Title: Paige K. B. and Kaitlin I. B. v. Steven G. B.

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
97-0873 
 
 
Complete Title 
of Case: 
 
 
Paige K.B. and Kaitlin I.B., minors by their 
Guardian ad Litem, Mark A. Peterson and Lauralie 
H.B.,  
 
Plaintiffs-Respondents, 
 
v. 
Steven G.B.  
 
Defendant, 
General Casualty Company of Wisconsin, a 
domestic insurance corporation, Milwaukee 
Guardian Insurance Inc., a domestic insurance 
corporation, Richard B. and Esther B.,  
 
Defendants-Appellants.  
 
ON CERTIFICATION FROM THE COURT OF APPEALS 
 
 
Opinion Filed: 
May 28, 1999 
Submitted on Briefs: 
 
Oral Argument: 
February 11, 1999 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Portage 
 
JUDGE: 
Virginia Wolf 
 
 
JUSTICES: 
 
Concurred: 
 
 
Dissented: 
 
 
Not Participating:  
 
 
ATTORNEYS: 
For the defendants-appellants, Milwaukee Guardian 
Insurance, Richard B. & Esther B., there were briefs by John P. 
Runde and Terwilliger, Wakeen, Piehler & Conway, S.C., Wausau and 
oral argument by John P. Runde. 
 
 
 
 
 
 
For the defendant-appellant, General Casualty 
Company of Wisconsin, there were briefs by Keith W. Kostecke and 
Menn, Nelson, Sharratt, Teetaert & Beisenstein, Ltd., Appleton. 
 
 
For the plaintiffs-respondents there was a brief 
by Mark A. Peterson, John F. Maloney, Robert K. Bultman, David W. 
Maas and McNally, Maloney & Peterson, S.C., Milwaukee and oral 
argument by Mark A. Peterson and John F. Maloney. 
 
 
No. 
97-0873 
 
1 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear in 
the bound volume of the official reports. 
 
 
No. 97-0873 
 
STATE OF WISCONSIN               :        
        
 
 
 
 
IN SUPREME COURT 
 
 
Paige K. B. and Kaitlin I. B.,  
minors by their Guardian ad Litem, Mark  
A. Peterson and Lauralie H. B.,  
 
          Plaintiffs-Respondents, 
 
     v. 
 
Steven G. B.  
 
          Defendant, 
 
General Casualty Company of Wisconsin, a  
domestic insurance corporation, Milwaukee  
Guardian Insurance Inc., a domestic  
insurance corporation, Richard B. and  
Esther B.,  
 
          Defendants-Appellants.  
FILED 
 
MAY 28, 1999 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
APPEAL from orders of the Circuit Court for Portage County, 
Virginia A. Wolfe, Circuit Court Judge.  Reversed and cause 
remanded. 
¶1 
WILLIAM A. BABLITCH, J.   Richard and Esther B. and 
their insurers, Milwaukee Guardian Insurance, Inc. and General 
Casualty Company of Wisconsin (collectively the “defendants”), 
appeal two orders of the circuit court.  The first precluded 
them from litigating an issue that had previously been litigated 
in a criminal proceeding against their son.  The second granted 
protective orders to limit discovery of plaintiffs Paige K. B. 
and Kaitlin I. B.  We conclude that because Richard and Esther 
No. 
97-0873 
 
2 
were not in privity nor did they have a sufficient identity of 
interest with their son in his criminal conviction, their due 
process rights were violated by applying issue preclusion to 
them.  Accordingly, we reverse the order of the circuit court 
giving conclusive effect to the criminal conviction as applied 
against Richard and Esther and their insurers.  Also, because 
the circuit court’s orders limiting discovery were based, at 
least in part, on its earlier order applying issue preclusion to 
Richard and Esther, an order we have reversed, we also reverse 
the 
orders 
limiting 
discovery 
and 
remand 
for 
further 
consideration in light of our decision.  We also clarify, 
pursuant to the court of appeals’ certification, the standard 
for reviewing circuit court decisions on issue preclusion. 
¶2 
The facts are these.  In February 1991, Steven B. 
(Steven) and Lauralie B. (Lauralie) were divorced.  Lauralie and 
Steven had two children, Paige K. B. and Kaitlin I. B.  
Following the judgment of divorce which awarded Steven primary 
physical placement of the children, Lauralie absconded with the 
children.  She returned to Wisconsin with the children on May 
24, 1991, and appeared on a felony complaint charging her with 
interference with Steven’s custody rights.  As she had done 
throughout the divorce proceedings, Lauralie continued to accuse 
Steven of sexually assaulting the children.  Accordingly, as a 
condition of Lauralie’s bond on the felony charge, the court 
ordered that she “take steps to see to it that the children are 
with the father’s parents [Richard and Esther] during the 
pendency of these proceedings unless otherwise ordered by a 
No. 
97-0873 
 
