State of Wisconsin ex rel. Universal Processing Services of Wisconsin, LLC, Petitioner, v. Circuit Court of Milwaukee County and the Honorable John J. DiMotto, presiding, Samuel B. Hicks and Merchant Card Services, Inc. Respondents.
CASE NO.: 2016AP923-W
SUPREME COURT OF WISCONSIN
March 29, 2017
2017
SUPERVISORY WRIT BEFORE THE SUPREME COURT
ORAL ARGUMENT: November 1, 2016
SOURCE OF APPEAL: COURT: Circuit; COUNTY: Milwaukee; JUDGE: John J. DiMotto
JUSTICES: CONCURRED/DISSENTED: ZIEGLER, J. concurs and dissents (Opinion filed). BRADLEY, R.G., J. joined by KELLY, J. concur and dissent (Opinion filed).
For the petitioners, there was a brief by Ryan M. Billings, Robert L. Gegios, Melinda A. Bialzik and Kohner, Mann & Kailas,, S.C., Milwaukee, and oral argument by Ryan M. Billings.
For the respondent the cause was argued by David C. Rice, assistant attorney general, with whom on the brief(s) was Brad D. Schimel, attorney general.
For the respondent, there was a brief by Joan M. Huffman, Paul R. Erickson and Gutglasas, Erickson, Bonville & Larson, S.C., Milwaukee, and oral argument by Joan M. Huffman.
NOTICE
This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports.
PETITION for supervisory writ. Dismissed. Rights Declared.
¶1 SHIRLEY S. ABRAHAMSON, J. Universal Processing Services of Wisconsin, LLC d/b/a Newtek, the plaintiff-petitioner, petitions this court, pursuant to
¶2 Newtek argues that the circuit court‘s order appointing the referee expanded the role of referee into the role of de facto circuit court judge in violation of the Wisconsin Constitution and
¶3 The dispute underlying this petition arises from a lawsuit initiated by Universal Processing Services of Wisconsin, LLC d/b/a Newtek (Newtek), a bankcard processing services company, the plaintiff-petitioner, against one of its independent sales agents, Samuel Hicks, and his Idaho company, Merchant Card Services (collectively, Hicks), the defendants-respondents.
¶4 The following issues are presented:
- Is Newtek‘s petition for a supervisory writ properly before this court?
- Has Newtek waived or forfeited its objection to the Order of Reference, is it estopped from challenging the Order, or has it impliedly consented to the Order?
- Does the circuit court‘s Order of Reference contravene
Article VII, Section 2 of the Wisconsin Constitution vesting judicial power of this state in a unified court system? - Does the circuit court‘s Order of Reference, including the provision that the circuit court‘s review of the referee‘s “rulings” shall be based only on the referee‘s “erroneous exercise of discretion,” contravene the Wisconsin Constitution and the Wisconsin statutes and rules regarding circuit court and appellate court authority and practice?
- Does the circuit court‘s Order of Reference contravene the parties’ right to “obtain justice freely, and without being obliged to purchase it,” guaranteed by
Article I, Section 9 of the Wisconsin Constitution , or to due process of law, guaranteed byArticle I, Section 1 of the Wisconsin Constitution , or Newtek‘s right to a jury trial, guaranteed byArticle I, Section 5 of the Wisconsin Constitution ? - Should the orders of the referee to date be vacated and should the parties be allowed to request substitution of the judge on remand?
¶5 For the reasons set forth, we conclude as follows:
- Newtek‘s petition for a supervisory writ does not meet the requirements set forth in
Wis. Stat. § (Rule) 809.71 . The petition was not first filed in the court of appeals and Newtek has failed to show that it was impractical to file the petition in the court of appeals. We do, however, exercise our constitutional superintending authority underArticle VII, Section 3(2) of the Wisconsin Constitution to determine the validity of the Order of Reference. A declaration of rights is an appropriate vehicle for an exercise of the superintending authority over circuit courts constitutionally granted to this court.4 See Part II, ¶¶36-50. - Regardless of whether Newtek has waived or forfeited its right to challenge the Order of Reference, is estopped from challenging the Order, or has it impliedly consented to the reference, this court may resolve the issue of the validity of the Order of Reference under its constitutional superintending authority. See Part III, ¶¶51-55.
- The Order of Reference impermissibly delegated to the referee judicial power constitutionally vested in Wisconsin‘s unified court system. Accordingly, the Order does not survive Newtek‘s constitutional challenge. See Part IV, ¶¶56-82.
- The circuit court‘s Order of Reference, including the provision that the circuit court‘s review of the referee‘s “rulings” shall be based only on the referee‘s “erroneous exercise of discretion,” contravenes the constitution and statutes or rules regarding circuit court and appellate court authority and practice. It infringes on the legislature‘s authority to define a circuit court‘s appellate jurisdiction. See Part V, ¶¶83-88.
- We do not decide the instant case on the basis of
Article I, Section 9 of the Wisconsin Constitution , the due process clause ofArticle I, Section 1 of the Wisconsin Constitution , or the right to jury trial ofArticle I, Section 5 of the Wisconsin Constitution , but we note that reference to a referee is the exception, not the rule; that there are constitutional limits on the powers of a referee;and that a reference can jeopardize a litigant‘s access to the justice system, due process, and right to a jury trial. The Wisconsin Constitution requires the state to provide a judicial system for the resolution of disputes. Access to state courts for conflict resolution is thus implicit in the state constitution. We express our concern that the use of referees increases the costs of litigation and may cause delay and, in certain cases, may deprive litigants of access to courts. See Part VI, ¶¶89-103. - To the extent the parties have agreed to abide by an order or ruling of the referee relating to discovery, that ruling or order shall stand. To the extent either party has objected to an order or ruling of the referee relating to discovery, that ruling or order shall be vacated. Any ruling or order of the referee on any dispositive motion is vacated. Either party may request substitution of the judge under
Wis. Stat. §§ 801.58(1) and (7) . See Part VII, ¶¶104-110.
¶6 We begin in Part I by setting forth the procedural facts relating to the appointment of the referee and the Order of Reference.
I
¶7 On August 27, 2014, after nearly a decade of successful collaboration between Newtek and Hicks, Newtek terminated Hicks’ contract. On September 16, 2014, Newtek brought an action against Hicks in the Circuit Court for Milwaukee County, John J. DiMotto, Judge, alleging breach of contract, tortious interference with contract, breach of fiduciary duty, and misappropriation of confidential information and trade secrets. Newtek demanded a jury trial.
¶8 The contract included restrictive covenants. The enforceability of these restrictive covenants is central to the underlying dispute. Hicks filed an answer to the complaint, asserting affirmative defenses and counterclaims and seeking nearly $17 million in damages.
¶9 Because the contract provided for injunctive relief, Newtek promptly sought and received an ex parte temporary restraining order from a duty judge just a few days after filing the complaint. The circuit court (Judge DiMotto) affirmed and reaffirmed the temporary restraining order.
¶10 Over the course of the next several months, the parties began extensive discovery. The parties periodically appeared before the circuit court for scheduling conferences and motion hearings.
¶11 In early 2015, Newtek moved to amend the scheduling order to extend the deadlines for naming experts and providing expert reports. Hicks opposed the extension and filed a motion to compel discovery.
¶12 On February 17, 2015, the circuit court held a hearing on Newtek‘s motion to amend the scheduling order and decided to appoint a referee to the case. At the hearing, Newtek described the case as a “classic big case” with numerous issues and production of a substantial number of documents in discovery (50,000 thus far):
[W]hen we appeared before you in November [everyone] was overly optimistic in terms of what could be accomplished. In particular, overly optimistic in where we slotted the expert disclosures in relation to what . . . this litigation has spawned by way of discovery. We‘re approaching just on our side nearly 40,000 pages of production, about which the other side is still complaining. The other side has produced . . . in the order of
10,000 [pages], about which we‘re complaining. . . . We have the classic big case with lots of issues now. We have more than one case in the sense that we have filed a complaint with numerous causes of action but there is a counter complaint. The counterclaims have been filed by the other side, and discovery is occurring with regard to both of those pleadings. . . .
