Kelley v. AW Distributing, Inc.

Background

A group of Girl Scouts and their parents was picking up trash near a highway in Chippewa Falls, Wisconsin, on November 3, 2018. Plaintiffs allege that Colten Treu drove off the highway and struck and killed several group members, including the plaintiffs’ relatives.

The plaintiffs allege that the moving defendants manufactured, distributed, or sold Ultra Duster, a dust-removal product that individuals use to get high. The plaintiffs brought California-law claims against the defendants for wrongful death; strict product liability based on design defects, manufacturing defects, and failure to warn; negligence; breach of express and implied warranties; public nuisance; violations of California’s Unfair Competition Law and False Advertising Law; negligent infliction of emotional distress; and survival.

The moving defendants included Walmart, Inc., Wal-Mart Stores, Inc., Wal-Mart Stores East, LP, Wal-Mart Stores East, LLC, AW Distributing, Inc., AW Product Sales & Marketing, Inc., Kennic Ho, Alice Wong, AW & Ho (Holdings), Inc., and Daiho Sangyo, Inc. The AW Defendants and Daiho joined Walmart’s motion.

Motion to Dismiss for Failure to Join Required Parties

The defendants argued that Treu, his passenger John Stender, and the plaintiffs in a separate Wisconsin action were required parties under Federal Rule of Civil Procedure 19. A required party generally must be joined if the case cannot provide complete relief among the existing parties or if the absent person’s interest could create a substantial risk of multiple or inconsistent obligations. If a person is required but cannot be joined, the court then considers whether the case can continue without that person or whether dismissal is appropriate.

The court held that the defendants had not shown that the plaintiffs in the Wisconsin action were required parties. The defendants argued that proceeding without them could create a substantial risk of double or inconsistent obligations, but they did not identify those obligations. The court distinguished inconsistent obligations—which can make compliance with one court order breach another—from merely inconsistent results in separate lawsuits.

The court also held that the defendants had not shown that Treu or Stender were required parties. The plaintiffs sought to hold the moving defendants responsible for their own alleged conduct, not merely for Treu’s or Stender’s conduct. The court relied on the principle that joint alleged wrongdoers do not all have to be named in one lawsuit. It also found that the defendants had not persuasively explained why they could not defend the claims without joining Treu and Stender or why discovery from them would be insufficient to support a defense that their conduct was a superseding cause.

Because the defendants failed to show that these absent people were required parties, the court did not reach the later questions about whether they could be joined or whether the case could proceed without them. The court denied the motion to dismiss.

Request for Abstention

The defendants alternatively asked the court to abstain—that is, to decline or postpone exercising its jurisdiction—in favor of a Wisconsin case filed by different plaintiffs arising from the same accident. They argued that the Wisconsin case presented difficult state-law questions concerning Wisconsin laws that allegedly limit liability for defective products and wrongful deaths.

The court explained that abstention is an extraordinary and narrow exception to a federal court’s duty to decide a case properly before it. Under the Colorado River doctrine, a federal court may stay or dismiss a case when a parallel state proceeding provides an adequate vehicle for resolving the issues. The two cases need not be exactly identical, but they must be substantially similar, and the state proceeding must be capable of resolving all the material issues in the federal case.

The court concluded that the Wisconsin case would not resolve all the material issues in this case because the plaintiffs here were not parties to the Wisconsin action. The defendants therefore had not shown that abstention was warranted.

Disposition

Judge Jeffrey S. White denied the moving defendants’ motion to dismiss and to abstain. The order did not decide the merits of the plaintiffs’ underlying claims.