3 
Court of Competent Jurisdiction.”  The children went to the home 
of Richard and Esther, their paternal grandparents. 
¶3 
An investigation regarding Lauralie’s accusations of 
sexual assault ensued.  Ultimately, petitions for Children in 
Need of Protection or Services (CHIPS) were filed on behalf of 
both children.  The petitions alleged that Steven sexually 
assaulted them.  Paige K. B. and Kaitlin I. B. were then removed 
from Richard and Esther’s home and placed in a foster care home, 
and criminal charges were filed against Steven. 
¶4 
On July 16, 1992, Steven was criminally convicted of 
first degree sexual assault of both children, such acts 
occurring between June 1, 1991, and August 1, 1991.  Steven 
pursued several avenues of relief from his criminal conviction 
including challenging the assistance of his counsel, appealing 
to the Wisconsin Court of Appeals and this court, and filing a 
writ of certiorari with the United States Supreme Court, all to 
no avail.   
¶5 
On October 12, 1993, Paige K. B. and Kaitlin I. B., by 
their guardian ad litem, and Lauralie (collectively, “the 
plaintiffs”), filed this civil complaint against Steven and his 
parents, Richard and Esther, and their insurers.  The cause of 
action against Steven alleged battery and intentional infliction 
of emotional distress.  The cause of action against Richard and 
Esther and their insurers alleged negligence and negligent 
infliction of emotional distress for failing to properly 
supervise Steven’s contact with the children while the children 
were staying in Richard and Esther’s home, between May 24, 1991, 
No. 
97-0873 
 
4 
and July 24, 1991.  (Plaintiffs later orally amended the time 
frame alleged in their civil suit to June 1, 1991 to August 1, 
1991, mirroring the dates charged in the criminal complaint 
against Steven.)  Paige K. B. and Kaitlin I. B. assert that 
Richard and Esther’s negligence resulted in them being sexually 
assaulted by Steven.  The plaintiffs seek to recover for damages 
they had suffered.  
¶6 
During the course of litigation in this civil suit, 
Richard and Esther’s attorney sought to depose Paige K. B. and 
Kaitlin I. B.  In response, the plaintiffs filed a motion for a 
protective order, requesting that the court preclude Richard and 
Esther and their insurers from asking questions about the nature 
of the sexual assault or litigating the issue of Steven’s 
criminal conviction.  On February 24, 1997, the Portage County 
Circuit Court, Judge Virginia A. Wolfe presiding, granted 
plaintiffs’ motion, thereby precluding the defendants from 
litigating this issue.   
¶7 
Plaintiffs also filed a motion to limit the scope of 
Richard and Esther’s discovery regarding the children.  The 
circuit court granted the motion, and pursuant to Wis. Stat. 
§ 804.01(3) (1989-90),1 limited the scope, length and manner of 
the children’s depositions in the following ways: limiting the 
length of the depositions to one hour for Kaitlin I. B. and one 
and one-half hours for Paige K. B.; allowing only one deposition 
                     
1 All references to the Wisconsin Statutes are to the 1989-
90 version unless otherwise noted. 
No. 
97-0873 
 
5 
of each child; requiring only one attorney to question the 
children on behalf of the defendants; precluding Steven from 
asking the children any questions except through selected legal 
counsel; requiring all questions to be submitted to the court in 
advance; 
disallowing 
questions 
directed 
to 
the 
children 
regarding what Steven did to them; and directing the defendants 
to 
make 
no 
gestures 
or 
comments 
toward 
the 
children.  
Furthermore, the circuit court ordered that the defendants’ 
experts not question the children regarding what was done to 
them by Steven. 
¶8 
The court of appeals granted Richard and Esther’s 
petition for leave to appeal from the circuit court’s non-final 
orders.  Steven, who had been appearing pro se throughout this 
civil action, did not appeal.2  The court of appeals certified 
the case to this court pursuant to Wis. Stat. § (Rule) 809.61. 
¶9 
The 
primary 
issues 
presented 
by 
this 
case, 
as 
certified by the court of appeals, are 1) whether an issue fully 
litigated in a criminal proceeding is conclusive in a subsequent 
civil proceeding against the defendant’s parents; and 2) whether 
the circuit court properly exercised its discretion in this case 
in granting a protective order to limit the scope of discovery. 
 We also clarify the standard for reviewing circuit court 
decisions on issue preclusion. 
                     
