Milwaukee Business Lawyer and Litigator

After all of the discovery, motions, and attempts at settlement are completed it is time to go to trial, where the case will be decided.

I have seen numerous reports making varied estimate, but the general consensus seems to be that only 2-5% of cases actually go to trial, the other 95-98% are resolved in some fashion before trial.

However, for those cases that get there, the trial is the opportunity for the “facts” of the case to be determined. Either the Judge or a jury will be the fact finder, but in either case, both parties, through their attorneys will present evidence to the fact finder. This will be in the form of testimony and exhibits. This part of the litigation process is what everyone imagines court to be like, jurors sitting in the jury box, witnesses in the witness stand, and the attorneys questioning and cross-examining each witness.

After all parties have presented their evidence the fact finder will render their findings on a number of issues that have been submitted by the parties prior to the trial. Thus, the fact finder does not come out and declare a winner and loser, but rather indicates how they have decided the specific jury questions that have been submitted for them to answer.

Depending on the outcome of the trial, and the in-trial rulings of the Judge during the case, each party has to decide whether or not it wants to appeal the outcome.

Part 4 of 5, “Mediation”

While mediation is voluntary, in most counties in Wisconsin, including Milwaukee and Waukesha County, the Court will order the parties to attend mediation. This does not mean that the parties must settle at mediation, only that they will attend.

What Happens at Mediation?

Mediation usually takes place after most of the discovery has been completed in the case, but before final pre-trial hearings or preparations have been done. The idea is that when you go to mediation, both parties know about the other parties case, but still have not made the final investment for their attorneys to get ready for trial.

Each party to the litigation, along with their attorneys, and the agreed upon mediator meet at a location they all agree on (usually one of the attorney’s offices or the mediators office) to discuss settling their case.

Each party usually submits a mediation report to the mediator, setting out the key high points of their case and the low points of the opposing party’s case. The mediator is not there to render a decision, but rather to encourage the parties to settle their dispute. This does not mean that the mediator will not express his/her opinion, or indicate how s/he thinks s/he would have decided the case. Most mediators are lawyers, and many are ex-judges.

By the end of the mediation session, the parties have either reached a voluntary agreement to settle the case, or they continue with the litigation and most likely begin preparing for trial. There are varying statistics, but various reports indicate that mediation is successful more often than not. From an attorneys standpoint mediation is always worthwhile, it either results in a settlement of the case or at the very least you get to learn something about the other side, and their position in the case.

Part 3 of 5, “Motions”

While there are a number of motions that may be filed during and after the discovery process, such as motions to compel discovery, or motions for protective orders, what I want to talk about are motions which directly effect the outcome of the case. So even though the title of this section is titled “Motions” it should probably be titled “Dispositive Motions”.

The most common question that I am asked by my clients during litigation is a variation on “can’t the judge just decide this case?” This is especially true when one side feels the other side’s case is completely without merit (as opposed to those cases where there is merely a dispute about how much one party owes another, not “if” one party owes something to the other.) Like many things in the law, the answer is that it depends; there are times when the Judge may make dispositive decisions regarding the case, and times when he/she may not. (This explanation is regarding Judges making decision prior to trial in the case of a Court trial case)

The rule of thumb is that for any dispositive motions, the Judge cannot decide issues of fact, but rather can decide issues of law. Therefore, the only time that dispositive motions, such as a motion for summary judgment is appropriate, is when your attorney believes that through the pleadings or discovery process they can show to the Judge that there are no material issues of fact relating to the claim at issue.

A simple example of a claim for summary judgment would be in an instance where there are two claims and three defendants. The claims are Breach of Contract and Intentional Misrepresentation/Fraud against all three defendants. The Defendants are ABC, LLC, Mr. X and Mr. Y both co-owners of the company. A claim of Fraud can be pled directly against an individual, because it is an intentional tort, and therefore Mr. X and Mr. Y cannot hide behind the liability protection of the LLC. However, through the Discovery process it turns out that the Plaintiff only alleges that there was conduct on the part of Mr. X that would constitute Fraud. This may mean that there are no facts alleged against Mr. Y to meet the elements of the claim for Fraud, and therefore it may be appropriate to bring a motion for Summary Judgment in which the Judge could rule that the Fraud claim against Mr. Y is dismissed.

