Defamation Down Under: Online Publications and Personal Jurisdiction

Recently, in Salfinger, et al. v. Fairfax Media, Ltd., et al., the Wisconsin Court of Appeals considered “whether a Wisconsin Court may exercise jurisdiction over foreign defendants whose only real connection to the State of Wisconsin is in having published an article online that is ostensibly available to anyone in the world and that also provides for targeted advertising based upon the user’s location and interests.”  ¶ 11.

Plaintiff Roderick Salfinger, an Australian claiming to be a resident of Shorewood, WI, brought a defamation claim against the Sydney Morning Herald for an article it ran about the family behind Yellow Tail wine, which noted his connection to them and contained other individuals’ descriptions and opinions about him which were “less than flattering.”  ¶¶ 2-4.  Of primary concern to the plaintiff was a statement that he “faces prosecution in the [United States] after allegedly producing a revolver at his daughter’s wedding.”  ¶ 4.

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Boy is it Cold! How is your Automatic Fire Sprinkler System?

A recent publication by NFPA, Hall, J. R. (2010). “U.S. Experience with Sprinklers and Other Automatic Fire Extinguishing Equipment” reports the analysis of data from a single calendar year reveals approximately 120 inadvertent automatic fire sprinkler discharges per day.  Inadvertent discharges result in millions of dollars in damage per year.

Sprinklers inadvertently discharge for a number of reasons, the most common of which are: (1) non-fire related overheating; (2) freezing; (3) mechanical damage; (4) corrosion; (5) sabotage; and (6) component manufacturing defects. Blum, A., Long, R.T., Dillon, S., “Investigating Inadvertent Automatic Fire Sprinkler System Discharges,” Forensic Engineering, 2012.  Commercial properties are most likely to see an inadvertent discharge, followed by manufacturing facilities, homes and warehouses.  Id.

Critical aspects of evidence collection include the discovery and collection of each piece of the failed component. Blum, et al. at 530.  As usual, preparation for this type of investigation is critical.  As much as possible, be prepared in advance to look for the right components.  Consult the as-built drawings.  Look at the spare heads in the spare sprinkler box, and study the appearance of the activation elements, caps and seals.  Try to get there prior to the commencement of cleanup efforts.  If they have begun before you are invited, do your best to document what has been cleaned up and by whom, as the duty to preserve evidence attaches at the time a claim is evident.  Preservation of fracture surfaces is critical, as those surfaces often tell the story of the failure.

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Falsely Induced “As-Is” Clause Will Not Defeat Statutory Claim of Deceptive Representation

A recent decision by the Court of Appeals examined how Wisconsin’s deceptive representation statute, Wis. Stat. § 100.18(1), applies to “as-is” sales and contractual exculpatory clauses. While sellers may rely on “as-is” language to avoid liability for problems or defects that are discovered down the road, this new decision confirms that, just as with common law claims for misrepresentation, a falsely induced “as is” clause does not preclude liability under section 100.18.

In Fricano v. Bank of America NA, 2015AP20 (recommended for publication), the bank acquired a home in foreclosure. After acquiring the home, the bank’s real estate agent discovered that the property had suffered severe water damage. The real estate agent emailed the bank’s asset manager photos of the damage, which included pooling water and fallen ceilings. The bank’s asset manager said that “quick clean up would save the property from any mold issues.”

However, the remediation and repair was not completed for seven months and the real estate agent found the work to be unsatisfactory. The real estate agent had warned the bank throughout the process that mold could develop, although by the time the remediation was complete and the house was listed, the real estate agent had not seen or smelled any signs of mold. Nevertheless, the house was listed and the plaintiff set up a showing. Her real estate agent took her through the home and noticed discoloration in the basement that looked like mold. Although they noticed mold elsewhere in the basement, they did not see any evidence of mold anywhere else in the home.

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Addressing Claims after a Product Rollout (I’m looking at you, Hoverboard)

My news feeds this morning are alive with the re-posting of tweets and other social media blasts related to injuries suffered by the recipients of, generically, the Hoverboard. These products remind me of the rollout of the Segway, and the inevitable claims and lawsuits for injuries that followed a truly revolutionary concept in human transportation.

