Suing the State: Class Action or "Mass Action"

31 October 2014 Wisconsin Appellate Law Blog

Wisconsin’s court of appeals recently clarified the extent to which class-action lawsuits may be brought against Wisconsin governmental entities in Townsend v. Neenah Joint School District, No. 13AP2839 (Oct. 22, 2014). Wisconsin cases have recognized the tension between the class-action device and Wisconsin’s requirement that a plaintiff provide a “notice of claim” to a governmental entity before suing that entity. In Townsend, the court clarified that one type of class action can coexist with the notice-of-claim requirements: “mass actions.”

This case began when the Neenah Joint School District amended its teachers’ retirement plan and when six of the teachers filed suit as a putative class action, challenging the amendments. Attached to their complaint was the notice of claim previously served on the District under Wis. Stat. § 893.80, which identified two teachers and purportedly was served on behalf of the class, with each class member listed in an attachment. Whether class members affirmatively chose to be listed on the notice is not clear, but they were all given the opportunity to opt out. The claim in the notice was for $61 million.

The District moved to dismiss, arguing that the notice was defective. The circuit court dismissed all plaintiffs except for the two who were named in the notice of claim. The court of appeals reversed.

The court of appeals considered whether this type of class action can be brought against governmental entities in Wisconsin and determined that it can. The court distinguished between (1) the typical class action case where a representative plaintiff sues on behalf of unnamed class members; and (2) an action brought as a class action on behalf of named and known class members, what it called a “mass action.”

The first is not viable in this context because claimants must be identified in a notice of claim before the suit is brought. However, a mass action can fulfill the notice-of-claim requirement.

While Wis. Stat. § 893.80(1d)(a)&(b) have both a “notice-of-injury” and a “notice-of-claim” requirement, only the notice-of-claim requirement was before the court. The court reaffirmed that only substantial, rather than strict, compliance with the statute was required and that the notice of claim that the two claimants served on the school district substantially complied with the statute, Wis. Stat. § 893.80(1d)(b).

The remaining issue for the court was whether the two claimants had authority from the more than 200 teacher class members to file the notice of claim on their behalf, and whether such authority was required. Ultimately the court concluded that that authority was not required for a notice of claim.

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