LEROY SWANSON, Complainant

KELLY SERVICES, Respondent

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

Based upon the commission's review of this matter, and for the reasons stated in the attached Memorandum Opinion, the Labor and Industry Commission issues the following:

The decision of the administrative law judge dismissing the complainant's complaint is reversed and this matter is remanded to the Equal Rights Division for further proceedings. The respondent's motion for sanctions is denied.

Dated and mailed October 13, 2004
swansle . rpr : 125 : 9

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

The Wisconsin Fair Employment Act makes it an act of employment discrimination for, among other things, an employer to refuse to hire an individual "on the basis of.conviction record." Wis. Stat. § § 111.321 and 111.322. The Act provides a number of exceptions to this prohibition against discrimination, however, one of which is when the individual has been convicted of any felony, misdemeanor or other offense the circumstances of which substantially relate to the circumstances of the particular job. Wis. Stat. § 111.335(1)(c)1.

The term "conviction record" is defined as including but not limited to "information indicating that an individual has been convicted of any felony, misdemeanor or other offense, has been adjudicated delinquent, has been less than honorably discharged, or has been placed on probation, fined, imprisoned, placed on extended supervision or paroled pursuant to any law enforcement or military authority." Wis. Stat. § 111.32(3).

On July 15, 2002, Swanson filed a complaint of discrimination with the ERD alleging that he was discriminated against on the basis of conviction record.

On July 29, 2003, the Division issued an initial determination of probable cause, and certified the matter to hearing. By letter dated September 3, 2003, the respondent provided notice to the ERD that it would be conducting discovery in the matter. This notice was required since Swanson was not represented by legal counsel. By letter dated September 23 the respondent sent to Swanson the respondent's First Set of Interrogatories, First Request for Production of Documents and First Requests to Admit. All of the respondent's requested discovery advised Swanson that he had 30 days in which to respond. The respondent's Requests to Admit advised Swanson that he had to admit or deny the Requests to Admit within 30 days. The following were included among the requests to admit:

9. Respondent based all decisions at issue on this case on Complainant's admitted behavior and factors other than Complainant's conviction record.

10. Complainant's criminal behavior for which he has been convicted is substantially related to employment with Respondent.

11. Respondent has not violated the Wisconsin Fair Employment Act in this case.

12. Respondent had not unlawfully discriminated against the Complainant.

Swanson was required to respond to the requests to admit by October 23 but he did not do so.

On October 28, 2003, the respondent deposed Swanson. Swanson, who was now represented by counsel, appeared at the deposition with his attorney, Janet McDonough. Swanson's deposition testimony was as follows:

On May 7, 2002, Swanson went to Tombstone in Medford, Wisconsin to apply for third shift work. Swanson stated that he was interested in third shift work because he liked to work third shift and because "underage people don't work third shift or are only allowed certain hours and all that. It's preferred that we work third shift." Swanson went to Tombstone because he heard they were hiring. Swanson was given a Kelly Services employment application. Swanson disclosed on the employment application that he had a felony conviction. Swanson indicated that in 1993 he had been convicted of sexually assaulting two fourteen-year-old girls when he was nineteen, that he had served eight and one-half years of a twelve-year sentence and that he would be on parole until August 2005. Two or three days later, Kelly Services asked Swanson to come to Tombstone's Medford office to talk about his application. During their meeting the respondent asked Swanson to explain about his criminal behavior, and to supply the respondent with records regarding his criminal behavior. Swanson discussed his behavior that led to his conviction. Swanson admitted to having engaged in the behavior he had been convicted of in substantially the same details as stated in his criminal complaint. (At the deposition Swanson also testified that he had a third degree misdemeanor conviction for sexually assaulting a 15-year-old girl in 1992.) Swanson had his parole officer furnish the respondent with a copy of his judgment of conviction and criminal complaint. Swanson subsequently got a call from the respondent advising him that he was being denied employment because of his "admitted behavior." Swanson stated that in his opinion Kelly denied him employment "because of my past history, criminal history, which is what was my admitted behavior."

Regarding his failure to respond to the discovery requests Swanson's deposition shows the following testimony:

When asked why he had not responded Swanson stated "Because I don't have the foggiest what they're talking about." In response to questioning about when he had retained an attorney Swanson stated "I made the arrangements for her to come down today, yes, yesterday (Monday, October 27, 2003). Swanson stated that prior to yesterday he had not had an attorney-client relationship with anyone. In response to the question "And you're aware your responses are late" Swanson replied, "Yes. I also called you on Friday (October 24) and asked for an extension. The respondent's counsel (Eric Rumbaugh) then stated, "And I told you that you'd have to - that I'd discuss it today - if you retained an attorney, I'd discuss it with your attorney, correct?" Swanson responded, " Yes."