So, while the Judge may be able to address the claims alleged against Mr. Y, he/she is not allowed to determine the sufficiency or the validity of the claims against Mr. X. If the plaintiff through Discovery has alleged that Mr. X has made specific fraudulent representations, it will be up to the trier of fact to determine at trial whether or not those allegations are true, not the Judge at Summary Judgment.

For obvious reasons motions for Summary Judgment can be a powerful tool. The more you are able to narrow your opponents claims or get a decision on your own claims, the more leverage you may have to try and settle the case in mediation

Part 2 of 5, “Discovery”

Part 4 of 5, “Mediation”

After the initial pleadings are entered, there will generally be a scheduling conference between the Attorneys and the Judge to set the schedule for the case. Part of that schedule will include a date in which all discovery must be completed.

Litigation has been described as playing poker with everyone’s cards face up. While this is a decent analogy, I would say its more appropriate to say you get to see the other person’s cards only if you ask the right questions. Discovery is the opportunity for each party to ask questions and demand documents from the other side. In this way it is up to the attorneys to ensure that they ask the right questions and in the right way to ensure that they get everything they want. Conversely, it is the responding attorney’s job to comply with the requests in a way that reveals what is required, but does not give away more than what was requested.

This creates a back and forth situation where each attorney is trying to get as much information from the other side as possible while at the same time trying their best not to reveal more than the other side actually asked for.

The Discovery process includes interrogatories, requests to admit, requests for production of documents, depositions, and various other means of finding out information. While all of these methods of obtaining information are used by attorneys with varying frequency, if you, or your business, is a party to a litigation, at some point you will almost certainly be deposed.

In a deposition the other party’s attorney gets to ask you whatever questions they like (within reason, but they are given a lot of leeway) about yourself, your business, and the events surrounding the dispute. Unlike in trial where there are rules regarding hearsay or relevance of questions, in a deposition, even if your attorney objects to the question, you generally are still required to answer. You are put under oath and there is a court reporter there to take down in writing everything that is said.

After depositions there may be additional interrogatories (written questions) or document production requests, but at some point each party will be satisfied that they will have obtained all of the information they can reasonably get about the case. As the discovery process winds down either party may choose to amend their pleadings and add allegations, or file a cross or counterclaim, but once the pleadings and discovery process winds up, it is time for any motions to be filed.

Part 1 of 5, “Pleadings”

Part 3 of 5, “Motions”

The pleadings stage is the initial stage of any litigation. The Plaintiff (or the person bringing the action) will file a summons and a complaint. The summons will indicate that the Defendant(s) have either 20 or 45 days (depending on the allegations made) to answer the complaint.

The complaint will contain all of the allegations that the Plaintiff says the defendant(s) did or did not do. For example you may see a complaint containing several counts, one may be breach of contract and another may be Fraud or Misrepresentation although they may all be referring to the same facts.

As a defendant you have the obligation to file an answer either 20 or 45 days (depending on what is plead) of being served with the summons and complaint. If you do not answer, a default judgment may be entered against you. (Plaintiff automatically wins). If you are a corporation or an LLC, you have to get a lawyer to enter an appearance and file an answer for you.

Your answer to the complaint is not the time for you to make your case as to why you are right and they are wrong, but rather is simply a format for admitting or denying each allegation made by the Plaintiff. Additionally the defendant(s) will take this opportunity to indicate any affirmative defenses and put forward any counterclaims or cross claims that they may have.

Once all of the pleadings have been filed, and any necessary amendments have been made, the discovery phase of litigation begins.

Part 2 of 5, “Discovery”

If you run a business, sooner or later you will have a disagreement with a customer, contractor, or vendor that may lead to litigation. For many business owners litigation, and what is entailed, is clouded in mystery. The next few articles are going to attempt to illuminate some of those mysteries and explain the process, in general terms, for litigation with a bend towards the local rules and practices of Milwaukee County.

