Law changes affecting product liability law

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Attorneys grappling with what statute modifications mean

It did not take long for the new administration to enact major changes this year to Wisconsin’s product liability laws, but the effects of the changes likely will take years to play out.

Included in the law are provisions that restore the open and obvious danger defense to product liability cases, change the burden of proof in design defect cases, protect retailers and wholesalers from liability for manufacturers’ faults, and create a statute of repose in product liability actions.

State attorneys recently weighed in on the changes, kicking off the arguments over exactly what various provisions of the new act mean.

Inherent characteristics

One provision certain to generate extensive argument over its meaning is sec. 895.047(3)(d), which provides,

“The court shall dismiss the claimant’s action under this section if the damage was caused by an inherent characteristic of the product that would be recognized by an ordinary person with ordinary knowledge common to the community that uses or consumes the product.”

According to plaintiffs’ attorney Lynn Laufenberg, the purpose of the provision is to legislatively overrule case law holding that the open and obvious danger doctrine does not apply to strict products liability cases.

Hansen v. New Holland North America Inc., 215 Wis.2d 655, 574 N.W.2dd 250 (Ct.App.1997).

The Laufenberg Stombaugh & Jassak SC attorney represented the plaintiff in Hansen, in which the Court of Appeals held that summary judgment improperly was granted to the manufacturer, even if the plaintiff did knowingly confront an open and obvious danger by manually clearing hay from a baler while the roller was engaged.

“The new law appears to make the presence of an open and obvious defect an absolute defense,” Laufenberg said. “The incentive then is for manufacturers to remove guards and make the danger worse. Where is the public policy behind that?”

But some attorneys question whether the language used by the Legislature actually accomplishes the goal of importing the open and obvious danger defense into product liability actions.

Jack Laffey, a defense attorney with Whyte Hirschboeck & Dudek SC, called the language used by the court “a little squishy.”

“The statute doesn’t even use the term, ‘open and obvious danger,’” he said. “That is a legal term of art.

People could look at case law for its meaning. So, instead of arguing whether plaintiffs knowingly confronted an open and obvious danger, attorneys will be arguing the meaning of the statute.”

Arguably, the statute could be read not to overrule Hansen at all, but merely to codify the decision in Godoy v. E.I. du Pont de Nemours & Co., 2009 WI 78.

In Godoy, the court held that lead pigment could not be considered defective based on presence of lead, because the presence of lead “is a characteristic of the product itself” — language strikingly similar to that adopted by the legislature in subsec. (3)(d) — “inherent characteristic of the product.”

Paul Benson of Michael Best & Friedrich LLP, who also defends product liability actions, said the statute could be read only to codify that plaintiffs can’t assert a product liability claim on the theory that the product should not have been manufactured in the first place.

Another defense attorney, Mitch Moser of Quarles & Brady LLP, also questioned whether the language adopted by the Legislature actually restores the open and obvious danger doctrine to strict liability cases.

Moser suggests that, if that was the intent, the statute specifically could have made reference to “ordinary knowledge of the danger.”

Design defects

Possibly, the biggest change for product liability cases, however, is the change in the bottom line regarding what a plaintiff must prove in the first place — the adoption of a new standard for imposing strict liability in design defect cases.

Since 1967, Wisconsin has adhered to the rule set forth in the Restatement (Second) of Torts, sec. 402A (1965), that strict liability is appropriate when a product is “unreasonably dangerous to the user or consumer.”

But in 2001, the landscape changed when then-Justice Diane Sykes, joined by Justice David Prosser, called for adoption of the Restatement (Third), which provides in relevant part that a product is defective in design only if “the foreseeable risks of harm … could have been reduced or avoided by the adoption of a reasonable alternative design …” Green v. Smith & Nephew AHP, Inc., 2001 WI 109.

While Sykes since has left the court, a majority of the current justices had gone on record as supporting the change. Because of recusals in the cases actually raising the issue, however, the law remained the same.

Horst v. Deere & Co., 2009 WI 75 (Ziegler, J., not participating); and Godoy v. E.I. du Pont de Nemours & Co., 2009 WI 78 (Roggensack, J., not participating).

But the new law effectively accomplishes what the Court has not. Section 895.047(1)(a) now provides, “A product is defective in design if the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the manufacturer and the omission of the alternative design renders the product not reasonably safe.”

While the legal standard has changed, some plaintiffs’ attorneys don’t think the change is that big of a deal.

Laufenberg said that, in most cases, you could show an alternative design.

Plaintiffs’ attorney John Cabaniss, of Cabaniss Law, Milwaukee, agreed that, even under the old law, as a practical matter, if you could not show an alternative design, the jury would not rule in your favor.

But Benson says the change is significant.

Plaintiffs routinely presented alternative designs to the jury under the old law, he acknowledged.

“But under the previous law, they never had to show that it was viable,” Benson said. “Now, they must show it is reasonable and feasible to use the alternative design. That is a sea change.”

But even if the new law does make it more difficult for some plaintiffs to recover, Cananiss said, in some cases, the new rule is better than the old one. Cabaniss represented the plaintiff in Horst, in which the court held that a little boy injured by a riding lawn mower going in reverse could not recover from the manufacturer.

Cabaniss alleged it was unreasonably dangerous for a riding mower to be capable of mowing while being driven in reverse. But the Court held that, even if the product was unreasonably dangerous to bystanders, the boy could not recover under a strict liability theory, because that design did not make the mower unreasonably dangerous to the user himself.

“I can say that the new standard would have been more favorable to the little boy in Horst,” Cabaniss said.

“This standard would have more fairly focused the issues.”

Sellers and distributors

Even a seemingly straightforward statute such as 895.047(2)(b), which requires that distributors and sellers be dismissed if the manufacturer submits to the court’s jurisdiction, will generate argument.

To recover against sellers or distributors, sec. 895.047(2)(a) provides that the plaintiff must prove by a preponderance of the evidence that neither the manufacturer nor its insurer is subject to service within the state, or that the manufacturer is judgment-proof.

But Laufenberg says it is uncertain what steps a plaintiff must take to prove that it is unable to bring the manufacturer into court, and worries that meeting the burden may be prohibitively expensive in some cases.

Statute of repose

The law also enacts, for the first time in Wisconsin, a statute of repose for product liability actions.

Historically, such actions could be brought no matter how long ago the product was manufactured. But sec. 895.047(5) creates a 15-year statute of repose, unless the manufacturer specifically represents that the product will last for more than 15 years, or the damages are caused by a latent disease.

Laufenberg noted that many manufactured products, such as farm machinery, are made to last much longer than that.

Benson said he expected constitutional challenges to the provision. Traditionally, Wisconsin courts were hostile to statutes of repose because they extinguished causes of action before they even accrued.

As recently as 1989, a unanimous Supreme Court said that, “except in topsy-turvy land,” a judicial remedy cannot expire before the injury occurs. Funk v. Wollin Silo & Equipment, 148 Wis.2d 59, 435 N.W.2d 244 (1989).

But the court since has upheld a statute of repose against a constitutional challenge. In Kohn v. Darlington Community Schools, 2005 WI 99, the court upheld the 10-year builder’s statute of repose against a challenge that it violated the constitutional right to a remedy for legal wrongs.

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