On November 4, 2003, the Division issued a notice of hearing to the parties advising them a hearing on the merits would be held on January 9, 2004.

By a hand-delivered letter to the ALJ dated November 14, 2003, the respondent filed a memorandum in support of a motion to dismiss and a motion for sanctions. Based upon Swanson's deposition testimony about his discussion with the respondent after submitting his May 7 application and the reason the respondent gave for not hiring him, the respondent argued that Swanson had failed to state a claim of conviction record discrimination pursuant to Wis. Stat. § 111.321. Further, the respondent asserted the matter should be dismissed because Swanson had failed to respond to any of the respondent's discovery requests. The respondent also argued that it should be awarded reasonable attorney's fees and costs associated with filing its motion and Swanson's failure to respond to the respondent's discovery requests.

The respondent argued that the matter should be dismissed because Swanson has failed to state a claim of conviction record discrimination. The respondent asserted that if there were a hearing in this matter one issue would be whether Swanson's crimes are substantially related to the employment he would have held with Kelly, but that issue need not be reached in this case because "[u]nder long- standing commission precedent, an employer is not guilty of conviction record discrimination, and the issue of substantial relationship is obviated, where the employer does its own investigation and learns that the complainant engaged in criminal behavior from another source besides the mere fact of the conviction." The respondent cited as support the cases of Ponto v. Grand Geneva Resort & Spa and Marcus Corp. (LIRC, 08/22/96), Lamb v. Happy Chef of Sparta (LIRC, 09/29/95), Greene v. Air Wisconsin (LIRC, 02/02/95), Paxton v. Aurora Health Care, Inc. (LIRC, 10/21/93), Springer v. Town of Madison (LIRC, 09/22/87), Mielke v. Orkin Exterminator Co., Inc. (LIRC, 04/11/88), McClellan v. Burns International Security (LIRC, 03/31/88) and Himmel v. Copps Corp. (LIRC, 10/29/86).

Alternatively, the respondent argued that the case could be dismissed because Swanson failed to answer the respondent's Interrogatories, Requests to Admit and Request for Production of Documents. Moreover, the respondent argued that an additional ground to dismiss existed. The respondent asserted that on September 23, 2003, Swanson was served with a request to admit. Namely, a request to admit that the respondent based all decisions at issue on his admitted behavior and factors other than his conviction record, that his criminal behavior for which he has been convicted is substantially related to employment with the respondent, that the respondent has not violated the Wisconsin Fair Employment Act and that the respondent has not unlawfully discriminated against him. The respondent asserted that under Wis. Stat. § 804.11(1)(a), a request to admit may relate to "statements or opinions of fact or of the application of law to fact." The respondent asserted that moreover, under Wis. Stat. § 804.11(1)(b) "A party who considers that a matter of which an admission has been requested presents a genuine issue for trial may not, on that ground alone, object to the request." The respondent also asserted that a request to admit directed to ultimate facts is appropriate. The respondent further asserted that matters requested to be admitted are "admitted unless, within 30 days after service of the request.the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or attorney."

The respondent argued that Swanson had not responded to any of its discovery requests, and that as a matter of law the matters requested to be admitted are admitted. The respondent argued that since Swanson has admitted that Kelly did not unlawfully discriminate against him and has not violated the WFEA, he cannot prevail. The respondent argued that Swanson cannot prevail because he has admitted in his deposition and by failing to respond to Kelly's Requests to Admit, that Kelly denied him employment because of his admitted behavior. The respondent argued that similarly, since Swanson has admitted that this conviction is substantially related to employment with Kelly, he cannot prevail on this matter because under Wis. Stat. § 111.335(1)(c)1, it is not employment discrimination because of conviction record to refuse to employ an individual who "has been convicted of any felony, misdemeanor or other offense the circumstances of which substantially relate to the circumstances of the particular job or licensed activity."

By letter dated November 21 responding to the respondent's arguments, Swanson's counsel argued that the respondent incorrectly asserts that there is a long-standing commission precedent that we need not use the substantially related test if an employer does its own investigation, learns the complainant committed the crime and argues they based their decision on something other than the mere fact of the arrest or conviction. Counsel argued that Swanson admits that he sexually assaulted two 14 year-old girls, the crime that he was convicted of. Counsel argued that the respondent does not want to use the substantial relationship test for the conduct, and that "it would be a sorry state of affairs if the law only protects convicts who refuse to admit guilt to potential employers." With respect to Swanson's failure to respond to the discovery requests, counsel argued that Swanson requested an extension of time to respond to the discovery requests, and that counsel herself asked for a one month extension of time to respond to the discovery requests, and that her request was denied. In an affidavit attached to her letter, Swanson's counsel stated, among other things, that "During a break in the deposition, I asked Attorney Rumbaugh if he was willing to grant a one-month extension for the discovery. He stated that usually he would, but in this case he was unwilling to grant any extension." Swanson's counsel also stated that on October 30 she e-mailed attorney Rumbaugh, asking that he e-mail her the discovery requests so she could easily incorporate the answers with the questions.

