86 Hawai'i 214, Kawamata Farms, Inc. v. United Agri Products

Decision Date11 December 1997
Docket NumberNo. 19201,19201
Citation948 P.2d 1055,86 Hawaii 214
CourtHawaii Supreme Court
Parties86 Hawai'i 214, 35 UCC Rep.Serv.2d 1132, Prod.Liab.Rep. (CCH) P 15,150 KAWAMATA FARMS, INC., Plaintiff-Appellee, v. UNITED AGRI PRODUCTS, Loveland Industries, Inc., dba United Agri Products (Hawaii); Reginald Hasegawa, E.I. DuPont de Nemours & Company, a Delaware corporation; Terra International, Inc., a Delaware corporation; Platte Chemical Co., a Nebraska corporation; Bartlo Packaging, a New Jersey corporation, Defendants-Appellants. Stanley T. TOMONO and Cynthia T. Tomono dba S.T.T. Farms, Plaintiffs-Appellees-Counter-Defendants-Counter-Appellees, v. E.I. DuPONT DE NEMOURS & COMPANY, a Delaware corporation; Terra International, Inc., a Delaware corporation; Platte Chemical Co., a Nebraska corporation; Bartlo Packaging, Incorporated, a New Jersey corporation; Loveland Industries, Inc., dba in Hawai'i as Loveland Industries, Inc., United Agri Products Hawaii, Reginald Hasegawa, Defendants-Appellants-Cross-Defendants-Cross-Appellees, and Kristofer Knutsen; Inger-Lise Knutsen; Bernard H.F. Chun; Marion Bush, Trustee of the Marion Pualani Keliikipi Bush Trust, Defendants-Appellants-Cross-Claimants-Cross-Appellants-Counter-Claimants-Counter-Appellants.

Edward W. Warren, Christopher Landau, Washington, DC, and James Gash, Los Angeles, CA, of Kirkland & Ellis, for appellants E.I. DuPont de Nemours and Company, Inc. and Bartlo Packaging Incorporated.

John R. Lacy, Lisa W. Munger and Bruce L. Lamon of Goodsill Anderson Quinn & Stifel, Honolulu, for appellants E.I. DuPont de Nemours and Company, Inc. and Bartlo Packaging Incorporated.

John S. Nishimoto and Calvin Young of Ayabe, Chong, Nishimoto, Sia & Nakamura, Honolulu, for appellants United Agri Products, Loveland Industries, Inc., United Agri Products (Hawaii), Reginald Hasegawa, and Platte Chemical Co.

William A. Bordner and David Gruebner of Burke Sakai McPheeters & Bordner, Honolulu, for appellant Terra International, Inc.

Stanley H. Roehrig, Andrew P. Wilson, Stephen T. Cox and Kris A. LaGuire of Roehrig, Roehrig, Wilson & Hara, Hilo, and Peter Van Name Esser, Honolulu, for appellees Kawamata Farms, Inc., Stanley T. Tomono and Cynthia T. Tomono dba S.T.T. Farms.

Stephen D. Whittaker and David W. Lacy of The Law Offices of Stephen D. Whittaker, Kailua Kona, for cross-appellants Kristofer Knutsen, Inger-Lise Knutsen, Bernard H.F. Chun, and Marion Bush, Trustee.

Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

NAKAYAMA, Justice.

In this products liability lawsuit, defendants-appellants-cross-defendants-cross-appellees E.I. DuPont de Nemours and Company, Terra International, Inc., Platte Chemical Co., Bartlo Packaging, Inc., United Agri Products, Loveland Industries, Inc., United Agri Products (Hawaii), and Reginald Hasegawa appeal from a judgment awarding plaintiffs-appellees Kawamata Farms, Inc. and plaintiffs-appellees-counter-defendants-counter-appellees Stanley T. Tomono, and Cynthia T. Tomono a total of more than $23 million in damages for crop damage resulting from a manufacturing defect in Benlate 50 DF and Benlate 50 WP, which are agricultural fungicides. Defendants-appellants-cross-claimants-cross-appellants-counter-claimants-counter -appellants Kristofer and Inger-Lise Knutsen, Bernard H.F. Chun, and Marion Bush also appeal from unfavorable jury verdicts in a declaratory action against them, as well as their counterclaims and cross-claims. For the reasons stated below, we affirm the judgment and all of the circuit court's orders.

I. BACKGROUND
A. The Parties

This appeal results from two separate products liability lawsuits that were consolidated for trial. Kawamata Farms, Inc. (Kawamata Farms) is a Hawai'i corporation that produces, distributes, markets, and sells ornamental flowers, including roses, in Hawai'i County. Stanley T. Tomono and Cynthia T. Tomono (the Tomono Plaintiffs) own and operate S.T.T. Farms, a business that grows, markets, and distributes tomatoes, cucumbers, orchids, and various other agricultural products in Hawai'i County.

