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Wisconsin Enacts Tort Reform Measures To Restrict Liability in Products Liability and Tort Actions

January 27, 2011

On January 27, 2011, Governor Scott Walker signed into law significant changes to Wisconsin law governing products liability and other tort claims and to the evidentiary rules that Wisconsin state courts employ in deciding whether to admit into evidence the testimony of expert witnesses. Many of these changes bring Wisconsin more into line with the laws of other states and the rules that govern claims brought in federal courts. Collectively, the tort reform measures enacted have made Wisconsin a much less attractive jurisdiction for certain types of products liability lawsuits that have increased dramatically in recent years, such as lawsuits alleging injuries from exposure to asbestos, lead, and other potentially hazardous materials. The legislation became effective on January 31, 2011 and applies to all cases filed on or after February 1, 2011.

Significant aspects of the legislation include the following:

Basis for Manufacturer Liability Under Products Law

Former law: Wisconsin did not have a separate statute governing products liability claims. Products liability cases could be brought either under common-law theories of negligence or strict liability, alleging a manufacturing defect, a design defect, or a failure to warn of the foreseeable risks of harm. For a strict liability claim, Wisconsin courts followed the "consumer contemplation" standard that requires a plaintiff to show that a product was dangerous beyond that which would be contemplated by the ordinary consumer. Wisconsin was one of only a handful of states that still employed that standard, which had been included in Section 402(A) of the Restatement (Second) of Torts, published in 1965.

New law: The legislation creates a statutory strict products liability claim that maintains the three available theories on which a products liability claim may be based (manufacturing defect, design defect, and failure to warn). The statute breaks with existing Wisconsin law by expressly adopting a new standard stated in the Restatement (Third) of Torts, published in 1997, requiring a plaintiff to prove that a reasonable alternative design existed and the manufacturer's failure to use that design rendered the product not reasonably safe. The adoption of this standard brings Wisconsin's law into alignment with that of most other states.

Restrictions on Liability of Sellers and Distributors

Former law: Wisconsin did not have an "innocent seller" statute or any restriction on the liability of sellers and distributors under strict liability theories. All parties in the chain of distribution were subject to joint and several liability for a strict liability claim.

New law: The new legislation restricts the liability of a seller or distributor of a product to cases where the manufacturer is held liable and: (1) the seller or distributor contractually assumed the manufacturer's duty to manufacture or design a safe product or provide adequate warnings; (2) neither the manufacturer nor its insurer may be haled into court in Wisconsin; or (3) the plaintiff could not enforce a judgment against the manufacturer or its insurer.

Defenses to Strict Products Liability Claims

Former law: Wisconsin's statutory defenses to strict products liability claims were limited. The contributory negligence statute bars plaintiffs from recovering where a jury assigns a plaintiff a greater percentage of responsibility for causing the plaintiff's injury than it assigns to the defective product.

New law: The legislation codifies five statutory defenses, some of which are new and some already available: (1) if the plaintiff was under the influence of alcohol or a controlled substance, there is a rebuttable presumption that the plaintiff's impairment was the cause of the injury; (2) if the product complied with federal or state standards when it was sold, there is a rebuttable presumption that it was not defective; (3) the claimant's misuse, alteration, or modification of the product will reduce the percentage of responsibility for causing the plaintiff's injury; (4) if the injury was caused by an inherent characteristic of the product, recognized by a typical user, the case must be dismissed; and (5) a seller or distributor that receives a sealed product from the manufacturer cannot be held liable if they did not have a reasonable opportunity to test or inspect the product.

Punitive Damages

Former law: Previously, a defendant could be held liable for punitive damages where the plaintiff demonstrated "that the defendant acted maliciously toward the plaintiff or in an intentional disregard of the rights of the plaintiff." Wisconsin statutes did not limit the amount of punitive damages that could be awarded, although decisions by the U.S. Supreme Court and the Wisconsin Supreme Court provided some restrictions on awards.

New law: The new law retains the same standard of conduct by which a defendant may be held liable for punitive damages but imposes a maximum punitive damages award of $200,000 or twice the amount of compensatory damages awarded to the plaintiff, whichever is greater. The limit does not apply where the defendant was found to have been operating a motor vehicle, snowmobile, all-terrain vehicle, or boat while intoxicated.

Subsequent Remedial Measures

Former law: In contrast to the vast majority of jurisdictions, Wisconsin allowed a plaintiff in a strict products liability case based on a defective product design to introduce into evidence as proof of defect changes that the manufacturer made to the product's design to make the product safer.