By fax and regular mail to the ALJ dated December 1, Swanson's attorney enclosed copies of two e-mails (one dated November 26, 2003 and the other dated December 1) that she had sent to the respondent's attorney regarding the respondent's discovery requests. The November 26, 2003 e-mail to the respondent's attorney reads as follows:

"I sent the discovery responses to my client for his signature last week. He called yesterday, the 24th to say that he had received them and was mailing them out same day. I will be sending the discovery responses to you as soon as I receive them, which should hopefully be this Friday.."

The copy of the December 1 e-mail, which shows that it was sent at 1:16 p.m. to the respondent's attorney, reads as follows:

"As I did not go into the office on Friday November 28th because I was ill, I did not have a chance to mail out the discovery responses. I am mailing them out today, December 1, 2003.."

By fax and regular mail dated December 1, the respondent's counsel submitted a reply memorandum in support of its motion to dismiss. The respondent argued that Swanson's attempt to distinguish the precedent that the WFEA is not implicated if an employer does its own investigation and determines that an applicant/employee engaged in the particular behavior for which he was arrested or convicted fails, both because he does not reference the holdings, which are fatal to his case and also because there is just too much precedent.

With respect to Swanson's failure to respond to its discovery requests, counsel argued that his responses were already late when he was deposed on October 28 and therefore the respondent was deprived of the right to have Swanson's responses to written discovery at the time of his deposition. Counsel argued that he had already traveled north for the deposition; accordingly, when Swanson asked for an extension, he refused, because Swanson, through his dereliction, had caused the respondent to expend time and money needlessly. Counsel argued that it was now December, that Swanson's responses are over a month late and that the hearing was scheduled for a little over a month from now, with the holidays intervening. Counsel argued that there was very little time to schedule any follow-up discovery before the submission of exhibit lists and that the respondent has been prejudiced in terms of time, money and reasonable hearing preparation, which was cause for sanctions. In an affidavit attached to his memorandum, counsel for the respondent stated that his office is in Milwaukee and that he scheduled two client meetings around his trip to Medford, Wisconsin for Swanson's deposition. Counsel stated that one meeting was in Minneapolis and another in Eau Claire, and that he would not have made the trip to Minneapolis or Eau Claire, but for his trip to Medford. Counsel stated that both trips (apparently referencing those to Minneapolis and Eau Claire) were scheduled as "visits" with clients and were not billable. Further, in his affidavit attorney Rumbaugh stated that on the evening of October 27 while in the Minneapolis area he received a call from attorney McDonough asking for a one-month extension to respond to discovery. Attorney Rumbaugh stated that he indicated to her that a court reporter had already been hired, that he had already made a trip which he would not have made but for Swanson's deposition, and moreover, he had expected to have Swanson's discovery responses at his deposition. Attorney Rumbaugh's affidavit further stated that "Because of Swanson's dereliction in failing to contact me until the eve of his deposition, I indicated to Attorney McDonough, I was not inclined to grant a request for an extension in these circumstances."

Counsel for the respondent further argued in his reply memorandum that "although Kelly has clearly been prejudiced, a showing of prejudice is not even necessary." Counsel argued that the matters in the requests to admit directed to Swanson were already legally admitted when he failed to respond within 30 days. Counsel argued that "an award of fees and costs is mandatory unless Swanson can meet his burden of proving, under Wis. Stat. § 804.12(4) that his failure to respond was substantially justified."

In a decision issued January 23, 2004, the ALJ granted the respondent's motion to dismiss for failure to state a claim of conviction record discrimination. The ALJ characterized the issue here as being clearly and concisely articulated by the Wisconsin Court of Appeals in City of Onalaska v. LIRC, 120 Wis. 2d 363, 367, 354 N.W.2d 22 (Ct. App. 1984) when it held:

To discharge an employee because of information indicating that the employee has been questioned by a law enforcement or military authority is to rely on an assertion by another person or entity. If, as here, the employer discharges an employee because the employer concludes from his own investigation and questioning of the employee that he or she had committed an offense, the employer does not rely on information indicating that the employee has been questioned, and therefore, does not rely on an arrest record, as defined in sec. 111.32(5)(h), Stats..

