CO2 and birth defects. They found literature indicating that birth defects can be a result of chemicals in the environment, but were unable to find any literature addressing whether ammonia or CO2, individually or in combination, caused birth defects.

¶ 14. Bangert then examined whether any of the other known causes of spina bifida were present. She interviewed the plaintiffs' mothers, and two of the fathers. Based upon these interviews, she concluded that none of those causes were present, and further concluded that therefore there was a "strong probability" that exposure to chemicals caused the defects.

¶ 15. Brueggeman then consulted with George Dahir, M.D. (Dahir), regarding causation. Brueggeman had in the past relied on Dahir, who serves as a consultant to lawyers in "toxic tort" actions, for help to determine whether or not a causal relationship existed between the exposure to a chemical and the problem of which the plaintiff is complaining. Although not an expert on causation, Dahir had apparently advised Brueggeman on technical issues in similar cases and advises attorneys generally on how best to proceed in such cases. Brueggeman testified at the sanctions hearing that after he explained the facts known to him, Dahir advised that due to the evolving nature of the science in the area of causation, in order to obtain an expert opinion on causation it would be necessary to commence an action and obtain discovery concerning the nature and extent of the exposure of the plaintiffs to the chemicals at JFI. The Previant firm relied on Dahir's advice and did not contact an expert on causation before it filed the action.

¶ 16. On March 1, 1995, shortly after the Previant firm was retained, the Wisconsin Senate approved Senate Bill 11, which by all accounts made significant changes to the law of comparative negligence. The law was scheduled to take effect on May 17, 1995 (which it did). The Previant firm received a number of "warnings" concerning the potential liability the firm could face if it did not file...