Chris Hinrichs v. DOW Chemical Company
937 N.W.2d 37
Wis.2020Background
- Plaintiff Chris Hinrichs (and Autovation) developed "JeeTops," acrylic skylights installed in Jeep hardtops; installation used an adhesive sold by Dow.
- Dow's agent tested the adhesive/primer and sent Hinrichs a report stating no evidence of crazing or surface cracking; Hinrichs relied and continued using Dow products.
- Many installed panels later crazed, fractured, and leaked; investigation indicated Dow's adhesive attacked the acrylic, causing product failures and reputational/economic harm to Hinrichs.
- Hinrichs sued Dow for negligent, intentional, and strict-responsibility misrepresentation, and for violation of Wis. Stat. § 100.18(1) (Deceptive Trade Practices Act).
- The circuit court dismissed all claims (economic loss doctrine barred common-law claims; §100.18 claim failed because Hinrichs was not "the public"); Court of Appeals affirmed dismissal of common-law claims but reversed on §100.18; Supreme Court affirmed the Court of Appeals in part and reversed in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether economic loss doctrine bars common-law misrepresentation claims | Hinrichs: doctrine shouldn't bar misrepresentation claims arising from deceptive statements about adhesive performance | Dow: plaintiffs seek only economic losses from product failure, so doctrine bars tort claims | Held: Economic loss doctrine bars Hinrichs' common-law misrepresentation claims |
| Whether "fraud in the inducement" exception saves common-law claims | Hinrichs: misrepresentation induced later purchases despite prior dealings | Dow: alleged misrepresentation concerns product quality, not extraneous facts | Held: Exception does not apply — statements related to product quality are not extraneous to the contract |
| Whether "other property" exception applies (damage to other property) | Hinrichs: JeeTops and adhesive are distinct products, so damage is to other property | Dow: adhesive and JeeTops became an integrated system once bonded | Held: Exception does not apply — adhesive and JeeTops are components of an integrated system |
| Whether economic loss doctrine bars claims under Wis. Stat. § 100.18(1) | Hinrichs: §100.18 is a statutory cause of action and not subject to economic loss limits | Dow: doctrine should apply to prevent recasting product-failure claims as statutory misrepresentation claims | Held: Economic loss doctrine does not bar §100.18 claims |
| Whether a single plaintiff can be "the public" under § 100.18(1) | Hinrichs: a single person may be a member of the public for §100.18 purposes | Dow: "the public" requires a broader audience; Automatic Merchandisers should be overruled | Held: One person can be "the public"; Automatic Merchandisers stands; whether Hinrichs was "the public" is a factual question for discovery |
| Whether heightened fraud pleading (§ 802.03(2)) applies to § 100.18 claims | Dow: §802.03(2) applies; complaint must plead "who, what, when, where, how" | Hinrichs: complaint met heightened standard; alternatively general pleading should suffice | Held: §802.03(2) does not apply to §100.18 statutory claims; general pleading standard governs and Hinrichs' complaint states a claim |
Key Cases Cited
- Kaloti Enters. v. Kellogg Sales Co., 283 Wis. 2d 555 (Wis. 2005) (recognizes narrow fraud-in-the-inducement exception; misrepresentation must be extraneous to contract)
- Van Lare v. Vogt, Inc., 274 Wis. 2d 631 (Wis. 2004) (describes purposes and scope of the economic loss doctrine)
- Wausau Tile, Inc. v. County Concrete Corp., 226 Wis. 2d 235 (Wis. 1999) (components incorporated into finished products form an integrated system for economic loss analysis)
- Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395 (Wis. 1998) (explains economic loss doctrine and its limits)
- State v. Automatic Merchandisers of Am., Inc., 64 Wis. 2d 659 (Wis. 1974) (holding that a person who responds to general advertising can be "the public"; adopts the "particular relationship" test)
- Kailin v. Armstrong, 252 Wis. 2d 676 (Ct. App. 2002) (recognizes §100.18 as a statutory cause of action; economic loss doctrine does not bar §100.18)
- K & S Tool & Die Corp. v. Perfection Mach. Sales, Inc., 301 Wis. 2d 109 (Wis. 2007) (applies the "particular relationship" test in §100.18 context)