Kelley v. AW Distributing, Inc.

Background

Plaintiffs alleged that, on November 3, 2018, Colten Treu drove off a highway near Chippewa Falls, Wisconsin, and struck and killed several members of a group picking up trash, including plaintiffs’ relatives. Plaintiffs, the decedents, Treu, and Treu’s passenger were residents of Wisconsin or Illinois. The AW Defendants were residents of California; the Wal-Mart Defendants were Delaware corporations with principal places of business in Arkansas; and Daiho Sangyo, Inc. was a Japanese limited liability company with its principal place of business in Tokyo, Japan.

Plaintiffs alleged that the defendants manufactured or distributed Ultra Duster, a dust-removal product containing a pressurized fluorinated hydrocarbon gas called DFE. They claimed the product could be abused by inhalation, that its bittering agent did not effectively prevent inhalant abuse, and that its warnings were inadequate. Their claims included wrongful death, strict products liability based on design defects, manufacturing defects, and failure to warn, negligence, breach of warranty, public nuisance, violations of California’s Unfair Competition Law and False Advertising Law, negligent infliction of emotional distress, and survival claims by three plaintiffs.

Choice-of-Law Framework

Because jurisdiction was based on diversity of citizenship, the court applied California’s governmental-interest test. That test asks: (1) whether the laws differ materially; (2) whether both jurisdictions have legitimate interests, creating a true conflict; and (3) which jurisdiction’s interest would be more impaired if its law were not applied.

The Moving Defendants argued that Wisconsin law should govern the claims. They included the Walmart Defendants, the AW Defendants, and Daiho. The court addressed product-liability law separately from wrongful-death damages and joint-and-several liability.

Product-Liability Claims

The court found material differences between Wisconsin and California law. Wisconsin’s Omnibus Tort Reform Act limits who may be held liable for defective products and uses a reasonable-alternative-design test for determining whether a product is defective. Plaintiffs conceded that the laws differed on those issues.

The court also found a true conflict because both Wisconsin and California had legitimate interests in applying their own laws. California has an interest in ensuring that manufacturers bear the costs of injuries caused by defective products rather than injured people. Wisconsin has an interest in regulating conduct within Wisconsin and establishing predictable limits on liability for businesses whose products are used there.

The court concluded that Wisconsin’s interests predominated. Although plaintiffs alleged that Ultra Duster was designed and distributed from California, the product was purchased in Wisconsin, the accident occurred there, and the accident was the last event necessary to make the defendants liable. The court also noted that the accident did not injure California residents and that an effective warning would have had to reach users in Wisconsin.

The court therefore granted, in part, the motion to apply Wisconsin law to plaintiffs’ product-liability claims.

Wrongful-Death Damages and Joint-and-Several Liability

The defendants also sought application of Wisconsin law to damages and joint-and-several liability. Wisconsin caps damages in wrongful-death claims and generally provides for joint liability only when a party’s responsibility is 51 percent or greater. Plaintiffs did not dispute that Wisconsin and California law differed on these issues.

The court explained that the choice of law for substantive liability does not necessarily determine the choice of law for damages. California law was presumptively applicable unless the defendants showed that Wisconsin had the more compelling interest. The court concluded that focusing on the accident’s location did not adequately address the interests involved in wrongful-death statutes and punitive damages, particularly because at least some defendants were California residents.

The court denied, without prejudice, the motion to apply Wisconsin law to wrongful-death damages and joint-and-several liability. It stated that the defendants could renew the motion to address the issues discussed in the order.

Disposition

The court granted in part and denied in part the motion to apply Wisconsin law. Wisconsin law applies to the product-liability claims. The motion was denied without prejudice as to wrongful-death damages and joint-and-several liability. The court also overruled as moot plaintiffs’ objections to materials it did not rely on in deciding the motion.