And so we are doing our best to produce without coming to the court . . . . And it has been a production that has gotten to the point of something like a thousand pages . . . that we are producing per day. That‘s what the average is since this began.
¶13 The circuit court granted Newtek‘s request for extension in part and also gave Hicks an extension. The circuit court expressed frustration with the already cumbersome discovery, especially the attorneys’ conduct, stating:
Well you know, the one thing that I put a real high value on are [sic] attorneys being reasonable. Quite frankly, it seems to me that both sides here are not being——at least they‘re not being reasonable . . . .
¶14 Explaining that the circuit court had “some 450 cases” on its docket, the circuit court stated that it was “not going to expend a lot of time dealing with [the parties‘] discovery bickering.” Accordingly, the circuit court appointed retired Judge Michael Skwierawski as the referee under
I am going to be appointing . . . retired Judge Michael Skwierawski as the Special Master in this case under 805.06. . . . [Y]ou‘ll have to deal with him with respect to discovery disputes, etcetera, because I‘m not going to waste precious court time that I can give to other cases to be your personal slave to your discovery disputes. So I just want you to know that. So the more reasonable you are with each other, the less likely you‘re going to need to pay the fees of retired Judge Michael Skwierawski. And he doesn‘t come cheap when it comes to being a Special Master. So I encourage you to be cooperative in your discovery, help each other out, get this case to mediation sooner than later. (Emphasis added.)
¶15 Although the circuit court uses the phrase “Special Master,” this opinion uses the word “referee,” adhering to
¶16 The circuit court explained that it would call retired Judge Michael Skwierawski to ask him if he would accept the appointment. The circuit court also explained that the referee would draft the Order Appointing Special Master/Referee (Order of Reference or Order)7 because the referee has a list of things that he requires. Neither party objected to the circuit court‘s decision to appoint the referee.
¶18 Newtek told the referee that it was reviewing the Order of Reference and would submit objections, if any, as soon as possible. Less than a day after counsel received the Order, the circuit court informed the parties that it had entered the Order. Thus, neither side was able to submit any objections before the Order of Reference was signed.
¶19 The Order of Reference pertained to more than discovery issues. In addition to authority to manage discovery, the Order granted authority over nearly all aspects of the case and provided for limited review by the circuit court. The reference provided, inter alia:
- All motions, whether discovery or dispositive, were to be heard and decided initially by the referee.
- The referee‘s written rulings would be adopted and entered as the rulings of the court, automatically and without hearing, unless a party filed an exception within five days.
- The referee could certify matters to the circuit court, and the circuit court could refuse to decide these matters.
- The circuit court retained the power to modify or set aside a referee‘s ruling, but the circuit court could only do so if the ruling were based on an erroneous exercise of discretion.
- The parties were to compensate the referee at $450 per hour plus reasonable and necessary expenses. The parties were to divide the cost of the referee equally. (The total cost of the referee thus far has been about $45,000.)
¶20 Three relevant provisions of the Order of Reference are as follows (emphasis added):
4. The [referee] shall have the full authority of the Court in coordinating and establishing all pretrial procedures. The [referee] shall also have the full authority of the Court to hear and decide, subject to Court review as set forth below, any other matters assigned to him by the Court. All motions filed, whether discovery or dispositive, shall initially be heard and decided by the [Referee], subject to review processes available as described below.8
7. If the [referee] is of the opinion that a specific issue presented by the parties is of such fundamental importance to the progress or outcome of the case that effective case management would not be furthered by having the [referee] render a decision in the first instance, the [Referee] may at his discretion certify that issue to the Court. As the final arbiter of case management, the Court may, but need not, accept the certification. . . .
8. Exceptions to any decisions made by the [referee] may be taken to this Court and must be filed with the Court within five (5) business days of the issuance of the decision. Review by the Court shall be based on the materials and record before the [referee]. No additional filings
will be permitted unless good cause and exceptional circumstances are demonstrated by the requesting Party. The Court has full authority to modify or set aside the ruling of the [referee] but will do so only if the ruling is based on an erroneous exercise of discretion. Unless an exception is taken, any ruling by the [referee] shall automatically and without hearing be adopted and entered as a ruling of the Court within five (5) business days of submission by the [referee] to the Court and parties. All decisions made by the [referee] shall be appealable after the final disposition of this case, to the full extent as if made by this Court. A party need not take exception to a decision by the [referee] in order to preserve the issue for appeal, either on an interlocutory basis or as an appeal of a final order.
¶21 A copy of the complete order appointing the referee is attached as Attachment A.
¶22 Shortly after the referee‘s appointment, Hicks moved to vacate the temporary injunction previously issued by the circuit court. As counsel for both parties and the referee were e-mailing back and forth about this motion and scheduling issues, the circuit court (copied on the e-mail chain by the referee) told the referee to handle this motion and any others that would arise.
¶23 The circuit court explained to the referee: “I appointed you to serve as [referee] because I anticipated extensive motion practice and discovery issues/disputes that would need [to be] addressed more quickly than I could do with my 400+ case calendar. I would like you to resolve these, and all, pretrial motions/discovery issues.”
¶24 The parties briefed the issue of vacating the temporary injunction; the referee heard oral argument and issued a written order that granted Hicks’ request to vacate the temporary injunction. Newtek subsequently filed an exception to this decision with the circuit court; the circuit court affirmed the referee‘s decision.
¶25 After vacating the temporary injunction, the referee ruled on more than 15 discovery motions and a few motions for sanctions (related to discovery conduct) over the course of several months. Newtek objected to several of these orders, all of which the circuit court affirmed without a hearing.
¶26 In 2015, the referee was asked to decide multiple dispositive motions. In July 2015, Hicks filed two motions for summary judgment; in October 2015, Newtek filed its own motion for summary judgment. These motions for summary judgment primarily involved the enforceability of the restrictive covenants and claims or discovery issues related thereto. Hicks also sought a motion in limine barring Newtek from introducing evidence at trial relating to the restrictive covenants.
¶27 Both parties submitted briefs and evidentiary materials on these motions and participated in a hearing before the referee. The referee recommended partially granting each side‘s motion for summary judgment and granting Hicks’ motion in limine. The referee recommended, inter alia, that summary judgment be granted to Newtek on certain of Hicks’ counterclaims and found that some restrictive covenants upon which Newtek relied were unreasonable, invalid, and unenforceable under
¶28 Newtek filed exceptions to these rulings, requesting leave to submit additional briefing or evidence to the circuit court regarding the referee‘s decisions. Newtek also asked the circuit court to review the referee‘s orders de novo (rather than under the Order‘s prescribed “erroneous exercise of discretion” standard of
¶29 Newtek also declared that “[a]s the parties were never afforded an opportunity to object to the scope and terms of the [referee‘s] appointment, Newtek will also seek to brief the issue of the appointment of the [referee].”
¶30 The circuit court agreed to review the referee‘s recommendations on the dispositive issues de novo. In regard to Newtek‘s other requests——to brief the dispositive issues further, submit additional evidence, and brief the issue of the appointment of the referee——the record is silent. Newtek claims that the circuit court denied these requests at an off-the-record status conference in chambers on January 12, 2016.
¶31 On January 21, 2016, the circuit court issued a lengthy order on the parties’ cross-motions for summary judgment and on the exceptions taken to the referee‘s recommendations. The circuit court agreed with most of the referee‘s recommendations, granting partial summary judgment to each party and limiting the evidence that Newtek could present at trial to prove its claims.