Relying on City of Onalaska, the ALJ concluded that no conviction record discrimination occurred because a copy of Swanson's deposition testimony shows clearly that Swanson admitted that he engaged in the conduct for which he was ultimately convicted and that once Kelly had knowledge of Swanson's conduct from Swanson himself, it was Kelly's decision alone whether or not he would be a suitable employee.

With respect to the respondent's motion for sanctions, the ALJ simply stated:

"As to Kelly's motion for sanctions, it seeks reasonable attorney's fees for bringing this motion because, among other things, Swanson did not respond to discovery requests. Kelly has not previously filed a motion to compel. The circumstances do not simply warrant an imposition of sanctions against Swanson."
 

Discussion

Conviction record discrimination

While the City of Onalaska principle has been cited in a number of commission decisions as applicable to conviction record cases, the commission believes that the ALJ's reliance on City of Onalaska to dismiss Swanson's complaint of conviction record discrimination is erroneous. The City of Onalaska case was an arrest record case. With the exception of the McClellan case, all of the cases cited by the respondent for the proposition that "under long-standing commission precedent an employer is not guilty of conviction record discrimination, and the issue of substantial relationship is obviated, where the employer does its own investigation and learns that the complainant engaged in criminal behavior from another source besides the mere fact of the conviction" were not conviction record cases but arrest record cases. Furthermore, in the McClellan case the commission concluded that even if the complainant had been discharged because of his conviction record, no violation of the Act occurred because his conviction was substantially related to the circumstance of his job. Further, in its brief to the commission, the respondent cites the commission's decision in Stroede v. Federal Express (LIRC, 08/14/96), for the proposition that the Onalaska principle does not apply only to arrest record cases. However, like the McClellan case, in Stroede the commission again also concluded that even if the employer had acted on the basis of the complainant's conviction, his conviction was substantially related to the job.

The term "arrest record" is defined as including but not limited to "information indicating that an individual has been questioned, apprehended, taken into custody or detention, held for investigation, arrested, charged with, indicted or tried for any felony, misdemeanor or other offense pursuant to any law enforcement or military authority." Wis. Stat. § 111.32(1).

Admittedly, there is a certain appeal to applying the Onalaska principle to conviction record cases: the definitions of both arrest record and conviction record begin by defining those terms as including "Information indicating that an individual." As noted above, in City of Onalaska the court indicated that to take an employment action against an employee (e.g., to discharge an employee) because of information indicating that an employee has been questioned by a law enforcement authority (i.e., the employee has an arrest record) is to rely on an assertion by another person or entity.

However, after that opening language about both terms being defined as "including information indicating that an individual.", is where those two concepts seem to end. In the context of the arrest record discrimination case in City of Onalaska, the court continued on to state that if the employer takes action against the employee because the employer concludes from his own investigation and questioning of the employee that he or she has committed an offense the employer does not rely on information indicating that the employee has been questioned, and therefore, does not rely on an arrest record.

In the definition of arrest record, after the language stating that " 'arrest record' includes, but is not limited to, information indicating that an individual." the following words appear "has been questioned, apprehended, taken into custody or detention, held for investigation, arrested, charged with, indicted or tried for any felony, misdemeanor or other offense pursuant to any law enforcement or military authority."

All of the listed examples of types of contact that an individual might have with law enforcement or military personnel present the potential for unwarranted assumptions about the individual's guilt regarding some unlawful activity despite that individual having never been adjudicated guilty of any offense. It is thus evident, at least with respect to arrest record discrimination, that the Legislature's primary concern in that type of discrimination case was about employment decisions being made on the basis of an assumption about the individual's guilt merely on the basis of an individual's contact with law enforcement or military authorities.

Indeed, as the court stated in City of Onalaska, an employer does not rely on an individual's arrest record, and therefore no arrest record discrimination has occurred, where the employer has determined from its own investigation and questioning of the individual that the individual has committed an offense.

With respect to the term conviction record, however, after the statute begins by defining this term as including "information indicating that an individual.", the definition goes on to read "has been convicted of any felony, misdemeanor or other offense, has been adjudicated delinquent, has been less than honorably discharged, or has been placed on probation, fined, imprisoned, placed on extended supervision or paroled pursuant to any law enforcement or military authority."

All of the listed examples of consequences that might befall an individual cited in the definition of conviction record are examples of consequences resulting from legal determinations made by law enforcement or military authority that an individual was guilty of committing some offense.

In all but the most unusual situation, in a conviction record case the question of whether the individual convicted of an offense was actually guilty of committing the offense for which he or she was convicted would never arise. Moreover, even if such a case were to arise, an employer that learned through its own investigation and questioning of the individual that the individual was convicted of some offense could not properly be held to have made an unwarranted assumption regarding the individual's guilt. It would therefore appear that unlike arrest record discrimination cases, the Legislature's concern in conviction record cases was something other than a concern about an employer making an employment decision based on an unwarranted assumption about an individual being guilty of committing some offense. It would appear that the Legislature's real concern in conviction record cases is whether or not the individual has been convicted of an offense that is substantially related to the job that an employer has to offer. However, this does not answer the question of whether an employer has made an employment decision because of an individual's conviction record.

