Wisconsin's New Tort Reform Law Provides Drafting Opportunities for Manufacturers, Distributors, and Retailers

01 February 2011 Publication
Author(s): Richard H. Casper

Legal News Alert: Distribution & Franchise

Last week, Foley published a summary of Wisconsin’s new law imposing restrictions on products liability suits (See http://www.foley.com/publications/pub_detail.aspx?pubid=7825). This alert highlights several provisions of that law that can be expected to affect the preparation of documents used in distributing products in Wisconsin.

15-Year Limitation on Strict Liability

The new law provides that strict liability actions against manufacturers, distributors, and/or retailers of a product (that is, those not based on negligence or breach of warranty) generally may not be filed more than 15 years after the product was manufactured. However, an important exception is entirely within the manufacturer’s control. If the manufacturer represented that the product will last more than 15 years (which would include representations in a contract and likely also include less formal representations in ads or correspondence), then the 15-year limit does not apply.

Protection for Distributors and Retailers That Buy in Sealed Containers

Subject to an exception referred to in the following paragraph, the new law provides that distributors or retailers that receive products in sealed containers and have no reasonable opportunity to inspect or test them are not liable on strict liability claims. From the perspective of distributors and retailers in Wisconsin, it will therefore be beneficial for their distributorship contracts with suppliers to include provisions contemplating that all products being resold are to be shipped to the distributors or retailers in sealed containers, that the distributors or retailers may return any product not so received, that the distributors or retailers are prohibited from opening the containers, and so forth. Including such provisions are not disadvantageous to suppliers.

Protection for Distributors and Retailers That Buy from Manufacturers Subject to the Jurisdiction of Wisconsin Courts

Distributors and retailers that are not manufacturers must generally be dismissed as defendants as to any strict liability claim, if the manufacturer has submitted itself to jurisdiction in Wisconsin courts. Further, if a manufacturer is not subject to jurisdiction in Wisconsin, the distributor or retailer will lose insulation from strict liability suits with respect to goods purchased in sealed containers (see the preceding paragraph). Accordingly, it is in any Wisconsin distributor’s interest that its distributorship contract includes a clause in which the manufacturer submits itself to jurisdiction in Wisconsin courts. A manufacturer may have opposing interests, depending on the convenience of defending itself in Wisconsin and on the relative stringency of strict liability principles in Wisconsin and other states in which the manufacturer may be subject to jurisdiction.

Statutory Ambiguities

The pertinent provisions of the new tort law include certain drafting anomalies, creating ambiguities that will not likely be resolved until there has been a significant volume of litigation interpreting those provisions.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:

Richard Casper
Milwaukee, Wisconsin

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