Kelley v. AW Distrib.

• Decision Date: 21 February 2023
• Docket Number: 20-cv-06942-JSW
• Parties: BRIAN KELLEY, et al., Plaintiffs, v. AW DISTRIBUTING, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of California

BRIAN KELLEY, et al., Plaintiffs, v. AW DISTRIBUTING, INC., et al., Defendants.

No. 20-cv-06942-JSW

United States District Court, N.D. California

February 21, 2023

ORDER GRANTING, IN PART, AND DENYING, IN PART, DAIHO SANGYO, INC'S MOTION FOR SUMMARY JUDGMENT AND SCHEDULING CASE MANAGEMENT CONFERENCE

RE: DKT. NO. 225

JEFFREY S. WHITE, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on consideration of the motion for summary judgment filed by Defendant Daiho Sangyo, Inc. (“Daiho”). Plaintiffs oppose the motion. AW Distributing, Inc. (“AW Distributing”), AW Product Sales & Marketing, Inc., Kennic Ho, and Alice Wong also oppose Daiho's motion.^[1] The Court has considered the parties' papers, relevant legal authority, and the record in this case and HEREBY GRANTS, IN PART, AND DENIES, IN PART Daiho's motion.

BACKGROUND

Unless otherwise noted, the following facts are undisputed. Plaintiffs bring claims against Daiho, the AW Defendants, and the Wal-Mart Defendants for wrongful death (claim 1), strict product liability based on design defects, manufacturing defects, and failure to warn (claims 2 through 4), negligence (claim 5), breach of express and implied warranties (claims 6 and 7), violations of California's Unfair Competition Law and California's False Advertising Law (claims 8 and 9), public nuisance (claim 10), negligent infliction of emotional distress (claim 11), and a survival claim (claim 12). The AW Defendants filed a cross-claim against Daiho seeking indemnification and contribution. (Dkt. No. 82.)

The AW Defendants sell a dust removal product, Ultra Duster, which contains “a pressurized volatile, fluorinated hydrocarbon gas called 1-1, difluoroethane [‘DFE'].” (First Amended Complaint (“FAC”) ¶ 59.) According to Plaintiffs, DFE is a popular substance to abuse by inhaling. (Id. ¶¶ 61-70.) Ultra Duster's label includes a statement that “misuse by deliberately concentrating and inhaling contents may be harmful or fatal.” Ultra Duster also purportedly contains a “bittering agent” to discourage inhalant abuse, but Plaintiffs claim the bittering agent is ineffective and may not even be present in Ultra Duster. (Id. ¶¶ 168, 183-184.)

On November 3, 2018, non-parties Colton Treu and John Stender purchased a can of Ultra Duster at a Wal-Mart in Chippewa Falls, Wisconsin.^[2] Treu and Stender inhaled the contents while Treu was driving, and Treu drove off the highway and struck and killed members of a group of Girl Scouts and their parents. Plaintiffs' relatives were among the individuals killed.

Daiho distributed Ultra Duster to AW Distributing from July 2008 until June 2018. (Dkt. No. 225-1, Declaration of John Radmer (“Radmer Decl.”), ¶¶ 2-3; Dkt. No. 225-2 at EC pp. 2-6, Radmer Decl., Ex. A, Declaration of Toru Hosoi (“Hosoi Decl.”), ¶¶ 2-3); Dkt. No. 225-2 at ECF pp. 4-38, Radmer Decl., B, Daiho Response to Plaintiffs' First Set of Interrogatories (“Daiho Resp. to Rog.”) 4(b)); see also Dkt. No. 236, Declaration of Kennic Ho (“Ho Decl.”), ¶¶ 3, 12.)^[3]Daiho and the AW Defendants' business relationship ended in litigation (the “Daiho-AW Litigation”).

Daiho does not dispute that “during the time [it] sold Ultra Duster to ... AW Distributing, [it] was involved in the design of Ultra Duster[.]” (Stipulation to Withdraw Rule 56(d) Requests at 2:12-14.) Daiho argues it is entitled to summary judgment because it did not manufacture, sell, or otherwise distribute Ultra Duster after June 2018 and argues that it did not manufacture, distribute, or sell the can found in Treu's vehicle (the “can at issue”). (See Hosoi Decl., ¶¶ 2-8; Daiho Resp. to Rogs. 4, 15.)

The Court will address additional facts as necessary in the analysis.

ANALYSIS

A. Applicable Legal Standards.

“A party may move for summary judgment, identifying each claim or defense . . . on which summary judgment is sought.” Fed.R.Civ.P. 56(a). A principal purpose of the summary judgment procedure is to identify and dispose of factually unsupported claims. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment, or partial summary judgment, is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The Court may not weigh evidence or make determinations of credibility. Rather, “[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986).