¶32 Although the circuit court‘s opinion states that it is based on a de novo review of the record and the parties’ submissions, Newtek contends that the circuit court did not actually conduct a de novo review.9
¶33 On February 4, 2016, Newtek filed a petition with the court of appeals for leave to appeal from the circuit court‘s order granting partial summary judgment and limiting evidence at trial.
¶34 In its February 2016 petition for leave to appeal, Newtek detailed problems relating to the referee‘s appointment, role, and lack of control by the circuit court, but it did not request the court of appeals to vacate the referee‘s appointment, to consider any constitutional issues, or to determine the referee‘s authority to find facts, make legal conclusions, and issue orders. Newtek‘s major argument focused on substantive legal issues; Newtek argued that the circuit court and the referee ignored the record and misstated the law.
¶35 On April 6, 2016, the court of appeals denied the petition for leave to appeal on a usually stated ground that the “petition fails to satisfy the criteria for permissive appeal. See
II
¶36 The first issue presented is whether Newtek‘s petition for a supervisory writ asking the court to vacate a circuit court order appointing retired Judge Michael Skwierawski as the referee is properly before this court. We conclude that the petition
¶37 The Wisconsin Constitution grants three separate powers to this court: appellate and original jurisdiction; the power to issue all writs necessary in aid of its jurisdiction; and superintending authority over all courts.
The original
The supreme court, except in cases otherwise provided in this constitution, shall have appellate jurisdiction only, which shall be coextensive with the state; but in no case removed to the supreme court shall a trial by jury be allowed. The supreme court shall have a general superintending control over all inferior courts; it shall have power to issue writs of habeas corpus, mandamus, injunction, quo warranto, (continued)
¶38 We begin with the court‘s power to issue supervisory writs.
¶39
certiorari, and other original and remedial writs, and to hear and determine the same.
In April 1977,
(1) The supreme court shall have superintending and administrative authority over all courts.
(2) The supreme court has appellate jurisdiction over all courts and may hear original actions and proceedings. The supreme court may issue all writs necessary in aid of its jurisdiction.
(3) The supreme court may review judgments and orders of the court of appeals, may remove cases from the court of appeals and may accept cases on certification by the court of appeals.
for a supervisory writ in the court of appeals unless it is impractical to do so.11
¶40
809.71 Rule (Supervisory writ). A person may request the supreme court to exercise its supervisory jurisdiction over a court and the judge presiding therein or other person or body by filing a petition in accordance with s. 809.51. A person seeking a supervisory writ from the supreme court shall first file a petition for a supervisory writ in the court of appeals under s. 809.51 unless it is impractical to seek the writ in the court of appeals. A petition in the supreme court shall show why it was impractical to seek the writ in the court of appeals or, if a petition had been filed in the court of appeals, the disposition made and reasons given by the court of appeals.
¶41 Newtek did not first file a petition for a supervisory writ in the court of appeals as required by
¶43 The grounds for the court of appeals to grant a petition for leave to appeal12 are not necessarily the same as the grounds for granting a supervisory writ.13 On this record, we cannot determine the ground on which the court of appeals denied Newtek‘s petition for leave to appeal or whether it was impractical for Newtek to seek a supervisory writ in the court of appeals that focused on the validity of the Order of Reference.
¶44 We decline to extend our supervisory writ jurisprudence and cast doubt on the continued vitality of the “impracticality” requirement of
¶45 In the alternative, Newtek asks that we use our constitutional power of “superintending authority” over all Wisconsin courts,
¶46 We can and should decide the issue of the validity of the Order of Reference using our constitutional superintending authority under the circumstances of this case. The validity of the Order of Reference is an important issue for Wisconsin courts and the public.
¶47 The superintending authority provision of the
¶48 The question of exercising the constitutional grant of superintending authority is one of judicial policy rather than one relating to the power of this court. To convince this court to exercise this constitutional grant of power, a party must establish that an appeal from a final judgment is inadequate and that grave hardship will follow a refusal to exercise the power.19
¶49 Whether an erroneously ordered compulsory reference creates such a hardship is judged on the facts of the case. The following circumstances compel the exercise of our superintending authority over circuit courts in the instant case:
- The Order of Reference broadly delegates to the referee the authority to decide all motions, whether discovery or dispositive.
- The Order of Reference is apparently used with some frequency in Milwaukee County, and the appointment of referees may become an increasingly common practice in the circuit courts.
- This court has not recently reviewed the permissible scope of references under Wisconsin law.
- The case presents significant state constitutional issues having statewide importance relating to core functions of the circuit courts and access to the courts.
- If this court does not review the validity of the Order of Reference at this time, the parties will endure great hardship; they will have to submit to a long and expensive reference and then trial before being afforded the opportunity to seek relief on appeal. And after trial and appeal if the reference is held invalid, the parties will again be at the discovery stage.20
¶50 We therefore use our constitutional superintending authority to declare the rights of the parties in the instant case.
III
¶51 Hicks argues that Newtek has sat on its rights too long by participating
¶52 Hicks raises an important point: Litigants should object to an Order of Reference promptly. Otherwise, litigation will become more protracted and costly. “If a party wishes to contest the reference, it should move the court to revoke the reference.” Ehlinger v. Hauser, 2010 WI 54, ¶77, 325 Wis. 2d 287, 785 N.W.2d 328.
¶53 Newtek offers reasons for its delay in objecting to the reference. We need not decide, however, whether Newtek was justified in failing to object more promptly. Rules of forfeiture and waiver are rules of judicial administration, and thus, a reviewing court may disregard a waiver or forfeiture and address the merits of an unpreserved issue in an appropriate case.22
¶54 Hicks urges that Newtek‘s participation in proceedings before the referee and Newtek‘s failure to seek relief from the Order of Reference promptly were tantamount to Newtek‘s impliedly consenting to the reference and estop Newtek. Newtek responds that it is not estopped, that affirmative consent——which it never gave——is necessary to bind a party to non-judicial dispute resolution (such as arbitration), and that implied consent cannot provide a referee with authority the law prohibits a referee from having, citing AT&T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986) (explaining that arbitration requires affirmative agreement); and Jovine v. FHP, Inc., 64 Cal. App. 4th 1506, 1531, 76 Cal. Rptr. 2d 322 (1998) (holding that a party must explicitly consent to a referee‘s making substantive rulings). See also In re L.J., 157 Cal. Rptr. 3d 197, 207 (Cal. Ct. App. 2013) (explaining that unauthorized referee orders are void and consent is irrelevant).
¶55 When the constitutional limitations of
¶56 We turn now to decide whether the circuit court‘s Order of Reference contravenes
Art. VII. Sec. 2. The judicial power of this state shall be vested in a unified court system consisting of one supreme court, a court of appeals, a circuit court, such trial courts of general uniform statewide jurisdiction as the legislature may create by law, and a municipal court if authorized by the legislature under section 14.
¶57 The phrase “judicial power” is not defined in the
¶58 Constitutional judicial power was discussed in State v. Williams, 2012 WI 59, 341 Wis. 2d 191, 814 N.W.2d 460. In Williams, we addressed whether a circuit court commissioner‘s issuance of a search warrant was an exercise of the judicial power vested in the unified court system by
¶59 No party in the instant case questions the power of a circuit court to appoint a referee.24 Used properly, a circuit court‘s power to appoint and assign functions to a referee is not unconstitutional and allows circuit courts to provide more efficient dispute resolution to litigants.
¶60 Indeed, the power of circuit courts to appoint referees to assist courts with limited functions can be traced to Wisconsin‘s territorial days. This historical role of referees informs our decision.
