United States: Wisconsin Court Of Appeals Enforces Parties' Stipulation To Remedies And Waiver Of Judicial Review In Administrative Proceeding

While many of us spent this past Halloween gorging on a variety of candies and sweets, Wisconsin's court of appeals was busy rendering an opinion that likely left Travis Technology High School ("Travis Tech") with a decidedly bitter taste in its mouth. Ceria M. Travis Academy, Inc. v. Evers, No. 2015AP2314, (Wis. Ct. App. Oct. 31, 2016), an opinion written by Judge Joan Kessler of District I (and recommended for publication in the official reports), confirmed that parties to an administrative proceeding can negotiate a settlement agreement that not only stipulates to a remedy for future violations but waives the breaching-party's right to seek judicial review when the agency invokes the remedy.

Travis Tech was a participant in the Milwaukee Parental Choice Program. As an MPCP school, Travis Tech received statutorily prescribed payments from the Department of Public Instruction based on its student enrollment. Participating schools are required to provide DPI with a financial report by September 1 of each year detailing the prior year's expenses. Schools failing to provide such information face a variety of administrative sanctions, "including, but not limited to, barring the school from participating in the MPCP."

After Travis Tech failed to timely file its financial report for the fourth consecutive year, DPI issued a notice of its preliminary decision to bar it from participating in MPCP—and withheld its scheduled payments. Travis Tech appealed the decision and, ultimately, the parties entered into a settlement agreement with two significant provisions: (1) Travis Tech agreed to obtain a surety bond by a date certain in an amount equal to 25% of its anticipated MPCP payment; and (2) if it failed to secure the bond—thereby triggering DPI's discretionary right under the settlement agreement to bar it from participating in the MPCP—Travis Tech agreed to waive its statutory right to judicial review of DPI's determination. After Travis Tech failed to secure a surety bond by the deadline, DPI entered an order barring it from participating in the MPCP. Despite the provision in the settlement agreement, Travis Tech then filed a petition for judicial review in Milwaukee County Circuit Court.

The circuit court recognized that, although DPI does have the authority to require a participating school to obtain a surety bond, the applicable regulation first requires that DPI determine that the school does "not have the financial ability to continue" in the MPCP. In this case, DPI made no such determination. Second, the circuit court held that DPI not only lacked the authority to require participating schools to waive review of its decisions, it was against public policy to do so.

On appeal, the court of appeals reversed both holdings.

As to the surety bond requirement, while conceding that the regulation prevents DPI from imposing a surety bond without first making a financial inability determination, the court held that the regulation does not preclude "DPI and a school from mutually agreeing to a bond requirement without such a finding." (emphasis added). The court characterized what the circuit court had done as having "prohibited DPI from stipulating with a represented party to anything DPI did not already have specific statutory authority or administrative authority to accomplish." The court explained that Wisconsin case law has "repeatedly held that although a statute permits certain actions, parties may nonetheless stipulate to the contrary."

Likewise, the court held that Travis Tech's waiver of judicial of review was enforceable. It explained that statutes conferring a private right or benefit may be waived by those that the statute intended to protect, as long as the waiver is intentional, voluntary, and a "clear and specific renunciation." Relying upon the Supreme Court's analysis in Brunton v. Nuvell Credit Corp., 2010 WI 50, the court observed that Travis Tech (1) was represented by counsel, (2) agreed that it "entered into the agreement knowingly and voluntarily, fully understanding its terms," and (3) "expressly waive[d] all appeal or other rights." The mere existence of Wis. Stat. ch. 227 and its statutory right of judicial review does not prohibit represented parties from agreeing to waive review.

Although this appears to be the first time that a published appellate decision in Wisconsin has applied these principles to administrative proceedings, the concepts of agreeing to a specific remedy on failure to perform settlement obligations and waiving the right to challenge the stipulated result are familiar ones in both civil and criminal law. See, e.g., Burmeister v. Vondrachek, 86 Wis. 2d 650, 273 N.W.2d 242 (1979) (enforcing stipulated settlement entered into during trial); State v. Reed, 2013 WI App 132, 351 Wis. 2d 517, 839 N.W.2d 877 (enforcing terms of plea agreement that expressly permitted State to "withdraw from the plea agreement at any time prior to sentencing" if the defendant "committed any new crimes"); Johnson v. Owen, 191 Wis. 2d 344, 528 N.W.2d 511 (Ct. App. 1995) (enforcing agreement to "forgo an appeal in exchange for waiver of court costs").

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