The question that therefore seems to arise is this: Can it be concluded that no conviction record discrimination has occurred simply because an employer concludes from its own investigation and questioning of the individual that the individual has been convicted of some offense that the individual admits he or she was guilty of?

The commission believes that the answer should be "no".

If we were to plug in the circumstances of this conviction record case to the court's holding in City of Onalaska, the result would be the following:

To [refuse to hire an individual] because of information indicating that the [individual] has been [convicted of any felony, misdemeanor, etc., pursuant to any] law enforcement or military authority is to rely on an assertion by another person or entity. If, as here, the employer [refuses to hire an individual] because the employer concludes from his own investigation and questioning of the [individual] that he or she [has been convicted of any felony, misdemeanor, etc.] the employer does not rely on information indicating that the [individual] has been [convicted], and therefore, does not rely on [a conviction record], as defined in sec [111.32(3)], Stats.

First of all, in a conviction record case, although the fact that an employer makes an employment decision because it concludes from its own investigation and questioning of the individual that he or she has been convicted of an offense has not "relied on information indicating" that the individual has been convicted of some offense, it cannot be concluded that the employer therefore "does not rely on" the individual's conviction record in making its employment decision.

In arrest record cases, it can be concluded that an employer "does not rely on information indicating the individual has an arrest record" because the employer has concluded from its own investigation and questioning of the individual that the individual has committed an offense. As previously stated, in all but the most unusual case, in a conviction record case the question of whether the individual that has been convicted of an offense was actually guilty of committing the offense for which he or she was convicted would never arise. Moreover, even if such a case were to arise, an employer that learned through its own investigation and questioning of the individual that the individual was convicted of some offense could not properly be held to have made an unwarranted assumption regarding the individual's guilt.

Second, to hold that an employer that concludes from its own investigation and questioning of an individual that he or she has been convicted of an offense "does not rely on information indicating that the individual has been convicted of some offense," is tantamount to a complete evisceration of the statute's protection against conviction record discrimination. All that an employer would have to do to escape liability under the Act is to undertake its own investigation by questioning the individual if he or she committed the offense for which he or she was convicted. Is this what the Legislature intended? The commission does not believe so.

Third, the problem in allowing an employer to escape liability on this basis really becomes apparent as identified by the following statement the ALJ makes: "Once Kelly had knowledge of Swanson's conduct from Swanson himself, it was Kelly's decision alone whether or not he would be a suitable employee." (Italics emphasis added.) This is what the affirmative defense in s. 111.335(1)(c)1, which the employer has the burden of proving, is all about. This affirmative defense states that "Notwithstanding s. 111.322, it is not employment discrimination because of conviction record to refuse to employ.any individual who: 1. Has been convicted of any felony, misdemeanor or other offense the circumstances of which substantially relate to the circumstances of the particular job." To allow an employer to have the unfettered authority to decide for itself that an individual's conviction is substantially related to the particular job just because it concluded from its investigation and questioning of the individual that the individual committed the offense for which the individual was convicted, would be to subject such individuals to the very arbitrary treatment the Act was enacted to prevent.

Finally, because it is the declared public policy of the state that the interpretation and application of the Act is to encourage and foster to the fullest extent practical the employment of all properly qualified individuals regardless of conviction record, and because the Act shall be liberally construed for the accomplishment of this purpose, the commission believes that the Act should not be interpreted in a fashion that would permit the arbitrary discrimination against individuals with conviction records.
 

Motion for sanctions for failure to respond to discovery; request for attorney's fees and costs

Alternatively, the respondent argued that the case should be dismissed as a sanction for Swanson's failure to respond to its discovery requests and because by not responding to the requests to admit Swanson has admitted the respondent did not violate the Act, and that the respondent should be awarded attorney's fees and costs.

Wisconsin Administrative Code DWD § 218.14(4) states that "The administrative law judge has the same authority to compel discovery, to issue protective orders and to impose sanctions as the court has under ch. 804, Stats." With respect to failure to make discovery and sanctions, Wis. Stat. § 804.12 reads in relevant part as follows:

(1) MOTION FOR ORDER COMPELLING DISCOVERY. A party, upon reasonable notice to other parties and all persons affected thereby, may apply for an order compelling discovery as follows:

(a) Motion. If . . . a party fails to answer an interrogatory submitted under s. 804.08, or if a party, in response to a request for inspection submitted under s. 804.09 [Production of documents and things and entry upon land for inspection and other purposes], fails to respond that inspection will be permitted as requested or fails to permit inspection as requested, the discovering party may move for an order compelling an answer . . . or an order compelling inspection in accordance with the request.
. . .
(b) Award of expenses of motion. 1. If the motion is granted, the court shall, after opportunity for hearing, require the party . . . whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in obtaining the order, including attorney fees, unless the court finds that the opposition to the motion was substantially justified or that other circumstances make an award of expenses unjust.