¶61 Wisconsin‘s territorial statutes recognized the use of special masters in any cause requiring the examination of a “long account.”25 “Actions at law which involved the examination of a long account might be compulsorily referred ever since the constitution was adopted, and for a long time before.”26
¶62 After adoption of the
¶63 Shortly after adoption of the
¶64 Although these early cases recognized that a reference was not a per se violation of the
¶65 Furthermore,
¶66 Not all references were (or are) barred by the
¶67 The United States Supreme Court and federal courts of appeal have recognized that judges bear primary responsibility
Article III preserves to litigants their interest in an impartial and independent federal adjudication of claims within the judicial power of the United States and serves as a significant part of the constitutional system of checks and balances, preventing legislative transfer of jurisdiction to emasculate the constitutional courts.36
¶68 Federal courts have attempted to delineate when a master assists a federal judge versus when a master unconstitutionally displaces a federal judge as adjudicator.
¶69 In La Buy v. Howes Leather Co., 352 U.S. 249 (1957), the Court affirmed the Seventh Circuit‘s issuance of a writ of mandamus directing the district court to vacate a reference to a special master. The reference essentially transferred the entire case, including the trial, to the master. Giving such broad duties to a special master “amounted to little less than an abdication of the judicial function depriving the parties of a trial before the court on the basic issues involved in the litigation.” La Buy, 352 U.S. at 256. The Court noted that while masters could “aid judges” in the performance of limited duties, they could not be permitted to “displace the court.” La Buy, 352 U.S. at 256.
¶70 Although the issue in La Buy was a trial conducted by a special master, the language and reasoning of the opinion have been applied by federal and state courts to the use of special masters or referees at all stages of litigation. These courts have scrutinized appointments of special masters or referees to prevent them from replacing the judge in settings beyond the trial itself.
¶71 When a federal district judge “referred an apparently urgent and contentious
¶72 The concern that a master will effectively replace the trial judge is especially apt when the master decides dispositive motions. “Determining bottom-line legal questions is the responsibility of the court itself.”39
¶73 In United States v. Microsoft Corp., 147 F.3d 935, 954-955 (D.C. Cir. 1998), the federal Court of Appeals for the District of Columbia Circuit vacated a reference to a special master to determine compliance under a consent decree. The court of appeals rejected the United States’ argument that having a special master oversee the implementation of a consent decree is a “well-established tradition.” Microsoft Corp., 147 F.3d at 954. Reasoning, instead, that the special master‘s duties involved interpretation and were “no more ‘remedial’ than would be those of any total referral of a contract case,” the court held that the reference was fatally flawed because it turned on the “determination of rights . . . .” “[S]pecial masters may not decide dispositive pretrial motions.” Microsoft Corp., 147 F.3d at 954 (citing In re United States, 816 F.2d 1083, 1090 (6th Cir. 1987)).40
¶74 Several state courts also have not permitted circuit courts to delegate authority to a non-judge to decide dispositive motions or make legal determinations of rights. See, e.g., Salt Lake City v. Ohms, 881 P.2d 844, 848 (Utah 1994) (referees cannot “exercise th[e] judge‘s ultimate judicial power, for such is a nondelegable core judicial function“); Jovine v. FHP, Inc., 64 Cal. App. 4th 1506, 1509, 1523-24 (1998) (deciding dispositive motions is beyond a referee‘s authority; the responsibility to decide cannot be delegated without the express consent of the parties; the state constitution governs delegation of judicial power); Russell v. Thompson, 619 P.2d 537, 539 (Nev. 1980) (a general reference by the circuit court of nearly all contested issues, giving the master the authority to decide substantially
¶75 Our court, however, has not decided the outer limits placed by the state constitution on the use of referees. But the Wisconsin Supreme Court very early declared that referees may share in judicial labor but cannot assume the place of the judge. “[C]onstitutional judges . . . can take [no power] from the legislature, to subdelegate their judicial functions.”41
¶76 Because courts cannot delegate their judicial power, the reasoning of the federal and state cases barring courts from delegating core judicial powers——that is, powers to conduct trials, decide dispositive motions, or determine fundamental rights——provides a compelling measuring stick to determine whether the circuit court in the instant case impermissibly delegated judicial power to the referee.
¶77 In the instant case, as we stated previously, the Order of Reference enables the referee to hear and decide all motions filed, whether discovery or dispositive, subject to review under the standard of erroneous exercise of discretion. We conclude that this Order impermissibly delegates constitutional “judicial power” to a referee, prohibiting the circuit court from freely rejecting the referee‘s rulings and conducting its own independent inquiry and reducing the function of the circuit court to that of a reviewing court.
¶78 Insofar as the Order of Reference in the instant case gave the referee the “full authority of the [circuit] Court to hear and decide” all motions filed, including the authority to hear and decide motions for injunctive relief, for partial summary judgment, or to limit evidence at trial, counsel for the circuit court and Judge DiMotto makes two arguments in the Order‘s defense.
¶79 Counsel for the circuit court and Judge DiMotto first argues that the circuit court decided these issues de novo even
¶80 We disagree with counsel. Although Newtek contends that the circuit court did not actually exercise de novo review, we need not decide the actual nature of the circuit court‘s review of the referee‘s rulings. Our focus in the instant case is on the validity of the Order, not on the conduct of the circuit court.42
¶81 We also are not willing to delay consideration of the validity of the Order until after judgment is entered because, as we previously explained, the parties will be irreparably harmed should a decision on the validity of the Order of Reference be delayed until after final judgment and appeal.
¶82 In sum, we conclude that the Order of Reference impermissibly delegated to the referee judicial power constitutionally vested in Wisconsin‘s unified court system. A referee may share judicial labor, but the Order of Reference may not allow a referee to assume the place of the judge. Accordingly, the Order does not survive Newtek‘s constitutional challenge.
V
¶83 We examine whether the provision in the circuit court‘s Order of Reference that the circuit court‘s review of the referee‘s “rulings” shall be based only on the referee‘s “erroneous exercise of discretion” contravenes the constitution43 and statutes or rules44 regarding circuit court and appellate court authority and practice.
¶84 The Order of Reference provides for circuit court review of a referee‘s ruling under the erroneous exercise of discretion standard.
¶85 This standard is not the same standard as a court‘s de novo review. In a de novo review, the reviewing court reaches whatever decision it would reach independently of the decision of the prior decision maker. In contrast, a circuit court that reviews a referee‘s ruling under the erroneous exercise of discretion standard is using the standard of review an appellate court ordinarily uses to review certain rulings of a circuit court.
¶86 Under the erroneous exercise of discretion standard, an appellate court may affirm the circuit court‘s ruling even though the appellate court would not necessarily reach the same decision independently of the prior decision maker. Thus, the Order of Reference gives the appearance of an abdication of the circuit court‘s responsibility to exercise independent judgment.
¶87 The Order of Reference further gives the appearance of granting appellate authority to the circuit court when the legislature has not granted such appellate authority.
¶88 We therefore conclude that the provision in the circuit court‘s Order of Reference that the circuit court‘s review of the referee‘s “rulings” shall be based on the referee‘s “erroneous exercise of discretion” contravenes the constitution, statutes, and rules regarding circuit court and appellate court authority and practice.
VI
¶89 We turn to the question of whether the circuit court‘s Order of Reference contravenes the parties’ right to “obtain justice freely, and without being obliged to purchase it” guaranteed by
¶90 Newtek argues that the Order of Reference deprived it of its constitutional rights to present its claims and defenses to a court of competent jurisdiction.
¶91 Wisconsin‘s constitutional framers, taking heed of Article 40 of the Magna Carta,46 provided in
Every person is entitled to a certain remedy in the laws for all injuries, or wrongs which he may receive in his person, property, or character; he ought to obtain justice freely, and without being obliged to purchase it, completely and without denial, promptly and without delay, conformably to the laws.