2 Because Steven did not appeal from the circuit court 
orders, any issues specifically regarding Steven are not before 
this court.  Accordingly, when we refer to “defendants” in this 
opinion we refer only to Richard and Esther and their insurers. 
  
No. 
97-0873 
 
6 
¶10 Issue 
preclusion, 
formerly 
known 
as 
collateral 
estoppel, Northern States Power Co. v. Bugher, 189 Wis. 2d 541, 
549, 
525 
N.W.2d 723 (1995), “is 
designed 
to 
limit the 
relitigation of issues that have been actually litigated in a 
previous action.”  Lindas v. Cady, 183 Wis. 2d 547, 558, 515 
N.W.2d 458 (1994).  See also Jensen v. Milwaukee Mut. Ins. Co., 
204 Wis. 2d 231, 235, 554 N.W.2d 232 (Ct. App. 1996).  The party 
asserting issue preclusion carries the burden to establish that 
it should be applied.  State ex rel. Flowers v. H&SS Department, 
81 Wis. 2d 376, 389, 260 N.W.2d 727 (1978).  “[O]nce an issue is 
actually and necessarily determined by a court of competent 
jurisdiction, that determination is conclusive in subsequent 
suits based on a different cause of action involving a party to 
the prior litigation.”  Montana v. United States, 440 U.S. 147, 
153 (1979) (citations omitted).   
¶11 Before reaching the primary issues, we must first 
clarify the appropriate standard of review for circuit court 
determinations regarding issue preclusion.  The plaintiffs, 
relying on Michelle T. v. Crozier, 173 Wis. 2d 681, 495 N.W.2d 
327 (1993), argue that the standard of review is whether the 
circuit court erroneously exercised its discretion in applying 
issue preclusion to Richard and Esther and their insurers.  They 
argue that whether issue preclusion applies is a question of 
fundamental fairnessa question left to the discretion of the 
circuit court.   
¶12 Richard and Esther and their insurers, relying on 
Lindas and Ambrose v. Continental Ins. Co., 208 Wis. 2d 346, 560 
No. 
97-0873 
 
7 
N.W.2d 309 (Ct. App. 1997), rev. denied 211 Wis. 2d 532, 568 
N.W.2d 299, assert that the standard of review is de novo to 
determine whether, as a matter of law, issue preclusion can be 
applied to them.  They assert that the circuit court must first 
determine whether applying issue preclusion would violate their 
due process rights.  If a circuit court determines that issue 
preclusion would not violate their due process rights, only then 
can the court exercise its discretion to determine whether 
applying it in the particular case is fundamentally fair.   
¶13 In Michelle T., the plaintiff commenced a civil action 
against Crozier, a man who had earlier been criminally convicted 
of second degree sexual assault for two acts of sexually 
touching her.  Michelle T., 173 Wis. 2d at 684.  During opening 
statements before the jury in the civil action, Crozier’s 
counsel indicated that he would introduce evidence to refute the 
evidence that had supported the criminal conviction.  Id.  In 
response, Michelle T. filed a motion in limine, asserting issue 
preclusion and prohibiting Crozier from presenting any evidence 
contrary to the criminal conviction.  Id.  The circuit court 
granted Michelle T.’s motion.   
¶14 On appeal this court recognized that the modern 
approach to issue preclusion was less formalistic and entailed 
“a looser, equities-based interpretation of the doctrine.”  Id. 
at 688.  Accordingly, the Michelle T. court relied on a 
“fundamental fairness” test to affirm the circuit court order on 
issue preclusion:   
 