The party moving for summary judgment bears the initial burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323; see also Fed.R.Civ.P. 56(c). An issue of fact is “genuine” only if there is sufficient evidence for a reasonable fact finder to find for the nonmoving party. Anderson, 477 U.S. at 248-49. A fact is “material” if it may affect the outcome of the case. Id. at 248. If the party moving for summary judgment does not have the ultimate burden of persuasion at trial, the party must produce evidence which either negates an essential element of the non-moving party's claims or show that the non-moving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial. Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000).

Once the moving party meets its initial burden, the non-moving party must “identify with reasonable particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (quoting Richards v. Combined Ins. Co., 55 F.3d 247, 251 (7th Cir. 1995)). It is not the Court's task “to scour the record in search of a genuine issue of triable fact.” Id. (quoting Richards, 55 F.3d at 251); see also Fed.R.Civ.P. 56(c)(3) (“The court need consider only the cited materials, but it may consider other materials in the record.”). “A mere scintilla of evidence will not be sufficient to defeat a properly supported motion for summary judgment; rather, the nonmoving party must introduce some significant probative evidence tending to support the complaint.” Summers v. Teichert & Son, Inc., 127 F.3d 1150, 1152 (9th Cir. 1997) (cleaned up). If the non-moving party fails to point to evidence precluding summary judgment, the moving party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 323.

B. Evidentiary Issues.

Plaintiffs filed a request for judicial notice and ask the Court to take notice of over 80 media reports documenting injuries caused by the abuse of dust removal sprays. These reports were most relevant to the analysis of the public nuisance claim. Although the Court GRANTS Plaintiffs' request, it addresses their failure to rely on particular exhibits in its analysis of that claim.

The AW Defendants object to Daiho Exhibits F, G, I, J, K, O and Q on the basis that Daiho failed to establish an adequate foundation and failed to authenticate the exhibits. The AW Defendants also argue the exhibits contain inadmissible hearsay. (Dkt. No. 244, Objections.) With the exception of Exhibit K, the Court did not rely on any of these exhibits to resolve the motion. Accordingly, the Court OVERRULES AS MOOT the AW Defendants' objections to Exhibits F, G, I, J, O, and Q. Exhibit K is a police report, and Mr. Radmer establishes that the document is what it purports to be. Daiho also submits deposition testimony regarding the contents of the report. Accordingly, the Court OVERRULES the AW Defendants' objections to Exhibit K.

C. Daiho Is Entitled to Summary Judgment on the Strict Liability Claims.

The Court has determined that Plaintiffs' strict liability claims are governed by Wisconsin law. (Dkt. No. 216, Order Granting, in Part, and Denying, in Part, Motion to Apply Wisconsin Law at 7:4-6.) The essential elements of a strict liability claim against a manufacturer are set forth in Wisconsin Statute section 895.047(1)(a)-(e) (“Section 895.047”).^[4] “[S]trict liability can extend to entities besides the manufacturer under certain circumstances.” State Farm. Fire & Cas. Co. v. Amazon.com, 390 F.Supp.3d 964, 968 (W.D. Wis. 2019); see also Wis.Stat. § 895.047(2) (seller and distributor liability). Sellers and distributors of a product are not liable unless a plaintiff proves the manufacturer would be liable under Section 895.047(1) and proves, inter alia, that “the seller or distributor has contractually assumed one of the manufacturer's duties to design... the product.” Id. § 895.047(2)(a)(1).^[5]

In 2011, the Wisconsin legislature enacted the Omnibus Tort Reform Act of 2011 or “Act 2.” See 2011 Wis.Act. 2 §§ 29-31, 45(5) (codified at Wis.Stat. § 895.046). Act 2 was intended to

clarify product liability law, generally, and the application of the risk contribution theory of liability ., specifically, in order to return tort law to its historical, common law roots. This return both protects the rights of citizens to pursue legitimate and timely claims of injury resulting from defective products, and assures that business may conduct activities in [Wisconsin] without fear of being sued for indefinite claims of harm from products which businesses may never have manufactured, distributed, sold, or promoted, or which were made and sold decades ago.

Wis. Stat. § 895.046(1g).

[Act 2] applies to all actions in law or equity, whenever filed or accrued, in which a claimant alleges that the manufacturer, distributor, seller, or promoter of a product is liable for an injury or harm to a person or property, including actions based on allegations that the design, manufacture, distribution, sale, or promotion of, or instructions or warnings about, a

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