Wis. Const. art. I, § 9 .
¶92 The guarantee of
¶93
¶94 Neither party argues that the $45,000 fee amounts to a bribe or was unreasonable in amount. Neither party seeks a partial or full refund of the fees paid.
¶95 The circuit court was right when it advised the parties that the referee “doesn‘t come cheap.” It encouraged the parties to consider the cost of the referee in deciding whether to raise issues and in making settlement decisions. A referee‘s fees increase the costs of litigation and thus may have a chilling effect on litigants. If the expenses are not circumscribed, people with meritorious claims will be discouraged from pursuing them in court because they cannot afford to go to court.
¶96 A reference to a referee in effect requires litigants to pay for the court system twice——once through the tax system and a second time by paying fees to a referee for resolution of their suit.
¶97 We need not decide this case on the basis of
¶98 The costs of litigation can price people out of the constitutionally established state judicial system. Yet justice should be available to all persons regardless of financial means. The Wisconsin Constitution embodies the principle that courts are an essential and integral part of Wisconsin‘s government, open to the people, and the cost thereof is borne as a public expense.
¶99 Circuit courts must heed the admonitions of the Alaska Supreme Court, which warned of denying litigants the right of access to courts and due process by appointment of referees as follows:
More fundamentally, all potential litigants——not just those who are indigent——have a constitutional right in Alaska of meaningful access to the justice system. Prohibitively high master‘s fees could potentially jeopardize such access. . . . Even if an imposition of costs or fees is valid on its face, it may offend due process because it operates to foreclose a particular party‘s opportunity to be heard. We believe the ultimate test . . . is whether the [cost] is so great that it imposes an intolerable burden on a losing litigant which, in effect, denies the litigant‘s right of access to the courts.
Peter v. Progressive Corp., 986 P.2d 865, 872-73 (Alaska 1999) (internal quotation marks and citations omitted).
The California court of appeals similarly stated:
Allowing trial courts routinely to shift their responsibilities to private judges unfairly requires the litigants, who are already paying taxes to fund the operation of the courts, to also bear the very substantial cost of private judges . . . .
[S]uch a burden ultimately could discourage . . . meritorious claims . . . .
¶100 In addition to raising
¶101 Newtek asserts that the substantive rulings of the referee regarding its property interests in confidential information and its contractual rights to prevent Hicks from improperly using Newtek‘s good will and proprietary information deprived Newtek of property rights without due process, that is, the right to be heard by the circuit court.
¶102 We need not and do not decide the instant case on the due process clause of
[W]e begin with the axiom that before the state may deprive an individual of life, liberty or property, the state must accord the individual a meaningful opportunity to be heard. In other words, litigants must be given their day in court. Access to the courts is an essential ingredient of the constitutional guarantee of due process. Whatever the precise status of the right of access to the courts, due process is satisfied “if the procedures provide an opportunity to be heard at a meaningful time and in a meaningful matter.”49
¶103 Finally, Newtek asserts, inter alia, that the Order contravenes Newtek‘s constitutional right to a trial by jury by authorizing the referee to make binding determinations of fact, citing In re Peterson, 253 U.S. 300, 310-11 (1920).50 In view of our decision that the Order of Reference contravenes
VII
¶104 The last two issues we must address are whether any orders of the referee
¶105 Certain discovery orders survive. Insofar as the Order of Reference in the instant case authorized the referee to supervise pretrial discovery disputes, the Order did not contravene the Wisconsin Constitution‘s vesting of judicial power in a unified court system. Discovery issues are often referred to a master in federal courts. 9C Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2602.1 (3d ed. 2008). Indeed, masters have been particularly helpful for overseeing discovery in complex federal cases. 9 James Wm. Moore & Joseph C. Spero, Moore‘s Federal Practice § 53.10[3][c][ii] (3d ed. 2016).
¶106 Accordingly, if neither party raised an objection to a referee‘s ruling or order on discovery, that ruling or order remains in full force and effect. If, however, either party raised an objection to a referee‘s ruling or order on discovery (whether or not reviewed by the circuit court), that ruling or order is vacated.
¶107 Because the Order of Reference impermissibly authorized the referee to rule on dispositive motions, any such referee rulings and the circuit court‘s orders adopting the referee‘s recommended rulings on dispositive motions, such as the parties’ motions for summary judgment, are vacated.
¶108 Finally, Newtek requests that we direct that a new judge be assigned to the matter on remand. Counsel for the circuit court objects, observing that
¶109 True, the statute limits substitution to appeals and writs of error, and a petition for a supervisory writ is neither an appeal nor a writ of error. But, as counsel for the circuit court forthrightly explains, this court has stated that
¶110 Because we reverse orders of the circuit court and remand this matter to the circuit court for further proceedings, and this matter seems to fall within the reach of
¶111 For the reasons set forth, we conclude as follows:
- Newtek‘s petition for a supervisory writ does not meet the requirements set forth in
Wis. Stat. § (Rule) 809.71 . The petition was not first filed in the court of appeals and Newtek has failed to show that it was impractical to file the petition in the court of appeals. We do, however, exercise our constitutional superintending authority underArticle VII, Section 3(2) of the Wisconsin Constitution to determine the validity of the Order of Reference. A declaration of rights is an appropriatevehicle for an exercise of the superintending authority over circuit courts constitutionally granted to this court.52 - Regardless of whether Newtek has waived or forfeited its right to challenge the Order of Reference, is estopped from challenging the Order, or has impliedly consented to the reference, this court may resolve the issue of the validity of the Order of Reference under its constitutional superintending authority.
- The Order of Reference impermissibly delegated to the referee judicial power constitutionally vested in Wisconsin‘s unified court system. Accordingly, the Order does not survive Newtek‘s constitutional challenge.
- The circuit court‘s Order of Reference, including the provision that the circuit court‘s review of the referee‘s “rulings” shall be based only on the referee‘s “erroneous exercise of discretion,” contravenes the constitution, statutes, and rules regarding circuit court and appellate court authority and practice. It infringes on the legislature‘s authority to define a circuit court‘s appellate jurisdiction.
- We do not decide the instant case on the basis of
Article I, Section 9 of the Wisconsin Constitution , the due process clause ofArticle I, Section 1 of the Wisconsin Constitution , or the right to jury trial ofArticle I, Section 5 of the Wisconsin Constitution , but we note that reference to a referee is the exception, not the rule; that there are constitutional limits on the powers of a referee; and that a reference can jeopardize a litigant‘s access to the justice system, due process, and right to a jury trial. The Wisconsin Constitution requires the state to provide a judicial system for the resolution of disputes. Access to state courts for conflict resolution is thus implicit in the state constitution. We express our concern that the use of referees increases the costs of litigation and may cause delay and, as a practical matter, may deprive litigants of access to the courts. - To the extent the parties have agreed to abide by an order or ruling of the referee relating to discovery, that ruling or order shall stand. To the extent either party has objected to an order or ruling of the referee relating to discovery, that ruling or order shall be vacated. Any ruling or order of the referee on a dispositive motion is vacated. Either party may request substitution of the judge pursuant to
Wis. Stat. § 801.58(1) and(7) .
By the Court.—The petition for supervisory writ is denied. Rights declared.
UNIVERSAL PROCESSING SERVICES OF WISCONSIN, LLC, Plaintiff, v. SAMUEL B. HICKS and MERCHANT CARD SERVICES, INC., Defendants.
Case No.: 14CV7986
Circuit Court, Milwaukee County
FEB 19 2015
Honorable Michael J. Skwierawski (ret.)