No. 
97-0873 
 
8 
Courts may consider some or all of the following 
factors to protect the rights of all parties to a full 
and fair adjudication of all issues involved in the 
action: (1) could the party against whom preclusion is 
sought, as a matter of law, have obtained review of 
the judgment; (2) is the question one of law that 
involves two distinct claims or intervening contextual 
shifts in the law; (3) do significant differences in 
the quality or extensiveness of proceedings between 
the two courts warrant relitigation of the issue; (4) 
have the burdens of persuasion shifted such that the 
party seeking preclusion had a lower burden of 
persuasion in the first trial than in the second; or 
(5) are matters of public policy and individual 
circumstances 
involved 
that 
would 
render 
the 
application of collateral estoppel to be fundamentally 
unfair, including inadequate opportunity or incentive 
to obtain a full and fair adjudication in the initial 
action? 
Id. at 688-89 (citing Restatement (Second) Judgments § 28 at p. 
273-74 (1982)).   
¶15 The main holding of Michelle T. was that, at the 
discretion of the circuit court, issue preclusion can be 
applied, allowing plaintiffs to prevent a defendant from 
litigating an issue that the defendant previously litigated and 
lost in a prior proceeding with a different party.  Michelle T., 
173 Wis. 2d at 697.  See also Mayonia M.M. v. Keith N., 202 
Wis. 2d 460, 469, 551 N.W.2d 31 (Ct. App. 1996).  “[W]hether the 
use of prior adjudication is appropriate to preclude an issue 
for 
determination 
in 
a 
second 
forum 
is 
dependent 
upon 
conformance with principles of fundamental fairness . . . .  
Such determination of fundamental fairness is a matter of 
discretion to be determined by the trial judge on a case-by-case 
basis.”  Michelle T., 173 Wis. 2d at 698.  
No. 
97-0873 
 
9 
¶16 In Lindas, decided just one year after Michelle T., 
the issue was whether the personnel commission’s unreviewed 
determination of no probable cause of sexual discrimination 
under the Wisconsin Fair Employment Act (WFEA) precluded the 
same plaintiff’s claim of discrimination under 42 U.S.C. § 1983. 
 Lindas, 183 Wis. 2d at 552.  With no discussion, the court 
stated that “[t]he application of preclusion doctrines to a 
given set of facts is a question of law which this court reviews 
without deference to lower courts.”  Id. (citing DePratt v. West 
Bend Mutual Insurance Co., 113 Wis. 2d 306, 310, 334 N.W.2d 883 
(1983)). 
¶17 However, the court also referred to Michelle T. with 
approval.  “In Michelle T., we noted that the more modern 
approach to issue preclusion requires courts to conduct a 
‘fundamental fairness’ analysis.  Under this analysis, courts 
consider 
an 
array 
of 
factors 
in 
deciding 
whether 
issue 
preclusion is equitable in a particular case.”  Lindas, 183 
Wis. 2d at 559 (citing Michelle T., 173 Wis. 2d at 688-89).  The 
court concluded that applying issue preclusion in Lindas 
comported with the “fundamental fairness” test articulated in 
Michelle T.  Lindas, 183 Wis. 2d at 560-61.  The factors listed 
in Michelle T. protect a litigant’s right to a full and fair 
adjudication of the issues.  Id. at 561 (referring to Michelle 
T., 173 Wis. 2d at 689).   
¶18 The first published appellate decision squarely faced 
with the question of the proper standard of review of the 
application of issue preclusion was Ambrose, 208 Wis. 2d 346.  
No. 
97-0873 
 
10
As in the present case, one party in Ambrose relied on Lindas to 
assert that the standard of review was de novo and the other 
party relied on Michelle T. to assert that application of issue 
preclusion was within the circuit court’s discretion.  Ambrose, 
208 Wis. 2d at 349-50.   
¶19 The Ambrose court first noted that Lindas and a later 
case, Northern States Power Co., 189 Wis. 2d at 550-51, both 
referred to Michelle T. with approval.  Accordingly, the court 
of appeals was “persuaded that the Lindas court did not intend 
to alter the standard of review established in Michelle T. for 
trial court decisions on issue preclusion and that Michelle T. 
is controlling in this case.”  Ambrose, 208 Wis. 2d at 355.  
However, the court of appeals recognized that in certain 
contexts, the standard of review for issue preclusion may be 
different.  “When [issue preclusion] is applied against a 
litigant who was not a party to the prior proceeding, that 
litigant’s right to due process is violated if the litigant did 
not have sufficient identity of interest with a party to the 
prior proceeding.”  Id. at 356 (citing Mayonia M.M., 202 Wis. 2d 
at 469).  “The threshold issue of whether such a litigant was in 
privity or had sufficient identity of interests to comport with 
due process presents a question of law.”  Ambrose, 208 Wis. 2d 
at 356.  This court reviews questions of law de novo.  Lindas, 
183 Wis. 2d at 552.   
¶20 Although not citing Montana, a United States Supreme 
Court decision regarding issue preclusion, the holding of 
Ambrose is consistent with Montana.  The Court in Montana did 
No. 
97-0873 
 
11
not specifically discuss the standard of review in an issue 
preclusion case, but it did provide a two-step analysis for 
issue preclusion.  The Montana Court first determined that the 
United States government, which had openly directed and financed 
a prior proceeding between a construction company and the State 
of Montana, Montana, 440 U.S. at 151, was sufficiently entwined 
in that prior litigation so as to have fully and fairly 
litigated its interests, id. at 154-55.  Although the United 
States government was not a party to the state litigation, it 
“plainly had a sufficient ‘laboring oar’ in the conduct of the 
state-court litigation to actuate principles of estoppel.”  Id. 
at 155.  Accordingly, application of issue preclusion would not, 
as a matter of law, violate the government’s right to due 
process.   
¶21 Only after making this determination did the Court 
consider whether it was appropriate to apply issue preclusion in 
the case.  Id.   
 