Please realize that each individual case is going to have its own intricacies and variables, and I certainly would not recommend using these articles as a road map to represent yourself, as this outline will be very broad and may be missing key elements that are essential for your case.

The basic steps of any litigation are the following:

- Pleadings
- Discovery
- Motions
- Mediation

- Trial

While most cases never make it all the way to trial, you can expect anywhere from 18-24 months to go from initial filing to Jury trial.

The next five articles will review each of the above steps and try and give you an overview of what is involved.

Part 1 of 5, “Pleadings”

In an ideal world we would always get what we pay for, and people would always live up to their obligations. Unfortunately in both residential and commercial buildings, the contractor does not always provide the quality of work that was contracted for. Often litigation arises to resolve the dispute. The focus of the litigation is going to be whether or not the contractor breached his or her contract, but underlying the entire case is the question of what the damages are if the contract was breached.
Do you tear down the building and build a new one? Do you simply get the money it would cost to repair it? Do you get the difference in value of what the building would be worth if was built correctly?

In every case the facts will vary as to what the proper solution is, but Wisconsin Jury Insturction 3700 gives us a clue. Jury Instruction 3700 suggests dealing with damages in the case of a breach of a building contract in the following way:

1. Can the building be repaired? If it can, what is the reasonable cost of repairs?

2. If the building cannot be repaired, what would the value of the building have been if it had been built correctly? What is the current value of the building having been built incorrectly? (The difference would be the damages)

These remedies may not be wholly adequate in every case, and these jury instructions are mandatory, though Wisconsin Courts do prefer to use the model jury instructions, but it can be helpful to know what ultimate question the jury may be facing at the beginning of your dispute as it may help inform the decisions you make in trying to resolve the matter prior to litigation.

A fascinating and enlightening article by Renee M. Mehl in the March 2009 edition of the Wisconsin Lawyer presents some interesting and note worthy observations about the law in Wisconsin regarding LLC’s and its members or managers representing the entities themselves.

You can see the entire article here

For whatever reason the legislature has never expressly addressed whether or not the members of an LLC can represent the LLC themselves. 

For Corporations, the officers or owners are not allowed to represent the corporation without the risk of violating the unauthorized practice of law statute, as a Corporation is its own separate entity. 

LLC’s provide the same type of liability protection as a Corporation, and it could be argued that therefore it is a separate entity and its members cannot represent it themselves. 

At the end of the day, if you choose to represent your LLC you may run the risk of not only violating Wisconsin’s unauthorized practice of law statutes, but also risk having any answer you submit being deemed invalid allowing the opposing side to obtain a default judgment against your LLC.

I have written in the past about the importance of a well written contract, but as my litigation practice expands I am constantly reminded about how important this is. The importance of not only including all of the legal boilerplate, but also making sure the specifics of dispute resolution are ironed out is paramount.

While this is certainly a problem with small businesses that are (understandably so) trying to save money by drafting contracts themselves, it also is a problem with large corporations that have Attorneys draft their contracts. It seems so often the Attorneys get caught up in the minutia of who is warranting and representing versus providing notice or knowledge, that they miss defining important practical aspects of the contract.

I am currently involved in a major arbitration proceedings that involves two large companies with a dispute about how to interpret a provision of the contract. The contract sets out all of the proper legal positions of each party, but fails to define a mechanism to determine who actually has what rights. (I cannot give specifics, but it has to do with calculations of different percentages of sales, and there is no method given to determine such calculation)

Now, instead of spending a few more attorney hours sorting this problem out in advance, both parties are spending tens of thousands of dollars arbitrating the dispute.

In many litigation cases, the question is not, “was there a breach”, but rather “what are my damages.” As smart business people, the decision must always be what is my likelihood of success combined with my likely award. Unfortunately, there are many times when one party is as right as rain, but if the damages are not sufficient to support the litigation, it may not be worth filing the complaint.

