Wischer v. Mitsubishi Heavy Industries America, Inc.

JON E WILCOX, J.

(dissenting).

¶ 79. The majority in this case and in Strenke v. Hogner, 2005 WI 25, 279 Wis. 2d 52, 694 N.W.2d 296, has written a duly enacted law of this state out of existence. It is undisputed that the clear intent of the legislature in enacting Wis. Stat. § 895.85(3) (1999-2000)1 was to restrict the number of cases in which punitive damages could be awarded by imposing a threshold for the recovery of such damages higher than that which was set under our common law. However, as this case illustrates, the majority has interpreted and applied § 895.85(3) in a manner that is indistinguishable from our common-law standard. In doing so, the majority has thwarted the *44will of the people of this state (as represented by the legislature) to make recovery of punitive damages more difficult.

¶ 80. Although this case presents tragic facts, the actions of the defendant, at most, constitute reckless behavior. The plaintiffs are certainly entitled to be compensated for their losses occasioned by the defendant's actions. However, the defendant's conduct in this case, while sufficient to support an award of punitive damages under our common law, is simply no longer adequate to support an award of punitive damages following the legislature's enactment of § 895.85(3).

¶ 81. Because the defendant's conduct clearly falls within the lower, common-law standard for awarding punitive damages, the majority's allowance of punitive damages in this case under § 895.85(3) highlights its erroneous interpretation of the statute and the fact that it has rendered the supposedly stricter statutory standard for punitive damages indistinguishable from the common-law standard. The majority's interpretation and application of § 895.85(3), so as to allow for punitive damages based on conduct that, at most, constitutes a reckless disregard of the plaintiffs' rights, is clear evidence that the court has rendered § 895.85(3) a nullity.

I

¶ 82. Section 895.85(3) provides: "The plaintiff may receive punitive damages if evidence is submitted showing that the defendant acted maliciously toward the plaintiff or in an intentional disregard of the rights of the plaintiff." In contrast, our common law allowed for punitive damages upon "a showing of wanton, wilful, *45or reckless disregard of the plaintiffs rights." Kink v. Combs, 28 Wis. 2d 65, 79, 135 N.W.2d 789 (1965).

¶ 83. As discussed in depth in my concurrence in today's companion case, Strenke, 279 Wis. 2d 52, ¶ 68 (Wilcox, J., concurring), the phrase "disregard of the plaintiffs rights" under the common law was utilized as "a shorthand for describing all of the various types of harm giving rise to punitive damages when coupled with the appropriate mental state of the defendant." The majority's interpretation of § 895.85(3) is premised on the faulty notion that our common law allowed for recovery of punitive damages if an individual recklessly disregarded a plaintiffs abstract rights. Contrary to the majority's position, our "common law required more than a showing that the defendant recklessly disregarded the plaintiffs 'rights' in the abstract in each particular case." Id., ¶ 68. Under the common law, "we focus [ed] on the defendant's knowledge and state of mind at the time of the [injury]" when evaluating whether his "conduct evidence[d] a reckless indifference to or disregard of the plaintiffs rights." Brown v. Maxey, 124 Wis. 2d 426, 434, 369 N.W.2d 677 (1985). "[I]n each case, our analysis focused on the defendant's awareness of the likelihood of some type of harm, rather than the likelihood of a violation of the plaintiffs rights in the abstract." Strenke, 279 Wis. 2d 52, ¶ 73 (Wilcox, J., concurring).

[P]unitive damages were allowed under the common law if the defendant acted with knowledge or appreciation that his conduct created an unreasonable risk of harm and that there was a strong probability that harm would result. While the phrase "rights of others" was used in a general sense to include the various types of injuries that could give rise to punitive damages, in each case, we focused on the particular harm caused by *46the defendant's conduct. The phrase "willful, wanton, or reckless" referred to the defendant's knowledge of the likelihood of harm — his knowledge that his conduct created at least a "strong probability" that harm would result.

Id., ¶ 85 (Wilcox, J., concurring) (footnote omitted).