To 
determine 
the 
appropriate 
application 
of 
collateral estoppel in the instant case necessitates 
three further inquiries: first, whether the issues 
presented by this litigation are in substance the same 
as those resolved against the United States in [the 
prior proceeding]; second, whether controlling facts 
or legal principles have changed significantly since 
the state-court judgment; and finally, whether other 
special circumstances warrant an exception to the 
normal rules of preclusion. 
Id.  The factors expressed in Michelle T. are consistent with 
these inquiries.   
No. 
97-0873 
 
12
¶22 Relying 
on 
Montana 
and 
the 
court 
of 
appeals’ 
harmonization of Michelle T. and Lindas in Ambrose, we conclude 
that whether issue preclusion applies against a litigant who was 
not a party to a prior proceeding requires a two-step analysis. 
 “The threshold issue [is] whether such a litigant was in 
privity or had sufficient identity of interests to comport with 
due process . . . .”  Ambrose, 208 Wis. 2d at 356.  This is a 
question of law which this court reviews de novo.  Id. (citing 
Jocz v. LIRC, 196 Wis. 2d 273, 304, 538 N.W.2d 588 (Ct. App. 
1995)).  If, as a matter of law, the litigant against whom issue 
preclusion is being asserted is not in privity or does not have 
sufficient identity of interest with a party to the prior 
proceeding, applying issue preclusion to the litigant would 
violate his or her due process rights and the analysis ends.  
Issue preclusion cannot be invoked.  If, however, as a matter of 
law, the litigant is in privity or has a sufficient identity of 
interest with a party to the prior proceeding, the court should 
turn to the second step.   
¶23 The second step in the analysis is whether actually 
applying 
issue 
preclusion 
to 
the 
litigant 
comports 
with 
principles of fundamental fairness.  Ambrose, 208 Wis. 2d at 355 
(referring to Michelle T., 173 Wis. 2d at 698).  This is 
generally a determination within the circuit court’s discretion. 
 Ambrose, 208 Wis. 2d at 355 (citing Michelle T., 173 Wis. 2d at 
698).  However, as noted in Ambrose, while the circuit court is 
to use its discretion to consider an array of factors to 
determine fairness in applying issue preclusion, certain of the 
No. 
97-0873 
 
13
Michelle T. factors present questions of law.  Ambrose, 208 
Wis. 2d at 355.  Particularly, the first factorwhether, as a 
matter of law, the party against whom issue preclusion is sought 
could have obtained judicial review of the prior judgmentis a 
question of law.  We review such decisions to determine whether 
the 
circuit 
court 
erroneously 
exercised 
its 
discretion.  
Michelle T., 173 Wis. 2d at 698-99.  If the circuit court 
decision involves a question of law, “we review the question of 
law de novo and reverse if the exercise of discretion is based 
on an error of law.”  Ambrose, 208 Wis. 2d at 356 (citing Berg 
v. Marine Trust Co., 141 Wis. 2d 878, 887, 416 N.W.2d 643 (Ct. 
App. 1987)).  See also Ayers v. City of Richmond, 895 F.2d 1267, 
1270 (9th Cir. 1990) (“The availability of collateral estoppel 
[issue preclusion] is a mixed question of law and fact in which 
legal issues predominate.”).    
¶24 Having set forth the appropriate standard, we now turn 
to the first issue presented by this case: whether an issue 
fully litigated in a criminal proceeding is conclusive in a 
subsequent civil proceeding against the defendant’s parents.  In 
other words, we must determine whether the doctrine of issue 
preclusion can be applied against a litigant who was not a party 
to an earlier case to prevent that party from litigating issues 
resolved in the earlier proceeding.   
¶25 The first part of the analysis requires the circuit 
court to determine whether the litigant against whom issue 
preclusion is asserted was in privity or had sufficient identity 
of interest with a party to the prior proceedings to comport 
No. 
97-0873 
 
