TO: SPEAKER SCOTT JENSEN
FROM: Don Dyke, Chief of Legal Services (Signed)
RE: October 24, 2001 Letter From Assistant Attorney General Matthew J. Frank to Dane County District Attorney Brian Blanchard
DATE: October 26, 2001

You have requested comment related to an October 24, 2001 letter from Assistant Attorney General Matthew J. Frank to Dane County District Attorney Brian Blanchard concerning the legality of the use of state funds for the legal defense of legislative employees who are being investigated in connection with allegations of improper use of state resources and related matters.

The October 24 letter responds to a request to the Attorney General from District Attorney Blanchard "regarding the legality of the use of state funds for the legal defense of state employees who are being investigated with regard to allegations of improper use of state resources and related violations of state law." Mr. Frank concludes: "Based upon the information publicly available, I believe that the procedure followed by the Senate and Assembly organization committees for the reimbursement of legal fees in connection with the above investigations is contrary to state law."

Assistant Attorney General Frank argues that the process for indemnifying state officers and employees for attorney fees incurred in the defense of actions or proceedings involving acts committed within the scope of employment is set forth in s. 895.46 (1), Stats., and related statutes. Section 895.46 (1), Stats., directs governmental units, including the state, to defend, or pay reasonable attorney fees and costs for the defense of, a public officer or employee proceeded against in an official capacity or as an individual because of acts committed while carrying out his or her duties as an officer or employee, The statute applies to actions and special proceedings. The Wisconsin Supreme Court has interpreted 895.46 (1) as applying only to civil, not criminal, matters. [Bablitch & Bablitch v. Lincoln County, 82 Wis. 2d 574, 263 N. W .2d 218 (1978).] Reimbursement of attorney fees is provided as a matter of right regardless of the results of the litigation "unless it is found by the court or jury that the defendant, officer or employee did not act within the scope of employment." Note that under the statute, attorney fees are not "recoverable" if the officer or employee fails to give notice to his or her department head of the legal proceeding as soon as reasonably possible or if the officer or employee refuses legal counsel offered by the state or political subdivision.


Mr. Frank asserts that this process was not followed because:

1. The state did not decline to provide legal representation to the employees because no request was made of the state to provide legal representation, which is a precondition of indemnification under s. 895.46 (I).
2. Before state funds may be paid pursuant to s. 895.46 (1), an affirmative determination must be made that the conduct at issue occurred in the scope of employment.
3. The statutory mechanism for reimbursing state employees who qualify for indemnification of attorney fees under s. 895.46 (1) involves submitting a claim to the Department of Administration under s. 20.865 (1) (fm), Stats., or, alternatively, submitting a claim to the Claims Board under s. 16.007, Stats.

COMMENT

The Legislature enjoys broad authority to exercise legislative power and determine the rules of Its proceedings. Article IV, Section 8, Wisconsin Constitution. The authority of the Legislature under the Wisconsin Constitution is plenary; i.e., only limited by the Constitution. The Wisconsin Constitution, therefore, is not a grant of power to the Legislature but a limitation on the power of the Legislature. State ex rel. McCormack v. Foley, 18.Wis. 2d 274, 118 N.W.2d 211 (1962). The Wisconsin Legislature may exercise all legislative power not forbidden by the Wisconsin Constitution and the Constitution and Laws of the United States.

Reflecting its broad authority under the Wisconsin Constitution to carry out its policies and functions, the Legislature has by statute and rule codified the authority of the Legislature, the Joint Committee on Legislative Organization and the Assembly and Senate Organization Committees to establish policy concerning legislative employees. See, for example, ss. 13.20, 13.80 (3), and 13:90, Stats., Joint Rule 23, Assembly Rule 7 (particularly sub. (4)) and Senate Rule 88. To carry out their respective policies and functions, both the Assembly and Senate have a sum sufficient appropriation. Section 20.765 (1) (a) and (b), Stats., These provisions, consistent with the separation of powers doctrine, are in addition to the procedures of s. 895.46, Stats., and authorize the Legislature to pursue an alternative course. This discretionary authority to reimburse its own employees from its own appropriations furthers the separation of powers by ensuring that the Legislature will not have to rely, for the defense of its employees, upon the decisions of a coequal branch of government.