¶ 84. The circumstances under which punitive damages could be awarded under our common law were aptly summarized in a punitive damages treatise written by two Marquette University Law School professors that was repeatedly discussed, cited, and relied upon by both our case law and jury instructions relating to punitive damages:

The conduct which the varying terms describes is generally of two distinct types. With the first the defendant desires to cause the harm sustained by the plaintiff, or believes that the harm is substantially certain to follow the conduct. With the second the defendant knows, or should have reason to know, not only that the conduct creates an unreasonable risk of harm, but also that there is a strong probability, although not a substantial certainty, that the harm will result and, nevertheless, proceeds with the conduct in reckless or conscious disregard of the consequences.

James D. Ghiardi & John J. Kircher, 1 Punitive Damages L. & Prac. § 5.01, at 8 (1996) (emphasis added).

¶ 85. Thus, "the phrase 'willful, wanton, or reckless disregard of rights' meant that the defendant engaged in a volitional act with knowledge or appreciation that his conduct created an unreasonable risk of harm and that there was a strong probability that harm would result." Strenke, 279 Wis. 2d 52, ¶ 68 (Wilcox, J, concurring). See, e.g., Loveridge v. Chartier, 161 Wis. 2d 150, 188, 468 N.W.2d 146 (1991); Maxey, 124 Wis. 2d at 433-34; Lundin v. Shimanski, 124 Wis. 2d 175, 197 *47n.14, 368 N.W.2d 676 (1985). Indeed, this court specifically held that punitive damages were not appropriate if the defendant did not know that his conduct created a strong probability of harm to the plaintiff. Loveridge, 161 Wis. 2d at 190-91.

¶ 86. Once one correctly understands the meaning and application of the phrase "disregard of the plaintiffs rights" under the common law, the result of the legislature's decision to remove the availability of punitive damages where the defendant acted in a "wanton, willful, or reckless" disregard of the plaintiffs rights becomes clear. In enacting § 895.85(3) and requiring that the defendant "intentionally" disregard the plaintiffs rights, the legislature "heightened the state of mind required of the actor and left intact the link between the actor's state of mind and the likelihood of the harm." Strenke, 279 Wis. 2d 52, ¶ 86 (Wilcox, J., concurring). Thus, "[s]ection 895.85(3) requires that the defendant intend the consequences of his actions— that is, intend to harm the plaintiff — in order to be liable for punitive damages." Id., ¶ 63 (Wilcox, J., concurring).

[W]ith the enactment of § 895.85, it is no longer sufficient for the defendant to know or have reason to know "that the conduct creates an unreasonable risk of harm, [and] also that there is a strong probability, although not a substantial certainty, that the harm will result." James D. Ghiardi & John J. Kircher, 1 Punitive Damages L. & Prac. § 5.01, at 8 (1996). Rather, following the enactment of § 895.85, it is necessary that the defendant have knowledge that there is a "substantial certainty" that harm will result from his conduct.

Id., ¶ 87 (Wilcox, J., concurring).

¶ 87. In other words, if the phrase "reckless disregard of the plaintiffs rights" under the common law *48meant "the defendant knew or should have known that his or her conduct created an unreasonable and strong probability of harm[,]" Loveridge, 161 Wis. 2d at 191,2 then the phrase "intentional disregard of the rights of the plaintiff' under § 895.85(3) must mean that the defendant, at the very least, knew his conduct was substantially certain to result in harm or injury to the plaintiff.

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¶ 88. If one parses the shroud of legal jargon, posturing, and rhetoric in this case and in Strenke, what a majority of this court really has done is to allow punitive damages under § 895.85(3) in the same circumstances in which they were allowed under our common law. This is evident because the plaintiffs' own characterization of the defendant's conduct in this case demonstrates that such conduct falls squarely within the lower common-law threshold for awarding punitive damages.

¶ 89. As counsel for the plaintiffs indicated at oral argument, the evidence in this case established that the defendant's employees proceeded with the lift in question "despite the potential for harm." They knew of the wind speed, were aware of "the danger that was obvious" that someone could be killed, and, in performing the lift, exhibited a "conscious disregard of workers' safety." Aware that proceeding with the lift in question would "probably cause a tragedy," they acted deliberately in nonetheless proceeding with the lift. In short, they were "aware of the risks and proceeded notwithstanding the risks."