Kawamata Farms and the Tomono Plaintiffs (referred to collectively as the Plaintiffs) filed their actions in 1991 and 1992, respectively, alleging that their plants, soil, and farm structures had been damaged by Benlate 50 DF and Benlate 50 WP (referred to collectively as Benlate), which are agricultural fungicides that were manufactured by E.I. DuPont de Nemours and Company (DuPont). The Plaintiffs sued DuPont, Terra International, Inc., Platte Chemical Co., Bartlo Packaging, Inc., United Agri Products, Loveland Industries, Inc., United Agri Products (Hawaii), and Reginald Hasegawa (referred to collectively as the Liability Defendants), who were involved in formulating, manufacturing, packaging, marketing, distributing, and/or selling of Benlate. The Plaintiffs sought compensatory damages under, among other things, theories of negligence and strict products liability, and breach of express warranty. The Plaintiffs also sought punitive damages.

Because the Tomono Plaintiffs had leased some of their farm land from various landlords, the Tomono Plaintiffs sought declaratory relief from the landlords to absolve themselves of responsibility for any alleged damage to the land. Two of the Tomono Plaintiffs' landlords, the State of Hawai'i and the Trustees under the Will and of the Estate of Bernice Pauahi Bishop (Bishop Estate), successfully sought dismissal from the case. The remaining landlords, Kristofer and Inger-Lise Knutsen, Bernard H.F. Chun, and Marion Bush (hereinafter referred to collectively as the Declaratory Defendants), filed a counterclaim against the Tomono Plaintiffs, alleging breach of contract, negligence, and waste. The Declaratory Defendants also filed a cross-claim against the Liability Defendants, essentially adopting the Plaintiffs' causes of action against the Liability Defendants, and seeking compensatory damages for soil remediation, as well as punitive damages.

The Plaintiffs' two lawsuits were consolidated on November 16, 1993, and trial was set for June 14, 1994. As explained below, at the conclusion of the trial, the jury issued a verdict in favor of the Plaintiffs and against the Liability Defendants, finding liability under Counts I and II, in which the Plaintiffs had alleged negligence liability and strict liability, respectively, for the defective manufacture or design of Benlate. The jury also found liability under Count III for the Liability Defendants' breach of an express warranty on the label of Benlate.

With respect to the Tomono Plaintiffs' declaratory action and the Declaratory Defendants' counterclaim and cross-claims, the jury rendered a verdict in favor of the Plaintiffs and Liability Defendants, and against the Declaratory Defendants.

B. The Recall of Benlate 50 DF

The Liability Defendants formulated, manufactured, packaged, marketed, distributed, and/or sold Benlate 50 DF, a fungicide that the Plaintiffs applied to their plants and soil. On September 1, 1989, the federal Environmental Protection Agency (EPA) issued a stop sale order that, at least temporarily, prohibited DuPont from selling certain lots of Benlate 50 DF because they were contaminated with the herbicide atrazine. Benlate 50 DF was deemed adulterated, and its sale constituted an unlawful act under the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.A. §§ 136-136y (1992) (FIFRA). In March 1991, the EPA issued a second stop sale order prohibiting DuPont from selling atrazine-contaminated Benlate 50 DF. Benlate 50 DF was again deemed adulterated, and its sale, again, constituted an unlawful act under the FIFRA. On March 22, 1991, DuPont instituted a total recall of Benlate 50 DF, after which DuPont no longer sold Benlate 50 DF in the United States.

C. Pre-Trial Motions

Before trial, DuPont and the other Liability Defendants moved for partial summary judgment, asserting that the FIFRA preempted several of the Plaintiffs' claims. In particular, the Liability Defendants contended (1) that the FIFRA's federal regulatory scheme governing the warnings set forth on pesticide labeling and packaging prohibited state law from imposing additional warning requirements on labels and, thus, (2) that the FIFRA preempted the Plaintiffs' claims. The circuit court partially granted the Liability Defendants' motion for partial summary judgment regarding FIFRA preemption issues, dismissing the Plaintiffs' negligence and strict liability claims in Counts I and II to the limited extent that those claims related to inadequacies in the labeling and packaging of Benlate.

However, the circuit court did not grant the Liability Defendants' motion for partial summary judgment regarding preemption to the extent that the Plaintiffs were alleging liability in Counts I and II for the defective manufacture and design of Benlate. Furthermore, the circuit court expressly denied the Liability Defendants' motion for partial summary judgment regarding preemption issues with respect to the Plaintiffs' claim for breach of express warranty in Count III.

The Liability Defendants also moved for partial summary judgment to the extent that the Plaintiffs' express warranty claim in Count III sought to recover damages in excess of the limitation of liability provision within the express warranty on the Benlate label, which the circuit court denied. In denying this motion, the circuit court stated that "[t]he Court finds as a matter of law that the Benlate products warranty disclaimers and limitation of remedies provisions are unconscionable under the facts of this case." As a result of this ruling, the circuit court eventually instructed the jury to disregard the limitation of liability provision within the express warranty on the Benlate label.

The Liability Defendants moved several times to have the circuit court realign the Declaratory Defendants as plaintiffs. The circuit court denied these motions, because it found...

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