(2) FAILURE TO COMPLY WITH ORDER. (a) If a party . . . fails to obey an order to provide or permit discovery, including an order made under sub. (1). . . the court in which the action is pending may make such orders in regard to the failure as are just, and among others the following:
. . .
3. An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof.

(3) EXPENSES ON FAILURE TO ADMIT. If a party fails to admit the genuineness of any document or the truth of any matter as requested under s. 804.11, and if the party requesting the admissions thereafter proves the genuineness of the document or the truth of the matter, the requesting party may apply to the court for an order requiring the other party to pay the requesting party the reasonable expenses incurred in the making of that proof, including reasonable attorney fees.

(4) FAILURE OF PARTY TO ATTEND AT OWN DEPOSITION OR SERVE ANSWERS TO INTERROGATORIES OR RESPOND TO REQUEST FOR INSPECTION OR SUPPLEMENT RESPONSES. If a party . . . fails . . . (b) to serve answers or objections to interrogatories submitted under s. 804.08, after proper service of the interrogatories, or (c) to serve a written response to a request for inspection submitted under s. 804.09, after proper service of the request . . . the court in which the action is pending on motion may make such orders in regard to the failure as are just, and among others, it may take any action authorized under sub. (2)(a) . . . 3. In lieu of any order or in addition thereto, the court shall require the party failing to act or the attorney advising the party or both to pay the reasonable expenses, including attorney fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust . . ."

(Italicized text emphasis added.)

The ALJ apparently characterizes the respondent's motion for sanctions simply as a motion for attorney's fees under Wis. Stat. § § 804.12(1)(a) and (b), and then apparently denies this motion because the respondent had not previously moved for an order compelling discovery. Under § § 804.12(1)(a) and (b), when the opposing party has failed to answer an interrogatory or permit inspection of documents the discovering party may move for an order compelling an answer or inspection. Further, if the discovering party's motion is granted, the party whose conduct necessitated the motion may be required to pay the moving party's reasonable expenses incurred in obtaining the order, including attorney's fees. To the extent that the respondent was seeking attorney's fees and costs under Wis. Stat. § § 804.12(1)(a) and (b) based upon Swanson's failure to answer its interrogatory and failure to produce requested documents, the ALJ was correct in denying the request for attorney's fees and expenses.

However, the respondent's motion for sanctions was broader than the ALJ's characterization of its motion. The respondent also sought a dismissal of the complaint as a sanction because Swanson did not respond to its discovery requests. Additionally, the respondent argued that a dismissal was required because due to Swanson's failure to respond within 30 days to its requests to admit he has admitted that the respondent denied him employment because of his admitted behavior, that the respondent did not unlawfully discriminate against him, that the respondent did not violate the WFEA, and that his conviction is substantially related to employment with the respondent.
 

Dismissal of the complaint as a sanction for failure to answer an interrogatory or to permit inspection

A dismissal of a complaint for failure to answer an interrogatory or to permit inspection does not need to be preceded by a motion for an order compelling an answer or inspection, the granting of said motion and then the party's failure to obey the order to provide or permit discovery before the court may order dismissal of the action or proceeding. This is the procedure described under § § 804.12(1)(a), (b) and 804.12(2)(a)3.

A party may also obtain a dismissal of a complaint as a sanction under § 804.12(4). Section 804.12(4) does not require a violation of a discovery order to justify sanctions. Failure to comply with the statutory directive is sufficient. In re Estate of Glass, 85 Wis. 2d 126, 146, 270 N.W.2d 386 (1978). However, the imposition of sanctions is discretionary with the court. Id. at 146-47. The ALJ concluded that the "circumstances do not simply warrant an imposition of sanctions against Swanson" but did not elaborate on what those circumstances were. Where the trial court fails to adequately explain the reasons for its discretionary decision, the appellate court will independently review the record to determine whether it provides a reasonable basis for the trial court's ruling. State v. Clark, 179 Wis. 2d 484, 490, 507 N.W.2d 172 (Ct. App. 1993).