To determine what damages you may be entitled to, first we look to the Wisconsin Standard Jury Instructions: “3710 Consequential Damages for Breach of Contract.”

The law provides that a person who has been damaged by a breach of contract shall be fairly and reasonably compensated for his or her loss. In determining the damages, if any, you will allow an amount that will reasonably compensate the injured person for all losses that are the natural and probable results of the breach.

This leaves us with the instruction that damages are “all losses that are the natural and probable results of the breach,” but what does that mean? To figure that out, we look to the relevant case law to see how Wisconsin Courts have interpreted that term.

The Wisconsin Courts have really focused on “foreseeability” as the main component of determining damages. The Court, in Thorp Sales Corp. v. Gyuro Grading Co., 111 Wis.2d 431 held

An injured party is only entitled to the benefit of his or her agreement, which is the net gain he or she would have realized from the contract but for the breach. Thorp Sales Corp. v. Gyuro Grading Co., 111 Wis.2d 431, 438-39, 331 N.W.2d 342 (1983).

The Court has also explained how prospective profits, not prospective revenues, fall into that determination:

The long-established rule in Wisconsin, stated in Buxbaum v. G.H.P. Cigar Co., 188 Wis. 389, 392, 206 N.W. 59 (1925), holds that “prospective profits are a legitimate item of damages resulting from a breach of contract when the circumstances are such that the future profits may be computed with some reasonable certainty.” See also 2 The Law of Damages in Wisconsin § 26.16 (Russell M. Ware ed., 2d ed.1995).

The key is that the potential revenues must be shown and offset by the potential costs.

Prospective profits must be diminished by charges composing an essential element in the cost of manufacture or service. Schubert v. Midwest Broad. Co., 1 Wis.2d 497, 503, 85 N.W.2d 449 (1957).

Wisconsin Standard Jury Instruction 3735 “Damages: Loss of Expectation” sets out the standard described in the case law above:

The measure of damages for a breach of contract is the amount which will compensate the plaintiff for the loss suffered because of the breach. A party who is injured should, as far as it is possible to do by monetary award, be placed in the position in which he or she would have been had the contract been performed. The fundamental basis for an award of damages for breach of contract is just compensation for losses necessarily flowing from the breach. A party whose contract has been breached is not entitled to be placed in a better position because of the breach than the party would have been had the contract been performed. The injured party is entitled to the benefit of his or her agreement, which is the net gain he or she would have realized from the contract but for the failure of the other party to perform. Wis JI-Civil 3735 (emphasis added).

Wis JI-Civil 3725 addresses damages and future profits; no mention is made of lost revenue. Revenue loss is not an appropriate consequential damages award.

While this is going to differ in every case, and depend on the specific facts and the nature of the breach, it is important to realize that the only consequential damages that Wisconsin Courts are going to award are those which you can prove were foreseeable losses and missed profit due to the breach.

Generally speaking, in Wisconsin, the statute of limitations for a contract claim is 6 years. How that is interpreted however, can make a world of difference for your case.

The Wisconsin Courts have held that the six year statute of limitations for Breach of Contract claim is an absolute six years, running from the date of the breach, not when it is discovered.

The Court said in Williams v. Kaerek Builders, Inc. 212 Wis.2d 150, 568 N.W.2d 313 Wis.App.,1997 that

[Plaintiffs] were required to bring their breach of contract action within six years of the breach, regardless of whether they had knowledge of the breach or could have diligently discovered the breach. See CLL Assocs. Ltd. Partnership v. Arrowhead Pacific Corp., 174 Wis.2d 604, 617, 497 N.W.2d 115, 120 (1993).

What does this mean for your business and its possible lawsuits? It means that if there is any possibility of a claim, you need to bring them to an attorney right away. While you may think you have time, it may turn out that the breach occurred much earlier than you realize, and then your claim may be barred. Every case is different, and it is impossible to predict over the phone how the statute of limitations will apply in every case. Be sure to bring your matter right away to an attorney and inform them if you think there is any possibility that the breach took place at some point in the past.