The Segway was expensive, though. Really expensive.  And they have handles.

Hoverboards, on the other hand, are running about $400. Price, and a steady stream of media stories leading up to Christmas made the product a hot gift this year.  A large sales volume of a relatively revolutionary concept in personal travel (without handles!) over a short time will mean that these manufacturers will be inundated with claims, and attempts to certify class action lawsuits, in the coming year.

Responding to those claims, evaluating accidents their causes, categorizing injuries and organizing the response to the inevitable claims will directly affect the bottom line of these manufacturers and their insurers over the coming several years.

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Statute of Limitations in Facebook Defamation Claim Based on “Active Use”

A recent published Court of Appeals decision has added some guidance for litigating defamation claims arising from use of social media. In Laughland v. Beckett, 2015 WI App 70, 14AP002393, the court examined a claim for defamation related to a fake Facebook account and posts made by the fake account that spanned several months. “Active use” of the social media account, which included “actively publish[ing] material” on the fake account, constituted a “continuing course of conduct” for purposes of the statute of limitations. See ¶18. As such, the “single publication rule” established in Ladd v. Uecker, 2010 WI App 28 was not outcome determinative. The court applied the statute of limitations based on the date of the last Facebook post and held that the claim was timely filed. The facts are as follows:

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Emergency Doctrine Does Not Apply to Dog Owner Who Intervened When Family Pet Was Attacked

Well, as summer vacation comes to a close, it’s time to set down my piña colada, fold up my hammock, and get back to work.  Thank goodness the legal industry takes a hiatus during these warmer months so we can all enjoy days on end in the sun with friends and family.

Or not. But at least I’m not the only one trapped in an office on these gorgeous, fleeting days. The Wisconsin Court of Appeals has been busy at work, too.  A recent decision focused on the importance of the temporal element when determining whether the emergency doctrine applies as a defense to a given fact situation. In Kelly v. Berg, 2014AP001346 (recommended for publication), the court of appeals remanded the case for a new trial after the jury was instructed on the emergency doctrine and returned a verdict in favor of the plaintiff who had suffered a dog bite.

While the defendants argued that the emergency doctrine should not apply to the actions of a person who is attempting to prevent damage to property (in this case, the plaintiff’s dog), the court did not reach this issue. Instead, the appellate court focused on the time in which action is required. For the doctrine to apply, “the person’s reaction to the danger must be “practically instinctive or intuitive.” The court compared two previous cases in which the time to react was two seconds (the doctrine applied) and seven seconds (the doctrine did not apply).

In this case, the appellate court did not refer to or rely upon any specific computation of time that elapsed before the plaintiff reacted. Nevertheless, the record demonstrated that the plaintiff had sufficient time to make a deliberate and intelligent choice whether to intervene in a fight between her dog and the defendants’ dog. The court also held that “when considered as a whole,” the instructions together did not convey the correct legal standard and therefore the erroneous instruction was prejudicial.

The facts are as follows:

Joan Kelly was drawn outside on the evening of June 16, 2011 when she heard her chocolate lab, Moosie, screeching and yelping. [Author’s note: awesome dog name.] Joan found Moosie under attack by her neighbor’s pitbull, Princess. Joan screamed for Princess’s owners, Amanda Berg and Adam Finkler, to come help but they did not respond. When it became apparent to Kelly that Princess would likely kill Moosie if she did not intervene, Kelly grabbed Princess’s jaws and pried them open, releasing Moosie’s neck and allowing Moosie to escape toward the back door of Kelly’s home.