ATTACHMENT A
ORDER APPOINTING SPECIAL MASTER/REFEREE
Pursuant to
- Therefore, the Honorable Michael J. Skwierawski, Milwaukee County Circuit Court Judge (ret.) is HEREBY APPOINTED Special Master/Referee (SM/R) pro hac vice, effective February 19, 2015, to assist in coordinating pretrial issues and discovery matters that may arise in this action.
- It is the order of the Court that the parties cooperate with Judge Skwierawski as SM/R in developing future scheduling recommendations and orders for this case. The current
scheduling order entered Feb. 16 by the Court will remain in effect. All counsel of record shall send their telephone, address, and email address to Judge Skwierawski at: mjskw@wi.rr.com. - The SM/R will be contacting the parties to set up a meeting to accomplish the aforeordered coordination wherein the SM/R is to act as intake on all issues that may otherwise come before the Court.
- The SM/R shall have the full authority of the Court in coordinating and establishing all pretrial procedures. The SM/R shall also have the full authority of the Court to hear and decide, subject to Court review as set forth below, any other matters assigned to him by the Court. All motions filed, whether discovery or dispositive, shall initially be heard and decided by the SM/R, subject to review processes available as described below.
- The SM/R shall have the duty and power to regulate and control all discovery matters and any discovery disputes arising in this action under
Chapter 804 of the Wisconsin Statutes .- The SM/R shall have the duty and the power to require the submission of reports and briefs, call meetings, and hold hearings in order to determine the status of discovery, to issue orders requiring the parties to adhere to discovery and case management dates set forth in the Scheduling Order.
- The SM/R shall have the power to take all measures that are necessary and proper within the Wisconsin Rules of Civil Procedure and the Wisconsin Statutes to ensure the performance of his duties.
- The SM/R shall act in accordance with the Wisconsin Rules of Civil Procedure, the Local Rules of this Court, the CMO, and other orders of this Court.
-
Except as ordered by the SM/R, the filing, service and notice of motions shall be governed by Local Rules of this Court, the Scheduling Order, and the screening and coordination of the SM/R and other orders of this Court. The original of every document filed with the SM/R shall be filed with the Court, with working copies filed directly with the SM/R. In the event any party objects to the scheduling of a motion for summary judgment or other dispositive motion on grounds that discovery necessary to the issues raised by the motion is not completed, such motion for rescheduling shall be heard and decided by the SM/R. - If the SM/R is of the opinion that a specific issue presented by the parties is of such fundamental importance to the progress or outcome of the case that effective case management would not be furthered by having the SM/R render a decision in the first instance, the SM/R may at his direction certify that issue to the Court. As the final arbiter of case management, the Court may, but need not, accept the certification. If the Court does not accept the certification, the SM/R shall proceed to render a decision in accordance with and subject to the terms of this Order.
- Exceptions to any decision made by the SM/R may be taken to this Court and must be filed with the Court within five (5) business days of the issuance of the decision. Review by the Court shall be based on the materials and record before the SM/R. No additional
filings will be permitted unless good cause and exceptional circumstances are demonstrated by the requesting Party. The Court has full authority to modify or set aside the ruling of the SM/R but will do so only if the ruling is based on an erroneous exercise of discretion. Unless an exception is taken, any ruling by the SM/R shall automatically and without hearing be adopted and entered as a ruling of the Court within five (5) business days of submission by the SM/R to the Court and parties. All decisions made by the SM/R shall be appealable after the final disposition of this case, to the full extent and as if made by this Court. A party need not take exception to a decision by the SM/R in order to preserve the issue for appeal, either on an interlocutory basis or as an appeal of a final order. -
- The SM/R shall be reasonably available to hear matters promptly and at such times as may be convenient, at the discretion of the SM/R. Argument may be heard by the SM/R in person or by telephone.
- Hearings will be held at places directed by the SM/R. The SM/R may, in his discretion, arrange for a court reporter to be present at hearings and shall provide to plaintiffs’ and defendants’ representatives, a copy of the transcript of the hearing promptly thereafter. The cost of the court reporter shall be borne jointly by the plaintiffs and defense in the same manner as set forth in paragraph 11. Any party ordering an additional copy of the transcript shall be responsible for the cost of such transcript.
- All decisions of the SM/R shall be accompanied by supporting reasons and shall be transmitted, in writing, to counsel of record. Except for good cause shown or by stipulation of the parties to a dispute, the SM/R shall issue a decision on all disputed matters
within fifteen (15) business days of the hearing on any motion, or within fifteen (15) business days of the conclusion of the briefing if no oral arguments are scheduled.
- SM/R may employ other persons to provide clerical, secretarial, and research assistance; such persons shall be under the supervision and control of the SM/R, who shall take appropriate action to insure that such persons preserve the confidentiality of matters submitted to the SM/R for review. The parties shall not be separately responsible for the cost of employing clerical or secretarial help. To the extent research support is deemed necessary by the SM/R, it may be directed and the costs thereof borne by the parties as set forth in paragraph 11, except it shall be at the lower hourly rate ordinarily charged by such research associate.
-
- The SM/R shall be compensated at the rate of four hundred fifty dollars ($450) per hour, billed no more often than monthly, for services rendered, and also shall be reimbursed for all reasonable and necessary expenses.
- The allocation of fees and expenses of the SM/R is to be determined by the SM/R in an equitable manner, among all parties participating in a motion, conference, or other issue resolution process. The contributions of the various parties, if there is an issue therewith, are to be resolved in a meeting with the SM/R and/or in the CMO.
- The SM/R shall submit statements to the parties for payment. The statements shall state the total amount of time spent and the type of services and work performed during such time. Expenses shall be itemized.
- All files of the SM/R, including all submissions by all parties in connection with this Order, shall become part of the formal record in this action, and shall be considered part of the record on appeal pursuant to
§ 809.15, Wis. Stats. by virtue of the filing requirement in Para. 6above. The SM/R shall file the original of any orders or decisions issued by him directly with the Court. - If the Parties stipulate and agree, the SM/R may also act as a mediator from time to time to attempt to facilitate settlement, in any manner consistent with the Wisconsin Alternative Dispute Resolution statutes and rules.
IT IS SO ORDERED this 19th day of February, 2015.
BY THE COURT:
Honorable John J. DiMotto
Circuit Court Judge, Branch 41
¶112 ANNETTE KINGSLAND ZIEGLER, J. (concurring in part, dissenting in part). The court denies Newtek‘s petition for a supervisory writ. I join that denial. I depart, however, from the court‘s decision to nevertheless address broader underlying issues because this court‘s determination should end with the fact that Newtek‘s petition fails for procedural reasons. I will now discuss why I depart from my colleagues.
¶113 Under
A person seeking a supervisory writ from the supreme court shall first file a petition for a supervisory writ in the court of appeals under s. 809.51 unless it is impractical to seek the writ in the court of appeals. A petition in the supreme
court shall show why it was impractical to seek the writ in the court of appeals . . . .
¶114 Even if Newtek had met
¶115 Thus, the court is correct to deny Newtek‘s petition for a supervisory writ, and that should be the end of the case. Nonetheless, the court proceeds to address a number of constitutional issues and ultimately grants Newtek relief anyway. I do not agree with court‘s decision to do so. While the court raises important issues, it finds itself in a less than desirable position to fully address these issues. What, precisely, occurred below was not adequately briefed or argued. We remain without the benefit of all of the circuit court‘s reasoning in its review of the referee‘s determinations. The court proceeds to determine the underlying issues without knowing whether the circuit court agreed or disagreed with the referee or reached its own conclusions. If the judge did so independently rule, it could be that it is, at most, harmless error to have assigned such broad authority initially to the referee. Because this case should be decided on more narrow grounds and we are without a full record, I would not unnecessarily delve into the many complex constitutional questions the court feels compelled to address.
