Wis. Executive Power Ruling Has A Downside For Businesses

By Brian Hauck
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Law360 (May 20, 2020, 5:39 PM EDT) --
Brian Hauck
Brian Hauck
Some business interests cheered last week when the Wisconsin Supreme Court in Wisconsin Legislature v. Palm invalidated the state's "safer at home" order as going beyond the governor's and Department of Health Services secretary's authorities. To those business interests, cutting back on the executive's authority to order residents to stay in their homes, and businesses to close, was a step forward in reopening the economy.

But those business interests may take a different view of state executive authority as the reopening process proceeds. While they may take a weak view of executive emergency powers today, they may favor much stronger executive powers down the road — particularly if governors used those powers to implement significant (if temporary) tort reforms on a state-by-state basis. Those who favor urgent tort reform should remember a basic legal truism as they celebrate the Wisconsin Supreme Court's decision: what goes around, comes around.

Tort reform is clearly on the table in Congress, where Senate Majority Leader Mitch McConnell, R-Ky., has called liability protection for businesses against claims by customers and employees a "red line" for future pandemic-related stimulus legislation. The idea, he has explained, is that for the economy to move forward, businesses "on the front lines" need to know that they will not face lawsuits for certain kinds of claims arising from the spread of the virus in connection with the business's operations.

Drawing less attention is the possibility that at a state level, some governors may have the power to implement reforms like these by executive order, without legislative involvement at all.

As we have seen, when governors and other executives invoke their state-of-emergency powers during a pandemic, they can — at least as a general matter — take steps that would in ordinary times be off the table. State and local executives have ordered businesses closed, travel restricted, elections delayed and medical procedures canceled, all without their legislatures weighing in and without the usual notice-and-comment processes for administrative rulemaking.

These officials are issuing these restrictions pursuant to special powers granted by state law when governors or other executives declare a state of emergency. State-of-emergency laws give governors and other officials the power to take unilateral action far beyond the scope of normal executive authority, freed of some of the checks and balances and procedural requirements that slow regulatory change in normal times.

The shelter-at-home and similar orders across the country have generally been exercises of these powers, and the "reopening" orders have typically been issued as revisions, updates or modifications of the original emergency orders.

Whether you think tort reform is a good idea or not, the question is now on the table: Could governors use their reopening orders to implement liability protections of the kind that McConnell has suggested at a federal level?

A governor's ability to implement tort reform measures by emergency executive order will vary with the nuances of state laws, but a few things are clear.

First, the terms of state emergency powers can be expansive.

In California, during a state of emergency, the governor has "all police power vested in the state by the Constitution and laws of the State of California in order to effectuate the purposes" of the state's state-of-emergency framework, including the right to "commandeer or utilize any private property or personnel deemed by him necessary."

In New York, the governor can, while still subject to the state constitution and federal law, "temporarily suspend any statute, local law, or orders, rules or regulations" that would hinder the response to the disaster, and "may issue any directive … necessary to cope with the disaster" — a power that has been interpreted to include the power to suspend laws as important as speedy trial requirements.

Second, any effort to accomplish tort reform through measures like these will be hotly contested. The economic stakes would be high, the political interests hot, and the law murky. While emergency enactments are, by their nature, time-limited, it is also clear now that pandemic-related conditions will be with us for a long time.

The Wisconsin Supreme Court's decision shows that the powers are unlikely to be viewed as limitless. And in most states, there is very little precedent that precisely sets out those limits — making these the kinds of cases where courts sometimes turn to first principles, the experiences of other states, or policy-based considerations.

Tort reform may all seem a long way away from the Wisconsin Supreme Court's decision on the state's "safer at home" order, which has in many ways been reported through a partisan lens: The political left has criticized the decision as risky public health policy; the political right has cheered it as reopening the economy.

But the court's decision was not framed as a policy judgment on economics or public health. Rather, it was framed as an analysis of the scope of the state executive branch's authority to act pursuant to emergency powers during a pandemic.

The Wisconsin court reasoned, in part, that while emergency powers might give the governor significant unilateral authority during a fast-moving forest fire, a pandemic "lasts month after month," and "the Governor cannot rely on emergency powers indefinitely."

In other words, in a pandemic, emergency powers that often justify unilateral action may instead require legislative involvement.

Legislative involvement, of course, makes tort reform significantly less likely. The business interests that sought to curb executive authority on shelter-at-home orders may someday wish that they had argued for strong executive authority, when they try to defend orders that limit businesses' tort liability during reopening. Those arguments for strong liability protection may run head-on into another legal truism: when you enfeeble the governor, you enfeeble the governor.



Brian Hauck is a partner at Jenner & Block LLP and co-chairman of the firm's state enforcement and regulatory practice.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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