Since 2018, Wis. Stat. § 165.08(1), or the “Settlement Statute,” has forbidden the Wisconsin Department of Justice (“DOJ”) from settling or discontinuing any civil action without the approval of the Wisconsin State Legislature. On June 17, 2025, in a decisive win for the DOJ, Governor, and executive branch agencies (the “Petitioners”), a unanimous Wisconsin Supreme Court significantly limited the Settlement Statute’s reach. See Kaul v. Wis. State Legislature, 2025 WI 23. In Kaul, the Court concluded that the Settlement Statute cannot be constitutionally applied to civil enforcement actions or actions brought on behalf of state agencies. Under the Wisconsin Constitution’s separation of powers, the authority to litigate and settle civil enforcement and agency-directed lawsuits is a core executive power in which the Legislature has no role.
Background:
The Wisconsin Constitution divides government into three separate branches, each vested with its own “core power.” Kaul, 2025 WI 23, ¶10. As relevant here, “the legislature is vested with the power to make the law.” Id. (quoted source and internal quotations omitted). “The executive branch is vested with the power to execute or enforce the law as enacted.” Id. In addition to each branch’s core powers, there are instances in which a power is shared between two branches. Id., ¶12. Under the Court’s established separation of powers framework, one branch’s exercise of another branch’s core power is “per se unconstitutional.” Id., ¶¶11, 14. Where two branches share a given power, however, the question is whether one branch’s exercise of that shared power “unduly burdens or substantially interferes with another branch’s exercise of its constitutional powers.” Id., ¶¶12-14.
Litigation and settlement are quintessential examples of “enforc[ing] the law as enacted.” Id., ¶10. Prior to 2018, the DOJ had, in most cases, the unilateral authority to discontinue and settle litigation brought on behalf of the State. After Governor Evers and Attorney General Kaul were elected, but days before they took office, the Legislature passed a flurry of lame-duck legislation, including 2017 Wis. Act 369, § 26. Section 26 amended the Settlement Statute to forbid the DOJ from settling or discontinuing any case without the approval of a legislative intervenor or the Legislature’s Joint Committee on Finance.
Shortly thereafter, in Service Employees International Union, Local 1 v. Vos (“SEIU”), 2020 WI 67, 393 Wis. 2d 38, 946 N.W.2d 35, a group of labor unions and taxpayers brought a facial challenge to the Settlement Statute on the ground that it violated the separation of powers by granting the Legislature authority over core executive power. The Court rejected the facial challenge and concluded that the Legislature has an institutional interest in at least some cases—such as cases brought on behalf of the Legislature and cases that involve the expenditure of state funds—and that litigating and settling those cases is therefore a “shared power.” Id., ¶¶50-73 (Hagedorn, J., majority op.). In such cases, SEIU summarily concluded that the Settlement Statute does not unduly burden or substantially interfere with executive powers and is therefore constitutional. Id., ¶72 n.22.
In Kaul, the Petitioners commenced a more limited challenge to the Settlement Statute. Specifically, the Petitioners challenged the Settlement Statute’s application to: (1) civil enforcement actions and (2) actions brought on behalf of executive agencies. In contrast to the categories of cases discussed in SEIU, the Petitioners argued that the Legislature lacked any institutional interest in these exclusively executive plaintiff-side civil actions, making the settlement of these cases a core executive power. Alternatively, the Petitioners asserted that even if the power to settle such actions was a shared one, the Settlement Statute unduly burdened and substantially interfered with the executive branch’s execution of the law and was likewise unconstitutional.
The Opinion:
In a unanimous opinion drafted by Justice Hagedorn, the Wisconsin Supreme Court in Kaul concluded that applying the Settlement Statute to the two challenged categories of cases was unconstitutional.
Applying the Court’s established separation of powers framework to the Petitioners’ challenge, the Court first considered whether the power to litigate and settle civil enforcement actions and actions brought on behalf of executive agencies is a core or shared power. Id., ¶¶15-22. The Court recognized that “[l]itigation on behalf of the state is chiefly an executive function,” and that it only “fall[s] within the borderlands of shared power” when the Legislature “has an institutional interest rooted in the constitution.” Id., ¶28.
The Court then assessed whether the Legislature has any constitutionally rooted institutional interests in the two specific categories of cases at issue. Id., ¶¶25-43. The Legislature identified two potential interests. Id., ¶29. First, it asserted that it has an institutional interest in revenue generated from settlements which it rooted in the taxing clause. Id., ¶¶30-39. The Court rejected this argument. Unlike the appropriations clause discussed in SEIU, which affords the Legislature “plenary” constitutional control over money flowing out of the state fisc, the taxing clause merely requires the Legislature to account for all revenue flowing in, so that it may impose a uniform tax the following year. Id., ¶38. The Court concluded that the Legislature’s need to account for the revenue generated from settlements simply does not afford it an interest in negotiating the terms of, or vetoing, settlement proposals. Id., ¶33.
Second, the Legislature claimed it has an institutional interest in the policy consequences of specific settlement terms. Id., ¶42. The Court also rejected this argument because permitting the Legislature to “step into the shoes of the executive when[ever] an executive action implicates public policy would eviscerate the separation of powers.” Id., ¶43. Although the Legislature may “announce[] its policy decisions” and “how they may be achieved” in the text of statutes that authorize the executive branch to engage in various actions, see id., ¶¶43-44, once the law is enacted, it is up to the executive branch to decide “how to effectuate the law’s policies.” Id. Short of legislating anew, the Legislature may not continuously police the executive branch’s execution of the law.
In sum, the power to litigate and settle such cases is a core executive power and the Settlement Statute’s application to both categories of cases is per se unconstitutional. The Court therefore did not proceed through a shared-powers analysis. Id., ¶14.
Takeaways:
Kaul significantly curbs one of the Legislature’s many 2017 lame-duck power grabs. Its conclusions that the Legislature’s taxing and policy-making authority do not justify legislative intervention in the executive branch’s execution of the law will help to restore the balance of powers between those two branches. On a practical level, the decision means the Legislature will no longer be involved in deciding whether and on what terms to settle these categories of cases, which should result in smoother, more timely settlements with the DOJ. Finally, and in the face of ongoing criticisms over the divided nature of the Court and its fractured opinions, the fact that the Court issued a unanimous opinion on a particularly contentious topic with significant partisan implications is cause for optimism.