¶116 Newtek petitioned this court for a supervisory writ. Simply stated, it did not meet the requirements for the issuance of the writ. This should end the analysis. Because the court continues further, I respectfully concur in part and dissent in part.
¶117 REBECCA GRASSL BRADLEY, J. (concurring in part, dissenting in part). Universal Processing Services of Wisconsin, LLC, doing business as Newtek, petitioned this court for a supervisory writ only after first acquiescing to discovery under the Order of Reference (the “Reference“), receiving an adverse summary judgment decision, and failing to persuade the court of appeals to grant interlocutory review. Now, Newtek raises various challenges to the Reference, under which it engaged in discovery without objection for nearly a year. Because Newtek‘s objections are untimely and not properly before this court, I concur in the majority‘s decision to deny the petition for a supervisory writ.1
¶118 Nevertheless, I respectfully dissent from the majority‘s declaration of rights pursuant to this court‘s superintending authority under the Wisconsin Constitution. Although I agree with the majority‘s conclusion that the Reference impermissibly delegated the circuit court‘s constitutionally
I
¶119 Two procedural deficiencies hamper Newtek‘s petition. First, Newtek skipped the court of appeals without an adequate justification and instead filed its petition first in this court. Second, Newtek failed to timely object to the Reference. Either deficiency alone provides a sufficient basis for denying the writ; together, they prove fatal. See Burnett v. Alt, 224 Wis. 2d 72, 96, 589 N.W.2d 21 (1999).
A
¶120
A person may request the supreme court to exercise its supervisory jurisdiction over a court and the judge presiding therein or other person or body by filing a petition in accordance with s. 809.51. A person seeking a supervisory writ from the supreme court shall first file a petition for a supervisory writ in the court of appeals under s. 809.51 unless it is impractical to seek the writ in the court of appeals. A petition in the supreme court shall show why it was impractical to seek the writ in the court of appeals or, if a petition had been filed in the court of appeals, the disposition made and reasons given by the court of appeals.
In this case, Newtek did not file a petition for a supervisory writ in the court of appeals before filing its petition in this court; consequently, this court will grant the writ only if Newtek “show[s] why it was impractical to seek the writ in the court of appeals,” as
¶121 Like the majority, I am not persuaded that the court of appeals’ denial of interlocutory review made it impractical for Newtek to seek a supervisory writ from that court. See majority op., ¶¶41-44. Interlocutory review and supervisory writs are distinct procedural devices and implicate
¶122 Although both legal standards account for possible irreparable harm in the absence of extraordinary review, they otherwise diverge: a request for interlocutory review focuses on efficient resolution of the litigation, whereas supervisory writ proceedings evaluate whether a judicial officer complied with obligations under the law. A circuit court‘s actions may not warrant interlocutory review on the merits but could nevertheless require correction by an appellate court exercising its supervisory authority.
¶123 Newtek presents solely a conclusory claim that petitioning the court of appeals for a supervisory writ was impractical, and as the majority correctly holds, we should not “cast doubt on the continued vitality of the ‘impracticality’ requirement.” Majority op., ¶44. Because Newtek failed to follow the statutory procedure for issuance of a writ, this court should deny the petition.
B
¶124 Also problematic for Newtek is its substantial delay in raising any objection to the Reference. Even if this court were to look past Newtek‘s failure to comply with the procedures in
¶125 Here, Newtek fails to satisfy the fourth criterion because its request was neither prompt nor speedy. Instead of challenging the Reference on the record as soon as the circuit court entered the order, Newtek assented to discovery under the referee‘s supervision for months, accepting many discovery rulings without objection. Indeed, Newtek‘s only objections came when it received unfavorable decisions from the referee: it objected to some of the referee‘s discovery decisions under the procedure specified in the Reference, and it aggressively challenged the referee‘s summary judgment determinations in the circuit court, the court of appeals, and now this court.
¶126 Newtek‘s delayed objection to the Reference illustrates why a writ will issue only when a party makes a prompt and speedy request for relief. In the absence of a timely-request requirement, a strategic party could intentionally wait to file a petition for a writ until after the referee made an adverse decision. That way, the party could accept favorable decisions while preserving a method of collaterally attacking an unacceptably unfavorable one. If the
¶127 Nothing prevented Newtek from petitioning the court of appeals for a supervisory writ as soon as the circuit court made the Reference. Newtek‘s counsel acknowledged as much during oral arguments before this court. The serious problems we identify with the Reference suggest Newtek likely possessed a meritorious claim, had it promptly pursued a remedy. But it did not do so. Because Newtek instead challenged the Reference only after losing on summary judgment, it failed to timely seek relief. This failure, coupled with its failure to seek relief from the court of appeals before petitioning this court for a supervisory writ, warrants denial of its petition and the retrospective relief it requested.
II
¶128 Despite the procedural deficiencies in Newtek‘s petition, I agree with the majority that this court should address the merits of the constitutional questions raised by this Reference. See Kalal, 271 Wis. 2d 633, ¶26 (“Although the Kalals have failed to establish the existence of a plain duty and are not entitled to a supervisory writ, we will address the statutory interpretation question presented by this case.“). Referees offer circuit courts a valuable tool for efficiently allocating court time and resources, so questions about the constitutionally permissible scope of an order of reference are likely to continue to arise. After thorough briefing and argument by adverse, interested parties, this petition offers the court an opportunity to evaluate a particular order for compliance with the referee statute. Examining the proper use of statutorily permissible referees allows us to give guidance to courts and litigants, thus mitigating uncertainty in Wisconsin courts. In support of that endeavor, I write to supplement the already comprehensive discussion in Part III of the majority opinion.
¶129 Our evaluation of the Reference at issue here must begin with the text of
In actions to be tried by a jury, a reference shall be made only when the issues are complicated; in actions to be tried without a jury, save in matters of account and of difficult computation of damages, a reference shall be made only upon a showing that some exceptional condition requires it.
Subsection (3) then lays out the referee‘s powers and the circuit court‘s ability to describe and restrain them:
The order of reference to the referee may specify or limit the referee‘s powers and may direct the referee to report only upon particular issues or to do or perform particular acts or to do or receive and report evidence only and may fix the time and place for beginning and closing the hearings and for the filing of the referee‘s report. Subject to the specifications and limitations stated in the order,
the referee has and shall exercise the power to regulate all proceedings in every hearing before the referee and to do all acts and take all measures necessary or proper for the efficient performance of duties under the order. The referee may require the production of evidence upon all matters embraced in the reference, including the production of all books, papers, vouchers, documents, and writings applicable thereto. The referee may rule upon the admissibility of evidence unless otherwise directed by the order of reference and has the authority to put witnesses on oath and may personally examine them and may call the parties to the action and examine them upon oath. When a party so requests, the referee shall make a record of the evidence offered and excluded in the same manner and subject to the same limitations as a court sitting without a jury.
¶130 When making a reference under
¶131 As the majority describes, “[a] referee may share judicial labor, but the Order of Reference may not allow a referee to assume the place of the judge” by exercising the judicial power the constitution confers on circuit courts. Majority op., ¶82. The judicial power vested in the circuit courts by the constitution places an outer limit on the scope of permissible delegation to referees. For help identifying that constitutional boundary, federal appellate court decisions offer two key insights.6
¶132 First, as the majority notes, an order of reference is an improper delegation of the judicial power when it grants the authority to make dispositive decisions. See majority op., ¶67 n.35, ¶¶72-74. “The use of masters is to aid judges in the performance of specific judicial duties . . . and not to displace the court.” La Buy v. Howes Leather Co., 352 U.S. 249, 256 (1957) (internal quotation mark omitted) (quoting Ex parte Peterson, 253 U.S. 300, 312 (1920)). A court issuing an
¶133 Second, the exceptional circumstances justifying an order of reference do not exist where the trial court is merely busy, dealing with a case involving a large number of parties, or working with an unfamiliar area of law. Most federal appellate courts point to the Supreme Court‘s opinion in La Buy v. Howes Leather Co., 352 U.S. 249 (1957), which made quick work of several proffered justifications. The Court first concluded that “congestion [on a court‘s docket] in itself is not such an exceptional circumstance as to warrant a reference to a master.” Id. at 259. Neither did the Court accept the case‘s “unusual complexity of . . . both fact and law” as an exceptional circumstance, observing that, “[o]n the contrary, . . . [complexity] is an impelling reason for trial before a regular, experienced trial judge rather than before a temporary substitute appointed on an ad hoc basis.” Id. “Nor,” the Court added, “does . . . the great length of time [that] trials will require offer exceptional grounds.” Id.
