Ziegler to hear tax case funded by election supporter; State hasn't asked justice to step aside
Milwaukee Journal Sentinel, November 28, 2007
By Patrick Marley
State Supreme Court Justice Annette K. Ziegler is poised to sit on a tax case partially financed by a group that spent more than $2 million to get her elected.
Ziegler is in the midst of an inquiry over conflicts of interest and recently dropped out of an unrelated case after a lawyer raised objections to a campaign contribution she received. But Attorney General J.B. Van Hollen, who represents the state Department of Revenue in the tax case, has not asked Ziegler to step aside.
Wisconsin Manufacturers & Commerce, the state's largest lobbying group, spent more than $2 million this spring touting Ziegler - more than Ziegler's own campaign spent.
WMC helped finance the appeal of the case and has filed a friend-of-the-court brief in the matter. One Wisconsin Now, a group that hammered Ziegler on ethics issues during the spring campaign, plans to launch an online petition today asking Ziegler to step aside in the tax case, said Scot Ross, the group's director.
WMC has long argued that state law exempts companies from paying sales tax on certain software they buy. On Thursday, the Supreme Court will hear oral arguments in a case brought by Menasha Corp. that will determine whether the lobbying group's position is correct. If the state loses, it could trigger an estimated $350 million in tax refunds to businesses.
WMC helped finance the appeal of the case and has filed a friend-of-the-court brief in the matter.
One Wisconsin Now, a group that hammered Ziegler on ethics issues during the spring campaign, plans to launch an online petition today asking Ziegler to step aside in the tax case, said Scot Ross, the group's director.
Earlier this month, Ziegler disclosed in a letter to the parties in the case that WMC supported her campaign. The letter also said she planned to participate in deliberations. She has made similar disclosures in 11 other cases; she withdrew from one case after a lawyer objected to her participation.
In April, Ziegler won the most expensive judicial race in state history after a bruising campaign that spawned investigations of her decision to rule on cases as a Washington County Circuit Court judge involving a bank her husband helps run. Ziegler's colleagues on the Supreme Court will determine if she should be punished for how she handled those cases.
Ziegler began routinely disclosing contributions and other potential conflicts shortly after she joined the court in August. Her disclosures have gone beyond what other justices have done.
State judicial ethics rules say judges must disqualify themselves from participating in cases when a reasonable person would question their ability to be impartial.
"The argument could certainly be made that it would be reasonable to question her impartiality" in this case, said James Sample, counsel at the Brennan Center for Justice at New York University.
Richard E. Flamm, a Berkeley, Calif., lawyer who wrote a book on judicial disqualification, said Ziegler's participation in the case "smells bad."
"Anytime you have a group putting that kind of money toward a judicial campaign, there's a sense they expect quid pro quo," he said.
Ziegler declined to comment, but her office released a statement noting that "parties are always able to notify the court when they feel a justice should not participate in any given case."
Former state Supreme Court Justice Janine Geske, a law professor at Marquette University, said she had no criticism of what she termed "a personal call."
"If you are going to have judges that recuse themselves anytime this has happened, you are not going to have a court," she said, referring to cases in which campaign supporters have an interest.
Geske is speaking at Ziegler's investiture on Friday.
WMC President James S. Haney said he does not expect Ziegler to withdraw.
"There is nothing philosophical, there is nothing partisan, nothing political," he said. "It is a tax case that is important to our members.
"Hopefully (Ziegler) is going to follow the law. We did support her because we think she is the kind of judge that will follow the law, and so be it."
Big dollars ride on case
The case is expected to determine what software is taxable. Modified software is not subject to sales tax, whereas off-the-shelf programs, such as those sold in boxes at retail outlets, are taxed.
Neenah-based Menasha, a privately owned company that makes packaging, purchased a multimillion-dollar software system from German company SAP in the mid-1990s and then adapted it for its own uses.
The state imposed a sales tax on the purchase, which Menasha paid and then appealed. The state Tax Appeals Commission ruled in favor of Menasha, but a Dane County judge later ruled that the Department of Revenue was correct in assessing the sales tax.
Earlier this year, the Court of Appeals in Madison reversed that ruling. At that time, state officials estimated that if the appeals court ruling stood, refunds and interest of as much as $350 million would be due to Menasha and other companies that had paid sales taxes in similar circumstances.
Officials with the Department of Revenue and Department of Justice declined to comment on why the state has not asked Ziegler to step aside.
WMC spent about $2 million in support of Ziegler. Never before had it or other third-party groups weighed in so heavily in a judicial race, according to the Wisconsin Democracy Campaign, which tracks election spending.
The only previous race that saw significant spending by third parties was in 1997, when a pro-school-choice group spent about $200,000 in support of Justice Jon P. Wilcox, said Mike McCabe, executive director of the Wisconsin Democracy Campaign. Wilcox later paid a $10,000 forfeiture to settle State Elections Board allegations that his campaign illegally coordinated with the school choice group. In 1998, Wilcox ruled with the majority in a case that said vouchers allowing students to attend religious schools at public expense were constitutional.
Ziegler's colleagues on the high court soon will determine whether to discipline her for presiding over 11 cases as a Washington County judge involving West Bend Savings Bank, where her husband, J.J., serves on the board of directors. The justices could dismiss the case, reprimand Ziegler, censure her, suspend her without pay or remove her from office.
The Judicial Commission that investigated the matter recommended a reprimand, which Ziegler has said would be appropriate.
The state Ethics Board separately investigated some of the bank cases as well. In a settlement with the board, Ziegler acknowledged that she violated ethics rules and agreed to pay about $17,000 in forfeitures and state attorney fees.