14
with due process.  Due process requires that the litigant had 
sufficient opportunity to be heard.  Parklane Hosiery Co. v. 
Shore, 439 U.S. 322, 327 n.7 (1979).  In other words, due 
process requires that the litigant have “at least one full and 
fair opportunity to litigate an issue before being bound by a 
prior determination of that issue.”  Parker v. Williams, 862 
F.2d 1471, 1474 (11th Cir. 1989).  See also Kunzelman v. 
Thompson, 799 F.2d 1172, 1174 (7th Cir. 1986).  It is fundamental 
that nonparties cannot be bound by a prior litigation unless 
their interests are deemed to have been litigated.  Mayonia 
M.M., 202 Wis. 2d at 268.  Anything less is a violation of the 
litigant’s due process rights.   
¶26 “To be in privity the parties must be ‘so closely 
aligned 
that 
they 
represent 
the 
same 
legal 
interest.’”  
Kunzelman, 799 F.2d at 1178 (quoting Donovan v. Estate of 
Fitzsimmons, 778 F.2d 298, 315 (7th Cir. 1985)).  A litigant has 
a sufficient identity of interest with a party to a prior 
proceeding if the litigant’s interests in the prior case can be 
deemed to have been litigated.  Teacher Retirement of Texas v. 
Badger XVI, 205 Wis. 2d 532, 550, 556 N.W.2d 415 (Ct. App. 1996) 
(quoting Mayonia M.M., 202 Wis. 2d at 469).  “‘[O]ne who 
prosecutes or defends a suit in the name of another to establish 
and protect his own right, or who assists in the prosecution or 
defense of an action in aid of some interest of his own . . .’” 
has had an opportunity to litigate his or her interests and “‘is 
as much bound . . . as he would be if he had been a party to the 
No. 
97-0873 
 
15
record.’”  Montana, 440 U.S. at 154 (quoting Souffront v. 
Compagnie des Sucreries, 217 U.S. 475, 486-87 (1910)).   
¶27 The due process clauses of the United States and 
Wisconsin 
Constitutions 
“prohibit 
a 
court 
from 
granting 
preclusive effect to a prior determination of an issue without 
the precluded party having had the opportunity to contest that 
issue.”  Parker, 862 F.2d at 1474 n.1.  If the litigant is not 
so closely aligned with a party in the prior proceeding as to 
represent the same legal interest or the litigant’s interests 
cannot be deemed to have been litigated in the prior proceeding, 
the litigant’s due process rights would, as a matter of law, be 
violated were a court to apply issue preclusion.  The facts of 
several cases provide examples. 
¶28 In Teacher Retirement of Texas, several lawsuits arose 
between an owner of an office complex, the general contractor, 
subcontractors and the architect, regarding the construction of 
the complex.  Teacher Retirement of Texas, 205 Wis. 2d at 537.  
Butzen, a roofing and sheet metal subcontractor, sought to 
preclude Skidmore, an architect, from litigating issues decided 
at an arbitration to which Skidmore was not a party.  Id. at 
550.  The court of appeals determined that Skidmore had not 
previously litigated the issues and did not have sufficient 
identity of interest with Butzen’s adverse party, the project’s 
general contractor, in the earlier arbitration proceeding.  Id. 
at 553.  Accordingly, applying issue preclusion to Skidmore 
would have violated his due process rights.   
No. 
97-0873 
 
16
¶29 Similarly, 
in 
Mayonia 
the 
court 
rejected 
the 
defendant’s 
argument 
that 
issue 
preclusion 
barred 
the 
child/plaintiff’s paternity action because she was not in 
privity with, nor had sufficient identity of interest with the 
mother/plaintiff in an earlier paternity action against the same 
defendant.  Mayonia M.M., 202 Wis. 2d at 469.  The child’s due 
process rights would have been violated by application of issue 
preclusion because she did not have the opportunity to litigate 
the issues in the prior proceeding.   
¶30 In contrast to Teacher Retirement of Texas and Mayonia 
M.M., the court of appeals did find sufficient identity of 
interest between two plaintiffs in Jensen.  Jensen, 204 Wis. 2d 
at 241.  In Jensen, the defendant insurance company sought to 
preclude the wife/passenger in a car accident from relitigating 
whether its insured was negligent.  Jensen, 204 Wis. 2d at 235. 
 A prior proceeding between the husband/driver in the accident 
and the insurance company and its insured determined that the 
insured was not negligent.  Id. at 234.  The court of appeals 
determined that the wife/passenger had sufficient identity of 
interest with the husband/driver in the prior proceeding, such 
that she “had adequate opportunity and incentive to obtain a 
full and fair adjudication of her negligence claim . . . .”  Id. 
at 239-40.   
¶31 We find guidance in the Restatement (Second) Judgments 
§ 85 regarding the effect of a criminal judgment in a subsequent 
civil action.  Specifically, the Restatement provides that “(2) 
A judgment in favor of the prosecuting authority is preclusive 
No. 
97-0873 
 
