Using Third-Party Decision Makers

By Attorney Gregg Herman
May 24, 2017

WhistleSimply put, judges are elected to make decisions when litigants don’t reach a settlement. Yet, in certain cases, non-judges – sometimes called arbitrators, special masters, or referees – are used for this purpose.

In family law, this may occur when parents are continually fighting about their children and irritating the court to the point where it appoints a third-party decision maker. Or, parents frustrated about the costs and inability to timely get into court, stipulate to arbitration. A recent Wisconsin Supreme Court case and an unpublished (but citable) family law case address these issues from different standpoints.

Two Recent Cases of Interest

The Wisconsin Supreme Court case, Universal Processing Services v. Circuit Court of Milwaukee County, 2017 WI 26 (March 29, 2017), involved an alleged breach of contract (and other allegations) that entailed a substantial amount of discovery. At some point, apparently being frustrated, the circuit court judge appointed a referee at $450 an hour to have “the full authority of the Court in coordinating and establishing all pretrial procedures.” The trial court order also gave the referee the court’s full authority to hear and decide other matters assigned to him by the court, with such motions subject to an abuse of discretion standard.

The Wisconsin Supreme Court held that the circuit court judge’s order impermissibly delegated to the referee “[j]udicial power constitutionally vested in Wisconsin’s Unified Court System.  A Referee may share judicial labor, but the Order of Reference may not allow a Referee to assume the place of the judge.”  At ¶82.   However, the supreme court made clear that a trial court can appoint and assign functions to a referee if – and here is the key phrase – the power is “used appropriately.”  At ¶59.  The court does not bother to go into detail as to what would be “appropriate,” except to make clear that it would not be the standard of an erroneous exercise of discretion by the referee.

In the family law context, the court of appeals recently affirmed an order by a circuit court judge that refused to remove a special master for issues involving placement. Rose v. Rose, 2015 AP 2646 and 2016 AP 692 (filed Dec. 21, 2016).  This case, while not published, is an authored opinion and may be cited for its persuasive value pursuant to Rule 809.23(3) (b).

In Rose, the parties had stipulated at the time of the divorce to the use of a special master/referee.  Post judgment, the father tried to remove the referee, but the court denied the motion, finding that the court had adopted the parties’ stipulation pursuant to Wis. Stat. section 805.06 . The court of appeals further noted that the referee’s decision was subject to judicial review on a de novo basis. For some reason, the court of appeals did not find it necessary to cite Lawrence v. Lawrence, 2004 WI AP 170, 276 Wis. 2d. 403, 687 N.W. 2d 748, which held that an agreement providing for a guardian ad litem and family court counselor to break any impasse between the parties regarding where a child attends school did not violate public policy.

There are certain occasions where a referee would greatly benefit parties in a family law context. One common scenario is a dispute over holidays. Given the time it may take to get a hearing date, and the parties are in court, the argument may be moot, and the child may have been treated as the turkey wish bone. Another common scenario is choice of schools. The child alternating schools until the hearing date is not a particularly good option. Since both of those issues are highly discretionary, usually either resolution is better than no resolution. Therefore, resorting to a third-party decision maker may be efficient for the parties and best for the children.

How to Use a Third-party Decision Maker?

The question then becomes how to use a third-party decision maker consistent with Universal Processing Services. One easy answer is for the parties to agree. That would lower the risk of collateral attack, as a stipulation for arbitration under Chapter 788 is more likely to be upheld than if the court orders a third-party decision maker against the wishes of the parties. But the most important aspect will be the provisions for review.

In family courts, many important decisions (some would say “all”) are not made by the judge, anyway, but rather by the family court commissioner (FCC). Since an aggrieved party is entitled to a de novo hearing (note that I said “entitled to” – the extent it is truly “novo” is a legitimate subject for debate), there cannot be an argument that a party was deprived of his or her constitution right to have the decision made by a duly elected judge. Most FCC decisions are not reviewed, so to the extent the goal is to reduce a judge’s workload, the system works for the most part. For those decisions that are reviewed by the court, well, isn’t making decisions.

Editor’s Note: This article originally appeared in Inside Track, a bi-weekly newsletter of the State Bar of Wisconsin.

Attorney Gregg Herman is a founding partner of Loeb & Herman S.C. in Milwaukee, WI. He practices family law exclusively, and can be reached via e-mail or by calling (414) 272-5632.