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Seventh Circuit Emphasizes Defenses To Claims Of Bad Faith While Holding That Cosmetic Damage Is A Covered “Direct Physical Loss”

A recent decision by the Seventh Circuit Court of Appeals emphasizes an insurer’s obligation to draft a clear and unambiguous insurance policy if it wishes to exclude certain property damages or losses that it deems to be merely cosmetic. In Advance Cable Company, LLC v. Cincinnati Insurance Company, 14-2620, the Seventh Circuit affirmed a Western District of Wisconsin decision granting summary judgment in favor of the insured, Advance Cable Company, on coverage but granting summary judgment in favor of Advance’s insurer, Cincinnati Insurance Company, on Advance’s claim of bad faith.

The decision recognizes that insurers must be allowed to investigate claims and retain legal counsel without fear that their every action might later be scrutinized as evidence of bad faith. And the decision certainly enforces a high standard to prevail on a claim for bad faith by implying that a successful claim would be one that could be described as “beyond the pale.”

The underlying facts are as follows: Advance had a policy of insurance through Cincinnati covering two properties in Middleton, Wisconsin. After a hailstorm in 2011, Advance submitted a claim to Cincinnati reporting damage to its property. That same month, Cincinnati’s adjuster inspected the roof and “spotted some dents, but he saw little other evidence of damage.” The estimate sent to Advance by Cincinnati noted “some dents to soft metal roof vents and AC fins” but stated that the adjuster “did not observe any damage to roofing.” After Advance’s $1,000 deductible, Cincinnati issued Advance a check for damage to both its buildings totaling $1,512.70.

Six months later, a potential buyer of one of Advance’s buildings had the roof inspected. The buyer’s inspector came to a different conclusion about the extent of the damage. He observed that there was “definitely hail damage” to the roof. Based on this report, Advance asked Cincinnati to reopen the claim. So Cincinnati inspected the roof again, and again it concluded that while some denting existed on the metal roof panels, the denting would “not affect the performance of the panels (roofs)” or reduce the roof’s life expectancy.

Advance believed that Cincinnati was required to replace the damaged roof, but Cincinnati believed that the damage was cosmetic and therefore not a covered “direct physical loss.” Ultimately, whether the damage was cosmetic was irrelevant, because the policy of insurance did not exclude cosmetic damage from its coverage.

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Court of Appeals Analyzes When Interest Accrues on Untimely Paid Insurance Claims

The recent case of Dilger v. Metropolitan Property and Casualty Insurance Company, 2014AP001851 (recommended for publication) analyzed the requirements necessary to obtain statutory interest on an insurance claim that is not promptly paid. The court’s holding appears to set a rather liberal standard regarding the requirement that “there can be no question of liability on the part of the insured,” because the court concluded that even a guilty plea in a related criminal proceeding will not extinguish doubts about liability. Instead, the uncertainty was only eliminated when the insured was sentenced, because only then was the insured’s ability to withdraw her guilty plea eliminated.

In reaching its holding, the Court of Appeals reaffirmed the work product and attorney-client privilege protections applicable to an insurance company’s claims files. However, it also held that under the circumstances of the case before it, the trial court’s error in ordering the production of the claims file was harmless.

The 2006 case of Kontowicz v. American Standard Insurance Co., 2006 WI 48, 290 Wis. 2d 302, 714 N.W.2d 105 established that Wis. Stat. § 628.46 applies to third-party insurance claims with three caveats:

(1) “there can be no question of liability on the part of the insured,”

(2) “the amount of the damages must be in a sum certain amount,” and

(3) “the claimant must provide written notice of both liability and the sum certain amount owed” to the insurer.

Kontowicz, 290 Wis. 2d 302, ¶2. The Kontowicz case also held that claims for interest due under § 628.46 may be bifurcated in order to expedite resolution and to avoid prejudice. Id., ¶ 49.

The Court of Appeals called the Dilger case the “follow-up” to Kontowicz. In Dilger, both parties were appealing the application of the Kontowicz caveats. The insurer argued that its insured’s liability was debatable and that the claimant’s damages were not in a sum certain. During the underlying litigation, the trial court had ordered the production of the insurer’s claims file and the plaintiff had pointed to certain portions of the file in support of its arguments for the interest accrual date.

