‘Public’ in sec. 100.18 includes prior customers

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Even though a buyer is a sophisticated commercial party with a prior history of doing business with the seller, and initiated contact with the seller, the buyer is nevertheless a member of “the public” within the meaning of sec. 100.18, the Wisconsin Court of Appeals held on June 22.

K&S Tool & Die Corp. is a Wisconsin corporation that creates metal parts and dies. Production stamping is one process K&S uses to create metal parts. The process uses a punch press and a die to stamp pieces of steel into metal parts.

In 2000, Thomas Klusken, the sole owner of K&S, determined that K&S needed a press with a 1000-ton pressing force for a particular job. K&S began searching through brochures it had been sent from companies that sold used presses, but was unable to find what it needed.

Perfection Machinery Sales, Inc., an Illinois corporation in the business of selling used industrial machinery to commercial clients, was one of the companies that had sent K&S brochures and catalogs.

Klusken contacted Perfection and spoke to Jason Broderick, a sales representative, telling him that K&S needed a 1,000-ton press with certain features. Perfection did not have in its inventory a 1,000-ton press with all the features K&S was looking for, but Broderick agreed to look around to see if he could find one.

Broderick subsequently called Klusken to say that he had found two 1,000-ton presses in Michigan. K&S hired another company, Industrial Rebuilding Machining, Inc., to inspect the presses, both of which were dismantled. Industrial Rebuilding recommended one as the better press, and K&S told Perfection it wanted to purchase that press. Perfection sold that press to K&S.

However, the press was actually an 800-ton press, and required three hits, rather than one, to make the part for which it had been purchased.

K&S brought suit against Perfection, asserting a number of claims. However, the sec. 100.18 claim was the only claim that went to trial. The jury found in favor of K&S, and found damages of $306,000. Perfection appealed, but the court of appeals affirmed, in a decision by Judge Margaret J. Vergeront.

The court concluded that K&S is a member of “the public,” under sec. 100.18

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The statute provides that a corporation intending to sell merchandise to the public, or attempting to encourage the public to enter a contract to purchase merchandise, shall not make untrue, deceptive or misleading assertions in any advertisements, or announcements to the public related to that merchandise.

After reviewing the case law addressing the definition of “the public,” the court concluded, “We can see no basis in the statute itself or the case law for concluding that the legislature intended that a purchaser of a particular product lose the protection of Wis. Stat. sec. 100.18 solely because the purchaser had previously made inquiries about products and purchased products from the seller.”

The court also found it irrelevant that K&S had initiated the contact with Perfection.

Finally, the court then held that reasonable reliance is not required for showing the causation of pecuniary loss to the plaintiff, because the statute creates a cause of action separate from common law misrepresentation. Because K&S did, in fact, rely on the representation, and suffered loss as a result, the court affirmed.

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David Ziemer can be reached by email.