Kelley v. AW Distributing, Inc.

Background

The plaintiffs sued Daiho Sangyo, Inc. (Daiho), the AW Defendants, and the Wal-Mart Defendants over a November 3, 2018 crash in Wisconsin. Two non-parties purchased a can of Ultra Duster at a Wal-Mart, inhaled its contents while one was driving, and crashed into a group of Girl Scouts and their parents. The plaintiffs’ relatives were among those killed.

The plaintiffs asserted claims for wrongful death, strict product liability based on design defects, manufacturing defects, and failure to warn, negligence, breach of express and implied warranties, violations of California’s Unfair Competition Law and False Advertising Law, public nuisance, negligent infliction of emotional distress, and survival. The AW Defendants also filed a cross-claim against Daiho for indemnification and contribution.

Daiho distributed Ultra Duster to AW Distributing from July 2008 through June 2018. After June 8, 2018, AW Distributing obtained the product from Mid-Land Ultra, doing business as Green Island. The can involved in the crash was marked as manufactured by Green Island on September 3, 2018. Daiho did not dispute that it had been involved in designing Ultra Duster while it sold the product to AW Distributing, but argued it did not manufacture, sell, or distribute the specific can involved in the crash.

Summary-judgment standard and evidence

Summary judgment is a procedure for deciding claims without a trial when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. The court may not weigh evidence or decide witness credibility at this stage.

The court granted the plaintiffs’ request for judicial notice of more than 80 media reports about injuries caused by abusing dust-removal sprays, although it noted that the plaintiffs did not rely on particular exhibits when discussing the public-nuisance claim. The court overruled as moot the AW Defendants’ objections to Daiho’s Exhibits F, G, I, J, O, and Q because it did not rely on those exhibits. It overruled the objections to Exhibit K, a police report, finding that the report was authenticated and supported by deposition testimony.

Strict-liability claims

The court applied Wisconsin law to the plaintiffs’ strict-liability claims. Wisconsin law requires a plaintiff proceeding under the applicable product-liability statute to show that the manufacturer, distributor, seller, or promoter handled the specific product alleged to have caused the injury. The plaintiffs and the AW Defendants argued that Daiho could be liable because it designed Ultra Duster.

The court held that the evidence was insufficient to show that Daiho was involved in placing the specific can involved in the crash into the stream of commerce. Evidence that the product’s specifications did not change and that the can might have used parts supplied by Daiho was speculative. The court therefore granted Daiho summary judgment on the second, third, and fourth claims for strict product liability based on design defects, manufacturing defects, and failure to warn.

Negligence and negligent infliction of emotional distress

The court applied Wisconsin law to the negligence claims because the plaintiffs based them on alleged defects in Ultra Duster’s design, manufacture, or warnings. The court explained that Wisconsin’s product-liability statute does not eliminate negligence claims against a product manufacturer.

The court concluded that the product-identification requirement applied to the common-law negligence claim, but found that the evidence that Ultra Duster’s design remained unchanged between July and September 2018 was enough to defeat summary judgment. Daiho’s arguments about the AW Defendants’ opportunity to change the product involved factual questions about causation. The court denied Daiho’s motion for summary judgment on the common-law negligence claim and, because Daiho did not challenge the other elements, also denied the motion on the negligent-infliction-of-emotional-distress claim.

Public nuisance

The plaintiffs brought a public-nuisance claim under California law. To pursue that claim as private plaintiffs, they had to show an injury different in kind—not merely greater in degree—from the injury suffered by the general public.

The court found that the plaintiffs had not identified specific evidence showing that their injuries differed in kind from the harm suffered by the general public. It therefore granted Daiho summary judgment on the public-nuisance claim. The court also stated that Daiho was entitled to judgment on the AW Defendants’ cross-claim to the extent it sought relief based on that claim.

Warranty claims and unfair-competition claim

The court granted Daiho summary judgment on the express- and implied-warranty claims. The plaintiffs had not shown enough evidence to overcome Daiho’s position that it did not manufacture or sell the specific can involved in the crash, and the relevant declaration provided only speculation about Daiho’s role.

The plaintiffs agreed to drop their California Unfair Competition Law claim against Daiho, so the court granted Daiho’s motion for summary judgment on that claim. Daiho had not addressed the plaintiffs’ False Advertising Law claim. The court ordered the parties to meet and confer about that claim.

Wrongful-death and survivor claims

Daiho sought summary judgment on the wrongful-death and survivor claims based on its argument that the plaintiffs lacked an underlying claim. Because the court denied summary judgment on the negligence claims, it also denied Daiho’s motion on the wrongful-death and survivor claims.

AW Defendants’ cross-claim

Daiho argued that the AW Defendants’ cross-claim for indemnification and contribution was barred by a settlement agreement’s release and covenant not to sue. The agreement covered claims arising from matters or events before its effective date, including claims that could have been asserted in specified litigation.

The accident occurred before the settlement agreement’s effective date, and the record showed that Daiho’s involvement in designing Ultra Duster also occurred before that date. The AW Defendants did not provide evidence that the release or covenant was ambiguous. The court therefore concluded that they had not overcome Daiho’s motion and granted Daiho summary judgment on the cross-claim.

Disposition

The court granted in part and denied in part Daiho’s motion for summary judgment. It ordered the parties to appear for a further case-management conference on March 31, 2023, and to file an updated joint case-management conference statement by March 24, 2023.