17
in favor of a third person in a civil action: . . . (b) Against 
a person having a relationship with the defendant specified in 
§§ 46, 48, 56(1), and 59-61, or analogous rules.”  Restatement 
(Second) Judgments § 85(2)(b).  The Restatement recognizes that 
a criminal proceeding may be conclusive against third parties 
only if the third party is in privity with the defendant as 
privity is defined in the specified sections of the Restatement. 
 Section 46 is in regard to the effect of a personal injury 
action on a wrongful death action; section 48 pertains to 
actions for losses resulting from personal injury to another 
person; 
section 
56(1) 
deals 
with 
promisees 
and 
intended 
beneficiaries 
under 
contract; 
sections 
59-61 
pertain 
to 
corporations, partnerships and unincorporated associations and 
their members, respectively.  In any of these cases, “[t]he 
relationship with the criminal defendant must be sufficiently 
close that it would be unjust to allow the third party to 
prevail notwithstanding the judgment for the prosecution [in the 
earlier proceeding.]”  Restatement (Second) Judgments § 85, cmt. 
f.   
¶32 We now turn to the facts of the present case.  
Plaintiffs seek to preclude Richard and Esther and their 
insurers from litigating the issue of whether Steven sexually 
assaulted Paige K. B. and Kaitlin I. B.  In a prior proceeding, 
Steven was criminally convicted of sexually assaulting his two 
daughters.  We must first determine whether, as a matter of law, 
Richard and Esther and their insurers are in privity with Steven 
or have sufficient identity of interest to conclude that, in the 
No. 
97-0873 
 
18
prior proceeding, they had an opportunity to fully and fairly 
adjudicate the issue of the sexual assaults.  If not, their due 
process rights would be violated by application of issue 
preclusion.  This is a question of law that we review de novo.  
Because Richard and Esther are not in privity with Steven, nor 
do they have a sufficient identity of interest with him in the 
criminal proceeding, we hold that Paige K. B. and Kaitlin I. B. 
cannot assert issue preclusion against them in this civil case. 
¶33 Richard and Esther did not have an opportunity to be 
heard in the case against their son.  They were not parties to 
the criminal action; they had no opportunity to examine or 
cross-examine witnesses.  They were, in essence, bystanders.  
The reality is that Richard and Esther could not participate in 
the criminal proceeding between the State and their son.  
Furthermore, Richard and Esther do not fall within any of the 
recognized examples of privity listed in the Restatement. 
¶34 The plaintiffs assert that Richard and Esther have a 
sufficient identity of interest with Steven because they agreed 
to assume the duty of taking the children into their home.  
Their due process rights are not violated, argue the plaintiffs, 
because the issue is whether Richard and Esther were negligent 
in their duty of supervision attendant to having the children in 
their home.  Regardless of the level of supervisory duty imposed 
on Richard and Esther, it is insufficient to create privity or 
an identity of interest on the issue of the sexual assaults.  
Whether Richard and Esther were negligent depends, in part, on 
No. 
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whether the sexual assaults occurredan issue Richard and Esther 
have not had the opportunity to litigate. 
¶35 In a case very similar to the present case, the 
Eleventh Circuit United States Court of Appeals reversed a 
district 
court determination 
that 
issue preclusion 
barred 
defendants from litigating the issue of a rape.  See Parker, 862 
F.2d at 1474-75.  In an earlier case, Williams, a county jailer, 
was criminally convicted of kidnapping and raping Parker.  Id. 
at 1474.  Parker then filed a § 1983 claim against three 
defendants: Williams, the former county sheriff, and the county 
itself.  Id.  The Eleventh Circuit determined that the sheriff 
and the county were not parties to the criminal case and 
therefore, had not had the opportunity to litigate the fact of 
the rape.  Id.  Accordingly, the sheriff and the county could 
not be precluded from litigating this issue. 
¶36 Parker is similar to the present case.  In both cases, 
the victim of a criminal act later brought a civil suit against 
the convicted defendant and third parties.  As in Parker, the 
defendants in the present case did not have the opportunity to 
litigate the issue at hand in the prior proceeding.  As in 
Parker, not only did the defendants in the present case not join 
the prior proceeding but they also would not have been able to 
join it.  As in Parker, the defendants had no opportunity to 
examine or cross-examine witnesses in the prior proceeding.  
And, as in Parker, the defendants’ due process rights would be 
violated if issue preclusion were applied to preclude them from 
litigating the fact of the crime in the second proceeding. 
No. 
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¶37 In sum, we conclude that an issue fully litigated in a 
criminal proceeding is not conclusive in a subsequent civil 
proceeding against the defendant’s parents unless they were in 
privity with the defendant or had sufficient identity of 
interests with the defendant so as to have had an opportunity to 
fully and fairly litigate the issues.  Absent such privity or 
identity of interest, application of issue preclusion would, as 
a matter of law, violate the litigant’s due process rights.  
Because we determine, as a matter of law, that Richard and 
Esther and their insurers were not in privity nor did they have 
sufficient identity of interest with Steven in the criminal 
trial, issue preclusion cannot be applied to them.  To do so 
would violate their due process rights.  Accordingly, the order 
of the circuit court deeming Steven’s criminal conviction 
conclusive as to his parents, is reversed. 
¶38 The final issue presented by this case is whether the 
circuit court properly exercised its discretion in granting a 
protective order pursuant to Wis. Stat. § 804.01(3) (reprinted 
below),3 to limit the scope of discovery.  Circuit courts have 
                     