Furthermore, s. 895.46 may be characterized as specifying when a state employee must be indemnified for attorney fees incurred. It arguably does not limit the Legislature's discretionary authority to reimburse employees for attorney fees or apply to the exercise of that discretionary authority. Just as the October 24 letter acknowledges that s. 895.46 is not the only method by which attorney fees may be reimbursed (in implying that the Claims Board may make payment without regard to the procedures of s. 895.46), the Constitution and the rules of the Legislature provide another method for weighing the merits of providing reimbursement of the legal fees of legislative members and employees.

There is no statutory prohibition against the Legislature, under any circumstance, reimbursing a legislative employee for attorney fees incurred as a result of civil or criminal investigations arising out of legislative employment. Because the Legislature has plenary power, arguably the only constraint on its authority to reimburse for attorney fees is consequently limited to restraints under the Constitution.

Even if it is conceded for purposes of argument that s. 895.46 might pose constraints on the reimbursement of the legislative employees' attorney fees, it is not clear to what extent the statute applies to the current investigations. As pointed out in the October 24 letter, s. 895.46 has been interpreted as applying only to civil proceedings. Further, the section applies to a "defendant" in a civil proceeding who is "proceeded against" in an official or individual capacity because of acts committed while carrying out duties as an officer or employee. It does not appear at this time that any of the employees involved is a named defendant in any civil action where the employee is being "proceeded against" in an official or individual capacity.

Reimbursement of legislative employees for legal expenses incurred in connection with civil or criminal proceedings related to their legislative employment may, however, raise legal issues under some circumstances.

It is a well-settled principle that all expenditures of public money must be for a public purpose. Slate ex rel. Warren v. Nusbaum, 59 Wis. 2d 391, 208 N.W.2d 780 (1973). The concept of a public purpose has been broadly construed; the Wisconsin Supreme Court has stated that only when it is "clear and palpable" that an expenditure of public funds will have no benefit to the public is it possible for a court to conclude that no public purpose exists. Nusbailm, supra.; City of West Allis v. Milwaukee County, 39 Wis. 2d 356, 159 N,W.2d 356 (1968), cert. denied. 393 U.S, 1064. Public purpose doctrine issues in connection with reimbursement of legal fees might be raised, for example, if, in a civil proceeding an employee were found to have acted outside the scope of employment or if, in a criminal proceeding, an employee were convicted. If reimbursement of attorney fees in a particular case raises public purpose doctrine issues, the initial determination as to whether a public purpose is served by reimbursement would be made by the Assembly and Senate Organization Committees through the Assembly and Senate Chief Clerks, If any reimbursement is challenged, the public purpose issue would be decided by the courts,

It is noted that both the Senate Organization Committee motion and the Assembly Organization Committee motion authorizing reimbursement or payment of legal fees in the situation under discussion arguably grant discretion to deal with public purpose doctrine issues in the reimbursement or payment of the fees. First, the motions only authorize reimbursement or payment and do not require it. The Senate Organization Committee motion is limited to services provided for 'any "inquiry or investigation" and the Senate Chief Clerk has authority to "review and approve" any reimbursement or payment request. The Assembly Organization Committee motion authorizes reimbursement or payment of all "reasonable expenses" for legal counsel relative to issues associated with the "investigations" of the caucus office staff.

Thus, while the reimbursement or payment of legal expenses incurred by the legislative employees might under some circumstances raise legal issues, it appears too early in the process to know what, if any, legal issues reimbursement will raise. Based on the above comments, however, one can take issue with the blanket assertion in the October 24 letter that the procedure followed by the Senate and Assembly Organization Committees for the reimbursement or payment of legal fees in connection with the investigations under consideration is "contrary to state law." In this matter, the legislature is exercising its discretionary authority to reimburse legislative employees from legislative Appropriations, consistent with pertinent statutes and rule of the legislature and reflections the constitutional authority of the legislature as a coequal, separate branch of government.

If you have any questions or need additional information, please contact me at the legislative Council Staff offices.



Cc: John Scocos