¶134 In the decades since the Supreme Court decided LaBuy, federal appellate courts have maintained a high bar to meet the exceptional circumstances requirement. See, e.g., Prudential Ins. Co. of Am. v. U.S. Gypsum Co., 991 F.2d 1080, 1086-87 (3d Cir. 1993) (observing that no special masters employed in two cases involving, respectively, 24 foreign electronics producers and 30,000 school districts across 54 jurisdictions (first citing In re Japanese Elec. Prods. Antitrust Litig., 723 F.2d 238 (3d Cir. 1983) (subsequent history omitted); then citing In re Sch. Asbestos Litig., 977 F.2d 764 (3d Cir. 1992)))); Stauble, 977 F.2d at 695 (declining to “forge an ‘exceptional condition’ test for cases of blended liability and damages“); In re United States, 816 F.2d at 1089 (“[T]he interest in a quick resolution of the case is simply an alternative way of asserting calendar congestion and the possibility of a lengthy trial as exceptional conditions . . . .“); Madrigal Audio Labs., Inc. v. Cello, Ltd., 799 F.2d 814, 818 & n.1 (2d Cir. 1986) (rebuking trial judge for appointing special master because the judge stated he did not “understand anything about the merits of any patent or trademark case” and was “not about to educate [himself] in that jungle“); Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 712 (7th Cir. 1984) (concluding no exceptional condition existed in case involving “several thousand pages” of documents when trial court felt it “did not have time for a long trial“).
¶135 In light of these principles, the deficiencies in the Reference here are
¶136 Put plainly, because the circuit court was busy and did not want to deal with the parties, it gave the referee authority over all matters in the litigation——including dispositive pretrial motions. That delegation “amounted to little less than an abdication of the judicial function depriving the parties of a trial before the court on the basic issues involved in the litigation.” LaBuy, 352 U.S. at 256.
III
¶137 It is with regard to invocation of this court‘s constitutional superintending authority that I depart most significantly from the majority opinion. The
¶138 Superintending authority is a power that the court does not and should not use lightly. Arneson v. Jezwinski, 206 Wis. 2d 217, 226, 556 N.W.2d 721 (1996) (citing In re Phelan, 225 Wis. 314, 321, 274 N.W. 411 (1937)). At its core, superintending authority “enables the court to control the course of ordinary litigation in the lower courts of Wisconsin.” Id. (first citing Phelan, 225 Wis. at 320-21; then citing State ex rel. Fourth Nat‘l Bank of Phila. v. Johnson, 103 Wis. 591, 613, 79 N.W. 1081 (1899)). Similar to the court‘s standard for issuance of a supervisory writ, “to invoke the superintending power to correct an error of the trial court, it is necessary to establish that an appeal from a final judgment is inadequate, and that grave hardship will follow a refusal to exercise the power.” State ex rel. Hutisford Light, Power & Mfg. Co. v. Grimm, 208 Wis. 366, 371, 243 N.W. 763 (1932); see also Jerrell C.J., 283 Wis. 2d 145, ¶145 (Prosser, J., concurring in part, dissenting in part) (“The purpose of this [‘superintending control over inferior courts‘] jurisdiction is to protect the legal rights of a litigant where the ordinary processes of action, appeal and review are inadequate to meet the situation, and where there is need for such intervention to avoid grave hardship or complete denial of rights.” (alterations in original) (quoting John D. Wickhem, The Power of Superintending Control of the Wisconsin Supreme Court, 1941 Wis. L. Rev. 153, 161-62)).
¶139 Retrospective application of this court‘s superintending authority is not appropriate in this case because Newtek‘s delay in seeking relief from the Reference discredits its claim of grave harm. By objecting to the Reference only after the referee decided the motion for summary
¶140 At the same time, the circuit court‘s improper delegation of the judicial power reflects an undeniable constitutional deficiency in the Reference. Allowing the case to proceed under the Reference without alteration could lead to the nonsensical result of the parties completing pretrial proceedings under an order that this court declared partially unconstitutional. To the extent any additional proceedings occur under the Reference, the right of all parties to an adjudication by a circuit court vested with the judicial power under the Wisconsin Constitution remains squarely at issue. Accordingly, prospectively vacating the order to the extent it contravenes the Wisconsin Constitution is an appropriate, limited application of our superintending authority over Wisconsin courts for the purpose of preserving the rights of these parties going forward.
IV
¶141 On the whole, Wisconsin‘s circuit courts do an admirable job of resolving complex disputes amidst crowded dockets, and the rules of civil procedure permit them to appoint a referee to facilitate expeditious resolution of some of those cases under exceptional circumstances. But when making a reference as allowed by rule, the circuit courts must heed their responsibilities under a higher authority, the Wisconsin Constitution. By improperly delegating judicial power to the referee, the Reference at issue here transgressed an important constitutional limitation. Although I would deny the petition for a supervisory writ because Newtek did not timely present it in a procedurally proper manner, I conclude that the Reference‘s constitutional infirmities require a limited exercise of this court‘s superintending power to prospectively vacate the Reference to the extent it denies these parties their constitutional rights. I therefore respectfully concur in part and dissent in part.
¶142 I am authorized to state that Justice DANIEL KELLY joins this opinion.
Notes
(2) APPEALS BY PERMISSION. A judgment or order not appealable as a matter of right under sub. (1) may be appealed to the court of appeals in advance of a final judgment or order upon leave granted by the court if it determines that an appeal will:
(a) Materially advance the termination of the litigation or clarify further proceedings in the litigation;
(b) Protect the petitioner from substantial or irreparable injury; or
(c) Clarify an issue of general importance in the administration of justice.
- An appeal is an inadequate remedy;
- Grave hardship or irreparable harm will result;
- The duty of the trial court is plain and it must have acted or intended to act in violation of that duty; and
- The request for relief is made promptly and speedily.
It seems too manifest for discussion that, under the constitution, no one can hold a circuit court but a circuit judge. . . . If the statute before us could be upheld, we do not see why one could not which should assume to give to the parties, in all actions, in all courts, power to stipulate the judges off the bench, and private persons into their seats. Judicial power is one of the attributes of sovereignty, necessarily delegated in its exercise. The constitution does not leave the delegation loose at the discretion of the legislature. It delegates the judicial power to constitutional courts, to be held by constitutional judges. And these constitutional judges take no power from the constitution, can take none from the legislature, to subdelegate their judicial functions.
. . . .
[T]he circuit judge might be likened to the sun . . . and [the referee] to the moon . . . shining with delegated jurisdiction. But the constitution mars the comparison. For by the astronomical constitution the sun appears to take power to delegate (continued) his functions of lighting the world; while the state constitution tolerates no such delegation, and appoints a sun only, without any moon, as luminary of the circuit court, whose “gladsome light of jurisprudence” must be sunshine only, not moonshine. Commissioners, masters, referees, and like judicial subordinates, may share in judicial labor and lighten it; but they cannot change places with the judge on the bench or share in the final judgments of the court.