The case arose as a result of a drunk driver hitting an on-duty police officer walking along a street in response to a call. The officer was severely injured and the driver did not turn herself in for three days. The driver maintained that she thought she hit a deer. The officer filed an action against the driver and the driver’s insurer. The insurer, Metropolitan, eventually settled for its policy limits of $1.5 million. The insured drunk driver also contributed $40,000. All claims were then dismissed with the exception of the officer’s claim for interest under Wis. Stat. § 628.46. The trial court awarded the officer $178,191.78, which was appealed by both parties—the insurer appealed the decision to award interest at all, and the officer appealed the amount of interest awarded.

The arguments concerning the Kontowicz caveats hinged on several important dates, and a timeline may be helpful to understand the decision:

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Wisconsin Supreme Court accepts seven new cases

The Wisconsin Supreme Court has decided to accept review of seven new cases, as summarized on the court system’s website.

Among those cases is WI Pharmacal Co. v. Nebraska Cultures of CA, an insurance coverage case that may clarify the law regarding the “occurrence” and “property damage” requirements in a CGL policy in relation to economic damages.  As pointed out on the court system website, the Court is expected to review the following issues:

  • “Is the supply of an ingredient that causes a recall of a product incorporating the contractually nonconforming ingredient a claim for “property damage”?
  • Does an action that alleges purely contract-based claims seeking purely economic damages as a result of a contractually nonconforming goods constitute an “occurrence”?
  • Does the Business Risk exclusion apply to negate coverage?”

Another insurance case, Johnson v. Cintas Corp. No. 2, reviews the Court of Appeals’ decision to allow a party entitled to interest under Wis. Stat. § 807.01(4) to collect interest at the time the offer of settlement was made, rather than the time that the judgment was entered.  After the offer of settlement pursuant to § 807.01(4) was made by the plaintiff, but before the jury awarded an amount of damages greater than in plaintiff’s offer, the legislature adopted 2011 Wis. Act 69 which reduced the interest amount from 12% to 1% plus prime (or 4.25% in this case).

Stay tuned to On The Docket for more updates as these cases are heard by the Supreme Court.

Wisconsin Court Analyzes Temporal Limit on Bystander Claims

In Seamonson v. Nazareth Health & Rehab. Center, plaintiffs sought review of a circuit court order granting summary judgment against them as to their claim for negligent infliction of emotional dismiss – a/k/a their “bystander” claim.  The Seamonsons’ action stemmed from their discovery of the death of their two-year-old son, Blake.  The Seamonsons had visited a relative at the Nazareth facility on Nov. 1, 2011.  Two days later, on Nov. 3, Blake was put to bed around 9:30 pm.  The next morning, sometime after 9:30, the Seamonsons were unable to wake Blake.  911 was called, CPR was administered and he was rushed to the hospital, but pronounced dead at 11:02 pm.  Blake’s autopsy showed that he had been poisoned after ingesting a Fentanyl medication patch, which the Seamonsons claim was improperly disposed of at Nazareth.

Among others, the Seamonsons brought a bystander claim for negligent infliction of emotional distress against Nazareth.  Bystander claims require that: “(1) the injury suffered by the victim must be fatal or severe; (2) the victim and plaintiff must have a close familial relationship; and (3) the plaintiff must have observed an extraordinary event, namely the incident and injury or the scene soon after the incident with the injured victim still at the scene.”  ¶ 5.  The temporal limit in the third element was at issue here.

The Court of Appeals explained that “Wisconsin courts have not defined a specific temporal limit for bystander claims,” and “[n]o bright line rule defines exactly how soon a claimant must have come upon the scene of the victim’s injury or death in order to state a claim for negligent infliction of emotional distress.”  ¶ 9.  The court explained that this element must be analyzed on a case by case basis and interpreted narrowly.  ¶¶ 9-10, ¶ 12.  Ultimately, after analyzing the temporal situations in other cases, the court affirmed, concluding that the third element had not been met where the Seamonsons discovered their son “after an undetermined amount of time, possibly hours, after his death.”  ¶ 13.


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