Daniel Virnich v. Jeffrey Vorwald, 2011 U.S. App. LEXIS 25215

Virnich sues Vorwald, American Trust, Polsky, and Beck Chaet, alleging Wisconsin §134.01 conspiracy to harm reputation or business; district court dismissed for failure to state a claim under Twombly/Iqbal.
CPC is controlled by Virnich through holding structure; CPC had loans with American Trust; personal guarantees were refused by Virnich and Moores.
Receivership for CPC was sought and granted in 2003 with Polsky appointed as receiver; alleged malice and false affidavit were used to establish the receivership.
Polsky and Vorwald allegedly conspired to obtain the receivership using a false affidavit and to harm Virnich and Moores’ reputations; later related litigation and press coverage followed.
Wisconsin receivership court found waiver of claims in 2011, indicating CPC, Virnich and Moores waived damages against American Trust and against the Receiver for pre-agreement actions.
The appellate court affirmed dismissal based on issue preclusion, holding the §134.01 claim barred by the state court’s waiver and waiver-based findings; fundamental fairness factors also support collateral estoppel.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Virnich plausibly pled a §134.01 conspiracy claim.	Virnich pled an agreement and concerted acts to harm him.	Polsky/Vorwald argue the claim rests on vague, improper motives incompatible with Wisconsin law.	Plaintiff's claim plausibly pled under Twombly/Iqbal.
Whether the malice requirement is satisfied.	Virnich alleged irrational malice by Polsky and Vorwald.	Defendants contended lack of proof that Polsky harbored malice toward Virnich.	Malice pled; irrational harm-for-harm motive is actionable under §134.01.
Whether issue preclusion bars the §134.01 conspiracy claim.	Virnich argues not personally a party to the receivership; should not preclude.	Receivership order and waiver apply to CPC and its privies; privity established.	Issue preclusion bars the claim.
Whether privity allows Virnich to be bound as to preclusion.	Virnich argues lack of personal party status.	Virnich is in privity with CPC as holder of substantial interest.	Privity established; preclusion applies.
Whether five-factor fairness analysis warrants avoiding preclusion.	Application of collateral estoppel would be unfair.	Factors favor preclusion; no fundamental unfairness.	Five-factor test satisfied; application of issue preclusion proper.

Radue v. Dill, 246 N.W.2d 507 (Wis. 1976) (implied private right of action for conspiracies to injure reputation or business)
Northern States Power Co. v. Bugher, 525 N.W.2d 723 (Wis. 1995) (collateral estoppel under Wisconsin law)
Aldrich v. Labor and Industry Review Comm’n, 801 N.W.2d 457 (Wis. App. 2011) (five-factor fundamental fairness test for preclusion)
Lindas v. Cady, 515 N.W.2d 458 (Wis. 1994) (five-factor preclusion considerations)
Jarrard v. CDI Telecommunications, Inc., 408 F.3d 905 (7th Cir. 2005) (diversity jurisdiction and preclusion considerations)
Knuth v. Lepp, 193 N.W.2d 519 (Wis. 1923) (pending appeal does not affect preclusive effect)
Kurek v. Pleasure Driveway & Park District, 557 F.2d 580 (7th Cir. 1977) (final judgment retains preclusive effect pending appeal)
Twombly v. Bell Atlantic Corp., 550 U.S. 544 (2007) (pleading must plead plausible claims, not mere speculation)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
Polsky v. Virnich, 800 N.W.2d 742 (Wis. 2011) (Wisconsin Supreme Court decision upholding waiver/recovery approach)
Virnich v. Vorwald, 2010 WL 3489770 (W.D. Wis. 2010) ( district court dismissal under Twombly/Iqbal)