In Hudson Diesel, Inc. v. Kenall, 194 Wis. 2d 531, 542, 535 N.W.2d 65 (Ct. App. 1995), the court stated:

"Because dismissal of a complaint terminates the litigation without regard to the merits of the claim, dismissal is an extremely drastic penalty that should be imposed only where such harsh measures are necessary. (Internal citation omitted.) In Johnson v. Allis Chalmers Corp., 162 Wis. 2d 261, 273, 470 N.W.2d 859, 865 (1991), our supreme court held that dismissal is appropriate only where the noncomplying party's conduct is egregious or in bad faith and without a clear and justifiable excuse."

In Hudson Diesel the court stated, "it is apparent that to dismiss a complaint for bad faith, the trial court must find that the noncomplying party intentionally or deliberately delayed, obstructed or refused the requesting party's discovery demand." Id. at 543. Further, the court stated that "If the noncomplying party's conduct, though unintentional, is so extreme, substantial and persistent that it can properly be characterized as egregious, the trial court may dismiss the action." (Citing Johnson v. Allis Chalmers Corp., 162 Wis. 2d at 273.)

The record in this case does not support a showing that Swanson's conduct was in bad faith, or so serious and persistent that it could be characterized as egregious and therefore warranted dismissal of Swanson's complaint. Swanson's deposition testimony shows that on October 24, 2003, the next day after his discovery responses were due, he asked the respondent's counsel for an extension of time to submit a response. Swanson, who was not represented by legal counsel prior to his October 28 deposition, testified at his deposition that he had not responded to the discovery requests because he did not have the foggiest idea what they were talking about. Swanson's deposition further indicates that when he made the request for an extension on October 24, the respondent's counsel agreed to discuss Swanson's request for an extension at the October 28 deposition if Swanson had retained an attorney. Swanson's attorney's affidavit states that during a break at the deposition she asked the respondent's attorney for a one- month extension in which to respond to the discovery, but such request was denied. The record does not indicate that Swanson was intentionally or deliberately delaying, obstructing or refusing the respondent's discovery demands. Nor does the record indicate that Swanson's conduct was so extreme, substantial and persistent that it can be characterized as egregious. The record indicates that Swanson simply needed more time to respond to the discovery requests. While the respondent may have been inconvenienced by not having Swanson's response to written discovery at the time of his deposition, the granting of the requested one- month extension by Swanson's attorney on October 28 would have made the discovery responses due by November 28, 2003. This would have still provided the respondent more than a month in which to schedule any potentially necessary follow-up discovery before the December 29, 2003 date that witness and exhibit lists were required to be submitted for the January 9, 2004 hearing. Swanson's request for a one-month extension to respond to the respondent's discovery requests was not unreasonable.
 

Dismissal of the complaint because the failure to respond to requests to admit results in admission that the respondent did not violate the WFEA

The ALJ's conclusion that "[t]he circumstances did not warrant an imposition of sanctions against Swanson" also fails to address the possible consequences of a failure to admit as provided under Wis. Stat. § § 804.11(1)(b) and 804.11(2). Those sections read in relevant part as follows:

"(1)(b) Each matter of which an admission is requested shall be separately set forth. The matter is admitted unless, within 30 days after service of the request, or within such shorter or longer time as the court may allow, the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or attorney . . .
. . .
(2) EFFECT OF ADMISSION. Any matter admitted under this section is conclusively established unless the court on motion permits withdrawal or amendment of the admission. The court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice the party in maintaining the action or defense on the merits . . ."

(Italicized emphasis added.)

First of all it should be noted that while s. 804.11(2) indicates that "on motion" the court may permit withdrawal or amendment of an admission, it is not necessary for a party seeking to amend or withdraw an admission to bring a formal motion in every case. Schmid v. Olsen, 111 Wis. 2d 228, 235 fn. 3, 330 N.W.2d 547 (1983). Also, the decision to allow relief from the effect of an admission is within the trial court's discretion. Id. at 237. Furthermore, "[a] reviewing court is obliged to uphold a discretionary decision of a trial court, if it can conclude ab initio that there are facts of record which would support the trial judge's decision had discretion been exercised on the basis of those facts." Id.

Swanson did not move for a withdrawal of his admissions. It does not appear that it was necessary for Swanson to have brought a formal motion for withdrawal under § 804.11(2), however. Aside from Swanson's complaint of alleged conviction record discrimination, which he signed acknowledging that to the best of his knowledge, information and belief the complaint was true and correct, the record shows the following: On October 24, the day after the requests to admit were due, Swanson, while unrepresented by legal counsel, requested an extension of time to respond to the respondent's discovery requests and was told by the respondent's counsel that he would discuss it at the October 28 deposition if Swanson retained an attorney. At his October 28 deposition Swanson stated it was his opinion that the respondent denied him employment "because of my past history, criminal history, which is what was my admitted behavior." Further, the attorney Swanson obtained to represent him on or about October 28, 2003, made a request for a one-month extension of time to respond to the respondent's discovery requests at Swanson's deposition on October 28, and on October 30 requested the respondent's attorney to e-mail to her the discovery requests so she could easily incorporate the answers with the questions. Subsequently, on November 26, Swanson's attorney sent an e-mail to the respondent's attorney stating that Swanson was mailing the responses out on November 24 and that she would be sending them as soon as she received them. And finally, on December 1 Swanson's attorney sent an e-mail to the respondent's attorney stating that she had not gone into the office on November 28 because she was ill and that she was mailing the discovery responses that day.