The Wisconsin Law Journal brought a recent case to my attention about a man who wrote up a contract with his brother to try and cheat his now ex-wife out of some of the family assets.

The terms of the contract were that Stanley, who was thinking of getting divorced, transferred 20 acres of land to his brother at a steep discount to prevent his soon to be ex-wife from getting any of it. The deal was that after the divorce, Thomas would transfer the property back. Only, Thomas decided to keep the property instead. When Stanley sued to enforce the contract, the Court’s refused to uphold it and assist Stanley with his fraud.

The opinion stated,

Because the court does not reward the perpetrator of a fraud upon the court, we affirm the trial court’s decision to void the contract and permit the parcel to be titled in Thomas’ name.

Oddly enough this leaves the now ex-wife with no ability to recover for her half of the property. Perhaps she could go after Stanley for her half through Family Court.

Either way, it just goes to show that what goes around comes around, and if you intend to create fraudulent contracts, don’t expect Wisconsin Courts to help you enforce them.

I just came across a really well written article about non-compete clauses, you can read it here www.saleofbusinesslawblog.com . I am a big fan of Non-compete clauses to sweeten a deal. Chances are, that if you are selling the business, it is because you are no longer going to be performing that type of work anyway. But guaranteeing it with a non-compete clause can give the other side a sense of security and can be a nice bargaining chip to help sweeten the deal.

Of course you have to be sure that you do not want to continue in the business and be sure that the amount added to price is sufficient to cover the opportunity cost involved in no longer being able to pursue an industry that you are knowledgeable about.

Often these agreements are limited to 3-5 years. This gives the buyer enough security about the short term without permanently banning the seller from the industry. Keep in mind however that non-competes vary in large degrees and that there are many specific rules you must follow in order for your non-compete to be enforceable. In Wisconsin, often times non-competes against individuals are limited to around 2 years.

Even when a contract is drafted by an attorney, there can be simple clerical errors that may change the whole contract. If you had an option to purchase, and on one line the wrong date was put for that option to end, it could materially change the terms of the contract.

Fortunately, or unfortunately, depending how you look at it, Wisconsin has a fair amount of case law addressing this problem. In a majority of these cases the error will simply be attributed to “Mutual Mistake”. Basically meaning that neither party noticed it was wrong, but did not intend for it to be present. In a case of Mutual Mistake the remedy is usually to reform the contract to reflect the parties true intentions. The reasoning being that an otherwise mutual oral agreement was erroneously put into writing. If the Court reforms the contract, then the parties true intentions are reflected.

[M]utual mistake, or mistake by one party and fraud by another are recognized as basis for the relief of reformation of an instrument, Findorff v. Findorff (1957), 3 Wis.2d 215, 224, 88 , City of Milwaukee v. Milwaukee Civic Devs., Inc., 71 Wis. 2d 647 (1976)

However, the burden of proof is on the party that is seeking reformation.

“A party seeking reformation must offer clear and convincing evidence that both parties agreed on facts different from those set forth in the agreement.” Hajec v. Novitzke 46 Wis. 2d. 590, 594 (1975)

There is an issue to consider if, for some reason, the error does not fall into the realm of “Mutual Mistake” but instead is construed as an ambiguous provision. In those cases, Court’s have held that any ambiguities are construed against the drafter. However, the intentions of the parties is the ultimate factor to be considered. In Wilke v. First Federal Sav. and Loan Ass’n of Eau Claire 108 Wis.2d 650, 655 the Wisconsin Supreme Court held

Construction of an ambiguous contract clause against the drafter is a general rule to be followed only where consistent with the language of the whole contract and the intent of the parties. The purpose of the rules of contract construction is to aid ascertainment of this intent.

So, while it is best to make sure that what you Contracted for is actually in the contract, if through honest mistake, or fraud from the other side, something in the contract is incorrectly represented, there are remedies to fix the contract based on the parties’ true intentions.