*49¶ 90. This characterization of the defendant's conduct is a perfect description of the lower, common-law requirement for recovering punitive damages. Under the common law, " '[rjeckless indifference to the rights of others and conscious action in deliberate disregard of them ... [could] provide the necessary state of mind to justify punitive damages.'" Wangen v. Ford Motor Co., 97 Wis. 2d 260, 267, 294 N.W.2d 437 (1980) (quoting Restatement (Second) of Torts, § 908, cmt. b. (1977)).

The actor's conduct is in reckless disregard of the safety of another if he does an act... knowing or having reason to know of facts which would lead a reasonable man to realize, not only that his conduct creates an unreasonable risk of physical harm to another, but also that such risk is substantially greater than that which is necessary to make his conduct negligent.

Restatement (Second) of Torts § 500 (1965).

¶ 91. In other words, here, the defendant, through its employees, acted with " 'a purpose to take known chances of perpetrating an injury.'" Wangen, 97 Wis. 2d at 274 (quoting Bielski v. Schulze, 16 Wis. 2d 1, 14-15, 114 N.W.2d 105 (1962)) (emphasis added). That is, the evidence in this case establishes that the defendant "realize[d] or, from facts which [it] kn[ew], should [have] realize[d] that there [was] a strong probability that harm [could] result." Restatement (Second) of Torts § 500, cmt. f (1965) (contrasting reckless disregard of safety with intentional misconduct).

¶ 92. While this type of conduct clearly would have met the common-law standard for awarding punitive damages, and may, in the view of some in the legal community, be deserving of punishment, we must apply the statute the legislature has written. As § 895.85(3) unquestionably heightened the standard for recovering *50punitive damages, conduct that would have fallen within the lowest common-law category for awarding punitive damages — a reckless disregard of the plaintiffs rights — simply cannot be sufficient for an award of punitive damages under the standard provided by the statute. In allowing punitive damages to be awarded in this case, the majority has lowered the bar the legislature raised when enacting § 895.85(3) and has thus rendered the statute a virtual nullity.

hH hH hH

¶ 93. As explained above, the court of appeals in the instant case correctly concluded that § 895.85(3), properly interpreted, "require [s] either an intent by a defendant to cause injury to the plaintiffs or knowledge that the defendant's conduct was practically certain to cause the accident or injury to the plaintiffs." Wischer v. Mitsubishi Heavy Indus. Am., Inc., 2003 WI App 202, ¶ 5, 267 Wis. 2d 638, 673 N.W.2d 303. Applying this standard to the facts of this case, it is clear that the defendant's conduct does not rise to the level necessary to award punitive damages.

¶ 94. In order to obtain insurance coverage and avoid the intentional acts exclusion of one of the defendant's insurance policies, the plaintiffs strenuously argued in the circuit court that the defendant's conduct did not rise to the level of an intent to cause harm: "Nowhere in the record is there any evidence that the MHIA employees subjectively intended to cause bodily injury to the decedents. . . . Federal cannot show that any injury to the decedents was substantially certain to occur from the MHIA employees' acts." In addition, they stated:

There is no evidence to permit a reasonable jury to conclude that the MHIA employees intended to cause *51bodily injury to the decedents or that they knew or should have known that bodily injury to the decedents was substantially certain to follow from their acts.
None of this testimony [that of Victor Grotlisch, Howard Shapiro, and William Keefe], however, is sufficient, by itself or in combination, to establish that the MHIA's employees [sic] acts on July 14, 1999 were substantially certain to result in bodily injury. The testimony is not even sufficient to create an issue of fact on the matter.

¶ 95. Furthermore, they contended that "[n]one of Grotlish's [sic] testimony ... establishes that there was a substantial certainty that bodily injury would occur. . . . The fact that Grotlisch was in the zone of danger indicates that he could not have believed that there was a substantial certainty that injury would occur."

¶ 96. As such, plaintiffs' own arguments foreclose any possibility that the defendant's conduct qualifies for punitive damages under a correct reading of § 895.85(3). Therefore, because the majority has erroneously interpreted § 895.85(3) and applied it in a manner that is no different from the common-law standard for awarding punitive damages, I respectfully dissent.

All references to the Wisconsin Statutes are to the 1999-2000 version unless otherwise noted.

See also Brown v. Maxey, 124 Wis. 2d 426, 433-34, 369 N.W.2d 677 (1985).