Based upon all of the above-stated reasons and because the respondent's liability for conviction record discrimination was at issue throughout the litigation, it should have been apparent to the respondent that Swanson disputed the admissions stated in the respondent's requests to admit.

A court's authority to permit withdrawal is constrained by the following language found in s. 804.11(2):

The court may permit withdrawal or amendment when the presentation of the merits or action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice the party maintaining the action or defense on the merits.

Mucek v. Nationwide Communications, Inc., 2002 WI App. 60, 252 Wis. 2d 426, ¶26, 643 N.W.2d 98.

The moving party must show that the presentation of the merits will be served, and the party who obtained the admission must fail to demonstrate that withdrawal or amendment will prejudice the party in maintaining the action on the merits. Bank of Two Rivers v. Zimmer, 112 Wis. 2d 624, 633, 334 N.W.2d 230 (1983).

Since the language in s. 804.11(2) was adopted from and is nearly identical to its counterpart provision in Rule 36(b) of the Federal Rules of Civil Procedure, we may look to federal case law for guidance. Mucek, 2002 WI 60 ¶29. Federal courts have held that the party making the admission must show that presentation of the merits will be subserved by withdrawal and that this inquiry involves consideration of whether the admission is contrary to the record in the case. Mucek, 2002 WI 60 27 n4, citing Siemien v. Chem. Waste Mgmt., Inc., Supp. 2d 939, 941-42 (W.D. La. 1998). See also, Schmid, 111 Wis. 2d at 238 (rejecting plaintiff's assertion that the withdrawal of the admission did not serve the presentation of merits of the case, since liability was a key issue in the case, and aside from the defendant's failure to respond to the requests for admission, there was no indication that it was not a disputed issue).

The record in this case indicates that the merits will be subserved by withdrawal of the admissions because Swanson's admissions are contrary to the record in the case. As noted above, on October 24, the day after the requests to admit were due, Swanson, while unrepresented by legal counsel, requested an extension of time to respond to the respondent's discovery requests and was told by the respondent's counsel that he would discuss it at the October 28 deposition if Swanson retained an attorney. At his October 28 deposition Swanson stated it was his opinion that the respondent denied him employment "because of my past history, criminal history, which is what was my admitted behavior." Further, the attorney Swanson obtained to represent him on or about October 28, 2003, made a request for a one- month extension of time to respond to the respondent's discovery requests at Swanson's deposition on October 28 and mailed Swanson's responses to the respondent's discovery requests to the respondent's attorney on December 1. The respondent's liability for alleged conviction record discrimination is the key issue in this case, and aside from Swanson's failure to timely respond to the requests for admission, there is no indication that this was not a disputed issue.

Federal cases explain that the prejudice contemplated by Federal Rule 36(b) is not simply that a party would be worse off without the admissions. Rather, the party benefiting from the admission must show prejudice in addition to the inherent consequence that the party will now have to prove something that would have been deemed conclusively established if the opposing party was held to its admissions. Mucek, 2002 WI 60 ¶30.

The respondent has argued that it was deprived of the right to have Swanson's responses to written discovery at the time of his deposition and that there was very little time (as of December 1) to schedule any follow-up discovery before the submission of the exhibit lists. The respondent has argued that it has been prejudiced in terms of time, money and reasonable hearing preparation.

The commission is not persuaded that the respondent had demonstrated that permitting Swanson to withdraw his admissions would have prejudiced the respondent in maintaining the action on the merits. As noted above, while the respondent may have been inconvenienced by not having Swanson's response to written discovery at the time of his scheduled October 28 deposition, had the respondent granted the reasonable one-month requested extension by Swanson's attorney on October 28 this would have made the discovery responses due by November 28, 2003. This would have still provided the respondent more than a month in which to schedule any potentially necessary follow-up discovery before the December 29, 2003 date that witness and exhibit lists were required to be submitted for the January 9, 2004 hearing. Furthermore, on October 23 the respondent's attorney had agreed to discuss Swanson's request for an extension at the October 28 deposition if he retained an attorney.

cc:
Attorney Janet McDonough
Attorney Eric H. Rumbaugh

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