861 Administrative law judge authority to determine that a claim or defense is frivolous, (Sec. 227.483, Stats.)

[Sec. 227.483, Stats., provides that if a hearing examiner finds, at any time during the proceeding, that an administrative hearing commenced or continued by a petitioner or a claim or defense used by a party is frivolous, the hearing examiner shall award the successful party the costs and reasonable attorney’s fees that are directly attributable to responding to the frivolous petition, claim, or defense. If the costs and fees awarded are awarded against the party other than a public agency, those costs may be assessed fully against either the party or the attorney representing the party, or they may be assessed so that the party and the attorney each pay a portion of the costs and fees.]

The Commission reviews an ALJ’s decision whether to impose sanctions for making a frivolous claim according to an “abuse of discretion” standard. The Commission was not given authority to make its own findings under sec. 227.483, and therefore cannot conduct a de novo review. Under the abuse of discretion standard, the question is whether the ALJ “examined the relevant facts, applied a proper standard of law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge could reach.” Loy v. Bunderson, 107 Wis. 2d 400, 415, 520 N.W.2d 175 (1982); Paytes v. Kost, 167 Wis. 2d 387, 393, 482 N.W.2d 130 (Ct. App. 1992). The ALJ failed to meet that standard, where she told the parties she would decide the issue based on the record and briefs, then proceeded to gather documents outside the record, and decided the issue based in part on those documents. Although the documents were in the possession of the agency in case files other than the one in front of the ALJ, and it may have been possible to take administrative notice of them under sec. 227.45(2), in this case the ALJ did not provide the parties an adequate opportunity to rebut the documents or offer countervailing evidence as required by sec. 227.45(2). Reed v. Heiser Ford, Inc. (LIRC, 05/31/13).

A party requesting an award of attorney’s fees and costs pursuant to sec. 227.483, Stats., (“Costs Upon Frivolous Claims”) must do so prior to the end of the proceedings before the Administrative Law Judge. LIRC cannot act on a request made for the first time before LIRC. Drabek v. Major Indus. (LIRC, 06/09/11).

Any request for an award under the frivolous claims statute, sec. 227.483, Stats., must be made to the Administrative Law Judge. LIRC can then review the ALJ’s ruling on the request. LIRC cannot act on a request made for the first time before LIRC. Kutschenreuter et al v. Roberts Trucking (LIRC, 04/21/11).

The authority of the Labor and Industry Review Commission extends only to review of an ALJ’s final findings and orders in a case within the meaning of sec. 111.39, Stats. From this it is clear that the only way in which LIRC can review a ruling by an ALJ under sec. 227.483, Stats., is in the course of conducting a review of an ALJ’s final findings and order in a case, when the findings and order include such a ruling. A party who wishes to have a ruling on a request for a finding of frivolousness and an award of costs and fees under sec. 227.483, Stats., must make such a request before the Administrative Law Judge issues his or her final findings and order in the case. The Administrative Law Judge can then include a ruling on the request in the ALJ’s final findings and order in the case. If this procedure is followed, then the ALJ’s ruling on the 227.483 request will be reviewable by the Labor and Industry Review Commission. Henderson v. DOC (LIRC, 03/19/09).

It seems obvious that in order to qualify as frivolous under sec. 227.483, Stats., the petition, claim, or defense in question must have been an unsuccessful one. In this case, the claims were found to be meritorious by the ALJ. Therefore, they could not be considered frivolous. Achilli v. Sienna Crest Assisted Living (LIRC, 07/18/08).

Prior to the hearing, the Respondent submitted a Motion for Sanctions for Frivolous Claim against the Complainant pursuant to sec. 227.483, Stats. The Respondent asserted that sanctions were appropriate because the Complainant had both commenced and continued this action in bad faith, solely for the purpose of harassing and injuring the Respondent, and without any reasonable basis in law or equity to bring or continue his claim. The Administrative Law Judge indicated that she would consider the motion for sanctions after the hearing. However, the Complainant withdrew his complaint on the day of the scheduled hearing. The Administrative Law Judge then dismissed his complaint, without ruling on the motion for sanctions. On appeal to the Labor and Industry Review Commission, the Respondent asserted that the Complainant should not be allowed to engage in a tactic of initiating charges and lawsuits against employers, only to abandon them. The Respondent argued that an interpretation that deprived the Equal Rights Division of jurisdiction the instant a notice of withdrawal was presented would allow any petitioner to file a frivolous charge and maintain it until the very moment it became apparent that defeat was imminent and that sanctions would be awarded. This would render sec. 227.483, Stats., meaningless, as it would not serve as a deterrent for a Complainant (especially in a case like this, where the Complainant had filed multiple claims against many different employers over the past several years). The Labor and Industry Review Commission agreed with the Respondent’s arguments that the Administrative Law Judge should retain jurisdiction to rule on a sec. 227.483, Stats., motion once a Complainant submitted a request to withdraw his complaint. The case was remanded to the Equal Rights Division for further proceedings with respect to the Respondent’s motion for sanctions against the Complainant for a frivolous claim. Reed v. Heiser Ford (LIRC, 12/07/07).