Four golf professionals can sue the city of Madison over claims their contracts with the city were terminated in 2012 without good cause, the Wisconsin Supreme Court ruled Thursday.
In a 5-2 decision that establishes a new precedent, the court said the city is subject to the Wisconsin Fair Dealership Law, which governs contractual obligations between those who sell goods or services and those who benefit from the sales, and rejected the city’s assertion it was protected from such lawsuits under governmental immunity.
The majority opinion, written by Justice Annette Ziegler, concluded that the golf pros’ contracts were “dealerships” under the law, and as such could only be terminated for cause. The city ended the contracts in 2012 and replaced the four longtime pros with one golf pro, some assistant golf pros and unionized concession workers as a cost-cutting move.
In her dissenting opinion, Justice Shirley Abrahamson said the decision establishes “a far-reaching precedent” that fundamentally changes the relationship between municipalities and contractors. “Municipalities will be limited with regard to managing their finances and their contracts,” Abrahamson wrote. Justice Ann Walsh Bradley also dissented.
Madison City Attorney Michael May agreed with Abrahamson’s opinion.
“It’s the first time a court anywhere has applied this law designed for commercial relationships to governmental bodies providing services to the public,” he said. “Every municipality, every local unit of government will need now to look at all their contracts to determine whether or not they are going to be subject to claims under this law.”
Mayor Paul Soglin called it a “classic example of right-wing hypocrisy.”
“They’ve taken a law and extended it beyond its legislative intent,” Soglin said. “The law was never intended for these situations.”
The decision sends the lawsuit back to Dane County Circuit Court, where it was originally filed in June 2013 by Odana Hills Golf Course pro Tom Benson, Monona Golf Course pro Rob Muranyi, Yahara Hills Golf Course pro Mark Rechlicz and Glenway Golf Course pro Bill Scheer.
The pros were originally seeking $1.8 million but may seek more, according to the pros’ attorney, Kevin Palmersheim.
“We won on every issue that went before the court. This is very satisfying,” said Palmersheim. “We consider this a home run.”
The Fair Dealership Law seeks to protect the economic interests of “dealers” against unfair treatment or practices by “grantors,” those who grant dealerships and who might have superior economic or bargaining powers. The law applies to arrangements in which there is a “community of interest” between the two parties, such as a shared financial interest or coordination of activities.
The pros maintain their contracts with the city, sale of goods associated with the city and shared financial interests in operating the courses created a dealership under the law.
A Dane County Circuit judge and a state appeals court both ruled that the city wasn’t subject to the Fair Dealership Law because it didn’t meet the law’s definition of a grantor as “a person.” But a majority on the Supreme Court disagreed, Ziegler wrote, noting that the law’s definition of a “person” included a corporation, and the city is a “municipal corporation.”
The majority opinion also disagreed with an appeals court’s decision that the pros weren’t selling or distributing the city’s goods or services. Golfers made reservations to play one of its courses through the golf pros or their attendants and paid their greens fees through them, Ziegler wrote. The city also provided the equipment necessary to process payments, and the golf pros remitted those revenues to the city.
“In this way, the golf pros sold access to city courses,” Ziegler wrote. She also wrote that the agreement between the pros and the city constituted “a community of interest” because there was a shared financial interest in the operation of the dealership.
“It is more than fair to say that the city’s power to terminate, cancel, or not renew the relationship(s) (was) a substantial threat to the economic health of the (golf pros),” Ziegler wrote.
In her dissenting opinion, Abrahamson wrote that the state Legislature’s instructions to the court in deciding whether a statute governs a municipality make clear that the Fair Dealership Law should not be interpreted as applying to a city. She noted that included among the powers conferred on a city by the Legislature is the management and control of the city property.
The majority opinion “ought to interpret the Dealership Law as not limiting the powers of the city of Madison because nothing in the Fair Dealership Law expressly limits the city of Madison in exercising management over its golf courses or expressly limits the city’s power to act for the good order of the city, its commercial benefit, or for the health, safety, and welfare of the public with regard to its golf courses,” Abrahamson wrote.
Palmersheim said the decision sets a precedent across the country “because more than half of the states in the country have laws similar to Wisconsin’s law.” But Palmersheim said he believes it will only affect municipalities’ contracts with private contractors who have made a significant investment and established a community of interest with a city.
“It won’t be as widespread as what they are saying it could be,” Palmersheim said.