New law: The legislation expressly prohibits the introduction of subsequent remedial measures in strict liability cases based on a manufacturing defect, design defect, or failure to warn, other than to prove feasibility, bringing Wisconsin in line with the majority rule.

Statute of Repose

Former law: Wisconsin had no statute of repose for products liability. Generally, a statute of repose prevents a plaintiff from bringing a product-related claim for an injury that the plaintiff sustained more than a certain number of years after the product was manufactured or sold.

New law: Wisconsin now has a statute of repose that generally prohibits a plaintiff from bringing a claim for an injury sustained more than 15 years after the product was manufactured, unless the manufacturer makes a specific representation that the product will last more than 15 years. The statute of repose does not apply to claims for damages caused by latent diseases.

Apportionment of Fault and Imposition of Joint and Several Liability

Former law: Wisconsin imposed joint and several liability on manufacturers found liable for contributing to the plaintiff's injury, regardless of their percentage of fault. It was tempered only by a plaintiff's contributory negligence.

New law: The legislation requires a jury to first determine, in a strict liability case, the percentage of responsibility for causing the injury that should be allocated to the plaintiff, to the defective condition of the product, and to any other person. If the plaintiff's percentage of responsibility is greater than that of the product, the plaintiff is barred from recovering. If the plaintiff's percentage is equal to or less than the percentage attributed to the product, then the plaintiff's damages are reduced by the percentage of the plaintiff's responsibility. If there is only one defendant responsible for the defective condition of the product, that defendant will be responsible for all damages, minus the reduction for plaintiff's responsibility, only if it was assigned at least 51% or greater responsibility. If multiple defendants are found liable for the product's defective condition, the fact finder must assign them percentages of responsibility for that defective condition, which the judge will multiply times the product's percentage of responsibility for the injury to establish the product defendant's percentage of responsibility for the plaintiff's damages. Each defendant will be liable in damages based on its percentage of responsibility but only a defendant allocated a 51% or greater share of responsibility is jointly and severally liable for all of the plaintiff's damages. Therefore, in effect, only one defendant, at most, may be subject to joint and several liability.

Market-share Liability

Former law: In very limited circumstances, under a legal theory that is generally referred to as "market share liability" in other states (and "risk contribution" in Wisconsin,Wisconsin allowed manufacturers to be held liable for injuries to a plaintiff even where the plaintiff could not prove that it was the manufacturer's product that caused the plaintiff's injury. That doctrine, which Wisconsin and most other states had allowed only in lawsuits.

alleging injuries from the anti-nausea medication diethylstilbestrol (or DES), was extended in 2005 by Wisconsin's Supreme Court to cases alleging exposure to lead pigment contained in house paint. In that ruling, Wisconsin became the only state in the country to allow market-share liability, or "risk contribution," to be applied in cases other than those involving DES.

New law: The new legislation generally requires a plaintiff to prove that each and every defendant that is named in a complaint either manufactured, distributed, sold, or promoted the specific product alleged to have caused the plaintiff's injury. If the plaintiff cannot meet that proof of specific product identification, the new statute allows the plaintiff to recover from the defendants (under several, but not joint liability) but only under a very restrictive set of criteria including requirements that: the plaintiff has no other legal remedy against any other person; the plaintiff's injury could be caused only by a manufactured product that is "chemically and physically identical" to the specific product alleged to have injured the plaintiff; each defendant manufactured, distributed, sold, or promoted a "complete integrated product" in the same form as the product that allegedly injured the plaintiff; each defendant's product was "chemically and physically identical" to the product that injured the plaintiff, was sold in the same geographic market at the same time as the product that injured the plaintiff, and was sold without any label or other distinctive characteristic identifying the defendant; and the plaintiff include as defendants the manufacturers holding an 80 percent market share for the product in Wisconsin during the relevant time. In addition, the legislation bars claims against defendants that last manufactured, distributed, sold, or promoted the product more than 25 years before the plaintiff was injured.

Standards for Expert Testimony

Former law: Wisconsin was one of only a handful of states that did not employ a special standard for the admissibility of expert testimony beyond the requirement that an expert be qualified in the area in which the expert rendered an opinion, and that the opinion be helpful to the jury.

New law: Wisconsin now will employ the Daubert standard that has been used in federal courts for nearly a decade, which requires a judge to determine whether an expert's opinion is "of a type reasonably relied upon by experts in the particular field" before it may be submitted to a jury. Under the Daubert standard, courts typically consider several well-established factors to make that determination.

For more information, please contact Doug Poland at 608.284.2625 or Josh Johanningmeier at 608.284.2637.

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