3 Wisconsin Stat. § 804.01(3) provides in pertinent part: 
(3) Protective orders.  (a) Upon motion by a party 
or by the person from whom discovery is sought, and 
for good cause shown, the court may make any order 
which justice requires to protect a party or person 
from annoyance, embarrassment, oppression, or undue 
burden or expense, including but not limited to one or 
more of the following: 
 
1. That the discovery not be had;  
 
No. 
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21
broad discretion in determining whether to limit discovery 
through a protective order.  State v. Beloit Concrete Stone Co., 
103 Wis. 2d 506, 511, 309 N.W.2d 28 (Ct. App. 1981).  If the 
moving party is able to show good cause, § 804.01(3) permits the 
circuit court to make any order “to protect a party or person 
from annoyance, embarrassment, oppression, or undue burden or 
expense.”  § 804.01(3).  Accordingly, we review the circuit 
court’s decision to determine whether it erroneously exercised 
its discretion.  Beloit Concrete, 103 Wis. 2d at 511.  A circuit 
court properly exercises its discretion if it examines the 
relevant facts, applies the proper standard of law and, using a 
rationale process, reaches a conclusion that a reasonable judge 
could reach.  See id. (citing McCleary v. State, 49 Wis. 2d 263, 
277, 182 N.W.2d 512 (1971)).  See also Loy v. Bunderson, 107 
Wis. 2d 400, 414-15, 320 N.W.2d 175 (1982).   
                                                                  
2. That the discovery may be had only on specified 
terms and conditions, including a designation of time 
or place; 
 
3. That the discovery may be had only by a method of 
discovery other than that selected by the party 
seeking discovery; 
 
4. That certain matters not be inquired into, or 
that the scope of the discovery be limited to certain 
matters; 
 
5. That discovery be conducted with no one present 
except persons designated by the court; 
 
6. That a deposition after being sealed be opened 
only by order of the court; 
. . .   
No. 
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¶39 As noted above, the circuit court in the present case 
granted plaintiffs’ motion for a protective order.  In two 
separate orders, the circuit court limited the scope, length and 
manner of the depositions of Paige K. B. and Kaitlin I. B., and 
the scope of questioning by defendants’ experts.  The court did 
so, however, in light of its earlier order that Steven’s 
criminal conviction for sexual assault was conclusive as to his 
parents and, therefore, the defendants were precluded from 
litigating that issue.  Because we have concluded that the 
circuit court’s first order, applying issue preclusion to the 
defendants, Richard and Esther and their insurers, violated 
their due process rights, we remand this case to the circuit 
court to reconsider its orders limiting discovery pursuant to 
Wis. Stat. § 804.01(3) in light of our holding.4  
                     
4 Because we are able to resolve this case without the need 
to rely on the deposition transcripts of Richard and Esther, we 
deny the motion made by Milwaukee Guardian Insurance, Inc. and 
Richard and Esther to supplement the record with excerpts of 
such transcriptsa motion which was held in abeyance pending 
this court’s consideration, on the merits, of the issues raised 
in this appeal.   
No. 
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23
By the Court.—The orders of the circuit court are reversed 
and the cause is remanded for further consideration in light of 
our holding. 
 
  
 
 
  
 
 
 
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