The latest news I have seen comes from a Wisconsin Law Journal Article on Tuesday stating that the Metropolitan Milwaukee Association of Commerce’s (MMAC) directors unanimously chose to sue the city of Milwaukee to stop the sick-leave ordinance from taking effect. You can see the article here.

I am very interested to see what the complaint states, as well as how the city responds. Apparently the organization 9to5, which is a branch of the National Association of Working Women, is prepared to file an amicus briefs to support the city in a lawsuit. (An amicus brief is a brief that a third party can submit in support of a party in the action).

I try my best to stay very politically neutral in these posts, but I want to address one portion of this argument. In the above mentioned article is the following

Amy Stear, 9to5 Wiscsonin Director said the MMAC’s decision disregards Milwaukee residents who voted 130,562 to 60,796 Nov. 4 to approve the ordinance in binding referendum.

“Essentially,” Stear said, “they’re saying that they don’t care what’s important to us.”

Regardless of the merits one way or the other of the referendum, basically saying that it is right because the majority wants it, is a very weak argument. Throughout the history of this country there have been some very bad ideas that are held by the majority. As recently as fifty years ago there were portions of the this country where the majority felt that blacks should not be able to vote.

I am in no means saying this is the same situation, but “majority is right” in my mind is a very bad argument. If the referendum had said, “Everyone in Milwaukee gets $10,000″ I am sure it would have passed, but it would not have made it legal, or a good idea.

The final piece of information I would love to get my hands on, is what percentage of Business Owners in Milwaukee, live in the city of Milwaukee. I have a feeling that an overwhelming majority of the people that this referendum adversely affects, business owners, were not even able to voice their opinion on the matter as they did not get to vote on the referendum.

It seems quite often you see contracts that contain provisions similar to the following:

Either party may cancel this contract at any time by giving the other party 60 days written notice.

This always sounds like a good idea when you discuss it. Basically it is the back-out provision, if things are going badly, you can get out before it gets worse. While this may be appropriate in some cases, in many cases it ends up destroying the entire reason for the contract.

The point of most contracts is to set a series of provisions out defining what each party is responsible for. Most of the value comes from the fact that both parties know they are tied to each other for a certain amount of time as long as both parties live up to their end. If you provide a get out of jail free card, with one of these provisions, then you do not have a 1, 2 or 3 year contract, all you really have is a self renewing 60 day contract.

There is nothing wrong with 60 day self renewing contracts, if that is what both parties want, but more often then not, when these provisions are used it is not the case.

Always be sure that what you contract for is what you intend. As my father always said to me “Say what you mean, and mean what you say.”

There are many situations where two existing businesses, or two just starting entrepreneurs want to jointly take on an endeavor, but do not want to be so tied to each other as to be the same entity. This is where a joint venture can come in handy. It creates a legally binding relationship, and if done correctly all of the fiduciary duties of being in business together with out all of the red tape when it is time to go your separate ways.

Like any contract, it is important to ensure that it is well written and extremely explicit as to what each person’s duties and responsibilities are. Some more explanation of the importance of well drafted contracts can be seen in my “Anatomy of a Contract” series.

Probably the two most important things to ensure that are included, other than what the contract is about, are that each member has a fiduciary duty to the Joint Venture (this means they have a duty to put the best interests of the Joint Venture first) and that you properly indemnify all parties from each other’s potential wrong doings that occur outside of the Joint Venture. The whole point of the Joint Venture is that you are not tied, lock stock and barrel to the other party, not being properly indemnified ends up defeating that purpose.

The law that was passed by referendum sets out a rule that mandates that Milwaukee Businesses provide mandatory sick leave to their employees. The rule states that employees will earn 1 hour of sick time for every 30 hours they work, with a cap of 5 days to 9 days depending on the size of the company.

The Wisconsin Law Journal and reporter Sean Ryan reported in a November 5th article “Business Group Preps for Sick Leave Suit” that the Metropolitan Milwaukee Association of Commerce (MMAC) is planning on attempting to challenge the law in the courts.

While the group, 9-5 that sponsored the bill is trying to work with businesses and the Mayor’s office to discuss enforcement mechanisms, the MMAC seems reluctant to do so. The quote from Steve Baas, the MMAC’s government affairs director pretty much summed it up:

If this new ordinance is illegal, you are not improving an illegal law by rearranging the deck chairs on the illegal Titanic.”

Although the MMAC filed a notice of claim to the City of Milwaukee on November 5th, as of today no actual suit has yet been filed, it remains to be seen if a lawsuit will actually emerge and what the legal basis of the suit will be.

The short answer: YES. DirecTV is cracking down on Commercial Misuse over the last year and a half, particularly misuse of NFL Sunday Ticket, resulting in huge fines. Previously DirecTV had limited its focus to just those who were using “Pirate” boxes or illegal access cards to get at its content. Now, DirecTV is unleashing its “Office of Signal Integrity” on commercial businesses large and small, especially sports bars, showing its content without paying for a commercial subscription. It even maintains an anti-piracy website www.hackhu.com listing all of its recent settlements and judgments against those both violating the piracy rules and what they have dubbed “Commercial Misuse” ranging from $50,000 to $100,000 settlement awards.

DirecTV has two different types of subscriptions, residential or commercial. The residential rates range from $30 per month to about $90 per month. In contrast, the minimum commercial package starts at $151.99 per month and maxes out at $361.99 depending on the size of your establishment. Add in the fact that commercial NFL Sunday Ticket prices range from $869 per season all the way to $45,799 based on your establishments fire code occupancy, you can see why business are trying to avoid paying for commercial licenses.

However, DirecTV has been making these business pay, and in a big way. Its anti-hacking website lists dozens of examples of $50,000+ settlements for violations of showing DirecTV programming without paying its commercial license rates. DirecTV also has not limited its blitzkrieg to large commercial bars, small mom and pop establishments are getting slapped down with four and five digit fines. Its main cause of action is based on 47 U.S.C. §605 “Unauthorized Publication or Use of Communications” which sets out damages of $1,000 to $100,000.

DirecTV has been smart about gathering its evidence and making sure that it can prove its case, but never actually has to. By forcing violators to settle regardless of how “innocent” or “grievous” their violation is out of fear of exorbitant legal fees, DirecTV manages to keep its claim of action intact and unchallenged by an actual fact finding hearing. DirecTV knows that it will be successful in summary judgment, be awarded the statutory fees as well as attorney’s fees. So, all of you small businesses, especially bars, that think that you are saving a few bucks a month by not paying for the commercial license, you are playing with fire, and one day soon may end up with a demand for a $50,000+ settlement to avoid a protracted law suit. If you get one of these demand letters make sure to contact an attorney and see if at the very least the damage can be minimized.

In an opinion that was issued last week the Wisconsin Appellate Court upheld a circuit court decision in which the plaintiff’s were not able to sue for actual damages in a failed residential real estate transaction because they did not return the earnest money to the buyer. The court ruled that they irrevocably elected liquidated damages as their remedy and forfeited their right to sue for actual damages when they refused to direct the return of the earnest money to the buyer.

What does this mean? The Wisconsin courts are saying to sellers that you need to make a choice as to whether to sue for actual damages or simply accept the earnest money, you cannot go after both when a buyer backs out of a deal. Earnest money is intended to be a form of insurance against buyers backing out of the offer. If you decide to keep the earnest money, then that is the extent of the damages that you can receive.

It seems that this decision will impact sellers in a couple of ways. One, there is now some incentive to require a higher earnest money amount from buyers. While this would not have been a problem a couple of years ago, sellers are no longer in the position to be especially picky about the offers that they will consider. The other is that we may see a chilling effect on the number of lawsuits for actual damages. This number is usually low anyway, but now that the earnest money must be returned prior to seeking actual damages many more people may choose to simply take the bird in the hand versus the two in the bush and accept the earnest money as liquidated damages and move on.

You can read the Appellate Court’s as yet unpublished decision at http://www.wisbar.org/res/capp/2008/2007ap001799.htm